<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 8, 1999.
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WORLD COLOR PRESS, INC.
(Exact name of Registrant as specified in its charter)
------------------------------
<TABLE>
<S> <C> <C>
DELAWARE 2752 37-1167902
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer Identification Number)
incorporation or organization) Classification Code Number)
</TABLE>
------------------------
<TABLE>
<S> <C>
THE MILL JENNIFER L. ADAMS, ESQ.
340 PEMBERWICK ROAD VICE CHAIRMAN, CHIEF LEGAL AND ADMINISTRATIVE
GREENWICH, CONNECTICUT 06831 OFFICER
(203) 532-4200 AND SECRETARY
THE MILL
340 PEMBERWICK ROAD
GREENWICH, CONNECTICUT 06831
(203) 532-4200
(Address, including zip code, and telephone (Name, address, including zip code, telephone
number, including area number, including area
code, of Registrant's principal executive office) code, of agent for service)
</TABLE>
------------------------
COPIES TO:
STEVEN DELLA ROCCA, ESQ.
LATHAM & WATKINS
885 THIRD AVENUE, SUITE 1000
NEW YORK, NEW YORK 10022
(212) 906-1200
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ______
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ______
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT FEE (1)
<S> <C> <C> <C>
8 3/8% Senior Subordinated Notes due 2008............................ $300,000,000.00 100.00% $83,400.00
</TABLE>
(1) The registration fee has been calculated in accordance with Rule 457(f)
under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THIS PROSPECTUS, DATED MARCH 8, 1999, IS SUBJECT TO COMPLETION AND AMENDMENT.
PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING
8 3/8% UNREGISTERED SENIOR SUBORDINATED NOTES DUE 2008
FOR
8 3/8% REGISTERED SENIOR SUBORDINATED NOTES DUE 2008
WORLD COLOR PRESS, INC.
We hereby offer, on the terms and conditions described in this prospectus,
to exchange all of our outstanding unregistered 8 3/8% Senior Subordinated Notes
due 2008 for our registered 8 3/8% Senior Subordinated Notes due 2008. The
unregistered notes and registered notes are sometimes collectively referred to
as the notes. The unregistered notes were issued on November 20, 1998 and, as of
the date of this prospectus, an aggregate principal amount of $300.0 million is
outstanding. The terms of the registered notes are identical to the terms of the
unregistered notes except that the registered notes are registered under the
Securities Act of 1933, as amended, and will not contain any legends restricting
their transfer.
<TABLE>
<S> <C>
PLEASE CONSIDER THE FOLLOWING: INFORMATION ABOUT THE NOTES:
- - You should carefully review the Risk - The notes will mature on November 15, 2008.
Factors beginning on page 17 of this - We will pay interest on the notes semi-annually
prospectus. on May 15 and November 15 of each year beginning
- - Our offer to exchange unregistered May 15, 1999, at the rate of 8 3/8% per annum.
notes for registered notes will be - We have the option to redeem all or a portion of
open until 5:00 p.m., New York City the notes at any time on or after November 15, 2003
time, on , 1999, unless at the redemption prices set forth on page 52 of
we extend the offer. this prospectus.
- - You should carefully review the - We also have the option to redeem up to 40% of
procedures for tendering the the original aggregate principal amount of the
unregistered notes beginning on page notes on or prior to November 15, 2001 with the
45 of this prospectus. If you do not net cash proceeds from a public equity offering.
follow those procedures, we may not - If we sell certain assets, we must offer to
exchange your unregistered notes for repurchase the notes.
registered notes. - The notes are subordinated to all of our current
- - If you fail to tender your senior indebtedness (other than trade payables) and
unregistered notes, you will future senior indebtedness (other than trade
continue to hold unregistered notes. payables) unless the terms of the indebtedness
Your ability to transfer expressly provide otherwise. Please be advised
unregistered notes after the offer that, as of December 27, 1998 after giving pro
could be adversely affected. forma effect to the February notes offering
- - No public market currently exists applying the proceeds as intended and after
for the unregistered notes. We do using the proceeds from the November offering to
not intend to list the registered redeem certain indebtedness, World Color had
notes on any securities exchange approximately $1,017.8 million of indebtedness
and, therefore, no active public and trade payables outstanding, of which
market is anticipated. approximately $394.3 million of indebtedness was
senior to the registered notes.
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More
Information..................... 3
Incorporation of Certain Documents
by Reference.................... 3
Cautionary Statement Regarding
Forward-Looking Statements...... 4
Summary........................... 5
Risk Factors...................... 17
Use of Proceeds................... 19
Capitalization.................... 20
Selected Financial Data........... 21
Management's Discussion and
Analysis
of Financial Condition and
Results
of Operations................... 23
<CAPTION>
PAGE
----
<S> <C>
Business.......................... 30
Management........................ 37
Principal Stockholders............ 39
Description of Certain
Indebtedness.................... 40
The Exchange Offer................ 42
Description of Registered Notes... 50
Certain Federal Income Tax
Considerations.................. 80
Plan of Distribution.............. 81
Legal Matters..................... 82
Experts........................... 82
Index to Financial Statements..... F-1
</TABLE>
------------------------
We are a Delaware corporation and have offices at The Mill, 340 Pemberwick
Road, Greenwich, Connecticut 06831. Our telephone number is (203) 532-4200. In
this prospectus the words "World Color," "Company," "we," "our," "ours," and
"us" refer to World Color Press, Inc. and its subsidiaries.
------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file at
the Commission's public reference rooms at 450 Fifth Street, N.W., Washington,
D.C., 20549, 7 World Trade Center, 13th Floor, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call 1-800-SEC-0330 for further information on the public
reference rooms. Our filings are also available to the public from commercial
document retrieval services and at the web site maintained by the Securities and
Exchange Commission at "http://www.sec.gov." In addition, our reports and proxy
statements, and certain other information concerning World Color, can be
inspected at the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE MATTERS WE DISCUSS IN THIS PROSPECTUS OTHER THAN THOSE
CONTAINED HEREIN OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY REFERENCE. IF YOU
ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE MATTERS THAT IS NOT
DISCUSSED OR INCORPORATED IN THIS PROSPECTUS, YOU MUST NOT RELY ON THAT
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT
PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. OUR AFFAIRS MAY HAVE
CHANGED SINCE THE DATE OF THIS PROSPECTUS. WE CANNOT ASSURE YOU THAT THE
INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY
REFERENCE IS CORRECT AFTER THIS DATE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We are incorporating by reference the following documents, all of which we
have filed with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, into and as a part of this prospectus:
(i) our annual report on Form 10-K for the fiscal year ended December
28, 1997;
(ii) the portions of our 1997 Annual Report to Stockholders that have
been incorporated by reference into the 1997 10-K;
(iii) the portions of our 1997 definitive Proxy Statement for our Annual
Meeting of Stockholders dated March 27, 1998 that have been
incorporated by reference into the 1997 10-K;
(iv) our Quarterly Report on Form 10-Q for the quarter ended March 29,
1998;
(v) our Quarterly Report on Form 10-Q for the quarter ended June 28,
1998;
(vi) our Quarterly Report on Form 10-Q for the quarter ended September
27, 1998;
(vii) our Current Report on Form 8-K dated November 18, 1998; and
(viii) our Current Report on Form 8-K dated February 23, 1999.
Each document that we file pursuant to Section 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 after the date of this prospectus and prior
to the termination of this exchange offer will be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the date of filing of
such document. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
We will provide without charge to each person to whom a copy of this
prospectus is delivered, on the request of any such person, a copy of any or all
of the foregoing documents incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference in such documents). Written or telephone requests for such copies
should be directed to the Office of Investor Relations, World Color Press, Inc.,
The Mill, 340 Pemberwick Road, Greenwich, Connecticut 06831, telephone: (203)
532-4200.
3
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain certain
forward-looking statements about our financial condition, results of operations
and business. These statements may be made expressly in this document, or may be
"incorporated by reference" to other documents we have filed with the Securities
and Exchange Commission. You can find many of these statements by looking for
words such as "believes," "expects," "anticipates," "estimates," or similar
expressions used in this prospectus or incorporated herein.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. Factors which may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements include, among
others, the following:
- our ability to pay interest and principal on a very large amount of debt;
- changes in our customers' demands;
- changes in raw material and equipment costs and availability;
- seasonal changes in customer orders;
- our ability, and the ability of our customers and vendors, to become Year
2000 compliant;
- the competitive nature of the printing business;
- our ability to acquire and successfully integrate new technologies; and
- our ability to acquire and successfully integrate complementary
businesses.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. You are cautioned not to place undue reliance on
such statements, which speak only as of the date of this prospectus or, in the
case of documents incorporated by reference, as of the date of such document.
We do not undertake any responsibility to release publicly any revisions to
these forward-looking statements to take into account events or circumstances
that occur after the date of this prospectus. Additionally, we do not undertake
any responsibility to update you on the occurrence of any unanticipated events
which may cause actual results to differ from those expressed or implied by the
forward-looking statements contained or incorporated by reference in this
prospectus.
4
<PAGE>
SUMMARY
THE WORDS "WORLD COLOR," "COMPANY," "WE," "OUR," "OURS," AND "US" MEAN WORLD
COLOR PRESS, INC. AND ALL OF OUR SUBSIDIARIES ON A CONSOLIDATED BASIS. THE
FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT THIS EXCHANGE OFFER. IT IS
LIKELY THAT THIS SUMMARY DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT
TO YOU. FOR A MORE COMPLETE UNDERSTANDING OF THIS OFFERING, WE ENCOURAGE YOU TO
READ THIS ENTIRE DOCUMENT AND THE DOCUMENTS TO WHICH WE HAVE REFERRED. ALL
REFERENCES TO FISCAL YEARS ARE TO OUR FISCAL YEAR WHICH IS THE 52 OR 53-WEEK
PERIOD ENDING ON THE LAST SUNDAY IN DECEMBER.
THE COMPANY
We are an industry leader in the management and distribution of print and
digital information, with revenues of approximately $2.4 billion for the twelve
months ended December 27, 1998. We are the second largest diversified commercial
printer in the United States, providing digital prepress, press, binding,
distribution and multi-media services to our customers in the commercial,
magazine, catalog, direct mail, book and directory markets. Founded in 1903, we
operate a national network of 52 production and distribution facilities and an
extensive network of sales offices nationwide. Through selective acquisitions
and internal expansion, we have strategically positioned ourselves as a
full-service provider of high technology solutions for our customers' imaging,
print and distribution needs.
Since the appointment of a new management team in May 1991, we have
significantly expanded our national presence as a leading, innovative commercial
printer. We have achieved significant growth in sales, adjusted operating income
(as defined herein) and net income, while also improving our operating margins.
Over the past eight fiscal years, net sales and adjusted operating income grew
at compound annual rates of 20.7% and 37.6%, respectively, and net income
increased from a net loss of $58.7 million in 1991 to net income of $73.6
million for the year ended December 27, 1998. In addition, we have recorded six
consecutive years of improvement in our adjusted operating income margins.
GROWTH STRATEGY
We have increased stockholder value through emphasizing quality,
diversification of our business mix, operational efficiencies and strategic
growth. Specifically, our growth strategy is to:
- further establish and strengthen our leadership positions in diverse and
balanced businesses;
- make strategic acquisitions and broaden the array of services we provide
to our customers;
- provide high quality services within a low cost operating structure; and
- continue to increase efficiency and productivity.
The key elements underlying this strategy are described below.
ESTABLISH AND STRENGTHEN LEADERSHIP POSITIONS IN DIVERSE, BALANCED
BUSINESSES. We continue to expand our services and geographic presence to meet
our customers' full range of digital imaging, print, information management and
distribution needs. We believe our broad array of high quality products and
services, cost-effective distribution capabilities, advanced technologies and
competitive pricing allow us to capture a larger share of our existing
customers' business as well as attract new customers.
STRATEGIC ACQUISITIONS. The fragmented printing industry continues to
undergo significant consolidation due primarily to changing customer demand for
a full range of sophisticated services and the high levels of capital investment
necessary to meet this demand. Since the beginning of 1993, we have capitalized
on the industry's consolidation opportunities by successfully consummating and
integrating 22 acquisitions having an aggregate purchase price of approximately
$1.3 billion (including assumed indebtedness). We have targeted our acquisitions
to expand our services and geographic presence and to diversify our business mix
by, among other things, targeting customers operating in new markets such as the
direct mail and book markets. Our acquisitions have been accretive to our
earnings because of, among other things, significant cost savings in the
purchase of raw materials, the reduction of overhead costs and productivity
gains captured by our ability to better absorb and manage available capacity at
newly acquired facilities. We believe that our competitive and financial
strengths and considerable experience in
5
<PAGE>
identifying, acquiring and integrating complementary businesses will continue to
provide significant growth opportunities. While we continuously evaluate
opportunities to make strategic acquisitions, at present we have no commitments
or agreements with respect to any material acquisitions.
LOW COST OPERATING STRUCTURE. We make a vigorous effort to optimize the
management of our resources, and believe our ratio of selling, general and
administrative expenses to net sales is among the lowest in our industry. We
continually evaluate our business in order to keep our costs in line with
current and anticipated revenues, as well as to identify opportunities for
productivity improvement. For instance, most recently we initiated the "World
2000" project which involves a systematic evaluation of each cost element within
our production facilities. We believe the project will improve business
processes throughout our production cycle and enable us to generate greater
efficiency from our existing capital. Our "one-company" operating structure has
allowed us to maximize capacity utilization by balancing production across
plants and to reduce costs by providing a central support organization for
administrative services. In addition, our purchasing power enables us to acquire
raw materials and equipment on more favorable terms than our smaller
competitors, as well as to ensure the availability of raw materials in tight
markets.
TARGETED CAPITAL INVESTMENTS TO INCREASE EFFICIENCY AND PRODUCTIVITY. We
have been at the forefront of technological advances and are committed to
maintaining our position as an industry leader through strategic capital
spending. We are a leader in the transition from conventional prepress to an
all-digital workflow, providing a complete spectrum of film and digital
preparation services. Since the beginning of 1993, we have invested
approximately $520.8 million in equipment and plant expansions (exclusive of
equipment obtained in acquisitions) to position ourselves for continued growth
and productivity improvements. We believe that our significant size and
financial strength allow us to invest in technologies that are not commercially
viable for smaller or less well-capitalized competitors.
MARKETS AND CUSTOMERS
As illustrated in the charts below, since the appointment of our current
management team in 1991, we have diversified our business mix and expanded into
serving customers in faster growth markets.
OUR BUSINESS MIX
PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>
1990 PRO FORMA 1998*
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<CAPTION>
COMMERCIAL 28%
<S> <C>
COMMERCIAL10%Magazines 27% Magazines 72%
Catalogs 23% Catalogs 4%
Direct Mail 9% Directories 14%
Books 9%
Directories 4%
</TABLE>
- ------------------------
* As used herein, "Pro Forma 1998" gives effect to the acquisitions of Magna
Graphic, Inc. (January 1998), Century Graphics Corporation (February 1998),
Dittler Brothers, Incorporated (March 1998), Acme Printing Company, Inc.
(April 1998), Great Western Publishing, Inc. (December 1998) and Infiniti
Graphics, Inc. (January 1999), as if each had occurred on the first day of
fiscal 1998. The Pro Forma 1998 amounts are not necessarily indicative of
the results that would have occurred had the acquisitions been consummated
on the first day of fiscal 1998, or of our or the acquired companies'
individual or combined future results.
6
<PAGE>
COMMERCIAL. We are a premier printer of virtually all of the different
kinds of materials used by businesses to promote their goods and services to
other businesses, investors and consumers. We print high quality specialty
products, such as annual reports and automobile and travel brochures, for
customers such as BMG, Columbia Pictures, Donna Karan/New York, Ford Motor,
Guess?, Mercedes Benz, Outback Steakhouse, Pillsbury, Princess Cruises, Reebok
and Tiffany. We are also a leading printer of product brochures, bill stuffers,
informational marketing materials and other advertising supplements. Our
customers in this area include ADVO, American Express Publishing, Grolier and
Ziff-Davis. We also print freestanding inserts for customers such as News
America and retail inserts for established national and regional retailers such
as Albertson's, Best Buy, Home Depot, J.C. Penney, Rite-Aid, Staples, True Value
and Wal-Mart. We are the second largest offset printer of retail advertising
inserts in the United States. We are also an industry leader in three highly
specialized areas: (1) complex personalized direct response materials; (2)
unique and intricate consumer-involvement promotional materials such as
scratch-off game pieces; and (3) airline guides and hotel directories. Our
long-standing customers include leading players in the direct mail, fast food,
soft drink and other consumer markets.
MAGAZINES. We believe that we are the second largest printer of consumer
magazines in the United States, printing over 2 billion magazines annually. We
believe that our principal competitors in this category consist of three
diversified printing companies. The magazines that we print are among the
best-selling in their class and include such titles as AMERICAN WAY, CIGAR
AFICIONADO, EBONY, ELLE, ENTERTAINMENT WEEKLY, ESPN MAGAZINE, FORBES, GOLF
DIGEST, GOOD HOUSEKEEPING, MAXIM, MEN'S HEALTH, NATIONAL GEOGRAPHIC, NEWSWEEK,
ROAD AND TRACK, SOAP OPERA WEEKLY, TEEN, TV GUIDE, VOGUE and WOMAN'S DAY. The
popularity of these magazines makes them less susceptible to cyclical downturns
in advertising spending, which we believe provides us with a significant
advantage over competitors whose customers may be more susceptible to such
downturns. A majority of our magazine printing is performed under contracts with
remaining terms of between one and ten years, the largest of which are with
customers with whom we have had relationships for, on average, more than 20
years. We have extended a majority of such contracts beyond their initial
expiration dates and intend to continue this practice when economically
practical.
CATALOGS. We are a leading printer for the U.S. catalog market, and print
approximately 3 billion catalogs annually. Our key competitors in this category
consist of four diversified commercial printers whose facilities enable them to
compete in the national market and smaller and local regional printers who
compete for regional business. We currently print many of the most well known
catalog titles, including Abercrombie & Fitch, Avon, Banana Republic, Blair,
Chadwick's, Crate & Barrel, Frontgate, Hammacher Schlemmer, Pottery Barn, Sears,
Starbucks, Victoria's Secret and Williams-Sonoma. In addition, our
business-to-business catalog printing work spans a broad range of industries
including the computer, home and office furniture, office products and
industrial safety products industries. Our business-to-business customers
include Global DirectMail and Reliable.
DIRECT MAIL. Direct mail targeted marketing services are an important and
growing component of many businesses' marketing programs and overall U.S.
advertising expenditures. We print direct mail materials such as booklets,
inserts, bill stuffers and other advertisements for customers including ADVO,
Blair, Citicorp, DiscoverCard, Fleet, The Franklin Mint, Frito-Lay, National
Geographic, New York Life, Publisher's Clearing House and Quaker Oats. Among the
direct mail services provided are direct imaging, personalization and other
lettershop services. We believe we are the only direct mail printer capable of
providing complex personalization for both short and long-run projects.
BOOKS. We print mass-market, racksize books for customers including Avon
Books, Bantam Doubleday Dell, Kensington Publishing, Random House and St.
Martin's Press/TOR. We also print hardcover books for the consumer, education
and reference markets on behalf of many of the largest U.S. publishers. Our
hardcover book customers include Grolier, Rand McNally, Random House, Reader's
Digest, Rodale, Thomas Publishing and Time Warner.
7
<PAGE>
DIRECTORIES. We have printed directories since 1981 predominantly through
our relationship with Pacific Bell. We print four-color white page and yellow
page directories for Pacific Bell pursuant to a contract which extends through
the year 2002 and which can be extended by Pacific Bell for up to an additional
three years. We print more than 100 different regional directory titles for
Pacific Bell and certain other customers. We print over 35 million directories
annually.
RECENT DEVELOPMENTS
NOVEMBER NOTES OFFERING. On November 20, 1998, we issued $300.0 million in
aggregate principal amount of 8 3/8% Senior Subordinated Notes due 2008. The net
proceeds from the issuance of these notes was approximately $291.7 million. We
used $160.8 million of the net proceeds to redeem our 9 1/8% Senior Subordinated
Notes due 2003. The remainder of the net proceeds were used to repay borrowings
under our credit facility, all of which may be reborrowed for general corporate
purposes.
EXISTING NOTES REDEMPTION. On December 28, 1998, we redeemed all of the
$150.0 million of outstanding principal amount of our existing 9 1/8% Senior
Subordinated Notes due 2003. The cost of redeeming these notes was $160.8
million, including prepayment premium and accrued interest to the date of
redemption. This early extinguishment of debt generated an extraordinary charge
in the first quarter of fiscal 1999 of approximately $6.0 million net of tax.
FEBRUARY NOTES OFFERING. On February 22, 1999, we issued $300.0 million in
aggregate principal amount of 7 3/4% Senior Subordinated Notes due 2009. The net
proceeds from the issuance of these notes was approximately $294.0 million. We
used: (a) $35.0 million to permanently reduce certain facilities under our
credit facility; (b) $224.8 million to reduce certain other facilities under our
credit facility, all of which may be reborrowed to fund acquisitions and for
other general corporate purposes; and (c) $34.2 million to fund acquisitions
within 90 days, or, to the extent we do not use such funds, to permanently
reduce certain facilities under our credit facility. Pending the use of such
funds, we are investing the remaining funds in short term, liquid securities.
RECENT RESULTS OF OPERATIONS. Our results for the quarter ended December
27, 1998 included an increase in net sales of 15.6% over the last quarter of
fiscal 1997 to $624.0 million reflecting continued core business growth, the
effects of the acquisitions we completed in fiscal 1998 and sales related to
capital expansion. Operating income increased 21.5% over the last quarter of
fiscal 1997 to $66.6 million. EBITDA (earnings before interest and
securitization fees, taxes and depreciation and amortization) increased 19.1% to
$102.5 million compared with $86.0 million in the fourth quarter of 1997. In
addition, net income increased 22.1% over the last quarter of fiscal 1997 to
$25.5 million. Diluted earnings per share increased 18.9% over the last quarter
of fiscal 1997 to $0.63.
Our results for the year ended December 27, 1998, included an increase in
net sales of 19.0% over the prior year to $2.36 billion and an increase in
operating income of 20.0% over the prior year to $214.2 million. EBITDA
increased 14.4% to $355.0 million compared with $310.3 million for fiscal 1997.
In addition, net income increased 28.6% from fiscal 1997 to $73.6 million, and
diluted earnings per share increased 15.0% from fiscal 1997 to $1.84 for the
year ended December 27, 1998.
CHANGE IN ACCOUNTING PRINCIPLE. In April 1998, the American Institute of
Certified Public Accountants issued Statement of Position ("SOP") 98-5,
"Reporting on the Costs of Start-up Activities," which requires costs of
start-up activities and organization costs to be expensed as incurred. We will
adopt this SOP in the first quarter of fiscal 1999. We estimate that the
adoption of SOP 98-5 will result in the recognition of a charge to income of
approximately $10.5 million, net of tax, as the cumulative effect of a change in
accounting principle in the first quarter of fiscal 1999.
1999 ACQUISITIONS. In December 1998, we purchased Great Western Publishing,
Inc., establishing us as the second largest offset printer of retail advertising
inserts in the United States. In January 1999, we purchased Infiniti Graphics,
Inc., adding short-run capabilities to our existing northeastern commercial
operations and strengthening our overall position in the northeastern commercial
printing market.
8
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
SECURITIES TO BE EXCHANGED.... On November 20, 1998, we issued $300.0 million in aggregate
principal amount of unregistered notes to the initial
purchasers in a transaction exempt from the registration
requirements of the Securities Act of 1933. The terms of the
registered notes and the unregistered notes are
substantially identical in all material respects, except
that the registered notes will be freely transferable by the
holders thereof except as otherwise provided herein. See
"Description of Registered Notes."
THE EXCHANGE OFFER............ $1,000 principal amount of registered notes in exchange for
each $1,000 principal amount of unregistered notes. As of
the date hereof, unregistered notes representing $300.0
million in aggregate principal amount are outstanding.
Based on interpretations by the staff of the Securities and
Exchange Commission, as set forth in no-action letters
issued to certain third parties unrelated to us, we believe
that registered notes issued pursuant to the exchange offer
in exchange for unregistered notes may be offered for
resale, resold or otherwise transferred by holders thereof
(other than any holder which is our "affiliate" within the
meaning of Rule 405 promulgated under the Securities Act of
1933, or a broker-dealer who purchased unregistered notes
directly from us to resell pursuant to Rule 144A or any
other available exemption promulgated under the Securities
Act of 1933), without compliance with the registration and
prospectus delivery requirements of the Securities Act of
1933; PROVIDED that such registered notes are acquired in
the ordinary course of such holders' business and such
holders have no arrangement with any person to engage in a
distribution of such registered notes.
However, the Securities and Exchange Commission has not
considered the exchange offer in the context of a no-action
letter and we cannot be sure that the staff of the
Securities and Exchange Commission would make a similar
determination with respect to the exchange offer as in such
other circumstances. Furthermore, each holder, other than a
broker-dealer, must acknowledge that it is not engaged in,
and does not intend to engage in, a distribution of such
registered notes and has no arrangement or understanding to
participate in a distribution of registered notes. Each
broker-dealer that receives registered notes for its own
account pursuant to the exchange offer must acknowledge that
it will comply with the prospectus delivery requirements of
the Securities Act of 1933 in connection with any resale of
such registered notes. Broker-dealers who acquired
unregistered notes directly from us and not as a result of
market-making activities or other trading activities may not
rely on the staff's interpretations discussed above or
participate in the exchange offer and must comply with the
prospectus delivery requirements of the Securities Act of
1933 in order to resell the unregistered notes.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
REGISTRATION RIGHTS
AGREEMENT................... We sold the unregistered notes on November 20, 1998 in a
private placement in reliance on Section 4(2) of the
Securities Act of 1933. The unregistered notes were
immediately resold by the initial purchasers in reliance on
Rule 144A and Regulation S under the Securities Act of 1933.
In connection with the sale, we entered into a registration
rights agreement with the initial purchasers of the
unregistered notes requiring us to make the exchange offer.
The registration rights agreement also provides that we must
use our reasonable best efforts to (i) cause the
registration statement with respect to the exchange offer to
be declared effective within 150 days of the date on which
we issued the unregistered notes and (ii) consummate the
exchange offer on or before the 180th day following the date
on which we issued the unregistered notes. See "The Exchange
Offer--Purpose and Effect."
EXPIRATION DATE............... The exchange offer will expire at 5:00 p.m., New York City
time, , 1999, or such later date and time to
which it is extended.
WITHDRAWAL.................... The tender of the unregistered notes pursuant to the
exchange offer may be withdrawn at any time prior to 5:00
p.m., New York City time, on , 1999, or such
later date and time to which we extend the offer. Any
unregistered notes not accepted for exchange for any reason
will be returned without expense to the tendering holder
thereof as soon as practicable after the expiration or
termination of the exchange offer.
INTEREST ON THE REGISTERED
NOTES AND THE UNREGISTERED
NOTES....................... Interest on the registered notes will accrue from the date
of the original issuance of the unregistered notes or from
the date of the last payment of interest on the unregistered
notes, whichever is later. No additional interest will be
paid on unregistered notes tendered and accepted for
exchange.
CONDITIONS TO THE EXCHANGE
OFFER....................... The exchange offer is subject to certain customary
conditions, certain of which may be waived by us. See "The
Exchange Offer--Certain Conditions to Exchange Offer."
PROCEDURES FOR TENDERING
UNREGISTERED NOTES.......... Each holder of the unregistered notes wishing to accept the
exchange offer must complete, sign and date the letter of
transmittal, or a copy thereof, in accordance with the
instructions contained in this prospectus and therein, and
mail or otherwise deliver the letter of transmittal, or the
copy, together with the unregistered notes and all other
required documentation, to the exchange agent at the address
set forth in this prospectus. Anyone holding the
unregistered notes through the Depository Trust Company
("DTC") and wishing to accept the exchange offer must do so
pursuant to the DTC's Automated Tender Offer Program, by
which each tendering holder will agree to be bound by the
letter of transmittal. By executing or agreeing to be bound
by the letter of transmittal, each holder will represent to
us that, among other things:
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
- the registered notes acquired pursuant to the exchange
offer are being obtained in the ordinary course of business
of the person receiving such registered notes, whether or
not such person is the registered holder of the
unregistered notes;
- the holder is not engaging in and does not intend to
engage in a distribution of such registered notes;
- the holder does not have an arrangement or understanding
with any person to participate in a distribution of such
registered notes; and
- the holder is not an "affiliate," as defined under Rule
405 under the Securities Act of 1933, of the Company.
Pursuant to the registration rights agreement if:
- we determine that we are not permitted to effect the
exchange offer as contemplated by this prospectus because of
any change in law or Securities and Exchange Commission
policy; or
- any holder of Transfer Restricted Securities notifies us
within 20 days after consummation of the exchange offer:
- that it is prohibited by law or Securities and Exchange
Commission policy from participating in the exchange
offer;
- that it may not resell the registered notes acquired by it
in the exchange offer to the public without delivering a
prospectus and that this prospectus is not appropriate or
available for such resales; or
- that it is a broker-dealer and owns unregistered notes
acquired directly from us or one of our affiliates,
we may be required to file a "shelf" registration statement
for a continuous offering pursuant to Rule 415 under the
Securities Act of 1933 in respect of the unregistered notes.
We will accept for exchange any and all unregistered notes
which are properly tendered (and not withdrawn) in the
exchange offer prior to 5:00 p.m., New York City time, on
, 1999. The registered notes issued pursuant
to the exchange offer will be delivered promptly following
the expiration date. See "The Exchange Offer--Terms of the
Exchange Offer."
EXCHANGE AGENT................ The Bank of New York is serving as exchange agent in
connection with the exchange offer.
FEDERAL INCOME TAX
CONSIDERATIONS.............. The exchange of unregistered notes for registered notes
pursuant to the exchange offer should not constitute a sale
or an exchange for federal income tax purposes. See "Certain
Federal Income Tax Considerations."
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
EFFECT OF NOT TENDERING....... Unregistered notes that are not tendered or that are
tendered but not accepted will, following the completion of
the exchange offer, continue to be subject to the existing
restrictions upon transfer. Except as noted above, we will
have no further obligation to provide for the registration
under the Securities Act of 1933 of such unregistered notes.
</TABLE>
12
<PAGE>
THE REGISTERED NOTES
The summary below describes the principal terms of the registered notes.
Certain of the terms and conditions described below are subject to important
limitations and exceptions. The "Description of Registered Notes" section of
this prospectus beginning on page 50 contains a more detailed description of the
terms and conditions of the registered notes.
<TABLE>
<S> <C>
TOTAL AMOUNT OF NOTES
OFFERED..................... $300.0 million in principal amount of 8 3/8% Senior
Subordinated Notes due 2008.
MATURITY...................... November 15, 2008.
ISSUE PRICE................... Par plus accrued interest from November 20, 1998.
INTEREST...................... Annual rate--8 3/8%.
Payment frequency-- every six months on May 15 and November
15.
First payment--May 15, 1999.
RANKING....................... These registered notes are senior subordinated debt.
They rank in right of payment behind all of our existing
senior indebtedness and all of our future borrowings, except
trade payables and any existing or future indebtedness that
expressly provides that it ranks equal in right of payment
with, or subordinated in right of payment to, these
registered notes.
Assuming we had completed the February notes offering and
applied the proceeds of the offering as intended and applied
the proceeds from the November offering to redeem certain
indebtedness prior to the 1998 fiscal year end, on December
27, 1998 these registered notes:
- would have been subordinated to $394.3 million of senior
indebtedness; and
- would have ranked equally with $623.5 million of other
senior subordinated indebtedness.
OPTIONAL REDEMPTION........... Before November 15, 2001, we may redeem up to 40% of the
aggregate principal amount of the registered notes with the
proceeds of certain public offerings of equity in our
Company at the price listed in the section "Description of
Registered Notes" under the heading "Optional Redemption;"
PROVIDED that at least 60% in aggregate principal amount of
the registered notes originally issued must remain
outstanding after each such redemption.
On or after November 15, 2003, we may redeem some or all of
the registered notes at any time at the redemption prices
listed in the section "Description of Registered Notes"
under the heading "Optional Redemption."
MANDATORY OFFER TO
REPURCHASE.................. If we sell certain assets, we must offer to repurchase the
registered notes at the prices listed in the section
"Description of Registered Notes."
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
BASIC COVENANTS OF
INDENTURE................... The indenture governing the registered notes contains
covenants limiting our (and most of our subsidiaries')
ability to:
- borrow money;
- pay dividends on stock or purchase stock or redeem debt
that is junior in right of payment to the registered notes;
- make investments;
- use assets as security in other transactions; and
- sell certain assets or merge with or into other companies.
For more details, see the section "Description of Registered
Notes" under the heading "Certain Covenants."
USE OF PROCEEDS............... We will not receive any cash proceeds from the issuance of
the registered notes.
</TABLE>
14
<PAGE>
SUMMARY FINANCIAL DATA
The following summary operating and financial data for the fiscal years
ended December 31, 1995 through December 28, 1997, have been derived from our
consolidated financial statements, which have been audited by Deloitte & Touche
LLP, independent auditors, whose report thereon is included elsewhere in this
prospectus. The following summary operating and financial data for the
nine-month periods ended September 28, 1997 and September 27, 1998 have been
derived from our unaudited condensed consolidated financial statements which, in
the opinion of our management, contain all adjustments (consisting of only
normal and recurring adjustments) necessary to present fairly our financial
position and results of operations at such dates and for such periods. The data
presented below should be read in conjunction with, and are qualified in their
entirety by reference to, our consolidated financial statements and the notes
thereto appearing elsewhere in this prospectus. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
FISCAL YEAR (1) NINE MONTHS (1)
---------------------------------------- --------------------------
1995 1996 1997 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND RATIOS)
OPERATING DATA:
Net sales..................................... $ 1,295,582 $ 1,641,412 $ 1,981,225 $ 1,441,266 $ 1,732,890
Cost of sales................................. 1,074,785 1,349,130 1,613,938 1,179,198 1,424,069
------------ ------------ ------------ ------------ ------------
Gross profit.................................. 220,797 292,282 367,287 262,068 308,821
Selling, general and administrative
expenses.................................... 125,539 153,071 188,688 138,287 161,202
Streamlining and other special
charges (2)................................. 40,900 -- -- -- --
------------ ------------ ------------ ------------ ------------
Operating income.............................. 54,358 139,211 178,599 123,781 147,619
Interest expense and securitization fees...... 37,897 58,417 80,039 61,099 65,368
Income tax provision.......................... 6,584 33,533 41,341 26,326 34,134
------------ ------------ ------------ ------------ ------------
Net income.................................... $ 9,877 $ 47,261 $ 57,219 $ 36,356 $ 48,117
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net income per common share (3):
Basic....................................... $ 0.31 $ 1.40 $ 1.65 $ 1.08 $ 1.25
Diluted..................................... 0.29 1.35 1.60 1.05 1.21
OTHER OPERATING DATA:
EBITDA (4).................................... $ 169,926 $ 243,704 $ 310,309 $ 224,279 $ 252,467
Adjusted operating income (5)................. 95,258 139,211 178,599 123,781 147,619
Capital expenditures(6)....................... 120,339 70,639 93,145 72,247 88,055
Cash provided by (used in) operations: 6,744 146,583 239,305 151,757 (19,675)
Gross profit margin........................... 17.0% 17.8% 18.5% 18.2% 17.8%
EBITDA margin................................. 13.1 14.8 15.7 15.6 14.6
Adjusted operating income margin.............. 7.4 8.5 9.0 8.6 8.5
Ratio of earnings to fixed charges (7)........ 1.3x 2.2x 2.1x 1.9x 2.0x
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER
27,
BALANCE SHEET DATA: 1998
-------------
<S> <C>
Working capital............................................................ $ 248,200
Property, plant and equipment, net......................................... 912,878
Total assets............................................................... 2,303,206
Long-term debt (including current maturities).............................. 1,115,842
Stockholders' equity....................................................... 640,389
</TABLE>
(FOOTNOTES ON NEXT PAGE)
15
<PAGE>
- ------------------------
(1) The fiscal years shown each represent the 52 or 53-week period ending on
the last Sunday in December. Fiscal year 1995 consisted of 53 weeks. Fiscal
years 1996 and 1997 each consisted of 52 weeks. The nine-month periods ended
September 28, 1997 and September 27, 1998 each consisted of 39 weeks.
(2) In the fourth quarter of 1995, we recorded a streamlining charge of $40,900
($24,540 net of tax benefits). This charge, which was primarily non-cash,
was related to the realignment of certain business operations which resulted
in the writedown of certain assets and a provision for other associated
costs. See Note 15 to our consolidated financial statements.
(3) In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," we have calculated net income per common share--basic
and diluted based on the weighted average shares and dilutive common
equivalent shares outstanding, as applicable, during each period after
giving effect to the change in our capital structure pursuant to the Merger
and Options Adjustments (as defined in the Notes to the consolidated
financial statements).
(4) EBITDA represents earnings before interest expense and securitization fees,
income taxes, depreciation, amortization and non-recurring streamlining and
other special charges. EBITDA is not intended to represent cash flows for
the period, is not presented as an alternative to operating income as an
indicator of operating performance, may not be comparable to other similarly
titled measures of other companies and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles. See our consolidated financial
statements and the notes thereto appearing elsewhere in this prospectus.
(5) Adjusted operating income represents operating income before non-recurring
streamlining and other special charges. Adjusted operating income is not
intended to represent cash flows for the period, is not presented as an
alternative to operating income as an indicator of operating performance,
may not be comparable to other similarly titled measures of other companies
and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. See our consolidated financial statements and the notes thereto
appearing elsewhere in this prospectus.
(6) Capital expenditures for the nine month period ended September 27, 1998 are
net of proceeds of $60,700 from the sale-leaseback of certain equipment.
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges (other than
capitalized interest) and amortization of previously capitalized interest.
Fixed charges consist of interest expense and debt issuance cost,
capitalized interest and that portion of rental expenses representative of
the interest factor. The 1995 ratio reflects the 1995 streamlining charge of
$40,900 discussed in footnote (2). Excluding the effect of this charge the
1995 ratio would be 2.2x.
16
<PAGE>
RISK FACTORS
THIS PROSPECTUS INCLUDES "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, INCLUDING, IN PARTICULAR, THE STATEMENTS ABOUT OUR PLANS,
STRATEGIES, AND PROSPECTS UNDER THE HEADINGS "SUMMARY," "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," AND "BUSINESS."
ALTHOUGH WE BELIEVE THAT OUR PLANS, INTENTIONS AND EXPECTATIONS REFLECTED IN OR
SUGGESTED BY SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CAN GIVE NO
ASSURANCE THAT SUCH PLANS, INTENTIONS OR EXPECTATIONS WILL BE ACHIEVED.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
FORWARD LOOKING STATEMENTS WE MAKE IN THIS PROSPECTUS ARE SET FORTH BELOW AND
ELSEWHERE IN THIS PROSPECTUS, AND INCLUDE CHANGES IN OUR CUSTOMERS' DEMANDS FOR
OUR PRODUCTS, CHANGES IN THE COSTS AND AVAILABILITY OF OUR RAW MATERIALS AND
EQUIPMENT, SEASONAL CHANGES IN CUSTOMER ORDERS, PRICING ACTIONS BY OUR
COMPETITORS, CHANGES IN ESTIMATES OF OUR READINESS AND THE READINESS OF OUR
VENDORS AND CUSTOMERS WITH REGARD TO YEAR 2000 ISSUES AND THE SIGNIFICANCE OF
THE COSTS THEREOF, AND GENERAL CHANGES IN ECONOMIC CONDITIONS. ALL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR PERSONS ACTING ON OUR BEHALF
ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOLLOWING CAUTIONARY
STATEMENTS.
FAILURE TO EXCHANGE NOTES--YOUR FAILURE TO TENDER YOUR UNREGISTERED NOTES IN THE
EXCHANGE OFFER COULD LIMITED THE TRADING MARKET AND TRADING VALUE OF YOUR
UNREGISTERED NOTES.
Registered notes will be issued in exchange for unregistered notes only
after timely receipt by the exchange agent of the unregistered notes, a properly
completed and duly executed letter of transmittal and all other required
documentation. Therefore, holders of unregistered notes who want to tender their
unregistered notes in exchange for registered notes should allow sufficient time
to ensure timely delivery. Neither the exchange agent nor World Color is under
any obligation to notify holders of defects or irregularities with respect to
tenders of unregistered notes for exchange. Unregistered notes that are not
exchanged in the exchange offer will continue to be subject to the existing
restrictions upon transfer thereof. Each broker-dealer that receives registered
notes for its own account in exchange for unregistered notes, where such
unregistered notes were acquired by the broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such registered
notes.
The trading market for unregistered notes that are not exchanged in the
exchange offer could be adversely affected due to the limited amount, or
"float," of the unregistered notes that are expected to remain outstanding
following the exchange offer. Generally, a lower "float" of a security could
result in less demand to purchase such security and could, therefore, result in
lower prices for such security. For the same reason, to the extent that a large
amount of unregistered notes are not exchanged in the exchange offer, the
trading market for the registered notes could be adversely affected. See "Plan
of Distribution" and "The Exchange Offer."
SUBORDINATION--YOUR RIGHT TO RECEIVE PAYMENTS ON THESE REGISTERED NOTES IS
JUNIOR TO OUR EXISTING INDEBTEDNESS AND, POSSIBLY, ALL OF OUR FUTURE BORROWINGS.
These registered notes rank in right of payment behind all of our existing
senior indebtedness and all of our future borrowings, except trade payables and
any existing or future indebtedness that expressly provides that it ranks equal
in right of payment with, or subordinated in right of payment to, the registered
notes. Assuming we had completed the February notes offering, applied the
proceeds as intended and used the proceeds from the November notes offering to
redeem certain indebtedness prior to the 1998 fiscal year end, at December 27,
1998:
- these registered notes would have been subordinated to $394.3 million of
senior indebtedness;
- we would have had approximately $522.0 million available for borrowing as
additional senior indebtedness under our credit facility; and
17
<PAGE>
- these registered notes would have ranked equally with $623.5 million of
other senior subordinated indebtedness and trade payables.
We will be permitted to borrow substantial additional indebtedness,
including senior indebtedness, in the future under the terms of our credit
facility and our indentures. As a result, upon any distribution to our creditors
in a bankruptcy, liquidation or reorganization or similar proceeding relating to
us or our property, the holders of our senior indebtedness will be entitled to
be paid in full in cash before any payment may be made with respect to these
registered notes. In addition, because the indenture requires that amounts
otherwise payable to holders of the registered notes in a bankruptcy or similar
proceeding be paid to holders of senior indebtedness instead, holders of the
registered notes may receive less, ratably, than holders of trade payables in
any such proceeding. Further, if any cash or assets are available after
distributing to holders of our senior indebtedness, you will have to share such
cash or assets with indebtedness that ranks equal to the registered notes.
In addition, all payments on the registered notes will be blocked in the
event of a payment default on our senior indebtedness and may be blocked for up
to 179 of 360 consecutive days in the event of certain non-payment defaults on
our senior indebtedness.
Our obligations under the credit facility are guaranteed, subject to certain
limitations, by all of our subsidiaries. The registered notes are not, and the
registered notes will not be, guaranteed by such subsidiaries. A significant
portion of our assets are owned by our subsidiaries. Our right, and thus the
right of our creditors, to participate in any distribution of earnings or assets
of our subsidiaries is subject to the prior claims of the creditors of such
subsidiaries, including the lenders under the credit facility.
COMPETITION--THE HIGH LEVEL OF COMPETITION IN THE PRINTING INDUSTRY MAY LEAD TO
CONTINUED PRESSURE TO DECREASE PRICES.
Although we are one of the largest diversified commercial printers in the
United States, the industry is highly competitive in most product categories and
geographic regions. Our industry is experiencing excess capacity. Further, the
industries that we serve have been subject to consolidation efforts, leading to
a smaller number of potential customers who exercise increased pricing leverage
over our industry. Primarily as a result of this excess capacity and customer
consolidation, there has been, and will continue to be, downward pricing
pressure and increased competition in the printing industry.
TECHNOLOGY--BECAUSE PRODUCTION TECHNOLOGIES CONTINUE TO EVOLVE, WE MAY BE
REQUIRED TO MAKE SIGNIFICANT CAPITAL EXPENDITURES TO REMAIN TECHNOLOGICALLY AND
ECONOMICALLY COMPETITIVE.
Production technology in the printing industry has evolved and continues to
evolve. Although we have invested approximately $520.8 million in equipment and
plant expansions (exclusive of equipment obtained in acquisitions) since the
beginning of fiscal 1993, we may be required to invest significant capital in
additional production technology in order to remain competitive.
ACQUISITIONS--OUR GROWTH STRATEGY DEPENDS, IN PART, UPON GROWTH THROUGH
ACQUISITIONS, MAKING US VULNERABLE TO FINANCING RISKS AND THE CHALLENGES OF
INTEGRATING NEW OPERATIONS INTO OUR OWN.
In order to expand our services and geographic presence, diversify our
business mix and lead the consolidation trend in the printing industry, our
business strategy includes growth through acquisitions. We cannot assure you
that future acquisition opportunities will exist on acceptable terms or that any
newly acquired companies will be successfully integrated into our operations. We
may use our common stock or we may incur additional long-term indebtedness or a
combination of both for all or a portion of the consideration to be paid in
future acquisitions. We cannot assure you that we will be able to secure any
such financing upon acceptable terms. While we continuously evaluate
opportunities to make strategic acquisitions, we have no present commitments or
agreements with respect to any material acquisitions.
ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER--YOU CANNOT BE SURE THAT AN
ACTIVE TRADING MARKET WILL DEVELOP FOR THE REGISTERED NOTES.
18
<PAGE>
The unregistered notes were not listed on any securities exchange. Prior to
the November offering of unregistered notes, there had been no market for the
unregistered notes. Since the issuance of the unregistered notes, there has been
a limited trading market for the notes and there can be no assurance that such
market will provide adequate liquidity for holders who want to sell their notes.
The registered notes will not be listed on any securities exchange. The
registered notes are new securities for which there is currently no market. The
registered notes may trade at a discount from their initial offering price,
depending upon prevailing interest rates, the market for similar securities, our
performance and other factors. We have been advised by BT Alex. Brown
Incorporated and CIBC Oppenheimer Corporation that they intend to make a market
in the registered notes, as well as the unregistered notes, as permitted by
applicable laws and regulations. However, they are not obligated to do so and
their market making activities may be discontinued at any time without notice.
In addition, their market making activities may be limited during the exchange
offer and the pendency of the shelf registration statement. Therefore, there can
be no assurance that an active market for the registered notes will develop. See
"The Exchange Offer" and "Plan of Distribution."
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the registered
notes. In consideration for issuing the registered notes as contemplated in this
prospectus, we will receive in exchange unregistered notes in like principal
amount, which will be canceled. Accordingly, there will not be any increase in
our outstanding indebtedness.
19
<PAGE>
CAPITALIZATION
The following table sets forth our cash and cash equivalents and our
consolidated capitalization as of September 27, 1998 on an actual basis and as
adjusted for the notes offering in February 1999, the notes offering in November
1998 and the application of the net proceeds of the offerings. See "Use of
Proceeds." The information below should be read in conjunction with our
consolidated financial statements and the notes thereto included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 27, 1998
--------------------------
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
(IN THOUSANDS)
<CAPTION>
<S> <C> <C>
Cash and cash equivalents............................................................. $ 23,621 $ 57,771
------------ ------------
------------ ------------
Debt:
Borrowings under the credit facility (1)(2)......................................... $ 752,200 $ 360,753
9 1/8% Senior Subordinated Notes due 2003(3)........................................ 150,000 --
8 3/8% Senior Subordinated Notes due 2008........................................... -- 300,000
7 3/4% Senior Subordinated Notes due 2009........................................... -- 300,000
6% Convertible Senior Subordinated Notes due 2007................................... 151,800 151,800
Other debt (4)...................................................................... 61,842 61,842
------------ ------------
Total debt...................................................................... $ 1,115,842 $ 1,174,395
------------ ------------
Stockholders' equity:
Common stock, $0.01 par value--authorized, 100,000,000 shares; issued and
outstanding, 38,589,142 at September 27, 1998 (5)................................. $ 386 $ 386
Additional paid-in capital.......................................................... 715,060 715,060
Accumulated deficit (3)............................................................. (66,923) (72,931)
Treasury stock, at cost: 185,100 shares............................................. (5,609) (5,609)
Unamortized restricted stock compensation........................................... (2,525) (2,525)
------------ ------------
Total stockholders' equity...................................................... 640,389 634,381
------------ ------------
Total capitalization.................................................................. $ 1,756,231 $ 1,808,776
------------ ------------
------------ ------------
</TABLE>
- ------------------------
(1) At September 27, 1998, commitments under the credit facility aggregated
$920,000, and the weighted average interest rate of all outstanding
borrowings under the credit facility was 6.29%.
(2) Includes current maturities of $28,725.
(3) On December 28, 1998, we redeemed all of the $150,000 of outstanding
principal amount of our 9 1/8% Senior Subordinated Notes due 2003 at a cost
of $160,800, including prepayment premium and accrued interest to the date
of redemption. In connection with the redemption of such notes, we
recognized an extraordinary charge of $6,008 for the extinguishment of debt.
(4) Includes current maturities of $9,156.
(5) Does not include 2,997,032 shares of common stock issuable upon exercise of
outstanding stock options (of which 1,698,659 were then exercisable) and
3,660,477 shares of common stock issuable upon conversion of the convertible
notes.
20
<PAGE>
SELECTED FINANCIAL DATA
The following selected operating and financial data for the five fiscal
years ended December 28, 1997 have been derived from our audited consolidated
financial statements. The following selected operating and financial data for
the nine-month periods ended September 28, 1997 and September 27, 1998 have been
derived from our unaudited condensed consolidated financial statements which, in
the opinion of management, contain all adjustments (consisting of only normal
and recurring adjustments) necessary to present fairly our financial position
and results of operations at such dates and for such periods. The data presented
below should be read in conjunction with, and is qualified in its entirety by
reference to, our consolidated financial statements and the notes thereto
appearing elsewhere in this prospectus. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR (1) (1)
------------------------------------------------------------ -----------
1993 1994 1995 1996 1997 1997
---------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PERCENTAGES AND RATIOS)
OPERATING DATA:
Net sales...................................... $ 825,569 $ 971,627 $ 1,295,582 $ 1,641,412 $ 1,981,225 $ 1,441,266
Cost of sales.................................. 715,895 817,934 1,074,785 1,349,130 1,613,938 1,179,198
---------- --------- ----------- ----------- ----------- -----------
Gross profit................................... 109,674 153,693 220,797 292,282 367,287 262,068
Selling, general and administrative expenses... 69,688 90,312 125,539 153,071 188,688 138,287
Streamlining and other special
charges (2).................................. 98,000 -- 40,900 -- -- --
---------- --------- ----------- ----------- ----------- -----------
Operating income (loss)........................ (58,014) 63,381 54,358 139,211 178,599 123,781
Interest expense and securitization fees....... 25,080 23,825 37,897 58,417 80,039 61,099
Income tax provision (benefit)................. (24,700) 15,822 6,584 33,533 41,341 26,326
Extraordinary charge (3)....................... 7,007 -- -- -- -- --
Cumulative effect of changes in accounting
methods (4).................................. 55,900 -- -- -- -- --
---------- --------- ----------- ----------- ----------- -----------
Net income (loss).............................. $ (121,301) $ 23,734 $ 9,877 $ 47,261 $ 57,219 $ 36,356
---------- --------- ----------- ----------- ----------- -----------
---------- --------- ----------- ----------- ----------- -----------
Net income (loss) per common share (5):
Basic........................................ $ (4.26) $ 0.74 $ 0.31 $ 1.40 $ 1.65 $ 1.08
Diluted...................................... (4.26) 0.69 0.29 1.35 1.60 1.00
OTHER OPERATING DATA:
EBITDA (6)..................................... $ 103,651 $ 124,023 $ 169,926 $ 243,704 $ 310,309 $ 224,279
Adjusted operating income (7).................. 39,986 63,381 95,258 139,211 178,599 123,781
Capital expenditures (8)....................... 57,234 83,875 120,339 70,639 93,145 72,247
Cash provided by (used in) operations.......... 83,208 100,124 6,744 146,583 239,305 151,757
Gross profit margin............................ 13.3% 15.8% 17.0% 17.8% 18.5% 18.2%
EBITDA margin.................................. 12.6 12.8 13.1 14.8 15.7 15.6
Adjusted operating income margin............... 4.8 6.5 7.4 8.5 9.0 8.6
Ratio of earnings to fixed charges (9)(10)..... -- 2.1x 1.3x 2.2x 2.1x 1.9x
BALANCE SHEET DATA (AT PERIOD END):
Working capital................................ $ 83,125 $ 113,144 $ 160,835 $ 227,068 $ 168,752 $ 180,411
Property, plant and equipment, net............. 356,060 363,929 480,421 818,157 857,195 879,451
Total assets................................... 818,130 837,417 1,150,728 1,822,432 1,933,571 1,966,932
Long-term debt (including current maturities).. 323,118 293,515 487,106 897,867 819,113 1,001,830
Stockholders' equity........................... 247,570 274,113 358,766 414,932 599,769 451,371
<CAPTION>
1998
-----------
<S> <C>
OPERATING DATA:
Net sales...................................... $ 1,732,890
Cost of sales.................................. 1,424,069
-----------
Gross profit................................... 308,821
Selling, general and administrative expenses... 161,202
Streamlining and other special
charges (2).................................. --
-----------
Operating income (loss)........................ 147,619
Interest expense and securitization fees....... 65,368
Income tax provision (benefit)................. 34,134
Extraordinary charge (3)....................... --
Cumulative effect of changes in accounting
methods (4).................................. --
-----------
Net income (loss).............................. $ 48,117
-----------
-----------
Net income (loss) per common share (5):
Basic........................................ $ 1.25
Diluted...................................... 1.21
OTHER OPERATING DATA:
EBITDA (6)..................................... $ 252,467
Adjusted operating income (7).................. 147,619
Capital expenditures (8)....................... 88,055
Cash provided by (used in) operations.......... (19,675)
Gross profit margin............................ 17.8%
EBITDA margin.................................. 14.6
Adjusted operating income margin............... 8.5
Ratio of earnings to fixed charges (9)(10)..... 2.0x
BALANCE SHEET DATA (AT PERIOD END):
Working capital................................ $ 248,200
Property, plant and equipment, net............. 912,878
Total assets................................... 2,303,206
Long-term debt (including current maturities).. 1,115,842
Stockholders' equity........................... 640,389
</TABLE>
(FOOTNOTES ON NEXT PAGE)
21
<PAGE>
- ------------------------
(1) The fiscal years shown each represent the 52 or 53-week period ending on the
last Sunday in December. Fiscal year 1995 consisted of 53 weeks. Fiscal
years 1993, 1994, 1996 and 1997 each consisted of 52 weeks. The nine-month
periods ended September 28, 1997 and September 27, 1998 each consisted of 39
weeks.
(2) See Note 15 to our consolidated financial statements regarding the 1995
amount. Operating income in 1993 was reduced by $98,000 of special charges.
These charges reflect our strategy in 1993 to grant price concessions to
certain significant customers to renew and extend long-term contracts in
advance of their expiration dates and to streamline its operations in
response to the continuing competitive marketplace.
(3) The 1993 extraordinary charge of $7,007 represents a writeoff, net of an
income tax benefit of $4,670, of deferred financing costs related to early
repayments of indebtedness during 1993.
(4) Effective December 28, 1992, we adopted Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and SFAS No. 109, "Accounting For Income
Taxes." Effective this same date, we also elected early adoption of SFAS No.
112, "Employers' Accounting for Postemployment Benefits." The cumulative
effect of adopting these new accounting standards was a non-cash charge to
income of $55,900, net of an income tax benefit of $22,100.
(5) EBITDA represents earnings before interest expense and securitization fees,
income taxes, depreciation, amortization and non-recurring streamlining and
other special charges. EBITDA is not intended to represent cash flows for
the period, is not presented as an alternative to operating income as an
indicator of operating performance, may not be comparable to other similarly
titled measures of other companies and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles. See our consolidated financial
statements and the notes thereto appearing elsewhere in this prospectus.
(6) In accordance with SFAS No. 128, "Earnings Per Share," we have calculated
net income (loss) per common share--basic and diluted based on the weighted
average shares and dilutive common equivalent shares outstanding, as
applicable, during each period after giving effect to the change in our
capital structure pursuant to the Merger and Options Adjustments (as defined
in the notes to the consolidated financial statements).
(7) Adjusted operating income represents operating income before non-recurring
streamlining and other special charges. Adjusted operating income is not
intended to represent cash flows for the period, is not presented as an
alternative to operating income as an indicator of operating performance,
may not be comparable to other similarly titled measures of other companies
and should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with generally accepted accounting
principles. See our consolidated financial statements and the notes thereto
appearing elsewhere in this prospectus.
(8) Capital expenditures for the nine month period ended September 27, 1998 are
net of proceeds of $60,700 from the sale-leaseback of certain equipment.
(9) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before income taxes plus fixed charges (other than
capitalized interest) and amortization of previously capitalized interest.
Fixed charges consist of interest expense and debt issuance cost,
capitalized interest and that portion of rental expenses representative of
the interest factor. The 1995 ratio reflects the 1995 streamlining charge of
$40,900 discussed in footnote (2). Excluding the effect of this charge the
1995 ratio would be 2.2x.
(10) Our earnings were inadequate to cover fixed charges by $83,014 in 1993.
Adjusted to eliminate non-cash charges of depreciation and amortization of
$63,665, as well as the non-recurring streamlining charge of $98,000, 1993
earnings would have exceeded fixed charges by $78,651. Excluding the effect
of this charge the 1993 ratio would be 1.5x.
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS PROSPECTUS.
GENERAL
We are a diversified commercial printer serving customers in the commercial,
magazine, catalog, direct mail, book and directory markets. Our objective is to
continue our growth in net sales, operating income, operating income margin and
net income. We have achieved compound annual growth rates in net sales and
adjusted operating income over the past eight fiscal years of 20.7% and 37.6%,
respectively, and have grown net income from a net loss of $58.7 million in 1991
to net income of $73.6 million for the year ended December 27, 1998.
Our revenues are derived primarily from the sale of services and materials
to our customer base, including digital and prepress services, press and binding
services and distribution and logistics services. We have a broad and diverse
customer base, of which no one customer accounted for more than 5.0% of 1998 net
sales. We continue to experience significant pricing pressure within our
industry.
Operating expenses include primarily the cost of paper and ink, salaries and
employee benefits, occupancy, depreciation and amortization and other general
and administrative expenses. We are focused on providing high-quality services
within a low cost structure by, among other things, increasing efficiency and
productivity and matching costs to revenues.
Our net sales include sales to certain customers of paper that we purchase.
The price of paper, our primary raw material, is volatile over time and may
cause significant swings in net sales and cost of sales. We generally are able
to pass on increases in the cost of paper to our customers, while declines in
paper costs result in lower prices to our customers. The paper market firmed in
pricing from early 1997 to late 1997. The paper market in 1998 softened from
late 1997. Prices continued to decline throughout 1998 as availability became
plentiful for most grades of paper. We anticipate that this trend will continue
in 1999. We believe we have adequate allocations with our paper suppliers to
meet our customers' needs. Our contracts with our customers generally provide
for price adjustments to reflect price changes for other materials, wages and
outside services.
Our operations are seasonal with approximately two-thirds of historical
operating profits recognized in the second half of the fiscal year, primarily
due to the higher number of magazine pages, new product launches and
back-to-school and holiday catalog promotions.
ACQUISITION HISTORY
We have completed 22 strategic acquisitions since the beginning of 1993
having a combined purchase price of approximately $1.3 billion, including two
acquisitions that have been completed since the beginning of fiscal 1999 having
a combined purchase price of approximately $60.0 million, including assumed
indebtedness, and four acquisitions that were completed in fiscal 1998 having a
combined purchase price of approximately $200.0 million, including assumed
indebtedness. These acquisitions have enabled us to diversify our business mix
and to expand our services and geographic presence. The following table
summarizes these acquisitions.
23
<PAGE>
<TABLE>
<CAPTION>
DATE ACQUISITION LOCATION STRATEGIC BENEFITS
- -------------- ------------------------ ----------------------- ---------------------------------------------
<S> <C> <C> <C>
January 1999 INFINITI GRAPHICS, INC. Enfield, CT STRENGTHENED OVERALL POSITION AS LEADER IN
NORTHEASTERN COMMERCIAL MARKET. ADDED
SHORT-RUN CAPABILITIES TO EXISTING
NORTHEASTERN COMMERCIAL OPERATIONS.
December 1998 GREAT WESTERN Phoenix, AZ/ Salt Lake ESTABLISHED US AS THE SECOND LARGEST OFFSET
PUBLISHING, INC. City, UT/ Ontario, CA/ PRINTER OF RETAIL ADVERTISING INSERTS IN THE
Houston, TX UNITED STATES.
April 1998 ACME PRINTING COMPANY, Wilmington, MA EXPANDED EAST COAST PRESENCE IN THE PRINTING
INC. OF HIGH- END COMMERCIAL PRODUCTS. ENHANCED
OUR POSITION AS A LEADING PRINTER OF ANNUAL
REPORTS.
March 1998 DITTLER BROTHERS, Atlanta, GA/Oakwood, GA EXPANDED AND ENHANCED DIRECT MAIL
INCORPORATED CAPABILITIES. ESTABLISHED US AS AN INDUSTRY
LEADER IN THE PRODUCTION OF UNIQUE AND
INTRICATE CONSUMER-INVOLVEMENT PROMOTIONAL
GAME PIECES.
February 1998 CENTURY GRAPHICS Metairie, LA/Omaha, ESTABLISHED US AS THE THIRD LARGEST OFFSET
CORPORATION NE/Winchester, PRINTER OF RETAIL ADVERTISING INSERTS.
VA/South Windsor, CT
January 1998 MAGNA GRAPHIC, INC. Lexington, KY DIGITAL PREPRESS ACQUISITION FURTHER
EXPANDING OUR SERVICES TO THE EDUCATIONAL
BOOK MARKET.
July 1997 THE JOHNSON & HARDIN CO. Lebanon, OH/Red Bank, COMPLEMENTARY SHORT TO MEDIUM-RUN PRINTER
OH SERVICING THE MAGAZINE AND COMMERCIAL MARKET
SECTORS, LOCATED IN THE MID-REGION OF THE
COUNTRY; PROVIDED VALUABLE SHORT CUT-OFF
PRESS CAPACITY.
January 1997 RAND MCNALLY BOOK & Versailles, KY/Taunton, ESTABLISHED PRESENCE AS A PRINTER OF
MEDIA SERVICES COMPANY MA HARDCOVER BOOKS; COMPLEMENTARY TO OPERATIONS
SERVICING MASS-MARKET, RACKSIZE BOOK
PUBLISHERS.
October 1996 MT/ORLANDO, INC. Orlando, FL COMPLEMENTARY EXPANSION OF COMMERCIAL
OPERATING PRESENCE IN SOUTHEASTERN REGION.
August 1996 ISA DIRECT, INC. Aurora, IL INCREASED NATIONAL PRESENCE AS A PRINTER OF
DIRECT MAIL MATERIALS; PROVIDED DIRECT
IMAGING AND PERSONALIZATION CAPABILITIES.
June 1996 KRUEGER ACQUISITION Itasca, IL SIGNIFICANT EXPANSION OF CATALOG AND MAGAZINE
CORPORATION (RINGIER (headquarters) PRINTING CAPABILITIES; PROVIDED ENTRY INTO
AMERICA) PRINTING FOR MASS-MARKET, RACKSIZE BOOK
PUBLISHERS.
April 1996 SHEA COMMUNICATIONS Oklahoma City, OK COMPLEMENTARY EXPANSION OF COMMERCIAL,
COMPANY CATALOG AND DIRECT MAIL PRINTING
CAPABILITIES.
February 1996 VIKING COLOR Los Angeles, CA INCREASED NATIONAL DIGITAL PREPRESS
CAPABILITIES.
November 1995 DIGITAL PRE-PRESS, INC. New York, NY INCREASED NATIONAL DIGITAL PREPRESS
CAPABILITIES.
September 1995 IMAGE TECHNOLOGIES, INC. St. Petersburg, FL ESTABLISHED PRESENCE AS AN INTERACTIVE,
MULTI-MEDIA SERVICE PROVIDER.
March 1995 THE WESSEL COMPANY, INC. Elk Grove Village, IL STRENGTHENED PRESENCE AS A PRINTER OF DIRECT
MAIL MATERIALS.
March 1995 NORTHEAST GRAPHICS INC. North Haven, CT COMPLEMENTARY EXPANSION OF COMMERCIAL
OPERATING PRESENCE IN NORTHEASTERN REGION.
March 1995 THE LANMAN COMPANIES,
INC.:
Lanman Progressive Washington, D.C. INCREASED NATIONAL DIGITAL PREPRESS
CAPABILITIES.
Lanman Lithotech, Inc. Orlando, FL INCREASED NATIONAL DIGITAL PREPRESS
CAPABILITIES.
Central Florida Press, Orlando, FL EXPANDED COMMERCIAL CAPABILITIES AND
L.L.C. OPERATING PRESENCE IN SOUTHEASTERN REGION.
May 1994 UNIVERSAL GRAPHICS Warren, MI INCREASED NATIONAL DIGITAL PREPRESS
CORPORATION CAPABILITIES.
February 1994 WEB INSERTS/ Gainesville, GA INCREASED PRESENCE AS A PRINTER FOR CATALOG
ATLANTA, INC. INSERT AND DIRECT MAIL PUBLISHERS.
December 1993 GEORGE RICE & SONS Los Angeles, CA ESTABLISHED WEST COAST PRESENCE IN THE
PRINTING OF HIGH-END COMMERCIAL PRODUCTS.
February 1993 THE ALDEN PRESS COMPANY Elk Grove Village, IL SIGNIFICANTLY INCREASED PRESENCE AS A PRINTER
FOR THE SPECIALTY CONSUMER CATALOG AND DIRECT
MAIL PUBLISHERS.
</TABLE>
24
<PAGE>
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 27, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 28,
1997
Net sales increased $291.6 million or 20.2% to $1,732.9 million in 1998 from
$1,441.3 million in 1997. The increase was due to the inclusion of sales from
the 1997 and 1998 acquisitions, higher paper prices and volume and improved base
business performance.
Gross profit increased $46.8 million or 17.8% to $308.8 million in 1998 from
$262.1 in 1997. The gross profit margin decreased to 17.8% from 18.2% in 1997
due to increased sales resulting from higher paper prices and volume, slightly
offset by the benefits of certain cost reduction initiatives and other synergies
resulting from the combination of acquisitions and increased plant utilization.
Selling, general and administrative expenses increased $22.9 million or
16.6% to $161.2 million in 1998 from $138.3 million in 1997. The increase was
attributable to the 1997 and 1998 acquisitions, including the related additional
amortization expense for goodwill, offset by benefits derived from cost saving
initiatives.
Interest expense and securitization fees increased $4.3 million or 7.0% to
$65.4 million in 1998 from $61.1 million in 1997. The increase was attributable
to higher average borrowings incurred to fund acquisitions, capital expenditures
and working capital requirements, offset by a lower average cost of funds.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was 41.5% for the first nine months of 1998 compared to 42.0%
for the comparable period in 1997.
YEAR ENDED DECEMBER 28, 1997 COMPARED TO YEAR ENDED DECEMBER 29, 1996
Net sales increased $339.8 million or 20.7% to $1,981.2 million in 1997 from
$1,641.4 million in 1996. The increase was attributable to the inclusion of both
a full year of results from the acquisitions in 1996 and results from the
acquisitions in 1997, as well as improved sales in our base business.
Gross profit increased $75.0 million or 25.7% to $367.3 million in 1997 from
$292.3 million in 1996, due primarily to the inclusion of the acquisitions in
1996 and 1997. Gross profit margin improved to 18.5% in 1997 from 17.8% in 1996.
This improvement is a result of the acquisitions in 1996 and 1997, including the
benefits of certain cost reduction initiatives and other synergies resulting
from the combination of the businesses.
Selling, general and administrative expenses increased $35.6 million or
23.3% to $188.7 million in 1997 from $153.1 million in 1996. The increase is
attributable to the acquisitions in 1996 and 1997, including the related
additional amortization expense for goodwill, offset by benefits derived from
cost saving initiatives. In addition, in 1997 we incurred a higher than usual
provision for bad debts related to a customer that entered into bankruptcy.
Interest expense and securitization fees increased $21.6 million or 37.0% to
$80.0 million in 1997 from $58.4 million in 1996. The increase is attributable
to higher average borrowings incurred to fund acquisitions, capital expenditures
and working capital requirements. The 1997 amount includes $5.1 million of fees
resulting from our asset securitization arrangement entered into on June 30,
1997. See "--Liquidity and Capital Resources."
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 42.0% for 1997 and 41.5% for 1996. This
slight increase was due to additional nondeductible amortization expense for
goodwill resulting from acquisitions.
25
<PAGE>
YEAR ENDED DECEMBER 29, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net sales increased $345.8 million or 26.7% to $1,641.4 million in 1996 from
$1,295.6 million in 1995. The increase was due to acquisitions in 1996,
partially offset by lower paper prices. 1996 net sales also benefited slightly
by continued business growth from new and existing customers.
Gross profit increased $71.5 million or 32.4% to $292.3 million in 1996 from
$220.8 million in 1995. The increase is attributable to the inclusion of
acquisitions in 1996, as well as increased volume and improved operating
efficiencies. Gross profit margin improved to 17.8% in 1996 from 17.0% in 1995
as a result of acquisitions in 1996, including certain cost savings and other
operating synergies that have resulted from the combination of the businesses,
along with the effect of lower paper prices.
Selling, general and administrative expenses increased $27.5 million or
21.9% to $153.1 million in 1996 from $125.5 million in 1995. The increase is
partially attributable to acquisitions in 1996, including the related additional
amortization expense for goodwill, as well as increased selling expenses related
to higher volume.
Operating income increased $84.9 million or 156.1% to $139.2 million in 1996
from $54.4 million in 1995. The increase is attributable to the factors
discussed in the preceding paragraphs, and the absence in 1996 of a streamlining
charge of $40.9 million recorded in the fourth quarter of 1995, when we
finalized and committed to a plan to realign certain business operations. The
major components of this realignment plan were to close a facility and to
consolidate certain digital prepress operations and functions. Before the
reduction for the 1995 streamlining charge, 1996 operating income increased
$44.0 million or 46.1%.
Interest expense increased $20.5 million or 54.1% to $58.4 million in 1996
from $37.9 million in 1995. The increase is attributable to higher average
borrowings incurred to fund acquisitions in 1996 and capital expenditures,
partially offset by a slight benefit from a lower average cost of funds.
The effective income tax rate was approximately 41.5% for 1996 and 40.0% for
1995, and was primarily composed of the combined federal and state statutory
rates.
LIQUIDITY AND CAPITAL RESOURCES
We have historically met our liquidity and capital investment needs with
cash flow from operations and external borrowings. Net income plus depreciation
and amortization, deferred taxes, and streamlining charge was $124.7 million,
$165.3 million and $203.2 million for the fiscal years 1995, 1996 and 1997,
respectively, and was $146.3 million and $164.7 million for the first nine
months of 1997 and 1998, respectively. Cash flow from operations was primarily
used to fund working capital requirements, capital expenditures and
acquisitions.
Working capital was $160.8 million, $227.1 million and $168.8 million at
December 31, 1995, December 29, 1996 and December 28, 1997, respectively, and
was $180.4 million and $248.2 million at September 28, 1997 and September 27,
1998, respectively.
Capital expenditures totaled $120.3 million, $70.6 million and $93.1 million
in 1995, 1996 and 1997, respectively. Capital expenditures, net of proceeds of
$60.7 million from the sale-leaseback of certain equipment, were $88.1 million
for the first nine months of 1998. These capital expenditures reflect the
purchase of additional press and bindery equipment and other capital items.
These capital expenditures have increased our capacity and are part of our
ongoing program to maintain modern, efficient plants and continually increase
productivity. Capital expenditures, net of proceeds of $88.5 million from the
sale and leaseback of certain equipment, were $95.5 million for the full year
ended 1998.
Our capital expenditures and acquisitions have been funded through
operations and borrowings under our Second Amended and Restated Credit Agreement
dated as of June 6, 1996, as amended. In June 1997, this credit facility was
amended in conjunction with the sale of accounts receivable described below.
After giving effect to this amendment, certain pay-downs and concurrent
commitment reductions, the credit
26
<PAGE>
facility provides for aggregate total commitments of $920.0 million, comprised
of $95.0 million in term loan commitments, $250.0 million of revolving loan
commitments and $575.0 million in acquisition term loan commitments. The credit
facility provides for varying semi-annual reductions in commitments through
maturity on December 31, 2002. Borrowings bear interest at rates that fluctuate
with the prime rate and Eurodollar rate. As of September 27, 1998, we had
unutilized commitments of $146.1 million under our credit facility.
Concurrently with the amendment to the credit facility, on June 30, 1997, we
entered into an agreement to sell, on a revolving basis for a period of up to
five years, certain of our accounts receivable to a wholly-owned subsidiary,
which entered into an agreement to transfer, on a revolving basis, an undivided
percentage ownership interest in a designated pool of accounts receivable to a
maximum of $204.0 million. At September 27, 1998, $200.0 million of accounts
receivable had been sold and reflected as a reduction of accounts receivable.
The net proceeds were primarily used to repay certain indebtedness incurred
under our credit facility. Fees associated with the securitization vary based on
commercial paper rates plus a margin, providing a lower effective rate than that
available from our traditional funding sources.
On October 8, 1997, we issued 4,600,000 shares of our common stock,
receiving net proceeds of approximately $127.6 million. Concurrent with such
stock offering, we issued $151.8 million aggregate principal amount of our 6%
Convertible Senior Subordinated Notes due 2007, receiving net proceeds of
approximately $147.9 million. Interest on these convertible notes is payable
semi-annually at the annual rate of 6.0%. The convertible notes have no required
principal payments prior to maturity on October 1, 2007. The convertible notes
in the aggregate are convertible into 3,660,477 shares of our common stock at
$41.47 per share subject to adjustment upon the occurrence of certain events.
See "Description of Certain Indebtedness--6% Convertible Senior Subordinated
Notes." The net proceeds from the stock offering and convertible note offering
were used to repay certain indebtedness incurred under our credit facility.
In July 1998, we entered into an agreement for the sale and leaseback of
certain printing equipment for which we received approximately $60.7 million of
proceeds. The lease, which expires in July 2010, has been classified as an
operating lease. In October 1998, we received proceeds of approximately $27.8
million for the sale and leaseback of additional equipment.
In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of our common stock. The repurchase of shares commenced in
August 1998 and may occur over the next three years in the open market at
prevailing market prices or in negotiated transactions, depending on market
conditions. The shares will be repurchased to satisfy commitments under certain
employee benefit plans. As of September 27, 1998, we had repurchased 313,119
shares at a weighted average cost of $30.88 and reissued 128,019 shares.
On November 20, 1998, we issued $300.0 million in aggregate principal amount
of our 8 3/8% senior subordinated notes due 2008, receiving net proceeds of
approximately $291.7 million. Interest on the November notes is payable
semi-annually at the annual rate of 8 3/8%. The November notes have no required
principal payments prior to maturity on November 15, 2008. See "Description of
Certain Indebtedness--8 3/8% Senior Subordinated Notes." On December 28, 1998,
$160.8 million of the net proceeds from the offering of our 8 3/8% Senior
Subordinated Notes was used to redeem the $150.0 million in aggregate principal
amount outstanding of our existing 9 1/8% Senior Subordinated Notes, including
prepayment premium and accrued interest to the date of redemption. The remainder
of the net proceeds were used to repay revolving loans under the credit
facility, all of which may be reborrowed for general corporate purposes.
On February 22, 1999, we issued $300.0 million in aggregate principal amount
of our 7 3/4% senior subordinated notes due 2009, receiving net proceeds of
approximately $294.0 million. Interest on the February notes is payable
semi-annually at the annual rate of 7 3/4%. The February notes have no required
principal payments prior to maturity on February 15, 2009. See "Description of
Registered Notes." We used: (a) $35.0 million to permanently reduce certain
facilities under our credit facility; (b) $224.8 million
27
<PAGE>
to reduce certain other facilities under our credit facility, all of which may
be reborrowed to fund acquisitions and for other general corporate purposes; and
(c) $34.2 million to fund acquisitions within 90 days, or, to the extent we do
not use such funds, to permanently reduce certain facilities under our credit
facility. Pending the use of such funds, we are investing the remaining funds in
short term, liquid securities.
Concentrations of credit risk with respect to accounts receivable are
limited due to our diverse operations and large customer base. As of September
27, 1998, we had no significant concentrations of credit risk.
In order to reduce the exposure on our variable rate obligations, we have
entered into interest rate cap and swap agreements. Our interest rate cap
agreements have a notional value of $400.0 million and expire in the third
quarter of 1999. Our interest rate swap agreements have a notional value of
$75.0 million and exchange floating rate for fixed interest payments
periodically over five years. The swap agreements are cancelable by the
respective counterparties in September and December 1999. The impact of these
agreements on the consolidated financial statements was not material for the
periods presented. While we are exposed to credit loss in the event of
nonperformance by the counterparties of these agreements, management believes
that the possibility of incurring such a loss is remote due to the
creditworthiness of the counterparties. We do not hold or issue any derivative
financial instruments for trading purposes.
At December 28, 1997, we had net operating loss carryforwards for federal
income tax purposes of $14.9 million available to reduce future taxable income,
which net operating loss carryforwards expire primarily in 2000, and had federal
tax credits of $2.5 million expiring primarily from 1999 to 2002 and state tax
credits of approximately $2.6 million expiring from 2001 to 2012. Also, we have
alternative minimum tax carryover credits of $34.5 million which do not expire
and may be applied against regular tax in the future, in the event regular tax
expense exceeds alternative minimum tax.
We believe that our liquidity, capital resources and cash flows are
sufficient to fund planned capital expenditures, working capital requirements
and interest and principal payments for the foreseeable future.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities," which requires costs of start-up activities and organization costs
to be expensed as incurred. We will adopt this SOP in the first quarter of
fiscal year 1999. We estimate that the adoption of SOP 98-5 will result in the
recognition of a charge to income of approximately $10.5 million, net of tax, as
the cumulative effect of a change in accounting principle in the first quarter
of 1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires companies to
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. We would account for gains or losses resulting from
changes in the values of those derivatives depending on the use of the
derivative and whether it qualifies for hedge accounting. We plan to adopt this
statement in the first quarter of fiscal year 2000. Based on our current
portfolio of derivative financial instruments, we do not expect the adoption of
SFAS No. 133 to have a material impact on our consolidated financial statements.
YEAR 2000
The Year 2000 issue, which affects virtually all corporations, arises due to
the inability of certain computer software and hardware and embedded chips found
in manufacturing and other equipment to properly recognize dates beyond 1999.
This inability may cause errors in information and/or system failures. We have a
comprehensive effort underway to address the Year 2000 issue. As discussed
below, we are, among other things, evaluating our present information technology
and non-information technology
28
<PAGE>
systems (i.e., equipment with embedded chips), monitoring and addressing our
vendor and customer Year 2000 issues and engaging in remediative measures as
necessary.
In connection with our readiness program, we have endeavored to inventory
and assess the state of compliance of all information systems and
non-information systems. We commenced remediation of our information systems in
1994. As a result, the majority of our information systems, including our
financial, human resources and payroll functions, are Year 2000 compliant. We
believe that all of our information systems will be compliant by mid-1999. With
respect to our non-information systems, we have substantially completed an
inventory of facilities (HVAC, safety and security) and manufacturing (press,
bindery and finishing) systems. We are working with the outside suppliers of
such systems as well as with an outside consultant to identify and remediate
non-compliant components. We have targeted mid-1999 for substantial completion
of our readiness efforts with respect to our non-information systems, including
selective testing procedures.
As part of our readiness program, we are communicating with our major
customers and vendors to assess such parties' respective efforts to identify and
remediate their own Year 2000 issues in a timely and comprehensive manner. We
are also requesting our vendors to certify to the compliance of their systems
and equipment that we currently own or lease. We intend to follow up with
non-compliant vendors through 1999 in order to continually assess the extent of
such third parties' Year 2000 exposure and to adjust our contingency plans
accordingly.
The costs incurred to date solely related to our Year 2000 efforts have not
been material to us, and based upon current estimates, we do not believe that
the total cost of our Year 2000 readiness program will have a material adverse
effect upon our operating results or financial condition. While we can make no
assurances as to the impact of the Year 2000 issue on our operations, we
currently anticipate that any adverse consequences of the Year 2000 issue on our
systems will not create a significant disruption to our operations. However, the
failure or delay by us, our customers and/or vendors to identify and remediate
each respective instance of Year 2000 non-compliance could result in a material
adverse effect on our results of operations, liquidity or financial condition.
Our readiness program includes the development of contingency plans
addressing potential business interruptions arising from Year 2000-related
disruptions. Such plans include assessing the movement of work among our
facilities. In 1999, we will hone our contingency plans, taking into account,
among other things, the state of readiness of our vendors, including, without
limitation, utility suppliers, as well as our major customers.
The statements set forth herein concerning Year 2000 issues which are not
historical facts are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. In particular, the costs associated with our
Year 2000 programs, the time-frame in which we plan to complete Year 2000
modifications and the potential impact of the Year 2000 issues are based upon
management's best estimates. These estimates were derived from internal
assessments and numerous assumptions of future events. These estimates may be
adversely affected by, among other things, the continued availability of
personnel and system resources, the accurate identification of all relevant
computer codes, the success of remediation efforts, the effectiveness of our
contingency plans and the failure of significant third parties to properly
address Year 2000 issues. Therefore, there can be no guarantee that any
estimates or other forward-looking statements will be achieved and actual
results could differ significantly from those contemplated.
SEASONALITY
Results of operations for interim periods are not necessarily indicative of
results for the full year. Our operations are seasonal. Historically,
approximately two-thirds of our operating income has been generated in the
second half of the fiscal year, primarily due to the higher number of magazine
pages, new product launches and back-to-school and holiday catalog promotions.
29
<PAGE>
BUSINESS
GENERAL
We are an industry leader in the management and distribution of print and
digital information, with revenues of approximately $2.4 billion for the twelve
months ended December 27, 1998. We are the second largest diversified commercial
printer in the United States, providing digital prepress, press, binding,
distribution and multi-media services to our customers in the commercial,
magazine, catalog, direct mail, book and directory markets. Founded in 1903, we
currently operate a national network of 52 production and distribution
facilities and an extensive network of sales offices nationwide. Through
selective acquisitions and internal expansion, we have strategically positioned
ourselves as a full-service provider of high technology solutions for our
customers' imaging, print and distribution needs.
Since the appointment of a new management team in May 1991, we have
significantly expanded our national presence as a leading, innovative commercial
printer, and have achieved significant growth in sales, adjusted operating
income (as defined herein) and net income, while also improving our operating
margins. Over the past eight fiscal years, net sales and adjusted operating
income grew at compound annual rates of 20.7% and 37.6%, respectively, and net
income increased from a net loss of $58.7 million in 1991 to net income of $73.6
million for the year ended December 27, 1998. In addition, we have recorded six
consecutive years of improvement in our adjusted operating income margins.
GROWTH STRATEGY
We have increased stockholder value through emphasizing quality,
diversification of our business mix, operational efficiencies and strategic
growth. Specifically, our growth strategy is to:
- further establish and strengthen our leadership positions in diverse and
balanced businesses;
- make strategic acquisitions and broaden the array of services we provide
to our customers;
- provide high quality services within a low cost operating structure; and
- continue to increase efficiency and productivity.
The key elements underlying this strategy are described below.
ESTABLISH AND STRENGTHEN LEADERSHIP POSITIONS IN DIVERSE, BALANCED
BUSINESSES. We continue to expand our services and geographic presence to meet
our customers' full range of digital imaging, print, information management and
distribution needs. We believe our broad array of high quality products and
services, cost-effective distribution capabilities, advanced technologies and
competitive pricing allow us to capture a larger share of our existing
customers' business as well as attract new customers.
STRATEGIC ACQUISITIONS. The fragmented printing industry continues to
undergo significant consolidation due primarily to changing customer demand for
a full range of sophisticated services and the high levels of capital investment
necessary to meet this demand. Since the beginning of 1993, we have capitalized
on the industry's consolidation opportunities by successfully consummating and
integrating 22 acquisitions having an aggregate purchase price of approximately
$1.3 billion (including assumed indebtedness). We have targeted our acquisitions
to expand our services and geographic presence and to diversify our business mix
by, among other things, targeting customers operating in new markets such as the
direct mail and book markets. Our acquisitions have been accretive to our
earnings because of, among other things, significant cost savings in the
purchase of raw materials, the reduction of overhead costs and productivity
gains captured by our ability to better absorb and manage available capacity at
newly acquired facilities. We believe that our competitive and financial
strengths and considerable experience in identifying, acquiring and integrating
complementary businesses will continue to provide significant growth
opportunities. While we continuously evaluate opportunities to make strategic
acquisitions, at present we have no commitments or agreements with respect to
any material acquisitions.
30
<PAGE>
LOW COST OPERATING STRUCTURE. We make a vigorous effort to optimize the
management of our resources, and believe our ratio of selling, general and
administrative expenses to net sales is among the lowest in our industry. We
continually evaluate our business in order to keep our costs in line with
current and anticipated revenues, as well as to identify opportunities for
productivity improvement. For instance, most recently we initiated the "World
2000" project which includes a systematic evaluation of each cost element within
our production facilities. We believe the project will improve business
processes throughout our production cycle and enable us to generate greater
efficiency from our existing capital. Our "one-company" operating structure has
allowed us to maximize capacity utilization by balancing production across
plants and to reduce costs by providing a central support organization for
administrative services. In addition, our purchasing power enables us to acquire
raw materials and equipment on more favorable terms than our smaller
competitors, as well as to ensure the availability of raw materials in tight
markets.
TARGETED CAPITAL INVESTMENTS TO INCREASE EFFICIENCY AND PRODUCTIVITY. We
have been at the forefront of technological advances and are committed to
maintaining our position as an industry leader through strategic capital
spending. We are a leader in the transition from conventional prepress to an
all-digital workflow, providing a complete spectrum of film and digital
preparation services. Since the beginning of 1993, we have invested
approximately $520.8 million in equipment and plant expansions (exclusive of
equipment obtained in acquisitions) to position ourselves for continued growth
and productivity improvements. We believe that our significant size and
financial strength allow us to invest in technologies that are not commercially
viable for smaller or less well-capitalized competitors.
THE PRINTING INDUSTRY
The $70 billion commercial printing industry in the United States is highly
fragmented and capital-intensive, and includes the printing and distribution of
magazines, advertising inserts, catalogs, direct mail, free-standing inserts,
directories and other printed material. There are approximately 35,000
commercial printers in the United States today, approximately 500 of which have
revenues in excess of $10 million. Technological trends in the industry,
together with increasing demands by customers for specialized capabilities and a
full range of services have increased the competitive advantages available to us
and other large printers. We believe that only large, well-capitalized printers,
such as World Color, will be capable of making the capital expenditures
necessary to invest in state-of-the-art technology and provide customers a full
range of services. As a result, we believe that consolidation in the printing
industry will continue.
WORLD COLOR SERVICES
As a result of significant capital expenditures and strategic acquisitions
which have allowed us to diversify our services, expand our geographic presence
and enhance our use of new technologies, we are an industry leader in the
management and distribution of print and digital information. Our services
include:
DIGITAL AND PREPRESS SERVICES. We are a leader in the transition from
conventional prepress to an all-digital workflow, providing a complete spectrum
of film and digital preparation services, from traditional paste-up and color
separations to state-of-the-art, all-digital prepress, as well as digital
imaging and digital archiving. Our 11 specialized digital and prepress
facilities, which are strategically located close to our customers, provide high
quality, 24-hour preparatory services linked directly to our various printing
facilities. In addition, our computer systems enable us to exchange images and
textual material electronically directly between our facilities and our
customers' business locations. The integrated prepress operations provide us
with competitive advantages over traditional prepress shops that are not able to
provide the same level of integrated services. Our digital group also provides
multi-media services such as the transformation of customers' existing printed
and digital material into interactive media such as user-friendly information
kiosk systems, Internet web sites, corporate intranets, CD-ROMs and computer
laptop sales presentations. Our digital services group has provided a natural
opportunity for our cross-
31
<PAGE>
selling efforts by offering integrated prepress and multi-media services to our
print customers who may have historically used third-party suppliers for their
prepress and multi-media needs.
PRESS AND BINDING SERVICES. We believe that we provide our customers with
access to state-of-the-art technology in all phases of the printing and binding
process, including, among others, wide-web presses, computerized quality
information systems, computer-to-plate and digital processing systems, high
speed binding and personalization capabilities and robotic material handling.
Wide-web press technology, a large expenditure which only a small number of
well-capitalized printers are able to justify, generates a significant cost
savings on longer press runs. The computerized quality information systems
provide us and our customers with instant analysis of the quality of the
printing, thereby enabling us to improve our performance and plan preventative
maintenance of our equipment more effectively. The computer-to-plate and digital
processing technologies eliminate the use of film which significantly reduces
costs and production time and enables our customers to extend their production
deadlines. Our personalization capabilities allow customers to include different
content, whether advertising or editorial or both, within different copies of
their product depending upon the geographic, demographic and subscriber
specifications of their readers.
We operate web and sheetfed offset, rotogravure and flexographic presses. We
believe that the variety and capabilities of our presses and other production
equipment allow us to meet the broad range of our customers' printing needs and
be the full service provider demanded by the market. This capacity provides us
with the competitive advantage over those smaller printers who are unable to
meet this demand.
DISTRIBUTION AND LOGISTICS. We believe that our sophisticated mailing and
distribution capabilities are among the best in the industry. We maintain a
network of strategic regional locations from which we provide customers
important local access to our nationwide services. Nearly all of our printing
facilities dedicated to servicing our magazine, catalog and direct mail
customers are strategically located in the mid-region of the country. We believe
that the size of these printing plants and their central location and close
proximity to each other provide us with a significant advantage in distribution
capabilities, enabling us to distribute a greater volume of product than our
competitors to a wider target market at a lower cost. We also operate facilities
on the west and east coasts which serve more regionalized needs. We use
computerized cost studies to examine the benefits of pooled and palletized
mailing for each customer to develop an efficient and cost effective
distribution plan designed to ensure that the customer's product reaches
consumers at narrowly specified delivery times.
32
<PAGE>
MARKETS AND CUSTOMERS
As illustrated in the charts below, since the appointment of our current
management team in 1991, we have diversified our business mix and expanded into
serving customers in faster growth markets.
OUR BUSINESS MIX
PERCENTAGE OF NET SALES
- ------------------------
* As used herein, "Pro Forma 1998" gives effect to the acquisitions of Magna
Graphic, Inc. (January 1998), Century Graphics Corporation (February 1998),
Dittler Brothers, Incorporated (March 1998), Acme Printing Company, Inc.
(April 1998), Great Western Publishing, Inc. (December 1998) and Infiniti
Graphics, Inc. (January 1999), as if each had occurred on the first day of
fiscal 1998. The Pro Forma 1998 amounts are not necessarily indicative of
the results that would have occurred had the acquisitions been consummated
on the first day of fiscal 1998, or of our or the acquired companies'
individual or combined future results.
COMMERCIAL
We had pro forma 1998 consolidated net sales for the commercial market of
approximately $704.6 million.
We are a premier printer of virtually all of the different kinds of printed
materials used by businesses to promote their goods and services to other
businesses, investors and consumers. We print high quality specialty products,
such as annual reports and automobile and travel brochures, for customers such
as:
<TABLE>
<S> <C>
- - BMG - OUTBACK STEAKHOUSE
- - COLUMBIA PICTURES - PILLSBURY
- - DONNA KARAN/NEW YORK - PRINCESS CRUISES
- - FORD MOTOR - REEBOK
- - GUESS? - TIFFANY
- - MERCEDES BENZ
</TABLE>
We are also a leading printer of product brochures, bill stuffers,
informational marketing materials and other advertising supplements. Our
customers in this area include ADVO, American Express Publishing, Grolier and
Ziff-Davis. We also print freestanding inserts for customers such as News
America and retail inserts for established national and regional retailers such
as Albertson's, Best Buy, Home Depot, J.C. Penney, Rite-Aid, Staples, True Value
and Wal-Mart. We are the second largest offset printer of retail advertising
inserts in the United States. We are also an industry leader in three highly
specialized areas: (1) complex personalized direct response materials; (2)
unique and intricate consumer-involvement promotional materials such as
scratch-off game pieces; and (3) airline guides and hotel directories. Our
long-standing customers include leading players in the direct mail, fast food,
soft drink and other consumer markets.
MAGAZINES
We believe that we are the second largest U.S. consumer magazine printer,
printing over 2 billion magazines annually with approximately 600 titles. We had
approximately $657.2 million in pro forma 1998 consolidated net sales in this
category and believe that our principal competitors consist of three diversified
printing companies.
33
<PAGE>
The magazines that we print are among the best-selling in their class and
include such titles as:
<TABLE>
<S> <C>
- - AMERICAN WAY - MEN'S HEALTH
- - CIGAR AFICIONADO - NATIONAL GEOGRAPHIC
- - EBONY - NEWSWEEK
- - ELLE - ROAD AND TRACK
- - ENTERTAINMENT WEEKLY - SOAP OPERA WEEKLY
- - ESPN MAGAZINE - TEEN
- - FORBES - TV GUIDE
- - GOLF DIGEST - VOGUE
- - GOOD HOUSEKEEPING - WOMAN'S DAY
- - MAXIM
</TABLE>
These magazines are published by leading publishers such as Conde Nast,
Dennis Maxim, Emap Petersen, ESPN, Forbes, Hachette Filipacchi, Hearst, Johnson
Publishing, National Geographic, The New York Times Sports & Leisure Group, News
America Publications, Newsweek, Primedia and Rodale. The popularity of these
magazines makes them less susceptible to cyclical downturns in advertising
spending, which we believe provides us with a significant advantage over
competitors whose customers may be more susceptible to such downturns. A
majority of our magazine printing is performed under contracts with remaining
terms of between one and ten years, the largest of which are with customers with
whom we have had relationships for, on average, more than 20 years. We have
extended a majority of such contracts beyond their initial expiration dates and
intend to continue this practice when economically practical.
CATALOGS
We are a leading printer for the U.S. catalog market, with pro forma 1998
consolidated net sales of approximately $562.2 million in this market. We print
approximately 3 billion catalogs annually.
Our key competitors in this category consist of four diversified commercial
printers whose facilities enable them to compete in the national market and
smaller and local regional printers who compete for regional business. We
currently print many of the most well known catalog titles, including:
<TABLE>
<S> <C>
- - ABERCROMBIE & FITCH - HAMMACHER SCHLEMMER
- - AVON - POTTERY BARN
- - BANANA REPUBLIC - SEARS
- - BLAIR - STARBUCKS
- - CHADWICK'S - VICTORIA'S SECRET
- - CRATE & BARREL - WILLIAMS-SONOMA
- - FRONTGATE
</TABLE>
In addition, our business-to-business catalog printing work spans a broad
range of industries including the computer, home and office furniture, office
products and industrial safety products industries. Our business-to-business
customers include Global DirectMail and Reliable.
DIRECT MAIL
We had pro forma 1998 consolidated net sales for the direct mail printing
market of approximately $210.4 million. Direct mail targeted marketing services
are an important and growing component of many
34
<PAGE>
businesses' marketing programs and overall U.S. advertising expenditures. We
print direct mail materials such as booklets, inserts, bill stuffers and other
advertisements for customers including:
<TABLE>
<S> <C>
- - ADVO - FRITO-LAY
- - BLAIR - NATIONAL GEOGRAPHIC
- - CITICORP - NEW YORK LIFE
- - DISCOVERCARD - PUBLISHER'S CLEARING HOUSE
- - FLEET - QUAKER OATS
- - THE FRANKLIN MINT
</TABLE>
Among the direct mail services provided are direct imaging, personalization
and other lettershop services. We believe we are the only direct mail printer
capable of providing complex personalization for both short and long-run
projects.
BOOKS
We had pro forma 1998 consolidated net sales to the book market of
approximately $230.2 million. We print mass-market, racksize books for customers
including:
<TABLE>
<S> <C>
- - AVON BOOKS - RANDOM HOUSE
- - BANTAM DOUBLEDAY DELL - ST. MARTIN'S PRESS/TOR
- - KENSINGTON PUBLISHING
</TABLE>
We also print hardcover books for the consumer, education and reference
markets on behalf of many of the largest U.S. publishers. Our hardcover book
customers include:
<TABLE>
<S> <C>
- - GROLIER - RODALE
- - RAND MCNALLY - THOMAS PUBLISHING
- - RANDOM HOUSE - TIME WARNER
- - READER'S DIGEST
</TABLE>
DIRECTORIES
We had pro forma 1998 consolidated net sales from directory printing of
approximately $95.0 million. We have printed directories since 1981
predominantly through our relationship with Pacific Bell. We print four-color
white page and yellow page directories for Pacific Bell pursuant to a contract
which extends through the year 2002 and which can be extended by Pacific Bell
for up to an additional three years. We print more than 100 different regional
directory titles for Pacific Bell and certain other customers. We print over 35
million directories annually.
RAW MATERIALS
The price of paper, our primary raw material, is volatile over time and may
cause significant swings in net sales and cost of sales. We generally are able
to pass on increases in the cost of paper to our customers, while declines in
paper costs result in lower prices to our customers. The paper market firmed in
pricing from early 1997 to late 1997. The paper market in 1998 softened from
late 1997. Prices continued to decline throughout 1998 as availability became
plentiful for most grades of paper. We anticipate that this trend will continue
in 1999. We believe we have adequate allocations with our paper suppliers to
meet our customers' needs. Our contracts with our customers generally provide
for price adjustments to reflect price changes for other materials, wages and
outside services. Our net sales include sales to certain customers of paper that
we purchase.
Our materials management program capitalizes on our purchasing power in
order to minimize materials costs while optimizing inventory management. In
addition, our strong commercial relationships with a relatively small number of
suppliers allow us to negotiate favorable price discounts and achieve
35
<PAGE>
more assured sourcing of high quality paper that meet our specifications. We are
not dependent upon any one source for our paper or ink. Given the volume of our
purchases, we are generally able to obtain quality paper, ink and other
materials at competitive prices. We believe that an adequate supply of ink is
available.
EMPLOYEES
As of December 1998 we had over 16,000 employees, approximately 16% of whom
were represented by unions. As of December 1998 approximately 1,600 of such
union employees, in two different facilities, were covered under several
different contracts which are currently under negotiation. The union contracts
under negotiation have expired and have not been extended. No assurance may be
given that any of the contracts will be renewed or extended and work stoppages
may occur at one or both facilities. If work stoppages affect both facilities,
are lengthy and we are unable to transfer a substantial portion of the affected
work to other facilities, such work stoppages could have an adverse effect upon
us.
The balance of the union employees are covered under contracts which expire
during 1999, 2000 and 2002.
ENVIRONMENTAL COMPLIANCE
We are subject to regulation under various and changing federal, state and
local laws relating to the environment and to employee safety and health. These
environmental regulations relate to the generation, storage, transportation,
disposal and emission into the environment of various substances. Permits are
required for operation of our business (particularly air emission permits), and
these permits are subject to renewal, modification and, in certain
circumstances, revocation. We believe that we are in substantial compliance with
such laws and permitting requirements. We are also subject to regulation under
various and changing federal, state and local laws which allow regulatory
authorities to compel (or to seek reimbursement for) clean-up of environmental
contamination at our own sites and at facilities where our waste are or have
been disposed.
We have internal controls and personnel dedicated to compliance with all
applicable environmental laws. We estimate that capital expenditures in 1999
required to comply with federal, state and local provisions for environmental
controls, as well as expenditures for our share of costs for environmental
clean-up, if any, will not be material and will not have a material adverse
effect on us. We expect to incur ongoing capital and operating costs to maintain
compliance with applicable environmental laws, which costs we do not expect to
be, in the aggregate, material.
LEGAL PROCEEDINGS
We do not believe that there are any pending legal proceedings which, if
adversely determined, could have a material adverse effect on our financial
condition or results of operations, taken as a whole.
36
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the names, ages as of the date of this prospectus
and titles of our executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- ----------------------------------------------------------------------
<S> <C> <C>
Robert G. Burton................... 60 Chairman of the Board of Directors and Chief Executive Officer
Jennifer L. Adams.................. 39 Vice Chairman, Chief Legal and Administrative Officer and Secretary
Jerome V. Brofft................... 54 Senior Vice President, Purchasing
Paul B. Carousso................... 29 Vice President, Controller
Robert B. Lewis.................... 35 Executive Vice President, Chief Financial Officer
James E. Lillie.................... 37 Executive Vice President, Investor Relations and Corporate
Communications
Heidi J. Nolte..................... 41 Senior Vice President, Chief Information Officer
Thomas J. Quinlan III.............. 36 Senior Vice President, Treasurer
Marc L. Reisch..................... 43 President
</TABLE>
ROBERT G. BURTON has been Chairman of the Board and Chief Executive Officer
since May 1991.
JENNIFER L. ADAMS has been Vice Chairman, Chief Legal and Administrative
Officer and Secretary since January 1998. Prior to holding that position, Ms.
Adams held the position of Executive Vice President, Chief Legal and
Administrative Officer and Secretary since July 1995 and the position of
Executive Vice President, General Counsel and Secretary of World Color from
October 1993 until July 1995.
JEROME V. BROFFT has been Senior Vice President, Purchasing since October
1995. Prior to holding that position, Mr. Brofft held the position of Vice
President, Purchasing and Logistics from February 1995 until October 1995 and
the position of Vice President, Purchasing from May 1992 until February 1995.
PAUL B. CAROUSSO has been Vice President, Controller since December 1998.
Prior to holding that position, Mr. Carousso was Vice President, Assistant
Controller from July 1998. Mr. Carousso held the position of Assistant
Controller from July 1996 to July 1998 and the position of Manager, Financial
Reporting from October 1994 to July 1996. Prior to joining World Color, Mr.
Carousso was an auditor with Ernst & Young LLP.
ROBERT B. LEWIS has held the position of Executive Vice President, Chief
Financial Officer since December 1998. Prior to holding that position, Mr. Lewis
held the position of Senior Vice President, Controller from December 1997 and
the position of Vice President, Corporate Controller from August 1997 until
December 1997. Mr. Lewis held the position of Vice President, Corporate
Accounting from November 1996 until August 1997 and the position of Vice
President, Strategic Planning since joining World Color in August 1996. Prior to
joining World Color, Mr. Lewis was with L.P. Thebault (a commercial printer)
since 1989, most recently as Vice President, Budgetary Operations.
JAMES E. LILLIE has been Executive Vice President, Investor Relations and
Corporate Communications since September 1998. Prior to holding that position,
Mr. Lillie held the position of Executive Vice President, Operations since
January 1998. Mr. Lillie held the position of Corporate Vice President, Human
Resources from May 1996 until January 1998 and held the position of Regional
Vice President, Human Resources from January through April 1996. Mr. Lillie held
the position of Vice President, General Manufacturing Manager of World Color's
Bradley Printing facility from January 1995 to January 1996 and the position of
Vice President and Senior Human Resources and Administration Executive at Alden
Press, from the time Alden was acquired by World Color in February 1993.
37
<PAGE>
HEIDI J. NOLTE has been Senior Vice President, Chief Information Officer of
World Color since July 1997. Prior to holding that position, Ms. Nolte was Vice
President, Chief Information Officer since joining World Color in September
1994. Prior to joining World Color, Ms. Nolte was Senior Director, MIS at U.S.
Surgical where she had been employed since 1979.
THOMAS J. QUINLAN III has been Senior Vice President, Treasurer since July
1998. Prior to holding that position, Mr. Quinlan held the position of Vice
President, Treasurer since July 1997. Mr. Quinlan was Assistant Treasurer of
World Color from February 1994 until July 1997. Prior to joining World Color,
Mr. Quinlan was Manager of Treasury Administration at Marsh & McLennan Companies
Inc.
MARC L. REISCH was appointed President of World Color in November 1998.
Prior to holding that position, Mr. Reisch held the position of Vice Chairman,
Group President since January 1998. Mr. Reisch held the position of Group
President, Sales and Chief Operating Officer from August 1996 until January
1998, and held the position of Executive Vice President, Chief Operating and
Financial Officer from June 1996 until August 1996. Mr. Reisch held the position
of Executive Vice President, Chief Operating and Financial Officer and Treasurer
from July 1995 until June 1996. Prior to holding that position, Mr. Reisch was
Executive Vice President, Chief Financial Officer and Treasurer since October
1993.
World Color's Board of Directors consists of Gerald S. Armstrong, Mr.
Burton, Patrice M. Daniels, Dr. Mark J. Griffin, Alexander Navab, Jr., Mr.
Reisch, and Scott M. Stuart. Mr. Stuart is a member of KKR LLC. Mr. Stuart is a
General Partner of KKR Associates L.P. ("KKR Associates"), a New York limited
partnership and an affiliate of Kohlberg Kravis Roberts & Co., L.P. ("KKR"). Mr.
Navab is an executive of KKR and a limited partner of KKR Associates. Ms.
Daniels is a managing director of CIBC Oppenheimer Corp.
38
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of January 31, 1999, based on publicly
available information filed with the Securities and Exchange Commission,
including beneficial ownership by (i) each stockholder of World Color who owns
more than 5% of the outstanding shares of our common stock, (ii) each director
of World Color, (iii) the Chief Executive Officer of World Color, (iv) World
Color's four highest paid executive officers (exclusive of the Chief Executive
Officer) and (v) all directors and executive officers of World Color as a group.
Except as otherwise noted, the persons named in the table below have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them. The address for the listed beneficial owners, unless
stated otherwise, is c/o World Color Press, Inc., The Mill, 340 Pemberwick Road,
Greenwich, Connecticut 06831.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
(1)
----------------------
<S> <C> <C>
NAME SHARES PERCENT
- ------------------------------------------------------------------------------------- --------- -----------
KKR Associates (2)................................................................... 9,016,489 23.4%
Scott M. Stuart (2).................................................................. -- --
Alexander Navab, Jr.................................................................. -- --
Gerald S. Armstrong.................................................................. 94,661(3) *
Patrice M. Daniels................................................................... 820 *
Mark J. Griffin...................................................................... 2,200 *
Robert G. Burton..................................................................... 626,846(4) 1.6
Marc L. Reisch....................................................................... 189,140(5) *
Jennifer L. Adams.................................................................... 152,342(6) *
James E. Lillie...................................................................... 9,131(7) *
Robert B. Lewis...................................................................... 6,590(8) *
All directors and executive officers as a group...................................... 1,147,360(9) 2.9
</TABLE>
- ------------------------
* Signifies less than 1%
(1) For purposes of this table "beneficial ownership" includes any shares which
such person has the right to acquire within 60 days of January 31, 1999. For
purposes of computing the percentage of outstanding shares held by each
person or group of persons named above on a given date, any security which
such person or persons has the right to acquire within 60 days after such
date is deemed to be outstanding for purposes of computing the percentage
ownership of such person, but is not deemed to be outstanding in computing
the percentage ownership of any other person.
(2) Shares of the common stock shown as owned by KKR Associates are owned of
record by KKR Associates, APC Associates, L.P. ("APC Associates"), GR
Associates, L.P. ("GR Associates"), WCP Associates, L.P. ("WCP Associates")
and KKR Partners II, L.P. ("KKR Partners II" and, collectively, the "KKR
Partnerships"). The sole general partner of each of APC Associates, GR
Associates, WCP Associates and KKR Partners II is KKR Associates which
possesses sole voting and investment power with respect to the shares of the
common stock shown as owned by KKR Associates. Henry R. Kravis, George R.
Roberts, Scott M. Stuart (a director of World Color), Robert I. MacDonnell,
Paul E. Raether, Michael W. Michelson, Michael T. Tokarz, James H. Greene,
Jr., Edward A. Gilhuly, Perry Golkin and Clifton S. Robbins, as the general
partners of KKR Associates, may be deemed to share beneficial ownership of
the shares of common stock shown as beneficially owned by KKR Associates.
Each of such persons disclaim beneficial ownership of such shares, other
than to the extent of his economic interest in such shares. The address of
KKR Associates is 9 West 57th Street, New York, New York 10019.
(3) Includes an aggregate of 60,397 options that are exercisable within 60 days
of the date hereof as well as an aggregate of 1,500 shares owned of record
by children of Mr. Armstrong, of which shares Mr. Armstrong may be deemed to
have indirect ownership.
(4) Includes an aggregate of 441,941 options that are exercisable within 60 days
of the date hereof as well as 1,000 shares owned of record as joint tenants
by Mr. Burton's wife and son, and 334 shares owned of record by children of
Mr. Burton, all of which shares Mr. Burton may be deemed to have indirect
ownership. Mr. Burton disclaims beneficial ownership of such shares.
(5) Includes an aggregate of 120,539 options that are exercisable within 60 days
of the date hereof.
(6) Includes an aggregate of 107,888 options that are exercisable within 60 days
of the date hereof as well as an aggregate of 1,380 shares owned of record
by children of Ms. Adams, of which shares Ms. Adams may be deemed to have
indirect ownership. Ms. Adams serves as the custodian for such shares.
(7) Includes an aggregate of 2,600 options that are exercisable within 60 days
of the date hereof.
(8) Includes an aggregate of 1,500 options that are exercisable within 60 days
of the date hereof.
(9) Includes an aggregate of 785,573 options that are exercisable within 60 days
of the date hereof as well as the shares that may be deemed to be owned
indirectly by each of Mr. Armstrong, Mr. Burton and Ms. Adams as set forth
in notes (3), (4) and (6).
39
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS
The summaries contained herein of certain provisions of our indebtedness do
not purport to be complete and are qualified in their entirety by reference to
the provisions of the various agreements and indentures related thereto. See
"Where You Can Find More Information."
CREDIT FACILITY
The credit facility is provided by a syndicate of banks and other financial
institutions. The credit facility currently provides us up to $920.0 million of
loans in three components: (i) a revolving portion of up to $250.0 million with
a final maturity date of December 29, 2002; (ii) a term portion of up to $95.0
million with scheduled quarterly reductions beginning in the fourth quarter of
2000 and ending in the fourth quarter of 2002; and (iii) an acquisition term
loan facility of up to $575.0 million with scheduled quarterly reductions
beginning in the second quarter of 1999 and ending in the fourth quarter of
2002. A portion of the revolving loan component is available for letters of
credit.
Borrowings under the credit facility bear interest at rates that fluctuate
with the prime rate and the Eurodollar rate.
The loans under the credit facility are guaranteed by each of our direct and
indirect subsidiaries other than the receivables financing subsidiary and
certain immaterial subsidiaries. Our obligations with respect to the credit
facility and each guarantor's obligations with respect to the related guaranty
are secured by substantially all of their respective assets, including, without
limitation, inventory, equipment, intercompany debt and, in the case of our
subsidiaries, capital stock, but excluding real property and improvements
thereto and accounts receivable.
The credit facility contains covenants and provisions that restrict, among
other things, our ability to: (i) incur additional indebtedness; (ii) incur
liens on its property; (iii) make investments and advances; (iv) enter into
guarantees and other contingent obligations; (v) merge or consolidate with or
acquire another person or engage in other fundamental changes; (vi) engage in
certain sales of assets; (vii) make capital expenditures; (viii) enter into
leases; (ix) engage in certain transactions with affiliates; and (x) make
certain restricted payments. The credit facility also requires the satisfaction
of certain financial performance criteria (including a consolidated fixed charge
coverage ratio, a leverage ratio and consolidated cash flow available for fixed
charges) and the repayment of loans under the credit facility with proceeds of
certain sales of assets and debt issuances, and with 50% of our Consolidated
Excess Cash Flow (as defined in the credit facility).
The credit facility provides for certain customary events of default,
including a Change of Control (as defined in the credit facility).
6% CONVERTIBLE SENIOR SUBORDINATED NOTES
In October 1997, we issued $151.8 million in aggregate principal amount of
6% Convertible Senior Subordinated Notes due 2007, pursuant to an indenture,
dated as of October 8, 1997, by and among World Color and State Street Bank and
Trust Company, as Trustee all of which remain outstanding. The convertible notes
require payments semiannually in arrears in cash on April 1 and October 1 of
each year at a rate of 6% per annum. The first payment date was April 1, 1998.
The convertible notes are subordinated to all existing and future Senior
Indebtedness (as defined in the indenture) of World Color and are PARI PASSU
with our 8 3/8% Senior Subordinated Notes due 2008 and our 7 3/4% Senior
Subordinated Notes due 2009. The convertible notes will also rank PARI PASSU
with the notes offered hereby. The convertible notes are also effectively
subordinated to all indebtedness and liabilities of the subsidiaries of World
Color. The indenture does not prohibit or limit the incurrence of additional
Senior Indebtedness.
40
<PAGE>
Each of the convertible notes is convertible into shares of our common
stock, at the option of the holder, at any time after 90 days following the
latest date of the original issuance thereof through maturity, unless previously
redeemed or otherwise purchased by us, at the conversion price of $41.47 per
share. The conversion price is subject to adjustment upon the occurrence of
certain events affecting our common stock.
The convertible notes may be redeemed at our option, in whole or in part, at
any time on or after October 4, 2000 at the redemption prices set forth in the
indenture plus accrued and unpaid interest, if any, to the date of redemption.
However, on or after October 4, 2000 and prior to October 4, 2002, the
convertible notes will not be redeemable at our option unless the closing price
of the common stock shall have exceeded $58.06 per share (subject to adjustment
upon occurrence of certain events) for 20 trading days within a period of 30
consecutive trading days ending within five trading days prior to the notice of
redemption.
In the event of a Change of Control (as defined in the indenture), the
holders of the convertible notes will have the right to require us to purchase
the convertible notes, at a price equal to 100% of the principal amount thereof,
plus accrued interest to the repurchase date. The repurchase price is payable in
cash or, at our option, in common stock (valued at 95% of the average closing
price of the common stock for the five trading days immediately preceding and
including the third trading date prior to the repurchase date).
7 3/4% SENIOR SUBORDINATED NOTES
On February 22, 1999, we consummated the private placement of $300.0 million
in aggregate principal amount of 7 3/4% Senior Subordinated Notes due 2009. The
notes bear interest at an annual interest rate of 7 3/4%, and interest payments
will be due semi-annually, commencing August 15, 1999. The 7 3/4% notes will
mature on February 15, 2009. The 7 3/4% notes do not contain any sinking fund
provision.
RANKING
The notes are our general unsecured obligations, subordinate in right of
payment to all Senior Debt (as defined in the indenture), whether outstanding on
the date of the note indenture or thereafter incurred, of World Color and senior
in right of payment to or PARI PASSU with all other of our indebtedness. See
"Capitalization." The notes rank equal to our 6% Convertible Senior Subordinated
Notes due 2008 and will rank equal to the notes offered hereby.
OPTIONAL REDEMPTION
Except as noted below, the notes are not redeemable at our option before
November 15, 2003. Thereafter, the notes will be subject to redemption at any
time at our option, in whole or in part, at specified redemption prices plus
accrued and unpaid interest and Liquidated Damages (as defined in the
registration rights agreement relating to the notes), if any, thereon to the
applicable redemption date. In addition, at any time prior to December 1, 2001,
we may on any one or more occasions redeem up to 40% of the original aggregate
principal amount of the notes at a redemption price of 108.375% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of redemption, with the net proceeds of one or more
offerings of our common equity. However, at least 60% of the original aggregate
principal amount of the notes must remain outstanding immediately after each
occurrence of redemption.
CERTAIN COVENANTS
The indenture contains certain covenants that, among other things,
significantly limit the ability of World Color and our subsidiaries to (a) incur
additional indebtedness, (b) issue preferred stock, (c) pay dividends, (d) make
certain other restricted payments, (e) create certain liens, (f) enter into
certain transactions with affiliates, (g) sell assets of World Color or our
subsidiaries, (h) issue or sell equity interests of the subsidiaries or (i)
enter into certain mergers and consolidations. In addition, under certain
circumstances, we will be required to offer to purchase the notes at a price
equal to 100.0% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of purchase, with the
proceeds of certain asset sales.
41
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
We sold the unregistered notes on November 20, 1998. In connection with that
placement, we entered into the registration rights agreement, which requires us
to file a registration statement under the Securities Act of 1933 with respect
to the registered notes. Upon the effectiveness of that registration statement,
we are required offer to the holders of the unregistered notes the opportunity
to exchange their unregistered notes for a like principal amount of registered
notes, which will be issued without a restrictive legend and which generally may
be reoffered and resold by the holder without registration under the Securities
Act of 1933.
The registration rights agreement further provides that we must use our
reasonable best efforts to:
- cause the registration statement with respect to the exchange offer to be
declared effective within 150 days of the date on which we issued the
unregistered notes; and
- consummate the exchange offer on or before the 180th day following the
date on which we issued the unregistered notes.
Except as provided below, upon the completion of the exchange offer, our
obligations with respect to the registration of the unregistered notes and the
registered notes will terminate. A copy of the registration rights agreement has
been filed as an exhibit to the registration statement, of which this prospectus
is a part, and the summary herein of the material provisions thereof does not
purport to be complete and is qualified in its entirety by reference thereto.
Following the completion of the exchange offer (except as set forth below),
holders of unregistered notes not tendered will not have any further
registration rights and those unregistered notes will continue to be subject to
certain restrictions on transfer. Accordingly, the liquidity of the market for
the unregistered notes could be adversely affected upon consummation of the
exchange offer.
In order to participate in the exchange offer, a holder must represent to
us, among other things, that:
- the registered notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the holder;
- the holder is not engaging in and does not intend to engage in a
distribution of the registered notes;
- the holder does not have an arrangement or understanding with any person
to participate in a distribution of the registered notes; and
- the holder is not an "affiliate," as defined under Rule 405 promulgated
under the Securities Act of 1933, of the Company.
Pursuant to the registration rights agreement if:
- we determine that it is not permitted to effect the exchange offer as
contemplated hereby because of any change in applicable law or Securities
and Exchange Commission policy, or
- any Holder of Transfer Restricted Securities notifies us prior to the 20th
day following consummation of the exchange offer:
- that it is prohibited by law or Securities and Exchange Commission policy
from participating in the exchange offer;
- that it may not resell the registered notes acquired by it in the
exchange offer to the public without delivering a prospectus and that
this prospectus is not appropriate or available for such resales; or
- that it is a broker-dealer and owns unregistered notes acquired directly
from us or our affiliate,
42
<PAGE>
we will be required to file a "shelf" registration statement for a continuous
offering pursuant to Rule 415 under the Securities Act of 1933 in respect of the
unregistered notes. For purposes of the foregoing, "Transfer Restricted
Securities" means each unregistered note until:
- the date on which such note has been exchanged by a person other than a
broker-dealer for a registered note in the exchange offer;
- following the exchange by a broker-dealer in the exchange offer of an
unregistered note for a registered note, the date on which such registered
note is sold to a purchaser who receives from such broker-dealer on or
prior to the date of such sale a copy of this prospectus;
- the date on which such unregistered note has been electively registered
under the Securities Act of 1933 and disposed of in accordance with such
"shelf" registration statement; or
- the date on which such unregistered note is distributed to the public
pursuant to Rule 144 under the Act or may be distributed to the public
pursuant to Rule 144(k) under the Act.
Other than as set forth above, no holder will have the right to participate
in the shelf registration statement nor otherwise require that we register such
holder's shares of unregistered notes under the Securities Act of 1933. See
"--Procedures for Tendering."
Based on an interpretation by the Securities and Exchange Commission's staff
set forth in no-action letters issued to third parties unrelated to us, we
believe that, with the exceptions set forth below, registered notes issued
pursuant to the exchange offer in exchange for unregistered notes may be offered
for resale, resold and otherwise transferred by holders thereof (other than any
holder which is our "affiliate" within the meaning of Rule 405 promulgated under
the Securities Act of 1933, or a broker-dealer who purchased unregistered notes
directly from us to resell pursuant to Rule 144A or any other available
exemption promulgated under the Securities Act of 1933) without compliance with
the registration and prospectus delivery provisions of the Securities Act of
1933; PROVIDED that the registered notes are acquired in the ordinary course of
business of the holder and the holder does not have an arrangement or
understanding with any person to participate in the distribution of such
registered notes.
Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the registered notes cannot rely on this
interpretation by the Securities and Exchange Commission's staff and must comply
with the registration and prospectus delivery requirements of the Securities Act
of 1933 in connection with a secondary resale transaction. Each broker-dealer
that receives registered notes for its own account in exchange for unregistered
notes, where such unregistered notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such
registered notes. See "Plan of Distribution." Broker-dealers who acquired
unregistered notes directly from us and not as a result of market-making
activities or other trading activities may not rely on the staff's
interpretations discussed above or participate in the exchange offer and must
comply with the prospectus delivery requirements of the Securities Act of 1933
in order to sell the unregistered notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the exchange offer (except as set forth under
"--Purpose and Effect" above), holders of unregistered notes not tendered will
not have any further registration rights and those unregistered notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's unregistered notes could be adversely
affected upon completion of the exchange offer if the holder does not
participate in the exchange offer.
43
<PAGE>
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all unregistered notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1999, or such date and time to which we extend the offer. We will
issue $1,000 principal amount of registered notes in exchange for each $1,000
principal amount of outstanding unregistered notes accepted in the exchange
offer. Holders may tender some or all of their unregistered notes pursuant to
the exchange offer. However, unregistered notes may be tendered only in integral
multiples of $1,000 in principal amount.
The form and terms of the registered notes are substantially the same as the
form and terms of the unregistered notes except that the registered notes have
been registered under the Securities Act of 1933 and will not bear legends
restricting their transfer. The registered notes will evidence the same debt as
the unregistered notes and will be issued pursuant to, and entitled to the
benefits of, the Indenture pursuant to which the unregistered notes were issued.
As of , 1999, unregistered notes representing $300.0 million in
aggregate principal amount were outstanding and there was one registered holder,
a nominee of the DTC. This prospectus, together with the letter of transmittal,
is being sent to such registered holder and to others believed to have
beneficial interests in the unregistered notes. We intend to conduct the
exchange offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
We shall be deemed to have accepted validly tendered unregistered notes
when, as, and if we have given oral or written notice thereof to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purpose of receiving the registered notes from us. If any tendered unregistered
notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth herein or otherwise, certificates for any such
unaccepted unregistered notes will be returned, without expense, to the
tendering holder thereof as promptly as practicable after , 1999,
unless the exchange offer is extended.
Holders who tender unregistered notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
unregistered notes pursuant to the exchange offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the exchange
offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date shall be 5:00 p.m., New York City time, on ,
1999, unless we, in our sole discretion, extend the exchange offer, in which
case the expiration date shall mean the latest date and time to which the
exchange offer is extended. In order to extend the exchange offer, we will
notify the exchange agent and each registered holder of any extension by oral or
written notice prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
We reserve the right, in our sole discretion:
- to delay accepting any unregistered notes, to extend the exchange offer
or, if any of the conditions set forth under "--Conditions to Exchange
Offer" shall not have been satisfied, to terminate the exchange offer, by
giving oral or written notice of such delay, extension or termination to
the exchange agent; or
- to amend the terms of the exchange offer in any manner.
In the event that we make a material or fundamental change to the terms of
the exchange offer, we will file a post-effective amendment to the registration
statement.
44
<PAGE>
PROCEDURES FOR TENDERING
Only a holder of unregistered notes may tender the unregistered notes in the
exchange offer. Except as set forth under "--Book Entry Transfer," to tender in
the exchange offer a holder must complete, sign, and date the letter of
transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the letter of transmittal, and mail or otherwise deliver the letter
of transmittal or copy to the exchange agent prior to the expiration date. In
addition:
- certificates for such unregistered notes must be received by the exchange
agent along with the letter of transmittal prior to the expiration date;
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such unregistered notes, if that procedure is available,
into the exchange agent's account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the exchange agent prior to the expiration
date; or
- the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the letter of transmittal and other required
documents must be received by the exchange agent at the address set forth under
"--Exchange Agent" prior to the expiration date.
The tender by a holder that is not withdrawn before the expiration date will
constitute an agreement between that holder and us in accordance with the terms
and subject to the conditions set forth herein and in the letter of transmittal.
THE METHOD OF DELIVERY OF UNREGISTERED NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
YOU SHOULD NOT SEND ANY LETTER OF TRANSMITTAL OR UNREGISTERED NOTES TO US.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose unregistered notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the letter of transmittal and delivering the owner's
unregistered notes, either make appropriate arrangements to register ownership
of the unregistered notes in the beneficial owner's name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution unless unregistered notes
tendered pursuant thereto are tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instruction" or "Special Delivery Instructions" on the letter
of transmittal; or
- for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, the guarantee must be by any
eligible guarantor institution that is a member of or participant in the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "eligible institution").
If the letter of transmittal is signed by a person other than the registered
holder of any unregistered notes listed therein, the unregistered notes must be
endorsed or accompanied by a properly completed
45
<PAGE>
bond power, signed by the registered holder as that registered holder's name
appears on the unregistered notes.
If the letter of transmittal or any unregistered notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal unless waived by us.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered unregistered notes will be
determined by us in our sole discretion, which determination will be final and
binding. We reserve the absolute right to reject any and all unregistered notes
not properly tendered or any unregistered notes that would, in the opinion of
counsel, be unlawful to accept. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular unregistered notes. Our
interpretation of the terms and conditions of the exchange offer (including the
instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of unregistered notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities with respect
to tenders of unregistered notes, neither we, the exchange agent, nor any other
person shall incur any liability for failure to give such notification. Tenders
of unregistered notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any unregistered notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following , 1999, unless the
exchange offer is extended.
In addition, we reserve the right in our sole discretion to purchase or make
offers for any unregistered notes that remain outstanding after the expiration
date or, as set forth under "--Conditions to the exchange offer," to terminate
the exchange offer and, to the extent permitted by applicable law, purchase
unregistered notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the exchange offer.
By tendering, each holder will represent to us that, among other things:
- the registered notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the person receiving such
registered notes, whether or not such person is the registered holder;
- the holder is not engaging in and does not intend to engage in a
distribution of such registered notes;
- the holder does not have an arrangement or understanding with any person
to participate in the distribution of such registered notes; and
- the holder is not our "affiliate," as defined under Rule 405 of the
Securities Act of 1933.
In all cases, issuance of registered notes for unregistered notes that are
accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of certificates for such unregistered notes
or a timely Book-Entry Confirmation of such unregistered notes into the exchange
agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed letter of transmittal (or, with respect to the DTC and its
participants, electronic instructions in which the tendering holder acknowledges
its receipt of and agreement to be bound by the letter of transmittal) and all
other required documents. If any tendered unregistered notes are not accepted
for any reason set forth in the terms and conditions of the exchange offer or if
unregistered notes are submitted for a greater principal amount than the holder
desires to exchange, such unaccepted or non-exchanged unregistered notes will be
returned without expense to the tendering Holder thereof (or, in the case of
unregistered notes tendered by book-entry transfer into the exchange agent's
account at the Book-Entry Transfer
46
<PAGE>
Facility pursuant to the book-entry transfer procedures described below, such
nonexchanged unregistered notes will be credited to an account maintained with
such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the exchange offer.
Each broker-dealer that receives registered notes for its own account in
exchange for unregistered notes, where such unregistered notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such registered notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account in respect of
the unregistered notes at the Book-Entry Transfer Facility for purposes of the
exchange offer within two business days after the date of this prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of unregistered notes being
tendered by causing the Book-Entry Transfer Facility to transfer such
unregistered notes into the exchange agent's account at the Book-Entry Transfer
Facility in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of unregistered notes may be effected
through book-entry transfer at the Book- Entry Transfer Facility, the letter of
transmittal or copy thereof, with any required signature guarantees and any
other required documents, must, in any case other than as set forth in the
following paragraph, be transmitted to and received by the exchange agent at the
address set forth under "--Exchange Agent" on or prior to the expiration date or
the guaranteed delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the exchange offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy letter of
transmittal. DTC is obligated to communicate those electronic instructions to
the exchange agent. To tender unregistered notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the exchange agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the letter of transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the unregistered notes desires to tender such
unregistered notes and the unregistered notes are not immediately available, or
time will not permit such holder's unregistered notes or other required
documents to reach the exchange agent before the expiration date, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed letter of
transmittal (or a facsimile thereof) and notice of guaranteed delivery,
substantially in the form provided by us (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address
of the holder of unregistered notes and the amount of unregistered notes
tendered, stating that the tender is being made thereby and guaranteeing
that within three New York Stock Exchange, Inc. ("NYSE") trading days
after the date of execution of the notice of guaranteed delivery, the
certificates for all physically tendered unregistered notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, will
be deposited by the eligible institution with the exchange agent; and
- the certificates for all physically tendered unregistered notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, are
received by the exchange agent within three NYSE trading days after the
date of execution of the notice of guaranteed delivery.
47
<PAGE>
WITHDRAWAL RIGHTS
Tenders of unregistered notes may be withdrawn at any time prior to 5:00
p.m., New York City time, on the expiration date.
For a withdrawal of a tender of unregistered notes to be effective, a
written or (for DTC participants) electronic ATOP transmission notice of
withdrawal must be received by the exchange agent at its address set forth under
"--Exchange Agent" prior to 5:00 p.m., New York City time, on the expiration
date. Any such notice of withdrawal must:
- specify the name of the person having deposited the unregistered notes to
be withdrawn;
- identify the unregistered notes to be withdrawn (including the certificate
number or numbers and principal amount of such unregistered notes);
- in the case of a written notice of withdrawal, be signed by the holder in
the same manner as the original signature on the letter of transmittal by
which such unregistered notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer
sufficient to have the trustee register the transfer of such unregistered
notes into the name of the person withdrawing the tender; and
- specify the name in which any such unregistered notes are to be
registered, if different from that of the person having deposited the
unregistered notes.
All questions as to the validity, form, and eligibility (including time of
receipt) of such notices will be determined by us. Such determination shall be
final and binding on all parties. Any unregistered notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
exchange offer. Any unregistered notes which have been tendered for exchange but
which are not exchanged for any reason will be returned to the holder thereof
without cost to such holder as soon as practicable after withdrawal, rejection
of tender, or termination of the exchange offer. Properly withdrawn unregistered
notes may be retendered by following one of the procedures under "--Procedures
for Tendering" at any time on or prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue registered notes in exchange for,
any unregistered notes and may terminate or amend the exchange offer if, at any
time before the acceptance of such unregistered notes for exchange or the
exchange of the registered notes for such unregistered notes, we determine that
the exchange offer violates applicable law, any applicable interpretation of the
staff of the Securities and Exchange Commission or any order of any governmental
agency or court of competent jurisdiction.
The foregoing conditions are for the our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in its sole
discretion. Our failure to exercise any of the foregoing rights at any time
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any unregistered notes
tendered, and no registered notes will be issued in exchange for any such
unregistered notes, if at such time any stop order shall be threatened or in
effect with respect to the registration statement of which this prospectus
constitutes a part or the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended. In any such event we are required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.
48
<PAGE>
EXCHANGE AGENT
All executed letters of transmittal should be directed to the exchange
agent. The Bank of New York has been appointed as exchange agent for the
exchange offer. Questions, requests for assistance and requests for additional
copies of this prospectus or of the letter of transmittal should be directed to
the exchange agent addressed as follows:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7-E Corporate Trust Services Window
New York, New York 10286 Ground Level
Attention: Chris Brown New York, New York 10286
Attention: Chris Brown
</TABLE>
BY FACSIMILE:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 815-6339
FOR INFORMATION OR
CONFIRMATION BY TELEPHONE:
(212) 815-4997
Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand or by overnight delivery service.
FEES AND EXPENSES
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
our officers and employees. We will pay the estimated cash expenses to be
incurred in connection with the exchange offer. We estimate such expenses to be
$ , which includes fees and expenses of the exchange agent, accounting,
legal, printing and related fees and expenses.
TRANSFER TAXES
Holders who tender their unregistered notes for exchange will not be
obligated to pay any transfer taxes in connection therewith, except that holders
who instruct us to register registered notes in the name of, or request that
unregistered notes not tendered or not accepted in the exchange offer be
returned to, a person other than the registered tendering holder will be
responsible for the payment of any applicable transfer tax thereon.
49
<PAGE>
DESCRIPTION OF REGISTERED NOTES
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions." In this description, the word "World
Color" refers only to World Color Press, Inc. and not to any of its
subsidiaries.
World Color will issue the registered notes under an indenture between
itself and The Bank of New York, as trustee. The terms of the registered notes
include those stated in the indenture and those made part of the indenture by
reference to the Trust Indenture Act of 1939.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. We urge you to
read the indenture because it, and not this description, defines your rights as
holders of these registered notes. We have filed a copy of the indenture as an
exhibit to the registration statement which includes this prospectus.
BRIEF DESCRIPTION OF THE REGISTERED NOTES
The registered notes:
- are general unsecured obligations of World Color;
- are subordinated in right of payment to all existing and future Senior
Indebtedness of World Color;
- are senior in right of payment to any future subordinated Indebtedness of
World Color; and
- are equal in right of payment with our existing senior subordinated
indebtedness.
Assuming we had completed the February notes offering and the November notes
offering and had applied the respective net proceeds as intended, as of December
27, 1998, World Color would have had total Senior Indebtedness of approximately
$394.3 million. As indicated above and as discussed in detail below under the
subheading "Subordination," payments on the registered notes will be
subordinated to the payment of Senior Indebtedness. The indenture permits us to
incur additional Senior Indebtedness.
As of the date of the indenture, all of our subsidiaries were "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "Certain Covenants--Investments in Unrestricted Subsidiaries," we
will be permitted to designate certain of our subsidiaries as "Unrestricted
Subsidiaries." Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants in the Indenture.
Because the operations of World Color are conducted partially through its
subsidiaries, World Color's cash flow and consequent ability to service its
indebtedness, including the registered notes, is partially dependent upon the
earnings of such subsidiaries and the distribution of those earnings to World
Color or upon loans or other payments of funds by such subsidiaries to World
Color. The subsidiaries are separate and distinct legal entities and will have
no obligation, contingent or otherwise, to pay any amounts due with respect to
the registered notes or to make any funds available therefor, whether by
dividends, loans or other payments.
PRINCIPAL, MATURITY AND INTEREST
World Color will issue registered notes with a maximum aggregate principal
amount of $300.0 million. We will issue registered notes in denominations of
$1,000 and integral multiples of $1,000. The registered notes will mature on
November 15, 2008.
Interest on the registered notes will accrue at the rate of 8 3/8% per annum
and will be payable semi-annually in arrears on May 15 and November 15,
commencing on May 15, 1999. We will make each interest payment to the Holders of
record of the registered notes on the immediately preceding May 1 and November
1.
50
<PAGE>
Interest on the registered notes will accrue from the date of original
issuance, or, if interest has already been paid, from the date it was most
recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Additional interest ("Liquidated Damages") may accrue on the registered
notes in certain circumstances pursuant to the Registration Rights Agreement.
References herein to "interest" shall include Liquidated Damages, if any, due in
respect of the registered notes.
METHODS OF RECEIVING PAYMENTS ON THE REGISTERED NOTES
If a Holder has given wire transfer instructions to World Color, we will
make all principal, premium and interest and Liquidated Damages, if any, on that
Holder's registered notes in accordance with those instructions. All other
payments on the registered notes will be made at the office or agency of the
Paying Agent and Registrar within the City and State of New York unless we elect
to make interest payments by check mailed to the Holders at their address set
forth in the register of Holders.
PAYING AGENT AND REGISTRAR FOR THE REGISTERED NOTES
The Trustee will initially act as Paying Agent and Registrar. World Color
may change the Paying Agent or Registrar without prior notice to the Holders of
the registered notes, and World Color or any of its Subsidiaries may act as
Paying Agent or Registrar.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange registered notes in accordance with the
indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and World
Color may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. World Color is not required to transfer or exchange
any registered note selected for redemption. Also, we are not required to
transfer or exchange any registered note for a period of 15 days before a
selection of registered notes to be redeemed.
The registered Holder of a registered note will be treated as the owner of
it for all purposes.
OPTIONAL REDEMPTION
At any time prior to November 15, 2001, World Color may redeem up to 40% of
the registered notes with the net proceeds from any public offering of Equity
Interests of World Color (other than Redeemable Stock) at a redemption price
equal to 108.375% of the principal thereof, plus accrued and unpaid interest to
the Redemption Date, PROVIDED that:
(1) at least 60% in aggregate principal amount of the registered notes
originally issued must remain outstanding after each such redemption; and
(2) the redemption must occur on or prior to 120 days of the receipt of
the proceeds of such offering of Equity Interests.
Except pursuant to the preceding paragraph, the registered notes will not be
redeemable at World Color's option prior to November 15, 2003. After November
15, 2003, the registered notes are redeemable at World Color's option. The
registered notes will be subject to redemption at the option of World Color, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of the principal amount) set forth
in the table below, plus accrued and unpaid
51
<PAGE>
interest thereon to the applicable Redemption Date, if redeemed during the
twelve-month period beginning:
<TABLE>
<CAPTION>
DATE PERCENTAGE
- --------------------------------------------------------------------------------- -----------
<S> <C>
November 15, 2003................................................................ 104.188%
November 15, 2004................................................................ 102.792%
November 15, 2005................................................................ 101.396%
November 15, 2006 and thereafter................................................. 100.000%
</TABLE>
MANDATORY REDEMPTION
Except as set forth below under "Certain Covenants--Limitations on Asset
Sales," World Color is not required to make mandatory redemption or sinking fund
payments with respect to the registered notes.
SELECTION AND NOTICE
In case of a partial redemption, selection of the registered notes or
portion thereof for redemption shall be made by the trustee by lot, pro rata or
in such manner as it shall deem appropriate and fair and in such manner as
complies with any applicable legal requirements. Registered notes may be
redeemed in part in multiples of $1,000 principal amount only. Notice of
redemption will be sent, by first class mail, postage prepaid, at least 30 days
and not more than 60 days prior to the date fixed for redemption to each Holder
whose registered notes are to be redeemed at the last address for such Holder
then shown on the registry books. If any registered note is to be redeemed in
part only, the notice of redemption that relates to such registered note shall
state the portion of the principal amount thereof to be redeemed. A new
registered note in principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder thereof upon cancellation of the original
registered note. On and after any redemption date, interest will cease to accrue
on the registered notes or part thereof called for redemption as long as World
Color has deposited with the Paying Agent funds in satisfaction of the
redemption price pursuant to the indenture.
SUBORDINATION
The payment of the principal of and premium, if any, and interest on the
registered notes will be subordinated in right of payment, as set forth in the
indenture, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness, whether outstanding on the Issue Date or thereafter
incurred, including any interest accruing subsequent to a bankruptcy or other
similar proceeding whether or not such interest is an allowed claim enforceable
against World Color in a bankruptcy case under Title 11 of the United States
Code.
Upon any distribution of assets of World Color of any kind or character,
whether in cash, property or securities upon any dissolution, winding up, total
or partial liquidation or reorganization of World Color (including, without
limitation, in bankruptcy, insolvency, or receivership proceedings or upon any
assignment for the benefit of creditors or any other marshalling of World
Color's assets and liabilities), the holders of Senior Indebtedness shall first
be entitled to receive payment in full in cash or cash equivalents of all
amounts payable under Senior Indebtedness (including interest after the
commencement of any such proceeding at the rate specified in the applicable
Senior Indebtedness whether or not interest is an allowed claim enforceable
against World Color in any such proceeding) before the holders of registered
notes will be entitled to receive any payment with respect to the registered
notes, and until all Obligations with respect to Senior Indebtedness are paid in
full in cash or cash equivalents, any distribution to which the holders of
registered notes would be entitled shall be made to the holders of Senior
Indebtedness.
No direct or indirect payment by or on behalf of World Color of principal
of, premium, if any, or interest on the registered notes whether pursuant to the
terms of the registered notes or upon acceleration or otherwise shall be made
if, at the time of such payment there exists a default in the payment of all or
any
52
<PAGE>
portion of principal of, premium, if any, or interest on any Designated Senior
Debt (and the trustee has received written notice thereof), and such default
shall not have been cured or waived or the benefits of this sentence waived by
or on behalf of the holders of the Designated Senior Debt. In addition, during
the continuance of any other event of default with respect to:
(1) the Credit Facility pursuant to which the maturity thereof may be
accelerated, upon the occurrence of (a) receipt by the trustee of written
notice from the Credit Agent, or (b) if such event of default results from
the acceleration of the registered notes, the date of such acceleration, no
such payment may be made by World Color upon or in respect of the registered
notes for a period ("Payment Blockage Period") commencing on the earlier of
the date of receipt of such notice or the date of such acceleration and
ending 179 days thereafter (unless such Payment Blockage Period shall be
terminated by written notice to the trustee from the Credit Agent); or
(2) any other Designated Senior Debt, upon receipt by the trustee of
written notice from the trustee or other representative for the holders of
such Designated Senior Debt (or the holders of at least a majority in
principal amount of such other Designated Senior Debt then outstanding), no
such payment may be made by or on behalf of World Color upon or in respect
of the registered notes for a Payment Blockage Period commencing on the date
of receipt of such notice and ending 119 days thereafter (unless such
Payment Blockage Period shall be terminated by written notice to the Trustee
from such trustee or other representative commencing the Payment Blockage
Period).
Notwithstanding anything herein to the contrary, in no event will a Payment
Blockage Period extend beyond 179 days from the date on which such Payment
Blockage Period was commenced. Not more than one Payment Blockage Period may be
commenced with respect to the registered notes during any period of 360
consecutive days; PROVIDED that the commencement of a Payment Blockage Period by
the holders of Designated Senior Debt other than under the Credit Facility shall
not bar the commencement of another Payment Blockage Period by the Credit Agent
within such period of 360 consecutive days. For all purposes of these
subordination provisions, no event of default which existed or was continuing on
the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Debt initiating such Payment Blockage Period shall be, or be
made, the basis for the commencement of a second Payment Blockage Period by the
representative of such Designated Senior Debt whether or not within a period of
360 consecutive days unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days.
The indenture will further require that World Color promptly notify holders
of Senior Indebtedness if payment of the registered notes is accelerated because
of an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, holders of registered notes may recover less
ratably than creditors of the World Color who are holders of Senior
Indebtedness. On a pro forma basis, after giving effect to the February notes
offering, the November notes offering and the application of the proceeds
therefrom (including the redemption of World Color's 9 1/8% Senior Subordinated
Notes due 2003), the principal amount of Senior Indebtedness outstanding as of
December 27, 1998 would have been approximately $394.3 million. The indenture
limits, subject to certain financial tests, the amount of additional
Indebtedness, including Senior Indebtedness, that World Color and its
subsidiaries can incur. See "--Certain Covenants."
However, the registered notes will be structurally subordinated to all
liabilities of World Color's subsidiaries, including trade payables, capitalized
lease obligations and indebtedness that may be incurred by World Color's
subsidiaries. Any right of World Color to receive assets of any subsidiary upon
such subsidiary's liquidation or reorganization will be structurally
subordinated to the claims of that subsidiary's creditors, except to the extent
that World Color is itself recognized as a creditor of such subsidiary, in which
case the claims of World Color would still be subject to any security interests
in the assets of such subsidiary and any liabilities of such subsidiary senior
to that held by World Color and may otherwise be challenged in a liquidation or
reorganization proceeding.
53
<PAGE>
"DESIGNATED SENIOR DEBT" means (i) the Senior Bank Debt and (ii) any other
Senior Indebtedness permitted under the indenture having a principal amount of
at least $30.0 million that is designated as "Designated Senior Indebtedness" by
written notice from World Color to the trustee.
"SENIOR BANK DEBT" means Indebtedness and all other monetary obligations of
every nature outstanding under the Credit Facility, including letters of credit
and reimbursement obligations in respect thereof and letters of credit and
reimbursement obligations in respect of letters of credit issued by lenders
party to the Credit Facility.
"SENIOR INDEBTEDNESS" means (i) the Senior Bank Debt and (ii) any other
indebtedness permitted to be incurred under the terms of the indenture, unless
the instrument under which such Indebtedness is incurred expressly provides that
it is on a parity with or subordinated in right of payment to the registered
notes. Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness shall not include (a) Indebtedness that is expressly subordinate or
junior in right of payment to any Indebtedness of World Color, (b) Indebtedness
that is represented by Redeemable Stock, (c) any liability for federal, state,
local or other taxes owed or owing by World Color, (d) Indebtedness of World
Color to any Subsidiary or any other Affiliate of World Color, (e) trade
payables, (f) Indebtedness that is incurred in violation of the Indenture (other
than Senior Bank Debt), (g) the 6% Convertible Notes and (h) World Color's
7 3/4% Senior Subordinated Notes due 2009.
CERTAIN COVENANTS
LIMITATIONS ON RESTRICTED PAYMENTS. World Color shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly:
(w) declare or pay any dividend or make any distribution on account of
World Color's or any of its Restricted Subsidiaries' Capital Stock or other
Equity Interests (other than (A) dividends or distributions payable in
Equity Interests (other than Redeemable Stock) of World Color or such
Restricted Subsidiary of World Color or (B) dividends or distributions
payable by a Restricted Subsidiary of World Color so long as, in the case of
any dividend or distribution payable on any class or series of securities
issued by a Restricted Subsidiary other than a wholly-owned Restricted
Subsidiary, World Color or a Restricted Subsidiary of World Color receives
at least its pro rata share of such dividend or distribution in accordance
with its equity interest in such class or series of securities);
(x) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of World Color or any of its Restricted Subsidiaries (other than
any such Equity Interests purchased from World Color or any of its
Restricted Subsidiaries);
(y) voluntarily prepay any Indebtedness that is subordinated to the
Notes (other than in connection with (A) any extension, refinancing,
renewal, replacement, substitution or refunding thereof permitted by the
terms of the Indenture, (B) Indebtedness between World Color and a
Restricted Subsidiary of World Color or between Restricted Subsidiaries of
World Color or (C) any Indebtedness permitted by clauses (4) and (8) of the
second paragraph of the "Incurrence of Indebtedness" covenant); or
(z) make any Restricted Investments
(the foregoing actions set forth in clauses (w) through (z) being referred
to as "Restricted Payments"), if:
(1) a Default or Event of Default shall have occurred and be continuing
at the time of such Restricted Payment or shall occur as a consequence
thereof; or
(2) immediately after such Restricted Payment and after giving effect
thereto on a pro forma basis, World Color could not incur at least $1.00 of
additional Indebtedness pursuant to the first
54
<PAGE>
paragraph of the "Incurrence of Indebtedness" covenant (without giving
effect to clauses (1) through (17) of the second paragraph thereof); or
(3) such Restricted Payment, together with the aggregate of:
(a) all other Restricted Payments made after the Issue Date; PLUS
(b) the amount, if any, by which the net amount of Investments in all
Unrestricted Subsidiaries (determined by subtracting (A) the aggregate
amount of all Transfers (valued as provided in the definition of
"Investment") from each Unrestricted Subsidiary to World Color or its
Restricted Subsidiaries from and after the Issue Date through and
including the relevant date of determination (calculated in accordance
with the penultimate paragraph of this "Limitations on Restricted
Payments " covenant) from (B) the aggregate amount of all Investments in
such Unrestricted Subsidiary made by World Color and its Restricted
Subsidiaries from and after the Issue Date through and including the
relevant date of determination, but in any case not below zero) exceeds
$40.0 million; EXCEEDS
(c) the sum of:
(A) 50% of the amount of the Adjusted Consolidated Net Income
(other than amounts, if any, included in the preceding clause (3)(b))
of World Color for the period (taken as one accounting period) from
the beginning of the first quarter commencing immediately after the
Issue Date through the end of World Color's fiscal quarter ending
immediately prior to the time of such Restricted Payment (or, if
Adjusted Consolidated Net Income for such period is a deficit, 100%
of such deficit); PLUS
(B) 50% of the aggregate amortization of intangibles for the
period specified in subclause (c)(A) of this clause (3); PLUS
(C) 100% of the aggregate amounts contributed to the capital of
World Color from and after the Issue Date; PLUS
(D) 100% of the aggregate net cash proceeds and the fair market
value, as determined in good faith by the Board of Directors, of
marketable securities received by World Color from (1) the issue or
sale of Equity Interests of World Color (other than such Equity
Interests issued or sold to a Restricted Subsidiary of World Color
and other than Redeemable Stock) or any Indebtedness or security
convertible into or exchangeable for any such Equity Interest that
has been so converted or exchanged, (2) the sale of the stock of an
Unrestricted Subsidiary or the sale of all or substantially all of
the assets of an Unrestricted Subsidiary to the extent that a
liquidating dividend is paid to World Color or any Restricted
Subsidiary of World Color from the proceeds of such sale or (3) the
sale or other disposition of Restricted Investments made by World
Color and its Restricted Subsidiaries, in each case from and after
the Issue Date; PLUS
(E) 100% of the aggregate net cash proceeds received by World
Color from the issue and sale of the 6% Convertible Notes if and to
the extent such 6% Convertible Notes are converted into Common Stock
of the Company.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration thereof such payment
would have complied with the provisions of the indenture;
(2) (a) the retirement of any Equity Interests of World Color (the
"Retired Equity Interests") either in exchange for or out of the net
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of other Equity Interests of World Color (the "Refunding Equity
Interests") other than any Redeemable Stock and (b) if immediately prior to
retirement of any Retired Equity
55
<PAGE>
Interest the declaration and payment of dividends thereon was permitted
under clause (4) of this paragraph, the declaration and payment of dividends
on the Refunding Equity Interest in an aggregate amount per year no greater
than the aggregate amount of dividends per year that was declarable and
payable on such Retired Equity Interest issued in connection with such
retirement immediately prior to such retirement;
(3) the repurchase, redemption or other acquisition or retirement for
value of (a) any Equity Interests of World Color issued to present and
former members of management of World Color and its Subsidiaries and certain
of their former affiliates pursuant to agreements in effect on the Issue
Date and (b) Equity Interests of World Color issued after the Issue Date to
members of management of World Color and its Subsidiaries pursuant to
agreements executed after the Issue Date containing provisions for the
repurchase of such Equity Interests upon death, disability or termination of
employment of such persons which are substantially identical to those
contained in the agreements in effect on the Issue Date;
(4) the declaration and payment of dividends on World Color's Common
Stock of up to 6% per annum of the net proceeds received by World Color in
the initial public offering of its Common Stock and any subsequent public
offerings of World Color's Common Stock;
(5) the repurchase, redemption or other acquisition or retirement for
value of Indebtedness of World Color which is subordinated in right of
payment to the registered notes either in exchange for or out of the
proceeds of the issuance of Equity Interests (other than Redeemable Stock)
of World Color;
(6) the declaration and payment of dividends to holders of any class or
series of World Color's preferred stock issued after the Issue Date
(including, without limitation, the declaration and payment of dividends on
Refunding Equity Interest in excess of the dividends declarable and payable
thereon pursuant to clause (2) of this paragraph); PROVIDED that at the time
of such issuance World Color's Fixed Charge Coverage Ratio, after giving
effect to such issuance, would be greater than 1.25 to 1;
(7) the redemption, repurchase or other acquisition or retirement for
value of any Indebtedness of World Color which is subordinated in right of
payment to the registered notes (a) with the proceeds of, or in exchange
for, Indebtedness incurred pursuant to clause (9) of the second paragraph of
the "Incurrence of Indebtedness" covenant or (b) if, after giving effect to
such redemption, repurchase or retirement, World Color could incur at least
$1.00 of Indebtedness under the first paragraph of the "Incurrence of
Indebtedness" covenant (without giving effect to clauses (1) through (17) of
the second paragraph thereof);
(8) the purchase, redemption or other acquisition or retirement for
value of any Equity Interest of a Restricted Subsidiary of World Color that
is not a wholly owned Subsidiary to the extent such purchase, redemption or
other acquisition or retirement constitutes a Permitted Investment; PROVIDED
that in determining the aggregate amount expended for Restricted Payments in
accordance with paragraph (3) of the first paragraph in this "Limitations on
Restricted Payments" covenant, (a) no amounts expended under clauses (2)(a),
(5), (7) and (8) of this paragraph shall be included and (b) 100% of the
amounts expended under clauses (1), (2)(b), (3), (4) and (6) of this
paragraph shall be included.
In determining the net amount of Investments in Unrestricted Subsidiaries
pursuant to clause (3)(b) of the first paragraph of this "Limitations on
Restricted Payments" covenant on any relevant date of determination, (i) all
Transfers which would not be included in the Adjusted Consolidated Net Income of
World Color for the relevant period will be applied to reduce the aggregate
amount of Investments in Unrestricted Subsidiaries before any Transfer which
would be included in the Adjusted Consolidated Net Income of World Color for the
relevant period shall be so applied AND (ii) no Transfer (or portion thereof)
which would be included in the Adjusted Consolidated Net Income of World Color
for the relevant period
56
<PAGE>
will be applied to reduce the aggregate amount of Investments in Unrestricted
Subsidiaries if, prior to or as a result of the application of such Transfer,
the net amount of Investments in Unrestricted Subsidiaries (after taking into
account all prior applications of Transfers) is or would be $40.0 million or
less.
Not later than the date of making any Restricted Payment, World Color shall
deliver to the trustee an Officer's Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this "Limitations on Restricted Payments" covenant were computed,
which calculations may be based on World Color's latest available internal
financial statements.
INVESTMENTS IN UNRESTRICTED SUBSIDIARIES. World Color shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, make any
Investment in any Unrestricted Subsidiary, if at the time of such Investment:
(1) a Default or Event of Default shall have occurred and be continuing
or shall occur as a consequence thereof;
(2) the amount of such Investment exceeds the amount then permitted to
be used to make Restricted Payments pursuant to clause (3) of the first
paragraph under "Limitations on Restricted Payments;" or
(3) immediately after such Investment and after giving effect thereto on
a pro forma basis deducting from Consolidated Net Income the amount of any
Investment World Color has made in an Unrestricted Subsidiary during the
four full fiscal quarters last preceding the date of such Investment, World
Color would not be permitted to incur at least $1.00 of Indebtedness
pursuant to the first paragraph of the "Incurrence of Indebtedness" covenant
(without giving effect to clauses (1) through (17) of the second paragraph
thereof).
Notwithstanding clauses (2) or (3) of this paragraph or any other provision
of the Indenture, World Color shall be permitted to make Investments in
Unrestricted Subsidiaries in an aggregate amount not to exceed $40.0 million at
any one time outstanding. The amount by which the aggregate of all Investments
in Unrestricted Subsidiaries exceeds $40.0 million at any one time outstanding
shall be counted in determining the aggregate permissible amount of Restricted
Payments pursuant to clause (3) of the first paragraph under "Limitations on
Restricted Payments" covenant. The net amount of Investments in Unrestricted
Subsidiaries that:
(1) exceeds $40.0 million will be reduced by all Transfers from
Unrestricted Subsidiaries to World Color and its Restricted Subsidiaries in
accordance with clause (3)(b) of the first paragraph and the penultimate
paragraph of the "Limitations on Restricted Payments" covenant; and
(2) is less than or equal to $40.0 million shall be reduced by the
amount of all Transfers which would not be included in the Adjusted
Consolidated Net Income of World Color.
World Color will not permit any Unrestricted Subsidiary to become a
Restricted Subsidiary, except in compliance with the last sentence of the
definition of "Unrestricted Subsidiary."
Not later than the date of making any Investment described above, World
Color will deliver to the trustee an Officer's Certificate stating that such
Investment is permitted and setting forth the basis upon which the calculations
required by the "Investments in Unrestricted Subsidiaries" covenant were
computed, which calculations may be based on World Color's latest available
internal financial statements.
INCURRENCE OF INDEBTEDNESS. World Color will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness unless World Color's Fixed Charge Coverage Ratio for its
four full fiscal quarters ending immediately prior to the date such additional
Indebtedness is created, incurred, issued, assumed or guaranteed would have been
at least 2.25 to 1 determined on a pro forma basis (including a pro forma
application of the net proceeds of such Indebtedness) as if the additional
57
<PAGE>
Indebtedness had been created, incurred, issued, assumed or guaranteed at the
beginning of such four-quarter period.
The foregoing limitations will not apply to the incurrence of:
(1) Indebtedness pursuant to the Credit Facility (PROVIDED that the
principal amount of such Indebtedness shall not exceed the aggregate amount
of the commitments under the Credit Facility on the Issue Date PLUS the
amount of Indebtedness under the Credit Facility incurred (A) as additional
Indebtedness permitted under clause (8) of this paragraph and which reduces
the amount of Indebtedness otherwise permitted under said clause (8), (B) as
additional Indebtedness permitted under the first paragraph of this
"Incurrence of Indebtedness" covenant or (C) as reimbursement obligations
with respect to letters of credit permitted under clause (7) below);
(2) Existing Indebtedness;
(3) Indebtedness represented by the registered notes;
(4) Capital Lease Obligations;
(5) Indebtedness constituting purchase money obligations for property
acquired in the ordinary course of business or other similar financing
transactions;
(6) Indebtedness incurred in connection with capital expenditures;
(7) Indebtedness constituting reimbursement obligations with respect to
letters of credit, including, without limitation, letters of credit in
respect of workers' compensation claims, issued for the account of World
Color or a Restricted Subsidiary of World Color in the ordinary course of
business, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
(8) additional Indebtedness in an aggregate principal amount equal to
the greater of (a) $75.0 million in the aggregate at any one time
outstanding for World Color and its Restricted Subsidiaries and (b)(A) 10%
of the Consolidated Net Worth of World Color at the time of incurrence by
World Color and (B) 10% of the Consolidated Net Worth of any Restricted
Subsidiary of World Color at the time of incurrence by such Restricted
Subsidiary;
(9) Indebtedness created, incurred, issued, assumed or given in exchange
for, or the proceeds of which are used to, extend, refinance, renew,
replace, substitute or refund any Indebtedness permitted under the indenture
or any Indebtedness issued to so extend, refinance, renew, replace,
substitute or refund such Indebtedness, including any additional
Indebtedness incurred to pay premiums and fees in connection therewith (the
"Refinancing Indebtedness"); PROVIDED, that (a) the principal amount of such
Refinancing Indebtedness shall not exceed the outstanding principal amount
of Indebtedness (including unused commitments) so extended, refinanced,
renewed, replaced, substituted or refunded PLUS any amounts incurred to pay
premiums and fees in connection therewith, (b) in the case of Refinancing
Indebtedness for Indebtedness permitted under clause (2) of this paragraph,
the Refinancing Indebtedness shall have an Average Life equal to or greater
than the Average Life of the Indebtedness being extended, refinanced,
renewed, replaced, substituted or refunded and (c) to the extent such
Refinancing Indebtedness refinances Indebtedness subordinated to the
registered notes, such Refinancing Indebtedness is subordinated to the
registered notes at least to the same extent as the Indebtedness being
extended, refinanced, renewed, replaced, substituted or refunded; and
PROVIDED FURTHER that subclauses (b) and (c) of this clause (9) will not
apply to any refunding or refinancing of any Senior Indebtedness;
58
<PAGE>
(10) intercompany Indebtedness incurred in connection with Investments
in Unrestricted Subsidiaries; provided that such Investments are permitted
by the "Limitations on Restricted Payments" covenant and the "Investments in
Unrestricted Subsidiaries" covenant;
(11) Indebtedness of any unconsolidated Subsidiary of World Color
created after the Issue Date; PROVIDED that such Indebtedness is nonrecourse
to World Color and its consolidated Restricted Subsidiaries and World Color
and its consolidated Restricted Subsidiaries have no obligations with
respect to such Indebtedness;
(12) Indebtedness under Currency Agreements and Interest Rate
Agreements, PROVIDED that in the case of Currency Agreements which relate to
other Indebtedness, such Currency Agreements do not increase the
Indebtedness of World Color outstanding other than as a result of
fluctuations in foreign currency exchange rates;
(13) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in
the case of daylight overdrafts, which will not be, and will not be deemed
to be, inadvertent) drawn against insufficient funds in the ordinary course
of business;
(14) Indebtedness of an entity at the time it is acquired as a
Restricted Subsidiary; PROVIDED that such Indebtedness was not incurred or
assumed by such entity in connection with or in anticipation of such
acquisition;
(15) Indebtedness between World Color and any Restricted Subsidiary of
World Color or between Restricted Subsidiaries of World Color;
(16) guarantees by Restricted Subsidiaries of World Color of
Indebtedness of World Color or any Restricted Subsidiary of World Color if
the Indebtedness so guaranteed is permitted under the Indenture; and
(17) World Color's Obligations arising from the repurchase, redemption
or other acquisitions of Equity Interests from management investors to the
extent permitted by the "Limitations on Restricted Payments" covenant.
DIVIDENDS AND PAYMENT RESTRICTIONS. World Color shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock,
or any other interest or participation in, or measured by, its profits,
owned by World Color or any of its Restricted Subsidiaries, or pay any
Indebtedness owed to World Color or any of its Restricted Subsidiaries,
(2) make loans or advances to World Color or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to World Color or any of
its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason
of:
(A) the terms (as in effect on the Issue Date) of Existing
Indebtedness;
(B) the terms (as in effect on the Issue Date) of the Credit
Facility;
(C) the terms of Indebtedness of World Color incurred in accordance
with the "Incurrence of Indebtedness" covenant; PROVIDED that the terms
of any such Indebtedness constitute no greater encumbrance or restriction
on the ability of any Restricted Subsidiary to pay dividends or make
distributions, make loans or advances or transfer properties or assets
than is otherwise permitted by this covenant at such time;
(D) the terms of the indenture and the registered notes;
59
<PAGE>
(E) applicable law;
(F) customary non-assignment provisions entered into in the ordinary
course of business and consistent with past practices;
(G) the terms of purchase money obligations for property acquired in
the ordinary course of business, but only to the extent that such
purchase money obligations restrict or prohibit the transfer of the
property so acquired;
(H) any encumbrance or restriction with respect to a Subsidiary of
World Color that is not a Subsidiary of World Color on the Issue Date,
which encumbrance or restriction is in existence at the time such person
becomes a Subsidiary of World Color or is created on the date it becomes
a Subsidiary of World Color;
(I) any encumbrance or restriction with respect to a Subsidiary of
World Color imposed pursuant to an agreement which has been entered into
for the sale or disposition of all or substantially all the Capital Stock
or assets of such Subsidiary; or
(J) any encumbrance or restriction existing under any amendment to,
and any agreement which refinances or replaces, the agreements described
in clauses (A), (B), (C) and (D); PROVIDED that the terms and conditions
of any such encumbrances or restrictions contained in any such amendment
or agreement constitute no greater encumbrance or restriction on the
ability of any Restricted Subsidiary to pay dividends or make
distributions, make loans or advances or transfer properties or assets
than those under or pursuant to the agreement evidencing the Indebtedness
or obligations so amended, refinanced or replaced.
Nothing contained in this covenant shall prevent World Color or a Restricted
Subsidiary from entering into any agreement permitting or providing for the
incurrence of Liens otherwise permitted by the "Limitations on Liens" covenant.
LIMITATIONS ON LIENS. World Color shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (other than Permitted Liens) upon any asset now owned
or hereafter acquired by it, or any income or profits therefrom or assign or
convey any right to receive income therefrom. Notwithstanding the foregoing,
World Color or any Restricted Subsidiary of World Color may create or assume any
Lien upon its properties or assets if World Color shall cause the registered
notes to be equally and ratably secured with all other Indebtedness secured by
such Lien for so long as such other Indebtedness shall be so secured.
LIMITATIONS ON ASSET SALES. World Color shall not, and shall not permit any
of its Restricted Subsidiaries (other than unconsolidated Restricted
Subsidiaries) to, directly or indirectly, consummate any Asset Sale that results
in Net Proceeds in excess of $45.0 million (including the sale of any of the
stock of any Restricted Subsidiary) unless World Color applies the Net Proceeds
from such Asset Sale to one or more of the following in such combination as it
shall choose:
(1) an investment in another asset or business in the same line of
business as, or a line of business similar to that of, the line of business
of World Color and its Subsidiaries; PROVIDED that such investment occurs on
or prior to the later to occur of (x) if applicable, the date on which such
proceeds are required to be applied pursuant to the express terms of the
Credit Facility as in effect on the Issue Date and without regard to any
waiver of such terms and (y) the 366th day following the date of such Asset
Sale (the "Asset Sale Payment Date"); PROVIDED, FURTHER that if the terms of
the Credit Facility do not restrict the use of such proceeds, the Asset Sale
Payment Date shall be deemed to be the 366th day following the date of such
Asset Sale;
(2) a Net Proceeds Offer (as defined below) expiring on or prior the
Asset Sale Payment Date; or
60
<PAGE>
(3) the purchase, redemption or other prepayment or repayment of
outstanding Senior Indebtedness on or prior the Asset Sale Payment Date;
PROVIDED, HOWEVER, that if the net amount not invested pursuant to clause (1)
above or applied pursuant to clause (3) above is less than $15.0 million (the
"Excess Net Proceeds"), World Color will not be further obligated to offer to
redeem registered notes pursuant to clause (2) above; and PROVIDED FURTHER, that
for purposes of the foregoing calculation of Excess Net Proceeds the Company
shall be required to repay any Senior Indebtedness that by its terms may be so
repaid at the time of such calculation, prior to determining the Excess Net
Proceeds.
For purposes of clause (2) of the preceding paragraph, World Color will
apply that portion of the Net Proceeds of the Asset Sale required to make a
tender offer in accordance with applicable law (a "Net Proceeds Offer") to
repurchase registered notes at a price not less than 100% of the principal
amount thereof plus accrued and unpaid interest to the date of repurchase. Any
Net Proceeds Offer will be made by World Color only if and to the extent
permitted under, and subject to prior compliance with, the terms of any
agreement governing Senior Indebtedness. If World Color commences a Net Proceeds
Offer, securities of World Color ranking PARI PASSU in right of payment with the
registered notes are outstanding at the commencement of such Net Proceeds Offer
and the terms of such securities provide that a similar offer must be made with
respect thereto, then the Net Proceeds Offer for the registered notes shall be
made concurrently with such other offer and securities of each issue will be
accepted pro rata in proportion to the aggregate principal amount of securities
of each issue which the Holder of securities of such issue elect to have
redeemed. After the last date on which Holders of the registered notes are
permitted to tender their registered notes in a Net Proceeds Offer, World Color
will not be restricted under the "Limitations on Asset Sales" covenant of the
indenture as to its use of any remaining Net Proceeds available to make such Net
Proceeds Offer but not used to redeem registered notes pursuant thereto.
Notwithstanding any other provision of the indenture to the contrary, for a
period of 120 days after the last date on which Holders of the registered notes
are permitted to tender their registered notes in the Net Proceeds Offer, World
Color may use any Net Proceeds available to make such Net Proceeds Offer but not
used to redeem registered notes pursuant thereto, to purchase, redeem or
otherwise acquire or retire for value any securities ranking junior in right of
payment to the registered notes at a price, stated as a percentage of the
principal amount of such junior securities, not greater than the price, stated
as a percentage of the principal amount, offered in the Net Proceeds Offer,
PROVIDED that, if the Net Proceeds Offer is for a principal amount (the "Net
Proceeds Offer Amount") of registered notes less than the aggregate principal
amount of registered notes then outstanding, then the Net Proceeds available by
the Company for such a purchase, redemption or other acquisition or retirement
for value of junior securities shall not exceed the Net Proceeds Offer Amount.
The Credit Facility requires that the Company apply the net cash proceeds of
asset sales (after deducting costs of sale, taxes and amounts applied to repay
any indebtedness secured by the assets sold) to repay outstanding obligations
under the Credit Facility, other than with respect to, among other things, (a)
certain intercompany asset sales, (b) sales of residential homes purchased by
the Company to facilitate employee hires or transfers and (c) any other sales of
assets in one or a related series of transactions for less than $15.0 million
(up to a maximum of $75.0 million during the term of the Credit Facility), and
excluding the net cash proceeds from the sale of any printing equipment (as
defined therein) to the extent that such net cash proceeds may be offset against
cash expenditures made or committed by the Company for the purchase of other
printing equipment during the Fiscal Year (as defined in the Credit Facility) in
which such sale occurs or, to the extent such printing equipment is purchased on
or prior to April 15 of the Fiscal Year immediately succeeding the Fiscal Year
in which the printing equipment to be replaced was sold, the immediately
preceding Fiscal Year.
TRANSACTIONS WITH AFFILIATES. World Color shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, enter into any
transaction (including, without limitation, the
61
<PAGE>
purchase, sale, lease or exchange of any property or the rendering of any
service) involving aggregate consideration in excess of $5.0 million for any one
transaction with any Affiliate, except for:
(1) transactions (including any investments, loans or advances by or to
any Affiliate) in good faith the terms of which are fair and reasonable to
World Color or such Restricted Subsidiary, as the case may be, and are at
least as favorable as the terms that could be obtained by World Color or
such Restricted Subsidiary, as the case may be, in a comparable transaction
made on an arms' length basis between unaffiliated parties; PROVIDED that
any such transaction will be deemed to be on terms that are fair and
reasonable and that are at least as favorable as the terms that could be
obtained by World Color or such Restricted Subsidiary, as the case may be,
in a comparable transaction made on an arms' length basis between
unaffiliated parties if (a) a majority of the directors of World Color
unaffiliated with such Affiliate or, if there are no such directors, a
majority of the directors of World Color approve such transaction or (b)
World Color or such Restricted Subsidiary, as the case may be, delivers to
the trustee and the Holders a written opinion of a nationally recognized
investment banking firm stating that such transaction is fair to World Color
or such Restricted Subsidiary from a financial point of view;
(2) payments by World Color or any of its Restricted Subsidiaries to KKR
or any affiliate thereof made pursuant to any financial advisory, financing,
underwriting or placement agreement;
(3) any Restricted Payment not otherwise prohibited under the
"Limitations on Restricted Payments" covenant and any Investment not
prohibited by the "Investments in Unrestricted Subsidiaries" covenant;
(4) the payment of reasonable and customary regular fees to directors of
World Color and its Subsidiaries who are not employees of World Color or its
Subsidiaries;
(5) payments to KKR that are not otherwise prohibited by the
"Limitations on Restricted Payments" covenant;
(6) loans to officers, directors and employees of World Color and its
Subsidiaries for business or personal purposes and other loans and advances
made in the ordinary course of business of World Color and its Subsidiaries;
(7) transactions between or among any of World Color and its Restricted
Subsidiaries; and
(8) the payment by World Color of management fees to KKR and/or its
affiliates.
MERGER, CONSOLIDATION OR SALE OF ASSETS. World Color shall not in a single
transaction or a series of related transactions consolidate with, or merge with
or into, or directly or indirectly sell, transfer, lease or convey substantially
all of its properties and assets, to another person (except any Restricted
Subsidiary of World Color existing on the date of the indenture and except any
Restricted Subsidiary of World Color created or acquired after the date of the
indenture with a positive Consolidated Net Worth; PROVIDED that in connection
with any merger of World Color with any such Subsidiary of World Color, no
consideration (other than common stock in the surviving corporation or World
Color) shall be issued or distributed to the stockholders of World Color)
unless:
(1) World Color shall be the continuing person, or the person (if other
than World Color) formed by such consolidation or into which World Color is
merged or to which the properties and assets of World Color are transferred
shall be a corporation or partnership organized and existing under the laws
of the United States or any State thereof or the District of Columbia and
shall expressly assume, by a supplemental indenture, executed and delivered
to the trustee, in form satisfactory to the trustee, all of the obligations
of World Color under the registered notes and the indenture;
(2) immediately after giving effect to such transaction, no Default and
no Event of Default under the indenture shall have occurred and be
continuing;
62
<PAGE>
(3) immediately after giving effect to such transaction on a pro forma
basis, the Consolidated Net Worth of the surviving entity is at least equal
to the Consolidated Net Worth of World Color immediately prior to such
transaction; and
(4) immediately after giving effect to such transaction on a pro forma
basis, the Fixed Charge Coverage Ratio of the surviving entity is at least
1:1; PROVIDED that if the Fixed Charge Coverage Ratio of World Color before
giving effect to such transaction is within the range set forth in column
(A) below, then the pro forma Fixed Charge Coverage Ratio of the surviving
entity shall be at least equal to the lesser of (x) the ratio determined by
multiplying the percentage set forth in Column B by the Fixed Charge
Coverage Ratio of World Color prior to such transaction, and (y) the ratio
set forth in Column C below:
<TABLE>
<CAPTION>
(A) (B) (C)
- ----------------- --------- ---------
<S> <C> <C> <C>
1.11:1 to 1.99:1 ................................................................ 90% 1.5:1
2.00:1 to 2.99:1 ................................................................ 80% 2.1:1
3.00:1 to 3.99:1 ................................................................ 70% 2.4:1
4.00:1 or more ................................................................ 60% 2.5:1
</TABLE>
and PROVIDED, FURTHER, that if the pro forma Fixed Charge Coverage Ratio of the
surviving entity is 3:1 or more, the calculation in the preceding proviso shall
be inapplicable and such transaction shall be deemed to have complied with the
requirements of this clause (4).
SENIOR SUBORDINATED DEBT. The indenture provides that World Color shall not
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is expressly by its terms subordinate or junior in right of
payment to any Senior Indebtedness and senior in any respect in right of payment
to the registered notes.
SUPPLEMENTAL INDENTURES
The indenture permits World Color and the Trustee, without notice to or the
consent of the Holders, to enter into one or more indentures supplemental hereto
for certain specified purposes, including, without limitation:
(1) to cure ambiguities, defects or inconsistencies (PROVIDED that such
action shall not adversely affect the interests of the Holders in any
respect);
(2) to add additional covenants for the benefit of the Holders or to
surrender any right or power conferred upon World Color in the indenture or
to make any other change that does not adversely affect the rights of any
Holder;
(3) to provide for collateral for the registered notes;
(4) to evidence the succession of another person to World Color and the
assumption by any such successor of the obligations of World Color in
accordance with Article V of the indenture and the reigstered notes;
(5) to provide for uncertificated registered notes; and
(6) to effect or maintain the qualification of the indenture under the
TIA.
Subject to the absolute and unconditional right of Holders to receive
principal, premium and interest, other modifications, amendments or supplements
to the indenture or the registered notes may be made with the consent of the
Holders of not less than a majority in aggregate principal amount of the then
outstanding registered notes and unregistered notes, taken as a whole, and such
modifications, amendments or supplemental indentures will be binding on every
Holder whether or not such Holder has consented thereto, PROVIDED that no such
modification, amendment or supplemental indenture shall,
63
<PAGE>
without the consent of Holders of each outstanding registered note or
unregistered note affected thereby, among other things:
(1) change the percentage of principal amount of registered notes whose
Holders must consent to an amendment, supplement or waiver of any provision
of this indenture or the registered notes;
(2) reduce the rate or extend the time for payment of interest on any
registered note;
(3) reduce the principal amount of any registered note or reduce the
Purchase Price or the Redemption Price;
(4) change the stated maturity of any registered note;
(5) alter the redemption provisions of the indenture or the purchase
price in connection with any repurchase of registered notes described in the
"Limitations on Asset Sales" covenant in any manner adverse to any Holder;
(6) make any changes in the provisions concerning waivers of Defaults or
Events of Default by Holders or the rights of Holders to recover the
principal or premium of, interest on, or redemption payment with respect to,
any registered note;
(7) make any changes relating to (a) the right of the trustee to file
proof of claim in any bankruptcy or similar proceeding, or (b) the
limitation on the right of Holders to direct the trustee to institute legal
proceedings with respect to the indenture or to such provision;
(8) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the registered notes or that resulted
from a failure to comply with the "Limitations on Asset Sales" covenant;
(9) make the principal of, or the interest on, any registered note
payable with anything or in any manner other than as provided for in this
indenture and the registered notes as in effect on the date hereof; or
(10) make the registered notes subordinated in right of payment to any
extent or under any circumstances to any other indebtedness, except to the
extent no less favorable to the Holders than would be consistent with the
indenture as in effect on the Issue Date.
EVENTS OR DEFAULT AND REMEDIES
Events of Default under the indenture include the following:
(1) a default in the payment of interest on any registered notes when
the same shall become due and payable and the continuance of such default
for a period of 30 days;
(2) a default in the payment of all or any part of the principal of (or
premium, if any, on), the registered notes when and as the same shall become
due and payable at maturity, or upon acceleration, redemption or otherwise
including default in the payment of the purchase price required to be
offered in a Net Proceeds Offer;
(3) a failure by the Company to comply with any of the other agreements
or covenants in or provisions of the registered notes or the indenture which
failure continues for a period of 30 days after written notice specifying
such failure and demanding that World Color remedy the same has been given
to World Color by the trustee or to World Color and the trustee by Holders
of at least 30% in aggregate principal amount of registered notes then
outstanding;
(4) a failure to pay the final scheduled principal installment in an
amount of at least $20.0 million at the stated maturity date thereof (after
giving effect to any applicable grace periods) under any mortgage, indenture
or instrument under which there may be issued or evidenced any Indebtedness
64
<PAGE>
for borrowed money by World Color or any of its Restricted Subsidiaries (or
the payment of which is guaranteed by World Color or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee is now existing or
hereafter created;
(5) a default under any mortgage, indenture or instrument under which
there may be issued or evidenced any Indebtedness for borrowed money by
World Color or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by World Color or any of its Restricted Subsidiaries) whether
such Indebtedness or guarantee is now existing or hereafter created if, as a
result of such default, the maturity of such Indebtedness has been
accelerated prior to its express maturity, and the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness with respect to which the principal amount remains unpaid upon
its final maturity (after giving effect to any extension of such maturity
date by the holder of such Indebtedness and the expiration of any applicable
grace period) or the maturity of which has been so accelerated, aggregates
$20.0 million or more;
(6) a final judgment or final judgments for the payment of money, or the
issuance of any warrant of attachment against any portion of the property or
the assets of World Color or any of its Restricted Subsidiaries, that in the
aggregate, equal or exceed $10.0 million at any one time shall be entered
against World Color or any of its Restricted Subsidiaries and such judgment
or judgments or warrant of attachment shall not be discharged, satisfied,
stayed, annulled or rescinded within 60 days of being entered, or in the
case of any final judgment which provides for payment over time, from any
applicable payment date; or
(7) certain events of bankruptcy, insolvency or reorganization.
If a Default or an Event of Default occurs and is continuing and if it is
known to the trustee, the trustee shall mail to each Holder a notice of the
Default or Event of Default within 30 days after it occurs or, if later, within
10 days after such Default or Event of Default becomes known to the trustee,
unless such Default or Event of Default has been cured. Except in the case of a
Default or Event of Default in the payment of principal of, premium, if any, or
interest on any registered note, the trustee may withhold the notice if and so
long as a committee of its trust officers in good faith determines that
withholding the notice is in the interest of the Holders of the registered
notes.
If an Event of Default (other than an Event of Default described in clause
(7) of the second preceding paragraph), shall occur and be continuing then, and
in every such case, unless the principal of all the registered notes shall have
already become due and payable, either the trustee or the Holders of not less
than 30% (or 25% in the case of an Event of Default with respect to payment of
principal of or interest on the registered notes and unregistered notes, taken
as a whole) in aggregate principal amount of the then outstanding registered
notes and unregistered notes, taken as a whole, by notice in writing to World
Color (and to the trustee if given by Holders) may declare all of the unpaid
principal of, premium if any, and accrued interest thereon to be due and payable
immediately, PROVIDED, HOWEVER, that if any Senior Indebtedness is outstanding
pursuant to the Credit Facility, upon a declaration of acceleration, such
principal and interest shall be due and payable upon the earlier of (x) the day
that is five business days after the provision to World Color and the Credit
Agent of such written notice, unless such Event of Default is cured or waived
prior to such date and (y) the date of acceleration of any Senior Indebtedness
under the Credit Facility. In the event of a declaration of acceleration because
of an Event of Default described in clause (4) or (5) of the second preceding
paragraph has occurred and is continuing, such declaration of acceleration shall
be automatically annulled if such payment default is cured or waived or the
holders of the Indebtedness which is the subject of such event of default have
rescinded their declaration of acceleration in respect of such Indebtedness
within 60 days thereof and the trustee has received written notice of such cure,
waiver or rescission and no other Event of Default described in clause (4) or
(5) of the second preceding paragraph has occurred that has not been cured or
waived within 60 days of the declaration of such acceleration in respect
thereof. If an Event of Default specified in clause (7)
65
<PAGE>
above occurs, all principal of, premium applicable to, and accrued interest on,
all outstanding Notes shall become immediately due and payable without any
declaration or other act on the part of the trustee or any Holder.
The provisions described in the preceding paragraphs, however, are subject
to the condition that if, at any time after a declaration of acceleration has
been made and before a judgment or decree for payment of the money due has been
obtained, the Holders of a majority in aggregate principal amount of the then
outstanding registered notes and unregistered notes, taken as a whole, by
written notice to World Color and the trustee, may waive, on behalf of all
Holders, a Default or an Event of Default if:
(1) World Color has paid or deposited with the trustee a sum sufficient
to pay (i) all overdue interest on all registered notes and unregistered
notes, taken as a whole, (ii) the principal of (and premium, if any,
applicable to) any registered notes and unregistered notes, taken as a
whole, which would become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by the registered notes
and unregistered notes, taken as a whole, (iii) to the extent that payment
of such interest is lawful, interest upon overdue interest at the rate borne
by the registered notes and unregistered notes, taken as a whole and (iv)
all sums paid or advanced by the trustee under the indenture and the
compensation, expenses, disbursements and advances of the trustee, its
agents and counsel; and
(2) all Events of Default, other than the nonpayment of the principal of
registered notes and unregistered notes, taken as a whole which have become
due solely by such declaration of acceleration, have been cured or waived.
Notwithstanding the previous sentence, no waiver shall be effective for any
Default or Event of Default in the payment of the principal of, premium, if
any, or interest on any note held by a nonconsenting Holder or any Default
or Event of Default with respect to any covenant or provision which cannot
be modified or amended without the consent of the Holder of each then
outstanding note, unless all such affected Holders agree, in writing, to
waive such Default or Event of Default. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
Prior to the declaration of acceleration of the maturity of the registered
notes and unregistered notes, taken as a whole, the Holder or Holders of not
less than a majority in aggregate principal amount of the registered notes and
unregistered notes, taken as a whole at the time outstanding by written notice
to World Color and the trustee may waive on behalf of all the Holders any past
default under the indenture and its consequence, except a default in the payment
of principal of, or interest on any note or a default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding note affected. The trustee is under no obligation
to exercise any of its rights or powers under the indenture at the request,
order or direction of any of the Holders unless such Holders have offered to the
trustee reasonable security or indemnity. Subject to all the provisions of the
indenture and applicable law, the Holders of a majority in aggregate principal
amount of the registered notes and unregistered notes, taken as a whole at the
time outstanding have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or exercising
any trust or power conferred upon the trustee.
World Color is required to furnish the trustee, forthwith upon becoming
aware of any Default or Event of Default under the indenture, an Officers'
Certificate specifying such default and within 120 days after the end of each
fiscal year, an Officers' Certificate to the effect that the officers executing
the same have conducted, or supervised, a review of the activities of World
Color and its Subsidiaries and of performance under the indenture and that, to
such officer's knowledge, based on their review, World Color has fulfilled all
of its obligations under the indenture, or, if there has been a failure to
comply with such obligations, describing such failure with particularity.
66
<PAGE>
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The indenture will provide that World Color may, at its option and at any
time, elect to have its obligations discharged with respect to the outstanding
notes ("Legal Defeasance"). Such Legal Defeasance means that World Color shall
be deemed to have paid and discharged the entire Indebtedness represented by,
and the indenture shall cease to be of further effect as to, all outstanding
notes except as to (1) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such notes when such payments are
due from the trust funds; (2) World Color's obligations with respect to such
notes concerning issuing temporary notes, registration of notes, mutilated,
destroyed, lost or stolen notes, and the maintenance of an office or agency for
payment and money for security payments held in trust; (3) the rights, powers,
trust, duties, and immunities of the trustee, and World Color's obligations in
connection therewith; and (4) the Legal Defeasance provisions of the indenture.
In addition, World Color may, at its option and at any time, elect to have the
obligations of World Color released with respect to certain covenants that are
described in the indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and other insolvency events) described under "Events of Default"
will no longer constitute an Event of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) World Color must irrevocably deposit with the trustee, in trust, for
the benefit of the Holders of the notes, U.S. legal tender, U.S. Government
Obligations or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on such
notes on the stated date for payment thereof or on the redemption date of
such principal or installment of principal of, premium, if any, or interest
on such notes, and the trustee, for the exclusive benefit of the Holders of
the notes, must have a valid, perfected, exclusive security interest in such
trust;
(2) in the case of Legal Defeasance before the date that is one year
prior to the stated maturity of the notes, World Color shall have delivered
to the trustee an opinion of counsel in the United States reasonably
acceptable to the trustee confirming that (A) World Color has received from,
or there has been published by, the Internal Revenue Service, a ruling or
(B) since the date of the indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders of
such notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance before the date that is one year
prior to the stated maturity of the notes, World Color shall have delivered
to the trustee an opinion of counsel in the United States reasonably
acceptable to such trustee confirming that the Holders of such notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or, insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the indenture or any
other material agreement or instrument to which World Color or any of its
Subsidiaries is a party or by which World Color or any of its Subsidiaries
is bound;
67
<PAGE>
(6) World Color shall have delivered to the trustee an Officers'
Certificate stating that the deposit was not made by World Color with the
intent of preferring the Holders of such notes over any other creditors of
World Color or with the intent of defeating, hindering, delaying or
defrauding any other creditors of World Color or others; and
(7) World Color shall have delivered to the trustee an Officers'
Certificate and an opinion of counsel, each stating that the conditions
precedent provided for in, in the case of the Officers' Certificate, clauses
(1) through (6) and, in the case of the opinion of counsel, clauses (1)
(with respect to the validity and perfection of the security interest), (2),
(3) and (5) of this paragraph have been complied with.
If the funds deposited with the trustee to effect Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal of premium, if any,
and interest on the notes when due, then the obligations of World Color under
the indenture will be revived and no such defeasance will be deemed to have
occurred.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No past, present or future director, officer, employee, incorporator or
stockholder of World Color, as such, shall have any liability for any
obligations of World Color under the indenture or the notes or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of the notes by accepting a note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Securities and Exchange
Commission (the "Commission") that such a waiver is against public policy.
CONCERNING THE TRUSTEE
The indenture contains certain limitations on the rights of the trustee,
should it become a creditor of World Color, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The trustee will be permitted to engage in other
transactions; HOWEVER, if it acquires any conflicting interest it must eliminate
such conflict within ninety days, apply to the Commission for permission to
continue or resign.
The Holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur (which shall not be cured), the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of his or her own affairs. Subject to such provisions, the trustee will
be under no obligation to exercise any of its rights or powers under the
indenture at the request of any of the Holders, unless they shall have offered
to the trustee security and indemnity satisfactory to it against any loss,
liability or expense.
ADDITIONAL INFORMATION
The indenture provides that World Color shall deliver to the trustee and
mail to each Holder within 15 days after the filing of the same with the
Commission, copies of the quarterly and annual report and of the information,
documents and other reports, if any, which World Color is required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act. The
indenture further provides that, notwithstanding that World Color may not be
required to remain subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, World Color shall continue to file with the Commission and
provide the trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. World Color shall also comply with the other provisions of TIA Section
314(a).
68
<PAGE>
CERTAIN DEFINITIONS
"ADJUSTED CONSOLIDATED NET INCOME" means, with respect to any person for
any period, (1) the Consolidated Net Income of such person for such period, plus
(2) in the case of World Color and its Restricted Subsidiaries, all cash
received during such period by World Color or any Restricted Subsidiary from its
Unrestricted Subsidiaries from the payment of dividends or distributions
(including tax sharing payments and loans or advances which are junior in right
of payment to the notes and have a longer Average Life than the notes), but only
to the extent such cash payments are not otherwise included in "Adjusted
Consolidated Net Income." Each item of Adjusted Consolidated Net Income will be
determined in conformity with GAAP, except that, for purposes of the application
of Accounting Principles Board Opinions Nos. 16 and 17, such person may select
an amortization practice allowable by GAAP up to 40 years, notwithstanding the
use of a different amortization in such person's consolidated financial
statements. Any designation of a Subsidiary of World Color as a Restricted
Subsidiary or Unrestricted Subsidiary at or prior to the time of the calculation
of Adjusted Consolidated Net Income of a Subsidiary will be treated as if it had
occurred at the beginning of the applicable period.
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. A person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another person if the controlling person
possesses, directly or indirectly the power to direct or cause the direction of
the management or policies, of the controlled person, whether through ownership
of voting securities, by agreement or otherwise.
"ASSET SALE" means, with respect to any person, in one or a series of
related transactions, the sale, lease, conveyance, disposition or other transfer
by the referent person of any of its assets (including by way of a
sale-and-leaseback and including the sale or other transfer or issuance of any
of the Capital Stock of any Subsidiary of the referent person); PROVIDED, that
notwithstanding the foregoing, the term "Asset Sale" shall not include the sale,
lease, conveyance, disposition or other transfer of (1) all or substantially all
of the assets of World Color, as permitted pursuant to the "Merger,
Consolidation or Sale of Assets" covenant, (2) any assets between World Color or
any Restricted Subsidiary, (3) any sale, conveyance, disposition or other
transfer of (a) cash and cash equivalents, (b) inventory in the ordinary course
of business and (c) any other tangible or intangible asset, in each case in the
ordinary course of business of World Color or its Subsidiaries, or (4) the sale
or discount, in each case without recourse, of accounts receivable arising in
the ordinary course of business, but only in connection with the compromise or
collection thereof.
"AVERAGE LIFE" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (1) the sum of the
products of the numbers of years from the date of determination to the dates of
each successive scheduled principal payment or, in the case of Redeemable Stock,
each successive scheduled mandatory redemption payment of such security or
instrument multiplied by the amount of such principal payment or, in the case of
Redeemable Stock, mandatory redemption payment by (2) the sum of all such
principal payments or, in, the case of Redeemable Stock, mandatory redemption
payment.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease which
would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock.
"CONSOLIDATED CASH FLOW" means, with respect to any person for any period,
the Adjusted Consolidated Net Income of such person for such period plus:
69
<PAGE>
(1) provision for taxes based on income or profits to the extent such
provision for taxes was included in computing Adjusted Consolidated Net
Income; plus
(2) consolidated Interest Expense, whether paid or accrued, to the
extent such expense was deducted in computing Adjusted Consolidated Net
Income (including amortization of original issue discount and non-cash
interest payments); plus
(3) depreciation, amortization and other non-cash charges to the extent
such depreciation, amortization and other non-cash charges were deducted in
computing Adjusted Consolidated Net Income (including amortization of
goodwill and other intangibles);
PROVIDED, with respect to the calculation of World Color's Fixed Charge Coverage
Ratio, that if, during such period, (a) such person or any of its Subsidiaries
shall have made any Asset Sales (other than, in the case of World Color and its
Subsidiaries, sales of the Capital Stock of or any assets of Unrestricted
Subsidiaries which constitute Asset Sales), Consolidated Cash Flow of such
person and its Subsidiaries for such period shall be reduced by an amount equal
to the Consolidated Cash Flow (if positive), to the extent such Consolidated
Cash Flow was included in computing Consolidated Cash Flow, directly
attributable to the assets or Capital Stock which are the subject of such Asset
Sales for such period or increased by an amount equal to the Consolidated Cash
Flow (if negative), to the extent such Consolidated Cash Flow was included in
computing Consolidated Cash Flow, directly attributable thereto for such period
and (b) such person or any of its Subsidiaries (other than, in the case of World
Color and its Subsidiaries, Unrestricted Subsidiaries) has made any acquisition
of assets or Capital Stock (occurring by merger or otherwise), including,
without limitation, any acquisition of assets or Capital Stock occurring in
connection with a transaction causing a calculation to be made hereunder,
Consolidated Cash Flow of such person and its Subsidiaries shall be calculated
(notwithstanding clause (3) of the definition of Consolidated Net Income)
excluding any expenses which, in the good faith estimate of management, will be
eliminated as a result of such acquisition, as if such acquisition of assets or
Capital Stock (including the incurrence of any Indebtedness in connection with
any such acquisition and the application of the proceeds thereof) took place on
the first day of such period.
"CONSOLIDATED FIXED CHARGES" means, with respect to any person for any
period, the (1) consolidated Interest Expense, whether paid or accrued, to the
extent such expense was deducted in computing Adjusted Consolidated Net Income
(including amortization of original issue discount and non-cash interest
payments) and (2) amount of all cash dividend payments on all series of
preferred stock, other than cash dividends on preferred stock of Unrestricted
Subsidiaries and cash dividends paid to such person or its Subsidiaries (other
than in the case of World Color and its Restricted Subsidiaries, Unrestricted
Subsidiaries); PROVIDED that if, during such period (a) such person or any of
its Subsidiaries shall have made any Asset Sales (other than in the case of
World Color and its Subsidiaries, sales of the Capital Stock of or any assets of
Unrestricted Subsidiaries which constitute Asset Sales), Consolidated Fixed
Charges of such person and its Subsidiaries for such period shall be reduced by
an amount equal to the Consolidated Fixed Charges directly attributable to the
assets which are the subject of such Asset Sales for such period and (b) such
person or any of its Subsidiaries (other than in the case of World Color and its
Subsidiaries, Unrestricted Subsidiaries) has made any acquisition of assets or
Capital Stock (occurring by merger or otherwise), including, without limitation,
any acquisition of assets or Capital Stock occurring in connection with the
transaction causing a calculation to be made hereunder, Consolidated Fixed
Charges of such person and its Subsidiaries shall be calculated on a pro forma
basis as if such acquisition of assets or Capital Stock (including the
incurrence of any Indebtedness in connection with any such acquisition and the
application of the proceeds thereof) took place on the first day of such period;
PROVIDED, HOWEVER, that with respect to World Color, its Consolidated Fixed
Charges for any period shall be calculated as if the Refinancing had occurred at
the beginning of such period.
"CONSOLIDATED NET INCOME" means, with respect to any person for any period,
the aggregate net income (or loss) of such person and its Subsidiaries (other
than, in the case of World Color and its Subsidiaries, Unrestricted
Subsidiaries) for such period, on a consolidated basis, determined in accordance
70
<PAGE>
with GAAP; PROVIDED that (1) the net income (or loss) of any person which is not
a Subsidiary or is accounted for by the equity method of accounting shall be
included only to the extent of the amount of cash dividends or distributions
(including tax sharing payments and loans or advances which are junior in right
of payment to the notes and have a longer Average Life than the notes) paid to
the referent person or a Subsidiary of the referent person (other than, in the
case of World Color and its Restricted Subsidiaries, Unrestricted Subsidiaries),
(2) except to the extent includible pursuant to the foregoing clause (1), the
income (or loss) of any person accrued prior to the date it becomes a Subsidiary
of such person or is merged into or consolidated with such person or any of its
Subsidiaries or that person's assets are acquired by such person or any of its
Subsidiaries shall be excluded, (3) any gains or losses attributable to Asset
Sales net of related tax costs or tax benefits, as the case may be, shall be
excluded, (4) after-tax items classified as extraordinary gains or losses shall
be excluded and (5) the cumulative effect of changes in accounting principles
shall be excluded.
"CONSOLIDATED NET WORTH" means, at any date of determination, the sum of
the Capital Stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) of the referent person and its Subsidiaries on a
consolidated basis, less amounts attributable to Redeemable Stock, each item to
be determined in conformity with GAAP (excluding the effects of (1) foreign
currency exchange adjustments under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 52 and (2) the application of
Accounting Principles Board Opinions Nos. 16 and 17 and related
interpretations).
"CREDIT AGENT" means the agent or representative of the lenders under the
Credit Facility.
"CREDIT FACILITY" means the Second Amended and Restated Credit Agreement,
dated as of June 6, 1996, as amended, by and among World Color, certain
financial institutions parties thereto and Bankers Trust Company, as
Administrative Agent, BA Securities, Inc., as Syndication Agent, and Citibank,
N.A., as Documentation Agent, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, supplemented, renewed,
refunded, refinanced, restructured or replaced from time to time (including
without limitation, any extension of maturity thereof, or the inclusion of
additional borrowers or guarantors thereunder).
"CURRENCY AGREEMENT" means the obligations of any person pursuant to any
foreign exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such person or any of its subsidiaries against
fluctuations in currency values.
"EQUITY INTERESTS" means Capital Stock, warrants, options or other rights
to acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means Indebtedness of World Color and its
Subsidiaries (other than the Credit Facility) in existence on the Issue Date,
until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means the ratio of Consolidated Cash Flow to
Consolidated Fixed Charges.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board ("FASB") or in such other statements by
such other entity as approved by a significant segment of the accounting
profession which are in effect in the United States at the time when and for the
period as to which such accounting principles are to be applied.
"HOLDER" means a person in whose name a note is registered. The Holder of a
note will be treated as the owner of such note for all purposes.
"INDEBTEDNESS" means, with respect to any person, any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or
71
<PAGE>
letters of credit (or reimbursement obligations with respect thereto) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to financing leases), if and to the extent any of
the foregoing indebtedness would appear as a liability upon a balance sheet of
such person prepared in accordance with GAAP (except that any such balance that
constitutes a trade payable and/or an accrued liability arising in the ordinary
course of business shall not be considered Indebtedness), and shall also
include, to the extent not otherwise included, any Capital Lease Obligations,
the maximum fixed repurchase price of any Redeemable Stock, indebtedness secured
by a Lien to which the property or assets owned or held by such person is
subject, whether or not the obligations secured thereby shall have been assumed,
guarantees of items that would be included within this definition to the extent
of such guarantees (exclusive of whether such items would appear upon such
balance sheet), and net liabilities in respect of Currency Agreements and
Interest Rate Agreements. For purposes of the preceding sentence, the maximum
fixed repurchase price of any Redeemable Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture,
PROVIDED that if such Redeemable Stock is not then permitted to be repurchased,
the repurchase price shall be the book value of such Redeemable Stock. The
amount of Indebtedness of any person at any date shall be without duplication
(1) the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any such contingent obligations at
such date and (2) in the case of Indebtedness of others secured by a Lien to
which the property or assets owned or held by such person is subject, the lesser
of the fair market value at such date of any asset subject to a Lien securing
the Indebtedness of others and the amount of the Indebtedness secured.
"INTEREST EXPENSE" means, with respect to any person, for any period, the
aggregate amount of interest in respect of Indebtedness (including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agreements, and excluding amortization of deferred
finance fees and interest recorded as accretion in the carrying value of
liabilities (other than Indebtedness) recorded at a discounted value) and all
but the principal component of rentals in respect of Capital Lease Obligations,
paid, accrued or scheduled to be paid or accrued by such person during such
period.
"INTEREST RATE AGREEMENTS" means the obligations of any person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such person or any of its
subsidiaries against fluctuations in interest rates.
"INVESTMENT" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other person. For the
purposes of the "Limitations on Restricted Payments" and "Investments in
Unrestricted Subsidiaries" covenants described above, (1) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (2) any property
transferred to or from an Unrestricted Subsidiary shall be valued at fair market
value at the time of such transfer, in each case as determined by the Board of
Directors of World Color in good faith.
"ISSUE DATE" means the date of first issuance of the notes under the
indenture.
"LIEN" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or
72
<PAGE>
give any security interest in and any filing or other agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"NET PROCEEDS" means, with respect to any Asset Sale, the aggregate amount
of U.S. Legal Tender (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, and including
any amounts received as disbursements or withdrawals from any escrow or similar
account established in connection with any such Asset Sale, but, in each such
case, only as and when so received) received by World Color or any of its
Subsidiaries in respect of such Asset Sale, net of (1) the cash expenses of such
sale (including, without limitation, the payment of principal, premium, if any,
and interest on Indebtedness required to be paid as a result of such Asset Sale
(other than pursuant to the "Limitations on Asset Sales" covenant) and legal,
accounting and investment banking fees and sales commissions), (2) taxes paid or
payable as a result thereof, (3) any portion of cash proceeds which World Color
determines in good faith should be reserved for post-closing adjustments, it
being understood and agreed that on the day that all such post-closing
adjustments have been determined, the amount (if any) by which the reserved
amount in respect of such Asset Sale exceeds the actual post closing adjustments
payable by World Color or any of its Subsidiaries shall constitute Net Proceeds
on such date and (4) any relocation expenses and pension, severance and shutdown
costs incurred as a result thereof.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PERMITTED INVESTMENTS" means:
(1) cash or Cash Equivalents;
(2) investments that are in persons at least a majority of whose
revenues are derived from commercial printing or prepress services or
ancillary operations related thereto and that have the purpose of furthering
the business operations of World Color;
(3) advances to employees not in excess of $5.0 million at any one time
outstanding;
(4) accounts receivable created or acquired in the ordinary course of
business;
(5) obligations or shares of stock received in connection with any good
faith settlement or bankruptcy proceeding involving a claim relating to a
Permitted Investment;
(6) evidences of Indebtedness, obligations or other investments not
exceeding $5.0 million in the aggregate held at any one time by World Color
or any of its Restricted Subsidiaries; and
(7) Currency Agreements and other similar agreements designed to hedge
against fluctuations in foreign exchange rates entered into in the ordinary
course of business in connection with the operation of World Color's or its
Subsidiaries businesses.
"PERMITTED LIENS" means:
(1) Liens for taxes, assessments, governmental charges or claims which
are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have
been made therefor;
(2) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate proceedings,
if a reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor;
73
<PAGE>
(3) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security;
(4) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return of money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);
(5) easements, rights-of-way, zoning or other restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
not interfering in any material respect with the business of World Color or
any of its Subsidiaries incurred in the ordinary course of business;
(6) Liens (including extensions, renewals and replacements thereof) upon
real or tangible personal property acquired after the date of the indenture,
PROVIDED, that (a) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance or
refund, the cost (including the cost of construction) of the item of
property subject thereto, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such cost, (c) such Lien does
not extend to or cover any other property other than such item of property
and any improvements on such item and (d) the incurrence of such
Indebtedness is permitted by the "Incurrence of Indebtedness" covenant;
(7) Liens securing reimbursement obligations with respect to letters of
credit which encumber documents and other property relating to such letters
of credit and the products and proceeds thereof;
(8) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(9) judgment and attachment Liens not giving rise to an Event of
Default;
(10) leases or subleases granted to others not interfering in any
material respect with the business of World Color or any of its Restricted
Subsidiaries;
(11) Liens encumbering customary initial deposits and margin deposits,
and other Liens incurred in the ordinary course of business and which are
within the general parameters customary in the industry, in each case
securing Indebtedness under Interest Rate Agreements and Currency
Agreements;
(12) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of World Color
or its Subsidiaries;
(13) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by World Color or any of its Subsidiaries in the
ordinary course of business of World Color and its Subsidiaries;
(14) any interest or title of a lessor in the property subject to any
Capital Lease Obligation or operating lease;
(15) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(16) Liens permitted by the Credit Facility as in effect on the Issue
Date;
(17) Liens securing Indebtedness described in clause (14) of the second
paragraph of the "Incurrence of Indebtedness" covenant;
(18) Liens securing Senior Indebtedness;
(19) Liens between World Color and any Restricted Subsidiary or between
Restricted Subsidiaries;
(20) Liens securing letters of credit in an amount not to exceed $10.0
million in the aggregate at any one time;
74
<PAGE>
(21) additional Liens at any one time outstanding with respect to assets
of World Color and its Restricted Subsidiaries the fair market value of
which does not exceed $10.0 million on the date of determination;
(22) Liens existing on the Issue Date and any extensions, renewals or
replacements thereof; and
(23) the Lien granted to the Trustee under the Indenture and any
substantially equivalent Lien granted to any trustee or similar institution
under any indenture for Indebtedness permitted by the terms of the
Indenture.
"REDEEMABLE STOCK" means any Equity Interest which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the notes), or upon the happening of
any event, matures or is mandatorily redeemable, in whole or in part, prior to
the stated maturity of the notes, or is, by its terms or upon the happening of
any event, redeemable at the option of the Holder thereof, in whole or in part,
at any time prior to the stated maturity of the notes, except for Equity
Interests of World Color issued to present and former members of management of
World Color and its Subsidiaries and certain of their former affiliates pursuant
to agreements in effect on the Issue Date and Equity Interests of World Color
issued after the Issue Date to members of management of World Color and its
Subsidiaries pursuant to agreements containing provisions for the repurchase of
such Equity Interests upon death, disability or termination of employment of
such persons which are substantially identical to those contained in the
agreements in effect on the Issue Date.
"RESTRICTED INVESTMENT" means any investment in, capital contribution, loan
or advance to or purchase of Equity Interests in, any person that is not a
wholly owned Subsidiary, or other transfer of assets to Subsidiaries or
Affiliates that are not wholly owned (other than any such other transfer of
assets to Subsidiaries or Affiliates that are not wholly owned in transactions
the terms of which are fair and reasonable to the transferor and are at least as
favorable as the terms that could be obtained by the transferor in a comparable
transaction made on an arms' length basis between unaffiliated parties (1) as
conclusively determined, for any such transfer involving aggregate consideration
in excess of $5.0 million, by (a) a majority of the directors of the transferor
that are unaffiliated with the transferee or, if there are no such directors, by
a majority of the directors of the transferor or (b) an opinion of a nationally
recognized investment banking firm stating that such transaction is fair to the
transferor from a financial point of view, and (2) otherwise as conclusively
determined by World Color), except in each case for Permitted Investments and
any such Investments existing on the Issue Date.
"RESTRICTED SUBSIDIARY" means any Subsidiary of World Color which at the
time of determination is not an Unrestricted Subsidiary. The Board of Directors
of World Color may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if, immediately after giving effect to such designation, World
Color could incur at least $1.00 of additional Indebtedness pursuant to the
first paragraph of the "Incurrence of Indebtedness" covenant (without giving
effect to clauses (1) through (17) of the second paragraph thereof), on a pro
forma basis taking into account such designation.
"SUBSIDIARY" of any person means any entity of which shares of the Capital
Stock or other equity interests (including partnership interests) entitled to
cast at least a majority of the votes that may be cast by all shares or equity
interest having ordinary voting power for the election of directors or other
governing body of such entity are owned by such person directly and/or through
one or more Subsidiaries.
"TRANSFERS" means (1) any payment of interest on Indebtedness, dividends or
repayments of loans or advances and (2) any other transfers of assets, in each
case from an Unrestricted Subsidiary to World Color or any of its Restricted
Subsidiaries.
"UNRESTRICTED SUBSIDIARY" means (1) any Subsidiary of World Color which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of World Color, as PROVIDED below) and (2) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of World Color may designate
any Subsidiary of World Color (including any newly acquired or newly formed
75
<PAGE>
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Lien on, any property of, any other
Subsidiary of World Color which is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED that (1) World Color certifies that such designation
complies with the covenants described above under "Limitations on Restricted
Payments" and "Investments in Unrestricted Subsidiaries" and (2) each Subsidiary
to be so designated and each of its Subsidiaries has not at the time of
designation, and does not thereafter, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable with respect to any Indebtedness
pursuant to which the lender has recourse to any of the assets of World Color or
any of its Restricted Subsidiaries. The Board of Directors of World Color may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED,
that immediately after giving effect to such designation, World Color could
incur at least $1.00 of additional Indebtedness pursuant to the "Incurrence of
Indebtedness" covenant (without giving effect to clauses (1) through (17) of the
second paragraph thereof) on a pro forma basis, giving effect to such
designation.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The notes will be in the form of one or more registered global notes without
interest coupons (collectively, the "Global Notes"). Upon issuance, the Global
Notes will be deposited with the trustee, as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or its
nominee, in each case for credit to the accounts of DTC's Direct and Indirect
participants (as defined below).
Transfer of beneficial interests in any Global Notes will be subject to the
applicable rules and procedures of DTC and its Direct or Indirect Participants
(including, if applicable, those of Euroclear and CEDEL), which may change from
time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be exchanged
for notes in certificated form in certain limited circumstances. See "--Transfer
of Interests in Global Notes for Certificated Notes."
Initially, the Trustee will act as Paying Agent and Registrar. The notes may
be presented for registration of transfer and exchange at the offices of the
Registrar.
DEPOSITARY PROCEDURES
DTC has advised World Color that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers (including the initial purchasers), banks, trust
companies, clearing corporations and certain other organizations, including
Euroclear and Cedel. Access to DTC's system is also available to other entities
that clear through or maintain a direct or indirect custodial relationship with
a Direct Participant (collectively, the "Indirect Participants"). DTC may hold
securities beneficially owned by other persons only through the Direct
Participants or Indirect Participants and such other person's ownership interest
and transfer of ownership interest will be recorded only on the records of the
Direct Participant and/or Indirect Participant, and not on the records
maintained by DTC.
DTC has also advised World Color that, pursuant to DTC's procedures, DTC
will credit the accounts of the Direct Participants designated by the Initial
Purchasers with portions of the principal amount of the Global Notes allocated
by the Initial Purchasers to such Direct Participants, and (ii) DTC will
maintain records of the ownership interests of such Direct Participants in the
Global Notes and the transfer of ownership interests by and between Direct
Participants. DTC will not maintain records of the ownership interests of, or
the transfer of ownership interests by and between, Indirect Participants or
other owners of beneficial interest in the Global Notes. Direct Participants and
Indirect Participants must maintain their
76
<PAGE>
own records of the ownership interests of, and the transfer of ownership
interests by and between, Indirect Participants and other owners of beneficial
interests in the Global Notes.
The laws of some states require that certain persons take physical delivery
in definitive, certificated form of securities that they own. This may limit or
curtail the ability to transfer beneficial interest in a Global Note to such
persons. Because DTC can act only on behalf of Direct Participants, which in
turn act on behalf of Indirect Participants and others, the ability of a person
having a beneficial interest in a Global Note to pledge such interest to persons
or entities that are not Direct Participants in DTC, or to otherwise take action
in respect of such interests, may be affected by the lack of physical
certificates evidencing such interests. For certain other restrictions on the
transferability of the Notes see "-- Transfers of Interests in Global Notes for
Certificated Notes."
Except as described in "--Transfers of Interests in Global Notes for
Certificated Notes," owners of beneficial interests in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
holders thereof under the indenture for any purpose.
Under the terms of the Indenture, World Color and the trustee will treat the
persons in whose names the Notes are registered (including notes represented by
Global Notes) as the owners thereof for the purpose of receiving payments and
for any and all other purposes whatsoever. Payments in respect of the principal,
premium, Liquidated Damages, if any, and interest on Global Notes registered in
the name of DTC or its nominee will be payable by the Trustee to DTC or its
nominee as the registered holder under the indenture. Consequently, neither
World Color or the Trustee nor any agent of World Color or the trustee has or
will have any responsibility or liability for (i) any aspect of DTC's records or
any Direct Participant's or Indirect Participant's records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising, or reviewing any of DTC's records or any Direct
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in any Global Note or (ii) any other matter relating to the
actions and practices of DTC or any of its Direct Participants or Indirect
Participants.
DTC has advised World Color that its current payment practice (for payments
of principal, interest and the like) with respect to securities such as the
notes is to credit the accounts of the relevant Direct Participants with such
payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Notes as shown on
DTC's records. Payments by Direct Participants and Indirect Participants to the
beneficial owners of the Notes will be governed by standing instructions and
customary practices between them and will not be the responsibility of DTC, the
trustee or World Color. Neither World Color nor the trustee will be liable for
any delay by DTC or its Direct Participants or Indirect Participants in
identifying the beneficial owners of the notes, and World Color and the trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee as the registered owner of the notes for all purposes.
The Global Notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants (other than Indirect Participants
who hold an interest in the notes through Euroclear or CEDEL) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of such Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interests in the notes through Euroclear and CEDEL will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the Notes
described herein, cross-market transfers between Direct Participants in DTC, on
the one hand, and Indirect Participants who hold interests in the Notes through
Euroclear or CEDEL, on the other hand, will be effected by Euroclear or CEDEL's
respective Nominee through DTC in accordance with DTC's rules on behalf of
Euroclear or
77
<PAGE>
CEDEL; HOWEVER, delivery of instructions relating to cross-market transactions
must be made directly to Euroclear or CEDEL, as the case may be, by the
counterparty in accordance with the rules and procedures of Euroclear or CEDEL
and within their established deadlines (Brussels time for Euroclear and UK time
for CEDEL). Indirect Participants who hold interests in the Notes through
Euroclear and CEDEL may not deliver instructions directly to Euroclear's or
CEDEL's Nominee. Euroclear or CEDEL will, if the transaction meets its
settlement requirements, deliver instructions to its respective Nominee to
deliver or receive interests on Euroclear's or CEDEL's behalf in the relevant
Global Note in DTC, and make or receive payment in accordance with normal
procedures for same-day fund settlement applicable to DTC.
Because of time zone differences, the securities accounts of an Indirect
Participant who holds an interest in the notes through Euroclear or CEDEL
purchasing an interest in a Global Note from a Direct Participant in DTC will be
credited, and any such crediting will be reported to Euroclear or CEDEL during
the European business day immediately following the settlement date of DTC in
New York. Although recorded in DTC's accounting records as of DTC's settlement
date in New York, Euroclear and CEDEL customers will not have access to the cash
amount credited to their accounts as a result of a sale of an interest in a Reg
S Permanent Global Note to a DTC Participant until the European business day for
Euroclear or CEDEL immediately following DTC's settlement date.
DTC has advised World Color that it will take an action permitted to be
taken by a holder of Notes only at the direction of one or more Direct
Participants to whose account interests in the Global Notes are credited and
only in respect of such portion of the aggregate principal amount of the notes
as to which such Direct Participant or Direct Participants has or have given
direction. However, if there is an Event of Default under the notes, DTC
reserves the right to exchange Global Notes (without the direction of one or
more of its Direct Participants) for legended Notes in certificated form, and to
distribute such certificated forms of Notes to its Direct Participants. See
"--Transfers of Interests in Global Notes for Certificated Notes."
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that World Color
believes to be reliable, but World Color takes no responsibility for the
accuracy thereof.
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global Note may be exchanged for definitive Notes in registered,
certificated form without interest coupons ("Certificated Notes") if (i) DTC (x)
notifies World Color that it is unwilling or unable to continue as depositary
for the Global Notes or (y) has ceased to be a clearing agency registered under
the Exchange Act, and, in either case, World Color thereupon fails to appoint a
successor depositary within 90 days, (ii) World Color, at its option, notifies
the trustee in writing that it elects to cause the issuance of Certificated
Notes or (iii) there shall have occurred and be continuing a Default or an Event
of Default with respect to the notes. In any such case, World Color will notify
the trustee in writing that, upon surrender by the Direct and Indirect
Participants of their interest in such Global Note, Certificated Notes will be
issued to each person that such Direct and Indirect Participants and the DTC
identify as being the beneficial owner of the related notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to DTC, by such
Direct Participant (for itself or on behalf of an Indirect Participant), to the
trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interests in any Global Note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such Direct or Indirect Participants (in accordance with DTC's
customary procedures).
Neither World Color nor the Trustee will be liable for any delay by the
holder of the Global Notes or DTC in identifying the beneficial owners of Notes,
and World Color and the Trustee may conclusively rely on, and will be protected
in relying on, instructions from the holder of the Global Note or DTC for all
purposes.
78
<PAGE>
SAME DAY SETTLEMENT AND PAYMENT
The indenture will require that payments in respect of the notes represented
by the Global Notes (including principal, premium, if any, interest and
Liquidated Damages, if any) be made by wire transfer of immediately available
same day funds to the accounts specified by the holder of interests in such
Global Note. With respect to Certificated Notes, World Color will make all
payments of principal, premium, if any, interest and Liquidated Damages, if any,
by wire transfer of immediately available same day funds to the accounts
specified by the holders thereof or, if no such account is specified, by mailing
a check to each such holder's registered address. World Color expects that
secondary trading in the Certificated Notes will also be settled in immediately
available funds.
79
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material federal income tax
considerations relevant to the exchange of unregistered notes for registered
notes. The discussion is based upon the Internal Revenue Code of 1986, as
amended, Treasury regulations, Internal Revenue Service rulings and
pronouncements, and judicial decisions now in effect, all of which are subject
to change at any time by legislative, judicial or administrative action. Any
such changes may be applied retroactively in a manner that could adversely
affect a holder of the registered notes. The description does not consider the
effect of any applicable foreign, state, local or other tax laws or estate or
gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING UNREGISTERED NOTES FOR REGISTERED NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF UNREGISTERED NOTES FOR REGISTERED NOTES
The exchange of unregistered notes for registered notes pursuant to the
exchange offer should not constitute a sale or an exchange for federal income
tax purposes. The holder will have a basis for the registered notes equal to the
basis of the unregistered notes and the holder's holding period for the
registered notes will include the period during which the unregistered notes
were held. Accordingly, such exchange should have no federal income tax
consequences to holders of unregistered notes.
80
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes for its own account in
exchange for unregistered notes pursuant to the exchange offer, where such
unregistered notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such registered
notes. This prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of registered notes
received in exchange for unregistered notes where such unregistered notes were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, for a period of 180 days after the consummation of
the exchange offer, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1999, all dealers effecting transactions in the
registered notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of registered notes
by broker-dealers. Registered notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the registered notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such registered notes. Any broker-dealer
that resells registered notes that were received by it for its own account
pursuant to the exchange offer and any broker or dealer that participates in a
distribution of such registered notes may be deemed to be an "underwriter"
within the meaning of the Securities Act of 1933, and any profit on any such
resale of registered notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act of 1933. The letter of transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act of
1933.
For a period of 180 days after the registration statement is declared
effective, the Company will promptly send additional copies of this prospectus
and any amendment or supplement to this prospectus to any broker-dealer that
requests such documents in the letter of transmittal or otherwise. The Company
has agreed to pay all expenses incident to the exchange offer (including the
expenses of one counsel for the holders of the notes) other than commissions or
concessions of any broker-dealers and will indemnify holders of the unregistered
notes (including any broker-dealers) against certain liabilities, including
certain liabilities under the Securities Act of 1933.
81
<PAGE>
LEGAL MATTERS
The validity of the registered notes will be passed upon for us by Latham &
Watkins, New York, New York. Certain partners of Latham & Watkins, members of
their families, related persons and others have an indirect interest, through
limited partnerships, in less than 1% of the common stock of World Color. Such
persons do not have the power to vote or dispose of such shares of common stock.
In addition, Latham & Watkins has in the past provided, and may continue to
provide, legal services to KKR and its affiliates.
EXPERTS
The consolidated financial statements as of December 29, 1996 and December
28, 1997 and for each of the three years in the period ended December 28, 1997
included in this prospectus and the related financial statement schedule
incorporated by reference from World Color's Annual Report on Form 10-K for the
year ended December 28, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports which are included and
incorporated by reference herein, and have been so included and incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
82
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PAGE
---------
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 27, 1998 AND FOR THE NINE MONTHS ENDED
SEPTEMBER 28, 1997 AND SEPTEMBER 27, 1998 (UNAUDITED)
Condensed Consolidated Balance Sheet (Unaudited) as of September 27, 1998................................ F-2
Condensed Consolidated Statements of Operations (Unaudited) for the Nine Months Ended September 28, 1997
and September 27, 1998................................................................................. F-3
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 28, 1997
and September 27, 1998................................................................................. F-4
Notes to Condensed Consolidated Financial Statements (Unaudited)......................................... F-5
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28,
1997
Independent Auditors' Report............................................................................. F-7
Consolidated Balance Sheets as of December 29, 1996 and December 28, 1997................................ F-8
Consolidated Statements of Operations for the Years Ended December 31, 1995, December 29, 1996 and
December 28, 1997...................................................................................... F-9
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1995, December 29, 1996
and December 28, 1997.................................................................................. F-10
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, December 29, 1996 and
December 28, 1997...................................................................................... F-11
Notes to Consolidated Financial Statements............................................................... F-12
</TABLE>
F-1
<PAGE>
WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER
27,
1998
------------
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................... $ 23,621
Accounts receivable--net........................ 213,785
Inventories..................................... 329,478
Deferred income taxes........................... 16,473
Other........................................... 46,350
------------
Total current assets........................ 629,707
Property, plant and equipment, at cost.......... 1,611,854
Accumulated depreciation and amortization....... (698,976 )
------------
Property, plant and equipment--net............ 912,878
Goodwill--net................................... 668,580
Other........................................... 92,041
------------
TOTAL ASSETS...................................... $ 2,303,206
------------
------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses........... $ 343,626
Current maturities of long-term debt............ 37,881
------------
Total current liabilities................... 381,507
Long-term debt.................................. 1,077,961
Deferred income taxes........................... 101,331
Other long-term liabilities..................... 102,018
------------
Total liabilities........................... 1,662,817
------------
Stockholders' Equity:
Common stock, $.01 par value--shares authorized,
100,000,000 at September 27, 1998; shares
outstanding, 38,589,142 at September 27,
1998.......................................... 386
Additional paid-in capital...................... 715,060
Accumulated deficit............................. (66,923 )
Treasury stock, at cost: 185,100 shares......... (5,609 )
Unamortized restricted stock compensation....... (2,525 )
------------
Total stockholders' equity.................. 640,389
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $ 2,303,206
------------
------------
</TABLE>
See notes to condensed consolidated financial statements.
F-2
<PAGE>
WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTH PERIODS ENDED
----------------------------
SEPTEMBER 28, SEPTEMBER 27,
1997 1998
------------- -------------
<S> <C> <C>
NET SALES...................................................................... $ 1,441,266 $ 1,732,890
COST OF SALES.................................................................. 1,179,198 1,424,069
------------- -------------
Gross profit............................................................... 262,068 308,821
Selling, general and administrative expenses................................... 138,287 161,202
------------- -------------
OPERATING INCOME............................................................... 123,781 147,619
INTEREST EXPENSE AND SECURITIZATION FEES....................................... 61,099 65,368
------------- -------------
INCOME BEFORE INCOME TAXES..................................................... 62,682 82,251
INCOME TAX PROVISION........................................................... 26,326 34,134
------------- -------------
NET INCOME..................................................................... $ 36,356 $ 48,117
------------- -------------
------------- -------------
Net income per common share--basic............................................. $ 1.08 $ 1.25
Net income per common share--diluted........................................... $ 1.05 $ 1.21
</TABLE>
See notes to condensed consolidated financial statements.
F-3
<PAGE>
WORLD COLOR PRESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTH PERIODS ENDED
----------------------------
SEPTEMBER 28, SEPTEMBER 27,
1997 1998
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income................................................................... $ 36,356 $ 48,117
Adjustments to reconcile net income to net cash flows provided by operating
activities:
Depreciation and amortization.............................................. 100,498 104,848
Deferred income tax provision.............................................. 9,402 11,762
Changes in operating assets and liabilities:
Proceeds from sale of accounts receivable................................ 170,000 --
Other changes in accounts receivable--net................................ (21,787) (606)
Inventories.............................................................. (60,237) (112,078)
Accounts payable and accrued expenses.................................... (32,930) (3,009)
Other assets and liabilities--net........................................ (49,545) (68,709)
------------- -------------
Net cash provided by (used in) operating activities.................... 151,757 (19,675)
------------- -------------
INVESTING ACTIVITIES:
Additions to property, plant and equipment--net.............................. (72,247) (88,055)
Acquisitions of businesses, net of cash acquired............................. (172,539) (190,095)
------------- -------------
Net cash used in investing activities.................................. (244,786) (278,150)
------------- -------------
FINANCING ACTIVITIES:
Net borrowings on debt....................................................... 83,966 291,449
Proceeds from issuance of common stock....................................... 83 1,989
Repurchases of common stock.................................................. -- (9,668)
------------- -------------
Net cash provided by financing activities.............................. 84,049 283,770
------------- -------------
DECREASE IN CASH AND CASH EQUIVALENTS.......................................... (8,980) (14,055)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD................................. 33,182 37,676
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD....................................... $ 24,202 $ 23,621
------------- -------------
------------- -------------
</TABLE>
See notes to condensed consolidated financial statements.
F-4
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated interim financial statements have
been prepared by World Color Press, Inc. (along with its subsidiaries, the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission and reflect normal and recurring adjustments, which are, in the
opinion of the Company, considered necessary for a fair presentation. As
permitted by these regulations, these statements do not include all information
required by generally accepted accounting principles to be included in an annual
set of financial statements, however, the Company believes that the disclosures
made are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in the
Company's latest Annual Report on Form 10-K.
During the nine month period ended September 27, 1998, the Company acquired
certain businesses whose contributions were not significant to the Company's
results of operations for the period presented, nor are they expected to have a
material effect on the Company's results on a continuing basis.
2. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 27,
1998
-------------
<S> <C>
Work-in-process.................................................... $ 187,298
Raw materials...................................................... 142,180
-------------
Total............................................................ $ 329,478
-------------
-------------
</TABLE>
3. NET INCOME PER COMMON SHARE
The following represents the weighted average common and common equivalent
shares utilized to calculate net income per common share - basic and diluted:
<TABLE>
<CAPTION>
NINE MONTHS
----------------------------
1997 1998
------------- -------------
<S> <C> <C>
Weighted average common shares outstanding..................... 33,748,531 38,365,261
Common equivalent shares:
Stock options................................................ 847,870 1,037,245
Convertible debt............................................. -- 3,660,477
------------- -------------
Weighted average common and common equivalent shares
outstanding................................................... 34,596,401 43,062,983
------------- -------------
------------- -------------
</TABLE>
Interest charges on convertible debt, net of tax, of $4,172 have been added
back to net income for the calculation of net income per common share - diluted
for the nine month period ended September 27, 1998.
Options to purchase 25,000 shares of common stock were not included in the
computation of net income per common share - diluted for the nine month period
ended September 27, 1998 because the exercise price of the options was greater
than the average market price of the common shares.
F-5
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4. SALE-LEASEBACK OF EQUIPMENT
In July 1998, the Company entered into an agreement for the sale and
leaseback of certain printing equipment for which it received approximately
$60,700 of proceeds. The proceeds have been reflected in additions to property,
plant and equipment--net in the condensed consolidated statements of cash flows
for the nine months ended September 27, 1998. The lease, which expires in July
2010, has been classified as an operating lease.
In October 1998, the Company received proceeds of approximately $27,800 for
the sale and leaseback of additional equipment.
5. TREASURY STOCK
In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of the Company's common stock. The repurchase of shares
commenced in August 1998 and may occur over the next three years in the open
market at prevailing market prices or in negotiated transactions, depending on
market conditions. The shares will be repurchased to satisfy commitments under
certain employee benefit plans. The Company reissues treasury shares using the
weighted average cost method. The excess of repurchase cost over reissuance
price is applied to the Company's accumulated deficit.
F-6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
WORLD COLOR PRESS, INC.:
We have audited the accompanying consolidated balance sheets of World Color
Press, Inc. and subsidiaries as of December 29, 1996 and December 28, 1997 and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 28, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of World Color Press, Inc. and
subsidiaries at December 29, 1996 and December 28, 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 28, 1997 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
February 4, 1998
F-7
<PAGE>
WORLD COLOR PRESS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 33,182 $ 37,676
Accounts receivable--net of allowances for doubtful accounts of $8,476 and $9,287,
respectively...................................................................... 311,478 166,747
Inventories......................................................................... 140,160 204,889
Deferred income taxes............................................................... 32,944 31,297
Other............................................................................... 24,843 33,625
------------ ------------
Total current assets.............................................................. 542,607 474,234
Property, plant and equipment--net.................................................. 818,157 857,195
Goodwill--net....................................................................... 423,880 535,416
Other............................................................................... 37,788 66,726
------------ ------------
TOTAL ASSETS.......................................................................... $ 1,822,432 $ 1,933,571
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 172,013 $ 163,710
Accrued expenses.................................................................... 134,854 132,802
Current maturities of long-term debt................................................ 8,672 8,970
------------ ------------
Total current liabilities......................................................... 315,539 305,482
Long-term debt...................................................................... 889,195 810,143
Deferred income taxes............................................................... 91,555 100,045
Other long-term liabilities......................................................... 111,211 118,132
------------ ------------
Total liabilities................................................................. 1,407,500 1,333,802
------------ ------------
Stockholders' equity:
Common stock, $.01 par value -authorized, 100,000,000 shares in 1996 and 1997;
shares outstanding, 33,744,531 in 1996 and 38,353,853 in 1997..................... 337 384
Additional paid-in capital.......................................................... 583,721 711,292
Accumulated deficit................................................................. (169,126) (111,907)
------------ ------------
Total stockholders' equity........................................................ 414,932 599,769
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................................ $ 1,822,432 $ 1,933,571
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-8
<PAGE>
WORLD COLOR PRESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES............................................................... $ 1,295,582 $ 1,641,412 $ 1,981,225
COST OF SALES........................................................... 1,074,785 1,349,130 1,613,938
------------ ------------ ------------
Gross profit........................................................ 220,797 292,282 367,287
------------ ------------ ------------
OTHER OPERATING EXPENSES:
Selling, general and administrative................................... 125,539 153,071 188,688
Streamlining charge................................................... 40,900 -- --
------------ ------------ ------------
Total other operating expenses...................................... 166,439 153,071 188,688
------------ ------------ ------------
OPERATING INCOME........................................................ 54,358 139,211 178,599
INTEREST EXPENSE AND SECURITIZATION FEES................................ 37,897 58,417 80,039
------------ ------------ ------------
INCOME BEFORE INCOME TAXES.............................................. 16,461 80,794 98,560
INCOME TAX PROVISION.................................................... 6,584 33,533 41,341
------------ ------------ ------------
NET INCOME.............................................................. $ 9,877 $ 47,261 $ 57,219
------------ ------------ ------------
------------ ------------ ------------
Net income per common share--basic...................................... $ 0.31 $ 1.40 $ 1.65
Net income per common share--diluted.................................... $ 0.29 $ 1.35 $ 1.60
</TABLE>
See notes to consolidated financial statements.
F-9
<PAGE>
WORLD COLOR PRESS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT
----------- ---------- ------------
<S> <C> <C> <C>
BALANCE, DECEMBER 25, 1994................................................... $ 257 $ 500,120 $ (226,264)
Net income................................................................. -- -- 9,877
Common stock issued........................................................ 65 74,711 --
----- ---------- ------------
BALANCE, DECEMBER 31, 1995................................................... 322 574,831 (216,387)
Net income................................................................. -- -- 47,261
Common stock issued........................................................ 15 8,890 --
----- ---------- ------------
BALANCE, DECEMBER 29, 1996................................................... 337 583,721 (169,126)
Net income................................................................. -- -- 57,219
Common stock issued........................................................ 47 127,571 --
----- ---------- ------------
BALANCE, DECEMBER 28, 1997................................................... $ 384 $ 711,292 $ (111,907)
----- ---------- ------------
----- ---------- ------------
</TABLE>
See notes to consolidated financial statements.
F-10
<PAGE>
WORLD COLOR PRESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................................................... $ 9,877 $ 47,261 $ 57,219
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization.......................................... 74,668 104,493 131,710
Streamlining charge.................................................... 40,900 -- --
Deferred income tax provision (benefit)................................ (766) 13,573 14,272
Changes in operating assets and liabilities:
Proceeds from sale of accounts receivable............................ -- -- 200,000
Other changes in accounts receivable--net............................ (31,097) (30,062) (13,812)
Inventories.......................................................... (51,083) 29,495 (53,936)
Accounts payable and accrued expenses................................ (7,650) 35,178 (43,577)
Other assets and liabilities--net.................................... (28,105) (53,355) (52,571)
----------- ----------- -----------
Net cash provided by operating activities.......................... 6,744 146,583 239,305
----------- ----------- -----------
INVESTING ACTIVITIES:
Additions to property, plant and equipment............................... (120,339) (70,639) (93,145)
Proceeds from sale of property, plant and equipment...................... 7,959 1,345 2,006
Acquisitions of businesses, net of cash acquired......................... (108,738) (167,283) (172,539)
----------- ----------- -----------
Net cash used in investing activities.............................. (221,118) (236,577) (263,678)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from borrowings................................................. 214,037 562,120 285,775
Payments on long-term debt............................................... (90,365) (456,751) (384,526)
Proceeds from issuance of common stock................................... 74,776 8,905 127,618
----------- ----------- -----------
Net cash provided by financing activities.......................... 198,448 114,274 28,867
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................... (15,926) 24,280 4,494
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................... 24,828 8,902 33,182
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR..................................... $ 8,902 $ 33,182 $ 37,676
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-11
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. ORGANIZATION
World Color Press, Inc. and subsidiaries (the "Company") specializes in the
production and distribution of data for customers in the magazine, catalog,
commercial, book, direct mail and directory markets.
Prior to November 20, 1995, the Company was wholly-owned by Printing
Holdings, L.P. ("PHLP"), a nonoperating affiliate of Kohlberg Kravis Roberts &
Co. L.P. ("KKR"), whose holdings consisted solely of the Company. On November
20, 1995, PHLP was merged with and into the Company, with the Company as the
survivor (the "Merger"). In connection with the Merger, PHLP partnership units
(aggregating approximately 65,500,000 units) were converted into approximately
32,200,000 shares of the Company's common stock, principally at a ratio of one
PHLP partnership unit to 0.50 shares of common stock. Accordingly, the common
stock and additional paid-in capital amounts presented on the consolidated
statements of stockholders' equity have been restated to reflect the change in
the Company's capital structure pursuant to the Merger. Also pursuant to the
Merger, the shares of the Company's common stock owned by PHLP immediately prior
to the Merger were canceled. On November 20, 1995, the Company also amended and
restated its Certificate of Incorporation increasing the authorized number of
shares of common stock to 100,000,000 shares and newly authorizing 50,000,000
shares of preferred stock, par value $0.01 per share. At December 29, 1996 and
December 28, 1997, there were no shares of preferred stock issued or
outstanding.
On January 25, 1996, 15,861,568 shares of the Company's common stock were
sold at $19 per share in an initial public equity offering (the "Offering"). All
of the shares in the Offering were sold by existing stockholders. The Company
did not receive any of the proceeds from the sale of the shares, except that
certain members of former management elected to participate in the Offering by
exercising certain stock options granted to them by the Company. An aggregate of
1,531,290 shares underlying such options were sold in the Offering, generating
proceeds to the Company of approximately $8,900. These proceeds were used to pay
expenses of the Offering and for general corporate purposes.
On October 8, 1997, the Company issued 4,600,000 common shares through a
public offering, resulting in net proceeds of approximately $127,600. These
proceeds were utilized to repay certain indebtedness under the Credit Agreement
(as defined in Note 2).
2. BUSINESS ACQUISITIONS
In March 1995, the Company acquired three companies that operate in the
commercial, digital and direct mail market sectors (the "1995 Acquisitions") for
an aggregate purchase price of approximately $108,000. In addition, the Company
liquidated approximately $44,500 of the acquired companies' indebtedness. The
1995 Acquisitions and liquidation of indebtedness were funded using proceeds
from the Company's credit facility. The 1995 Acquisitions were accounted for as
purchases and the consolidated financial statements include the results of their
operations from the respective acquisition dates. The excess of purchase cost
over estimated fair value of net assets acquired was approximately $81,700,
which is being amortized using the straight-line method over 35 years.
In June 1996, the Company acquired from Ringier A.G. all of the issued and
outstanding capital stock of Krueger Acquisition Corporation, including all of
the issued and outstanding capital stock of Ringier Holdings, Inc., Ringier
America, Inc., Krueger Ringier, Inc., Ringier Print U.S., Inc. and W.A. Krueger
Co.
F-12
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2. BUSINESS ACQUISITIONS (CONTINUED)
Olathe (collectively, "Ringier America"), for approximately $128,000 (the
"Acquisition"). In addition, the Company assumed approximately $287,000 of
Ringier America's indebtedness, of which approximately $281,000 was liquidated
upon consummation of the Acquisition. Ringier America was a leading diversified
commercial printer whose business included the printing of catalogs, magazines
and mass-market, racksize books. The Acquisition and liquidation of certain
indebtedness were funded using proceeds from acquisition term loans under the
Second Amended and Restated Credit Agreement dated as of June 6, 1996, as
amended (the "Credit Agreement"), among the Company and the lenders and agents
party thereto. The Acquisition was accounted for as a purchase and the
consolidated financial statements include the results of Ringier America's
operations from the acquisition date. The excess of purchase cost over estimated
fair value of net assets acquired was approximately $160,000, and is being
amortized using the straight-line method over 35 years.
During 1995 and 1996, the Company acquired certain other businesses whose
contributions were not significant to the Company's results of operations for
the periods presented, nor are they expected to have a material effect on the
Company's results on a continuing basis.
In 1997, the Company acquired two businesses operating in the book, magazine
and catalog markets. These companies were acquired for the aggregate purchase
price of approximately $173,000, primarily funded using proceeds from the
Company's credit facility. The Company liquidated approximately $20,000 of the
acquired companies' indebtedness. These acquisitions were accounted for as
purchases and the consolidated financial statements include the results of their
operations from the respective acquisition dates. The excess of purchase cost
over estimated fair value of net assets acquired was approximately $126,000 and
is being amortized using the straight-line method over 35 years.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of World Color Press, Inc. and its subsidiaries. Intercompany
transactions have been eliminated.
CASH AND CASH EQUIVALENTS--Cash equivalents consist of highly liquid
instruments with original maturities of three months or less.
ACCOUNTING PERIOD--The Company's fiscal year is the 52 or 53-week period
ending on the last Sunday in December. Fiscal year 1995 included 53 weeks.
Fiscal years 1996 and 1997 each included 52 weeks.
CONSOLIDATED STATEMENTS OF CASH FLOWS--During 1995, 1996 and 1997, the
Company borrowed and repaid $318,700, $407,200 and $563,200, respectively,
pursuant to the terms of credit agreements. See also Note 7. Such amounts have
not been reflected in the consolidated statements of cash flows because of the
short-term nature of the borrowings.
Cash paid for interest by the Company during the years 1995, 1996 and 1997
was $37,193, $54,037 and $75,738, respectively, net of capitalized interest of
$1,810, $252 and $941, respectively. Cash paid for taxes during the years 1995,
1996 and 1997 was $8,305, $18,068 and $28,266, respectively.
REVENUE RECOGNITION--In accordance with trade practice, sales are recognized
by the Company on the basis of production and service activity at the pro rata
billing value of work completed.
F-13
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES--The Company's raw materials of paper and ink and the related
raw material component of work-in-process are valued at the lower of cost, as
determined using the first-in, first-out ("FIFO") method, or market. The
remainder of the work-in-process is valued at the pro rata billing value of work
completed.
DEPRECIATION AND AMORTIZATION--Property, plant and equipment is stated at
cost. Depreciation is recorded principally on the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized on
the straight-line method over the lesser of the useful life of the improvement
or the lease term. Estimated useful lives used in computing depreciation and
amortization expense are 3 to 15 years for machinery and equipment and 15 to 40
years for buildings and leasehold improvements.
GOODWILL--Goodwill is amortized using the straight-line method primarily
over 35 years. Amortization of goodwill for the years 1995, 1996 and 1997 was
$7,275, $10,757 and $16,424, respectively, and is included in selling, general
and administrative expenses. Accumulated amortization of goodwill was $34,804
and $51,228 as of year-end 1996 and 1997, respectively.
NET INCOME PER COMMON SHARE--In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share," which establishes new standards for computing and
presenting net income per common share. The Company adopted SFAS No. 128 in the
fourth quarter 1997, and has calculated "net income per common share - basic"
based on the weighted average common shares outstanding during each period and
"net income per common share--diluted" based on the weighted average common and
dilutive common equivalent shares outstanding during each period. Weighted
average shares were adjusted to give effect to the change in the Company's
capital structure pursuant to the Merger and the Options Adjustments, as
described in Notes 1 and 11.
RECLASSIFICATIONS--Certain reclassifications have been made to prior years'
amounts to conform with the current presentation.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS--In March 1995, the
Financial Accounting Standards Board issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
SFAS No. 121 establishes the accounting for the impairment of long-lived assets,
certain identifiable intangibles and goodwill related to those assets to be held
and used and for long-lived assets and certain identifiable intangibles to be
disposed. The Company adopted SFAS No. 121 for the year ended December 29, 1996.
Accordingly, the Company evaluates long-lived assets, including goodwill,
periodically to determine if there has been an impairment of value by reviewing
current and estimated undiscounted cash flows. The carrying amounts of such
long-lived assets will be adjusted if and
F-14
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
when it has been determined that a permanent impairment has occurred. There were
no adjustments to the carrying value of these assets for 1996 or 1997.
ACCOUNTING FOR STOCK-BASED COMPENSATION--In October 1995, the Financial
Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 encourages companies to account for stock
compensation awards based on their fair value at the date they are granted. The
resulting compensation cost would be shown as an expense on the income
statement. Companies choosing not to apply the new accounting method are
permitted to continue following current accounting requirements, however, they
are required to disclose in the notes to the financial statements the effect on
net income and earnings per share had the new accounting method been applied.
The Company has adopted only the disclosure provisions of SFAS No. 123.
Accordingly, the Company has disclosed in Note 11 the pro forma effect on net
income and net income per common share--basic and diluted.
RECENT ACCOUNTING PRONOUNCEMENTS--In June 1997, the Financial Accounting
Standards Board issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
effective for the fiscal year ended 1998. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in the
financial statements. The Company does not expect the adoption of SFAS No. 130
to have a material effect on its consolidated financial statements. SFAS No. 131
establishes standards for reporting information on operating segments in the
financial statements. The Company is currently evaluating the impact SFAS No.
131 may have on additional disclosure, if any, to its consolidated financial
statements.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement Benefits,"
which standardizes the disclosure for pensions and other postretirement
benefits. The Company will adopt this statement for the fiscal year ended 1998.
The Company is currently evaluating the impact SFAS No. 132 may have on
additional disclosure, if any, to its consolidated financial statements.
4. INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Work-in-process....................................................... $ 73,747 $ 111,326
Raw materials......................................................... 66,413 93,563
---------- ----------
Total............................................................... $ 140,160 $ 204,889
---------- ----------
---------- ----------
</TABLE>
F-15
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is as follows:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Land........................................................................ $ 14,822 $ 16,252
Buildings and leasehold improvements........................................ 247,806 292,092
Machinery and equipment..................................................... 1,075,349 1,180,297
Leased property under capitalized leases.................................... 8,519 6,692
------------ ------------
1,346,496 1,495,333
Accumulated depreciation and amortization................................... 528,339 638,138
------------ ------------
Total..................................................................... $ 818,157 $ 857,195
------------ ------------
------------ ------------
</TABLE>
Depreciation expense related to property, plant and equipment was $65,526,
$91,186 and $114,819 for the years 1995, 1996 and 1997, respectively.
6. ACCRUED EXPENSES
Accrued expenses are as follows:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Compensation................................................................ $ 48,447 $ 50,239
Employee health and welfare benefits........................................ 16,593 9,696
Deferred revenue............................................................ 16,105 10,956
Interest.................................................................... 8,493 10,368
Other....................................................................... 45,216 51,543
------------ ------------
Total..................................................................... $ 134,854 $ 132,802
------------ ------------
------------ ------------
</TABLE>
7. LONG-TERM DEBT
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Senior Subordinated Notes................................................... $ 150,000 $ 150,000
Convertible Senior Subordinated Notes....................................... -- 151,800
Borrowings under credit agreements.......................................... 672,000 450,500
Notes payable, average of 9.17% due 2004--2005.............................. 40,129 36,729
Capitalized lease obligations, weighted average imputed interest rate of
9.27% due through 2003.................................................... 5,067 3,540
Other debt, average of 8.46% due 1998--2004................................. 30,671 26,544
------------ ------------
Total..................................................................... 897,867 819,113
Less current maturities..................................................... 8,672 8,970
------------ ------------
Noncurrent portion.......................................................... $ 889,195 $ 810,143
------------ ------------
------------ ------------
</TABLE>
F-16
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (CONTINUED)
At December 28, 1997, the fair value of the Senior Subordinated Notes and
Convertible Senior Subordinated Notes was approximately $156,188 and $146,108,
respectively, based on quoted market prices. The fair value of the Company's
remaining debt approximated its carrying value, based upon the Company's current
incremental borrowing rates for similar types of borrowing arrangements.
SENIOR SUBORDINATED NOTES--On May 10, 1993, Senior Subordinated Notes (the
"Notes") were issued in the aggregate principal amount of $150,000. Interest on
the Notes is payable semi-annually at the annual rate of 9.125%. The Notes have
no required principal payments prior to maturity on March 15, 2003.
CONVERTIBLE SENIOR SUBORDINATED NOTES--On October 8, 1997, the Company
issued $151,800 aggregate principal amount of Convertible Senior Subordinated
Notes (the "Convertible Notes"), receiving net proceeds of approximately
$147,900. Interest on the Convertible Notes is payable semi-annually at the
annual rate of 6.00%. The Convertible Notes have no required principal payments
prior to maturity on October 1, 2007. The Convertible Notes in the aggregate are
convertible into 3,660,477 shares of the Company's common stock at $41.47 per
share, subject to adjustment upon the occurrence of certain events. The
Convertible Notes are redeemable at the option of the holder at any time and at
the option of the Company, at specified prices, subsequent to October 4, 2000.
The net proceeds from the Convertible Notes offering were utilized to repay
certain indebtedness incurred under the Credit Agreement.
BORROWINGS UNDER CREDIT AGREEMENTS--On June 6, 1996, an amendment was made
to the Company's credit facility to provide for an additional $566,000 of
commitments and to extend the maturity date two years to December 31, 2002. In
June and October 1997, concurrent with the liquidation of indebtedness utilizing
proceeds from the Asset Securitization (as defined in Note 8), equity offering
and Convertible Notes offering, the Credit Agreement was amended to provide and
subsequently maintain the aggregate total commitments of $920,000, comprised of
$95,000 in term loan commitments, $250,000 of revolving loan commitments and
$575,000 in acquisition term loan commitments. All other significant financial
provisions of the Credit Agreement remained substantially unchanged. The Credit
Agreement requires varying semi-annual reductions in commitments, and the
borrowings bear interest at rates that fluctuate with the prime rate and the
Eurodollar rate which ranged from 6.25% to 8.50% in 1996 and 6.25% to 8.63% in
1997. The Credit Agreement includes a commitment fee of .25% per annum based on
the daily average unutilized revolving credit commitment. At December 28, 1997,
$272,000 of acquisition term loan commitments and $181,929 of the revolving loan
commitments were unutilized. The amount unutilized under the revolving loan
commitments has been reduced by outstanding letters of credit of $15,571, not
reflected in the accompanying consolidated financial statements, for which the
Company was contingently liable under the Credit Agreement. Such letters of
credit primarily guarantee various insurance reserves.
Borrowings under the terms of the Credit Agreement are secured by pledges of
various assets of the Company. The Credit Agreement has covenants which, among
other things, restrict the incurrence of additional indebtedness by the Company
and limit its ability to make payments to affiliated parties. The Credit
Agreement also restricts the payment of dividends or other distributions of
capital. The Company was in compliance with these covenants as of December 28,
1997.
F-17
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT (CONTINUED)
Aggregate annual maturities of long-term debt subsequent to December 28,
1997 are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
1998.............................................................................. $ 8,970
1999.............................................................................. 25,209
2000.............................................................................. 75,733
2001.............................................................................. 96,427
2002.............................................................................. 289,718
2003 and thereafter............................................................... 320,512
----------
816,569
Noncurrent portion of capitalized lease obligations............................... 2,544
----------
Total............................................................................. $ 819,113
----------
----------
</TABLE>
8. ASSET SECURITIZATION
In conjunction with the amended Credit Agreement described in Note 7, on
June 30, 1997, the Company entered into an agreement to sell, on a revolving
basis for a period of up to five years, certain of its accounts receivable to a
wholly-owned subsidiary, which entered into an agreement to transfer, on a
revolving basis, an undivided percentage ownership interest in a designated pool
of accounts receivable to a maximum of $204,000 (the "Asset Securitization"). At
December 28, 1997, $200,000 of accounts receivable had been sold and reflected
as a reduction of accounts receivable. Fees arising from the securitization
transaction of $5,133 are included in interest expense and securitization fees
in the consolidated statement of operations for the year ended December 28,
1997. These fees vary based on commercial paper rates plus a margin, providing a
lower effective rate than that available under the Company's Credit Agreement.
The Company maintains an allowance for doubtful accounts based on the expected
collectibility of all accounts receivable, including receivables sold.
9. LEASES
CAPITAL LEASES--The Company is a lessee under several noncancellable capital
lease agreements for certain fixed assets. The leases extend for periods up to 6
years and contain purchase provisions.
OPERATING LEASES--The Company leases certain equipment, warehouse facilities
and office space under noncancellable operating leases which expire over the
next 11 years. Most of these operating leases provide the Company with the
option, after the initial lease term, either to purchase the equipment or renew
its lease based upon the fair value of the property at the option date.
F-18
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
9. LEASES (CONTINUED)
Future minimum rental payments required under noncancellable leases at
December 28, 1997 were as follows:
<TABLE>
<CAPTION>
YEAR CAPITAL OPERATING
- ------------------------------------------------------------------------ --------- ----------
<S> <C> <C>
1998.................................................................... $ 1,465 $ 47,795
1999.................................................................... 1,181 45,808
2000.................................................................... 556 42,076
2001.................................................................... 556 38,212
2002.................................................................... 556 22,153
2003 and thereafter..................................................... 231 52,585
--------- ----------
Total minimum lease payments............................................ 4,545 $ 248,629
----------
----------
Less imputed interest................................................... 1,005
---------
Capitalized lease obligations........................................... 3,540
Less current maturities................................................. 996
---------
Noncurrent portion...................................................... $ 2,544
---------
---------
</TABLE>
Rental expense for operating leases was $31,948, $36,299 and $44,703 for the
years 1995, 1996 and 1997, respectively. Assets recorded under capital leases
amounted to $5,342 and $4,828, net of accumulated amortization of $3,177 and
$1,864 at the end of 1996 and 1997, respectively.
F-19
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
10. INCOME TAXES
The provision (benefit) for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal..................................................... $ 6,540 $ 16,542 $ 21,178
State....................................................... 810 3,418 5,891
--------- --------- ---------
7,350 19,960 27,069
--------- --------- ---------
Deferred:
Federal..................................................... (944) 12,491 14,525
State....................................................... 178 1,082 (253)
--------- --------- ---------
(766) 13,573 14,272
--------- --------- ---------
Total................................................... $ 6,584 $ 33,533 $ 41,341
--------- --------- ---------
--------- --------- ---------
</TABLE>
The tax effects of significant items comprising the Company's net deferred
tax liability as of December 29, 1996 and December 28, 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
---------- -----------
<S> <C> <C>
Deferred tax assets:
Operating loss carryforwards....................................... $ 15,161 $ 8,219
Tax credit carryforwards........................................... 21,241 39,602
Postemployment benefits............................................ 22,106 20,906
Postretirement benefits other than pensions........................ 11,450 10,867
Pension accrual.................................................... 7,668 7,232
Vacation accrual................................................... 5,390 7,172
Other differences.................................................. 21,585 10,119
---------- -----------
Gross deferred tax assets........................................ 104,601 104,117
---------- -----------
Deferred tax liabilities:
Differences between book and tax bases of property................. (138,116) (138,066)
Other differences.................................................. (18,256) (27,959)
---------- -----------
Gross deferred tax liabilities................................... (156,372) (166,025)
---------- -----------
Deferred tax asset valuation allowance............................... (6,840) (6,840)
---------- -----------
Net deferred tax liability........................................... (58,611) (68,748)
Less current deferred tax asset...................................... 32,944 31,297
---------- -----------
Noncurrent deferred tax liability.................................... $ (91,555) $ (100,045)
---------- -----------
---------- -----------
</TABLE>
The 1996 and 1997 amounts above include a valuation allowance of $6,840
relating to a capital loss carryforward that is not expected to be realized for
tax purposes and for the limitations of certain state net operating loss
carryforwards.
F-20
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
10. INCOME TAXES (CONTINUED)
The following table reconciles the difference between the U.S. federal
statutory tax rates and the rates used by the Company in the determination of
net income:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Income tax provision, at 35%.................................. $ 5,761 $ 28,278 $ 34,496
State and local income taxes, net of federal income tax
benefit..................................................... 642 2,941 3,665
Deferred tax asset valuation allowance........................ (1,160) -- --
Other, primarily goodwill amortization........................ 1,341 2,314 3,180
--------- --------- ---------
Total..................................................... $ 6,584 $ 33,533 $ 41,341
--------- --------- ---------
--------- --------- ---------
</TABLE>
At December 28, 1997, the Company has net operating loss carryforwards for
federal income tax purposes of $14,875 available to reduce future taxable
income, expiring primarily in 2000. The Company also has federal tax credits of
$2,495 expiring primarily from 1999 to 2002 and state tax credits of $2,575
expiring from 2001 to 2012. In addition, the Company has alternative minimum tax
carryover credits of $34,532 which do not expire and may be applied against
regular tax in the future, in the event that the regular tax expense exceeds the
alternative minimum tax.
11. EMPLOYEE BENEFIT PLANS
PENSION PLANS--The Company has defined benefit pension plans in effect which
cover certain employees who meet minimum eligibility requirements and who are
not covered by multiemployer plans. The Company contributes annually amounts
sufficient to satisfy the government's minimum standards.
Net periodic pension cost is determined based upon years of service and
compensation levels, using the projected unit credit method. Prior year service
costs and unrecognized gains and losses are amortized over the estimated future
service periods of active employees in the respective plan.
Effective January 1, 1997, several of the Company's defined benefit plans
were merged into the World Color Press, Inc. Retirement Plan, which was then
amended to form the World Color Press Cash Balance Plan (the "Cash Balance
Plan"), which provides for a new benefit formula applicable to all participants.
Under the Cash Balance Plan, each participant's account is credited with both
interest and a fixed percentage of the participant's annual compensation.
The components of net periodic pension cost are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Service cost (for benefits earned during the year)............. $ 2,270 $ 4,927 $ 5,201
Interest cost on projected benefit obligation.................. 5,010 9,218 14,066
Actual return on plan assets................................... (7,751) (12,467) (14,947)
Net amortization and deferral.................................. 1,800 2,295 (1,712)
--------- --------- ---------
Net periodic pension cost...................................... $ 1,329 $ 3,973 $ 2,608
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-21
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. EMPLOYEE BENEFIT PLANS (CONTINUED)
The funded status of the Company's pension plans at year-end, which reflects
the aforementioned mergers and amendment, is presented below.
<TABLE>
<CAPTION>
1996 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
(PLANS IN WHICH)
<CAPTION>
ACCUMULATED ASSETS ACCUMULATED
BENEFITS EXCEED BENEFITS
EXCEED ACCUMULATED EXCEED
ASSETS BENEFITS ASSETS
------------ ------------ ------------
<S> <C> <C> <C>
Actuarial present value of plan benefits:
Vested.................................................................. $ 27,774 $ 83,262 $ 170,732
Nonvested............................................................... 1,273 5,723 8,026
------------ ------------ ------------
Accumulated benefit obligation.......................................... 29,047 88,985 178,758
Effect of projected future salary increases............................. 2,822 12,201 13,091
------------ ------------ ------------
Projected benefit obligation............................................ 31,869 101,186 191,849
Plan assets at fair value............................................... 26,260 109,669 168,625
------------ ------------ ------------
Plan assets greater than (less than) the projected benefit obligation... (5,609) 8,483 (23,224)
Unrecognized net loss (gain)............................................ (245) (18,520) 15,474
Unrecognized net transition obligation (asset).......................... 347 (982) (408)
Unrecognized prior service cost (credit)................................ 694 (6,508) (11,125)
Adjustment required to recognize minimum liability...................... (1,477) -- (3,484)
------------ ------------ ------------
Accrued pension liability............................................... $ (6,290) $ (17,527) $ (22,767)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The unrecognized net transition asset or obligation is being amortized over
the average expected future service periods of employees. The market value of
plan assets was used to calculate the assumed return on plan assets. At the end
of 1996 and 1997, an additional minimum pension liability for unfunded
accumulated benefit obligations of $1,477 and $3,484, respectively, was
recognized. The weighted average discount rate and rate of increase in future
compensation levels used in determining actuarial present value of the projected
benefit obligation for the Company's plans were 8.0% and 3.5% in 1996 and 7.5%
and 3.5% in 1997, respectively. The expected long-term rate of return on plan
assets used was 9.0%, 10.0% and 10.0% for 1995, 1996 and 1997, respectively.
Plan assets consist principally of common stocks and U.S. government and
corporate obligations. At December 28, 1997, the plans' assets included an
aggregate of $4,614 of the Company's common stock.
Certain union employees of the Company participate in multiemployer plans.
Amounts charged to benefit expense relating to the multiemployer plans for 1995,
1996 and 1997 totaled $3,049, $3,185 and $3,352, respectively. In addition, the
Company has various deferred savings and profit sharing plans for certain
employees who meet eligibility requirements. Amounts charged to benefit expense
related to these plans for 1995, 1996 and 1997 totaled $1,186, $1,044 and
$1,977, respectively.
F-22
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. EMPLOYEE BENEFIT PLANS (CONTINUED)
POSTRETIREMENT BENEFIT PLANS--The Company provides postretirement medical
benefits to eligible employees. The Company's postretirement health care plans
are unfunded. The status of the plans is as follows:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Actuarial present value of plan benefits:
Retirees................................................................ $ 15,349 $ 17,263
Fully eligible active plan participants................................. 2,274 6,783
Other active plan participants.......................................... 8,503 20,619
--------- ---------
Total accumulated benefit obligation.................................... 26,126 44,665
Unrecognized net deferrals.............................................. 5,172 (584)
--------- ---------
Accrued postretirement benefits......................................... $ 31,298 $ 44,081
--------- ---------
--------- ---------
</TABLE>
The components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Service Cost................................................... $ 511 $ 839 $ 1,365
Interest Cost.................................................. 1,192 1,596 3,158
Amortization of unrecognized prior service cost................ (1,289) (1,289) (1,289)
Amortization of unrecognized net gain.......................... (194) -- --
--------- --------- ---------
Net periodic postretirement benefit cost....................... $ 220 $ 1,146 $ 3,234
--------- --------- ---------
--------- --------- ---------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 7% and 5% at the end of 1996 and 1997,
respectively, after which it remains constant at 5%. A one percentage point
increase in the assumed health care cost trend rate would increase the
accumulated postretirement benefit obligation as of December 28, 1997 by $3,409
and the annual postretirement benefit expense by approximately $392. The assumed
discount rate used in determining the accumulated postretirement benefit
obligation was 8.0% and 7.5% in 1996 and 1997, respectively.
STOCK OPTION PLANS--Upon consummation of the Merger described in Note 1, the
Stock Option Committee of the Board of Directors (the "Stock Option Committee")
adjusted all of the outstanding options so that each option became exercisable
for five times the number of shares of common stock for which it had been
exercisable immediately prior to the Merger at an exercise price per share equal
to one-fifth of the exercise price per share immediately prior to the Merger
(the "Options Adjustments"). Accordingly, the following stock option data has
been presented on a post-Merger basis.
The Company has stock option plans that permit the Stock Option Committee to
grant up to an aggregate of 5,250,000 options to purchase shares of the
Company's common stock to certain key employees of the Company. Options granted
under the plans generally vest ratably over a five-year period.
F-23
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. EMPLOYEE BENEFIT PLANS (CONTINUED)
Vested options may generally be exercised up to ten years from the date of
grant. Information related to the Company's stock option plans is presented
below.
<TABLE>
<CAPTION>
NUMBER OF OPTION
OPTIONS PRICE
----------- ------------------
<S> <C> <C>
Outstanding at December 25, 1994............................ 3,406,000 $5.49 to $10.30
Granted................................................... 640,555 $11.20 to $15.00
Exercised................................................. (26,575) $5.49
Rescinded/Canceled........................................ (204,660) $6.89 to $10.30
-----------
Outstanding at December 31, 1995............................ 3,815,320 $5.49 to $15.00
-----------
Granted................................................... 354,000 $22.00
Exercised................................................. (1,532,290) $5.49 to $6.95
Rescinded/Canceled........................................ (74,725) $8.97 to $15.00
-----------
Outstanding at December 29, 1996............................ 2,562,305 $5.49 to $22.00
-----------
Granted................................................... 804,000 $23.75 to $26.75
Exercised................................................. (12,000) $6.89
Rescinded/Canceled........................................ (45,365) $11.20 to $22.00
-----------
Outstanding at December 28, 1997............................ 3,308,940 $5.49 to $26.75
-----------
</TABLE>
<TABLE>
<CAPTION>
RESERVED
FOR
FUTURE
EXERCISABLE GRANTS
---------- -----------
<S> <C> <C>
December 31, 1995................................................... 2,810,910 1,434,680
December 29, 1996................................................... 1,655,640 1,155,405
December 28, 1997................................................... 1,861,934 396,770
</TABLE>
As permitted by SFAS No. 123, the Company has not recorded compensation
expense for stock options granted to employees, but rather has determined the
pro forma net income and net income per common share--basic and diluted amounts
for fiscal years 1995, 1996 and 1997, had compensation expense been recorded for
options granted during those years under the applicable fair value method
described in the statement.
For options granted during 1995, the fair value was estimated using the
minimum value method. Under this method, the expected volatility of the
Company's common stock is not estimated, as prior to the Offering there was no
market for the Company's common stock in which to monitor stock price
volatility. For options granted during 1996 and 1997, the fair value at the date
of grant was estimated using the Black-Scholes option pricing model. Under the
Black-Scholes model, a volatility factor of 0.312 and 0.310 was used for 1996
and 1997, respectively.
The following weighted average assumptions were used in calculating the fair
value of the options granted in 1995, 1996 and 1997, respectively: risk-free
interest rates of 6.41%, 6.80% and 6.33%; an assumed dividend yield of zero; and
an expected life of the options of ten years.
F-24
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. EMPLOYEE BENEFIT PLANS (CONTINUED)
For purposes of the pro forma disclosures, the estimated fair value of the
options granted is amortized to compensation expense over the options' vesting
period. The Company's pro forma information is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income:
As reported................................................. $ 9,877 $ 47,261 $ 57,219
Pro forma................................................... $ 9,746 $ 46,688 $ 55,893
Net income per common share--basic:
As reported................................................. $ 0.31 $ 1.40 $ 1.65
Pro forma................................................... $ 0.30 $ 1.39 $ 1.61
Net income per common share--diluted:
As reported................................................. $ 0.29 $ 1.35 $ 1.60
Pro forma................................................... $ 0.28 $ 1.34 $ 1.57
Weighted average fair value of options granted during the
year:....................................................... $ 7.01 $ 12.81 $ 14.39
</TABLE>
F-25
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
12. NET INCOME PER COMMON SHARE
The following represents the reconciliation between net income per common
share--basic and diluted: (In thousands, except per share data)
<TABLE>
<CAPTION>
PER
INCOME SHARES SHARE
--------- --------- ---------
<S> <C> <C> <C>
For the year ended 1995:
Net income per common share--basic............................. $ 9,877 32,218 $ 0.31
Effect of dilutive securities:
Stock options................................................ -- 2,223
--------- ---------
Net income per common share--diluted........................... $ 9,877 34,441 $ 0.29
--------- ---------
--------- ---------
For the year ended 1996:
Net income per common share--basic............................. $ 47,261 33,642 $ 1.40
Effect of dilutive securities:
Stock options................................................ -- 1,361
--------- ---------
Net income per common share--diluted........................... $ 47,261 35,003 $ 1.35
--------- ---------
--------- ---------
For the year ended 1997:
Net income per common share--basic............................. $ 57,219 34,773 $ 1.65
Effect of dilutive securities:
Stock options................................................ -- 863
Convertible debt............................................. 1,264 815
--------- ---------
Net income per common share--diluted........................... $ 58,483 36,451 $ 1.60
--------- ---------
--------- ---------
</TABLE>
Options to purchase 429,000 shares of common stock were issued and
outstanding in 1997, but were not included in the computation of net income per
common share--diluted because the exercise price of the options was greater than
the average market price of the common shares.
13. TRANSACTIONS WITH AFFILIATES
The Company has incurred expenses of $850, $750 and $750 in 1995, 1996 and
1997, respectively, for management services provided by affiliated companies. In
addition, the Company paid $3,735 in advisory fees in 1995 associated with the
acquisitions described in Note 2, to affiliated companies.
14. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is subject to legal proceedings and other claims arising in the
ordinary course of operations. In the opinion of management, ultimate resolution
of proceedings currently pending will not have a material effect on the results
of operations or financial position of the Company.
15. STREAMLINING CHARGE
In the fourth quarter of 1995, the Company finalized and committed to a plan
to realign certain business operations, resulting in a charge of $40,900. The
major components of this realignment plan were
F-26
<PAGE>
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, DECEMBER 29, 1996 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
15. STREAMLINING CHARGE (CONTINUED)
to close a facility and to consolidate certain digital prepress operations and
functions. The financial statement effects of this decision were a writedown of
assets to net realizable value of $30,700, a provision for severance costs of
$8,000 and a provision for certain other related costs of $2,200. The facility
referred to above was exited and the consolidation of the operations and
functions were substantially complete at the end of 1996. At December 28, 1997,
substantially all of the amounts provided for as severance and other related
costs had been paid.
16. UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET INCOME NET INCOME
PER PER
COMMON COMMON
GROSS SHARE- SHARE-
QUARTER ENDED NET SALES PROFIT NET INCOME BASIC DILUTED
- ---------------------------------- ------------ ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
March 31, 1996.................... $ 329,111 $ 52,286 $ 5,939 $ 0.18 $ 0.17
June 30, 1996..................... 342,266 57,942 6,056 0.18 0.17
September 29, 1996................ 487,804 96,406 19,217 0.57 0.55
December 29, 1996................. 482,231 85,648 16,049 0.48 0.46
------------ ----------- -----------
$ 1,641,412 $ 292,282 $ 47,261 $ 1.40 $ 1.35
------------ ----------- -----------
------------ ----------- -----------
March 30, 1997.................... $ 458,351 $ 75,315 $ 6,903 $ 0.20 $ 0.20
June 29, 1997..................... 425,647 76,052 6,580 0.19 0.19
September 28, 1997................ 557,268 110,701 22,873 0.68 0.66
December 28, 1997................. 539,959 105,219 20,863 0.55 0.53
------------ ----------- -----------
$ 1,981,225 $ 367,287 $ 57,219 $ 1.65 $ 1.60
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
F-27
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO]
OFFER TO EXCHANGE
ALL OUTSTANDING
8 3/8% SENIOR SUBORDINATED NOTES
DUE 2008
FOR
8 3/8% SENIOR SUBORDINATED NOTES
DUE 2008
We have not authorized anyone to give you any information or to make any
representations about the transactions we discuss in this prospectus other than
those contained herein or in the documents we incorporate herein by reference.
If you are given any information or representations about these matters that is
not discussed or incorporated in this prospectus, you must not rely on that
information. This prospectus is not an offer to sell or a solicitation of an
offer to buy securities anywhere or to anyone where or to whom we are not
permitted to offer or sell securities under applicable law. The delivery of this
prospectus offered hereby does not, under any circumstances, mean that there has
not been a change in our affairs since the date hereof. It also does not mean
that the information in this prospectus or in the documents we incorporate
herein by reference is correct after this date.
Until , 1999, all dealers effecting transactions in the registered
notes, whether or not participating in this distribution, may be required to
deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. Reference is made to Section
102(b)(7) of the Delaware General Corporation Law (the "DGCL"), which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (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) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payments of dividends of unlawful stock purchase or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit.
Reference is also made to Section 145 of the DGCL, which provides that a
corporation may indemnify any person, including an officer or director, who is,
or is threatened to be made, party to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such officer,
director, employee or agent acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the corporation's best interest and, for
criminal proceedings, had no reasonable cause to believe that his conduct was
unlawful. A Delaware corporation may indemnify any officer or director in an
action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses that
such officer or director actually and reasonably incurred.
Article VIII of the Amended and Restated By-laws of the Company (filed as
Exhibit 3.1) provides for indemnification of the officers and directors to the
full extent permitted by applicable law.
The limited partnership agreements pursuant to which APC Associates, L.P.,
GR Associates, L.P., WCP Associates, L.P. and KKR Partners II, L.P. were
organized provide that such partnerships shall indemnify and hold harmless KKR
Associates, L.P., the general partner of each of such partnerships, against any
action, suit or proceeding to which it may be made a party or otherwise involved
or with which it shall be threatened by reason of its being the general partner
of such partnership except for liability arising out of any act or omission of
the general partner judicially determined to have been grossly negligent,
fraudulent or to have constituted willful misconduct. The limited partnership
agreement of KKR Associates, L.P. provides substantially identical indemnity to
its general partners, which include Scott M. Stuart, a director of the Company.
Mr. Armstrong is indemnified for liabilities arising prior to February 2,
1996, pursuant to Merrill Lynch & Co.'s corporate charter which provides that,
to the extent he is not so indemnified by the Company, Mr. Armstrong will be
indemnified by Merrill Lynch & Co., in his capacity as a director of World Color
Press, Inc., to the fullest extent permitted by Delaware law.
II-1
<PAGE>
ITEM 21. EXHIBITS.
(a) Exhibits:
The following exhibits are filed pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
*1.1 Purchase Agreement relating the unregistered notes, dated as of November 12, 1998, among World Color
Press, Inc., BT Alex. Brown Incorporated and CIBC Oppenheimer Corp.
*1.2 Purchase Agreement relating the 7 3/4% Senior Subordinated Notes, dated as of February 16, 1999, among
World Color Press, Inc., Morgan, Stanley & Co. Incorporated, ABN AMRO Incorporated, BancBoston Robertson
Stephens, Inc., CIBC Oppenheimer Corp. and Fleet Securities, Inc.
3.1 Amended and Restated Certificate of Incorporation of World Color Press, Inc., incorporated by reference
to Exhibit 3.1 to World Color's Registration Statement on Form S-1 (No. 33-99676) under the Securities
Act of 1933.
3.2 Amended and Restated By-Laws of World Color Press, Inc., incorporated by reference to Exhibit 3.2 to
World Color's Annual Report on Form 10-K for the fiscal year ended December 29, 1996.
*4.1 Indenture between World Color Press, Inc. and The Bank of New York, as trustee, relating to World
Color's 8 3/8% Senior Subordinated Notes due 2008.
*4.2 Specimen of World Color's 8 3/8% Senior Subordinated Notes due 2008 (included in the Indenture filed as
Exhibit 4.1).
*4.3 Indenture between World Color Press, Inc. and The Bank of New York, as trustee, relating to World
Color's 7 3/4% Senior Subordinated Notes due 2009.
*4.4 Specimen of World Color's 7 3/4% Senior Subordinated Notes due 2009 (included in the Indenture filed as
Exhibit 4.3).
*5.1 Form of Opinion of Latham & Watkins regarding the legality of the securities being registered.
*10.1 Sixth Amendment to Second Amended and Restated Credit Agreement dated as of November 11, 1998, by and
among World Color Press, Inc., the Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the Guarantors listed on the signature
pages, incorporated by reference to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for
the quarterly period ended June 28, 1998.
*10.2 Seventh Amendment to Second Amended and Restated Credit Agreement dated as of November 23, 1998, by and
among World Color Press, Inc., the Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the Guarantors listed on the signature
pages, incorporated by reference to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for
the quarterly period ended June 28, 1998.
*10.3 Limited Consent and Eighth Amendment to Second Amended and Restated Credit Agreement dated as of
February 3, 1999, by and among World Color Press, Inc., the Lenders party to the Second Amended and
Restated Credit Agreement, as amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages,
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
incorporated by reference to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for the
quarterly period ended June 28, 1998.
<C> <S>
*12.1 Statement regarding computation of ratios.
*21.1 Subsidiaries of the Registrant.
*23.1 Consent of Deloitte & Touche LLP.
*23.2 Consent of Latham & Watkins (included in Exhibit 5.1 hereto).
*24.1 Powers of Attorney (included above the signature block to the Registration Statement).
*25.1 STATEMENT OF ELIGIBILITY OF TRUSTEE.
</TABLE>
* Filed herewith.
ITEM 22. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expense incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted against the registrant by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's Annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's Annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
D. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
E. (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145, the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
II-3
<PAGE>
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933, as amended,
and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Greenwich, State of
Connecticut on March 8, 1999.
WORLD COLOR PRESS, INC.
By: /s/ JENNIFER L. ADAMS
-------------------------------------
Name: Jennifer L. Adams
Title: Vice Chairman, Chief Legal and
Administrative Officer and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints jointly and severally, Jennifer L. Adams, Robert
G. Burton and Robert B. Lewis, and each one of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign any
and all amendments to this registration statement (including post effective
amendments), and to sign any registration statement for the same offering
covered by this registration statement that is to be effective upon filing
pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and all
post-effective amendments thereto, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- --------------------------- -------------------
<C> <S> <C>
/s/ ROBERT G. BURTON Chairman of the Board of March 8, 1999
- ----------------------------- Directors, Chief
Robert G. Burton Executive Officer
(Principal Executive
Officer)
/s/ ROBERT B. LEWIS Executive Vice President, March 8, 1999
- ----------------------------- Chief Financial Officer
Robert B. Lewis (Principal Financial
Officer and Principal
Accounting Officer)
/s/ MARC L. REISCH President and Director March 8, 1999
- -----------------------------
Marc L. Reisch
/s/ GERALD S. ARMSTRONG Director March 8, 1999
- -----------------------------
Gerald S. Armstrong
/s/ PATRICE M. DANIELS Director March 8, 1999
- -----------------------------
Patrice M. Daniels
/s/ DR. MARK J. GRIFFIN Director March 8, 1999
- -----------------------------
Dr. Mark J. Griffin
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- --------------------------- -------------------
<C> <S> <C>
/s/ ALEXANDER NAVAB, JR. Director March 8, 1999
- -----------------------------
Alexander Navab, Jr.
/s/ SCOTT M. STUART Director March 8, 1999
- -----------------------------
Scott M. Stuart
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
*1.1 Purchase Agreement relating the unregistered notes, dated as of November 12, 1998, among World Color
Press, Inc., BT Alex. Brown Incorporated and CIBC Oppenheimer Corp.
*1.2 Purchase Agreement relating the 7 3/4% Senior Subordinated Notes, dated as of February 16, 1999, among
World Color Press, Inc., Morgan, Stanley & Co. Incorporated, ABN AMRO Incorporated, BancBoston Robertson
Stephens, Inc., CIBC Oppenheimer Corp. and Fleet Securities, Inc.
3.1 Amended and Restated Certificate of Incorporation of World Color Press, Inc., incorporated by reference
to Exhibit 3.1 to World Color's Registration Statement on Form S-1 (No. 33-99676) under the Securities
Act of 1933.
3.2 Amended and Restated By-Laws of World Color Press, Inc., incorporated by reference to Exhibit 3.2 to
World Color's Annual Report on Form 10-K for the fiscal year ended December 29, 1996.
*4.1 Indenture between World Color Press, Inc. and The Bank of New York, as trustee, relating to World Color's
8 3/8% Senior Subordinated Notes due 2008.
*4.2 Specimen of World Color's 8 3/8% Senior Subordinated Notes due 2008 (included in the Indenture filed as
Exhibit 4.1).
*4.3 Indenture between World Color Press, Inc. and The Bank of New York, as trustee, relating to World Color's
7 3/4% Senior Subordinated Notes due 2009.
*4.4 Specimen of World Color's 7 3/4% Senior Subordinated Notes due 2009 (included in the Indenture filed as
Exhibit 4.3).
*5.1 Form of Opinion of Latham & Watkins regarding the legality of the securities being registered.
*10.1 Sixth Amendment to Second Amended and Restated Credit Agreement dated as of November 11, 1998, by and
among World Color Press, Inc., the Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the Guarantors listed on the signature
pages, incorporated by reference to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for the
quarterly period ended June 28, 1998.
*10.2 Seventh Amendment to Second Amended and Restated Credit Agreement dated as of November 23, 1998, by and
among World Color Press, Inc., the Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the Guarantors listed on the signature
pages, incorporated by reference to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for the
quarterly period ended June 28, 1998.
*10.3 Limited Consent and Eighth Amendment to Second Amended and Restated Credit Agreement dated as of February
3, 1999, by and among World Color Press, Inc., the Lenders party to the Second Amended and Restated
Credit Agreement, as amended, Bankers Trust Company, as Administrative Agent, and the Guarantors listed
on the signature pages, incorporated by reference to Exhibit 10.4 to the World Color Quarterly Report on
Form 10-Q for the quarterly period ended June 28, 1998.
*12.1 Statement regarding computation of ratios.
*21.1 Subsidiaries of the Registrant.
*23.1 Consent of Deloitte & Touche LLP.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
*23.2 Consent of Latham & Watkins (included in Exhibit 5.1 hereto).
*24.1 Powers of Attorney (included above the signature block to the Registration Statement).
*25.1 STATEMENT OF ELIGIBILITY OF TRUSTEE.
</TABLE>
* Filed herewith.
<PAGE>
Exhibit 1.1
EXECUTION COPY
WORLD COLOR PRESS, INC.
$300,000,000
83/8 % Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
November 12, 1998
BT ALEX. BROWN INCORPORATED
CIBC OPPENHEIMER CORP.
<PAGE>
$300,000,000
83/8 % Senior Subordinated Notes due 2008
of WORLD COLOR PRESS, INC.
PURCHASE AGREEMENT
November 12, 1998
BT Alex. Brown Incorporated
CIBC Oppenheimer Corp.
c/o BT Alex. Brown Incorporated
130 Liberty Street
1 BT Plaza
37th Floor
New York, New York 10006
Ladies and Gentlemen:
World Color Press, Inc. (the "COMPANY"), a Delaware corporation,
proposes to issue and sell to BT Alex. Brown Incorporated and CIBC Oppenheimer
Corp. (each an "INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS")
an aggregate of $300,000,000 in principal amount of its 83/8 % Senior
Subordinated Notes due 2008 (the "SERIES A NOTES"), subject to the terms and
conditions set forth herein. The Series A Notes are to be issued pursuant to the
provisions of an indenture (the "INDENTURE"), to be dated as of the Closing Date
(as defined below), among the Company and a trustee to be determined (the
"TRUSTEE"). The Series A Notes and the Series B Notes (as defined below)
issuable in exchange therefor are collectively referred to herein as the
"NOTES." The Notes will have the terms and conditions set forth in Exhibit A
hereto.
1. OFFERING MEMORANDUM. The Series A Notes will be offered and sold
to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"ACT"). The Company
<PAGE>
will prepare an offering memorandum relating to the Series A Notes. Such
offering memorandum (including material incorporated therein by reference) is
hereinafter referred to as the "OFFERING MEMORANDUM."
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Indenture, the Series A Notes (and all
securities (other than the Series B Notes) issued in exchange therefor, in
substitution thereof or upon conversion thereof) shall bear the following
legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGIS TERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOW ING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT)(A "QIB"), (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT), (C) IT IS AN INSTITU TIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"), OR (D) IT HAS OTHERWISE ACQUIRED THIS NOTE OR A
BENEFICIAL INTEREST HEREIN IN ACCORDANCE WITH THE TERMS OF THE INDENTURE
RELATING TO THIS NOTE AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE
SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON
THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURI-
3
<PAGE>
TIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAIN ING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANS
FERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSAC TION", "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representa
tions, warranties and covenants contained in this Agreement, and subject to the
terms and conditions contained herein, the Company agrees to issue and sell to
the Initial Purchasers, and the Initial Purchasers agree, severally and not
jointly, to purchase from the Company, the principal amount of Series A Notes
set forth opposite the name of such Initial Purchaser on Schedule A hereto at a
purchase price equal to 97.575% of the principal amount thereof (the "PURCHASE
PRICE").
3. TERMS OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "EXEMPT RESALES") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memoran dum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS") or (ii) persons permitted to purchase the
Series A Notes in offshore
4
<PAGE>
transactions in reliance upon Regulation S under the Act (each, a "REGULATION S
PURCHASER") (such persons specified in clauses (i) and (ii) being referred to
herein as the "ELIGIBLE PURCHASERS"). The Initial Purchasers will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes
will have registration rights set forth in the registration rights agreement
(the "REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date (as defined
below), in substantially the form of Exhibit B hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"COMMISSION"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 83/8 % Series B Senior Subordinated Notes due 2008 (the "SERIES
B NOTES"), to be offered in exchange for the Series A Notes (such offer to
exchange being referred to as the "EXCHANGE OFFER") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain
holders of the Series A Notes and use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Series A Notes shall be made at the office of Skadden, Arps, Slate, Meagher &
Flom LLP at 919 Third Avenue, New York, New York, 10022-3897, or such other
location as may be mutually acceptable. Such delivery and payment shall be made
at 9:00 a.m., New York City time, on November 20, 1998, or at such other time as
shall be agreed upon by the Initial Purchasers and the Company. The time and
date of such delivery and payment are herein called the "CLOSING DATE."
(b) One or more of the Series A Notes in definitive global
form, registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
5
<PAGE>
aggregate principal amount of the Series A Notes (collectively, the "GLOBAL
NOTES") shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company hereby agrees with each
Initial Purchaser as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by an Initial Purchaser, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for offering
or sale in any jurisdiction designated by an Initial Purchaser pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) of the happening of any event during the period referred to in Section
5(d) hereof that makes any statement of a material fact made in the Offering
Memorandum untrue or that requires any additions to or changes in the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company shall use
its reasonable efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any Series A Notes under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Series A Notes under any state securities
or Blue Sky laws, the Company shall use its reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest practicable time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge, as many
copies of the Offering Memorandum, and any amendments or supplements thereto, as
the Initial Purchasers may reasonably request. Subject to the Initial
Purchasers' compliance with their representations and warranties and agreements
set forth in Section 7 hereof, the Company consents to the use of the Offering
Memorandum, and any amendments and supplements thereto required pursuant hereto,
by the Initial Purchasers in connection with Exempt Resales.
6
<PAGE>
(c) During the period referred to in Section 5(d) hereof, (i)
not to make any amendment or supplement to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which the
Initial Purchasers shall reasonably object after being so advised; PROVIDED,
HOWEVER, that notwithstanding the Initial Purchasers' objection such amendment
or supplement may be effected if counsel to the Company reasonably determines
that the Company would be adversely affected if such amendment or supplement is
not effected; and (ii) to prepare promptly upon the Initial Purchasers'
reasonable request, any amendment or supplement to the Offering Memorandum which
may be necessary or advisable in connection with Exempt Resales.
(d) If, after the date hereof during such period as in the
opinion of counsel for the Initial Purchasers an Offering Memorandum is required
by law to be delivered in connection with Exempt Resales by the Initial
Purchasers, which period shall end no later than the earlier of (i) the date on
which the Initial Purchasers' distribution of the Notes is complete or (ii) the
date on which a shelf registration statement for the benefit of the Initial
Purchasers becomes effective pursuant to the Registration Rights Agreement, any
event shall occur or condition exist as a result of which it becomes necessary
to amend or supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion of
counsel to the Initial Purchasers, it is necessary to amend or supplement the
Offering Memorandum to comply with applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of the Series A Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchasers and
counsel to the Initial Purchasers in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial Purchasers
and pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request and to continue such
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith to register or qualify as
a
7
<PAGE>
foreign corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service of
process or taxation in any jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, to promptly furnish
to the Initial Purchasers a copy of its annual report to stockholders for such
year; and to promptly furnish to the Initial Purchasers a copy of each report
and any definitive proxy statement of the Company filed with the Commission
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
mailed to stockholders.
(g) During the period of two years after the Closing Date,
without the prior written consent of BT Alex. Brown Incorporated, not to, and
not to permit any of its affiliates (as defined in Rule 144 under the Act) to,
resell any of the Notes that have been reacquired by any of them, except for
sales of Notes purchased by the Company or any of its affiliates and resold in
transactions registered under the Securities Act.
(h) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to performance of the obligations of the Company
under this Agreement including: (i) the fees, disbursements and expenses of
counsel to the Company and accountants of the Company in connection with the
sale and delivery of the Series A Notes to the Initial Purchasers and pursuant
to Exempt Resales, and all other fees or expenses in connection with the
preparation, printing, filing and distribution of the Offering Memorandum and
all amendments and supplements thereto (including financial statements) prior to
or during the period specified in Section 5(d) hereof, including the mailing and
delivering of copies thereof to the Initial Purchasers and persons designated by
them as specified herein, (ii) all costs and expenses related to the transfer
and delivery of the Series A Notes to the Initial Purchasers and pursuant to
Exempt Resales, including any transfer or other taxes payable thereon, (iii) all
costs of printing or producing this Agreement, the other Operative Documents and
any other agreements or documents in connection with the offering, purchase,
sale or delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the reasonable filing fees and fees and disbursements of
counsel for the Initial Purchasers in connection with such registration or
qualification and memoranda relating thereto), (v) the cost of printing
certificates representing the Series A Notes, (vi) all expenses and listing fees
in
8
<PAGE>
connection with the application for quotation of the Series A Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated Quotation
System PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and
Trustee's counsel in connection with the Indenture and the Notes, (viii) the
costs and charges of any transfer agent, registrar and/or depositary (including
DTC), (ix) any fees charged by rating agencies for the rating of the Notes, (x)
all costs and expenses of the Exchange Offer and any Registration Statement, as
set forth in the Registration Rights Agreement, and (xii) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section 5.
(i) To use its reasonable best efforts to assist the Initial
Purchasers in effecting the inclusion of the Series A Notes in PORTAL and to
maintain the listing of the Series A Notes on PORTAL for so long as the Series A
Notes are outstanding.
(j) To obtain the approval of DTC for "book-entry" transfer of
the Notes, and to comply with all of its agreements set forth in the
representation letters of the Company to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
(k) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
any warrants, rights or options to purchase or otherwise acquire debt securities
of the Company substantially similar to the Notes (other than (i) the Notes and
(ii) commercial paper issued in the ordinary course of business), without the
prior written consent of the Initial Purchasers.
(l) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes to the Initial
Purchasers or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Series A Notes under the Act.
(m) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes.
(n) To comply with all of its agreements set forth in the
Registration Rights Agreement.
9
<PAGE>
(o) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Series A Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As of the date
hereof, the Company represents and warrants to each Initial Purchaser that:
(a) The Offering Memorandum will not, and any supplement or
amendment thereto will not, at the date of the Offering Memorandum and at the
date of such supplements or amendments, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties contained in this paragraph (a) shall not apply to statements in or
omissions from the Offering Memorandum (or any supplement or amendment thereto)
made in reliance upon and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers or on
their behalf with their consent expressly for use therein. No stop order
preventing the use of the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued.
(b) Except as disclosed in the Offering Memorandum, the
Company's Annual Report on Form 10-K most recently filed with the Commission and
all subsequent reports which have been filed by the Company with the Commission
or sent to the stockholders pursuant to the Exchange Act did not include, as of
their respective dates, any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Such documents, when
they were filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
(c) The Company and each of the Company's "significant
subsidiaries" as such term is defined in Rule 1-02 of Regulation S-X under the
Act (each a "Subsidiary" and collectively, the "Subsidiaries") has been duly
organized, is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as described in the Offering Memorandum and
to own, lease and operate its properties,
10
<PAGE>
and each is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the business, results of operations or condition (financial or
otherwise) of the Company and its subsidiaries taken as a whole (a "MATERIAL
ADVERSE EFFECT").
(d) All of the issued and outstanding shares of capital stock
of, or other ownership interests in, each Subsidiary have been duly and validly
authorized and issued, and, as of the Closing Date, all of the shares of capital
stock of, or other ownership interests in, each Subsidiary will be owned,
directly or through Subsidiaries, by the Company free and clear of any security
interest, mortgage, pledge, claim, lien or encumbrance (each, a "Lien") other
than (i) as created by the Second Amended and Restated Credit Agreement dated as
of June 6, 1997 among the Company, the Lenders party thereto and Bankers Trust
Company, as agent, as amended, and (ii) such other Liens as are not,
individually or in the aggregate, material to the Company and its subsidiaries,
taken as a whole. All such shares of capital stock are fully paid and
nonassessable and, on the Closing Date, will be fully paid and nonassessable. On
the Closing Date, there will be no outstanding subscriptions, rights, warrants,
options, calls, convertible securities or commitments of sale related to or
entitling any person to purchase or otherwise to acquire any shares of the
capital stock of, or other ownership interest in, any Subsidiary.
(e) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, non-assessable
and were not issued in violation of any preemptive or similar rights.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Indenture has been duly authorized by the Company and,
on the Closing Date, will have been validly executed and delivered by the
Company. When the Indenture has been duly executed and delivered by the Company,
the Indenture will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms (assuming the due execution and
delivery of the Indenture by the Trustee), subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and general
principles of equity.
11
<PAGE>
(h) The Series A Notes have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Series A Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, the Series A
Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and general principles of equity. On the Closing
Date, the Series A Notes will conform in all material respects as to legal
matters to the description thereof contained in the Offering Memorandum.
(i) On the Closing Date, the Series B Notes will have been
duly authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and general
principles of equity.
(j) The Registration Rights Agreement has been duly authorized
by the Company and, on the Closing Date, will have been duly executed and
delivered by the Company. When the Registration Rights Agreement has been duly
executed and delivered, the Registration Rights Agreement will be a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and general principles of equity. On the
Closing Date, the Registration Rights Agreement will conform in all material
respects as to legal matters to the description thereof contained in the
Offering Memorandum.
(k) Neither the Company nor any of its Subsidiaries is (a) in
violation of its respective charter or by-laws or (b) in default in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other agreement,
indenture or instrument, to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or their respective
properties is bound except, with respect to defaults referred to in clause (b),
such as would not, singly or in the aggregate, have a Material Adverse Effect,
nor has any event occurred which with notice or lapse of time or both would
constitute such a violation or default.
12
<PAGE>
(l) The execution, delivery and performance of this Agreement,
the Indenture, the Series A Notes, the Series B Notes and the Registration
Rights Agreement by the Company and compliance by the Company with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), except for consents, approvals,
authorizations or orders which would not, singly or in the aggregate, have a
Material Adverse Effect and would not materially and adversely affect the
consumma tion of this Agreement, the Registration Rights Agreement, the
Indenture or the transactions contemplated hereby and thereby, and will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Company or any of its Subsidiaries
or any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
their respective property is bound, or violate or conflict with any applicable
law or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, any of its
Subsidiaries or their respective property, except for such conflicts, violations
or breaches which would not, singly or in the aggregate, have a Material Adverse
Effect and would not materially and adversely affect the consummation of this
Agreement, the Registration Rights Agreement, the Indenture or the transactions
contemplated hereby and thereby, and except for (i) such conflicts, violations
or breaches as to which the Company has obtained the necessary consents or
waivers and (ii) receipt of a consent from the Lenders under the Company's
credit facilities to permit the redemption of the Company's outstanding 91/8 %
Senior Subordinated Notes due 2003 (the "BANK CONSENT").
(m) Other than as described in the Offering Memorandum, there
is no action, suit or proceeding before or by any court or governmental agency
or body, domestic or foreign, pending against the Company or any of its
Subsidiaries or any of their respective properties which could reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect or which
might materially and adversely affect the consummation of this Agreement, the
Registration Rights Agreement, the Indenture or the transactions contemplated
hereby and thereby, and, to the Company's knowledge, no such proceedings are
threatened.
(n) No action has been taken and no statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or
13
<PAGE>
body which prevents the execution, delivery and performance of any of the
Operative Documents, the issuance of the Series A Notes, or suspends the sale of
the Series A Notes in any jurisdiction referred to in Section 5(e) hereof; and
no injunction, restraining order or other relief of any nature by a federal or
state court or other tribunal of competent jurisdiction has been issued with
respect to the Company which would prevent or suspend the issuance or sale of
the Series A Notes in any jurisdiction referred to in Section 5(e) hereof.
(o) Except as disclosed in the Offering Memorandum or as would
not, singly or in the aggregate, have a Material Adverse Effect: (i) the Company
and each of the Subsidiaries is in compliance with all laws and regulations
relating to protection of human health or environment or imposing liability or
standards of conduct concerning any Materials of Environmental Concern (as
defined below) ("ENVIRONMEN TAL LAWS") applicable to it, including, without
limitation, possession of required permits and compliance with the terms and
conditions thereof, and there are no circumstances known to the Company that
will prevent such compliance in the future; (ii) neither the Company nor any of
the Subsidiaries has received any written notice, and there is no pending or, to
the Company's knowledge, threatened action, suit or proceeding before or by any
court or governmental agency or body ("ENVIRONMENTAL CLAIM"), alleging potential
liability (including, but not limited to, investigatory, cleanup or governmental
response costs, natural resources or property damages, personal injuries, or
penalties) of the Company or any of the Subsidiaries or any person or entity for
whom the Company or any of the Subsidiaries has contractually retained or
assumed responsibil ity, arising out of, based on, or resulting from the
presence, or release, discharge, emission or disposal into the environment, of
any Materials of Environmental Concern at or from any location, owned or
operated by the Company or any of the Subsidiaries, as the case may be, or any
violation or alleged violation of any Environmental Law; and (iii) there are no
past or present actions, activities, conditions, events or incidents that could
be reasonably expected to form the basis of any such Environmental Claim; the
term "MATERIALS OF ENVIRONMENTAL CONCERN" means (a) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant
or hazardous, dangerous, or toxic chemical, material, waste or substance
regulated or defined under any other Environmental Law.
(p) Except as otherwise set forth in the Offering Memoran dum
or such as are not material to the business, financial condition or results of
14
<PAGE>
operation of the Company and its subsidiaries taken as a whole, the Company and
each of its Subsidiaries has good title, free and clear of all liens, claims,
encumbrances and restrictions except liens for taxes not yet due and payable, to
all properties and assets described in the Offering Memorandum as being owned by
it except for liens, claims, encumbrances and restrictions which would not,
singly or in the aggregate, have a Material Adverse Effect. All leases to which
the Company or any of its Subsidiaries is a party are valid and binding on the
Company or such Subsidiary and, to the Company's knowledge, on the other party
or parties and, to the knowledge of the Company, no default has occurred or is
continuing thereunder, which might result in any material adverse change in the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole (a "MATERIAL ADVERSE CHANGE").
(q) Deloitte & Touche LLP are independent public accountants
with respect to the Company as required by the Act and the Exchange Act. The
financial statements, together with the related schedules and notes included or
incorporated by reference in the Offering Memorandum (and any amendment or
supplement thereto), comply as to form in all material respects with the
requirements applicable to registration statements on Form S-3 under the Act and
present fairly in all material respects the consolidated financial position,
results of operations and changes in cash flows of the Company and its
consolidated subsidiaries on the basis stated or incorporated by reference in
the Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and the related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
or incorporated by reference in the Offering Memorandum (and any amendment or
supplement thereto) is, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company and its subsidiaries.
(r) The Company and each of the Subsidiaries possess all
certificates, consents, exemptions, orders, permits, licenses, authorizations,
or other approvals (each, an "AUTHORIZATION") of and from, and has made all
declarations and filings with, all Federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, necessary or required to own, lease, license and use its properties
and assets and to conduct its respective business in the manner described in the
Offering Memorandum, except to the extent that the failure to obtain or file
would not, singly or in the aggregate, have a Material Adverse Effect; all such
Authorizations are valid and in full force and effect and the Company and each
of the Subsidiaries are in compliance with the terms and conditions of all such
15
<PAGE>
Authorizations and with the rules and regulations of the regulatory authorities
and governing bodies having jurisdiction with respect thereto, except where the
failure to be in full force and effect or to be in compliance would not, singly
or in the aggregate, have a Material Adverse Effect.
(s) The Company is not (i) an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act"), or (ii) a "holding company" or a "subsidiary company" of a
holding company, or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(t) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to include securities held by such person in the Exchange Offer
Registration Statement or any Shelf Registration Statement required by the
Registration Rights Agreement.
(u) Neither the Company nor any agent thereof acting on the
behalf of it has taken, and none of them will take, any action that might cause
this Agreement or the issuance or sale of the Series A Notes to violate
Regulation T (12 C.R.F. Part 220), Regulation U (12 C.F.R. Part 221) or
Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(v) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on the Company's retaining any rating
assigned to the Company or any securities of the Company or (ii) has indicated
to the Company that it is considering (a) the downgrading, suspension or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any adverse
or negative change in the rating of any securities of the Company.
(w) Since the respective dates as of which the information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) neither the Company, nor any of the Subsidiaries,
has incurred any liabilities or obligations, direct or contingent, which are
material to the Company and the Subsidiaries taken as a whole, nor entered into
any transaction not in the ordinary course of business and (ii) there has not
been, singly or in the aggregate, any Material
16
<PAGE>
Adverse Change or any development which may reasonably be expected to involve a
Material Adverse Change.
(x) The Company is subject to Section 13 or 15(d) of the
Exchange Act.
(y) When the Series A Notes are issued and delivered pursuant
to this Agreement, the Series A Notes will not be of the same class (within the
meaning of Rule 144A under the Act) as any security of the Company that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(z) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company or any of its
representatives (other than the Initial Purchasers, as to whom the Company makes
no representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.
(aa) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
(bb) None of the Company nor any of its affiliates or any
person acting on behalf of any of them (other than the Initial Purchasers, as to
whom the Company makes no representation) has engaged or will engage in any
directed selling efforts within the meaning of Regulation S under the Act
("REGULATION S") with respect to the Series A Notes.
(cc) The Series A Notes offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions within the meaning of Regulation S.
(dd) The sale of the Series A Notes pursuant to Regulation S
is not part of a plan or scheme to evade the registration provisions of the Act.
17
<PAGE>
(ee) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to the Initial Purchasers as
contemplated hereby or for the Exempt Resales on the terms set forth in the
Offering Memorandum assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(ff) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty of the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Company, and agrees that:
(a) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A
Notes with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
(c) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) has been or will be used by
such Initial Purchaser or any of its representatives in connection with the
offer and sale of the Series A Notes pursuant hereto, including, but not limited
to, articles, notices or other communications published in any newspaper,
magazine or similar medium or broadcast over television or radio, or any seminar
or meeting whose attendees have been invited by any general solicitation or
general advertising.
18
<PAGE>
(d) In connection with Exempt Resales, such Initial Purchaser
will solicit offers to buy the Series A Notes only from, and will offer to sell
the Series A Notes only to, Eligible Purchasers. Each Initial Purchaser further
agrees that it will offer to sell the Series A Notes only to, and will solicit
offers to buy the Series A Notes only from (1)(A) QIBs who, in purchasing the
Series A Notes will be deemed to have represented and agreed that (x) they are
purchasing the Series A Notes for their own accounts or accounts with respect to
which they exercise sole investment discretion and that they or such accounts
are QIBs and (y) they acknowledge that the seller of such Series A Notes may be
relying on the exemption from the provisions of Section 5 of the Act provided by
Rule 144A thereunder and that such Series A Notes will not have been registered
under the Act and (B) Regulation S Purchasers who, in purchasing the Series A
Notes, will be deemed to have represented and agreed that their purchase of
Series A Notes pursuant to Regulation S is not part of a plan or a scheme to
evade the registration provisions of the Act and (2) Eligible Purchasers that
agree that (x) Series A Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k) under
the Act (taking into account the provisions of Rule 144(d) under the Act, if
applicable), as in effect on the date of the transfer of such Series A Notes,
only (I) to the Company, (II) to a person whom the seller reasonably believes is
a QIB purchasing for its own account or for the account of a QIB in a
transaction meeting the requirements of Rule 144A under the Act, (III) in an
offshore transaction (as defined in Rule 902 under the Act) meeting the
requirements of Rule 903 or 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an institutional "accredited
investor," as defined in Rule 501(a)(1), (2), (3) or (7) under the Act that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Note (the form of which will be attached as ANNEX A to the Offering
Memorandum) and, if such transfer is in respect of an aggregate principal amount
of Series A Notes less than $250,000, an opinion of counsel acceptable to the
Company that such transfer is in compliance with the Act, (VI) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
acceptable jurisdiction and (y) they will deliver to each person to whom such
Series A Notes or an interest therein is transferred a notice substantially to
the effect of the foregoing.
19
<PAGE>
(e) Neither such Initial Purchaser nor any of its affiliates
or any person acting on its behalf has engaged in any directed selling efforts
within the meaning of Regulation S with respect to the Series A Notes.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that is has offered the
Series A Notes and will offer and sell the Series A Notes (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering of the Series A Notes and the Closing Date, only in
accordance with Rule 903 of Regulation S or another exemption from the
registration requirements of the Securities Act. Accordingly, neither such
Initial Purchaser, its affiliates nor any persons acting on its or their behalf
has engaged or will engage in any directed selling efforts within the meaning of
Rule 901(b) of Regulation S with respect to the Series A Notes, and such Initial
Purchaser, its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirements of
Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes, it will have sent to each distributor,
dealer or person receiving a selling concession, fee or other remuneration that
purchases Series A Notes from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the 'Securities Act'), and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
Offering and the Closing Date, except in either case in accordance with
Regulation S (or Rule 144A or to Accredited Investors in transactions that
are exempt from the registration requirements of the Securities Act) under
the Securities Act. Terms used above have the meanings assigned to them in
Regulation S."
20
<PAGE>
Such Initial Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Series A Notes, except with its affiliates or with the prior written consent
of the Company.
(j) Such Initial Purchaser (i) has not offered or sold and
will not offer or sell any Series A Notes to persons in the United Kingdom prior
to the expiry of the period of six months from the issue date of the Series A
Notes, except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their business or otherwise in circumstances which have not resulted
and will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (ii) has complied
and will comply with all applicable provisions of the Financial Services Act
1986 with respect to anything done by it in relation to the Series A Notes in,
from or otherwise involving the United Kingdom and (iii) has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance or the Series A Notes to a person
who is of a kind described in Article 11(3) of the Financial Services Act of
1986 (Investment Advertise ments) (Exemptions) Order 1996 or is a person to whom
the document may otherwise lawfully be issued or passed on.
(k) Such Initial Purchaser will not offer, sell or deliver any
of the Series A Notes in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and will take at its owns expense whatever action is required to permit its
purchase and resale of the Series A Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
The Initial Purchasers acknowledge that the Company and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and the
Initial Purchasers hereby consent to such reliance.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Securities
21
<PAGE>
Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering Memorandum
(or any amendment or supplement thereto) or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Initial Purchaser furnished to the Company in writing by such
Initial Purchaser expressly for use therein.
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through you expressly for use
in the Offering Memorandum or any amendment or supplement thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than
22
<PAGE>
one separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by BT Alex. Brown
Incorporated, in the case of parties indemnified pursuant to Section 8(a), and
by the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable consider ations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of the Series A
Notes shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Series A Notes (before deducting expenses)
received by the Company and the total discounts and commissions received by the
Initial Purchasers bear to the total price to investors of the Series A Notes,
in each case as set forth in the table on the cover of the Offering Memorandum.
The relative fault of the Company on the one hand and the Initial Purchasers on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Initial Purchasers and the parties' relative intent,
knowledge, access
23
<PAGE>
to information and opportunity to correct or prevent such statement or omission.
The Initial Purchasers' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal amount of Series
A Notes they have purchased hereunder, and not joint.
(e) The Company and the Initial Purchasers agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
price at which the Series A Notes purchased by an Initial Purchaser were sold to
investors in Exempt Resales exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Series A Notes.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
24
<PAGE>
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's debt securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole, from that set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in the judgment of the Initial
Purchasers, is material and adverse and that makes it, in the judgment of
the Initial Purchasers, impractica ble to market the Series A Notes on the
terms and in the manner contemplated in the Offering Memorandum.
(b) The Initial Purchasers shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 9(a)(i) above and to the effect
that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date. The
officer signing and delivering such certificate may rely upon the best of his or
her knowledge as to proceedings threatened.
(c) No action shall have been taken (including the issuance of
any stop order) and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency which would, as of the
Closing Date, have a Material Adverse Effect;
(d) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to you and your counsel), dated the Closing Date,
of Latham & Watkins, counsel for the Company, to the effect that:
(i) the Company and its subsidiaries listed on a
schedule to such opinion (collectively, the "Material Subsidiaries") have
each been duly incorporated and are validly existing and in good standing
under
25
<PAGE>
applicable corporate law of their respective states of incorporation. The
Company and its Material Subsidiaries each have the corporate power and
authority to own, lease and operate their respective properties and to
conduct their respective businesses as described in the Offering
Memorandum;
(ii) this Agreement has been duly authorized, executed
and delivered by the Company;
(iii) the Series A Notes have been duly authorized and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of the
Company, enforceable in accordance with their terms;
(iv) the statements in the Offering Memorandum under the
captions "Exchange Offer; Registration Rights," "Description of Notes,"
and "Plan of Distribution" (but only the statements that summarize the
provisions of this Agreement) insofar as such statements constitute a
summary of legal mat ters, documents or proceedings referred to therein,
are accurate in all material respects;
(v) the Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms;
(vi) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable in accordance with its
terms;
(vii) the execution, delivery and performance by the
Company of this Agreement and the other Operative Documents and the
consummation of the transactions contemplated hereby and thereby will not
(A) to the best of such counsel's knowledge, require any consent,
approval, authori zation or other order of, or filing with, any federal,
California, New York, Illinois or District of Columbia court or
governmental agency or body (except such as may be required under state
securities or Blue Sky laws), (B) conflict with or constitute a breach of
any of the terms or provisions of the certificate of incorporation or
by-laws of the Company or any of its Subsidiaries, or (C) vio-
26
<PAGE>
late or conflict with any federal, California, New York, Illinois or
District of Columbia statute, rule or regulation applicable to the Company
or its subsid iaries or the General Corporation Law of the State of the
Delaware (other than federal or state securities laws, which are
specifically addressed elsewhere herein), except for such conflicts and
violations as to which the Company has obtained the necessary consents or
waivers;
(viii) neither the Company nor any of the Subsidiaries
is an "investment company" within the meaning of the Investment Company
Act of 1940, as amended;
(ix) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and regulations
of the Commission applicable to an indenture which is qualified
thereunder. It is not necessary in connection with the offer, sale and
delivery of the Series A Notes to the Initial Purchasers in the manner
contemplated by this Agreement or in connection with the Exempt Resales to
qualify the Indenture under the TIA;
(x) the Offering Memorandum, as of its date, and each
amendment or supplement thereto, as of its date, complied with the
requirements of Rule 144A(d)(4) of the Act;
(xi) when the Series A Notes are issued and delivered
pursuant to this Agreement, the Series A Notes will not be of the same
class (within the meaning of Rule 144A under the Act) as any securities of
the Company that are listed on a national securities exchange registered
under Section 6 of the Exchange Act or that are quoted in a United States
automated inter-dealer quotation system; and
(xii) no registration under the Act of the Series A
Notes is required for the sale of the Series A Notes to the Initial
Purchasers as contemplated by this Agreement or for the Exempt Resales
assuming the accuracy of the Initial Purchasers' representations and
agreements contained in Section 7 of this Agreement, and, in the case of
Exempt Resales, compliance with the terms of the Notes.
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of the Initial
27
<PAGE>
Purchasers and their counsel, at which the contents of the Offering Memorandum
and related matters were discussed and, although they are not passing upon, and
do not assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Offering Memorandum (except as set forth in
paragraph (iv) above) and have not made any independent check or verification
thereof, during the course of such participation, no facts came to their
attention that caused them to believe that the Offering Memorandum (as amended
or supplemented, if applicable), as of its date or as of the Closing Date,
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that such
counsel shall express no belief with respect to the financial statements and
other financial data included or incorporated by reference in or omitted from
the Offering Memorandum.
In rendering the opinion set forth in paragraphs (iii), (v) and (vi)
above, such counsel may state that such opinion is subject to the following
exceptions, limita tions and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, fraudulent transfers or obligations, moratorium or
other similar laws now or hereafter in effect relating to or affecting the
rights and remedies of creditors; (ii) the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or law, and
the discretion of the court before which any proceeding therefor may be brought;
and (iii) the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or contribution to
a party with respect to a liability where such indemnification or contribution
is contrary to public policy.
Such opinion shall be rendered to the Initial Purchasers at the
request of the Company and shall so state therein.
(e) The Representatives shall have received on the Closing
Date an opinion, dated the Closing Date, of Jennifer L. Adams, Executive Vice
President, Chief Legal and Administrative Officer and Secretary of the Company,
to the effect that:
(i) to the best of such counsel's knowledge, there is no
action, suit or proceeding before or by any court or governmental agency
or body pending against the Company or any Subsidiary or any of their
respective properties which might result, singly or in the aggregate, in a
Material Adverse Effect.
28
<PAGE>
(ii) to such counsel's knowledge, the execution and
delivery of the Purchase Agreement, the Registration Rights Agreement and
Indenture by the Company does not violate any order of any court or govern
mental agency or body having jurisdiction over the Company or any of its
properties; and
(iii) to such counsel's knowledge, all of the
outstanding capital stock of each of the Subsidiaries is owned of record,
directly by the Com pany or by a subsidiary of the Company, either
directly or indirectly, free and clear of any security interest, claim,
lien or encumbrance, other than any security interests which may be
described in the Offering Memorandum; to such counsel's knowledge, there
are no outstanding rights, warrants or options to ac quire, or instruments
convertible into or exchangeable for, any shares of capital stock or other
equity interest in any Subsidiary, except as may be described in the
Offering Memorandum.
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of the Initial Purchasers and their counsel, at which the
contents of the Offering Memorandum and related matters were discussed and,
although such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum and has not made any independent check or
verification thereof, during the course of such participation (relying as to
materiality to the extent deemed appropriate upon the statements of officers and
other representatives of the Company), no facts came to such counsel's attention
that caused such counsel to believe that the Offering Memorandum (as amended or
supplemented, if applicable), as of its date or as of the Closing Date,
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that such
counsel shall express no belief with respect to the financial statements,
schedules and other financial and statistical data included or incorporated by
reference in the Offering Memorandum.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom
LLP, special counsel for the Initial Purchasers, in form and substance
reasonably satisfactory to the Initial Purchasers.
29
<PAGE>
(g) The Initial Purchasers shall have received on the Closing
Date, a letter dated the Closing Date in form and substance satisfactory to the
Initial Purchasers from Deloitte & Touche LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information included or incorporated
by reference in the Offering Memoran dum.
(h) The Series A Notes shall have been approved by the NASD
for trading and duly listed in PORTAL.
(i) The Company and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received a counterpart,
conformed as executed, thereof.
(j) The Company shall have executed the Registration Rights
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company.
(k) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company at or prior to the
Closing Date.
(l) On or prior to the Closing Date, the Company shall have
received the Bank Consent, in form and substance reasonably satisfactory to the
Initial Purchasers.
9A. CONDITION OF THE COMPANY'S OBLIGATIONS. The obligations of the
Company to issue and sell the Series A Notes under this Agreement are subject to
the following condition: on or prior to the Closing Date, the Company shall have
received the Bank Consent, in form and substance reasonably satisfactory to the
Company.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the delivery of this Agreement by the parties hereto.
This Agreement shall be subject to termination by notice given by
the Initial Purchasers to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended
30
<PAGE>
or materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Initial Purchasers, is material and adverse and (b) in the case of any of
the events specified in clauses 10(a)(i) through 10(a)(iv), such event, singly
or together with any other such event, makes it, in the judgment of the Initial
Purchasers, impracticable to market the Series A Notes on the terms and in the
manner contemplated in the Offering Memorandum.
If, on the Closing Date any one or more of the Initial Purchasers
shall fail or refuse to purchase Series A Notes that it has or they have agreed
to purchase hereunder on such date, and the aggregate principal amount of Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Series A Notes to be purchased on such date, the other
Initial Purchasers shall be obligated severally in the proportions that the
principal amount of Series A Notes set forth opposite their respective names in
Schedule A bears to the aggregate principal amount of Series A Notes set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as the Initial Purchasers may specify, to purchase the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but
failed or refused to purchase on such date; PROVIDED that in no event shall the
principal amount of Series A Notes that any Initial Purchaser has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 10 by
an amount in excess of one-ninth of such principal amount of Series A Notes
without the written consent of such Initial Purchaser. If, on the Closing Date,
any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
Series A Notes and the aggregate principal amount of Series A Notes with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of Series A Notes to be purchased, and arrangements satisfactory to the
Initial Purchasers and the Company for the purchase of such Series A Notes are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Initial Purchaser or the
Company. In any such case either the Initial Purchasers or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in Offering Memorandum
or in any other documents
31
<PAGE>
or arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to World Color
Press, Inc., The Mill, 340 Pemberwick Road, Greenwich, Conn, Attention:
Executive Vice President, Chief Legal and Administrative Officer and Secretary,
with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New
York 10022, Attention: Steven Della Rocca, Esq.; (ii) if to any Initial
Purchaser, c/o BT Alex. Brown Incorporated, Corporate Finance Department, 130
Liberty Street, 1 BT Plaza, 37th Floor, New York, New York 10006, Attention:
Kris Cicardo, with a copy to Skadden, Arps, Slate, Meagher & Flom LLP at 919
Third Avenue, New York, NY 10022, Attention: Mark C. Smith or (iii) in any case
to such other address as the person to be notified may have requested in
writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of an Initial Purchaser, the officers
or directors of an Initial Purchaser, any person controlling an Initial
Purchaser, the Company, the officers or directors of the Company, or any person
controlling the Company, (ii) acceptance of the Series A Notes and payment for
them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Initial Purchasers
in connection with this Agreement or the offering contemplated hereunder.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein,
32
<PAGE>
the directors of the Company, and their respective successors and assigns, all
as and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the Series A
Notes from the Initial Purchasers merely because of such purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
33
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
WORLD COLOR PRESS, INC.
By: /s/ Jennifer L. Adams
--------------------------------
Name: Jennifer L. Adams
Title: Executive Vice President
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
BT ALEX. BROWN INCORPORATED
CIBC OPPENHEIMER CORP.
By: BT ALEX. BROWN INCORPORATED
By: /s/ Michael R. Duckworth
--------------------------------
Name: Michael R. Duckworth
Title: Managing Director
<PAGE>
SCHEDULE A
Principal
Initial Purchaser Amount of Notes
----------------- ---------------
BT Alex. Brown Incorporated....................... $150,000,000
CIBC Oppenheimer Corp............................. 150,000,000
=================
Total....................................... $300,000,000
<PAGE>
Exhibit 1.2
CONFORMED COPY
WORLD COLOR PRESS, INC.
$300,000,000
7 3/4 % Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
February 16, 1999
MORGAN STANLEY & CO. INCORPORATED
ABN AMRO INCORPORATED
BANCBOSTON ROBERTSON STEPHENS INC.
CIBC OPPENHEIMER CORP.
FLEET SECURITIES INC.
<PAGE>
$300,000,000
7 3/4 % Senior Subordinated Notes due 2009
of WORLD COLOR PRESS, INC.
PURCHASE AGREEMENT
February 16, 1999
Morgan Stanley & Co. Incorporated
ABN AMRO Incorporated
BancBoston Robertson Stephens Inc.
CIBC Oppenheimer Corp.
Fleet Securities Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
World Color Press, Inc. (the "COMPANY"), a Delaware corporation,
proposes to issue and sell to Morgan Stanley & Co. Incorporated, ABN AMRO
Incorporated, BancBoston Robertson Stephens Inc., CIBC Oppenheimer Corp. and
Fleet Securities Inc. (each an "INITIAL PURCHASER" and, collectively, the
"INITIAL PURCHASERS") an aggregate of $300,000,000 in principal amount of its
73/4% Senior Subordinated Notes due 2009 (the "SERIES A NOTES"), subject to the
terms and conditions set forth herein. The Series A Notes are to be issued
pursuant to the provisions of an indenture (the "INDENTURE"), to be dated as of
the Closing Date (as defined below), among the Company and Bank of New York, as
trustee thereunder (the "TRUSTEE"). The Series A Notes and the Series B Notes
(as defined below) issuable in exchange therefor are collectively referred to
herein as the "NOTES." The Notes will have the terms and conditions set forth
in Exhibit A hereto.
1. OFFERING MEMORANDUM. The Series A Notes will be offered and sold to
the Initial Purchasers pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "ACT"). The
Company
<PAGE>
will prepare an offering memorandum relating to the Series A Notes. Such
offering memorandum (including material incorporated therein by reference) is
hereinafter referred to as the "OFFERING MEMORANDUM."
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities (other than the Series B Notes) issued in exchange therefor, in
substitution thereof or upon conversion thereof) shall bear the following
legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT)(A "QIB"), (B) IT IS ACQUIRING THIS NOTE
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT), (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"), OR (D) IT HAS OTHERWISE ACQUIRED THIS NOTE OR A
BENEFICIAL INTEREST HEREIN IN ACCORDANCE WITH THE TERMS OF THE INDENTURE
RELATING TO THIS NOTE AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE
SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE
DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURI-
3
<PAGE>
TIES ACT (IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN
BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING RESTRICTIONS."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions contained herein, the Company agrees to issue and sell to the
Initial Purchasers, and the Initial Purchasers agree, severally and not jointly,
to purchase from the Company, the principal amount of Series A Notes set forth
opposite the name of such Initial Purchaser on Schedule A hereto at a purchase
price equal to 98.15% of the principal amount thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING. The Initial Purchasers have advised the Company
that the Initial Purchasers will make offers (the "EXEMPT RESALES") of the
Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS") or (ii) persons permitted to purchase the
Series A Notes in offshore
4
<PAGE>
transactions in reliance upon Regulation S under the Act (each, a "REGULATION S
PURCHASER") (such persons specified in clauses (i) and (ii) being referred to
herein as the "ELIGIBLE PURCHASERS"). The Initial Purchasers will offer the
Series A Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date (as defined
below), in substantially the form of Exhibit B hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"COMMISSION"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 7 3/4 % Series B Senior Subordinated Notes due 2009 (the
"SERIES B NOTES"), to be offered in exchange for the Series A Notes (such offer
to exchange being referred to as the "EXCHANGE OFFER") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "SHELF
REGISTRATION STATEMENT" and, together with the Exchange Offer Registration
Statement, the "REGISTRATION STATEMENTS") relating to the resale by certain
holders of the Series A Notes and use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(1) Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the office of Skadden, Arps, Slate, Meagher & Flom LLP at
919 Third Avenue, New York, New York, 10022-3897, or such other location as may
be mutually acceptable. Such delivery and payment shall be made at 9:00 a.m.,
New York City time, on February 23, 1999, or at such other time as shall be
agreed upon by the Initial Purchasers and the Company. The time and date of
such delivery and payment are herein called the "CLOSING DATE."
(2) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the
5
<PAGE>
aggregate principal amount of the Series A Notes (collectively, the "GLOBAL
NOTES") shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY. The Company hereby agrees with each
Initial Purchaser as follows:
(1) To advise the Initial Purchasers promptly and, if requested by an
Initial Purchaser, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for offering or sale in any
jurisdiction designated by an Initial Purchaser pursuant to Section 5(e) hereof,
or the initiation of any proceeding by any state securities commission or any
other federal or state regulatory authority for such purpose and (ii) of the
happening of any event during the period referred to in Section 5(d) hereof that
makes any statement of a material fact made in the Offering Memorandum untrue or
that requires any additions to or changes in the Offering Memorandum in order to
make the statements therein, in the light of the circumstances under which they
are made, not misleading. The Company shall use its reasonable efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any Series A Notes under any state securities or Blue Sky laws and,
if at any time any state securities commission or other federal or state
regulatory authority shall issue an order suspending the qualification or
exemption of any Series A Notes under any state securities or Blue Sky laws, the
Company shall use its reasonable efforts to obtain the withdrawal or lifting of
such order at the earliest practicable time.
(2) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company, without charge, as many copies of the
Offering Memorandum, and any amendments or supplements thereto, as the Initial
Purchasers may reasonably request. Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Offering Memorandum,
and any amendments and supplements thereto required pursuant hereto, by the
Initial Purchasers in connection with Exempt Resales.
6
<PAGE>
(3) During the period referred to in Section 5(d) hereof, (i) not to
make any amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised; PROVIDED, HOWEVER,
that notwithstanding the Initial Purchasers' objection such amendment or
supplement may be effected if counsel to the Company reasonably determines that
the Company would be adversely affected if such amendment or supplement is not
effected; and (ii) to prepare promptly upon the Initial Purchasers' reasonable
request, any amendment or supplement to the Offering Memorandum which may be
necessary or advisable in connection with Exempt Resales.
(4) If, after the date hereof during such period as in the opinion of
counsel for the Initial Purchasers an Offering Memorandum is required by law to
be delivered in connection with Exempt Resales by the Initial Purchasers, which
period shall end no later than the earlier of (i) the date on which the Initial
Purchasers' distribution of the Notes is complete or (ii) the date on which a
shelf registration statement for the benefit of the Initial Purchasers becomes
effective pursuant to the Registration Rights Agreement, any event shall occur
or condition exist as a result of which it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with applicable law, forthwith to prepare an appropriate
amendment or supplement to such Offering Memorandum so that the statements
therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(5) Prior to the sale of the Series A Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchasers and
counsel to the Initial Purchasers in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial Purchasers
and pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may request and to continue such
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith to register or qualify as
a
7
<PAGE>
foreign corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service of
process or taxation in any jurisdiction in which it is not now so subject.
(6) So long as the Notes are outstanding, to promptly furnish to the
Initial Purchasers a copy of its annual report to stockholders for such year;
and to promptly furnish to the Initial Purchasers a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or mailed to
stockholders.
(7) During the period of two years after the Closing Date, without
the prior written consent of Morgan Stanley & Co. Incorporated, not to, and not
to permit any of its affiliates (as defined in Rule 144 under the Act) to,
resell any of the Notes that have been reacquired by any of them, except for
sales of Notes purchased by the Company or any of its affiliates and resold in
transactions registered under the Securities Act.
(8) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to performance of the obligations of the Company under this
Agreement including: (i) the fees, disbursements and expenses of counsel to the
Company and accountants of the Company in connection with the sale and delivery
of the Series A Notes to the Initial Purchasers and pursuant to Exempt Resales,
and all other fees or expenses in connection with the preparation, printing,
filing and distribution of the Offering Memorandum and all amendments and
supplements thereto (including financial statements) prior to or during the
period specified in Section 5(d) hereof, including the mailing and delivering of
copies thereof to the Initial Purchasers and persons designated by them as
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Series A Notes to the Initial Purchasers and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, (iii) all costs
of printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the reasonable filing fees and fees and disbursements of
counsel for the Initial Purchasers in connection with such registration or
qualification and memoranda relating thereto), (v) the cost of printing
certificates representing the Series A Notes, (vi) all expenses and listing fees
in
8
<PAGE>
connection with the application for quotation of the Series A Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated Quotation
System - PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and
Trustee's counsel in connection with the Indenture and the Notes, (viii) the
costs and charges of any transfer agent, registrar and/or depositary (including
DTC), (ix) any fees charged by rating agencies for the rating of the Notes, (x)
all costs and expenses of the Exchange Offer and any Registration Statement, as
set forth in the Registration Rights Agreement, and (xii) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section 5.
(9) To use its reasonable best efforts to assist the Initial
Purchasers in effecting the inclusion of the Series A Notes in PORTAL and to
maintain the listing of the Series A Notes on PORTAL for so long as the Series A
Notes are outstanding.
(10) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company to DTC relating to the approval of the Notes by DTC for
"book entry" transfer.
(11) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
warrants, rights or options to purchase or otherwise acquire debt securities of
the Company substantially similar to the Notes (other than (i) the Notes and
(ii) commercial paper issued in the ordinary course of business), without the
prior written consent of the Initial Purchasers.
(12) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(13) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(14) To comply with all of its agreements set forth in the
Registration Rights Agreement.
9
<PAGE>
(15) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As of the date hereof,
the Company represents and warrants to each Initial Purchaser that:
(1) The Offering Memorandum will not, and any supplement or amendment
thereto will not, at the date of the Offering Memorandum and at the date of such
supplements or amendments, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or omissions
from the Offering Memorandum (or any supplement or amendment thereto) made in
reliance upon and in conformity with information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers or on
their behalf with their consent expressly for use therein. No stop order
preventing the use of the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued.
(2) Except as disclosed in the Offering Memorandum, the Company's
Annual Report on Form 10-K most recently filed with the Commission and all
subsequent reports which have been filed by the Company with the Commission or
sent to the stockholders pursuant to the Exchange Act did not include, as of
their respective dates, any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Such documents, when
they were filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
(3) The Company and each of the Company's "significant subsidiaries"
as such term is defined in Rule 1-02 of Regulation S-X under the Act (each a
"Subsidiary" and collectively, the "Subsidiaries") has been duly organized, is
validly existing in good standing under the laws of its jurisdiction of
formation and has the requisite corporate power and authority to carry on its
business as described in the Offering Memorandum and to own, lease and operate
its properties, and each is duly
10
<PAGE>
qualified and is in good standing as a foreign entity authorized to do business
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the business, results
of operations or condition (financial or otherwise) of the Company and its
subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(4) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Subsidiary have been duly and validly
authorized and issued, and, as of the Closing Date, all of the shares of capital
stock of, or other ownership interests in, each Subsidiary will be owned of
record by the Company, either directly or indirectly through one or more of its
subsidiaries, free and clear of any security interest, mortgage, pledge, claim,
lien or encumbrance (each, a "Lien") other than (i) as created by the Second
Amended and Restated Credit Agreement dated as of June 6, 1997 among the
Company, the Lenders party thereto and Bankers Trust Company, as agent, as
amended, and (ii) such other Liens as are not, individually or in the aggregate,
material to the Company and its subsidiaries, taken as a whole. All such shares
of capital stock are fully paid and nonassessable and, on the Closing Date, will
be fully paid and nonassessable. On the Closing Date, there will be no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities or commitments of sale related to or entitling any person to purchase
or otherwise to acquire any shares of the capital stock of, or other ownership
interest in, any Subsidiary.
(5) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and were
not issued in violation of any preemptive or similar rights.
(6) This Agreement has been duly authorized, executed and delivered
by the Company.
(7) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been validly executed and delivered by the Company.
When the Indenture has been duly executed and delivered by the Company, the
Indenture will be a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms (assuming the due execution and
delivery of the Indenture by the Trustee), subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and general
principles of equity.
11
<PAGE>
(8) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When the
Series A Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and general principles of equity. On the Closing Date, the
Series A Notes will conform in all material respects as to legal matters to the
description thereof contained in the Offering Memorandum.
(9) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and general
principles of equity.
(10) The Registration Rights Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company. When the Registration Rights Agreement has been duly executed and
delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and general principles of equity. On the Closing
Date, the Registration Rights Agreement will conform in all material respects as
to legal matters to the description thereof contained in the Offering
Memorandum.
(11) Neither the Company nor any of its Subsidiaries is (a) in
violation of its respective charter or by-laws or (b) in default in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other agreement,
indenture or instrument, to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or their respective
properties is bound except, with respect to defaults referred to in clause (b),
such as would not, singly or in the aggregate, have a Material Adverse Effect,
nor has any event occurred which with notice or lapse of time or both would
constitute such a violation or default.
12
<PAGE>
(12) The execution, delivery and performance of this Agreement, the
Indenture, the Series A Notes, the Series B Notes and the Registration Rights
Agreement by the Company and compliance by the Company with all provisions
hereof and thereof and the consummation of the transactions contemplated hereby
and thereby will not require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various states),
except for consents, approvals, authorizations or orders which would not, singly
or in the aggregate, have a Material Adverse Effect and would not materially and
adversely affect the consummation of this Agreement, the Registration Rights
Agreement, the Indenture or the transactions contemplated hereby and thereby,
and will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter, by-laws or other organizational
documents, as the case may be, of the Company or any of its Subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or their respective
property is bound, or violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, any of its Subsidiaries or their
respective property, except for such conflicts, violations or breaches which
would not, singly or in the aggregate, have a Material Adverse Effect and would
not materially and adversely affect the consummation of this Agreement, the
Registration Rights Agreement, the Indenture or the transactions contemplated
hereby and thereby, and except for such conflicts, violations or breaches as to
which the Company has obtained the necessary consents or waivers.
(13) Other than as described in the Offering Memorandum, there is no
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, pending against the Company or any of its
Subsidiaries or any of their respective properties which could reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect or which
might materially and adversely affect the consummation of this Agreement, the
Registration Rights Agreement, the Indenture or the transactions contemplated
hereby and thereby, and, to the Company's knowledge, no such proceedings are
threatened.
(14) No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the execution, delivery and performance of any of the Operative
Documents, the issuance of the Series A Notes, or suspends the sale of the
Series A
13
<PAGE>
Notes in any jurisdiction referred to in Section 5(e) hereof; and no injunction,
restraining order or other relief of any nature by a federal or state court or
other tribunal of competent jurisdiction has been issued with respect to the
Company which would prevent or suspend the issuance or sale of the Series A
Notes in any jurisdiction referred to in Section 5(e) hereof.
(15) Except as disclosed in the Offering Memorandum or as would not,
singly or in the aggregate, have a Material Adverse Effect: (i) the Company and
each of the Subsidiaries is in compliance with all laws and regulations relating
to protection of human health or environment or imposing liability or standards
of conduct concerning any Materials of Environmental Concern (as defined below)
("ENVIRONMENTAL LAWS") applicable to it, including, without limitation,
possession of required permits and compliance with the terms and conditions
thereof, and there are no circumstances known to the Company that will prevent
such compliance in the future; (ii) neither the Company nor any of the
Subsidiaries has received any written notice, and there is no pending or, to the
Company's knowledge, threatened action, suit or proceeding before or by any
court or governmental agency or body ("ENVIRONMENTAL CLAIM"), alleging potential
liability (including, but not limited to, investigatory, cleanup or governmental
response costs, natural resources or property damages, personal injuries, or
penalties) of the Company or any of the Subsidiaries or any person or entity for
whom the Company or any of the Subsidiaries has contractually retained or
assumed responsibility, arising out of, based on, or resulting from the
presence, or release, discharge, emission or disposal into the environment, of
any Materials of Environmental Concern at or from any location, owned or
operated by the Company or any of the Subsidiaries, as the case may be, or any
violation or alleged violation of any Environmental Law; and (iii) there are no
past or present actions, activities, conditions, events or incidents that could
be reasonably expected to form the basis of any such Environmental Claim; the
term "MATERIALS OF ENVIRONMENTAL CONCERN" means (a) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (b) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or contaminant
or hazardous, dangerous, or toxic chemical, material, waste or substance
regulated or defined under any other Environmental Law.
(16) Except as otherwise set forth in the Offering Memorandum or such
as are not material to the business, financial condition or results of operation
of the Company and its subsidiaries taken as a whole, the Company and each of
its Subsidiaries has good title, free and clear of all liens, claims,
encumbrances and
14
<PAGE>
restrictions except liens for taxes not yet due and payable, to all properties
and assets described in the Offering Memorandum as being owned by it except for
liens, claims, encumbrances and restrictions which would not, singly or in the
aggregate, have a Material Adverse Effect. All leases to which the Company or
any of its Subsidiaries is a party are valid and binding on the Company or such
Subsidiary and, to the Company's knowledge, on the other party or parties and,
to the knowledge of the Company, no default has occurred or is continuing
thereunder, which might result in any material adverse change in the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole (a "MATERIAL ADVERSE CHANGE").
(17) Deloitte & Touche LLP are independent public accountants with
respect to the Company as required by the Act and the Exchange Act. The
financial statements, together with the related schedules and notes included or
incorporated by reference in the Offering Memorandum (and any amendment or
supplement thereto), comply as to form in all material respects with the
requirements applicable to registration statements on Form S-3 under the Act and
present fairly in all material respects the consolidated financial position,
results of operations and changes in cash flows of the Company and its
consolidated subsidiaries on the basis stated or incorporated by reference in
the Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and the related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
or incorporated by reference in the Offering Memorandum (and any amendment or
supplement thereto) is, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company and its subsidiaries.
(18) The Company and each of the Subsidiaries possess all
certificates, consents, exemptions, orders, permits, licenses, authorizations,
or other approvals (each, an "AUTHORIZATION") of and from, and has made all
declarations and filings with, all Federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, necessary or required to own, lease, license and use its properties
and assets and to conduct its respective business in the manner described in the
Offering Memorandum, except to the extent that the failure to obtain or file
would not, singly or in the aggregate, have a Material Adverse Effect; all such
Authorizations are valid and in full force and effect and the Company and each
of the Subsidiaries are in compliance with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory authorities
and governing bodies having jurisdiction with respect thereto, except where the
failure to be
15
<PAGE>
in full force and effect or to be in compliance would not, singly or in the
aggregate, have a Material Adverse Effect.
(19) The Company is not (i) an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment Company
Act"), or (ii) a "holding company" or a "subsidiary company" of a holding
company, or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(20) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
include securities held by such person in the Exchange Offer Registration
Statement or any Shelf Registration Statement required by the Registration
Rights Agreement.
(21) Neither the Company nor any agent thereof acting on the behalf of
it has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Series A Notes to violate Regulation T
(12 C.R.F. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12
C.F.R. Part 224) of the Board of Governors of the Federal Reserve System.
(22) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company that it is considering imposing) any
condition (financial or otherwise) on the Company's retaining any rating
assigned to the Company or any securities of the Company or (ii) has indicated
to the Company that it is considering (a) the downgrading, suspension or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any adverse
or negative change in the rating of any securities of the Company.
(23) Since the respective dates as of which the information is given
in the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) neither the Company, nor any of the Subsidiaries, has
incurred any liabilities or obligations, direct or contingent, which are
material to the Company and the Subsidiaries taken as a whole, nor entered into
any transaction not in the ordinary course of business and (ii) there has not
been, singly or in the aggregate, any Material Adverse Change or any development
which may reasonably be expected to involve a Material Adverse Change.
16
<PAGE>
(24) The Company is subject to Section 13 or 15(d) of the Exchange
Act.
(25) When the Series A Notes are issued and delivered pursuant to this
Agreement, the Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated inter-dealer quotation system.
(26) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company or any of its
representatives (other than the Initial Purchasers, as to whom the Company makes
no representation) in connection with the offer and sale of the Series A Notes
contemplated hereby, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.
(27) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(28) None of the Company nor any of its affiliates or any person
acting on behalf of any of them (other than the Initial Purchasers, as to whom
the Company makes no representation) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S under the Act
("REGULATION S") with respect to the Series A Notes.
(29) The Series A Notes offered and sold in reliance on Regulation S
have been and will be offered and sold only in offshore transactions within the
meaning of Regulation S.
(30) The sale of the Series A Notes pursuant to Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(31) No registration under the Act of the Series A Notes is required
for the sale of the Series A Notes to the Initial Purchasers as contemplated
17
<PAGE>
hereby or for the Exempt Resales on the terms set forth in the Offering
Memorandum assuming the accuracy of the Initial Purchasers' representations and
warranties and agreements set forth in Section 7 hereof.
(a) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty of the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers, will rely
upon the accuracy and truth of the foregoing representations and hereby consent
to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Company, and agrees that:
(1) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(2) Such Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
(3) No form of general solicitation or general advertising (within
the meaning of Regulation D under the Act) has been or will be used by such
Initial Purchaser or any of its representatives in connection with the offer and
sale of the Series A Notes pursuant hereto, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
18
<PAGE>
(4) In connection with Exempt Resales, such Initial Purchaser
will solicit offers to buy the Series A Notes only from, and will offer to sell
the Series A Notes only to, Eligible Purchasers. Each Initial Purchaser further
agrees that it will offer to sell the Series A Notes only to, and will solicit
offers to buy the Series A Notes only from (1)(A) QIBs who, in purchasing the
Series A Notes will be deemed to have represented and agreed that (x) they are
purchasing the Series A Notes for their own accounts or accounts with respect to
which they exercise sole investment discretion and that they or such accounts
are QIBs and (y) they acknowledge that the seller of such Series A Notes may be
relying on the exemption from the provisions of Section 5 of the Act provided by
Rule 144A thereunder and that such Series A Notes will not have been registered
under the Act and (B) Regulation S Purchasers who, in purchasing the Series A
Notes, will be deemed to have represented and agreed that their purchase of
Series A Notes pursuant to Regulation S is not part of a plan or a scheme to
evade the registration provisions of the Act and (2) Eligible Purchasers that
agree that (x) Series A Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k) under
the Act (taking into account the provisions of Rule 144(d) under the Act, if
applicable), as in effect on the date of the transfer of such Series A Notes,
only (I) to the Company, (II) to a person whom the seller reasonably believes is
a QIB purchasing for its own account or for the account of a QIB in a
transaction meeting the requirements of Rule 144A under the Act, (III) in an
offshore transaction (as defined in Rule 902 under the Act) meeting the
requirements of Rule 903 or 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an institutional "accredited
investor," as defined in Rule 501(a)(1), (2), (3) or (7) under the Act that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Note (the form of which will be attached as EXHIBIT C to the Series A
Notes) and, if such transfer is in respect of an aggregate principal amount of
Series A Notes less than $250,000, an opinion of counsel acceptable to the
Company that such transfer is in compliance with the Act, (VI) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
acceptable jurisdiction and (y) they will deliver to each person to whom such
Series A Notes or an interest therein is transferred a notice substantially to
the effect of the foregoing.
(5) Neither such Initial Purchaser nor any of its affiliates or any
person acting on its behalf has engaged in any directed selling efforts within
the meaning of Regulation S with respect to the Series A Notes.
19
<PAGE>
(6) The Series A Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be offered and
sold only in offshore transactions.
(7) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.
(8) Such Initial Purchaser agrees that is has offered the Series A
Notes and will offer and sell the Series A Notes (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the commencement
of the offering of the Series A Notes and the Closing Date, only in accordance
with Rule 903 of Regulation S or another exemption from the registration
requirements of the Securities Act. Accordingly, neither such Initial
Purchaser, its affiliates nor any persons acting on its or their behalf has
engaged or will engage in any directed selling efforts within the meaning of
Rule 901(b) of Regulation S with respect to the Series A Notes, and such Initial
Purchaser, its affiliates and all persons acting on its or their behalf have
complied and will comply with the offering restrictions requirements of
Regulation S.
(9) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Series A Notes, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that purchases
Series A Notes from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the 'Securities Act'), and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
Offering and the Closing Date, except in either case in accordance with
Regulation S (or Rule 144A or to Accredited Investors in transactions that
are exempt from the registration requirements of the Securities Act) under
the Securities Act. Terms used above have the meanings assigned to them in
Regulation S."
Such Initial Purchaser further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or delivery of
the Series A Notes, except with its affiliates or with the prior written consent
of the Company.
20
<PAGE>
(10) Such Initial Purchaser (i) has not offered or sold and will not
offer or sell any Series A Notes to persons in the United Kingdom prior to the
expiry of the period of six months from the issue date of the Series A Notes,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995, (ii) has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Series A Notes in, from or
otherwise involving the United Kingdom and (iii) has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issuance or the Series A Notes to a person who is of a
kind described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.
(11) Such Initial Purchaser will not offer, sell or deliver any of the
Series A Notes in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and will take at its owns expense whatever action is required to permit its
purchase and resale of the Series A Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
The Initial Purchasers acknowledge that the Company and, for purposes
of the opinions to be delivered to each Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchasers hereby consent to such reliance.
8. INDEMNIFICATION.
(1) The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material
21
<PAGE>
fact contained in the Offering Memorandum (or any amendment or supplement
thereto) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Initial
Purchaser furnished to the Company in writing by such Initial Purchaser
expressly for use therein.
(2) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through you expressly for use
in the Offering Memorandum or any amendment or supplement thereto.
(3) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties
22
<PAGE>
indemnified pursuant to Section 8(b). The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(4) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of the Series A
Notes shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Series A Notes (before deducting expenses)
received by the Company and the total discounts and commissions received by the
Initial Purchasers bear to the total price to investors of the Series A Notes,
in each case as set forth in the table on the cover of the Offering Memorandum.
The relative fault of the Company on the one hand and the Initial Purchasers on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Initial Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Initial Purchasers' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of Series A Notes they have purchased hereunder, and
not joint.
23
<PAGE>
(5) The Company and the Initial Purchasers agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Series A Notes purchased by an Initial Purchaser were sold to investors in
Exempt Resales exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(6) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchaser or any person
controlling any Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Series A Notes.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of the
Initial Purchasers to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(1) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(1) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
24
<PAGE>
possible change, in the rating accorded any of the Company's debt
securities by any "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act; and
(2) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in the judgment of the Initial
Purchasers, is material and adverse and that makes it, in the judgment of
the Initial Purchasers, impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Memorandum.
(2) The Initial Purchasers shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Section 9(a)(i) above and to the effect that
the representations and warranties of the Company contained in this Agreement
are true and correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date. The officer
signing and delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.
(b) No action shall have been taken (including the issuance of any
stop order) and no statute, rule, regulation or order shall have been enacted,
adopted or issued by any governmental agency which would, as of the Closing
Date, have a Material Adverse Effect;
(3) The Initial Purchasers shall have received on the Closing Date an
opinion (satisfactory to you and your counsel), dated the Closing Date, of
Latham & Watkins, counsel for the Company, to the effect that:
(1) the Company and its subsidiaries listed on a schedule to
such opinion (collectively, the "Material Subsidiaries") have each been
duly organized and are validly existing and in good standing under
applicable corporate law of their respective states of organization. The
Company and its Material Subsidiaries each have the power and authority to
own, lease and operate their respective properties and to conduct their
respective businesses as described in the Offering Memorandum;
25
<PAGE>
(2) this Agreement has been duly authorized, executed and
delivered by the Company;
(3) the Series A Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of the
Company, enforceable in accordance with their terms;
(4) the Series B Notes have been duly authorized by the Company;
(5) the statements in the Offering Memorandum under the captions
"Exchange Offer; Registration Rights," "Description of Notes," and "Private
Placement" (but only the statements that summarize the provisions of this
Agreement) insofar as such statements constitute a summary of legal
matters, documents or proceedings referred to therein, are accurate in all
material respects;
(6) the Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the
Company, enforceable in accordance with its terms;
(7) the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement
of the Company, enforceable in accordance with its terms;
(8) the execution, delivery and performance by the Company of
this Agreement and the other Operative Documents and the consummation of
the transactions contemplated hereby and thereby will not (A) to the best
of such counsel's knowledge, require any consent, approval, authorization
or other order of, or filing with, any federal, California, New York,
Illinois or District of Columbia court or governmental agency or body
(except such as may be required under state securities or Blue Sky laws),
(B) conflict with or constitute a breach of any of the terms or provisions
of the certificate of incorporation or formation, as the case may be, or
by-laws, operating agreements or partnership agreements, as the case may
be, of the Company or any of its
26
<PAGE>
Subsidiaries, or (C) violate or conflict with any federal, California, New
York, Illinois or District of Columbia statute, rule or regulation
applicable to the Company or its subsidiaries or the General Corporation
Law of the State of the Delaware (other than federal or state securities
laws, which are specifically addressed elsewhere herein), except for such
conflicts and violations as to which the Company has obtained the necessary
consents or waivers;
(9) neither the Company nor any of the Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended;
(10) No registration of the Notes under the Securities Act, and
no qualification of the Indenture under the Trust Indenture Act, is
required for the purchase of the Notes by the Initial Purchasers or the
initial resale of the Notes by the Initial Purchasers to Eligible
Purchasers, in each case, in the manner contemplated by the Purchase
Agreement. We express no opinion, however, as to when or under what
circumstances any Notes initially sold by the Initial Purchasers may be
reoffered or resold.
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of the Initial Purchasers and their counsel, at which the
contents of the Offering Memorandum and related matters were discussed and,
although they are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Offering Memorandum (except as set forth in paragraph (iv) above) and have not
made any independent check or verification thereof, during the course of such
participation, no facts came to their attention that caused them to believe that
the Offering Memorandum (as amended or supplemented, if applicable), as of its
date or as of the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; it
being understood that such counsel shall express no belief with respect to the
financial statements and other financial data included or incorporated by
reference in or omitted from the Offering Memorandum.
In rendering the opinion set forth in paragraphs (iii), (v) and (vi)
above, such counsel may state that such opinion is subject to the following
exceptions, limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, fraudulent transfers or obligations, moratorium or
other similar laws now or hereafter
27
<PAGE>
in effect relating to or affecting the rights and remedies of creditors; (ii)
the effect of general principles of equity, whether enforcement is considered in
a proceeding in equity or law, and the discretion of the court before which any
proceeding therefor may be brought; and (iii) the unenforceability under certain
circumstances under law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to a liability where
such indemnification or contribution is contrary to public policy.
Such opinion shall be rendered to the Initial Purchasers at the
request of the Company and shall so state therein.
(4) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Jennifer L. Adams, Executive Vice President,
Chief Legal and Administrative Officer and Secretary of the Company, to the
effect that:
(1) to the best of such counsel's knowledge, there is no action,
suit or proceeding before or by any court or governmental agency or body
pending against the Company or any Subsidiary or any of their respective
properties which might result, singly or in the aggregate, in a Material
Adverse Effect.
(2) to such counsel's knowledge, the execution and delivery of
the Purchase Agreement, the Registration Rights Agreement and Indenture by
the Company does not violate any order of any court or governmental agency
or body having jurisdiction over the Company or any of its properties; and
(3) to such counsel's knowledge, all of the outstanding capital
stock of each of the Subsidiaries is owned of record by the Company, either
directly or indirectly through one or more of its subsidiaries, free and
clear of any security interest, claim, lien or encumbrance, other than any
security interests which may be described in the Offering Memorandum; to
such counsel's knowledge, there are no outstanding rights, warrants or
options to acquire, or instruments convertible into or exchangeable for,
any shares of capital stock or other equity interest in any Subsidiary,
except as may be described in the Offering Memorandum.
28
<PAGE>
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of the Initial Purchasers and their counsel, at which the
contents of the Offering Memorandum and related matters were discussed and,
although such counsel is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum and has not made any independent check or
verification thereof, during the course of such participation (relying as to
materiality to the extent deemed appropriate upon the statements of officers and
other representatives of the Company), no facts came to such counsel's attention
that caused such counsel to believe that the Offering Memorandum (as amended or
supplemented, if applicable), as of its date or as of the Closing Date,
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; it being understood that such
counsel shall express no belief with respect to the financial statements,
schedules and other financial and statistical data included or incorporated by
reference in the Offering Memorandum.
(5) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers.
(6) The Initial Purchasers shall have received on the Closing Date, a
letter dated the Closing Date in form and substance satisfactory to the Initial
Purchasers from Deloitte & Touche LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information included or incorporated
by reference in the Offering Memorandum.
(7) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(8) The Company and the Trustee shall have entered into the Indenture
and the Initial Purchasers shall have received a counterpart, conformed as
executed, thereof.
29
<PAGE>
(9) The Company shall have executed the Registration Rights Agreement
and the Initial Purchasers shall have received an original copy thereof, duly
executed by the Company.
(10) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required to
be performed or complied with by the Company at or prior to the Closing Date.
(11) The consent from the Lenders under the Company's credit
facilities shall be in full force and effect and shall not have been modified,
amended or rescinded.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the delivery of this Agreement by the parties hereto.
This Agreement shall be subject to termination by notice given by the
Initial Purchasers to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in the judgment of the Initial Purchasers, is material and adverse and (b)
in the case of any of the events specified in clauses 10(a)(i) through
10(a)(iv), such event, singly or together with any other such event, makes it,
in the judgment of the Initial Purchasers, impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Memorandum.
If, on the Closing Date any one or more of the Initial Purchasers
shall fail or refuse to purchase Series A Notes that it has or they have agreed
to purchase hereunder on such date, and the aggregate principal amount of Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Series A Notes to be purchased on such date, the other
Initial Purchasers shall be obligated
30
<PAGE>
severally in the proportions that the principal amount of Series A Notes set
forth opposite their respective names in Schedule A bears to the aggregate
principal amount of Series A Notes set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as the Initial
Purchasers may specify, to purchase the Series A Notes which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
on such date; PROVIDED that in no event shall the principal amount of Series A
Notes that any Initial Purchaser has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 10 by an amount in excess of
one-ninth of such principal amount of Series A Notes without the written consent
of such Initial Purchaser. If, on the Closing Date, any Initial Purchaser or
Initial Purchasers shall fail or refuse to purchase Series A Notes and the
aggregate principal amount of Series A Notes with respect to which such default
occurs is more than one-tenth of the aggregate principal amount of Series A
Notes to be purchased, and arrangements satisfactory to the Initial Purchasers
and the Company for the purchase of such Series A Notes are not made within 36
hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Initial Purchaser or the Company. In any such
case either the Initial Purchasers or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in Offering Memorandum or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Initial Purchaser from liability in
respect of any default of such Initial Purchaser under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to World Color
Press, Inc., The Mill, 340 Pemberwick Road, Greenwich, Conn, Attention:
Executive Vice President, Chief Legal and Administrative Officer and Secretary,
with a copy to Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New
York 10022, Attention: Steven Della Rocca, Esq.; (ii) if to any Initial
Purchaser, c/o Morgan Stanley & Co. Incorporated, Corporate Finance Department,
1585 Broadway, New York, New York 10036, Attention: Jonathan Knee, with a
copy to Skadden, Arps, Slate, Meagher & Flom LLP at 919 Third Avenue, New York,
NY 10022, Attention: Mark C. Smith or (iii) in any case to such other address
as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Series A
Notes, regardless of (i) any
31
<PAGE>
investigation, or statement as to the results thereof, made by or on behalf of
an Initial Purchaser, the officers or directors of an Initial Purchaser, any
person controlling an Initial Purchaser, the Company, the officers or directors
of the Company, or any person controlling the Company, (ii) acceptance of the
Series A Notes and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Initial Purchasers
in connection with this Agreement or the offering contemplated hereunder.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the directors of the Company, and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Series A Notes from the Initial Purchasers merely because of such
purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
32
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
WORLD COLOR PRESS, INC.
By: /s/ Jennifer Adams
---------------------------------
Name: Jennifer Adams
Title: Vice Chairman, Chief Legal and
Administrative Officer
<PAGE>
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
MORGAN STANLEY & CO. INCORPORATED
ABN AMRO INCORPORATED
BANCBOSTON ROBERTSON STEPHENS INC.
CIBC OPPENHEIMER CORP.
FLEET SECURITIES INC.
By: MORGAN STANLEY& CO. INCORPORATED
By: /s/ Jonathan A. Knee
-------------------------------
Name: Jonathan A. Knee
Title: Principal
<PAGE>
SCHEDULE A
Principal
Initial Purchaser Amount of Notes
----------------- ---------------
Morgan Stanley Co. & Incorporated $240,000,000
ABN AMRO Incorporated 15,000,000
BancBoston Robertson Stephens Inc 15,000,000
CIBC Oppenheimer Corp. 15,000,000
Fleet Securities Inc. 15,000,000
============
Total $300,000,000
<PAGE>
Exhibit 4.1
================================================================================
World Color Press, Inc.
$300,000,000
8-3/8% Senior Subordinated Notes due 2008
-------------
INDENTURE
Dated as of November 20, 1998
-------------
The Bank of New York
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.................................................1
Section 1.2 Other Definitions..........................................17
Section 1.3 Incorporation by Reference of Trust Indenture Act..........17
Section 1.4 Rules of Construction......................................18
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating............................................19
Section 2.2 Execution and Authentication...............................19
Section 2.3 Registrar and Paying Agent.................................20
Section 2.4 Paying Agent to Hold Assets in Trust.......................21
Section 2.5 Holder Lists...............................................22
Section 2.6 Transfer and Exchange......................................22
Section 2.7 Replacement Securities.....................................31
Section 2.8 Outstanding Securities.....................................32
Section 2.9 Treasury Securities........................................32
Section 2.10 Temporary Securities.......................................33
Section 2.11 Cancellation...............................................33
Section 2.12 Defaulted Interest.........................................33
Section 2.13 CUSIP Numbers..............................................34
ARTICLE III
OPTIONAL REDEMPTION
Section 3.1 Notices to Trustee.........................................34
Section 3.2 Selection of Securities to be Redeemed.....................34
Section 3.3 Notice of Redemption.......................................35
Section 3.4 Effect of Notice of Redemption.............................36
Section 3.5 Deposit of Redemption Price................................36
Section 3.6 Securities Redeemed in Part................................37
Section 3.7 Optional Redemption........................................37
<PAGE>
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities......................................38
Section 4.2 Maintenance of Office or Agency............................38
Section 4.3 SEC Reports; Financial Statements..........................39
Section 4.4 Compliance Certificate; Notice of Default..................39
Section 4.5 Payment of Taxes and Other Claims..........................40
Section 4.6 Waiver of Stay, Extension and Usury Laws...................41
Section 4.7 Limitations on Restricted Payments.........................41
Section 4.8 Dividends and Payment Restrictions.........................44
Section 4.9 Incurrence of Indebtedness.................................45
Section 4.10 Limitation on Sales of Assets..............................47
Section 4.11 Transactions With Affiliates...............................51
Section 4.12 Limitations on Liens.......................................52
Section 4.13 Investments in Unrestricted Subsidiaries...................52
Section 4.14 Corporate Existence........................................53
Section 4.15 Limitation on Other Subordinated Indebtedness..............53
ARTICLE V
SUCCESSORS
Section 5.1 Merger, Consolidation, or Sale of Assets...................54
Section 5.2 Opinion of Counsel to Trustee; Officers' Certificate.......55
Section 5.3 Successor Corporation Substituted..........................55
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default..........................................56
Section 6.2 Acceleration...............................................58
Section 6.3 Other Remedies.............................................60
Section 6.4 Waiver of Past Defaults....................................60
Section 6.5 Control By Majority........................................61
Section 6.6 Limitations On Suits.......................................61
Section 6.7 Rights of Holders To Receive Payment.......................62
Section 6.8 Collection Suit By Trustee.................................62
Section 6.9 Trustee May File Proofs of Claim...........................62
Section 6.10 Priorities.................................................63
ii
<PAGE>
Section 6.11 Undertaking For Costs......................................64
Section 6.12 Rights and Remedies Cumulative.............................64
Section 6.13 Delay or Omission Not Waiver...............................64
Section 6.14 Restoration of Rights and Remedies.........................64
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee..........................................65
Section 7.2 Rights of Trustee..........................................66
Section 7.3 Individual Rights of Trustee...............................68
Section 7.4 Trustee's Disclaimer.......................................68
Section 7.5 Notice of Default..........................................68
Section 7.6 Reports by Trustee to Holders..............................68
Section 7.7 Compensation and Indemnity.................................69
Section 7.8 Replacement of Trustee.....................................70
Section 7.9 Successor Trustee by Merger, Etc...........................71
Section 7.10 Eligibility; Disqualification..............................71
Section 7.11 Preferential Collection of Claims against Company..........71
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant Defeasance...72
Section 8.2 Legal Defeasance and Discharge.............................72
Section 8.3 Covenant Defeasance........................................73
Section 8.4 Conditions to Legal or Covenant Defeasance.................73
Section 8.5 Deposited Cash and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions...........75
Section 8.6 Repayment to the Company...................................75
Section 8.7 Reinstatement..............................................76
Section 9.1 Supplement Indentures Without Consent of Holders...........77
Section 9.2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders....................................77
Section 9.3 Compliance with TIA........................................79
Section 9.4 Revocation and Effect of Consents..........................79
iii
<PAGE>
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.5 Notation on or Exchange of Securities......................80
Section 9.6 Trustee to Sign Amendments, Etc............................81
ARTICLE X
SUBORDINATION
Section 10.1 Securities Subordinated to Senior Indebtedness.............81
Section 10.2 No Payment on Securities in Certain Circumstances..........81
Section 10.3 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorgani-
zation of Company..........................................83
Section 10.4 Holders to Be Subrogated to Rights of Holders of
Senior Indebtedness........................................84
Section 10.5 Obligations of the Company Unconditional...................85
Section 10.6 Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice.......................................86
Section 10.7 Subordination Rights Not Impaired by Acts or Omis-
sions of Company or Holders of Senior Indebtedness.........86
Section 10.8 Holders Authorize Trustee to Effectuate Subordination
of Securities..............................................87
Section 10.9 Right of Trustee to Hold Senior Indebtedness...............87
Section 10.10 Article Ten Not to Prevent Events of Default...............88
Section 10.11 No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness...............................................88
Section 11.1 Trust Indenture Act Controls...............................88
Section 11.2 Notices....................................................88
Section 11.3 Communication by Holders With Other Holders................90
Section 11.4 Certificate and Opinion as to Conditions Precedent.........90
Section 11.5 Statements Required in Certificate or Opinion..............90
Section 11.6 Rules by Trustee, Paying Agent, Registrar..................91
Section 11.7 Legal Holidays.............................................91
Section 11.8 No Recourse Against Others.................................91
Section 11.9 Governing Law..............................................91
Section 11.10 No Adverse Interpretation of Other Agreements..............92
Section 11.11 Successors.................................................92
Section 11.12 Counterpart Originals......................................92
iv
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.13 Table of Contents, Headings, etc...........................93
Section 11.14 Severability...............................................93
Section 11.15 Qualification of Indenture.................................93
Section 11.16 Registration Rights........................................93
SIGNATURES
EXHIBIT A FORM OF SECURITY
v
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
- --------------- ---------
310 (a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.**
(a)(4)................................................... N.A.
(b)...................................................... 7.8; 7.10; 12.2
(c)...................................................... N.A.
311 (a)...................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
312 (a)...................................................... 2.5
(b)...................................................... 11.3
(c)...................................................... 11.3
313 (a)...................................................... 7.6
(b)(1)................................................... N.A.
(b)(2)................................................... 7.6
(c)...................................................... 7.6; 11.2
(d)...................................................... 7.6
314 (a)...................................................... 4.3; 11.2
(b)...................................................... N.A.
(c)(1)................................................... 12.4
(c)(2)................................................... 12.4
(c)(3)................................................... N.A.
(d)...................................................... N.A.
(e)...................................................... 11.5
(f)...................................................... N.A.
315 (a)...................................................... 7.1(2)
(b)...................................................... 7.5; 12.2
(c)...................................................... 7.1(1)
(d)...................................................... 7.1(3)
(e)...................................................... 6.11
316 (a)(last sentence)....................................... 2.9
(a)(1)(A)................................................ 6.5
(a)(1)(B)................................................ 6.4
(a)(2)................................................... N.A.
(b)...................................................... 6.7
(c)...................................................... 9.4
317 (a)(1)................................................... 6.8
- --------
* This Cross-Reference Table is not part of the Indenture.
** N.A. means not applicable.
vi
<PAGE>
(a)(2)................................................... 6.9
(b)...................................................... 2.4
318 (a)...................................................... 11.1
vii
<PAGE>
INDENTURE, dated as of November 20, 1998, among World Color Press,
Inc., a Delaware corporation (the "Company"), and The Bank of New York, a New
York banking corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders (as defined below) of the
Company's 8-3/8% Senior Subordinated Notes due 2008 (the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 DEFINITIONS.
"ADJUSTED CONSOLIDATED NET INCOME" means, with respect to any Person
for any period, (i) the Consolidated Net Income of such Person for such period,
plus (ii) in the case of the Company and its Restricted Subsidiaries, all cash
received during such period by the Company or any Restricted Subsidiary from its
Unrestricted Subsidiaries from the payment of dividends or distributions
(including tax sharing payments and loans or advances which are junior in right
of payment to the Securities and have a longer Average Life than the
Securities), but only to the extent such cash payments are not otherwise
included in "Adjusted Consolidated Net Income." Each item of Adjusted
Consolidated Net Income will be determined in conformity with GAAP, except that,
for purposes of the application of Accounting Principles Board Opinions Nos. 16
and 17, such Person may select any amortization practice allowable by GAAP up to
40 years, notwithstanding the use of a different amortization in such Person's
consolidated financial statements. Any designation of a Subsidiary of the
Company as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the
time of the calculation of Adjusted Consolidated Net Income of a Subsidiary will
be treated as if it had occurred at the beginning of the applicable period.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to
<PAGE>
direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of voting securities, by agreement or
otherwise.
"AGENT" means any authenticating agent, Registrar, Paying Agent or
transfer agent.
"ASSET SALE" means, with respect to any Person, in one or a series
of related transactions, the sale, lease, conveyance, disposition or other
transfer by the referent Person of any of its assets (including by way of a
sale-and-leaseback and including the sale or other transfer or issuance of any
Capital Stock of any Subsidiary of the referent Person); PROVIDED that
notwithstanding the foregoing, the term "Asset Sale" shall not include the sale,
lease, conveyance, disposition or other transfer of (i) all or substantially all
of the assets of the Company, as permitted pursuant to Section 5.1 hereof, (ii)
any assets between the Company or any Restricted Subsidiary, (iii) any sale,
conveyance, disposition or other transfer or (A) cash and cash equivalents, (B)
inventory in the ordinary course of business and (C) any other tangible or
intangible asset, in each case in the ordinary course of business of the Company
or its Restricted Subsidiaries, or (iv) the sale or discount, in each case
without recourse, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof.
"AVERAGE LIFE" means, as of the date of determination, with respect
to any security or instrument, the quotient obtained by dividing (i) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payment or, in the case of Redeemable
Stock, each successive scheduled mandatory redemption payment of such security
or instrument multiplied by the amount of such principal payment or, in the case
of Redeemable Stock, such mandatory redemption payment, by (ii) the sum of all
such principal payments or, in the case of Redeemable Stock, mandatory
redemption payments.
"BANKRUPTCY LAW" means Title 11, U.S. Code, as amended, or any
similar federal, state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
2
<PAGE>
"BOARD RESOLUTION" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
which would at such time be required to be capitalized on the balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500.0 million or a commercial bank
organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development and having total assets in
excess of $500.0 million with a maturity date not more than one-year from the
date of acquisition, (iii) repurchase obligations with a term of not more than 7
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (ii)
above, (iv) commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition and (v) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (i) through (iv) above.
"COMMON STOCK" means the common stock, par value $0.01 per share,
of the Company.
"COMPANY" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means such successor.
3
<PAGE>
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Adjusted Consolidated Net Income of such Person for such period PLUS
(a) provision for taxes based on income or profits to the extent such provision
for taxes was included in computing Adjusted Consolidated Net Income, PLUS (b)
consolidated Interest Expense, whether paid or accrued, to the extent such
expense was deducted in computing Adjusted Consolidated Net Income (including
amortization of original issue discount and non-cash interest payments), PLUS
(c) (depreciation, amortization and other non-cash charges to the extent such
depreciation, amortization and other non-cash charges were deducted in computing
Adjusted Consolidated Net Income (including amortization of goodwill and other
intangibles); PROVIDED, with respect to the calculation of the Company's Fixed
Charge Coverage Ratio, that if, during such period, (i) such Person or any of
its Subsidiaries shall have made any Asset Sales (other than in the case of the
Company and its Subsidiaries, sales of the Capital Stock of or any assets of
Unrestricted Subsidiaries which constitute Asset Sales), Consolidated Cash Flow
of such Person and its Subsidiaries for such period shall be reduced by an
amount equal to the Consolidated Cash Flow (if positive), to the extent such
Consolidated Cash Flow was included in computing Consolidated Cash Flow,
directly attributable to the assets or Capital Stock which are the subject of
such Asset Sales for such period or increased by an amount equal to the
Consolidated Cash Flow (if negative), to the extent such Consolidated Cash Flow
was included in computing Consolidated Cash Flow, directly attributable thereto
for such period and (ii) such Person or any of its Subsidiaries (other than, in
the case of the Company and its Subsidiaries, Unrestricted Subsidiaries) has
made any acquisition of assets or Capital Stock (occurring by merger or
otherwise), including, without limitation, any acquisition of assets or Capital
Stock occurring in connection with a transaction causing a calculation to be
made hereunder, Consolidated Cash Flow of such Person and its Subsidiaries shall
be calculated (notwithstanding clause (ii) of the definition of Consolidated Net
Income), excluding any expenses which, in the good faith estimate of management,
will be eliminated as a result of such acquisition, as if such acquisition of
assets or Capital Stock (including the incurrence of any Indebtedness in
connection with any such acquisition and the application of the proceeds
thereof) took place on the first day of such period.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person for
any period, the (a) consolidated Interest Expense, whether paid or accrued, to
the extent such expense was deducted in computing Adjusted Consolidated Net
Income (including amortization of original issue discount and non-cash interest
payments) and (b) amount of all cash dividend payments on all series of
preferred stock, other than cash dividends on preferred stock of Unrestricted
Subsidiaries and cash dividends paid to such Person
4
<PAGE>
or its Subsidiaries (other than in the case of the Company and its Restricted
Subsidiaries, Unrestricted Subsidiaries); PROVIDED that if, during such period
(i) such Person or any of its Subsidiaries shall have made any Asset Sales
(other than in the case of the Company and its Subsidiaries, sales of the
Capital Stock of or any assets of Unrestricted Subsidiaries which constitute
Asset Sales), Consolidated Fixed Charges of such Person and its Subsidiaries for
such period shall be reduced by an amount equal to the Consolidated Fixed
Charges directly attributable to the assets which are the subject of such Asset
Sales for such period and (ii) such Person or any of its Subsidiaries (other
than, in the case of the Company and its Subsidiaries, Unrestricted
Subsidiaries) has made any acquisition of assets or Capital Stock (occurring by
merger or otherwise), including, without limitation, any acquisition of assets
or Capital Stock occurring in connection with the transaction causing a
calculation to be made hereunder, Consoli dated Fixed Charges of such Person and
its Subsidiaries shall be calculated on a pro forma basis as if such acquisition
of assets or Capital Stock (including the incurrence of any Indebtedness in
connection with any such acquisition and the application of the proceeds
thereof) took place on the first day of such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Subsidiaries
(other than, in the case of the Company and its Subsidiaries, Unrestricted
Subsidiaries) for such period, on a consolidated basis, determined in accordance
with GAAP, PROVIDED that (i) the net income (or loss) of any Person which is not
a Subsidiary or is accounted for by the equity method of accounting shall be
included only to the extent of the amount of cash dividends or distributions
(including tax sharing payments and loans or advances which are junior in right
of payment to the Securities and have a longer Average Life than the Securities)
paid to the referent Person or a Subsidiary of the referent Person (other than,
in the case of the Company and its Restricted Subsidiaries, Unrestricted
Subsidiaries), (ii) except to the extent includible pursuant to the foregoing
clause (i), the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of such Person or is merged into or consolidated with such
Person or any of its Subsidiaries or that Person's assets are acquired by such
Person or any of its Subsidiaries shall be excluded, (iii) any gains or losses
attributable to Asset Sales net of related tax costs or tax benefits, as the
case may be, shall be excluded, (iv) after-tax items classified as extraordinary
gains or losses shall be excluded and (v) the cumulative effect of changes in
accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, at any date of determination, the
sum of the Capital Stock and additional paid-in-capital plus retained earnings
(or minus
5
<PAGE>
accumulated deficit) of the referent Person and its Subsidiaries on a
consolidated basis, less amounts attributable to Redeemable Stock, each item to
be determined in conformity with GAAP (excluding the effects of (i) foreign
currency exchange adjustments under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 52 and (ii) the application of
Accounting Principles Board Opinions No. 16 and 17 and related interpretations.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 11.2 or such other address as the Trustee may
designate from time to time.
"CREDIT AGENT" means the agent or representative of the lenders
under the Credit Facility.
"CREDIT FACILITY" means the Second Amended and Restated Credit
Agreement, dated as of June 6, 1996, as amended, by and among the Company,
certain financial institutions parties thereto and Bankers Trust Company, as
Administrative Agent, BA Securities, Inc., as Syndication Agent, and Citibank,
N.A., as Documentation Agent, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, supplemented, renewed,
refunded, refinanced, restructured or replaced from time to time (including
without limitation, any extension of maturity thereof or the inclusion of
additional borrowers or guarantors thereunder).
"CURRENCY AGREEMENT" means the obligations of any Person pursuant to
any foreign exchange contract, currency swap agreement or other similar
agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"DEFAULT" means any event, act or condition that is or, after notice
or the passage of time or both, would be an Event of Default.
"DEFINITIVE SECURITIES" means Securities that are in the form of the
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 5 thereof.
6
<PAGE>
"DEPOSITARY" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DESIGNATED SENIOR DEBT" means (i) the Senior Bank Debt and (ii) any
other Senior Indebtedness permitted under this Indenture having a principal
amount of at least $30.0 million that is designated as "Designated Senior Debt"
by written notice form the Company to the Trustee.
"DTC" shall have the meaning specified in Section 2.3.
"EQUITY INTERESTS" means Capital Stock, warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"EXCHANGE SECURITIES" means the 8-3/8% Senior Subordinated Notes due
2008 to be issued pursuant to this Indenture in connection with the offer to
exchange Securities for the Initial Securities that may be made by the Company
pursuant to the Registration Rights Agreement.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than the Credit Facility) in existence on the Issue Date,
until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means the ratio of Consolidated Cash
Flow to Consolidated Fixed Charges.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession which are in effect
7
<PAGE>
in the United States at the time when and for the period as to which such
accounting principles are to be applied.
"GLOBAL SECURITY" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 5
to the form of Security attached hereto as Exhibit A.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a Security
is registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement obligations with respect
thereto) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to financing leases), if and to the extent
any of the foregoing indebtedness would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP (except that any such
balance that constitutes a trade payable and/or an accrued liability arising in
the ordinary course of business shall not be considered Indebtedness), and shall
also include, to the extent not otherwise included, any Capital Lease
Obligations, the maximum fixed repurchase price of any Redeemable Stock,
indebtedness secured by a Lien to which the property or assets owned or held by
such Person is subject, whether or not the obligations secured thereby shall
have been assumed, guarantees of items that would be included within this
definition to the extent of such guarantees (exclusive of whether such items
would appear upon such balance sheet), and net liabilities in respect of
Currency Agreements and Interest Rate Agreements. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Redeemable Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were repurchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, PROVIDED that if such Redeemable Stock is not then permitted to
be repurchased, the repurchase price shall be the book value of such Redeemable
Stock. The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such contingent
obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person
8
<PAGE>
is subject, the lesser of the fair market value at such date of any asset
subject to a Lien securing the Indebtedness of others and the amount of the
Indebtedness secured.
"INDENTURE" means this Indenture as amended or supplemented from
time to time in accordance with the terms hereof.
"INITIAL PURCHASERS" means BT Alex. Brown Incorporated and CIBC
Oppenheimer Corp.
"INITIAL SECURITIES" means the 8-3/8% Senior Subordinated Notes due
2008, as supplemented from time to time in accordance with the terms hereof,
issued under this Indenture on the Issue Date.
"INTEREST EXPENSE" means, with respect to any Person, for any
period, the aggregate amount of interest in respect of Indebtedness (including
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agree ments, and excluding amortization of
deferred finance fees and interest recorded as accretion in the carrying value
of liabilities (other than Indebtedness) recorded at a discounted value) and all
but the principal component of rentals in respect of Capital Lease Obligations,
paid, accrued or scheduled to be paid or accrued by such Person during such
period.
"INTEREST PAYMENT DATE" means the stated due date of an installment
of interest on the Securities.
"INTEREST RATE AGREEMENTS" means the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates.
"INVESTMENT" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For the
purposes of Sections 4.7 and 4.13
9
<PAGE>
hereof, (i) "Investment" shall include and be valued at the fair market value of
the net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair
market value of the net assets of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary and (ii) any
property transferred to or form an Unrestricted Subsidiary shall be valued at
fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Company in good faith.
"ISSUE DATE" means the date of first issuance of the Securities
hereunder.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"LIEN" means any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give any security interest in and any filing or other
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"MATURITY DATE" means, with respect to any Security, the date on
which the principal of (and premium, if any) and interest on such Security
become due and payable as therein or herein provided, whether at Stated
Maturity, or by declaration of acceleration, call for redemption or otherwise.
"NET PROCEEDS" means, with respect to any Asset Sale, the aggregate
amount of U.S. Legal Tender (including any cash received by way of deferred
payment pursuant to a note receivable issued in connection with such Asset Sale,
other than the portion of such deferred payment constituting interest, and
including any amounts received as disbursements or withdrawals from any escrow
or similar account established in connection with any such Asset Sale, but, in
each such case, only as and when so received) received by the Company or any of
its Subsidiaries in respect of such Asset Sale, net of (i) the cash expenses of
such sale (including, without limitation, the payment of principal, premium, if
any, and interest on Indebtedness required to be paid as a result of such Asset
Sale (other than pursuant to Section 4.10(a) hereof) and legal, accounting and
investment banking fees and sales commissions), (ii) taxes paid or payable as a
result thereof, (iii) any portion of cash proceeds which the Company determines
in good faith should be reserved for post-closing adjustments, it being
understood and agreed that on the day that all such post-closing adjustments
have been
10
<PAGE>
determined, the amount (if any) by which the reserved amount in respect of such
Asset Sale exceeds the actual post-closing adjustments payable by the Company or
any of its Subsidiaries shall constitute Net Proceeds on such date and (iv) any
relocation expenses and pension, severance and shutdown costs incurred as a
result thereof.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifica tions, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICERS" means the Chief Executive Officer, the President, any
Vice President, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers,
one of whom must be the Company's Chief Executive Officer, Chief Financial
Officer or the Controller.
"OPINION OF COUNSEL" means a written opinion prepared in accordance
with Section 11.5 hereof, from legal counsel who is reasonably acceptable to the
Trustee. Except as specified in Section 8.4(f), the counsel may be an employee
of or counsel to the Company or the Trustee.
"PERMITTED INVESTMENTS" means (i) cash or Cash Equivalents, (ii)
investments that are in Persons at least a majority of whose revenues are
derived from commercial printing or prepress services or ancillary operations
related thereto and that have the purpose of furthering the business operations
of the Company, (iii) advances to employees not in excess of $5.0 million at any
one time outstanding, (iv) accounts receivable created or acquired in the
ordinary course of business, (v) obligations or shares of stock received in
connection with any good faith settlement or bankruptcy proceeding involving a
claim relating to a Permitted Investment, (vi) evidences of Indebtedness,
obligations or other investments not exceeding $5.0 million in the aggregate
held at any one time by the Company or any of its Restricted Subsidiaries and
(vii) Currency Agreements and other similar agreements designed to hedge against
fluctuations in foreign exchange rates entered into in the ordinary course of
business in connection with the operation of the Company's or its Subsidiaries'
businesses.
11
<PAGE>
"PERMITTED LIENS" means (i) Liens for taxes, assessments,
governmental charges or claims which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor; (iii)
Liens incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, zoning or other restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its Subsidiaries incurred in
the ordinary course of business; (vi) Liens (including extensions, renewals and
replacements thereof) upon real or tangible personal property acquired after the
date of this Indenture, PROVIDED that (a) any such Lien is created solely for
the purpose of securing Indebtedness representing, or incurred to finance,
refinance or refund, the cost (including the cost of construction) of the item
of property subject thereto, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such cost, (c) such Lien does not
extend to or cover any other property other than such item of property and any
improvements on such item and (d) the incurrence of such Indebtedness is
permitted by Section 4.9 hereof; (vii) Liens securing reimbursement obligations
with respect to letters of credit which encumber documents and other property
relating to such letters of credit and the products and proceeds thereof; (viii)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods;
(ix) judgment and attachment Liens not giving rise to an Event of Default; (x)
leases or subleases granted to others not interfering in any material respect
with the business of the Company or any of its Restricted Subsidiaries; (xi)
Liens encumbering customary initial deposits and margin deposits, and other
Liens incurred in the ordinary course of business and which are within the
general parameters customary in the industry, in each case securing Indebtedness
under Interest Rate Agreements and Currency Agreements; (xii) Liens encumbering
deposits made to secure obligations arising from statutory, regulatory,
contractual or warranty requirements of
12
<PAGE>
the Company or its Subsidiaries; (xiii) Liens arising out of consignment or
similar arrangements for the sale of goods entered into by the Company or any of
its Subsidiaries in the ordinary course of business of the Company and its
Subsidiaries; (xiv) any interest or title of a lessor in the property subject to
any Capital Lease Obligation or operating lease; (xv) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; (xvi) Liens
permitted by the Credit Facility as in effect on the Issue Date; (xvii) Liens
securing Indebtedness described in clause (xiv) of the second paragraph of
Section 4.9 hereof; (xviii) Liens between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries; (xix) Liens securing letters of
credit in an amount not to exceed $10 million in the aggregate at any one time;
(xx) additional Liens at any one time outstanding with respect to assets of the
Company and its Restricted Subsidiaries the fair market value of which does not
exceed $10 million on the date of determination; (xxi) Liens existing on the
Issue Date and any extensions, renewals or replacements thereof; (xxii) Liens
securing Senior Indebtedness; and (xxiiii) the Lien granted to the Trustee under
this Indenture and any substantially equivalent Lien granted to any trustee or
similar institution under any indenture for Indebtedness permitted by the terms
of this Indenture.
"PERSON" or "PERSON" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership, trust,
unincorporated association, or a government or any agency or political
subdivision thereof.
"REDEEMABLE STOCK" means any Equity Interest which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Securities), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the stated maturity of the Securities, or is, by its terms or
upon the happening of any event, redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the stated maturity of the Securities,
except for Equity Interests of the Company issued to present and former members
of management of the Company and its Subsidiaries and certain of their former
affiliates pursuant to Agreements in effect on the Issue Date and Equity
Interests of the Company issued after the Issue Date to members of management of
the Company and its Subsidiaries pursuant to agreements containing provisions
for the repurchase of such Equity Interests upon death, disability or
termination of employment of such persons which are substantially identical to
those contained in the agreements in effect on the Issue Date.
13
<PAGE>
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the Form of Security attached as Exhibit A hereto.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the Form of Security, which shall include, without duplication, in each case,
accrued and unpaid interest to the Redemption Date (subject to the provisions of
Section 3.4).
"REGISTRAR" shall have the meaning specified in Section 2.3.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the Issue Date by and between the Company and the Initial
Purchasers providing for certain registration rights for the Securities.
"REPRESENTATIVE" means the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness.
"RESTRICTED INVESTMENT" means any investment in, capital
contribution, loan or advance to or purchase of Equity Interests in, any Person
that is not a wholly owned Subsidiary, or other transfer of assets to
Subsidiaries or Affiliates that are not wholly owned (other than any such other
transfer of assets to Subsidiaries or Affiliates that are not wholly owned in
transactions the terms of which are fair and reasonable to the transferor and
are at least as favorable as the terms that could be obtained by the transferor
in a comparable transaction made on an arms' length basis between unaffiliated
parties (A) as conclusively determined, for any such transfer involving
aggregate consideration in excess of $5.0 million, by (i) a majority of the
directors of the transferor that are unaffiliated with the transferee or, if
there are no such directors, by a majority of the directors of the transferor or
(ii) an opinion of a nationally recognized investment banking firm stating that
such transaction is fair to the transferor from a financial point of view, and
(B) otherwise as conclusively determined by the Company), except in each case
for Permitted Investments and any such Investments existing on the Issue Date.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which at
the time of determination is not an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately after giving effect to such
designation, the Company could incur
14
<PAGE>
at least $1.00 of additional Indebtedness pursuant to the first paragraph of
Section 4.9 hereof (without giving effect to clauses (i) through (xvii) of the
second paragraph thereof), on a PRO FORMA basis taking into account such
designation.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means, collectively, the Initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"SECURITIES CUSTODIAN" means the Registrar, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"SENIOR BANK DEBT" means Indebtedness and all other monetary
obligations of every nature outstanding under the Credit Facility, including
letters of credit and reimbursement obligations in respect thereof and letters
of credit and reimbursement obligations in respect of letters of credit issued
by lenders party to the Credit Facility.
"SENIOR INDEBTEDNESS" means (i) the Senior Bank Debt and (ii) any
other Indebtedness permitted to be incurred pursuant to the terms hereof, unless
the instrument under which such Indebtedness is incurred expressly provides that
it is on a parity with or subordinated in right of payment to the Securities.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (i) Indebtedness that is expressly subordinate or junior in
right of payment to any Indebtedness of the Company, (ii) Indebtedness that is
represented by Redeemable Stock, (iii) any liability for federal, state, local
or other taxes owed or owing by the Company, (iv) Indebtedness of the Company to
any Subsidiary or any other Affiliate of the Company, (v) trade payables, (vi)
Indebtedness that is incurred in violation of this Indenture (other than Senior
Bank Debt) and (vii) the 6% Convertible Notes.
"6% CONVERTIBLE NOTES" means the Company's 6% Convertible Senior
Subordinated Notes due 2007.
15
<PAGE>
"STATED MATURITY" means, when used with respect to any Security or
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable.
"SUBSIDIARY" of any Person means any entity of which shares of the
Capital Stock or other equity interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to cast at least
a majority of the votes that may be cast by all shares or equity interests
having ordinary voting power for the election of directors or other governing
body of such entity are owned by such Person directly and/or through one or more
Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
ss.ss. 77aaa-77bbbb).
"TRANSFER RESTRICTED SECURITIES" means Securities that bear or are
required to bear the legend set forth in Section 2.6 hereof.
"TRANSFERS" means (i) any payment of interest on Indebtedness,
dividends or repayments of loans or advances and (ii) any other transfers of
assets, in each case from an Unrestricted Subsidiary to the Company or any of
its Restricted Subsidiaries.
"TRUSTEE" means The Bank of New York until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"TRUST OFFICER" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any
16
<PAGE>
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Lien on, any property of, any other
Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so
designated; PROVIDED that (a) the Company certifies that such designation
complies with Section 4.7 and 4.13 hereof, and (b) each Subsidiary to be so
designated and each of its Subsidiaries has not at the time of designation, and
does not thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Company or any of its
Restricted Subsidiaries. The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary, PROVIDED that immediately
after giving effect to such designation, the Company could incur at least $1.00
of additional Indebtedness pursuant to the Section 4.9 (without giving effect to
clauses (i) through (xvii) of the second paragraph thereof), on a PRO FORMA
basis, giving effect to such designation.
"U.S. GOVERNMENT OBLIGATIONS" means direct noncallable obligations
of or guaranteed by the United States of America for the payment of which
obligation or guarantee the full faith and credit of the United States of
America is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
Section 1.2 OTHER DEFINITIONS.
Defined
Term in Section
- ---- ----------
"Asset Sale Payment Date"................... 4.10(a)
"Covenant Defeasance"....................... 8.3
"Excess Net Proceeds"....................... 4.10(a)
"Final Put Date" 4.10(c)
"Legal Holiday"............................. 11.7
"Legal Defeasance".......................... 8.2
"Net Proceeds Offer"........................ 4.10(b)
"Net Proceeds Offer Amount"................. 4.10(d)
"Net Proceeds Payment Date"................. 4.10(b)
17
<PAGE>
"Paying Agent".............................. 2.3
"Payment Blockage Period"................... 10.2(a)
"Purchase Price"............................ 4.10(b)
"Registrar"................................. 2.3
"Restricted Payments"....................... 4.7
"Retired Equity Interest"................... 4.7
"Refunding Equity Interest"................. 4.7
"Surviving Entity".......................... 5.1
Section 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITYHOLDER" means a Holder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Securities means the Company, any other obligor
upon the Securities or any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.4 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
18
<PAGE>
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles are to Sections or
Articles of this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 FORM AND DATING.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A hereto, which is a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage or the terms hereof. The Company shall
approve the form of Securities and any notation, legend or endorsement on them.
Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.2 EXECUTION AND AUTHENTICATION.
19
<PAGE>
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Initial Securities for original
issue in the aggregate principal amount of up to $300.0 million and shall
authenticate Exchange Securities for original issue in the aggregate principal
amount of up to $300.0 million, in each case upon a written order of the Company
in the form of an Officers' Certificate, PROVIDED that such Exchange Securities
shall be issuable only upon the valid surrender for cancellation of Initial
Securities of a like aggregate principal amount in accordance with the
Registration Rights Agreement. The Officers' Certificate shall specify the
amount of Securities to be authenticated and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $300.0 million, except as provided in
Section 2.7. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
20
<PAGE>
Section 2.3 REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities may be presented for payment ("Paying Agent") and where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as Registrar or Paying Agent, except that for the purposes of
Articles III, VIII and Section 4.10 and as otherwise specified in this
Indenture, neither the Company nor any Affiliate of the Company shall act as
Paying Agent. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-registrars and one or
more additional Paying Agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional Paying Agent. The Company
hereby initially appoints the Trustee as Registrar and Paying Agent, and by its
signature hereto, the Trustee hereby agrees so to act. The Company may at any
time change any Paying Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate written agency agreement
with any Agent (including the Paying Agent) not a party to this Indenture, which
agreement shall implement the provisions of this Indenture that relate to such
Agent, and shall furnish a copy of each such agreement to the Trustee. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
The Trustee is authorized to enter into a letter of representation
with DTC in the form provided to the Trustee by the Company and to act in
accordance with such letter.
Section 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that such Paying Agent shall hold in trust for the benefit
of Holders or
21
<PAGE>
the Trustee all assets held by the Paying Agent for the payment of principal of,
premium, if any, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default or any
Event of Default, upon written request to a Paying Agent, require such Paying to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have been
delivered by the Company to the Paying Agent, the Paying Agent (if other than
the Company or a Subsidiary of the Company) shall have no further liability for
such assets.
Section 2.5 HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee or any
Paying Agent is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each Interest Payment Date and, at such other
times as the Trustee or any such Paying Agent may request in writing, a list in
such form and as of such date as the Trustee or any such Paying Agent may
reasonably require of the names and addresses of Holders and the Company shall
otherwise comply with TIA ss. 312(a).
Section 2.6 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES. When
Definitive Securities are presented to the Registrar with a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized denominations,
22
<PAGE>
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Definitive Securities surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and
the Registrar duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Transfer Restricted Securities that
are Definitive Securities, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the name
of such Holder, without transfer, a certification from such Holder
to that effect (in substantially the form set forth on the reverse
of the Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (within the meaning
of Rule 144A promulgated under the Securities Act), that is aware
that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer
Restricted Security for its own account or for the account of
another such "qualified institutional buyer," a certification from
such Holder to that effect (in substantially the form set forth on
the reverse of the Security); or
(C) if such Transfer Restricted Security is being
transferred pursuant to an exemption from registration in accordance
with Rule 144, or outside the United States in an offshore
transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities
Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being
transferred to an "institutional accredited investor" within the
meaning
23
<PAGE>
of Rule 501(A)(1), (2), (3) or (7) under the Securities Act (an
"IAI") that is acquiring the Security for its own account, or for
the account of such an IAI, not with a view to or for offer or sale
in connection with any distribution in violation of the Securities
Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security)
(including a letter in the form of Annex A to the Security) and, if
such transfer is in respect of an aggregate principal amount of
Securities less than $250,000, an opinion of counsel reasonably
acceptable to the Company, the Trustee and the Registrar to the
effect that such transfer is in compliance with the Securities Act;
or
(E) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act and in accordance with all
applicable securities laws of the states of the United States, a
certification from such Holder to that effect (in substantially the
form set forth on the reverse of the Security) and an opinion of
counsel reasonably acceptable to the Company and to the Registrar to
the effect that such transfer is in compliance with the Securities
Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i)(A) if such Definitive Security is a Transfer
Restricted Security which is being transferred to a "qualified
institutional buyer" (within the meaning of Rule 144A promulgated
under the Securities Act), that is aware that any sale of Securities
to it will be made in reliance on Rule 144A under the Securities Act
and that is acquiring such Transfer Restricted Security for its own
account or for the account of another such "qualified institutional
buyer," a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
24
<PAGE>
(B) if such Definitive Security is a Transfer Restricted
Security which is being transferred outside the United States in an
offshore transaction in compliance with Rule 904 under the
Securities Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
(C) if such Definitive Security is a Transfer Restricted
Security which is being transferred to an IAI that is acquiring the
Security for its own account, or for the account of such an IAI, not
with a view to or for offer or sale in connection with any
distribution in violation of the Securities Act, a certification
from such Holder to that effect (in substantially the form set forth
on the reverse of the Security) (including a letter in the form of
Annex A to the Security) and, if such transfer is in respect of an
aggregate principal amount of Securities less than $250,000, an
opinion of counsel reasonably acceptable to the Company, the Trustee
and the Registrar to the effect that such transfer is in compliance
with the Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions directing the Trustee
to make, or to direct the Securities Custodian to make, an endorsement on
the applicable Global Security (the "Applicable Global Security") to
reflect an increase in the aggregate principal amount of the Securities
represented by the Applicable Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Securities represented by the Applicable Global
Security to be increased accordingly. If an Applicable Global Security is not
then outstanding, the Company shall issue and the Trustee shall authenticate a
new Global Security in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor.
25
<PAGE>
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR
A DEFINITIVE SECURITY.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Trustee of written instructions
or such other form of instructions as is customary for the Depositary,
from the Depositary or its nominee on behalf of any Person having a
beneficial interest in a Global Security, and upon receipt by the Trustee
of a written instruction or such other form of instructions as is
customary for the Depositary or the Person designated by the Depositary as
having such a beneficial interest in a Transfer Restricted Security only,
the following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the beneficial
owner, a certification from the transferor to that effect (in
substantially the form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to
a "qualified institutional buyer" (within the meaning of Rule 144A
promulgated under the Securities Act), that is aware that any sale
of Securities to it will be made in reliance on Rule 144A under the
Securities Act and that is acquiring such beneficial interest in the
Transfer Restricted Security for its own account or the account of
another such "qualified institutional buyer", a certification to
that effect from the transferor (in substantially the form set forth
on the reverse of the Security); or
(C) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with Rule
144, or outside the United States in an offshore transaction in
compliance with Rule 904 under the Securities Act, or pursuant to an
effective registration statement under the Securities Act, a
certification from the transferor to that effect (in substantially
the form set forth on the reverse of the Security);
26
<PAGE>
(D) if such beneficial interest is being transferred to
an IAI that is acquiring the Security for its own account, or for
the account of such an IAI, not with a view to or for offer or sale
in connection with any distribution in violation of the Securities
Act, a certification from the transferor to that effect (in
substantially the form set forth on the reverse of the Security)
(including a letter in the form of Annex A to the Security) and, if
such transfer is in respect of an aggregate principal amount of
Securities less than $250,000, an Opinion of Counsel reasonably
acceptable to the Company, the Trustee and the Registrar to the
effect that such transfer is in compliance with the Securities Act;
or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act and in accordance with all applicable securities
laws of the states of the United States, a certification to that
effect from the transferor (in substantially the form set forth on
the reverse of the Security) and an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the Company and to
the Registrar to the effect that such transfer is in compliance with
the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee or the Trustee's authenticating agent will
authenticate and make available for delivery to the transferee a Definitive
Security.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations as
the Deposi tary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
make available for delivery such Definitive Securities to the Persons in
whose names such Securities are so registered.
27
<PAGE>
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL
SECURITIES. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE SECURITIES IN ABSENCE OF
DEPOSITARY. If at any time:
(i) the Depositary for the Securities (x) notifies the
Company that the Depositary is unwilling or unable to continue as
Depositary for the Global Securities and a successor Depositary for the
Global Securities is not appointed by the Company within 90 days after
delivery of such notice or (y) has ceased to be a clearing agency
registered under the Exchange Act;
(ii) the Company, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture; or
(iii) there shall have occurred and be continuing a
Default or an Event of Default with respect to the Securities;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will, or its authenticating agent will, authenticate and make available for
delivery Definitive Securities, in an aggregate principal amount equal to the
principal amount of the Global Securities, in exchange for such Global
Securities.
(g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITY. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, repurchased or cancelled, such Global
Security shall be returned to or retained and cancelled by the Trustee. At any
time prior to such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made
28
<PAGE>
on such Global Security, by the Trustee or the Securities Custodian, at the
direction of the Trustee, to reflect such reduction.
(h) LEGENDS.
(i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following
form:
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOW ING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (C) IT IS AN INSTITU TIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"), OR (D) IT HAS OTHERWISE ACQUIRED THIS NOTE OR A
BENEFICIAL INTEREST HEREIN IN ACCORDANCE WITH THE TERMS OF THE INDENTURE
RELATING TO THIS NOTE AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE
SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON
THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURI-
29
<PAGE>
TIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, THE TRUSTEE AND THE REGISTRAR THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRA TION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, THE
TRUSTEE AND THE REGISTRAR) OR (G) PURSUANT TO AN EFFEC TIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFF
SHORE TRANSACTION," "U.S. PERSONS" AND "UNITED STATES" HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULA TION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Security) pursuant to Rule 144 under the Securities Act or an effective
regis tration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Security that does not bear the legend set forth above
and rescind any restriction on the transfer of such Transfer
Restricted Security; and
30
<PAGE>
(B) any such Transfer Restricted Security represented by
a Global Security shall not be subject to the provisions set forth
in (i) above (such sales or transfers being subject only to the
provisions of Section 2.6(c) hereof); PROVIDED, HOWEVER, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144 under the Securities Act, the Holder thereof
shall certify in writing to the Registrar that such request is being
made pursuant to Rule 144 under the Securities Act (such
certification to be substantially in the form set forth on the
reverse of the Security).
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE SECURITIES.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee or any authenticating agent of
the Trustee shall authenticate Definitive Securities and Global Securities
at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax, assessment, or similar
governmental charge payable in connection therewith (other than any such
transfer taxes, assessments, or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.2 (fourth paragraph), 2.10,
3.6, 4.10, or 9.5).
(iii) The Registrar shall not be required to register
the transfer of or exchange (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any Definitive Security being redeemed in part, or
(b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase or redeem Securities and
ending at the close of business on the day of such mailing.
(iv) Prior to due presentment for registration or
transfer of any Security, the Trustee, any Agent and the Company may deem
and treat the Person in whose name the Security is registered as the
absolute owner of
31
<PAGE>
such Security, and none of the Trustee, Agent or the Company shall be
affected by notice to the contrary.
(j) MISCELLANEOUS.
Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange
or assignment of such Holder's Security in violation of any provision of
this Indenture and/or applicable United States federal or state securities
law.
Section 2.7 REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by an Officer, shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of both Trustee and the Company to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for its
reasonable out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
Section 2.8 OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee (including any Security represented by a
Global Security) except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 hereof (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the
32
<PAGE>
Trustee receives proof satisfactory to it that the replaced Security is held by
a BONA FIDE purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company, a Subsidiary of the Company or any Affiliate thereof) holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest and premium, if any, due on the Securities payable on
that date and payment of the Securities called for redemption is not otherwise
prohibited, then on and after that date Securities cease to be outstanding and
interest on them ceases to accrue.
Section 2.9 TREASURY SECURITIES.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Company or by any Affiliate of the Company shall be disregarded,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Securities
which a Trustee actually knows are so owned shall be so disregarded.
Section 2.10 TEMPORARY SECURITIES
Until Definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon a written
order of the Company signed by an Officer and delivered or caused to be
delivered to a Trust Officer. Temporary Securities shall be substantially in the
form of Definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Securities in
exchange for temporary Securities. Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
permanent Securities authenticated and delivered hereunder.
Section 2.11 CANCELLATION
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or
Paying Agent (other than the
33
<PAGE>
Company or an Affiliate of the Company) and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.7, the Company may not issue
new Securities to replace Securities that have been paid or that have been
delivered to the Trustee for cancellation. No Securities shall be authenticated
in lieu of or in exchange for any Securities cancelled as provided in this
Section 2.11, except as expressly permitted in the form of Securities and as
permitted by this Indenture.
Section 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest in any lawful manner plus, (to the extent
lawful) interest on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest,
whether or not such day is a Business Day, in each case at the rate provided in
the Securities and in Section 4.1 hereof. At least 15 days before the subsequent
special record date, the Company shall mail to each Holder with a copy to the
Trustee a notice that states the special record date, the related payment date
and the amount of defaulted interest, and interest payable on defaulted
interest, if any, to be paid.
Section 2.13 CUSIP NUMBERS.
The Company in issuing the Securities may use CUSIP numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness of such number either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE III
OPTIONAL REDEMPTION
Section 3.1 NOTICES TO TRUSTEE.
34
<PAGE>
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 30 days but not more than 60 days before a Redemption Date, an Officers'
Certificate setting forth that such redemption shall occur pursuant to Section
3.7 hereof and setting forth the Redemption Date, the principal amount of
Securities to be redeemed and the Redemption Price.
Section 3.2 SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed PRO
RATA or by lot or by such other method as the Trustee shall determine to be fair
and appropriate and in such manner as complies with any applicable legal and
stock exchange requirements.
The Trustee shall make the selection form the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 3.3 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed at
the last address for such Holder shown on the registry books of the Registrar.
At the Company's request delivered to the Trustee at least 15 days before the
date selected for the mailing of the notice of redemption, the Trustee shall
give the notice of redemption in the Company's name and at the Company's
expense. Each notice for redemption shall identify the Securities to be redeemed
and shall state:
(a) the Redemption Date;
35
<PAGE>
(b) the Redemption Price, including the amount of accrued and unpaid
interest to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the Redemption
Price;
(e) that, unless the Company defaults in its obligation to deposit
U.S. Legal Tender with the Paying Agent in accordance with Section 3.5 hereof,
interest on Securities called for redemption ceases to accrue on and after the
Redemption Date and the only remaining right of the Holders of such Securities
is to receive payment of the Redemption Price, including accrued and unpaid
interest to the Redemption Date, upon surrender to the Paying Agent of the
Securities called for redemption and to be redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the
identifica tion of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to be
redeemed and the aggregate principal amount of Securities to be outstanding
after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.3 and
pursuant to the option redemption provisions of Paragraph 5 of the Securities.
Section 3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price together with accrued and unpaid interest. Upon
surrender to the Trustee or if the Trustee is no longer the Paying Agent, to the
Paying Agent, such
36
<PAGE>
Securities called for redemption shall be paid at the Redemption Price plus
interest, if any, accrued and unpaid on the Redemption Date; PROVIDED that if
the Redemption Date is after a regular record date and on or prior to the
Interest Payment Date to which such record date relates, the accrued interest
shall be payable to the Holder of the redeemed Securities registered on the
relevant record date, and PROVIDED, FURTHER, that if a Redemption Date is a
Legal Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the prior from such Redemption Date to such succeeding
Business Day.
Section 3.5 DEPOSIT OF REDEMPTION PRICE.
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Paying Agent (other than the Company or an Affiliate of
the Company) U.S. Legal Tender sufficient to pay the Redemption Price of, and
accrued and unpaid interest on, all Securities to be redeemed on such Redemption
Date (other than Securities or portions thereof called for redemption on that
date that have been delivered by the Company to the Trustee for cancellation).
The Paying Agent shall promptly return to the Company any U.S. Legal Tender so
deposited in excess of the amounts necessary to pay the Redemption Price and
accrued interest on all Securities to be redeemed.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and in the Security.
Section 3.6 SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without
37
<PAGE>
service charge, a new Security or Securities equal in principal amount to the
unredeemed portion of the Security surrendered.
Section 3.7 OPTIONAL REDEMPTION.
The Company may redeem all or any of the Securities, in whole or in
part, at any time on or after November 15, 2003, at a Redemption Price equal to
a percentage of the principal amount thereof, as set forth in the immediately
succeeding paragraph, plus accrued and unpaid interest to the Redemption Date.
The Redemption Price as a percentage of the principal amount shall
be as follows, if the Securities are redeemed during the 12 month period
beginning:
YEAR PERCENTAGE
- ---- ----------
November 15, 2003..................... 104.188%
November 15, 2004..................... 102.792%
November 15, 2005..................... 101.396%
November 16, 2006 and thereafter...... 100.000%
Notwithstanding the foregoing, at any time prior to November 15,
2001, the Company may also redeem up to 40% of the aggregate principal amount of
the Securities originally outstanding with the net proceeds from any public
offering of Equity Interests of the Company (other than Redeemable Stock) at a
Redemption Price equal to 108.375% of the principal thereof plus accrued and
unpaid interest to the Redemption Date; PROVIDED that at least 60% in aggregate
principal amount of the Securities originally issued must remain outstanding
after each such redemption. Any such redemption must be consummated on or prior
to 120 days of the receipt of the proceeds of such offering of Equity Interests.
Any redemption pursuant to this Section 3.7 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.1 through 3.6
hereof.
ARTICLE IV
COVENANTS
38
<PAGE>
Section 4.1 PAYMENT OF SECURITIES.
The Company shall pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided herein and in
the Securities. Principal, premium, if any, and interest shall be considered
paid on the date due if the Trustee or Paying Agent, other than the Company or
an Affiliate of the Company, holds for the benefit of the Holders, on or before
10:00 a.m. New York City time on that date, money deposited by the Company in
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, at the same rate per annum on the Securities to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful;
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain, in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or the
Registrar) where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Trustee's
39
<PAGE>
agency at The Bank of New York, 101 Barclay Street, Floor 21W, N.Y., N.Y. 10286,
Attn: Corporate Trust Trustee Administration as such office.
Section 4.3 SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company shall deliver to the Trustee and mail to each Holder
and to prospective purchasers of Securities identified to the Company by an
Initial Purchaser, within 15 days after the filing of the same with the SEC,
copies of its annual report and of the information, documents and other reports,
if any, which the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. The Company shall also comply with the other
provisions of TIA ss.314(a).
(b) The Company shall deliver to the Trustee and to each Holder,
within 15 days after it files the same with the SEC, copies of all reports and
information that the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may
not be required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and provide the
Trustee and Holders with such annual reports and such information, documents and
other reports as would otherwise be required if it were subject to such
requirements.
(c) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.4 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee within 120 days after
the end of its fiscal year an Officers' Certificate complying with Section
314(a)(4) of the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under
this Indenture and further stating, as to each such Officer signing such
certificate, whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or covenants in this
40
<PAGE>
Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) So long as not contrary to the then current policies of the
American Institute of Certified Public Accountants, the Company shall deliver to
the Trustee within 120 days after the end of each of its fiscal years a written
report of a firm of independent certified public accountants with an established
national reputation stating that in conducting their audit for such fiscal year,
nothing has come to their attention that caused them to believe that the Company
or any Restricted Subsidiary of the Company was not in compliance with the
provisions set forth in Article IV or V of this Indenture.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default under this Indenture, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of a Default or an Event of Default unless one of its Trust Officers
receives written notice thereof from the Company or any of the Holders.
Section 4.5 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall, and shall cause each of its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, all material taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company or any of its Restricted
Subsidiaries or properties and assets of the Company or any of its Restricted
Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment or
governmental charge whose amount, applicability or validity is being contested
in good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
Section 4.6 WAIVER OF STAY, EXTENSION AND USURY LAWS.
41
<PAGE>
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law,
wherever enacted, now or at any hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the principal of, premium,
if any, or interest on the Securities as contemplated herein or in the
Securities or which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law insofar as such law
applies to the Securities, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee relating to any such law, but will suffer and permit the execution
of every such power as though no such law has been enacted.
Section 4.7 LIMITATIONS ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Capital Stock or other Equity Interests (other than (A) dividends
or distributions payable in Equity Interests (other than Redeemable Stock) of
the Company or such Restricted Subsidiary or (B) dividends or distributions
payable by a Restricted Subsidiary so long as, in the case of any dividend or
distribution payable on any class or series of securities issued by a Restricted
Subsidiary other than a wholly owned Restricted Subsidiary, the Company or a
Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its equity interest in such class or series of
securities), (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any of its Restricted Subsidiaries (other
than any such Equity Interests purchased from the Company or any of its
Restricted Subsidiaries), (iii) voluntarily prepay any Indebtedness that is
subordinated to the Securities (other than in connection with (A) any extension,
refinancing, renewal, replacement, substitution or refunding thereof permitted
by the terms of the Indenture, (B) Indebtedness between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries or (C) any Indebtedness
permitted by clauses (iv) and (viii) of the second paragraph of Section 4.9 or
(iv) make any Restricted Investments (the foregoing actions set forth in clauses
(i) through (iv) being referred to as "Restricted Payments"), if:
42
<PAGE>
(a) a Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or shall occur as a
consequence thereof; or
(b) immediately after such Restricted Payment and after giving
effect thereto on a pro forma basis, the Company could not incur at least $1.00
of additional Indebtedness pursuant to the first paragraph of Section 4.9 hereof
(without giving effect to clauses (i) through (xvii) of the second paragraph
thereof); or
(c) such Restricted Payment, together with the aggregate of (i) all
other Restricted Payments made after the Issue Date PLUS (ii) the amount, if
any, by which the net amount of Investments in all Unrestricted Subsidiaries
(determined by subtracting (A) the aggregate amount of all Transfers (valued as
provided in the definition of Investment) from each Unrestricted Subsidiary to
the Company or its Restricted Subsidiaries from and after the Issue Date through
and including the relevant date of determination (calculated in accordance with
the penultimate paragraph of this Section 4.7) from (B) the aggregate amount of
all Investments in such Unrestricted Subsidiary made by the Company and its
Restricted Subsidiaries from and after the Issue Date through and including the
relevant date of determination, but in any case not below zero) exceeds $40
million, exceeds (iii) the sum of (A) 50% of the amount of the Adjusted
Consolidated Net Income (other than amounts, if any, included in the preceding
clause (c)(ii)) of the Company for the period (taken as one accounting period)
from the beginning of the first quarter commencing immediately after the Issue
Date through the end of the Company's fiscal quarter ending immediately prior to
the time of such Restricted Payment (or, if Adjusted Consolidated Net Income for
such period is a deficit, 100% of such deficit); PLUS (B) 50% of the aggregate
amortization of intangibles for the period specified in subclause (iii)(A) of
this clause (c); PLUS (C) 100% of the aggregate amounts contributed to the
capital of the Company from and after the Issue Date; PLUS (D) 100% of the
aggregate net cash proceeds and the fair market value, as determined in good
faith by the Board of Directors, of marketable securities received by the
Company from (1) the issue or sale of Equity Interests of the Company (other
than such Equity Interests issued or sold to a Restricted Subsidiary and other
than Redeemable Stock) or any Indebtedness or security convertible into or
exchangeable for any such Equity Interest that has been so converted or
exchanged, (2) the sale of the stock of an Unrestricted Subsidiary or the sale
of all or substantially all of the assets of an Unrestricted Subsidiary to the
extent that a liquidating dividend is paid to the Company or any Restricted
Subsidiary from the proceeds of such sale or (3) the sale or other disposition
of Restricted Investments made by the Company and its Restricted
43
<PAGE>
Subsidiaries, in each case from and after the Issue Date plus (E) 100% of the
aggregate net cash proceeds received by the Company from the issue and sale of
the 6% Convertible Notes are converted into Common Stock of the Company.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at the date of
declaration thereof such payment would have complied with the provisions of this
Indenture, (ii)(A) the retirement of any Equity Interests of the Company (the
"Retired Equity Interests") either in exchange for or out of the net proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary) of
other Equity Interests of the Company (the "Refunding Equity Interests") other
than any Redeemable Stock, and (B) if immediately prior to retirement of any
Retired Equity Interest the declaration and payment of dividends thereon was
permitted under clause (vi) of this paragraph, the declaration and payment of
dividends on the Refunding Equity Interest in an aggregate amount per year no
greater than the aggregate amount of dividends per year that was declarable and
payable on such Retired Equity Interest issued in connection with such
retirement immediately prior to such retirement; (iii) the repurchase,
redemption or other acquisition or retirement for value of (A) any Equity
Interests of the Company issued to present and former members of management of
the Company and its Subsidiaries and certain of their former affiliates,
pursuant to agreements in effect on the Issue Date and (B) any Equity Interests
of the Company issued after the Issue Date to members of management of the
Company and its Subsidiaries pursuant to agreements executed subsequent to the
Issue Date, containing provisions for the repurchase of such Equity Interests
upon death, disability or termination of employment of such persons which are
substantially identical to those contained in the agreements in effect on the
Issue Date, (iv) the declaration and payment of dividends on the Company's
Common Stock of up to 6% per annum of the net proceeds received by the Company
in the initial public offering of its Common Stock and any subsequent public
offerings of the Company's Common Stock; (v) the repurchase, redemption or other
acquisition or retirement for value of Indebtedness of the Company which is
subordinated in right of payment to the Securities either in exchange for or out
of the proceeds of the issuance of Equity Interests (other than Redeemable
Stock) of the Company; (vi) the declaration and payment of dividends to holders
of any class or series of the Company's preferred stock issued after the Issue
Date (including, without limitation, the declaration and payment of dividends on
Refunding Equity Interests in excess of the dividends declarable and payable
thereon pursuant to clause (ii) of this paragraph); PROVIDED that at the time of
such issuance the Company's Fixed Charge Coverage Ratio, after giving effect to
such
44
<PAGE>
issuance, would be greater than 1.25 to 1; (vii) the redemption, repurchase or
other acquisition or retirement for value of any Indebtedness of the Company
which is subordinated in right of payment to the Securities (A) with the
proceeds of, or in exchange for, Indebtedness incurred pursuant to clause (ix)
of the second paragraph of Section 4.9 hereof or (B) if, after giving effect to
such redemption, repurchase or retirement, the Company could incur at least
$1.00 of Indebtedness under the first paragraph of Section 4.9 hereof (without
giving effect to clauses (i) through (xvii) of the second paragraph thereof);
(viii) the purchase, redemption or other acquisition or retirement for value of
any Equity Interest of a Restricted Subsidiary that is not a wholly owned
Subsidiary to the extent such purchase, redemption or other acquisition or
retirement constitutes a Permitted Investment; PROVIDED that in determining the
aggregate amount expended for Restricted Payments in accordance with paragraph
(c) above, (1) no amounts expended under clauses (ii)(A), (v), (vii) and (viii)
of this paragraph shall be included, and (2) 100% of the amounts expended under
clauses (i), (ii)(B), (iii), (iv) and (vi) of this paragraph shall be included.
In determining the net amount of Investments in Unrestricted
Subsidiar ies pursuant to clause (c)(ii) of the first paragraph of this Section
4.7 on any relevant date of determination, (i) all Transfers which would not be
included in the Adjusted Consolidated Net Income of the Company for the relevant
period will be applied to reduce the aggregate amount of Investments in
Unrestricted Subsidiaries before any Transfer which would be included in the
Adjusted Consolidated Net Income of the Company for the relevant period shall be
so applied and (ii) no Transfer (or portion thereof) which would be included in
the Adjusted Consolidated Net Income of the Company for the relevant period will
be applied to reduce the aggregate amount of Investments in Unrestricted
Subsidiaries if, prior to or as a result of the application of such Transfer,
the net amount of Investments in Unrestricted Subsidiaries (after taking into
account all prior applications of Transfers) is or would be $40 million or less.
No later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.7 were computed, which calculations may
be based on the Company's latest available internal financial statements.
Section 4.8 DIVIDENDS AND PAYMENT RESTRICTIONS.
45
<PAGE>
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock, or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its Restricted Subsidiaries, or pay
any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii)
make loans or advances to the Company or any of its Restricted Subsidiaries or
(iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of: (A) the terms (as in effect on the Issue Date) of any
Existing Indebtedness, (b) the terms (as in effect on the Issue Date) of the
Credit Facility, (C) the terms of Indebtedness of the Company incurred in
accordance with Section 4.9 hereof; PROVIDED that the terms of any such
Indebtedness constitute no greater encumbrance or restriction on the ability of
any Restricted Subsidiary to pay dividends or made distributions, make loans or
advances or transfer properties or assets than is otherwise permitted by this
Section 4.8 at such time, (D) the terms of this Indenture and the Securities,
(E) applicable law, (F) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices, (G) the terms of
purchase money obligations for property acquired in the ordinary course of
business, but only to the extent that such purchase money obligations restrict
or prohibit the transfer of the property so acquired, (H) any encumbrance or
restriction with respect to a Subsidiary of the Company that is not a Subsidiary
of the Company on the Issue Date, which encumbrance or restriction is in
existence at the time such Person becomes a Subsidiary of the Company or is
created on the date it becomes a Subsidiary of the Company, (I) any encumbrance
or restriction with respect to a Subsidiary of the Company imposed pursuant to
an agreement which has been entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary or (J) any
encumbrance or restriction existing under any amendment to, and any agreement
which refinances or replaces, the agreements described in clauses (A), (B), (C)
and (D), PROVIDED that the terms and conditions of any such encumbrances or
restrictions contained in any such amendment or agreement constitute no greater
encumbrance or restriction on the ability of any Restricted Subsidiary to pay
dividends or make distributions, make loans or advances or transfer properties
or assets than those under or pursuant to the agreement evidencing the
Indebtedness or obligations so amended, refinanced or replaced. Nothing
contained in this Section 4.8 shall prevent the Company or a Restricted
Subsidiary from entering into any agreement permitting or providing for the
incurrence of Liens otherwise permitted by Section 4.12 hereof.
46
<PAGE>
Section 4.9 INCURRENCE OF INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness unless the Company's Fixed Charge Coverage Ratio for its four full
fiscal quarters ending immediately prior to the date such additional
Indebtedness is created, incurred, issued, assumed or guaranteed would have been
at least 2.25 to 1 determined on a pro forma basis (including a pro forma
application of the net proceeds of such Indebtedness) as if the additional
Indebtedness had been created, incurred, issued, assumed or guaranteed at the
beginning of such four-quarter period.
The foregoing limitations will not apply to the incurrence of (i)
Indebtedness pursuant to the Credit Facility (provided that the principal amount
of such Indebtedness shall not exceed the aggregate amount of the commitments
under the Credit Facility on the Issue Date PLUS the amount of Indebtedness
under the Credit Facility incurred (A) as additional Indebtedness permitted
under clause (viii) of this paragraph and which reduces the amount of
Indebtedness otherwise permitted under said clause (viii), (B) as additional
Indebtedness permitted under the first paragraph of this Section 4.9 or (C) as
reimbursement obligations with respect to letters of credit permitted under
clause (vii) below); (ii) Existing Indebtedness; (iii) Indebtedness represented
by the Securities; (iv) Capital Lease Obligations; (v) Indebtedness constituting
purchase money obligations for property acquired in the ordinary course of
business or other similar financing transactions; (vi) Indebtedness incurred in
connection with capital expenditures; (vii) Indebtedness constituting
reimbursement obligations with respect to letters of credit, including, without
limitation, letters of credit in respect of workers' compensation claims, issued
for the account of the Company or a Restricted Subsidiary in the ordinary course
of business, or other Indebtedness with respect to reimbursement-type
obligations regarding workers' compensation claims; (viii) additional
Indebtedness in an aggregate principal amount equal to the greater of (A) $75.0
million in the aggregate at any one time outstanding for the Company and its
Restricted Subsidiaries and (B)(1) 10% of the Consolidated Net Worth of the
Company at the time of incurrence by the Company and (2) 10% of the Consolidated
Net Worth of any Restricted Subsidiary at the time of incurrence by such
Restricted Subsidiary; (ix) Indebtedness created, incurred, issued, assumed or
given in exchange for, or the proceeds of which are used to, extend, refinance,
renew, replace, substitute or refund any Indebtedness permitted under the
Indenture or any Indebtedness issued to so extend,
47
<PAGE>
refinance, renew, replace, substitute or refund such Indebtedness, including any
additional Indebtedness incurred to pay premiums and fees in connection
therewith (the "Refinancing Indebtedness"); PROVIDED, that (A) the principal
amount of such Refinancing Indebtedness shall not exceed the outstanding
principal amount of Indebtedness (including unused commitments) so extended,
refinanced, renewed, replaced, substituted or refunded plus any amounts incurred
to pay premiums and fees in connection therewith, (B) in the case of Refinancing
Indebtedness for Indebtedness permitted under clause (ii) of this paragraph, the
Refinancing Indebtedness shall have an Average Life equal to or greater than the
Average Life of the Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded and (C) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinated to the Securities, such Refinancing
Indebtedness is subordinated to the Securities at least to the same extent as
the Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded; and PROVIDED FURTHER that subclauses (B) and (C) of this clause (ix)
will not apply to any refunding or refinancing of any Senior Indebtedness; (x)
intercompany Indebtedness incurred in connection with Investments in
Unrestricted Subsidiaries; PROVIDED that such Investments are permitted by each
of Section 4.7 and Section 4.13 hereof; (xi) Indebtedness of any unconsolidated
Subsidiary of the Company created after the Issue Date; PROVIDED that such
Indebtedness is nonrecourse to the Company and its consolidated Restricted
Subsidiaries and the Company and its consolidated Restricted Subsidiaries have
no obligations with respect to such Indebtedness, (xii) Indebtedness under
Currency Agreements and Interest Rate Agreements; PROVIDED that in the case of
Currency Agreements which relate to other Indebtedness, such Currency Agreements
do not increase the Indebtedness of the Company outstanding other than as a
result of fluctuations in foreign currency exchange rates; (xiii) Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business; (xiv)
Indebtedness of an entity at the time it is acquired as a Restricted Subsidiary;
PROVIDED that such Indebtedness was not incurred or assumed by such entity in
connection with or in anticipation of such acquisition; (xv) Indebtedness
between the Company and any Restricted Subsidiary or between Restricted
Subsidiaries, (xvi) guarantees by Restricted Subsidiaries of Indebtedness of the
Company or any Restricted Subsidiary if the Indebtedness so guaranteed is
permitted under this Indenture; and (xvii) the Company's Obligations arising
from the repurchase, redemption or other acquisitions of Equity Interests from
management investors to the extent permitted by Section 4.7.
48
<PAGE>
Section 4.10 LIMITATION ON SALES OF ASSETS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries (other than unconsolidated Restricted Subsidiaries) to,
directly or indirectly, consummate any Asset Sale that results in Net Proceeds
in excess of $45.0 million (including the sale of any of the stock of any
Restricted Subsidiary) unless the Company shall apply the Net Proceeds from such
Asset Sale to one or more of the following in such combination as it shall
choose: (i) an investment in another asset or business in the same line of
business as, or a line of business similar to that of, the line of business of
the Company and its Subsidiaries; PROVIDED that such investment occurs prior to
the later to occur of (x) if applicable, the date on which such proceeds are
required to be applied pursuant to the express terms of the Credit Facility as
in effect on the Issue Date and without regard to any waiver of such terms and
(y) the 366th day following the date of such Asset Sale (the "Asset Sale Payment
Date"); PROVIDED, FURTHER, that if the terms of the Credit Facility do not
restrict the use of such proceeds, the Asset Sale Payment Date shall be deemed
to be the 366th day following the date of such Asset Sale, (ii) a Net proceeds
Offer (as defined below) expiring on or prior to the Asset Sale Payment Date or
(iii) the purchase, redemption or other prepayment or repayment of outstanding
Senior Indebtedness on or prior to the Asset Sale Payment Date; PROVIDED,
HOWEVER, that if the net amount not invested pursuant to clause (i) or applied
pursuant to clause (iii) above (the "Excess Net Proceeds") is less than $15.0
million, the Company shall not be further obligated to offer to redeem
Securities pursuant to clause (ii) above; and PROVIDED, FURTHER, that for
purposes of the foregoing calculation of Excess Net Proceeds the Company shall
be required to repay any Senior Indebtedness that by its terms may be so repaid
at the time of such calculation, prior to determining the Excess Net Proceeds.
(b) For purposes of subsection (ii) of clause (a) of this Section,
the Company shall apply that portion of the Net Proceeds of the Asset Sale
required to make a tender offer in accordance with applicable law (a "Net
Proceeds Offer") to repurchase the Securities at a price (the "Purchase Price")
not less than 100% of the principal amount thereof plus accrued and unpaid
interest to the date fixed for payment therefor, which date shall be no earlier
than 30 days or later than 45 days after the date of mailing of the notice of
the Net Proceeds Offer; PROVIDED, HOWEVER that the Company may extend the date
fixed for payment if, in the opinion of counsel, the Net Proceeds Offer is
required to be extended under applicable law (as so extended, the "Net Proceeds
Payment Date"). Any Net Proceeds Offer shall be made by the Company only if and
to the extent permitted under and subject to prior compliance with the terms of
any
49
<PAGE>
agreement governing Senior Indebtedness. If on the date any Net Proceeds Offer
is commenced securities of the Company ranking PARI PASSU in right of payment
with the Securities are outstanding and the terms of such securities provide
that an offer to repurchase such securities similar to the Net Proceeds Offer is
to be made with respect thereto, then the Net Proceeds Offer shall be made
concurrently with such other offer, and securities of each issue shall be
accepted on a pro rata basis, in proportion to the aggregate principal or face
amount, as the case may be, of securities of each issue which the holders
thereof elect to have redeemed.
(c) At such time as the Company determines to make a Net Proceeds
Offer, it shall so notify the Trustee in writing. Within 15 days thereafter, it
shall mail or cause the Trustee to mail (in the Company's name and at its
expense) notice of a Net Proceeds Offer to the Holders of the Securities at
their last registered addresses with a copy to the Trustee and the Paying Agent.
The Net Proceeds Offer shall remain open from the time of mailing until the
close of business on the fourth Business Day prior to the Net Proceeds Payment
Date. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Securities pursuant to the Net Proceeds Offer. The
notice, which shall govern the terms of the Net Proceeds Offer, shall state:
(1) that the Net Proceeds Offer is being made pursuant to this
Section 4.10 and that the Securities will be accepted for payment on a PRO RATA
basis (rounded down to the nearest $1,000), if necessary;
(2) the Purchase Price and the Net Proceeds Payment Date;
(3) that any Security not tendered or accepted for payment
will continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net Proceeds Payment
Date;
(5) that each Holder of a Security electing to have such
Security purchased pursuant to a Net Proceeds Offer will be required to
surrender the Security, at the address specified in the notice prior to the
close of business on the fourth Business Day prior to the Net Proceeds Payment
Date (the "Final Put Date");
(6) that Holders will be entitled to withdraw their election
if the Trustee receives, not later than the close of business on the fifth
Business Day next
50
<PAGE>
preceding the Net Proceeds Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Securities the
Holder delivered for purchase and a statement that such Holder is withdrawing
his election to have such Securities purchased; and
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered.
Any such Net Proceeds Offer shall comply with all applicable
provisions of federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provision of such laws.
The Trustee shall notify the Company at the opening of business on
the Business Day following the Final Put Date as to the principal amount of each
of the Securities or portions thereof which have been surrendered to the Trustee
in connection with the Net Proceeds Offer. On the Net Proceeds Payment Date, the
Company shall (i) subject to clause (b) of this Section 4.10, accept for payment
on a PRO RATA basis (if necessary) Securities or portions thereof tendered
pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent money
sufficient to pay the Purchase Price with respect to all Securities or portions
thereof so accepted and (iii) deliver or cause to be delivered to the Trustee
all Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company and the
calculations used in determining the amount of Net Proceeds to be applied to the
redemption of Securities. The Paying Agent shall promptly mail to Holders of
Securities so accepted, payment in an amount equal to the Purchase Price, and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted shall be promptly mailed by the
Trustee to the Holder thereof. The Company will publicly announce the results of
the Net Proceeds Offer on or as soon as practicable after the Net Proceeds
Payment Date. For purposes of this Section 4.10, the Trustee shall act as the
Paying Agent.
(d) After the Final Put Date, the Company will not be restricted
under this Section 4.10 as to its use of any remaining Net Proceeds available to
make such Net Proceeds Offer but not used to redeem the Securities pursuant
thereto.
51
<PAGE>
Notwithstanding any other provision of this Indenture to the
contrary, for a period of 120 days after the Final Put Date, the Company may use
any Net Proceeds available to make such Net Proceeds Offer but not used to
redeem Securities pursuant thereto to purchase, redeem or otherwise acquire or
retire for value any securities of the Company ranking junior in right of
payment to the Securities at a price, stated as a percentage of the principal or
face amount of such junior securities, not greater than the price, stated as a
percentage of the principal amount of the Securities, offered in the Net
Proceeds Offer; PROVIDED that if the Net Proceeds Offer is for a principal
amount (the "Net Proceeds Offer Amount") of Securities less than the aggregate
principal amount of the Securities then outstanding then the Net Proceeds
available for such a purchase, redemption or other acquisition or retirement for
value of junior securities shall not exceed the Net Proceeds Offer Amount.
Section 4.11 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction (including,
without limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) involving aggregate consideration in excess of $5.0
million for any one transaction with any Affiliate, except for (i) transactions
(including any investments, loans or advances by or to any Affiliate) in good
faith the terms of which are fair and reasonable to the Company or such
Restricted Subsidiary, as the case may be, and are at least as favorable as the
terms which could be obtained by the Company or such Restricted Subsidiary, as
the case may be, in a comparable transaction made on an arm's length basis
between unaffiliated parties; PROVIDED that any such transaction shall be deemed
to be on terms that are fair and reasonable and that are at least as favorable
as the terms that could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis between unaffiliated parties if (a) the Company or such Restricted
Subsidiary, as the case may be, delivers to the Trustee and the Holders a
written opinion of a nationally recognized investment banking firm stating that
the transaction is fair to the Company or such Restricted Subsidiary from a
financial point of view or (b) a majority of the directors of the Company
unaffiliated with such Affiliate or, if there are no such directors, a majority
of the directors of the Company approve such transaction, (ii) payments by the
Company or any of its Restricted Subsidiaries to KKR or any affiliate thereof
made pursuant to any financial advisory, financing, underwriting or placement
agreement, (iii) any Restricted Payment not otherwise prohibited under Section
4.7 hereof and any Investment not prohibited under Section 4.13 hereof, (iv) the
payment of reasonable and
52
<PAGE>
customary regular fees to directors of the Company and its Subsidiaries who are
not employees of the Company or its Subsidiaries, (v) payments to KKR that are
not otherwise prohibited by Section 4.7 hereof, (vi) loans to officers,
directors and employees of the Company and its Subsidiaries for business or
personal purposes and other loans and advances made in the ordinary course of
business of the Company and its Restricted Subsidiaries and (viii) the payment
by the Company of management fees to KKR and/or its affiliates.
Section 4.12 LIMITATIONS ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) upon any asset now owned or
hereafter acquired by it or any income or profits therefrom or assign or convey
any right to receive income therefrom. Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may create or assume any Lien upon its
properties or assets if the Company shall cause the Securities to be equally and
ratably secured with all other Indebtedness secured by such Lien for so long as
such other Indebtedness shall be so secured.
Section 4.13 INVESTMENTS IN UNRESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Investment in any Unrestricted
Subsidiary, if at the time of such Investment:
(a) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof;
(b) the amount of such Investment exceeds the amount then permitted
to be used to make Restricted Payments pursuant to clause (c) of the first
paragraph of Section 4.7 hereof; or
(c) immediately after such Investment and after giving effect
thereto on a pro forma basis deducting from Consolidated Net Income the amount
of any Investment the Company has made in an Unrestricted Subsidiary during the
four full
53
<PAGE>
fiscal quarters last preceding the date of such Investment, the Company would
not be permitted to incur at least $1.00 of Indebtedness pursuant to the first
paragraph of Section 4.9 hereof (without giving effect to clauses (i) through
(xvii) of the second paragraph thereof).
Notwithstanding clauses (b) or (c) of this paragraph or any other
provision of this Indenture, the Company shall be permitted to make Investments
in Unrestricted Subsidiaries in an aggregate amount not to exceed $40.0 million
at any one time outstanding. The amount by which the aggregate of all
Investments in Unrestricted Subsidiaries exceeds $40.0 million at any one time
outstanding shall be counted in determining the aggregate permissible amount of
Restricted Payments pursuant to clause (c) of the first paragraph under Section
4.7 hereof. The net amount of Investments in Unrestricted Subsidiaries that (i)
exceeds $40.0 million shall be reduced by all Transfers from Unrestricted
Subsidiaries to the Company and its Restricted Subsidiaries in accordance with
clause (c)(ii) and the penultimate paragraph of Section 4.7 and (ii) is less
than or equal to $40.0 million shall be reduced by the amount of all Transfers
which would not be included in the Adjusted Consolidated Net Income of the
Company. The Company will not permit any Unrestricted Subsidiary to become a
Restricted Subsidiary, except in compliance with the last sentence of the
definition of Unrestricted Subsidiary.
Not later than the date of making any Investment described above,
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Investment is permitted and setting forth the basis upon which the
calculations required by this Section 4.13 were computed, which calculations may
be based on the Company's latest available internal financial statements.
Section 4.14 CORPORATE EXISTENCE.
Subject to Article V hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Restricted Subsidiary in accordance with the respective organizational documents
of each Restricted Subsidiary (as amended from time to time) and the rights
(charger and statutory), licenses and franchises of the Company and its
Restricted Subsidiaries; PROVIDED that neither the Company nor any Restricted
Subsidiary shall be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any Restricted Subsidiary,
if the Board of Directors of the Company or such Restricted Subsidiary shall
54
<PAGE>
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole and
that the loss thereof is not adverse in any material respect to the Holders.
Section 4.15 LIMITATION ON OTHER SUBORDINATED INDEBTEDNESS.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is expressly by its terms
subordinate or junior in right of payment to any Senior Indebtedness and senior
in any respect in right of payment to the Securities.
ARTICLE V
SUCCESSORS
Section 5.1 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not in a single transaction or through a series of
related transactions consolidate with or merge with or into, or directly or
indirectly sell, transfer, lease or convey all or substantially all of its
properties and assets to, another Person (except any Restricted Subsidiary
existing on the date hereof and except any other Restricted Subsidiary created
or acquired after the date hereof with a positive Consolidated Net Worth,
PROVIDED that in connection with any merger of the Company with any such
Subsidiary, no consideration (other than common stock in the surviving
corporation or the Company) shall be issued or distributed to the stockholders
of the Company) unless:
(a) (i) the Company is the continuing person or (ii) the resulting,
surviving or transferee entity (the "Surviving Entity") is a corporation or
partnership organized and existing under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes by supplemental
indenture, executed and delivered to the Trustee, in a form satisfactory to the
Trustee, all of the obligations of the Company under this Indenture and the
Securities;
(b) immediately after giving effect to such transaction, no Default
and no Event of Default under this Indenture shall have occurred and be
continuing;
55
<PAGE>
(c) immediately after giving effect to such transaction on a PRO
FORMA basis, the Consolidated Net Worth of the Surviving Entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and
(d) immediately after giving effect to such transaction on a PRO
FORMA basis, the Fixed Charge Coverage Ratio of the Surviving Entity is at least
1:1; PROVIDED that if the Fixed Charge Coverage Ratio of the Company before
giving effect to such transaction is within the range set forth in column (A)
below, then the PRO FORMA Fixed Charge Coverage Ratio of the Surviving Entity
shall be at least equal to the lesser of (x) the ratio determined by multiplying
the percentage set forth in Column B by the Fixed Charged Charge Coverage Ratio
of the Company prior to such transaction, and (y) the ratio set forth in Column
C below:
(A) (B) (C)
- --- --- ---
1.11:1 to 1.99:1..................... 90% 1.5:1
2.00:1 to 2.99:1..................... 80% 2.1:1
3.00:1 to 3.99:1..................... 70% 2.4:1
4.00:1 or more....................... 60% 2.5:1
and PROVIDED, FURTHER, that if the PRO FORMA Fixed Charge Coverage Ratio of the
Surviving Entity is 3:1 or more, the calculation in the preceding proviso shall
be inapplicable and such transaction shall be deemed to have complied with the
require ments of this clause (d).
Section 5.2 OPINION OF COUNSEL TO TRUSTEE; OFFICERS' CERTIFICATE.
The Trustee, subject to the provisions of Section 7.1 and 7.2, shall
receive and be entitled to conclusively rely upon an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger, sale,
transfer, lease or conveyance complies with the applicable provisions of this
Indenture and that all conditions precedent herein provided relating to such
transaction have been complied with.
Section 5.3 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, transfer, lease or
conveyance of properties or assets in accordance with Section 5.1, the Surviving
Entity
56
<PAGE>
formed by such consolidation or into which the Company is merged or to which
such transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such Surviving Entity had been named as the Company herein. When a
Surviving Entity duly assumes all of the obligations of the Company pursuant
hereto and pursuant to the Securities, the predecessor shall be released from
such obligations, PROVIDED that, in the case of transfer by lease, the
predecessor corporation shall not be released from the payment of principal,
premium, if any, and interest on the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT.
An "Event of Default," whenever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether or
not it shall be occasioned or prohibited by the provisions of Article X or
voluntarily or involuntarily be effected by the operation of law or pursuant to
any judgment, decree or order of any administrative or governmental body):
(a) a default in the payment of interest on any Security when the
same shall become due and payable and the continuance of such default for a
period of 30 days;
(b) a default in the payment of all or any part of the principal of
or premium, if any, on any Security when and as the same shall become due and
payable at maturity, or upon acceleration, redemption or otherwise including
default in the payment of the Purchase Price required to be offered in a Net
Proceeds Offer;
(c) a failure by the Company to comply with any of the other
agreements or covenants in, or provisions of, the Securities or this Indenture
which failure continues for the period and after the notice specified below;
(d) a failure to pay the final scheduled principal installment in an
amount of at least $20.0 million at the stated maturity date thereof (after
giving effect to any applicable grace periods) under any mortgage, indenture or
instrument under which there may be issued or evidenced any Indebtedness for
borrowed money by the
57
<PAGE>
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee is now existing or hereafter created;
(e) a default under any mortgage, indenture or instrument under
which there may be issued or evidenced any Indebtedness for borrowed money by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee is now existing or hereafter created if, as a result
of such default, the maturity of such Indebtedness has been accelerated prior to
its express maturity, and the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness with respect to which
the principal amount remains unpaid upon its final maturity (after giving effect
to any extension of such Maturity Date by the holder of such Indebtedness and
the expiration of any applicable grace period) or the maturity of which has been
so accelerated, aggregates $20.0 million or more;
(f) a final judgment or final judgments for the payment of money, or
the issuance of any warrant of attachment against any portion of the property or
assets of the Company or any of its Restricted Subsidiaries, that in the
aggregate, equal or exceed $10.0 million at any one time are entered by a court
or courts of competent jurisdiction against the Company, or any of its
Restricted Subsidiaries and such judgment or judgments or warrant of attachment
shall not be discharged, satisfied, stayed, annulled or rescinded within 60 days
of being entered or, in the case of any final judgment which provides for
payment over time, from any applicable payment date;
(g) the Company, or any of the Restricted Subsidiaries pursuant to
or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a Custodian
of it or for all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its
creditors;
58
<PAGE>
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Restricted Subsidiaries as debtor in an involuntary case,
(ii) appoints a Custodian of the Company or any of its
Restricted Subsidiaries or a Custodian for all or substantially all of the
property of the Company or any of its Restricted Subsidiaries, or
(iii) orders the liquidation of the Company or
any of its Restricted Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days;
The Company is required, pursuant to Section 4.4(a) hereof, to
deliver to the Trustee annually a statement regarding compliance with the
provisions of the Indenture, and the Company is required, pursuant to Section
4.4(c) hereof, upon becoming aware of any Default or Event of Default to deliver
a statement to the Trustee specifying such Default or Event of Default.
A Default under clause (c) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 30% in principal amount
of the then outstanding Securities notify the Company and the Trustee, in
writing of the Default and the Company does not cure the Default within 30 days
after receipt of the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a Notice of Default.
In the case of any Event of Default pursuant to the provisions of
this Section 6.1 occurring by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium, if any, which the Company would have had to pay if the
Company then had elected to redeem the Securities pursuant to Section 3.7
hereof, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law, anything in this Indenture or in the
Securities contained to the contrary withstanding.
Section 6.2 ACCELERATION.
59
<PAGE>
If an Event of Default (other than an Event of Default with respect
to the Company specified in clauses (g) or (h) of Section 6.1 hereof) occurs and
is continuing, the Trustee by written notice to the Company or the Holders of at
least 30% (or 25% in the case of an Event of Default with respect to payment of
principal of or interest on the Securities) in aggregate principal amount of the
then outstanding Securities by written notice to the Company (and the Trustee if
given by the Holders), may and the Trustee at the request of such Holders shall,
declare all unpaid principal of, premium, if any, and accrued and unpaid
interest on the Securities to be due and payable immediately; PROVIDED, HOWEVER,
that if any Senior Indebtedness is outstanding pursuant to the Credit Facility,
upon a declaration of acceleration, such principal and interest shall be due and
payable upon the earlier of (x) the day that is five Business Days after the
provision to the Company and the Credit Agent of such written notice, unless
such Event of Default is cured or waived prior to such date, and (y) the date of
acceleration of any Senior Indebtedness under the Credit Facility. In the event
of a declaration of acceleration because an Event of Default described in clause
(d) or (e) of Section 6.1 hereof has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if such payment
default is cured or waived or the Holders of the Indebtedness which is the
subject of such Event of Default have rescinded their declaration of
acceleration in respect of such Indebtedness within 60 days thereof and the
Trustee has received written notice of such cure, waiver or rescission and no
other Event of Default described in clause (d) or (e) of Section 6.1 hereof has
occurred that has not been cured or waived within 60 days of the declaration of
acceleration of such Indebtedness in respect thereof. Upon such declaration of
acceleration the principal, premium, if any, and accrued interest, due and
payable on the Securities, as determined in the next succeeding paragraph, shall
be due and payable immediately. If an Event of Default with respect to the
Company specified in clause (g) or (h) of Section 6.1 hereof occurs, all unpaid
principal of, premium, if any, and accrued interest on the Securities then
outstanding shall IPSO FACTO become and be immediately due and payable without
any declaration, notice or other act on the part of the Trustee or any Holder.
Notwithstanding the foregoing, at any time after a declaration of
acceleration has been made and before a judgment or decree for payment of the
money due has been obtained, the Holder or Holders of a majority in aggregate
principal amount of then outstanding Securities, by written notice to the
Company and the Trustee, may waive, on behalf of all Holders, a Default or an
Event of Default if:
60
<PAGE>
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable to) any
Securities which would become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances for the Trustee,
its agents and counsel, and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration of
accelera tion, have been cured or waived.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Default or Event of Default in the payment of the principal
of, premium, if any, or interest on any Security held by a non-consenting Holder
or any Default or Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
then outstanding Security, unless all such affected Holders agree, in writing,
to waive such Default or Event of Default. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
Section 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if any
, or interest then due on the Securities or to enforce the performance of any
provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or
61
<PAGE>
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies hereunder are
cumulative to the extent permitted by law.
Section 6.4 WAIVER OF PAST DEFAULTS.
Subject to Section 6.7, prior to the declaration of acceleration of
maturity of the Securities as provided in Section 6.2, the Holders of not less
than a majority in aggregate principal amount of the then outstanding Securities
by written notice to the Trustee may waive an existing Default or Event of
Default and its consequences (including waivers obtained in connection with a
tender offer or exchange offer for Securities), except a continuing Default or
Event of Default (i) in the payment of the principal of, premium, if any, or
interest on any Security (including, without limitation, pursuant to any
mandatory or optional redemption obligation hereunder) or (ii) with respect to
any covenant or provision which, under Article IX, cannot be modified or amended
without the consent of the Holder of each outstanding Security affected. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 6.5 CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the then
outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, PROVIDED THAT the
Trustee may refuse to follow any direction that conflicts with any rule of law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of other Holders not taking part in such written direction or that may
involve the Trustee in personal liability.
Section 6.6 LIMITATIONS ON SUITS.
A Holder may not pursue a remedy with respect to this Indenture or
the Securities unless:
62
<PAGE>
(1) the Holder has previously given to the Trustee written
notice of a continuing Event of Default;
(2) the Holders of at least 30% (or 25% in the case of an
Event of Default with respect to payment of principal of and interest on the
Securities) in principal amount of the then outstanding Securities have made a
written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
indemnity satisfactory to the Trustee against any loss, liability or expense to
be incurred or reasonably probable to be incurred in compliance with such
request;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
aggregate principal amount of the then outstanding Securities do not give the
Trustee a direction which is inconsistent with the request,
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of principal of, premium, if any,
and interest on the Security, on the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder.
Section 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) hereof
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as
63
<PAGE>
trustee of an express trust against the Company for the amount of principal,
premium, if any, and interest remaining unpaid on the Securities, determined in
accordance with Section 6.2 hereof and interest on overdue principal, premium,
if any, and, to the extent lawful, interest, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
counsel.
Section 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other property which the Holders of the Securities may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10 PRIORITIES.
Subject to Article X, any money collected by the Trustee pursuant to
this Article VI shall be applied in the following order and, in case of the
distribution of such money on account of principal, premium (if any) or
interest, upon presentation of the
64
<PAGE>
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: to the Trustee for amounts due under Section 7.7 hereof;
SECOND: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and interest on, the Securities in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal, premium, if any, and interest, respectively; and
THIRD: to the Company.
The Trustee may, but shall not be obligated to, fix a record date
and payment date for any payment to Holders pursuant to this Article VI.
Section 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section 6.11 shall not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in aggregate principal amount of the then outstanding Securities.
Section 6.12 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion
65
<PAGE>
or employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or remedy.
Section 6.13 DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VI or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 6.14 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in such
exercise, as a prudent Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
66
<PAGE>
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no covenants
or obligations shall be implied or read into this Indenture which are
adverse to the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions (whether in their original or facsimile form) furnished to the
Trustee and conforming to the requirements of this Indenture. However, in
the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture but not to
verify the contents thereof.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by it, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the
67
<PAGE>
request, order or direction of the Holders or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2 RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel of its selection and may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Sections 11.4 and 11.5. The Trustee
shall not be liable for and shall have full and complete authorization and
protection in respect of any action it takes or omits to take in good faith in
reliance on such certificate, opinion or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent (other than an
agent who is an employee of the Trustee) appointed by it with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
68
<PAGE>
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order, or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance
of the Company's covenants in Article IV hereof or as to the performance by any
Agent of its duties hereunder. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except any Default or Event of
Default of which the Trustee shall have received written notification (which
notice references this Indenture) or with respect to which a Trust Officer shall
have actual knowledge.
(i) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any of
its Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11 hereof.
Section 7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities or any money paid to the
Company or upon the Company's direction under any provision hereof, and it shall
not be responsible for any statement or recital herein or any statement in the
Securities other than its certificate of
69
<PAGE>
authentication or for the use or application of any funds received by a Paying
Agent other than the Trustee.
Section 7.5 NOTICE OF DEFAULT.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Holder a notice of the
Default or Event of Default within 90 days after it occurs or, if later, within
ten days after such Default or Event of Default becomes known to the Trustee
unless such Default or Event of Default has been cured. Except in the case of a
Default or Event of Default in payment of principal of, premium, if any, or
interest on any Security, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers determines in good faith that withholding the
notice is in the interests of the Holders.
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with May 15, 1999, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a)
has occurred within the twelve months preceding the reporting date, no report
need be transmitted). The Trustee also shall comply with TIA ss.313(b). The
Trustee shall also transmit by mail all reports as required by TIA ss.313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system or
are delisted therefrom.
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange on which the Securities are listed.
Section 7.7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable disbursements, advances and expenses incurred by it, except for any
such disburse-
70
<PAGE>
ments, advances and expenses arising from its negligence or bad faith. Subject
to the foregoing, such expenses shall include the reasonable fees, disbursements
and expenses of the Trustee's counsel.
The Company shall indemnify and hold harmless the Trustee or any
predecessor Trustee and their agents against any loss, liability or expense
(including without limitation reasonable fees and expenses of counsel) incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture including, without limitation, costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of its powers and duties hereunder, except as set
forth in the next paragraph. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal,
premium, if any, and interest on particular Securities. Such Lien shall survive
the satisfaction and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article VIII of this
Indenture and any rejection or termination of this Indenture under any
Bankruptcy Law.
Section 7.8 REPLACEMENT OF TRUSTEE.
71
<PAGE>
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company in writing. The Holders of a majority in
aggregate principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company in writing and may appoint a
successor Trustee with the Company's consent. The Company may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee
under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
The foregoing notwithstanding, a resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this Section 7.8.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in aggregate principal amount of the Securities may
appoint a successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all
72
<PAGE>
sums owing to the Trustee provided for in Section 7.7 have been paid, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the Lien provided for in Section 7.7, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee. The successor Trustee shall
mail a notice of its succession to the Holders.
Section 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
Subject to Section 7.10 hereof, if the Trustee consolidates, merges
or converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be the successor
Trustee.
Section 7.10 ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA ss.
310(a)(1) and TIA ss. 310(a)(5). The Trustee shall have a combined capital and
surplus of at least $25.0 million as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA ss. 310(b).
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
73
<PAGE>
The Company may, at its option and at any time, elect to have
Section 8.2 or Section 8.3 applied to all outstanding Securities upon compliance
with the conditions set forth below in this Article VIII.
Section 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.2, the Company shall be deemed to have been
discharged from its obligations with respect to all outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by, and this Indenture shall cease to be of further effect as to, all
outstanding Securities, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 and the other Sections of this Indenture
referred to in (a) and (b) below, and the Company shall be deemed to have
satisfied all its obligations under such Securities and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) rights of
Holders to receive payments in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due from the trust funds
described below; (b) the Company's obligations with respect to such Securities
concerning issuing temporary Securities, registration of Securities, mutilated,
destroyed, lost or stolen Securities, and the maintenance of an office or agency
for payment and money for security payments held in trust; (c) the rights,
powers, trust, duties, and immunities of the Trustee, and the Company's
obligations in connection therewith; and (d) this Article VIII. Subject to
compliance with this Article VIII, the Company may exercise its option under
this Section 8.2 notwithstanding the prior exercise of its option under Section
8.3 with respect to the Securities.
Section 8.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option
applicable to this Section 8.3, the Company shall be released from its
obligations under the covenants contained in Sections 4.3, 4.4, 4.7, 4.8, 4.9,
4.10, 4.11, 4.12, 4.13 and 4.15, and Article V, with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof)
74
<PAGE>
in connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities, the Company need not
comply with and shall have any liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document (and Section 6.1(c) shall not apply to any such covenant), but, except
as specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.1
of the option applicable to this Section 8.3, Sections 6.1(d), 6.1(e) and 6.1(f)
shall not constitute Events of Default.
Section 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article VIII
applicable to it), in trust, for the benefit of the Holders of such Securities,
(i) U.S. Legal Tender in an amount, or (ii) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, U.S. Legal Tender in an amount, or (iii) a combination
thereof, in such amounts, as in each case will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge and
which shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest on the outstanding
Securities on the stated maturity or on the applicable redemption date, as the
case may be, of such principal or installment of principal, premium, if any, or
interest on the Securities and the Trustee, for the exclusive benefit of the
Holders of the Securities, shall have a valid, perfected, exclusive security
interest in such trust;
(b) In the case of an election under Section 8.2 before the date
that is one year prior to the Stated Maturity, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that (i) the Company has received from, or there has
been published by, the
75
<PAGE>
Internal Revenue Service a ruling or (ii) since the date hereof, there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3 before the date
that is one year prior to the Stated Maturity, the Company shall have delivered
to the Trustee an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that the Holders of the outstanding Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax in the
same amount, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, insofar as
Section 6.1(g) or Section 6.1(h) is concerned, at any time in the period ending
on the 91st day after the date of such deposit;
(e) Such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) In the case of an election under either Section 8.2 or 8.3, the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.2
or 8.3 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the conditions
precedent provided for in, in the case of the Officers' Certificate, clauses (a)
through (f), and, in the case of the Opinion of Counsel, clauses (a) (with
respect to the validity and perfection of the security interest), (b), (c) and
(e) of this Section 8.4 have been complied with.
76
<PAGE>
If the funds deposited with the Trustee to effect Legal Defeasance
or Covenant Defeasance are insufficient to pay the principal of, premium, if
any, and interest on the Securities when due, then the obligations of the
Company under this Indenture and the Securities will be revived and no such
defeasance will be deemed to have occurred.
Section 8.5 DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6, all U.S. Legal Tender and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Paying Agent") pursuant to Section 8.4 in respect of the outstanding Securities
shall be held in trust and applied by the Paying Agent, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any other Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law. The Company
shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to
Section 8.4 or the principal and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of outstanding Securities.
Section 8.6 REPAYMENT TO THE COMPANY.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee or the Paying Agent, as applicable, shall deliver or pay to the Company
from time to time upon the request of the Company any U.S. Legal Tender or U.S.
Government Obligations held by it as provided in Section 8.4 hereof which in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.4(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Any U.S. Legal Tender and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on
77
<PAGE>
any Security and remaining unclaimed for two years after such principal, and
premium, if any, or interest has become due and payable shall, subject to the
requirements of applicable law, be paid to the Company on its request; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in THE NEW YORK TIMES and THE
WALL STREET JOURNAL (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company at the Company's written
request.
Section 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.2 or 8.3, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section 8.2
or 8.3 until such time as the Trustee or Paying Agent is permitted to apply such
money in accordance with Section 8.2 and 8.3, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Security following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the U.S. Legal Tender and U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 SUPPLEMENT INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may enter
into
78
<PAGE>
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency, PROVIDED such
action pursuant to this clause (a) shall not adversely affect the interests of
any Holder in any respect;
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company or
to make any other change that does not adversely affect the rights of any
Holder;
(c) to provide for collateral for the Securities;
(d) to evidence the succession of another person to the Company, and
the assumption by any such successor of the obligations of the Company, herein
and in the Securities in accordance with Article V;
(e) to provide for uncertificated Securities; or
(f) to effect or maintain the qualification of this Indenture under
the TIA.
Section 9.2 AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF
HOLDERS.
Subject to Section 6.7, with the consent of the Holders of a
majority in aggregate principal amount of then outstanding Securities, by
written act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by Board Resolutions, and the Trustee may amend or
supplement this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Sections 6.4 and 6.7, the Holder or
Holders of a majority, in principal amount of then outstanding Securities may
waive compliance by the Company with any provision of this Indenture or the
Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
79
<PAGE>
(a) change the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(b) reduce the rate or extend the time for payment of interest on
any Security;
(c) reduce the principal amount of any Security, or reduce the
Purchase Price or the Redemption Price;
(d) change the stated maturity or the Net Proceeds Payment Date
(other than in accordance with Section 4.10) of any Security;
(e) alter the redemption provisions of Article III or the terms or
provisions of Section 4.10 in a manner adverse to any Holder;
(f) make any changes in the provisions concerning waivers of
Defaults or Events of Default by Holders of the Securities or the rights of
Holders to recover the principal or premium of, interest on, or redemption
payment with respect to, any Security;
(g) make any changes in Section 6.4, 6.7 or this clause (g);
(h) make the principal of, or the interest on, any Security payable
with anything or in any manner other than as provided for in this Indenture and
the Securities as in effect on the date hereof;
(i) waive a Default or an Event of Default in the payment of
principal of or premium, if any, or interest on the Securities or that resulted
from failure to comply with Section 4.10; or
(j) make the Securities subordinated in right of payment to any
extent or under any circumstances to any other indebtedness, except to the
extent no less favorable to the Holders than would be consistent with Article X
and this Indenture as in effect on the Issue Date;
80
<PAGE>
(k) make any changes relating to (a) the right of the Trustee to
file proof of claim in any bankruptcy or similar proceeding, or (b) the
limitation on the right of Holders to direct the Trustee to institute legal
proceedings with respect to the Indenture or to such provision.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mal such notice, or any defect therein, shall not, however, in
any way impair or affect the validity or any such supplemental indenture.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 9.3 COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to his Security or portion of his Security by written notice to
the Company or the person designated by the Company as the person to whom
consents should be sent received before the date on which the Trustee receives
an Officers' Certificate certifying that the
81
<PAGE>
Holders of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date, and only those persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
Section 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes, the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms. Any failure to make the appropriate notation or to issue a new Security
shall not affect the validity of such amendment, supplement or waiver.
Section 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
82
<PAGE>
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; PROVIDED, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture.
ARTICLE X
SUBORDINATION
Section 10.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees that the payment of the principal of, premium,
if any, and interest on the Securities is subordinated, to the extent and in the
manner provided in this Article X, to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness whether outstanding on the Issue Date or
thereafter incurred, including any interest accruing subsequent to a bankruptcy
or other similar proceeding whether or not such interest is an allowed claim
enforceable against the Company in a bankruptcy case under Title 11 of the
United States Code.
This Article X shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.
Section 10.2 NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment by or on behalf of the Company of
principal of, premium, if any, or interest on the Company of principal of,
premium, if any, or interest on the Securities whether pursuant to the terms of
the Securities or upon acceleration or otherwise shall be made if, at the time
of such payment there exists a default in the payment of all or any portion of
principal of, premium, if any, or interest
83
<PAGE>
on any Designated Senior Debt (and the Trustee has received written notice
thereof), and such default shall not have been cured or waived or the benefits
of this sentence waived by or on behalf of the holders of Designated Senior
Debt. In addition, during the continuance of any other event of default with
respect to (i) the Credit Facility pursuant to which the maturity thereof may be
accelerated, upon the occurrence of (a) receipt by the Trustee of written notice
from the Credit Agent, or (b) if such event of default results from the
acceleration of the Securities, the date of such acceleration, no such payment
may be made by or on behalf of the Company upon or in respect of the Securities
for a period ("Payment Blockage Period") commencing on the earlier of the date
of receipt of such notice or the date of such acceleration and ending 179 days
thereafter (unless such Payment Blockage Period shall be terminated by written
notice to the Trustee from the Credit Agent), or (ii) any other Designated
Senior Debt, upon receipt by the Trustee of written notice from the trustee or
other representative for the holders of such Designated Senior Debt (or the
holders of at least a majority in aggregate principal amount of such other
Designated Senior Debt then outstanding), no such payment may be made by or on
behalf of the Company upon or in respect of the Securities for a Payment
Blockage Period commencing on the date of receipt of such notice and ending 119
days thereafter (unless such Payment Blockage Period shall be terminated by
written notice to the Trustee from such trustee or other representative
commencing the Payment Blockage Period). Notwithstanding anything herein to the
contrary, in no event will a Payment Blockage Period extend beyond 179 days from
the date on which such Payment Blockage Period was commenced. Not more than one
Payment Blockage Period may be commenced with respect to the Securities during
any period of 360 consecutive days; PROVIDED that the commencement of a Payment
Blockage Period by the holders of Designated Senior Debt other than under the
Credit Facility shall not bar the commencement of another Payment Blockage
Period by the Credit Agent within such period of 360 consecutive days. For all
purposes of this paragraph, no Event of Default which existed or was continuing
on the date of the commencement of any Payment Blockage Period with respect to
the Designated Senior Debt initiating such Payment Blockage Period shall be, or
be made, the basis for the commencement of a second Payment Blockage Period by
the representative of such Designated Senior Debt whether or not within a period
of 360 consecutive days unless such event of default shall have been cured or
waived for a period of not loss than 90 consecutive days.
(b) In furtherance of the provisions of Section 10.1, in the event
that, notwithstanding the foregoing provisions of this Section 10.2, any payment
on account of principal of, premium, if any, or interest on the Securities or to
redeem (or make a deposit in redemption of), defease or acquire any of the
Securities shall be made by or
84
<PAGE>
on behalf of the Company and received by the Trustee, by any Holder or by any
Paying Agent (or, if the Company is acting as its own Paying Agent, money for
any such payment shall be segregated and hold in trust), at a time when such
payment was prohibited by the provisions of this Section 10.2, then, unless and
until such payment is no longer prohibited by this Section 10.2, such payment
(subject to the provisions of Section 10.6) shall be received and held in trust
by the Trustee or such Holder or Paying Agent for the benefit of the holders of
Senior Indebtedness, or their respective representative, ratably according to
the respective amounts of Senior Indebtedness held or represented by each, and
shall be immediately paid over or delivered to the holders of the Senior
Indebtedness remaining unpaid to the extent necessary to make payment in full,
in cash or cash equivalents, to the holders of all Senior Indebtedness remaining
unpaid, after giving effect to all concurrent payments and such distributions to
or for the holders of Senior Indebtedness.
The Company shall give prompt written notice to the Trustee and the
Holders of any default or event of default, and any cure or waiver thereof, or
any acceleration under any Senior Indebtedness or under any agreement pursuant
to which Senior Indebtedness may have been issued.
Section 10.3 SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS
ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF COMPANY.
Upon any distribution of assets of the Company of any kind or
character, whether in cash, property or securities upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company (including,
without limitation, in bankruptcy, insolvency or receivership proceedings or
upon any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company):
(a) the holders of all Senior Indebtedness shall first be entitled
to receive payment in full in cash or cash equivalents of all amounts payable
under Senior Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness whether
or not such interest is an allowed claim against the Company in a bankruptcy
case under Title 11 of the United States Code), before the Holders or the
Trustee on behalf of the Holders are entitled to receive any payment on account
of the principal of, premium, if any or interest on the Securities;
85
<PAGE>
(b) any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, property or securities, to
which the Holders or the Trustee on behalf of the Holders would be entitled
except for the provisions of this Article X, shall be immediately paid by the
Company or by any liquidating trustee or agent or other person making such a
payment or distribution, directly to the holders of Senior Indebtedness or their
Representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full in cash or cash equivalents of all Senior Indebtedness remaining
unpaid after giving effect to all concurrent payments and distributions to or
for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or the
Holders or any Paying Agent (or, if the Company is acting as its own Paying
Agent, money for any such payment or distribution shall be segregated or held in
trust) on account of principal of, premium, if any, or interest on the
Securities before all Senior Indebtedness is paid in full in cash or cash
equivalents, such payment or distribution (subject to the provisions of Sections
10.6) shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of the Senior Indebtedness, or their
respective representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, and shall be immediately paid over or
delivered to the holders of the Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid after giving effect to all concurrent payments and distributions to or
for the holders of such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
Section 10.4 HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS
Subject to the payment in full in cash or cash equivalents of all
Senior Indebtedness, the Holders of Securities shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions
86
<PAGE>
to the holders of Senior Indebtedness by or on behalf of the Company, or by or
on behalf of the Holders by virtue of this Article X, which otherwise would have
been made to the Holders shall, as between the Company and the Holders, be
deemed to be payment by the Company to or on account of the Senior Indebtedness,
it being understood that the provisions of this Article X are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article X shall have been
applied, pursuant to the provisions of this Article X, to the payment of amounts
payable under the Senior Indebtedness, then the Holders shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or cash equivalents.
Section 10.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article X or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as between the Company and
the Holders, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
X, of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets or securities of the Company referred to in this
Article X, the Trustee, subject to the provisions of Sections 7.1 and 7.2, and
the Holders shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X. Nothing in
87
<PAGE>
this Section 10.5 shall apply to the claims of, or payments to, the Trustee
under or pursuant to Section 7.7.
Section 10.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF
NOTICE.
Neither the Trustee nor any Paying Agent shall at any time be
charged with the knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee or Paying Agent, unless and until
the Trustee or Paying Agent shall have received written notice thereof from the
Company or one or more holders of Senior Indebtedness or from any trustee or
agent therefor, and, prior to the receipt of any such written notice, the
Trustee or paying agent shall be entitled to assume conclusively that no such
facts exist. Unless at least three Business Days prior to the date on which by
the terms of this Indenture any moneys are to be deposited by the Company with
the Trustee or any Paying Agent (whether or not in trust) for any purpose
(including, without limitation, the payment of the principal, premium, if any,
the interest or other amounts due on any Security), the Trustee or Paying Agent
shall have received with respect to such moneys the notice provided for in the
preceding sentence, the Trustee or Paying Agent shall have full power and
authority to receive such moneys and to apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary
which may be received by it on or after such date. The foregoing shall not apply
to the Paying Agent if the Company is acting as Paying Agent. Nothing contained
in this Section 10.6 shall limit the right of the holders of Senior Indebtedness
to recover payments as contemplated by Section 10.2.
Section 10.7 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF COMPANY
OR HOLDERS OF SENIOR INDEBTEDNESS.
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article X
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time,
88
<PAGE>
without the consent of or notice to the holder of any Indebtedness of the
Company, without incurring responsibility to the holders of any Indebtedness of
the Company, and without impairing or releasing the subordination provisions
contained in this Article X, or the obligations hereunder of the holders of the
Indebtedness of the Company, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any Instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness or fail to perfect or delay the perfection of any
such lien; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
Section 10.8 HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article X and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attor ney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company) tending towards
liquidation of the business and assets of the Company, the immediate filing of a
claim for the unpaid balance of his Securities in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
30 days before the expiration of the time to file such claim or claims, then the
holders of the Senior Indebtedness or their Representative are or is hereby
authorized to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Securities. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior Indebtedness or
their Representative to vote in respect of the claim of any Holder in any such
proceeding.
Section 10.9 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
89
<PAGE>
The Trustee shall be entitled to all of the rights set forth in this
Article X in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
Section 10.10 ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article X shall not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.1.
Section 10.11 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article X or otherwise. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants or obligations are as specifically set
forth in this Article and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. Nothing in this Section 10.11 shall affect the obligation of any other
such person to hold such payment for the benefit of, and to pay such payment
over to, the holders of Senior Indebtedness or their Representative.
ARTICLE XI
MISCELLANEOUS
Section 11.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of the Indenture under the TIA, shall control.
90
<PAGE>
Section 11.2 NOTICES.
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the other's address.
If to the Company
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Attention: Jennifer L. Adams, Esq.
If to the Trustee:
The Bank of New York
101 Barclay St., Floor 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administrator
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered, five Business Days
after being deposited in the mail, postage prepaid, if mailed, when receipt
acknowledged, if telecopied and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to the
Holder's address shown on
91
<PAGE>
the register kept by the Registrar. Failure to mail a notice or communication to
a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time proscribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
Section 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 11.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel to the Trustee (which shall include the
statements set forth in Section 11.5 hereof) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been complied
with.
Section 11.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
92
<PAGE>
(a) a statement that the Person making such certificate or opinion
has read and understands such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with, and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with; PROVIDED that with respect to
matters of fact Opinions of Counsel may rely on an Officers' Certificate or
certificates of public officials.
Section 11.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7 LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section 11.8 NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Security
93
<PAGE>
waives and releases all such liability. The waiver and release are part of the
consider ation for Issuance of the Securities.
Section 11.9 GOVERNING LAW
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE
AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF TIE TRUSTEE OR ANY SECURITYHOLDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 11.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 11.11 SUCCESSORS.
94
<PAGE>
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
Section 11.12 COUNTERPART ORIGINALS.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together represent the same agreement.
Section 11.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 11.14 SEVERABILITY.
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 11.15 QUALIFICATION OF INDENTURE.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall pay
all costs and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith, including, but not limited to, costs
and expenses of qualifica tion of this Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive from
the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
Section 11.16 REGISTRATION RIGHTS.
95
<PAGE>
Certain Holders of the Securities may be entitled to certain
registration rights with respect to such Securities pursuant to, and subject to
the terms of, the Registration Rights Agreement.
96
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
WORLD COLOR PRESS, INC.
By: /s/ Jennifer L. Adams
--------------------------------
Name: Jennifer L. Adams
Title: Executive Vice President
THE BANK OF NEW YORK, Trustee
By: /s/ Mary La Gumina
--------------------------------
Name: Mary La Gumina
Title: Assistant Vice President
97
<PAGE>
EXHIBIT A
FORM OF SECURITY
8-3/8% SENIOR SUBORDINATED NOTE DUE 2008
CUSIP:
No. $_________
WORLD COLOR PRESS, INC.
promises to pay to
or registered assigns, the principal sum of ________________ dollars on November
15, 2008.
Interest Payment Dates: May 15 and November 15 commencing May 15, 1999. Record
Dates: May 1 and November 1
Reference is hereby made to the further provisions of this Senior Subordinated
Note due 2008 set forth on the reverse side hereof and such further provisions
shall have the same effect as if set forth on the front side hereof.
A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed
by its duly authorized officers.
WORLD COLOR PRESS, INC.
By: ______________________________
By: ______________________________
CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the within mentioned Indenture.
Dated: November 20, 1998
THE BANK OF NEW YORK, as Trustee
By: ______________________________
Authorized Signatory
A-2
<PAGE>
8-3/8% SENIOR SUBORDINATED NOTE DUE 2008
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONG FUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(1)
- ----------
(1) This paragraph should only be added if the Security is issued in
global form.
A-3
<PAGE>
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOW ING SENTENCE. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (C) IT IS AN INSTITU TIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (A) (1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"), OR (D) IT HAS OTHERWISE ACQUIRED THIS NOTE OR A
BENEFICIAL INTEREST HEREIN IN ACCORDANCE WITH THE TERMS OF THE INDENTURE
RELATING TO THIS NOTE AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE
SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON
THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURI TIES ACT, (D) IN A TRANSACTION MEETING OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANS FER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY, THE TRUSTEE AND THE REGISTRAR THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIRE MENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF
A-4
<PAGE>
COUNSEL ACCEPTABLE TO THE COMPANY, THE TRUSTEE AND THE REGISTRAR) OR (G)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANS FERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSAC TIONS," "U.S.
PERSONS" AND "UNITED STATES" HAVE THE MEAN INGS GIVEN TO THEM BY RULE 902
OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
NOTE IN VIOLATION OF THE FOREGOING.(2)
Capitalized terms used herein have the meaning assigned to them in
the Indenture (as defined in Section 4 below) unless otherwise indicated.
1. INTEREST. World Color Press, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
8-3/8% per annum from November 20, 1998 until maturity. The Company will pay
interest semiannually on May 15 and November 15 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Securities will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from the Issue
Date; PROVIDED that if there is no existing Default in the payment of interest,
and if this Security is authenticated between a record date referred to on the
face hereof and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date; PROVIDED, FURTHER, that the
first Interest Payment Date shall be May 15, 1999. The Company shall pay
interest on overdue principal from time to time on demand at the same rate per
annum on the Securities to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods) from
- ----------
(2) This paragraph should be included only for the Transfer Restricted
Securities.
A-5
<PAGE>
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Securities (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the May 1 or November 1 next preceding
the Interest Payment Date, even if such Securities are cancelled after such
record date and on or before such Interest Payment Date. The Securities will be
payable both as to principal and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest may be made by check
mailed to the holders of the Securities at their addresses set forth in the
register of holders of Securities and PROVIDED that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest and premium on all Global Securities, and all other Securities the
Holders of which shall have provided wire transfer instructions to an account
within the United States to the Company or the Paying Agent at least five days
before the relevant Record Date. Until otherwise designated by the Company, the
Company's office or agency will be the corporate trust office of the Trustee
presently located at The Bank of New York, 101 Barclay Street, Floor 21W, N.Y.,
NY. 10286, Attn: Corporate Trust Trustee Administration.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may, subject to certain exceptions, act in
any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture
dated as of November 20, 1998 (the "Indenture") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77 aaa-77bbbb) (the "TIA"). The Securities
are subject to all such terms, anD Holders are referred to the Indenture and the
TIA for a statement of such terms. The Securities are general unsecured
obligations of the Company limited to $300.0 million in aggregate principal
amount, plus premium, if any, plus amounts, if any, sufficient to pay interest
on outstanding Securities as set forth in Paragraph 2 hereof.
5. REDEMPTION.
A-6
<PAGE>
(a) The Company may redeem all or any of the Securities, in
whole or in part, at any time on or after November 15, 2003, at the Redemption
Price (expressed as a percentage of the principal amount therefor) set forth
below if the Securities are redeemed during the twelve-month period beginning on
the date indicated in the table below, in each case together with any accrued
but unpaid interest to the Redemption Date, as set forth in Section 3.7 of the
Indenture.
YEAR REDEMPTION
---- ----------
November 15, 2003.................104.188%
November 15, 2004.................102.792%
November 15, 2005.................101.396%
November 16, 2006 or thereafter...100.000%
Notwithstanding the foregoing, at any time prior to November 15,
2001, the Company may also redeem up to 40% in aggregate principal amount of the
Securities originally issued with the net proceeds from any public offering of
Equity Interests of the Company (other than Redeemable Stock) at a redemption
price equal to 108.375% of the principal amount thereof plus accrued and unpaid
interest to the Redemption Date; PROVIDED that at least 60% in aggregate
principal amount of the Securities originally issued must remain outstanding
after each such redemption.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Securities are to be redeemed at its registered address. Securities
in denomina tions larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Securities held by a Holder are to be
redeemed. On and after the Redemption Date interest ceases to accrue on
Securities or portions thereof called for redemption.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and Securities
may be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Security or portion of a Security
selected for redemption, except the unredeemed portion of any Security being
redeemed in part. Also, it need not exchange or register the transfer of any
Securities for a period of 15 days before a selection of Securities to be
A-7
<PAGE>
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
8. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
9. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. Except as set forth in
the Indenture, if the Company irrevocably deposits with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender, U.S. Government Obligations
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Company will be discharged from certain provisions of the Indenture and the
Securities (including the restrictive covenants described in paragraph 12 below,
but excluding their obligation to pay the principal of, premium, if any and
interest on the Securities).
10. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain
exceptions, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in aggregate principal amount
of the Securities then outstanding (including consents obtained in connection
with a tender offer or exchange offer for Securities). Without the consent of
any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Securities to cure any ambiguity, defect or inconsistency (provided that
such action shall not adversely affect the interests of the Holders in any
respect); to add to the covenants of the Company for the benefit of Holders or
to surrender any right or power herein conferred upon the Company or to make any
other change that does not adversely affect the rights of any Holder; to provide
collateral for the Securities; to evidence the succession of another person to
the Company; to provide for uncertificated Securities; and to effect or maintain
the qualification of the Indenture under the TIA.
Without the consent of each Holder affected, an amendment or waiver
may not (with respect to any Securities held by a non-consenting holder) (i)
change the percentage of the principal amount of this Security whose Holders
must consent to an amendment, supplement or waiver of any provision of any
Security or the Indenture; (ii) reduce the rate or extend the time for payment
on this Security; (iii) reduce the principal amount of any Security or reduce
the Purchase Price or the Redemption Price; (iv) change the Stated Maturity or
the Net Proceeds Payment Date (other than in accordance with Section 4.10 of the
Indenture); (v) alter the redemption provisions of Article Three of the
Indenture or the terms and provisions of Section 4.10 of the Indenture, in any
A-8
<PAGE>
case, in a manner adverse to any Holder; (vi) make changes in provisions
concerning waivers of Defaults or Events of Defaults of Holders of securities or
the rights of Holders to recover principal or premium of, interest on, or
redemption payment with respect to, any Security in the form and manner provided
in the Indenture; (vii) make any changes to Section 6.9 or 6.6 or the third
sentence of Section 9.2 of the Indenture.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture or this Security (and the
obligation of the Company to obtain any such consent otherwise required from
such Holder) may be subject to the requirement that such Holder shall have been
the Holder of record of any Securities with respect to which such consent is
required or sought as of a date identified by the Trustee in a notice furnished
to Holders in accordance with the terms of the Indenture.
11. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest on any Security for 30 days; default in payment of principal
of or premium on the Securities at maturity, or upon acceleration, redemption or
otherwise; failure by the Company for 30 days after written notice to it from
the Trustee or Holders of at least 30% in principal amount of the then
outstanding Securities to comply with any of its other agreements in the
Indenture or the Securities; certain defaults under other Indebtedness; certain
final judgments that remain undischarged for 60 days after being entered; and
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 30% (or 25% in the case of an
Event of Default with respect to payment of principal of or interest on the
Securities) in aggregate principal amount of the then outstanding Securities may
declare all the Securities to be immediately due and payable for any amount
equal to 100% of the principal amount of the Securities plus premium, if any,
and accrued interest to the date of payment, except that in the case of an Event
of Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately without further action
or notice and except that if any Senior Indebtedness is outstanding pursuant to
the Credit Facility, upon a declaration of acceleration, such principal,
premium, if any, and interest shall be due and payable upon the earlier of (x)
the day that is five business days after the provision to the Company and the
Credit Agent of such written notice, unless such Event of Default is cured or
waived prior to such date and (y) the date of acceleration of any Senior
Indebtedness under the Credit Facility. Holders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority is principal amount of the
then outstanding Securities may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing
A-9
<PAGE>
Default or Event of Default (except a Default or an Event of Default in payment
of principal, premium, if any, or interest) if and so long as a committee of its
Trust Officers determines in good faith that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
12. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations
on the ability of the Company and its Restricted Subsidiaries to, among other
things, pay dividends and make distributions with respect to, or repurchase or
otherwise acquire or retire for value, any of their Equity Interests, prepay
subordinated Indebtedness, make Restricted Investments, incur additional
Indebtedness, enter into transactions with Affiliates, incur Liens, sell assets,
merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of all or substantially all of its properties ro assets. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.
13. TRUSTEE DEALINGS WITH COMPANY. Subject to applicable provisions
under the TIA, the Trustee, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates as if it
were not Trustee.
14. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
15. AUTHENTICATION. This Security shall not be valid until authenti
cated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Monors Act).
17. SUBORDINATION. The securities are subordinated to Senior
Indebtedness (as defined in the Indenture), which includes (i) the Senior Bank
Debt and (ii) any other Indebtedness permitted to be incurred pursuant to the
terms of Section 4.8 of the Indenture, unless the instrument under which such
Indebtedness is incurred
A-10
<PAGE>
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities. Notwithstanding anything to the contrary in the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness that is
expressly subordinate or junior in right of payment to any Indebtedness of the
Company, (ii) Indebtedness that is represented by Redeemable Stock, (iii) any
liability for federal, state, or local taxes owed or owing by the Company, (iv)
Indebtedness of the Company to any Subsidiary or any Affiliate of the Company,
(v) trade payables, (vi) Indebtedness that is incurred in violation of the
Indenture (other than Senior Bank Debt) and (vii) the 6% Convertible Notes. To
the extent provided in the Indenture, Senior Indebtedness must be paid before
the Securities may be paid. the Company agrees, and each Holder by accepting a
Security consents and agrees, to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company will cause
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
19. ADDITIONAL RIGHTS OF HOLDERS OF SECURITIES. Certain Holders of
the Securities may be entitled to certain registration rights with respect to
such Securities pursuant to, and subject to the terms of, the Registration
Rights Agreement.3
- ----------
(3) This paragraph should be included only for the Initial Securities.
A-11
<PAGE>
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
WORLD COLOR PRESS, INC.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Attention: General Counsel
A-12
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
In connection with any transfer of this Security occurring prior to the date
which is the earlier of (i) the date of the declaration by the Securities and
Exchange Commission of the effectiveness of a registration statement under the
Securities act of 1933, as amended (the "Securities Act") covering resales of
this Security (which effectiveness shall not have been suspended or terminated
at the date of the transfer) and (ii) November 20, 2000, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer and that:
[Check One]
|_| (a) this Security is being transferred in compliance with the exemp
tion from registration under the Securities Act provided by Rule 144A
thereunder.
|_| (b) this Security is being transferred other than in accordance with
(a) above and documents are being furnished which comply with the conditions of
transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security in the name of any Person other than the
Holder hereof unless
A-13
<PAGE>
and until the conditions to any such transfer or registration set forth herein
and in Section 2.6 of the Indenture shall have been satisfied.(4)
________________________________________________________________________________
Date:______________________ Your Signature:_____________________________
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
- ----------
(4) This paragraph should be included only for the Initial Securities.
A-14
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES(5)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized signatory of
Date of Principal Amount of Principal Amount of Security following Trustee or
Exchange of this Global this Global such decrease (or Securities
Security Security increase) Custodian
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(5) This schedule should only be added if the Security is issued in global
form.
A-15
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES1
Re: 8-3/8% SENIOR SUBORDINATED NOTES DUE 2008 OF WORLD COLOR PRESS, INC.
This Certificate relates to $______________ principal amount of Securities
held in (check applicable box) _____ book-entry or ______ definitive form by
______________ (the "Transferor").
The Transferor (check applicable box):
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because (check
applicable box):
|_| Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
|_| Such Security is being transferred to a "qualified institutional
buyer" (within the meaning of Rule 144A promulgated under the Securities Act),
that is aware that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer Restricted
Security for its own account,
- ----------
(6) This Certificate shall be included only for Transfer Restricted
Securities.
A-16
<PAGE>
or for the account of another such "qualified institutional buyer" (in
satisfaction of Section 2.6(a)(ii)(B) or Section 2.6 (d)(i)(B) of the
Indenture).
|_| Such Security is being transferred pursuant to an exemption from regis
tration in accordance with Rule 144, or outside the United States in an Offshore
Transaction in compliance with Rule 904 under the Securities Act, or pursuant to
an effective registration statement under the Securities Act (in satisfaction of
Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
|_| Such Security is being transferred to an institutional "accredited
investor" within the meaning of Rule 501(A)(1), (2), (3) or (7) under the
Securities Act that is acquiring the Security for its own account, or for the
account of such an institutional accredited investor, not with a view to or for
offer or sale in connection with any distribution in violation of the Securities
Act, and a letter in the form of Annex A to this Security accompanies this
Certificate, and, if such transfer is in respect of an aggregate principal
amount of Securities less than $250,000, an Opinion of Counsel to the effect
that such transfer is in compliance with the Securities Act accompanies this
Certificate (in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of
the Indenture).
|_| Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act and
in accordance with applicable securities laws of the states of the United
States, other than as provided in the three immediately preceding paragraphs. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(E) or Section 2.6(d)(i)(E) of the Indenture).
-------------------------------
[INSERT NAME OF TRANSFEROR]
By: ___________________________
Date:______________________
A-17
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES(7)
Re: 8-3/8% SENIOR SUBORDINATED NOTES DUE 2008 OF WORLD COLOR PRESS, INC.
This Certificate relates to $______________ principal amount of Securities
held in (check applicable box) _____ book-entry or ______ definitive form by
______________ (the "TRANSFEROR").
The Transferor (check applicable box):
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
|_| has requested the Registrar by written order to exchange or register
the transfer of a Security or Securities.
- ----------
(7) This certificate shall be included only for the Exchange Securities.
A-18
<PAGE>
ANNEX A TO OFFERING SECURITY(8)
INVESTOR LETTER OF REPRESENTATION
WORLD COLOR PRESS, INC.
THE BANK OF NEW YORK, AS TRUSTEE
c/o The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Attn: Corporate Trust Trustee Administration
Ladies and Gentlemen:
This letter is delivered by the undersigned to request a transfer of
$___________ principal amount of the 8-3/8% Senior Subordinated Notes due 2008
(the "Notes") of World Color Press, Inc. (the "Company"). The Notes are
described in that certain Offering Memorandum (the "Offering Memorandum") dated
November 12, 1998 relating to the offering of the Notes. We acknowledge receipt
of the Offering Memorandum and acknowledge that we have read the Offering
Memorandum, including the information on pages 68-70, have had access to such
financial and other information and have been afforded the opportunity to ask
such questions of representatives of the Company and receive answers thereto, as
we deem necessary in connection with our decision to purchase the Notes.
Upon transfer the Notes would be registered in the name of the
undersigned:
Name:____________________
Address:_________________
- ----------
(8) This Annex shall be included only for Transfer Restricted Securities.
A-19
<PAGE>
Taxpayer ID Number:__________________
A-20
<PAGE>
The undersigned represents and warrants to you that:
(a) We are an institutional "accredited investor" (as defined in Rule
501(a)(1),(2),(3),or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing Notes for our own account or for the account of
such an institutional "accredited investor," and we are acquiring the Notes for
investment purposes and not with a view to, or for offer or sale in connection
with any distribution in violation of the Securities Act, and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risk of our investment in the Notes and invest in or
purchase securities similar to the Notes in the normal course of our business
and we, and any accounts for which we are acting, are each able to bear the
economic risk of our or its investment. We confirm that neither the Company nor
any person acting on its behalf has offered to sell the Notes by, and that we
have not been made aware of the offering of the Notes by, any form of general
solicitation or general advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio.
(b) We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes within the time period referred to under Rule 144(k) (taking into
account the provisions of Rule 144(d) under the Securities Act, if applicable)
under the Securities Act as in effect on the Note of the transfer, (the "Resale
Restriction Termination Date") only (a) to the Company, (b) pursuant to a
registration statement that has been declared effective under the Securities
Act, (c) so long as the Notes are eligible for resale pursuant to Rule 144A
under the Securities Act, to a person we reasonably believe is a qualified
institutional buyer under Rule 144A under the Securities Act (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) in an
offshore transaction complying with Rule 903 or 904 of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" within the meaning
of Rule 501(a)(1),(2),(3),or (7) under the Securities Act that is purchasing for
its own account or for the account of an institutional "accredited investor", in
each case, with respect of the Notes, or (f) pursuant to any other available
exemption from the registration requirements of the Securities Act, subject in
each of the foregoing cases to any requirement of law that the disposition of
our property of such investor account or accounts be at all times within our or
their control and in compliance with any applicable state securities laws. The
foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other
A-21
<PAGE>
transfer of the Notes is proposed to be made pursuant to clause (e) above prior
to the Resale Restriction Termination Date, the transferor shall deliver a
letter from the transferee substantially in the from of this letter to the
Company and the trustee (the "Trustee") under the indenture, dated as of
November 20, 1998, between the Company and the Trustee relating to the Notes,
which shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7) under
the Securities Act and that it is acquiring such Notes for investment purposes
and not for distribution in violation of the Securities Act. Each purchaser
acknowledges that the Company and the Trustee reserve the right prior to any
offer, sale or other transfer, prior to the Resale Restriction Termination Date,
of the Notes (i) pursuant to clause (e) above (if such transfer is in respect of
an aggregate principal amount of Securities less than $250,000) or (ii) pursuant
to clause (f) above, to require the delivery of an opinion of counsel
satisfactory to the Company and the Trustee.
(c) We understand that the Notes will be in the form of definitive
physical certificates bearing the legend set forth in clause (4) in the
"Transfer Restrictions" section of the Offering Memorandum.
We acknowledge that you, the Initial Purchasers and others will rely upon
our confirmations acknowledgments and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations and warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
__________________________
By:_______________________
A-22
<PAGE>
Exhibit 4.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
World Color Press, Inc.
$300,000,000
7 3/4% Senior Subordinated Notes due 2009
-------------
INDENTURE
Dated as of February 22, 1999
-------------
The Bank of New York
Trustee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.........................................................1
Section 1.2 Other Definitions..................................................20
Section 1.3 Incorporation by Reference of Trust Indenture Act..................20
Section 1.4 Rules of Construction..............................................21
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating....................................................22
Section 2.2 Execution and Authentication.......................................23
Section 2.3 Registrar and Paying Agent.........................................25
Section 2.4 Paying Agent to Hold Assets in Trust...............................25
Section 2.5 Holder Lists.......................................................26
Section 2.6 Transfer and Exchange..............................................26
Section 2.7 Replacement Securities.............................................44
Section 2.8 Outstanding Securities.............................................44
Section 2.9 Treasury Securities................................................45
Section 2.10 Temporary Securities...............................................45
Section 2.11 Cancellation.......................................................45
Section 2.12 Defaulted Interest.................................................46
Section 2.13 CUSIP Numbers......................................................46
Section 2.14 Issuance of Additional Securities..................................46
ARTICLE III
OPTIONAL REDEMPTION
Section 3.1 Notices to Trustee.................................................47
Section 3.2 Selection of Securities to be Redeemed.............................47
Section 3.3 Notice of Redemption...............................................48
Section 3.4 Effect of Notice of Redemption.....................................49
Section 3.5 Deposit of Redemption Price........................................49
Section 3.6 Securities Redeemed in Part........................................50
Section 3.7 Optional Redemption................................................50
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities..............................................51
Section 4.2 Maintenance of Office or Agency....................................52
Section 4.3 SEC Reports; Financial Statements..................................52
Section 4.4 Compliance Certificate; Notice of Default..........................53
Section 4.5 Payment of Taxes and Other Claims..................................54
Section 4.6 Waiver of Stay, Extension and Usury Laws...........................54
Section 4.7 Limitations on Restricted Payments.................................54
Section 4.8 Dividends and Payment Restrictions.................................58
Section 4.9 Incurrence of Indebtedness.........................................59
Section 4.10 Limitation on Sales of Assets......................................61
Section 4.11 Transactions With Affiliates.......................................64
Section 4.12 Limitations on Liens...............................................65
Section 4.13 Investments in Unrestricted Subsidiaries...........................65
Section 4.14 Corporate Existence................................................66
Section 4.15 Limitation on Other Subordinated Indebtedness......................67
ARTICLE V
SUCCESSORS
Section 5.1 Merger, Consolidation, or Sale of Assets...........................67
Section 5.2 Opinion of Counsel to Trustee; Officers' Certificate...............68
Section 5.3 Successor Corporation Substituted..................................68
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default..................................................69
Section 6.2 Acceleration.......................................................72
Section 6.3 Other Remedies.....................................................73
Section 6.4 Waiver of Past Defaults............................................74
Section 6.5 Control By Majority................................................74
Section 6.6 Limitations On Suits...............................................74
Section 6.7 Rights of Holders To Receive Payment...............................75
Section 6.8 Collection Suit By Trustee.........................................76
Section 6.9 Trustee May File Proofs of Claim...................................76
Section 6.10 Priorities.........................................................77
Section 6.11 Undertaking For Costs..............................................77
Section 6.12 Rights and Remedies Cumulative.....................................77
Section 6.13 Delay or Omission Not Waiver.......................................78
Section 6.14 Restoration of Rights and Remedies.................................78
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee..................................................78
Section 7.2 Rights of Trustee..................................................80
Section 7.3 Individual Rights of Trustee.......................................81
Section 7.4 Trustee's Disclaimer...............................................81
Section 7.5 Notice of Default..................................................82
Section 7.6 Reports by Trustee to Holders......................................82
Section 7.7 Compensation and Indemnity.........................................82
Section 7.8 Replacement of Trustee.............................................83
Section 7.9 Successor Trustee by Merger, Etc...................................85
Section 7.10 Eligibility; Disqualification......................................85
Section 7.11 Preferential Collection of Claims against Company..................85
ARTICLE VIII
LEGAL DEFEASANCE AND
COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant Defeasance...........85
Section 8.2 Legal Defeasance and Discharge.....................................85
Section 8.3 Covenant Defeasance................................................86
Section 8.4 Conditions to Legal or Covenant Defeasance.........................87
Section 8.5 Deposited Cash and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions..............................89
Section 8.6 Repayment to the Company...........................................89
Section 8.7 Reinstatement......................................................90
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplement Indentures Without Consent of Holders...................90
Section 9.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders.................................................91
Section 9.3 Compliance with TIA................................................93
Section 9.4 Revocation and Effect of Consents..................................93
Section 9.5 Notation on or Exchange of Securities..............................94
Section 9.6 Trustee to Sign Amendments, Etc....................................94
ARTICLE X
SUBORDINATION
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
Section 10.1 Securities Subordinated to Senior Indebtedness.....................95
Section 10.2 No Payment on Securities in Certain Circumstances..................95
Section 10.3 Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization
of Company.........................................................97
Section 10.4 Holders to Be Subrogated to Rights of Holders of Senior
Indebtedness.......................................................98
Section 10.5 Obligations of the Company Unconditional...........................99
Section 10.6 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice..................................................99
Section 10.7 Subordination Rights Not Impaired by Acts or Omissions
of Company or Holders of Senior Indebtedness......................100
Section 10.8 Holders Authorize Trustee to Effectuate Subordination of
Securities........................................................100
Section 10.9 Right of Trustee to Hold Senior Indebtedness......................101
Section 10.10 Article X Not to Prevent Events of Default........................101
Section 10.11 No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness......................................................101
ARTICLE XI
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls......................................102
Section 11.2 Notices...........................................................102
Section 11.3 Communication by Holders With Other Holders.......................103
Section 11.4 Certificate and Opinion as to Conditions Precedent................103
Section 11.5 Statements Required in Certificate or Opinion.....................104
Section 11.6 Rules by Trustee, Paying Agent, Registrar.........................104
Section 11.7 Legal Holidays....................................................105
Section 11.8 No Recourse Against Others........................................105
Section 11.9 Governing Law.....................................................105
Section 11.10 No Adverse Interpretation of Other Agreements.....................106
Section 11.11 Successors........................................................106
Section 11.12 Counterpart Originals.............................................106
Section 11.13 Table of Contents, Headings, etc..................................106
Section 11.14 Severability......................................................106
Section 11.15 Qualification of Indenture........................................107
Section 11.16 Registration Rights...............................................107
SIGNATURES.......................................................................108
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
EXHIBIT A FORM OF SECURITY
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
</TABLE>
v
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
----------- ---------
<S> <C>
310(a)(1)............................................................... 7.10
(a)(2)............................................................... 7.10
(a)(3)............................................................... N.A.**
(a)(4)............................................................... N.A.
(b).................................................................. 7.8; 7.10; 11.2
(c).................................................................. N.A.
311(a).................................................................. 7.11
(b).................................................................. 7.11
(c).................................................................. N.A.
312(a).................................................................. 2.5
(b).................................................................. 11.3
(c).................................................................. 11.3
313(a).................................................................. 7.6
(b)(1)............................................................... N.A.
(b)(2)............................................................... 7.6
(c).................................................................. 7.6; 11.2
(d).................................................................. 7.6
314(a).................................................................. 4.3; 11.2
(b).................................................................. N.A.
(c)(1)............................................................... 11.4
(c)(2)............................................................... 7.2; 11.4
(c)(3)............................................................... N.A.
(d).................................................................. N.A.
(e).................................................................. 11.5
(f).................................................................. N.A.
315(a).................................................................. 7.1(2)
(b).................................................................. 7.5; 11.2
(c).................................................................. 7.1(1)
(d).................................................................. 7.1(3)
(e).................................................................. 6.11
316(a)(last sentence)................................................... 2.9
(a)(1)(A)............................................................ 6.5
(a)(1)(B)............................................................ 6.4
(a)(2)............................................................... N.A.
(b).................................................................. 6.7
(c).................................................................. 9.4
317(a)(1)............................................................... 6.8
</TABLE>
- --------
* This Cross-Reference Table is not part of the Indenture.
** N.A. means not applicable.
vi
<PAGE>
<TABLE>
<S> <C>
(a)(2)............................................................... 6.9
(b).................................................................. 2.4
318(a).................................................................. 11.1
</TABLE>
vii
<PAGE>
INDENTURE, dated as of February 22, 1999, among World Color
Press, Inc., a Delaware corporation (the "Company"), and The Bank of New York, a
New York banking corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders (as defined below) of
the Company's 7 3/4% Senior Subordinated Notes due 2009 (the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 DEFINITIONS.
"144A GLOBAL SECURITY" means a global security in the form of
Exhibit A hereto bearing the Global Security Legend and the Private Placement
Legend and deposited with and registered in the name of the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Initial Securities sold in reliance on Rule 144A.
"ADDITIONAL SECURITIES" means, subject to the Company's
compliance with Section 4.9, 7 3/4% Senior Subordinated Notes due 2009 issued
from time to time after the Issue Date under the terms of this Indenture (other
than pursuant to Section 2.6, 2.7, 2.10, 3.6, 4.10 or 9.5 of this Indenture and
other than Exchange Securities issued pursuant to an Exchange Offer).
"ADJUSTED CONSOLIDATED NET INCOME" means, with respect to any
Person for any period, (i) the Consolidated Net Income of such Person for such
period, plus (ii) in the case of the Company and its Restricted Subsidiaries,
all cash received during such period by the Company or any Restricted Subsidiary
from its Unrestricted Subsidiaries from the payment of dividends or
distributions (including tax sharing payments and loans or advances which are
junior in right of payment to the Securities and have a longer Average Life than
the Securities), but only to the extent such cash payments are not otherwise
included in "Adjusted Consolidated Net Income." Each item of Adjusted
Consolidated Net Income will be determined in conformity with GAAP, except that,
for purposes of the application of Accounting Principles Board Opinions Nos. 16
and 17,
<PAGE>
such Person may select any amortization practice allowable by GAAP up to 40
years, notwithstanding the use of a different amortization in such Person's
consolidated financial statements. Any designation of a Subsidiary of the
Company as a Restricted Subsidiary or Unrestricted Subsidiary at or prior to the
time of the calculation of Adjusted Consolidated Net Income of a Subsidiary will
be treated as if it had occurred at the beginning of the applicable period.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of voting securities, by agreement or otherwise.
"AGENT" means any authenticating agent, Registrar, Paying
Agent or transfer agent.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Security, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"ASSET SALE" means, with respect to any Person, in one or a
series of related transactions, the sale, lease, conveyance, disposition or
other transfer by the referent Person of any of its assets (including by way of
a sale-and-leaseback and including the sale or other transfer or issuance of any
Capital Stock of any Subsidiary of the referent Person); PROVIDED that
notwithstanding the foregoing, the term "Asset Sale" shall not include the sale,
lease, conveyance, disposition or other transfer of (i) all or substantially all
of the assets of the Company, as permitted pursuant to Section 5.1 hereof, (ii)
any assets between the Company or any Restricted Subsidiary, (iii) any sale,
conveyance, disposition or other transfer or (A) cash and cash equivalents, (B)
inventory in the ordinary course of business and (C) any other tangible or
intangible asset, in each case in the ordinary course of business of the Company
or its Restricted Subsidiaries, or (iv) the sale or discount, in each case
without recourse, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof.
2
<PAGE>
"AVERAGE LIFE" means, as of the date of determination, with
respect to any security or instrument, the quotient obtained by dividing (i) the
sum of the products of the number of years from the date of determination to the
dates of each successive scheduled principal payment or, in the case of
Redeemable Stock, each successive scheduled mandatory redemption payment of such
security or instrument multiplied by the amount of such principal payment or, in
the case of Redeemable Stock, such mandatory redemption payment, by (ii) the sum
of all such principal payments or, in the case of Redeemable Stock, mandatory
redemption payments.
"BANKRUPTCY LAW" means Title 11, U.S. Code, as amended, or any
similar federal, state or foreign law for the relief of debtors.
"BOARD OF DIRECTORS" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"BROKER-DEALER" means any broker-dealer that receives Exchange
Securities for its own account in an Exchange Offer in exchange for Initial
Securities that were acquired by such broker-dealer as a result of market-making
or other trading activities.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease which would at such time be required to be capitalized on the
balance sheet in accordance with GAAP.
"CAPITAL STOCK" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock.
"CASH EQUIVALENTS" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic
3
<PAGE>
commercial bank of recognized standing having capital and surplus in excess of
$500.0 million or a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development and having total assets in excess of $500.0 million with a maturity
date not more than one-year from the date of acquisition, (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
the parent corporation of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 and commercial paper issued
by others rated at least A-2 or the equivalent thereof by Standard & Poor's
Corporation or at least P-2 or the equivalent thereof by Moody's Investors
Service, Inc. and in each case maturing within one year after the date of
acquisition and (v) investments in money market funds substantially all of whose
assets comprise securities of the types described in clauses (i) through (iv)
above.
"CEDEL" means Cedel Bank, societe anonyme, or any successor
thereof.
"COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company.
"COMPANY" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture, and thereafter means such successor.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for
any period, the Adjusted Consolidated Net Income of such Person for such period
PLUS (a) provision for taxes based on income or profits to the extent such
provision for taxes was included in computing Adjusted Consolidated Net Income,
PLUS (b) consolidated Interest Expense, whether paid or accrued, to the extent
such expense was deducted in computing Adjusted Consolidated Net Income
(including amortization of original issue discount and non-cash interest
payments), PLUS (c) (depreciation, amortization and other non-cash charges to
the extent such depreciation, amortization and other non-cash charges were
deducted in computing Adjusted Consolidated Net Income (including amortization
of goodwill and other intangibles); PROVIDED, with respect to the calculation of
the Company's Fixed Charge Coverage Ratio, that if, during such period, (i) such
Person or any of its Subsidiaries shall have made any Asset Sales (other than in
the case of the Company and its Subsidiaries, sales of the Capital Stock of or
any assets of Unrestricted Subsidiaries which constitute Asset Sales),
Consolidated Cash Flow of
4
<PAGE>
such Person and its Subsidiaries for such period shall be reduced by an amount
equal to the Consolidated Cash Flow (if positive), to the extent such
Consolidated Cash Flow was included in computing Consolidated Cash Flow,
directly attributable to the assets or Capital Stock which are the subject of
such Asset Sales for such period or increased by an amount equal to the
Consolidated Cash Flow (if negative), to the extent such Consolidated Cash Flow
was included in computing Consolidated Cash Flow, directly attributable thereto
for such period and (ii) such Person or any of its Subsidiaries (other than, in
the case of the Company and its Subsidiaries, Unrestricted Subsidiaries) has
made any acquisition of assets or Capital Stock (occurring by merger or
otherwise), including, without limitation, any acquisition of assets or Capital
Stock occurring in connection with a transaction causing a calculation to be
made hereunder, Consolidated Cash Flow of such Person and its Subsidiaries shall
be calculated (notwithstanding clause (iii) of the definition of Consolidated
Net Income) excluding any expenses which, in the good faith estimate of
management, will be eliminated as a result of such acquisition, as if such
acquisition of assets or Capital Stock (including the incurrence of any
Indebtedness in connection with any such acquisition and the application of the
proceeds thereof) took place on the first day of such period.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person
for any period, the (a) consolidated Interest Expense, whether paid or accrued,
to the extent such expense was deducted in computing Adjusted Consolidated Net
Income (including amortization of original issue discount and non-cash interest
payments) and (b) amount of all cash dividend payments on all series of
preferred stock, other than cash dividends on preferred stock of Unrestricted
Subsidiaries and cash dividends paid to such Person or its Subsidiaries (other
than in the case of the Company and its Restricted Subsidiaries, Unrestricted
Subsidiaries); PROVIDED that if, during such period (i) such Person or any of
its Subsidiaries shall have made any Asset Sales (other than in the case of the
Company and its Subsidiaries, sales of the Capital Stock of or any assets of
Unrestricted Subsidiaries which constitute Asset Sales), Consolidated Fixed
Charges of such Person and its Subsidiaries for such period shall be reduced by
an amount equal to the Consolidated Fixed Charges directly attributable to the
assets which are the subject of such Asset Sales for such period and (ii) such
Person or any of its Subsidiaries (other than, in the case of the Company and
its Subsidiaries, Unrestricted Subsidiaries) has made any acquisition of assets
or Capital Stock (occurring by merger or otherwise), including, without
limitation, any acquisition of assets or Capital Stock occurring in connection
with the transaction causing a calculation to be made hereunder, Consoli dated
Fixed Charges of such Person and its Subsidiaries shall be calculated on a pro
forma basis as if such acquisition of assets or Capital Stock (including the
incurrence
5
<PAGE>
of any Indebtedness in connection with any such acquisition and the application
of the proceeds thereof) took place on the first day of such period.
"CONSOLIDATED NET INCOME" means, with respect to any Person
for any period, the aggregate net income (or loss) of such Person and its
Subsidiaries (other than, in the case of the Company and its Subsidiaries,
Unrestricted Subsidiaries) for such period, on a consolidated basis, determined
in accordance with GAAP, PROVIDED that (i) the net income (or loss) of any
Person which is not a Subsidiary or is accounted for by the equity method of
accounting shall be included only to the extent of the amount of cash dividends
or distributions (including tax sharing payments and loans or advances which are
junior in right of payment to the Securities and have a longer Average Life than
the Securities) paid to the referent Person or a Subsidiary of the referent
Person (other than, in the case of the Company and its Restricted Subsidiaries,
Unrestricted Subsidiaries), (ii) except to the extent includable pursuant to the
foregoing clause (i), the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary of such Person or is merged into or consolidated
with such Person or any of its Subsidiaries or that Person's assets are acquired
by such Person or any of its Subsidiaries shall be excluded, (iii) any gains or
losses attributable to Asset Sales net of related tax costs or tax benefits, as
the case may be, shall be excluded, (iv) after-tax items classified as
extraordinary gains or losses shall be excluded and (v) the cumulative effect of
changes in accounting principles shall be excluded.
"CONSOLIDATED NET WORTH" means, at any date of determination,
the sum of the Capital Stock and additional paid-in-capital plus retained
earnings (or minus accumulated deficit) of the referent Person and its
Subsidiaries on a consolidated basis, less amounts attributable to Redeemable
Stock, each item to be determined in conformity with GAAP (excluding the effects
of (i) foreign currency exchange adjustments under Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 52 and (ii) the
application of Accounting Principles Board Opinions No. 16 and 17 and related
interpretations.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the
address of the Trustee specified in Section 11.2 or such other address as the
Trustee may designate from time to time.
"CREDIT AGENT" means the agent or representative of the
lenders under the Credit Facility.
6
<PAGE>
"CREDIT FACILITY" means the Second Amended and Restated Credit
Agreement, dated as of June 6, 1996, as amended, by and among the Company,
certain financial institutions parties thereto and Bankers Trust Company, as
Administrative Agent, BA Securities, Inc., as Syndication Agent, and Citibank,
N.A., as Documentation Agent, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, supplemented, renewed,
refunded, refinanced, restructured or replaced from time to time (including
without limitation, any extension of maturity thereof or the inclusion of
additional borrowers or guarantors thereunder).
"CURRENCY AGREEMENT" means the obligations of any Person
pursuant to any foreign exchange contract, currency swap agreement or other
similar agreement or arrangement designed to protect such Person or any of its
subsidiaries against fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"DEFAULT" means any event, act or condition that is or, after
notice or the passage of time or both, would be an Event of Default.
"DEFINITIVE SECURITIES" means Securities that are in the form
of the Security attached hereto as Exhibit A that do not bear the Global
Security Legend or the "Schedule of Exchange of Interests in the Global
Security" attached thereto.
"DEPOSITARY" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.3
as the Depositary with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"DESIGNATED SENIOR DEBT" means (i) the Senior Bank Debt and
(ii) any other Senior Indebtedness permitted under this Indenture having a
principal amount of at least $30.0 million that is designated as "Designated
Senior Debt" by written notice form the Company to the Trustee.
"DTC" shall have the meaning specified in Section 2.3.
7
<PAGE>
"EQUITY INTERESTS" means Capital Stock, warrants, options or
other rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system, or any successor thereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"EXCHANGE OFFER" means a registered offer to exchange Initial
Securities for Exchange Securities pursuant to the terms of a Registration
Rights Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means an Exchange
Offer Registration Statement as defined in a Registration Rights Agreement.
"EXCHANGE SECURITIES" means the 7 3/4% Senior Subordinated
Notes due 2009 to be issued pursuant to this Indenture in connection with the
offer to exchange Securities for Initial Securities (including any Additional
Securities) that may be made by the Company pursuant to a Registration Rights
Agreement.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and
its Subsidiaries (other than the Credit Facility) in existence on the Issue
Date, until such amounts are repaid.
"FIXED CHARGE COVERAGE RATIO" means the ratio of Consolidated
Cash Flow to Consolidated Fixed Charges.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession which are in effect in the United States at the time when
and for the period as to which such accounting principles are to be applied.
"GLOBAL SECURITY" means each of a 144A Global Security, a
Regulation S Permanent Global Security and a Regulation S Temporary Global
Security.
8
<PAGE>
"GLOBAL SECURITY LEGEND" means the legend set forth in Section
2.7(g)(ii) to be placed on all Global Securities issued under this Indenture.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a
Security is registered. The Holder of a Security will be treated as the owner of
such Security for all purposes.
"INDEBTEDNESS" means, with respect to any Person, any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement obligations with respect
thereto) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to financing leases), if and to the extent
any of the foregoing indebtedness would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP (except that any such
balance that constitutes a trade payable and/or an accrued liability arising in
the ordinary course of business shall not be considered Indebtedness), and shall
also include, to the extent not otherwise included, any Capital Lease
Obligations, the maximum fixed repurchase price of any Redeemable Stock,
indebtedness secured by a Lien to which the property or assets owned or held by
such Person is subject, whether or not the obligations secured thereby shall
have been assumed, guarantees of items that would be included within this
definition to the extent of such guarantees (exclusive of whether such items
would appear upon such balance sheet), and net liabilities in respect of
Currency Agreements and Interest Rate Agreements. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Redeemable Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were repurchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, PROVIDED that if such Redeemable Stock is not then permitted to
be repurchased, the repurchase price shall be the book value of such Redeemable
Stock. The amount of Indebtedness of any Person at any date shall be without
duplication (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such contingent
obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the Indebtedness
secured.
9
<PAGE>
"INDENTURE" means this Indenture as amended or supplemented
from time to time in accordance with the terms hereof.
"INDIRECT PARTICIPANT" means, with respect to DTC, Euroclear
or Cedel, a Person that clears through or maintains a direct or indirect
custodial relationship with a Participant.
"INITIAL PURCHASERS" means (i) with respect to the Initial
Securities issued pursuant to the Indenture on the Issue Date, Morgan Stanley &
Co. Incorporated, ABN AMRO Incorporated, BancBoston Robertson Stephens Inc.,
CIBC Oppenheimer Corp. and Fleet Securities Inc. and (ii) with respect to each
issuance of Additional Securities, the Persons purchasing such Additional
Securities under the related purchase agreement or underwriting agreement.
"INITIAL SECURITIES" means (i) the $300.0 million 7 3/4%
Senior Subordi nated Notes due 2009, issued under this Indenture on the Issue
Date and (ii) Additional Securities, if any, issued in a transaction exempt from
the registration requirements of the Securities Act, in each case as
supplemented from time to time in accordance with the terms hereof.
"INSTITUTIONAL ACCREDITED INVESTOR" means an "institutional
accredited investor" within the meaning of Rule 501(A)(1), (2), (3) or (7) under
the Securities Act.
"INTEREST EXPENSE" means, with respect to any Person, for any
period, the aggregate amount of interest in respect of Indebtedness (including
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and the net cost (benefit)
associated with Interest Rate Agree ments, and excluding amortization of
deferred finance fees and interest recorded as accretion in the carrying value
of liabilities (other than Indebtedness) recorded at a discounted value) and all
but the principal component of rentals in respect of Capital Lease Obligations,
paid, accrued or scheduled to be paid or accrued by such Person during such
period.
"INTEREST PAYMENT DATE" means the stated due date of an
installment of interest on the Securities.
"INTEREST RATE AGREEMENTS" means the obligations of any Person
pursuant to any interest rate swap agreement, interest rate collar agreement or
other
10
<PAGE>
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"INVESTMENT" means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business, which are
recorded as accounts receivable on the balance sheet of any Person or its
Subsidiaries) or other extension of credit or capital contribution to (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others), or any purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities issued by any other
Person. For the purposes of Sections 4.7 and 4.13 hereof, (i) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) any property
transferred to or form an Unrestricted Subsidiary shall be valued at fair market
value at the time of such transfer, in each case as determined by the Board of
Directors of the Company in good faith.
"ISSUE DATE" means the date of first issuance of the
Securities hereunder.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Securities for use by
such Holders in connection with an Exchange Offer.
"LIEN" means any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give any security interest in and any filing or other
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"MATURITY DATE" means, with respect to any Security, the date
on which the principal of (and premium, if any) and interest on such Security
become due and payable as therein or herein provided, whether at Stated
Maturity, or by declaration of acceleration, call for redemption or otherwise.
11
<PAGE>
"NET PROCEEDS" means, with respect to any Asset Sale, the
aggregate amount of U.S. Legal Tender (including any cash received by way of
deferred payment pursuant to a note receivable issued in connection with such
Asset Sale, other than the portion of such deferred payment constituting
interest, and including any amounts received as disbursements or withdrawals
from any escrow or similar account established in connection with any such Asset
Sale, but, in each such case, only as and when so received) received by the
Company or any of its Subsidiaries in respect of such Asset Sale, net of (i) the
cash expenses of such sale (including, without limitation, the payment of
principal, premium, if any, and interest on Indebtedness required to be paid as
a result of such Asset Sale (other than pursuant to Section 4.10(a) hereof) and
legal, accounting and investment banking fees and sales commissions), (ii) taxes
paid or payable as a result thereof, (iii) any portion of cash proceeds which
the Company determines in good faith should be reserved for post-closing
adjustments, it being understood and agreed that on the day that all such
post-closing adjustments have been determined, the amount (if any) by which the
reserved amount in respect of such Asset Sale exceeds the actual post-closing
adjustments payable by the Company or any of its Subsidiaries shall constitute
Net Proceeds on such date and (iv) any relocation expenses and pension,
severance and shutdown costs incurred as a result thereof.
"NON-U.S. PERSON" means a person who is not a U.S. Person.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifica tions, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICERS" means the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two
Officers, one of whom must be the Company's Chief Executive Officer, Chief
Financial Officer or the Controller.
"OPINION OF COUNSEL" means a written opinion prepared in
accordance with Section 11.5 hereof, from legal counsel who is reasonably
acceptable to the Trustee. Except as specified in Section 8.4(f), the counsel
may be an employee of or counsel to the Company or the Trustee.
12
<PAGE>
"PARTICIPANT" means, with respect to DTC, Euroclear or Cedel,
a Person who has an account with DTC, Euroclear or Cedel, respectively (and,
with respect to DTC, shall include Euroclear and Cedel).
"PERMITTED INVESTMENTS" means (i) cash or Cash Equivalents,
(ii) investments that are in Persons at least a majority of whose revenues are
derived from commercial printing or prepress services or ancillary operations
related thereto and that have the purpose of furthering the business operations
of the Company, (iii) advances to employees not in excess of $5.0 million at any
one time outstanding, (iv) accounts receivable created or acquired in the
ordinary course of business, (v) obligations or shares of stock received in
connection with any good faith settlement or bankruptcy proceeding involving a
claim relating to a Permitted Investment, (vi) evidences of Indebtedness,
obligations or other investments not exceeding $5.0 million in the aggregate
held at any one time by the Company or any of its Restricted Subsidiaries and
(vii) Currency Agreements and other similar agreements designed to hedge against
fluctuations in foreign exchange rates entered into in the ordinary course of
business in connection with the operation of the Company's or its Subsidiaries'
businesses.
"PERMITTED LIENS" means (i) Liens for taxes, assessments,
governmental charges or claims which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings, if a reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor; (iii)
Liens incurred or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of- money bonds and other
obligations of a like nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, zoning or other restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its Subsidiaries incurred in
the ordinary course of business; (vi) Liens (including extensions, renewals and
replacements thereof) upon real or tangible personal property acquired after the
date of this Indenture, PROVIDED that (a)
13
<PAGE>
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
the cost of construction) of the item of property subject thereto, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost, (c) such Lien does not extend to or cover any other property other
than such item of property and any improvements on such item and (d) the
incurrence of such Indebtedness is permitted by Section 4.9 hereof; (vii) Liens
securing reimbursement obligations with respect to letters of credit which
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (viii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (ix) judgment and attachment Liens not
giving rise to an Event of Default; (x) leases or subleases granted to others
not interfering in any material respect with the business of the Company or any
of its Restricted Subsidiaries; (xi) Liens encumbering customary initial
deposits and margin deposits, and other Liens incurred in the ordinary course of
business and which are within the general parameters customary in the industry,
in each case securing Indebtedness under Interest Rate Agreements and Currency
Agreements; (xii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty requirements of the Company
or its Subsidiaries; (xiii) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or any of its
Subsidiaries in the ordinary course of business of the Company and its
Subsidiaries; (xiv) any interest or title of a lessor in the property subject to
any Capital Lease Obligation or operating lease; (xv) Liens arising from filing
Uniform Commercial Code financing statements regarding leases; (xvi) Liens
permitted by the Credit Facility as in effect on the Issue Date; (xvii) Liens
securing Indebtedness described in clause (xiv) of the second paragraph of
Section 4.9 hereof; (xviii) Liens between the Company and any Restricted
Subsidiary or between Restricted Subsidiaries; (xix) Liens securing letters of
credit in an amount not to exceed $10 million in the aggregate at any one time;
(xx) additional Liens at any one time outstanding with respect to assets of the
Company and its Restricted Subsidiaries the fair market value of which does not
exceed $10 million on the date of determination; (xxi) Liens existing on the
Issue Date and any extensions, renewals or replacements thereof; (xxii) Liens
securing Senior Indebtedness; and (xxiiii) the Lien granted to the Trustee under
this Indenture and any substantially equivalent Lien granted to any trustee or
similar institution under any indenture for Indebtedness permitted by the terms
of this Indenture.
14
<PAGE>
"PERSON" or "PERSON" means any corporation, individual,
limited liability company, joint stock company, joint venture, partnership,
trust, unincorporated association, or a government or any agency or political
subdivision thereof.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in
Section 2.7(g)(i) to be placed on all Securities issued under this Indenture
except where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"REDEEMABLE STOCK" means any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable before the stated maturity of the Securities), or upon the
happening of any event, matures or is mandatorily redeemable, in whole or in
part, prior to the stated maturity of the Securities, or is, by its terms or
upon the happening of any event, redeemable at the option of the holder thereof,
in whole or in part, at any time prior to the stated maturity of the Securities,
except for Equity Interests of the Company issued to present and former members
of management of the Company and its Subsidiaries and certain of their former
affiliates pursuant to Agreements in effect on the Issue Date and Equity
Interests of the Company issued after the Issue Date to members of management of
the Company and its Subsidiaries pursuant to agreements containing provisions
for the repurchase of such Equity Interests upon death, disability or
termination of employment of such persons which are substantially identical to
those contained in the agreements in effect on the Issue Date.
"REDEMPTION DATE," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to this Indenture
and Paragraph 5 in the Form of Security attached as Exhibit A hereto.
"REDEMPTION PRICE," when used with respect to any Security to
be redeemed, means the redemption price for such redemption pursuant to
Paragraph 5 in the Form of Security, which shall include, without duplication,
in each case, accrued and unpaid interest to the Redemption Date (subject to the
provisions of Section 3.4).
"REGISTRAR" shall have the meaning specified in Section 2.3.
"REGISTRATION RIGHTS AGREEMENT" means (i) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated as of the
15
<PAGE>
Issue Date by and between the Company and the Initial Purchasers providing for
certain registration rights for such Securities and (ii) with respect to each
issuance of Additional Securities issued in a transaction exempt from the
registration requirements of the Securities Act, the registration rights
agreement, if any, among the Company and the Persons purchasing such Additional
Securities under the related purchase agreement.
"REGULATION S" means Regulation S promulgated under the
Securities Act.
"REGULATION S GLOBAL SECURITY" means a Regulation S Temporary
Global Security or Regulation S Permanent Global Security, as appropriate.
"REGULATION S PERMANENT GLOBAL SECURITY" means a permanent
global Security in the form of Exhibit A hereto bearing the Global Security
Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Security upon expiration of the Restricted Period.
"REGULATION S TEMPORARY GLOBAL SECURITY" means a temporary
global Security in the form of Exhibit A bearing the Private Placement Legend
and the Global Security Legend and deposited with or on behalf of and registered
in the name of the Depositary or its nominee, issued in a denomination equal to
the outstanding principal amount of the Initial Securities initially sold in
reliance on Rule 903 of Regulation S.
"REGULATION S TEMPORARY GLOBAL SECURITY LEGEND" means the
legend found in Section 2.6(g)(iii).
"REPRESENTATIVE" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.
"RESTRICTED BROKER-DEALER" has the meaning set forth in the
Registration Rights Agreement.
"RESTRICTED DEFINITIVE SECURITY" means a Definitive Security
bearing the Private Placement Legend.
16
<PAGE>
"RESTRICTED GLOBAL SECURITY" means a Global Security bearing
the Private Placement Legend.
"RESTRICTED INVESTMENT" means any investment in, capital
contribution, loan or advance to or purchase of Equity Interests in, any Person
that is not a wholly owned Subsidiary, or other transfer of assets to
Subsidiaries or Affiliates that are not wholly owned (other than any such other
transfer of assets to Subsidiaries or Affiliates that are not wholly owned in
transactions the terms of which are fair and reasonable to the transferor and
are at least as favorable as the terms that could be obtained by the transferor
in a comparable transaction made on an arms' length basis between unaffiliated
parties (A) as conclusively determined, for any such transfer involving
aggregate consideration in excess of $5.0 million, by (i) a majority of the
directors of the transferor that are unaffiliated with the transferee or, if
there are no such directors, by a majority of the directors of the transferor or
(ii) an opinion of a nationally recognized investment banking firm stating that
such transaction is fair to the transferor from a financial point of view, and
(B) otherwise as conclusively determined by the Company), except in each case
for Permitted Investments and any such Investments existing on the Issue Date.
"RESTRICTED PERIOD" means the 40-day restricted period as
defined in Regulation S.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company
which at the time of determination is not an Unrestricted Subsidiary. The Board
of Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately after giving effect to such
designation, the Company could incur at least $1.00 of additional Indebtedness
pursuant to the first paragraph of Section 4.9 hereof (without giving effect to
clauses (i) through (xvii) of the second paragraph thereof), on a PRO FORMA
basis taking into account such designation.
"RULE 144A" means Rule 144A promulgated under the Securities
Act.
"RULE 903" means Rule 903 promulgated under the Securities
Act.
"RULE 904" means Rule 904 promulgated under the Securities
Act.
"SEC" means the Securities and Exchange Commission.
17
<PAGE>
"SECURITIES" means, collectively, the Securities issued under
this Indenture, including the Initial Securities and, when and if issued as
provided in a Registration Rights Agreement, the Exchange Securities, and
Additional Securities, if any, issued pursuant to a registration statement filed
with the SEC under the Securities Act, treated as a single class.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"SECURITIES CUSTODIAN" means the Registrar, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"SENIOR BANK DEBT" means Indebtedness and all other monetary
obligations of every nature outstanding under the Credit Facility, including
letters of credit and reimbursement obligations in respect thereof and letters
of credit and reimbursement obligations in respect of letters of credit issued
by lenders party to the Credit Facility.
"SENIOR INDEBTEDNESS" means (i) the Senior Bank Debt and (ii)
any other Indebtedness permitted to be incurred pursuant to the terms hereof,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to the
Securities. Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness shall not include (i) Indebtedness that is expressly subordinate or
junior in right of payment to any Indebtedness of the Company, (ii) Indebtedness
that is represented by Redeemable Stock, (iii) any liability for federal, state,
local or other taxes owed or owing by the Company, (iv) Indebtedness of the
Company to any Subsidiary or any other Affiliate of the Company, (v) trade
payables, (vi) Indebtedness that is incurred in violation of this Indenture
(other than Senior Bank Debt), (vii) the 6% Convertible Notes and (viii) the
Company's 8 3/8% Senior Subordi nated Notes due 2008.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration
Statement as defined in a Registration Rights Agreement.
"6% CONVERTIBLE NOTES" means the Company's 6% Convertible
Senior Subordinated Notes due 2007.
18
<PAGE>
"STATED MATURITY" means, when used with respect to any
Security or installment of interest thereon, the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"SUBSIDIARY" of any Person means any entity of which shares of
the Capital Stock or other equity interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to cast at least
a majority of the votes that may be cast by all shares or equity interests
having ordinary voting power for the election of directors or other governing
body of such entity are owned by such Person directly and/or through one or more
Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended (15
U.S.C. ss.ss. 77aaa-77bbbb).
"TRANSFER RESTRICTED SECURITIES" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"TRANSFERS" means (i) any payment of interest on Indebtedness,
dividends or repayments of loans or advances and (ii) any other transfers of
assets, in each case from an Unrestricted Subsidiary to the Company or any of
its Restricted Subsidiaries.
"TRUSTEE" means The Bank of New York until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"TRUST OFFICER" means any officer within the corporate trust
department of the Trustee, including any vice president, assistant vice
president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"UNRESTRICTED DEFINITIVE SECURITY" means one or more
Definitive Securities that do not bear and are not required to bear the Private
Placement Legend.
19
<PAGE>
"UNRESTRICTED GLOBAL SECURITY" means a permanent Global
Security in the form of Exhibit A attached hereto that bears the Global Security
Legend and that has the "Schedule of Exchanges of Interests in the Global
Security" attached thereto, and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of Securities
that do not bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the
Company which at the time of determination is an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below) and (ii)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns, or holds any Lien on, any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated; PROVIDED that (a) the Company certifies that
such designation complies with Section 4.7 and 4.13 hereof, and (b) each
Subsidiary to be so designated and each of its Subsidiaries has not at the time
of designation, and does not thereafter, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors of the
Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary,
PROVIDED that immediately after giving effect to such designation, the Company
could incur at least $1.00 of additional Indebtedness pursuant to the Section
4.9 (without giving effect to clauses (i) through (xvii) of the second paragraph
thereof), on a PRO FORMA basis, giving effect to such designation.
"U.S. GOVERNMENT OBLIGATIONS" means direct noncallable
obligations of or guaranteed by the United States of America for the payment of
which obligation or guarantee the full faith and credit of the United States of
America is pledged.
"U.S. LEGAL TENDER" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
Section 1.2 OTHER DEFINITIONS.
20
<PAGE>
<TABLE>
<CAPTION>
Defined
Term in Section
- ---- ----------
<S> <C>
"Asset Sale Payment Date"....................................... 4.10(a)
"Covenant Defeasance"........................................... 8.3
"Excess Net Proceeds"........................................... 4.10(a)
"Final Put Date"................................................ 4.10(c)
"Legal Holiday"................................................. 11.7
"Legal Defeasance".............................................. 8.2
"Net Proceeds Offer"............................................ 4.10(b)
"Net Proceeds Offer Amount"..................................... 4.10(d)
"Net Proceeds Payment Date"..................................... 4.10(b)
"Paying Agent".................................................. 2.3
"Payment Blockage Period"....................................... 10.2(a)
"Purchase Price"................................................ 4.10(b)
"Registrar"..................................................... 2.3
"Restricted Payments"........................................... 4.7
"Retired Equity Interest"....................................... 4.7
"Refunding Equity Interest"..................................... 4.7
"Surviving Entity".............................................. 5.1
</TABLE>
Section 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the Securities.
"INDENTURE SECURITYHOLDER" means a Holder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee; and
21
<PAGE>
"OBLIGOR" on the Securities means the Company, any other
obligor upon the Securities or any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
Section 1.4 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(A) a term has the meaning assigned to it;
(B) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(C) "or" is not exclusive;
(D) words in the singular include the plural, and in
the plural include the singular;
(E) provisions apply to successive events and
transactions;
(F) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(G) references to Sections or Articles are to
Sections or Articles of this Indenture, unless stated
otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 FORM AND DATING.
22
<PAGE>
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, which is a part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage or the terms hereof. The Company shall
approve the form of Securities and any notation, legend or endorsement on them.
Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Securities issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Security Legend and the
"Schedule of Exchanges of Interests in the Global Security" attached thereto).
Securities issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Security Legend and without
the "Schedule of Exchanges of Interests in the Global Security" attached
thereto). Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Security to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Securities represented thereby shall be made by
the Trustee or the Securities Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.
Initial Securities offered and sold in reliance on Regulation
S shall be issued initially in the form of a Regulation S Temporary Global
Security, which shall be deposited on behalf of the purchasers of the Securities
represented thereby with the Trustee, at its Corporate Trust Office, as
custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding on
behalf of Euroclear or Cedel, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Restricted Period shall be terminated
upon the receipt by the Trustee of (i) a written certificate from the
Depositary, together with copies of certificates from Euroclear and Cedel
certifying that they have received certification of non-United States beneficial
ownership
23
<PAGE>
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Security (except to the extent of any beneficial owners thereof who acquired an
interest therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Security bearing a Private Placement Legend,
all as contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Security shall
be exchanged for beneficial interests in Regulation S Permanent Global Security
pursuant to the Applicable Procedures. Simultaneously with the authentication of
the Regulation S Permanent Global Security, the Trustee shall cancel the
Regulation S Temporary Global Security. The aggregate principal amount of the
Regulation S Temporary Global Security and the Regulation S Permanent Global
Security may from time to time be increased or decreased by adjustments made on
the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel shall be
applicable to transfers of beneficial interests in a Regulation S Temporary
Global Security and the Regulation S Permanent Global Securities that are held
by the Agent Members through Euroclear or Cedel.
Initial Securities offered and sold in reliance on Rule 144A
shall be issued initially in the form of a 144A Global Security. Additional
Securities, if any, issued pursuant to a registration statement filed with the
SEC under the Securities Act shall be issued initially in the form of an
Unrestricted Global Security.
Section 2.2 EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and one
Officer shall attest to, the Security for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Security was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless and
the Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
24
<PAGE>
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
On the Issue Date, the Trustee shall authenticate Initial
Securities for original issue in the aggregate principal amount of up to $300.0
million and, at any time and from time to time thereafter, the Trustee shall
authenticate and deliver Additional Securities for original issue in an
aggregate principal amount specified in such written order, in each case upon a
written order of the Company in the form of an Officers' Certificate. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and, in the case
of an issuance of Additional Securities pursuant to Section 2.14 after the Issue
Date, shall certify that such issuance is in compliance with Section 4.9. In
addition, the Trustee shall authenticate Exchange Securities for original issue
in the aggregate principal amount of up to $300.0 million, in each case upon a
written order of the Company in the form of an Officers' Certificate, PROVIDED
that such Exchange Securities shall be issuable only upon the valid surrender
for cancellation of Initial Securities of a like aggregate principal amount in
accordance with a Registration Rights Agreement. The Officers' Certificate shall
specify the amount of Securities to be authenticated and the date on which the
Securities are to be authenticated. Upon the written order of the Company in the
form of an Officers' Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of the
Company.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
Section 2.3 REGISTRAR AND PAYING AGENT.
25
<PAGE>
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where Securities may be presented for
registration of transfer or exchange ("Registrar") and an office or agency where
Securities may be presented for payment ("Paying Agent") and where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as Registrar or Paying Agent, except that for the purposes of
Articles III, VIII and Section 4.10 and as otherwise specified in this
Indenture, neither the Company nor any Affiliate of the Company shall act as
Paying Agent. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co- registrars and one
or more additional Paying Agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional Paying Agent. The Company
hereby initially appoints the Trustee as Registrar and Paying Agent, and by its
signature hereto, the Trustee hereby agrees so to act. The Company may at any
time change any Paying Agent or Registrar without notice to any Holder.
The Company shall enter into an appropriate written agency
agreement with any Agent (including the Paying Agent) not a party to this
Indenture, which agreement shall implement the provisions of this Indenture that
relate to such Agent, and shall furnish a copy of each such agreement to the
Trustee. The Company shall promptly notify the Trustee in writing of the name
and address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as
Securities Custodian with respect to the Global Securities.
The Trustee is authorized to enter into a letter of
representation with DTC in the form provided to the Trustee by the Company and
to act in accordance with such letter.
Section 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, premium, if any, or interest on, the Securities
(whether such assets have been distributed to it by the Company or any other
obligor on the Securities), and shall notify the Trustee
26
<PAGE>
in writing of any Default by the Company (or any other obligor on the
Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall segregate such assets and hold them as a
separate trust fund for the benefit of the Holders or the Trustee. The Company
at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default or any Event of Default, upon
written request to a Paying Agent, require such Paying to distribute all assets
held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent (if other than the Company or a
Subsidiary of the Company) shall have no further liability for such assets.
Section 2.5 HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee or any Paying Agent is not the Registrar, the Company shall furnish to
the Trustee at least seven Business Days before each Interest Payment Date and,
at such other times as the Trustee or any such Paying Agent may request in
writing, a list in such form and as of such date as the Trustee or any such
Paying Agent may reasonably require of the names and addresses of Holders and
the Company shall otherwise comply with TIA Section 312(a).
Section 2.6 TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. A Global
Security may not be transferred as a whole except by the Depositary to a nominee
of the Depositary, by a nominee of the Depositary to the Depositary or to
another nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Securities will be exchanged by the Company for Definitive Securities if (i) the
Company delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 90 days after the date of such
notice from the Depositary, (ii) the Company in its sole discretion determines
that the Global Securities (in whole but not in part) should be exchanged for
Definitive Securities and delivers a written notice to such effect to the
Trustee; PROVIDED that in no event shall the Regulation S Temporary Global
Security be exchanged by the Company
27
<PAGE>
for Definitive Securities prior to (x) the expiration of the Restricted Period
and (y) the receipt by the Registrar of any certificates required pursuant to
Rule 903 under the Securities Act, or (iii) there shall have occurred and be
continuing a Default or Event of Default with respect to the Securities. Upon
the occurrence of any of the preceding events in (i), (ii) or (iii) above,
Definitive Securities shall be issued in such names as the Depositary shall
instruct the Trustee. Global Securities also may be exchanged or replaced, in
whole or in part, as provided in Section 2.7 and 2.10 hereof. Every Security
authenticated and delivered in exchange for, or in lieu of, a Global Security or
any portion thereof, pursuant to Section 2.7 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Security. A
Global Security may not be exchanged for another Security other than as provided
in this Section 2.6(a); however, beneficial interests in a Global Security may
be transferred and exchanged as provided in Section 2.6(b), (c) or (f) hereof.
(b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE
GLOBAL SECURITIES. The transfer and exchange of beneficial interests in the
Global Securities shall be effected through the Depositary, in accordance with
the provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Securities shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Securities also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs as
applicable:
(i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL
SECURITY. Beneficial interests in any Restricted Global Security may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Security in
accordance with the transfer restrictions set forth in the Private
Placement Legend; PROVIDED, HOWEVER, that prior to the expiration of
the Restricted Period transfers of beneficial interests in a Regulation
S Temporary Global Security may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Security may be
transferred only to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Security. No written
orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.6(b)(i).
28
<PAGE>
(ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS
IN GLOBAL SECURITIES. In connection with all transfers and exchanges of
beneficial interests (other than a transfer of a beneficial interest in
a Global Security to a Person who takes delivery thereof in the form of
a beneficial interest in the same Global Security), the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Proce dures directing
the Depositary to credit or cause to be credited a beneficial interest
in another Global Security in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given in
accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or
(B) (1) a written order from a Participant or an Indirect Participant
given to the Depositary in accordance with the Applicable Procedures
directing the Depositary to cause to be issued a Definitive Security in
an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such
Definitive Security shall be registered to effect the transfer or
exchange referred to in (1) above; PROVIDED that in no event shall
Definitive Securities be issued upon the transfer or exchange of
beneficial interests in a Regulation S Temporary Global Security prior
to (x) the expiration of the Restricted Period and (y) the receipt by
the Registrar of any certificates required pursuant to Rule 903 under
the Securities Act. Upon an Exchange Offer by the Company in accordance
with Section 2.6(f) hereof, the requirements of this Section
2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Securities. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Securities
contained in this Indenture, the Securities and otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount
of the relevant Global Security(ies) pursuant to Section 2.6(h) hereof.
(iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED
GLOBAL SECURITY. A beneficial interest in any Restricted Global
Security may be transferred to a Person who takes delivery thereof in
the form of a beneficial interest in another Restricted Global Security
if the transfer complies with the requirements of clause (ii) above and
the Registrar receives the following:
29
<PAGE>
(A) if the transferee will take delivery in the form
of a beneficial interest in a 144A Global Security, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certificates in item (1) thereof; and
(B) if the transferee will take delivery in the form
of a beneficial interest in a Regulation S Temporary Global
Security or a Regulation S Permanent Global Security, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof.
(iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL SECURITY FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED
GLOBAL SECURITY. A beneficial interest in any Restricted Global
Security may be exchanged by any holder thereof for a beneficial
interest in an Unrestricted Global Security or transferred to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Security if the exchange or transfer complies with
the requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to
an Exchange Offer in accordance with a Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a Broker-Dealer, (2) a Person
participating in the distribution of the Exchange Securities
or (3) a Person who is an affiliate (as defined in Rule 144)
of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with a Registration
Rights Agreement;
(C) any such transfer is effected by a Restricted
Broker- Dealer pursuant to the Exchange Offer Registration
Statement in accordance with a Registration Rights Agreement;
or
(D) the Registrar receives the following:
30
<PAGE>
(1) if the holder of such beneficial
interest in a Restricted Global Security proposes to exchange
such beneficial interest for a beneficial interest in an
Unrestricted Global Security, a certificate from such holder
in the form of Exhibit C hereto, including the certifications
in item (1)(a) thereof;
(2) if the holder of such beneficial
interest in a Restricted Global Security proposes to transfer
such beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Security, a certificate from such holder
in the form of Exhibit B hereto, including the certifications
in item (4) thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Registrar and the Company to the effect that
such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and
in the Private Placement Legend no longer not required in
order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.2 hereof, the Trustee shall authenticate one or more
Unrestricted Global Securities in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraph
(B) or (D) above.
Beneficial interests in an Unrestricted Global Security cannot
be exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Security.
(c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR
DEFINITIVE SECURITIES.
(i) If any holder of a beneficial interest in a Restricted
Global Security proposes to exchange such beneficial interest for a
Definitive Security or to transfer such beneficial interest to a Person
who takes delivery thereof in
31
<PAGE>
the form of a Definitive Security, then, upon receipt by the Registrar
of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Security proposes to exchange such
beneficial interest for a Restricted Definitive Security, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities
Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non- U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to the Company, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate
32
<PAGE>
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Security to be reduced accordingly pursuant to
Section 2.6(h) hereof, and the Company shall execute, and upon receipt
of an authentication order pursuant to Section 2.2, the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Restricted Definitive Security in the appropriate principal amount. Any
Restricted Definitive Security issued in exchange for a beneficial
interest in a Restricted Global Security pursuant to this Section
2.6(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest
shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver
such Restricted Definitive Securities to the Persons in whose names
such Securities are so registered. Any Restricted Definitive Security
issued in exchange for a beneficial interest in a Restricted Global
Security pursuant to this Section 2.6(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Notwithstanding Sections 2.6(c)(i)(A) and (C) hereof, a
beneficial interest in a Regulation S Temporary Global Security may not
be (A) exchanged for a Definitive Security prior to (x) the expiration
of the Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903(c)(3)(B) under the
Securities Act or (B) transferred to a Person who takes delivery
thereof in the form of a Definitive Security prior to the events set
forth in clause (A) above or unless the transfer is pursuant to an
exemption from the registration requirements of the Securities Act
other than Rule 903 or Rule 904.
(iii) Notwithstanding Section 2.6(c)(i) hereof, a holder of a
beneficial interest in a Restricted Global Security may exchange such
beneficial interest for an Unrestricted Definitive Security or may
transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Security only if:
(A) such exchange or transfer is effected pursuant to
an Exchange Offer in accordance with a Registration Rights
Agreement and
33
<PAGE>
the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a Broker-Dealer, (2) a Person participating in the
distribution of the Exchange Securities or (3) a Person who is
an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with a Regulation
Rights Agree ment;
(C) any such transfer is effected by a Restricted
Broker- Dealer pursuant to the Exchange Offer Registration
Statement in accordance with a Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Security proposes to exchange
such beneficial interest for a Definitive Security that does
not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(b) thereof;
(2) if the holder of such beneficial
interest in a Restricted Global Security proposes to transfer
such beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Security that does not
bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Registrar and the Company, to the effect
that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities
Act.
(iv) If any holder of a beneficial interest in an Unrestricted
Global Security proposes to exchange such beneficial interest for an
Unrestricted
34
<PAGE>
Definitive Security or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of an Unrestricted Definitive
Security, then, upon satisfaction of the conditions set forth in
Section 2.6(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Security to be reduced
accordingly pursuant to Section 2.6(h) hereof, and the Company shall
execute and, upon receipt of an authentication order pursuant to
Section 2.2, the Trustee shall authenticate and deliver to the Person
designated in the instructions an Unrestricted Definitive Security in
the appropriate principal amount. Any Unrestricted Definitive Security
issued in exchange for a beneficial interest pursuant to this Section
2.6(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Unrestricted Definitive Securities to the
Persons in whose names such Securities are so registered. Any
Unrestricted Definitive Security issued in exchange for a beneficial
interest pursuant to this Section 2.6(c)(iii) shall not bear the
Private Placement Legend. A beneficial interest in an Unrestricted
Global Security cannot be exchanged for a Definitive Security bearing
the Private Placement Legend or transferred to a Person who takes
delivery thereof in the form of a Definitive Security bearing the
Private Placement Legend.
(d) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES FOR
BENEFICIAL INTERESTS.
(i) If any Holder of a Restricted Definitive Security proposes
to exchange such Security for a beneficial interest in a Restricted
Global Security or to transfer such Restricted Definitive Securities to
a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Security, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive
Security proposes to exchange such Security for a beneficial
interest in a Restricted Global Security, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a
35
<PAGE>
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof; or
(C) if such Restricted Definitive Security is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof,
the Trustee shall cancel the Restricted Definitive Security, increase
or cause to be increased the aggregate principal amount of, in the case
of clause (A) above, the appropriate Restricted Global Security, in the
case of clause (B) above, a 144A Global Security, in the case of clause
(C) above, a Regulation S Global Security.
(ii) A Holder of a Restricted Definitive Security may exchange
such Security for a beneficial interest in an Unrestricted Global
Security or transfer such Restricted Definitive Security to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Security only if:
(A) such exchange or transfer is effected pursuant to
an Exchange Offer in accordance with a Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution
of the Exchange Securities or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with a Registration
Rights Agreement;
(C) any such transfer is effected by a Restricted
Broker- Dealer pursuant to the Exchange Offer Registration
Statement in accordance with a Registration Rights Agreement;
or
(D) the Registrar receives the following:
36
<PAGE>
(1) if the Holder of such Restricted
Definitive Securities proposes to exchange such Securities for
a beneficial interest in the Unrestricted Global Security, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof;
(2) if the Holder of such Restricted
Definitive Securities proposes to transfer such Securities to
a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Security, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Registrar and the Company to the effect that
such exchange or transfer is in compliance with the Securities
Act, that the restrictions on transfer contained herein and in
the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act, and such
Restricted Definitive Securities are being exchanged or
transferred in compliance with any applicable blue sky
securities laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.6(d)(ii), the Trustee shall cancel the Definitive Security
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Security.
(iii) A Holder of an Unrestricted Definitive Security may
exchange such Security for a beneficial interest in an Unrestricted
Global Security or transfer such Unrestricted Definitive Securities to
a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Security at any time. Upon receipt
of a request for such an exchange or transfer, the Trustee shall cancel
the applicable Unrestricted Definitive Security and increase or cause
to be increased the aggregate principal amount of one of the
Unrestricted Global Securities.
If any such exchange or transfer from a Definitive Security to
a beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii)
37
<PAGE>
above at a time when an Unrestricted Global Security has not yet been
issued, the Company shall issue and, upon receipt of an authentication
order in accordance with Section 2.2 hereof, the Trustee shall
authenticate one or more Unrestricted Global Securities in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES FOR
DEFINITIVE SECURITIES. Upon request by a Holder of Definitive Securities and
such Holder's compliance with the provisions of this Section 2.6(e), the
Registrar shall register the transfer or exchange of Definitive Securities.
Prior to such registration of transfer or exchange, the requesting Holder shall
present or surrender to the Registrar the Definitive Securities duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, pursuant to the
provisions of this Section 2.6(e).
(i) Restricted Definitive Securities may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Security if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver (x) a
certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required
by item (3) thereof; if applicable.
(ii) Any Restricted Definitive Security may be exchanged by
the Holder thereof for an Unrestricted Definitive Security or
transferred to a Person
38
<PAGE>
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Security if:
(A) such exchange or transfer is effected pursuant to
an Exchange Offer in accordance with a Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution
of the Exchange Securities or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with a Registration
Rights Agreement;
(C) any such transfer is effected by a Restricted
Broker- Dealer pursuant to the Exchange Offer Registration
Statement in accordance with a Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Securities proposes to exchange such Securities for
an Unrestricted Definitive Security, a certificate from such
Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof;
(2) if the Holder of such Restricted
Definitive Securities proposes to transfer such Securities to
a Person who shall take delivery thereof in the form of an
Unrestricted Definitive Security, a certificate from such
Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof; and
(3) in each such case set forth in this
subparagraph (D), an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act, that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act, and such Restricted
39
<PAGE>
Definitive Security is being exchanged or transferred in
compliance with any applicable blue sky securities laws of any
State of the United States.
(iii) A Holder of Unrestricted Definitive Securities may
transfer such Securities to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Security. Upon receipt of a request
for such a transfer, the Registrar shall register the Unrestricted
Definitive Securities pursuant to the instructions from the Holder
thereof. Unrestricted Definitive Securities cannot be exchanged for or
transferred to Persons who take delivery thereof in the form of a
Restricted Definitive Security.
(f) EXCHANGE OFFER. Upon the occurrence of an Exchange Offer
in accordance with a Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.2, the
Trustee shall authenticate (i) one or more Unrestricted Global Securities in an
aggregate principal amount equal to the sum of (A) the principal amount of the
beneficial interests in the Restricted Global Securities tendered for acceptance
by Persons that certify in the applicable Letters of Transmittal that they are
not (x) Broker-Dealers, (y) Persons participating in the distribution of the
Exchange Securities or (z) Persons who are affiliates (as defined in Rule 144)
of the Company and accepted for exchange in the Exchange Offer and (B) the
principal amount of Definitive Securities exchanged or transferred for
beneficial interests in Unrestricted Global Securities in connection with the
Exchange Offer pursuant to Section 2.6(d)(ii) and (ii) Definitive Securities in
an aggregate principal amount equal to the principal amount of the Restricted
Definitive Securities accepted for exchange in the Exchange Offer (other than
Definitive Securities described in clause (i)(B) immediately above).
Concurrently with the issuance of such Securities, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Securities to be
reduced accordingly, and the Company shall execute and, upon receipt of an
authentication order pursuant to Section 2.2, the Trustee shall authenticate and
deliver to the Persons designated by the Holders of Definitive Securities so
accepted Definitive Securities in the appropriate principal amount.
(g) LEGENDS. The following legends shall appear on the face of
all Global Securities and Definitive Securities issued under this Indenture
unless specifically stated otherwise in the applicable provisions of this
Indenture.
(i) PRIVATE PLACEMENT LEGEND.
40
<PAGE>
(A) Except as permitted by subparagraph (B) below,
each Global Security and each Definitive Security (and all
Securities issued in exchange therefor or substitution
thereof) shall appear the legend in substantially the
following form:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGIS TERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOW ING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (C) IT IS AN
INSTITU TIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"),
OR (D) IT HAS OTHERWISE ACQUIRED THIS SECURITY OR A BENEFICIAL INTEREST
HEREIN IN ACCORDANCE WITH THE TERMS OF THE INDENTURE RELATING TO THIS
SECURITY AND IN COMPLI ANCE WITH APPLICABLE SECURITIES LAWS, (2) AGREES
THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
(TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES
ACT, IF APPLICABLE) UNDER THE SECURI TIES ACT AS IN EFFECT ON THE DATE
OF THE TRANSFER OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSAC TION MEETING THE REQUIREMENTS OF RULE
144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURI TIES ACT, (E) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FUR NISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN
41
<PAGE>
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANS FER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE)
AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY OR (G) PURSUANT TO AN EFFEC TIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT
IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "U.S.
PERSONS" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
902 OF REGULA TION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS SECURITY IN VIOLATION OF THE FOREGO ING."
(B) Notwithstanding the foregoing, (x) any Global
Security or Definitive Security issued pursuant to
subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii),
(e)(iii) or (f) to this Section 2.6 (and all Securities issued
in exchange therefor or substitution thereof) (y) Additional
Securities, if any, issued pursuant to a registration
statement filed with the SEC under the Securities Act, shall
not bear the Private Placement Legend.
(ii) GLOBAL SECURITY LEGEND. To the extent required by the
Deposi tary, each Global Security shall bear a legend in substantially
the following form:
"THIS GLOBAL SECURITY IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS SECURITY) OR ITS
42
<PAGE>
NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND
IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT
(I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSU
ANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL SECU RITY MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE
INDENTURE, (III) THIS GLOBAL SECURITY MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV)
THIS GLOBAL SECURITY MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COM PANY."
(iii) REGULATION S TEMPORARY GLOBAL SECURITY LEGEND. To the
extent required by the Depositary, the Regulation S Temporary Global
Security shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL SECURITY,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE
SECURITIES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL SECURITY SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF
INTEREST DURING THE PERIOD IN WHICH SUCH HOLDER HOLDS THIS SECURITY.
NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM
ACCRUING ON THIS SECURITY."
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL SECURITIES. At
such time as all beneficial interests in a particular Global Security have been
exchanged for Definitive Securities or a particular Global Security has been
redeemed, repurchased or cancelled in whole and not in part, each such Global
Security shall be returned to or retained and cancelled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Security is exchanged for or transferred to
a Person who will take delivery thereof in the form of a beneficial interest in
another Global Security or for Definitive Securities, the principal amount of
Securities represented by such Global Security shall be reduced accordingly and
an endorsement shall be made on such Global Security, by the Trustee or by the
Registrar at the direction of the Trustee, to reflect such reduction; and if the
beneficial
43
<PAGE>
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global
Security, such other Global Security shall be increased accordingly and an
endorsement shall be made on such Global Security, by the Trustee or by the
Registrar at the direction of the Trustee, to reflect such increase.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global
Securities and Definitive Securities upon the Company's order or at the
Registrar's request in accordance with Section 2.2 hereof.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Security or to a Holder of a Definitive
Security for any registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.2 (fourth paragraph), 2.10,
3.6, 4.10, and 9.5 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Security selected for redemption in whole
or in part, except the unredeemed portion of any Security being
redeemed in part.
(iv) All Global Securities and Definitive Securities issued
upon any registration of transfer or exchange of Global Securities or
Definitive Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Securities or Definitive Securities
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange Securities during a period
beginning at the opening of business 15 days before the day of any
selection of Securities for redemption under Section 3.2 hereof and
ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any
44
<PAGE>
Security being redeemed in part or (C) to register the transfer of or
to exchange a Security between a record date and the next succeeding
Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Company may
deem and treat the Person in whose name any Security is registered as
the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Securities and for all
other purposes, and none of the Trustee, any Agent or the Company shall
be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Securities and
Definitive Securities in accordance with the provisions of Section 2.2
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.6 to effect a transfer or exchange may be submitted by
facsimile.
(ix) Each Holder of a Security agrees to indemnify the Company
and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Security in violation
of any provision of this Indenture and/or applicable United States
federal or state securities laws.
Section 2.7 REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by an Officer, shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of both Trustee and the Company to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for its
reasonable out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company and shall be entitled to all benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
45
<PAGE>
Section 2.8 OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee (including any Security represented by a
Global Security) except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected by
the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 hereof
(other than a mutilated Security surrendered for replacement), it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a BONA FIDE purchaser. A mutilated Security ceases
to be outstanding upon surrender of such Security and replacement thereof
pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Company, a Subsidiary of the Company or any Affiliate thereof)
holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of
the principal and interest and premium, if any, due on the Securities payable on
that date and payment of the Securities called for redemption is not otherwise
prohibited, then on and after that date Securities cease to be outstanding and
interest on them ceases to accrue.
Section 2.9 TREASURY SECURITIES.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Affiliate of the Company shall be
disregarded, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trustee actually knows are so owned shall be so disregarded.
Section 2.10 TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities upon
a written order of the Company signed by an Officer and delivered or caused to
be delivered to a Trust Officer. Temporary Securities shall be substantially in
the form of definitive Securities
46
<PAGE>
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Until so exchanged, the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as permanent Securities
authenticated and delivered hereunder.
Section 2.11 CANCELLATION
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or
Paying Agent (other than the Company or an Affiliate of the Company) and no one
else shall cancel all Securities surrendered for registration of transfer,
exchange, payment, replacement or cancellation. Subject to Section 2.7, the
Company may not issue new Securities to replace Securities that have been paid
or that have been delivered to the Trustee for cancellation. No Securities shall
be authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section 2.11, except as expressly permitted in the form of
Securities and as permitted by this Indenture.
Section 2.12 DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus, (to
the extent lawful) interest on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day, in each case at the rate
provided in the Securities and in Section 4.1 hereof. At least 15 days before
the subsequent special record date, the Company shall mail to each Holder with a
copy to the Trustee a notice that states the special record date, the related
payment date and the amount of defaulted interest, and interest payable on
defaulted interest, if any, to be paid.
Section 2.13 CUSIP NUMBERS.
The Company in issuing the Securities may use CUSIP numbers
(if then generally in use), and, if so, the Trustee shall use CUSIP numbers in
notices of redemption as a convenience to Holders; PROVIDED that any such notice
may state that
47
<PAGE>
no representation is made as to the correctness of such number either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
Section 2.14 ISSUANCE OF ADDITIONAL SECURITIES.
The Company shall be entitled, subject to its compliance with
Section 4.9, to issue Additional Securities under this Indenture which shall
have identical terms as the Initial Securities issued on the Issue Date, other
than with respect to the date of issuance, issue price and amount of interest
payable on the first payment date applicable thereto (and, if such Additional
Securities shall be issued in the form of Unrestricted Definitive Securities or
Unrestricted Global Securities, other than with respect to transfer
restrictions). The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities issued in exchange therefor shall be
treated as a single class for all purposes under this Indenture.
With respect to any Additional Securities, the Company shall
set forth in a resolution of the Board of Directors and an Officers'
Certificate, a copy of each of which shall be delivered to the Trustee, the
following information:
(1) the aggregate principal amount of such Additional
Securities to be authenticated and delivered pursuant to this
Indenture;
(2) the issue price, the issue date and the CUSIP number of
such Additional Securities and the amount of interest payable on the
first payment date applicable thereto; PROVIDED, HOWEVER, that no
Additional Securities may be issued at a price that would cause such
Additional Securities to have "original issue discount" within the
meaning of Section 1273 of the Internal Revenue Code of 1986, as
amended; and
(3) whether such Additional Securities shall be Restricted
Definitive Securities or Restricted Global Securities and issued in the
form of Initial Securities or shall be issued in the form of
Unrestricted Definitive Securities or Unrestricted Global Securities.
48
<PAGE>
ARTICLE III
OPTIONAL REDEMPTION
Section 3.1 NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 30 days but not more than 60 days before a Redemption Date, an Officers'
Certificate setting forth that such redemption shall occur pursuant to Section
3.7 hereof and setting forth the Redemption Date, the principal amount of
Securities to be redeemed and the Redemption Price.
Section 3.2 SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed PRO
RATA or by lot or by such other method as the Trustee shall determine to be fair
and appropriate and in such manner as complies with any applicable legal and
stock exchange requirements.
The Trustee shall make the selection form the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 3.3 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee and each Holder whose Securities are to be redeemed at
the last address for such Holder shown on the registry books of the Registrar.
At the Company's request delivered to the Trustee at least 15 days before the
date selected for the mailing of the notice of redemption, the Trustee shall
give the notice of redemption in the Company's
49
<PAGE>
name and at the Company's expense. Each notice for redemption shall identify the
Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the Redemption
Price;
(e) that, unless the Company defaults in its obligation to deposit
U.S. Legal Tender with the Paying Agent in accordance with Section 3.5 hereof,
interest on Securities called for redemption ceases to accrue on and after the
Redemption Date and the only remaining right of the Holders of such Securities
is to receive payment of the Redemption Price, including accrued and unpaid
interest to the Redemption Date, upon surrender to the Paying Agent of the
Securities called for redemption and to be redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the identifica
tion of the particular Securities (or portion thereof) to be redeemed, as well
as the aggregate principal amount of such Securities to be redeemed and the
aggregate principal amount of Securities to be outstanding after such partial
redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.3 and
pursuant to the option redemption provisions of Paragraph 5 of the Securities.
Section 3.4 EFFECT OF NOTICE OF REDEMPTION.
50
<PAGE>
Once notice of redemption is mailed in accordance with Section 3.3,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price together with accrued and unpaid interest. Upon
surrender to the Trustee or if the Trustee is no longer the Paying Agent, to the
Paying Agent, such Securities called for redemption shall be paid at the
Redemption Price plus interest, if any, accrued and unpaid on the Redemption
Date; PROVIDED that if the Redemption Date is after a regular record date and on
or prior to the Interest Payment Date to which such record date relates, the
accrued interest shall be payable to the Holder of the redeemed Securities
registered on the relevant record date, and PROVIDED, FURTHER, that if a
Redemption Date is a Legal Holiday, payment shall be made on the next succeeding
Business Day and no interest shall accrue for the prior from such Redemption
Date to such succeeding Business Day.
Section 3.5 DEPOSIT OF REDEMPTION PRICE.
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Paying Agent (other than the Company or an Affiliate of
the Company) U.S. Legal Tender sufficient to pay the Redemption Price of, and
accrued and unpaid interest on, all Securities to be redeemed on such Redemption
Date (other than Securities or portions thereof called for redemption on that
date that have been delivered by the Company to the Trustee for cancellation).
The Paying Agent shall promptly return to the Company any U.S. Legal Tender so
deposited in excess of the amounts necessary to pay the Redemption Price and
accrued interest on all Securities to be redeemed.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not otherwise prohibited, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and in the Security.
51
<PAGE>
Section 3.6 SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
Section 3.7 OPTIONAL REDEMPTION.
The Company may redeem all or any of the Securities, in whole or in
part, at any time on or after February 15, 2004, at a Redemption Price equal to
a percentage of the principal amount thereof, as set forth in the immediately
succeeding paragraph, plus accrued and unpaid interest to the Redemption Date.
The Redemption Price as a percentage of the principal amount shall be
as follows, if the Securities are redeemed during the 12 month period beginning:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
February 15, 2004..................... 103.875%
February 15, 2005..................... 102.583%
February 15, 2006..................... 101.292%
February 15, 2007 and thereafter...... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to February 15, 2002,
the Company may also redeem up to 40% of the aggregate principal amount of the
Securities originally outstanding (including the original principal amount of
any Additional Securities) with the net proceeds from any public offering of
Equity Interests of the Company (other than Redeemable Stock) at a Redemption
Price equal to 107.75% of the principal thereof plus accrued and unpaid interest
to the Redemption Date; PROVIDED that at least 60% in aggregate principal amount
of the Securities originally issued (including the original principal amount of
any Additional Securities) must remain outstanding after each such redemption.
Any such redemption must be consummated on or prior to 120 days of the receipt
of the proceeds of such offering of Equity Interests.
Any redemption pursuant to this Section 3.7 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.1 through 3.6
hereof.
52
<PAGE>
ARTICLE IV
COVENANTS
Section 4.1 PAYMENT OF SECURITIES.
The Company shall pay the principal of, premium, if any, and interest
on the Securities on the dates and in the manner provided herein and in the
Securities. Principal, premium, if any, and interest shall be considered paid on
the date due if the Trustee or Paying Agent, other than the Company or an
Affiliate of the Company, holds for the benefit of the Holders, on or before
10:00 a.m. New York City time on that date, money deposited by the Company in
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
at the same rate per annum on the Securities to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace period) at the same rate to the extent lawful;
Section 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain, in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or the
Registrar) where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all
53
<PAGE>
such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Trustee's agency at The Bank of New
York, 101 Barclay Street, Floor 21W, N.Y., N.Y. 10286, Attn: Corporate Trust
Trustee Administration as such office.
Section 4.3 SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company shall deliver to the Trustee and mail to each Holder
and to prospective purchasers of Securities identified to the Company by an
Initial Purchaser, within 15 days after the filing of the same with the SEC,
copies of its annual report and of the information, documents and other reports,
if any, which the Company is required to file with the SEC pursuant to Section
13 or 15(d) of the Exchange Act. The Company shall also comply with the other
provisions of TIA Section 314(a).
(b) The Company shall deliver to the Trustee and to each Holder, within
15 days after it files the same with the SEC, copies of all reports and
information that the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may
not be required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and provide the
Trustee and Holders with such annual reports and such information, documents and
other reports as would otherwise be required if it were subject to such
requirements.
(c) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.4 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
54
<PAGE>
(a) The Company shall deliver to the Trustee within 120 days after the
end of its fiscal year an Officers' Certificate complying with Section 314(a)(4)
of the TIA and stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
whether or not the signer knows of any failure by the Company or any Subsidiary
of the Company to comply with any conditions or covenants in this Indenture and,
if such signer does know of such a failure to comply, the certificate shall
describe such failure with particularity. The Officers' Certificate shall also
notify the Trustee should the relevant fiscal year end on any date other than
the current fiscal year end date.
(b) So long as not contrary to the then current policies of the
American Institute of Certified Public Accountants, the Company shall deliver to
the Trustee within 120 days after the end of each of its fiscal years a written
report of a firm of independent certified public accountants with an established
national reputation stating that in conducting their audit for such fiscal year,
nothing has come to their attention that caused them to believe that the Company
or any Restricted Subsidiary of the Company was not in compliance with the
provisions set forth in Article IV or V of this Indenture.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default under this Indenture, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of a Default or an Event of Default unless one of its Trust Officers
receives written notice thereof from the Company or any of the Holders.
Section 4.5 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall, and shall cause each of its Restricted Subsidiaries
to, pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, all material taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to taxes)
levied or imposed upon the Company or any of its Restricted Subsidiaries or
properties and assets of the Company or any of its Restricted Subsidiaries;
PROVIDED, HOWEVER, that the Company
55
<PAGE>
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment or governmental charge whose amount, applicability or
validity is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves have been established in accordance
with GAAP.
Section 4.6 WAIVER OF STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law, wherever
enacted, now or at any hereafter in force, which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any, or
interest on the Securities as contemplated herein or in the Securities or which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law insofar as such law applies to the Securities, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee relating to any such
law, but will suffer and permit the execution of every such power as though no
such law has been enacted.
Section 4.7 LIMITATIONS ON RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend or make
any distribution on account of the Company's or any of its Restricted
Subsidiaries' Capital Stock or other Equity Interests (other than (A) dividends
or distributions payable in Equity Interests (other than Redeemable Stock) of
the Company or such Restricted Subsidiary or (B) dividends or distributions
payable by a Restricted Subsidiary so long as, in the case of any dividend or
distribution payable on any class or series of securities issued by a Restricted
Subsidiary other than a wholly owned Restricted Subsidiary, the Company or a
Restricted Subsidiary receives at least its pro rata share of such dividend or
distribution in accordance with its equity interest in such class or series of
securities), (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any of its Restricted Subsidiaries (other
than any such Equity Interests purchased from the Company or any of its
Restricted Subsidiaries), (iii) voluntarily prepay any Indebtedness that is
subordinated to the Securities (other than in connection with (A) any extension,
refinancing, renewal, replacement, substitution or refunding thereof permitted
by the terms of the Indenture, (B) Indebtedness between the Company
56
<PAGE>
and a Restricted Subsidiary or between Restricted Subsidiaries or (C) any
Indebtedness permitted by clauses (iv) and (viii) of the second paragraph of
Section 4.9 or (iv) make any Restricted Investments (the foregoing actions set
forth in clauses (i) through (iv) being referred to as "Restricted Payments"),
if:
(a) a Default or Event of Default shall have occurred and be continuing
at the time of such Restricted Payment or shall occur as a consequence thereof;
or
(b) immediately after such Restricted Payment and after giving effect
thereto on a pro forma basis, the Company could not incur at least $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.9 hereof
(without giving effect to clauses (i) through (xvii) of the second paragraph
thereof); or
(c) such Restricted Payment, together with the aggregate of (i) all
other Restricted Payments made after the Issue Date PLUS (ii) the amount, if
any, by which the net amount of Investments in all Unrestricted Subsidiaries
(determined by subtracting (A) the aggregate amount of all Transfers (valued as
provided in the definition of Investment) from each Unrestricted Subsidiary to
the Company or its Restricted Subsidiaries from and after the Issue Date through
and including the relevant date of determination (calculated in accordance with
the penultimate paragraph of this Section 4.7) from (B) the aggregate amount of
all Investments in such Unrestricted Subsidiary made by the Company and its
Restricted Subsidiaries from and after the Issue Date through and including the
relevant date of determination, but in any case not below zero) exceeds $40
million, exceeds (iii) the sum of (A) 50% of the amount of the Adjusted
Consolidated Net Income (other than amounts, if any, included in the preceding
clause (c)(ii)) of the Company for the period (taken as one accounting period)
from the beginning of the first quarter commencing immediately after the Issue
Date through the end of the Company's fiscal quarter ending immediately prior to
the time of such Restricted Payment (or, if Adjusted Consolidated Net Income for
such period is a deficit, 100% of such deficit); PLUS (B) 50% of the aggregate
amortization of intangibles for the period specified in subclause (iii)(A) of
this clause (c); PLUS (C) 100% of the aggregate amounts contributed to the
capital of the Company from and after the Issue Date; PLUS (D) 100% of the
aggregate net cash proceeds and the fair market value, as determined in good
faith by the Board of Directors, of marketable securities received by the
Company from (1) the issue or sale of Equity Interests of the Company (other
than such Equity Interests issued or sold to a Restricted Subsidiary and other
than Redeemable Stock) or any Indebtedness or security convertible into or
exchangeable for
57
<PAGE>
any such Equity Interest that has been so converted or exchanged, (2) the sale
of the stock of an Unrestricted Subsidiary or the sale of all or substantially
all of the assets of an Unrestricted Subsidiary to the extent that a liquidating
dividend is paid to the Company or any Restricted Subsidiary from the proceeds
of such sale or (3) the sale or other disposition of Restricted Investments made
by the Company and its Restricted Subsidiaries, in each case from and after the
Issue Date plus (E) 100% of the aggregate net cash proceeds received by the
Company from the issue and sale of the 6% Convertible Notes are converted into
Common Stock of the Company.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at the date of
declaration thereof such payment would have complied with the provisions of this
Indenture, (ii)(A) the retirement of any Equity Interests of the Company (the
"Retired Equity Interests") either in exchange for or out of the net proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary) of
other Equity Interests of the Company (the "Refunding Equity Interests") other
than any Redeemable Stock, and (B) if immediately prior to retirement of any
Retired Equity Interest the declaration and payment of dividends thereon was
permitted under clause (vi) of this paragraph, the declaration and payment of
dividends on the Refunding Equity Interest in an aggregate amount per year no
greater than the aggregate amount of dividends per year that was declarable and
payable on such Retired Equity Interest issued in connection with such
retirement immediately prior to such retirement; (iii) the repurchase,
redemption or other acquisition or retirement for value of (A) any Equity
Interests of the Company issued to present and former members of management of
the Company and its Subsidiaries and certain of their former affiliates,
pursuant to agreements in effect on the Issue Date and (B) any Equity Interests
of the Company issued after the Issue Date to members of management of the
Company and its Subsidiaries pursuant to agreements executed subsequent to the
Issue Date, containing provisions for the repurchase of such Equity Interests
upon death, disability or termination of employment of such persons which are
substantially identical to those contained in the agreements in effect on the
Issue Date, (iv) the declaration and payment of dividends on the Company's
Common Stock of up to 6% per annum of the net proceeds received by the Company
in the initial public offering of its Common Stock and any subsequent public
offerings of the Company's Common Stock; (v) the repurchase, redemption or other
acquisition or retirement for value of Indebtedness of the Company which is
subordinated in right of payment to the Securities either in exchange for or out
of the proceeds of the issuance of Equity Interests (other than Redeemable
Stock) of the Company; (vi) the declaration and payment of dividends to holders
of any class or series of the Company's preferred stock
58
<PAGE>
issued after the Issue Date (including, without limitation, the declaration and
payment of dividends on Refunding Equity Interests in excess of the dividends
declarable and payable thereon pursuant to clause (ii) of this paragraph);
PROVIDED that at the time of such issuance the Company's Fixed Charge Coverage
Ratio, after giving effect to such issuance, would be greater than 1.25 to 1;
(vii) the redemption, repurchase or other acquisition or retirement for value of
any Indebtedness of the Company which is subordinated in right of payment to the
Securities (A) with the proceeds of, or in exchange for, Indebtedness incurred
pursuant to clause (ix) of the second paragraph of Section 4.9 hereof or (B) if,
after giving effect to such redemption, repurchase or retirement, the Company
could incur at least $1.00 of Indebtedness under the first paragraph of Section
4.9 hereof (without giving effect to clauses (i) through (xvii) of the second
paragraph thereof); (viii) the purchase, redemption or other acquisition or
retirement for value of any Equity Interest of a Restricted Subsidiary that is
not a wholly owned Subsidiary to the extent such purchase, redemption or other
acquisition or retirement constitutes a Permitted Investment; PROVIDED that in
determining the aggregate amount expended for Restricted Payments in accordance
with paragraph (c) above, (1) no amounts expended under clauses (ii)(A), (v),
(vii) and (viii) of this paragraph shall be included, and (2) 100% of the
amounts expended under clauses (i), (ii)(B), (iii), (iv) and (vi) of this
paragraph shall be included.
In determining the net amount of Investments in Unrestricted
Subsidiaries pursuant to clause (c)(ii) of the first paragraph of this
Section 4.7 on any relevant date of determination, (i) all Transfers which
would not be included in the Adjusted Consolidated Net Income of the Company
for the relevant period will be applied to reduce the aggregate amount of
Investments in Unrestricted Subsidiaries before any Transfer which would be
included in the Adjusted Consolidated Net Income of the Company for the
relevant period shall be so applied and (ii) no Transfer (or portion thereof)
which would be included in the Adjusted Consolidated Net Income of the
Company for the relevant period will be applied to reduce the aggregate
amount of Investments in Unrestricted Subsidiaries if, prior to or as a
result of the application of such Transfer, the net amount of Investments in
Unrestricted Subsidiaries (after taking into account all prior applications
of Transfers) is or would be $40 million or less.
No later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.7 were computed, which calculations may
be based on the Company's latest available internal financial statements.
59
<PAGE>
Section 4.8 DIVIDENDS AND PAYMENT RESTRICTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock, or any other interest or participation in, or measured by,
its profits, owned by the Company or any of its Restricted Subsidiaries, or pay
any Indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii)
make loans or advances to the Company or any of its Restricted Subsidiaries or
(iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of: (A) the terms (as in effect on the Issue Date) of any
Existing Indebtedness, (b) the terms (as in effect on the Issue Date) of the
Credit Facility, (C) the terms of Indebtedness of the Company incurred in
accordance with Section 4.9 hereof; PROVIDED that the terms of any such
Indebtedness constitute no greater encumbrance or restriction on the ability of
any Restricted Subsidiary to pay dividends or made distributions, make loans or
advances or transfer properties or assets than is otherwise permitted by this
Section 4.8 at such time, (D) the terms of this Indenture and the Securities,
(E) applicable law, (F) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices, (G) the terms of
purchase money obligations for property acquired in the ordinary course of
business, but only to the extent that such purchase money obligations restrict
or prohibit the transfer of the property so acquired, (H) any encumbrance or
restriction with respect to a Subsidiary of the Company that is not a Subsidiary
of the Company on the Issue Date, which encumbrance or restriction is in
existence at the time such Person becomes a Subsidiary of the Company or is
created on the date it becomes a Subsidiary of the Company, (I) any encumbrance
or restriction with respect to a Subsidiary of any imposed pursuant to
an agreement which has been entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary or (J) any
encumbrance or restriction existing under any amendment to, and any agreement
which refinances or replaces, the agreements described in clauses (A), (B), (C)
and (D), PROVIDED that the terms and conditions of any such encumbrances or
restrictions contained in any such amendment or agreement constitute no greater
encumbrance or restriction on the ability of any Restricted Subsidiary to pay
dividends or make distributions, make loans or advances or transfer properties
or assets than those under or pursuant to the agreement evidencing the
Indebtedness or obligations so amended, refinanced or replaced. Nothing
contained in this Section 4.8 shall prevent
60
<PAGE>
the Company or a Restricted Subsidiary from entering into any agreement
permitting or providing for the incurrence of Liens otherwise permitted by
Section 4.12 hereof.
Section 4.9 INCURRENCE OF INDEBTEDNESS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable with respect to any
Indebtedness unless the Company's Fixed Charge Coverage Ratio for its four full
fiscal quarters ending immediately prior to the date such additional
Indebtedness is created, incurred, issued, assumed or guaranteed would have been
at least 2.25 to 1 determined on a pro forma basis (including a pro forma
application of the net proceeds of such Indebtedness) as if the additional
Indebtedness had been created, incurred, issued, assumed or guaranteed at the
beginning of such four-quarter period.
The foregoing limitations will not apply to the incurrence of (i)
Indebtedness pursuant to the Credit Facility (provided that the principal amount
of such Indebtedness shall not exceed the aggregate amount of the commitments
under the Credit Facility on the Issue Date PLUS the amount of Indebtedness
under the Credit Facility incurred (A) as additional Indebtedness permitted
under clause (viii) of this paragraph and which reduces the amount of
Indebtedness otherwise permitted under said clause (viii), (B) as additional
Indebtedness permitted under the first paragraph of this Section 4.9 or (C) as
reimbursement obligations with respect to letters of credit permitted under
clause (vii) below); (ii) Existing Indebtedness; (iii) Indebtedness represented
by the Securities (other than Additional Securities); (iv) Capital Lease
Obligations; (v) Indebtedness constituting purchase money obligations for
property acquired in the ordinary course of business or other similar financing
transactions; (vi) Indebtedness incurred in connection with capital
expenditures; (vii) Indebtedness constituting reimbursement obligations with
respect to letters of credit, including, without limitation, letters of credit
in respect of workers' compensation claims, issued for the account of the
Company or a Restricted Subsidiary in the ordinary course of business, or other
Indebtedness with respect to reimbursement-type obligations regarding workers'
compensation claims; (viii) additional Indebtedness in an aggregate principal
amount equal to the greater of (A) $75.0 million in the aggregate at any one
time outstanding for the Company and its Restricted Subsidiaries and (B)(1) 10%
of the Consolidated Net Worth of the Company at the time of
incurrence by the Company and (2) 10% of the Consolidated Net Worth of any
Restricted Subsidiary at the time of
61
<PAGE>
incurrence by such Restricted Subsidiary; (ix) Indebtedness created, incurred,
issued, assumed or given in exchange for, or the proceeds of which are used to,
extend, refinance, renew, replace, substitute or refund any Indebtedness
permitted under the Indenture or any Indebtedness issued to so extend,
refinance, renew, replace, substitute or refund such Indebtedness, including any
additional Indebtedness incurred to pay premiums and fees in connection
therewith (the "Refinancing Indebtedness"); PROVIDED, that (A) the principal
amount of such Refinancing Indebtedness shall not exceed the outstanding
principal amount of Indebtedness (including unused commitments) so extended,
refinanced, renewed, replaced, substituted or refunded plus any amounts incurred
to pay premiums and fees in connection therewith, (B) in the case of Refinancing
Indebtedness for Indebtedness permitted under clause (ii) of this paragraph, the
Refinancing Indebtedness shall have an Average Life equal to or greater than the
Average Life of the Indebtedness being extended, refinanced, renewed, replaced,
substituted or refunded and (C) to the extent such Refinancing Indebtedness
refinances Indebtedness subordinated to the Securities, such Refinancing
Indebtedness is subordinated to the Securities at least to the same extent as
the Indebtedness being extended, refinanced, renewed, replaced, substituted or
refunded; and PROVIDED, FURTHER that subclauses (B) and (C) of this clause (ix)
will not apply to any refunding or refinancing of any Senior Indebtedness; (x)
intercompany Indebtedness incurred in connection with Investments in
Unrestricted Subsidiaries; PROVIDED that such Investments are permitted by each
of Section 4.7 and Section 4.13 hereof; (xi) Indebtedness of any unconsolidated
Subsidiary of the Company created after the Issue Date; PROVIDED that such
Indebtedness is nonrecourse to the Company and its consolidated Restricted
Subsidiaries and the Company and its consolidated Restricted Subsidiaries have
no obligations with respect to such Indebtedness, (xii) Indebtedness under
Currency Agreements and Interest Rate Agreements; PROVIDED that in the case of
Currency Agreements which relate to other Indebtedness, such Currency Agreements
do not increase the Indebtedness of the Company outstanding other than as a
result of fluctuations in foreign currency exchange rates; (xiii) Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts, which will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business; (xiv)
Indebtedness of an entity at the time it is acquired as a Restricted Subsidiary;
PROVIDED that such Indebtedness was not incurred or assumed by such entity in
connection with or in anticipation of such acquisition; (xv) Indebtedness
between the Company and any Restricted Subsidiary or between Restricted
Subsidiaries, (xvi) guarantees by Restricted Subsidiaries of Indebtedness of the
Company or any Restricted Subsidiary if the Indebtedness so guaranteed is
permitted under this Indenture; and
62
<PAGE>
(xvii) the Company's Obligations arising from the repurchase, redemption or
other acquisitions of Equity Interests from management investors to the extent
permitted by Section 4.7.
Section 4.10 LIMITATION ON SALES OF ASSETS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries (other than unconsolidated Restricted Subsidiaries) to, directly or
indirectly, consummate any Asset Sale that results in Net Proceeds in excess of
$45.0 million (including the sale of any of the stock of any Restricted
Subsidiary) unless the Company shall apply the Net Proceeds from such Asset Sale
to one or more of the following in such combination as it shall choose: (i) an
investment in another asset or business in the same line of business as, or a
line of business similar to that of, the line of business of the Company and its
Subsidiaries; PROVIDED that such investment occurs prior to the later to occur
of (x) if applicable, the date on which such proceeds are required to be applied
pursuant to the express terms of the Credit Facility as in effect on the Issue
Date and without regard to any waiver of such terms and (y) the 366th day
following the date of such Asset Sale (the "Asset Sale Payment Date"); PROVIDED,
FURTHER, that if the terms of the Credit Facility do not restrict the use of
such proceeds, the Asset Sale Payment Date shall be deemed to be the 366th day
following the date of such Asset Sale, (ii) a Net proceeds Offer (as defined
below) expiring on or prior to the Asset Sale Payment Date or (iii) the
purchase, redemption or other prepayment or repayment of outstanding Senior
Indebtedness on or prior to the Asset Sale Payment Date; PROVIDED, HOWEVER, that
if the net amount not invested pursuant to clause (i) or applied pursuant to
clause (iii) above (the "Excess Net Proceeds") is less than $15.0 million, the
Company shall not be further obligated to offer to redeem Securities pursuant to
clause (ii) above; and PROVIDED, FURTHER, that for purposes of the foregoing
calculation of Excess Net Proceeds the Company shall be required to repay any
Senior Indebtedness that by its terms may be so repaid at the time of such
calculation, prior to determining the Excess Net Proceeds.
(b) For purposes of subsection (ii) of clause (a) of this Section, the
Company shall apply that portion of the Net Proceeds of the Asset Sale required
to make a tender offer in accordance with applicable law (a "Net Proceeds
Offer") to repurchase the Securities at a price (the "Purchase Price") not less
than 100% of the principal amount thereof plus accrued and unpaid interest to
the date fixed for payment therefor, which date shall be no earlier than 30 days
or later than 45 days after the date of mailing of the notice of the Net
Proceeds Offer; PROVIDED, HOWEVER that the Company may
63
<PAGE>
extend the date fixed for payment if, in the opinion of counsel, the Net
Proceeds Offer is required to be extended under applicable law (as so extended,
the "Net Proceeds Payment Date"). Any Net Proceeds Offer shall be made by the
Company only if and to the extent permitted under and subject to prior
compliance with the terms of any agreement governing Senior Indebtedness. If on
the date any Net Proceeds Offer is commenced securities of the Company ranking
PARI PASSU in right of payment with the Securities are outstanding and the terms
of such securities provide that an offer to repurchase such securities similar
to the Net Proceeds Offer is to be made with respect thereto, then the Net
Proceeds Offer shall be made concurrently with such other offer, and securities
of each issue shall be accepted on a pro rata basis, in proportion to the
aggregate principal or face amount, as the case may be, of securities of each
issue which the holders thereof elect to have redeemed.
(c) At such time as the Company determines to make a Net Proceeds
Offer, it shall so notify the Trustee in writing. Within 15 days thereafter, it
shall mail or cause the Trustee to mail (in the Company's name and at its
expense) notice of a Net Proceeds Offer to the Holders of the Securities at
their last registered addresses with a copy to the Trustee and the Paying Agent.
The Net Proceeds Offer shall remain open from the time of mailing until the
close of business on the fourth Business Day prior to the Net Proceeds Payment
Date. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Securities pursuant to the Net Proceeds Offer. The
notice, which shall govern the terms of the Net Proceeds Offer, shall state:
(A) that the Net Proceeds Offer is being made pursuant to this
Section 4.10 and that the Securities will be accepted for payment on a
PRO RATA basis (rounded down to the nearest $1,000), if necessary;
(B) the Purchase Price and the Net Proceeds Payment Date;
(C) that any Security not tendered or accepted for payment will
continue to accrue interest;
(D) that any Security accepted for payment pursuant to the Net
Proceeds Offer shall cease to accrue interest after the Net Proceeds
Payment Date;
(E) that each Holder of a Security electing to have such Security
purchased pursuant to a Net Proceeds Offer will be required to
64
<PAGE>
surrender the Security, at the address specified in the notice prior to
the close of business on the fourth Business Day prior to the Net
Proceeds Payment Date (the "Final Put Date");
(F) that Holders will be entitled to withdraw their election if
the Trustee receives, not later than the close of business on the fifth
Business Day next preceding the Net Proceeds Payment Date, a facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Securities purchased; and
(G) that Holders whose Securities are purchased only in part will
be issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered.
Any such Net Proceeds Offer shall comply with all applicable provisions
of federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provision of such laws.
The Trustee shall notify the Company at the opening of business on the
Business Day following the Final Put Date as to the principal amount of each of
the Securities or portions thereof which have been surrendered to the Trustee in
connection with the Net Proceeds Offer. On the Net Proceeds Payment Date, the
Company shall (i) subject to clause (b) of this Section 4.10, accept for payment
on a PRO RATA basis (if necessary) Securities or portions thereof tendered
pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent money
sufficient to pay the Purchase Price with respect to all Securities or portions
thereof so accepted and (iii) deliver or cause to be delivered to the Trustee
all Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company and the
calculations used in determining the amount of Net Proceeds to be applied to the
redemption of Securities. The Paying Agent shall promptly mail to Holders of
Securities so accepted, payment in an amount equal to the Purchase Price, and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted shall be promptly mailed by the
Trustee to the Holder thereof. The Company will publicly announce the results of
the Net Proceeds Offer on or as
65
<PAGE>
soon as practicable after the Net Proceeds Payment Date. For purposes of this
Section 4.10, the Trustee shall act as the Paying Agent.
(d) After the Final Put Date, the Company will not be restricted under
this Section 4.10 as to its use of any remaining Net Proceeds available to make
such Net Proceeds Offer but not used to redeem the Securities pursuant thereto.
Notwithstanding any other provision of this Indenture to the contrary,
for a period of 120 days after the Final Put Date, the Company may use any Net
Proceeds available to make such Net Proceeds Offer but not used to redeem
Securities pursuant thereto to purchase, redeem or otherwise acquire or retire
for value any securities of the Company ranking junior in right of payment to
the Securities at a price, stated as a percentage of the principal or face
amount of such junior securities, not greater than the price, stated as a
percentage of the principal amount of the Securities, offered in the Net
Proceeds Offer; PROVIDED that if the Net Proceeds Offer is for a principal
amount (the "Net Proceeds Offer Amount") of Securities less than the aggregate
principal amount of the Securities then outstanding then the Net Proceeds
available for such a purchase, redemption or other acquisition or retirement for
value of junior securities shall not exceed the Net Proceeds Offer Amount.
Section 4.11 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction (including,
without limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) involving aggregate consideration in excess of $5.0
million for any one transaction with any Affiliate, except for (i) transactions
(including any investments, loans or advances by or to any Affiliate) in good
faith the terms of which are fair and reasonable to the Company or such
Restricted Subsidiary, as the case may be, and are at least as favorable as the
terms which could be obtained by the Company or such Restricted Subsidiary, as
the case may be, in a comparable transaction made on an arm's length basis
between unaffiliated parties; PROVIDED that any such transaction shall be deemed
to be on terms that are fair and reasonable and that are at least as favorable
as the terms that could be obtained by the Company or such Restricted
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis between unaffiliated parties if (a) the Company or such Restricted
Subsidiary, as the case may be, delivers to the Trustee and the Holders a
written opinion of a nationally recognized investment banking firm stating that
the transaction is fair to the Company or such
66
<PAGE>
Restricted Subsidiary from a financial point of view or (b) a majority of the
directors of the Company unaffiliated with such Affiliate or, if there are no
such directors, a majority of the directors of the Company approve such
transaction, (ii) payments by the Company or any of its Restricted Subsidiaries
to KKR or any affiliate thereof made pursuant to any financial advisory,
financing, underwriting or placement agreement, (iii) any Restricted Payment not
otherwise prohibited under Section 4.7 hereof and any Investment not prohibited
under Section 4.13 hereof, (iv) the payment of reasonable and customary regular
fees to directors of the Company and its Subsidiaries who are not employees of
the Company or its Subsidiaries, (v) payments to KKR that are not otherwise
prohibited by Section 4.7 hereof, (vi) loans to officers, directors and
employees of the Company and its Subsidiaries for business or personal purposes
and other loans and advances made in the ordinary course of business of the
Company and its Restricted Subsidiaries and (viii) the payment by the Company of
management fees to KKR and/or its affiliates.
Section 4.12 LIMITATIONS ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) upon any asset now owned or
hereafter acquired by it or any income or profits therefrom or assign or convey
any right to receive income therefrom. Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may create or assume any Lien upon its
properties or assets if the Company shall cause the Securities to be equally and
ratably secured with all other Indebtedness secured by such Lien for so long as
such other Indebtedness shall be so secured.
Section 4.13 INVESTMENTS IN UNRESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, make any Investment in any Unrestricted Subsidiary,
if at the time of such Investment:
(a) a Default or Event of Default shall have occurred and be continuing
or shall occur as a consequence thereof;
(b) the amount of such Investment exceeds the amount then permitted to
be used to make Restricted Payments pursuant to clause (c) of the first
paragraph of Section 4.7 hereof; or
67
<PAGE>
(c) immediately after such Investment and after giving effect thereto
on a pro forma basis deducting from Consolidated Net Income the amount of any
Investment the Company has made in an Unrestricted Subsidiary during the four
full fiscal quarters last preceding the date of such Investment, the Company
would not be permitted to incur at least $1.00 of Indebtedness pursuant to the
first paragraph of Section 4.9 hereof (without giving effect to clauses (i)
through (xvii) of the second paragraph thereof).
Notwithstanding clauses (b) or (c) of this paragraph or any other
provision of this Indenture, the Company shall be permitted to make Investments
in Unrestricted Subsidiaries in an aggregate amount not to exceed $40.0 million
at any one time outstanding. The amount by which the aggregate of all
Investments in Unrestricted Subsidiaries exceeds $40.0 million at any one time
outstanding shall be counted in determining the aggregate permissible amount of
Restricted Payments pursuant to clause (c) of the first paragraph under Section
4.7 hereof. The net amount of Investments in Unrestricted Subsidiaries that (i)
exceeds $40.0 million shall be reduced by all Transfers from Unrestricted
Subsidiaries to the Company and its Restricted Subsidiaries in accordance with
clause (c)(ii) of the first paragraph and the penultimate paragraph of Section
4.7 and (ii) is less than or equal to $40.0 million shall be reduced by the
amount of all Transfers which would not be included in the Adjusted Consolidated
Net Income of the Company. The Company will not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary, except in compliance with the last
sentence of the definition of Unrestricted Subsidiary.
Not later than the date of making any Investment described above, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Investment is permitted and setting forth the basis upon which the calculations
required by this Section 4.13 were computed, which calculations may be based on
the Company's latest available internal financial statements.
Section 4.14 CORPORATE EXISTENCE.
Subject to Article V hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each Restricted
Subsidiary in accordance with the respective organizational documents of each
Restricted Subsidiary (as amended from time to time) and the rights (charger and
statutory), licenses and
68
<PAGE>
franchises of the Company and its Restricted Subsidiaries; PROVIDED that neither
the Company nor any Restricted Subsidiary shall be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any Restricted Subsidiary, if the Board of Directors of the Company or such
Restricted Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders.
Section 4.15 LIMITATION ON OTHER SUBORDINATED INDEBTEDNESS.
The Company shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is expressly by its terms
subordinate or junior in right of payment to any Senior Indebtedness and senior
in any respect in right of payment to the Securities.
ARTICLE V
SUCCESSORS
Section 5.1 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not in a single transaction or through a series of
related transactions consolidate with or merge with or into, or directly or
indirectly sell, transfer, lease or convey all or substantially all of its
properties and assets to, another Person (except any Restricted Subsidiary
existing on the date hereof and except any other Restricted Subsidiary created
or acquired after the date hereof with a positive Consolidated Net Worth,
PROVIDED that in connection with any merger of the Company with any such
Subsidiary, no consideration (other than common stock in the surviving
corporation or the Company) shall be issued or distributed to the stockholders
of the Company) unless:
(a) (i) the Company is the continuing person or (ii) the resulting,
surviving or transferee entity (the "Surviving Entity") is a corporation or
partnership organized and existing under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes by supplemental
indenture, executed and delivered to the Trustee, in a form satisfactory to the
Trustee, all of the obligations of the Company under this Indenture and the
Securities;
69
<PAGE>
(b) immediately after giving effect to such transaction, no Default and
no Event of Default under this Indenture shall have occurred and be continuing;
(c) immediately after giving effect to such transaction on a PRO FORMA
basis, the Consolidated Net Worth of the Surviving Entity is at least equal to
the Consolidated Net Worth of the Company immediately prior to such transaction;
and
(d) immediately after giving effect to such transaction on a PRO FORMA
basis, the Fixed Charge Coverage Ratio of the Surviving Entity is at least 1:1;
PROVIDED that if the Fixed Charge Coverage Ratio of the Company before giving
effect to such transaction is within the range set forth in column (A) below,
then the PRO FORMA Fixed Charge Coverage Ratio of the Surviving Entity shall be
at least equal to the lesser of (x) the ratio determined by multiplying the
percentage set forth in Column B by the Fixed Charged Charge Coverage Ratio of
the Company prior to such transaction, and (y) the ratio set forth in Column C
below:
<TABLE>
<CAPTION>
(A) (B) (C)
- --- --- ---
<S> <C> <C>
1.11:1 to 1.99:1...................................... 90% 1.5:1
2.00:1 to 2.99:1...................................... 80% 2.1:1
3.00:1 to 3.99:1...................................... 70% 2.4:1
4.00:1 or more........................................ 60% 2.5:1
</TABLE>
and PROVIDED, FURTHER, that if the PRO FORMA Fixed Charge Coverage Ratio of the
Surviving Entity is 3:1 or more, the calculation in the preceding proviso shall
be inapplicable and such transaction shall be deemed to have complied with the
require ments of this clause (d).
Section 5.2 OPINION OF COUNSEL TO TRUSTEE; OFFICERS' CERTIFICATE.
The Trustee, subject to the provisions of Section 7.1 and 7.2, shall
receive and be entitled to conclusively rely upon an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger, sale,
transfer, lease or conveyance complies with the applicable provisions of this
Indenture and that all conditions precedent herein provided relating to such
transaction have been complied with.
70
<PAGE>
Section 5.3 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, transfer, lease or
conveyance of properties or assets in accordance with Section 5.1, the Surviving
Entity formed by such consolidation or into which the Company is merged or to
which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such Surviving Entity had been named as the Company herein.
When a Surviving Entity duly assumes all of the obligations of the Company
pursuant hereto and pursuant to the Securities, the predecessor shall be
released from such obligations, PROVIDED that, in the case of transfer by lease,
the predecessor corporation shall not be released from the payment of principal,
premium, if any, and interest on the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 EVENTS OF DEFAULT.
An "Event of Default," whenever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether or
not it shall be occasioned or prohibited by the provisions of Article X or
voluntarily or involuntarily be effected by the operation of law or pursuant to
any judgment, decree or order of any administrative or governmental body):
(a) a default in the payment of interest on any Security when the same
shall become due and payable and the continuance of such default for a period of
30 days;
(b) a default in the payment of all or any part of the principal of or
premium, if any, on any Security when and as the same shall become due and
payable at maturity, or upon acceleration, redemption or otherwise including
default in the payment of the Purchase Price required to be offered in a Net
Proceeds Offer;
(c) a failure by the Company to comply with any of the other agreements
or covenants in, or provisions of, the Securities or this Indenture which
failure continues for the period and after the notice specified below;
71
<PAGE>
(d) a failure to pay the final scheduled principal installment in an
amount of at least $20.0 million at the stated maturity date thereof (after
giving effect to any applicable grace periods) under any mortgage, indenture or
instrument under which there may be issued or evidenced any Indebtedness for
borrowed money by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee is now existing or
hereafter created;
(e) a default under any mortgage, indenture or instrument under which
there may be issued or evidenced any Indebtedness for borrowed money by the
Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee is now existing or hereafter created if, as a result
of such default, the maturity of such Indebtedness has been accelerated prior to
its express maturity, and the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness with respect to which
the principal amount remains unpaid upon its final maturity (after giving effect
to any extension of such Maturity Date by the holder of such Indebtedness and
the expiration of any applicable grace period) or the maturity of which has been
so accelerated, aggregates $20.0 million or more;
(f) a final judgment or final judgments for the payment of money, or
the issuance of any warrant of attachment against any portion of the property or
assets of the Company or any of its Restricted Subsidiaries, that in the
aggregate, equal or exceed $10.0 million at any one time are entered by a court
or courts of competent jurisdiction against the Company, or any of its
Restricted Subsidiaries and such judgment or judgments or warrant of attachment
shall not be discharged, satisfied, stayed, annulled or rescinded within 60 days
of being entered or, in the case of any final judgment which provides for
payment over time, from any applicable payment date;
(g) the Company, or any of the Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
72
<PAGE>
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(iv) makes a general assignment for the benefit of its creditors; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries as debtor in an involuntary case,
(ii) appoints a Custodian of the Company or any of its Restricted
Subsidiaries or a Custodian for all or substantially all of the property of
the Company or any of its Restricted Subsidiaries, or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries,
and the order or decree remains unstayed and in effect for 60 days;
The Company is required, pursuant to Section 4.4(a) hereof, to deliver
to the Trustee annually a statement regarding compliance with the provisions of
the Indenture, and the Company is required, pursuant to Section 4.4(c) hereof,
upon becoming aware of any Default or Event of Default to deliver a statement to
the Trustee specifying such Default or Event of Default.
A Default under clause (c) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 30% in principal amount of the
then outstanding Securities notify the Company and the Trustee, in writing of
the Default and the Company does not cure the Default within 30 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a Notice of Default.
In the case of any Event of Default pursuant to the provisions of this
Section 6.1 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium, if any, which the Company would have had to pay if the Company
then had elected to redeem the Securities pursuant to Section 3.7 hereof, an
equivalent premium shall also
73
<PAGE>
become and be immediately due and payable to the extent permitted by law,
anything in this Indenture or in the Securities contained to the contrary
withstanding.
Section 6.2 ACCELERATION.
If an Event of Default (other than an Event of Default with respect to
the Company specified in clauses (g) or (h) of Section 6.1 hereof) occurs and is
continuing, the Trustee by written notice to the Company or the Holders of at
least 30% (or 25% in the case of an Event of Default with respect to payment of
principal of or interest on the Securities) in aggregate principal amount of the
then outstanding Securities by written notice to the Company (and the Trustee if
given by the Holders), may and the Trustee at the request of such Holders shall,
declare all unpaid principal of, premium, if any, and accrued and unpaid
interest on the Securities to be due and payable immediately; PROVIDED, HOWEVER,
that if any Senior Indebtedness is outstanding pursuant to the Credit Facility,
upon a declaration of acceleration, such principal and interest shall be due and
payable upon the earlier of (x) the day that is five Business Days after the
provision to the Company and the Credit Agent of such written notice, unless
such Event of Default is cured or waived prior to such date, and (y) the date of
acceleration of any Senior Indebtedness under the Credit Facility. In the event
of a declaration of acceleration because an Event of Default described in clause
(d) or (e) of Section 6.1 hereof has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if such payment
default is cured or waived or the Holders of the Indebtedness which is the
subject of such Event of Default have rescinded their declaration of
acceleration in respect of such Indebtedness within 60 days thereof and the
Trustee has received written notice of such cure, waiver or rescission and no
other Event of Default described in clause (d) or (e) of Section 6.1 hereof has
occurred that has not been cured or waived within 60 days of the declaration of
acceleration of such Indebtedness in respect thereof. Upon such declaration of
acceleration the principal, premium, if any, and accrued interest, due and
payable on the Securities, as determined in the next succeeding paragraph, shall
be due and payable immediately. If an Event of Default with respect to the
Company specified in clause (g) or (h) of Section 6.1 hereof occurs, all unpaid
principal of, premium, if any, and accrued interest on the Securities then
outstanding shall IPSO FACTO become and be immediately due and payable without
any declaration, notice or other act on the part of the Trustee or any Holder.
Notwithstanding the foregoing, at any time after a declaration of
acceleration has been made and before a judgment or decree for payment of the
money due has been obtained, the Holder or Holders of a majority in aggregate
principal
74
<PAGE>
amount of then outstanding Securities, by written notice to the Company and the
Trustee, may waive, on behalf of all Holders, a Default or an Event of Default
if:
(A) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(1) all overdue interest on all Securities,
(2) the principal of (and premium, if any, applicable to) any
Securities which would become due otherwise than by such declaration of
acceleration, and interest thereon at the rate borne by the Securities,
(3) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities and
(4) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances for the
Trustee, its agents and counsel, and
(B) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declara tion of
acceleration, have been cured or waived.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective for any Default or Event of Default in the payment of the principal
of, premium, if any, or interest on any Security held by a non-consenting Holder
or any Default or Event of Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the Holder of each
then outstanding Security, unless all such affected Holders agree, in writing,
to waive such Default or Event of Default. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
Section 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, or
interest
75
<PAGE>
then due on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies hereunder are
cumulative to the extent permitted by law.
Section 6.4 WAIVER OF PAST DEFAULTS.
Subject to Section 6.7, prior to the declaration of acceleration of
maturity of the Securities as provided in Section 6.2, the Holders of not less
than a majority in aggregate principal amount of the then outstanding Securities
by written notice to the Trustee may waive an existing Default or Event of
Default and its consequences (including waivers obtained in connection with a
tender offer or exchange offer for Securities), except a continuing Default or
Event of Default (i) in the payment of the principal of, premium, if any, or
interest on any Security (including, without limitation, pursuant to any
mandatory or optional redemption obligation hereunder) or (ii) with respect to
any covenant or provision which, under Article IX, cannot be modified or amended
without the consent of the Holder of each outstanding Security affected. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
Section 6.5 CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the then
outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred upon the Trustee, PROVIDED THAT the
Trustee may refuse to follow any direction that conflicts with any rule of law
or this Indenture, that the Trustee determines may be unduly prejudicial to the
rights of other Holders not taking part in such written direction or that may
involve the Trustee in personal liability.
Section 6.6 LIMITATIONS ON SUITS.
76
<PAGE>
A Holder may not pursue a remedy with respect to this Indenture or the
Securities unless:
(A) the Holder has previously given to the Trustee written notice of a
continuing Event of Default;
(B) the Holders of at least 30% (or 25% in the case of an Event of
Default with respect to payment of principal of and interest on the
Securities) in principal amount of the then outstanding Securities have made
a written request to the Trustee to pursue the remedy;
(C) such Holder or Holders offer to the Trustee reasonable indemnity
satisfactory to the Trustee against any loss, liability or expense to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(E) during such 60-day period the Holders of a majority in aggregate
principal amount of the then outstanding Securities do not give the Trustee
a direction which is inconsistent with the request,
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 6.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of, premium, if any, and
interest on the Security, on the respective due dates expressed in the Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
Holder.
77
<PAGE>
Section 6.8 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the amount of
principal, premium, if any, and interest remaining unpaid on the Securities,
determined in accordance with Section 6.2 hereof and interest on overdue
principal, premium, if any, and, to the extent lawful, interest, and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee and counsel.
Section 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other property which the Holders of the Securities may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
78
<PAGE>
Section 6.10 PRIORITIES.
Subject to Article X, any money collected by the Trustee pursuant to
this Article VI shall be applied in the following order and, in case of the
distribution of such money on account of principal, premium (if any) or
interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: to the Trustee for amounts due under Section 7.7 hereof;
SECOND: to Holders for amounts due and unpaid on the Securities for
principal, premium, if any, and interest on, the Securities in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal, premium, if any, and interest, respectively; and
THIRD: to the Company.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to Holders pursuant to this Article VI.
Section 6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section 6.11 shall not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in aggregate principal amount of the then outstanding Securities.
Section 6.12 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be
79
<PAGE>
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 6.13 DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of any Security to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 6.14 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
Section 7.1 DUTIES OF TRUSTEE.
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in such exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
80
<PAGE>
(b) Except during the continuance of a Default or an Event of Default:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied or read into this Indenture
which are adverse to the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclu sively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions (whether in their original or facsimile form) furnished to the
Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture but
not to verify the contents thereof.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by it, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b) and (c) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any
81
<PAGE>
of its duties hereunder or to take or omit to take any action under this
Indenture or at the request, order or direction of the Holders or in the
exercise of any of its rights or powers if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(f) The Trustee shall not be liable for interest on any assets received
by it except as the Trustee may agree in writing with the Company. Assets held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.2 RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may conclusively rely on any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel of its selection and may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Sections 11.4 and 11.5. The Trustee
shall not be liable for and shall have full and complete authorization and
protection in respect of any action it takes or omits to take in good faith in
reliance on such certificate, opinion or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent (other than an
agent who is an employee of the Trustee) appointed by it with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
82
<PAGE>
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order, or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance of
the Company's covenants in Article IV hereof or as to the performance by any
Agent of its duties hereunder. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except any Default or Event of
Default of which the Trustee shall have received written notification (which
notice references this Indenture) or with respect to which a Trust Officer shall
have actual knowledge.
(i) Whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
Section 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any of
its Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 7.10 and 7.11 hereof.
Section 7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for the
Company's use of the proceeds from the Securities or any money paid to the
Company or upon the Company's direction under any provision hereof, and it
shall not be responsible for any statement
83
<PAGE>
or recital herein or any statement in the Securities other than its certificate
of authentication or for the use or application of any funds received by a
Paying Agent other than the Trustee.
Section 7.5 NOTICE OF DEFAULT.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to each Holder a notice of the
Default or Event of Default within 90 days after it occurs or, if later, within
ten days after such Default or Event of Default becomes known to the Trustee
unless such Default or Event of Default has been cured. Except in the case of a
Default or Event of Default in payment of principal of, premium, if any, or
interest on any Security, the Trustee may withhold the notice if and so long as
a committee of its Trust Officers determines in good faith that withholding the
notice is in the interests of the Holders.
Section 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with May 15, 1999, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system or
are delisted therefrom.
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange on which the Securities are listed.
Section 7.7 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as the
Company and the Trustee shall from time to time agree in writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable
84
<PAGE>
disbursements, advances and expenses incurred by it, except for any such
disburse ments, advances and expenses arising from its negligence or bad faith.
Subject to the foregoing, such expenses shall include the reasonable fees,
disbursements and expenses of the Trustee's counsel.
The Company shall indemnify and hold harmless the Trustee or any
predecessor Trustee and their agents against any loss, liability or expense
(including without limitation reasonable fees and expenses of counsel) incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture including, without limitation, costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of its powers and duties hereunder, except as set
forth in the next paragraph. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a Lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal,
premium, if any, and interest on particular Securities. Such Lien shall survive
the satisfaction and discharge of the Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article VIII of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
Section 7.8 REPLACEMENT OF TRUSTEE.
85
<PAGE>
The Trustee may resign and be discharged from the trust hereby created
by so notifying the Company in writing. The Holders of a majority in aggregate
principal amount of the then outstanding Securities may remove the Trustee by so
notifying the Trustee and the Company in writing and may appoint a successor
Trustee with the Company's consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the
Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
The foregoing notwithstanding, a resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this Section 7.8.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in aggregate principal amount of the Securities may
appoint a successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
86
<PAGE>
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 7.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the Lien provided for in Section
7.7, the resignation or removal of the retiring Trustee shall become effective,
and the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under Section 7.7 hereof
shall continue for the benefit of the retiring Trustee. The successor Trustee
shall mail a notice of its succession to the Holders.
Section 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
Subject to Section 7.10 hereof, if the Trustee consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the resulting, surviving or transferee
corporation without any further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be the successor
Trustee.
Section 7.10 ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $25.0 million as set forth in its
most recent published annual report of condition. The Trustee shall comply
with TIA Section 310(b).
Section 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
87
<PAGE>
The Company may, at its option and at any time, elect to have Section
8.2 or Section 8.3 applied to all outstanding Securities upon compliance with
the conditions set forth below in this Article VIII.
Section 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.2, the Company shall be deemed to have been discharged from
its obligations with respect to all outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For
this purpose, such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by, and this
Indenture shall cease to be of further effect as to, all outstanding Securities,
which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.5 and the other Sections of this Indenture referred to in (a) and (b)
below, and the Company shall be deemed to have satisfied all its obligations
under such Securities and this Indenture (and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (a) rights of Holders to receive payments in respect of
the principal of, premium, if any, and interest on such Securities when such
payments are due from the trust funds described below; (b) the Company's
obligations with respect to such Securities concerning issuing temporary
Securities, registration of Securities, mutilated, destroyed, lost or stolen
Securities, and the maintenance of an office or agency for payment and money for
security payments held in trust; (c) the rights, powers, trust, duties, and
immunities of the Trustee, and the Company's obligations in connection
therewith; and (d) this Article VIII. Subject to compliance with this Article
VIII, the Company may exercise its option under this Section 8.2 notwithstanding
the prior exercise of its option under Section 8.3 with respect to the
Securities.
Section 8.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 of the option applicable
to this Section 8.3, the Company shall be released from its obligations under
the covenants contained in Sections 4.3, 4.4, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13 and 4.15, and Article V, with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof)
88
<PAGE>
in connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities, the Company need not
comply with and shall have any liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document (and Section 6.1(c) shall not apply to any such covenant), but, except
as specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.1
of the option applicable to this Section 8.3, Sections 6.1(d), 6.1(e) and 6.1(f)
shall not constitute Events of Default.
Section 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.2 or Section 8.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article VIII
applicable to it), in trust, for the benefit of the Holders of such Securities,
(i) U.S. Legal Tender in an amount, or (ii) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, U.S. Legal Tender in an amount, or (iii) a combination
thereof, in such amounts, as in each case will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge and
which shall be applied by the Trustee (or other qualifying trustee) to pay and
discharge the principal of, premium, if any, and interest on the outstanding
Securities on the stated maturity or on the applicable redemption date, as the
case may be, of such principal or installment of principal, premium, if any, or
interest on the Securities and the Trustee, for the exclusive benefit of the
Holders of the Securities, shall have a valid, perfected, exclusive security
interest in such trust;
(b) In the case of an election under Section 8.2 before the date that
is one year prior to the Stated Maturity, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that (i) the Company has received from, or there has been
published by, the
89
<PAGE>
Internal Revenue Service a ruling or (ii) since the date hereof, there has been
a change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the Holders of the
outstanding Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) In the case of an election under Section 8.3 before the date that
is one year prior to the Stated Maturity, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably acceptable to
the Trustee confirming that the Holders of the outstanding Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax in the same
amount, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(d) No Default or Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit or, insofar as
Section 6.1(g) or Section 6.1(h) is concerned, at any time in the period ending
on the 91st day after the date of such deposit;
(e) Such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) In the case of an election under either Section 8.2 or 8.3, the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.2
or 8.3 was not made by the Company with the intent of preferring the Holders
over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that the conditions
precedent provided for in, in the case of the Officers' Certificate, clauses (a)
through (f), and, in the case of the Opinion of Counsel, clauses (a) (with
respect to the validity and perfection of the security interest), (b), (c) and
(e) of this Section 8.4 have been complied with.
90
<PAGE>
If the funds deposited with the Trustee to effect Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal of, premium, if any,
and interest on the Securities when due, then the obligations of the Company
under this Indenture and the Securities will be revived and no such defeasance
will be deemed to have occurred.
Section 8.5 DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6, all U.S. Legal Tender and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Paying Agent") pursuant to Section 8.4 in respect of the outstanding Securities
shall be held in trust and applied by the Paying Agent, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any other Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law. The Company
shall pay and indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against the U.S. Government Obligations deposited pursuant to
Section 8.4 or the principal and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of outstanding Securities.
Section 8.6 REPAYMENT TO THE COMPANY.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee or the Paying Agent, as applicable, shall deliver or pay to the Company
from time to time upon the request of the Company any U.S. Legal Tender or U.S.
Government Obligations held by it as provided in Section 8.4 hereof which in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.4(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Any U.S. Legal Tender and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on
91
<PAGE>
any Security and remaining unclaimed for two years after such principal, and
premium, if any, or interest has become due and payable shall, subject to the
requirements of applicable law, be paid to the Company on its request; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in THE NEW YORK TIMES and THE
WALL STREET JOURNAL (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company at the Company's written
request.
Section 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.2 or 8.3, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant to Section 8.2
or 8.3 until such time as the Trustee or Paying Agent is permitted to apply such
money in accordance with Section 8.2 and 8.3, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, or interest on any Security following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the U.S. Legal Tender and U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 SUPPLEMENT INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may enter
92
<PAGE>
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency, PROVIDED such
action pursuant to this clause (a) shall not adversely affect the interests of
any Holder in any respect;
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company or
to make any other change that does not adversely affect the rights of any
Holder;
(c) to provide for collateral for the Securities;
(d) to evidence the succession of another person to the Company, and
the assumption by any such successor of the obligations of the Company, herein
and in the Securities in accordance with Article V;
(e) to provide for uncertificated Securities; or
(f) to effect or maintain the qualification of this Indenture under the
TIA.
Section 9.2 AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF
HOLDERS.
Subject to Section 6.7, with the consent of the Holders of a majority
in aggregate principal amount of then outstanding Securities, by written act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by Board Resolutions, and the Trustee may amend or supplement this
Indenture or the Securities or enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or the
Securities or of modifying in any manner the rights of the Holders under this
Indenture or the Securities. Subject to Sections 6.4 and 6.7, the Holder or
Holders of a majority, in principal amount of then outstanding Securities may
waive compliance by the Company with any provision of this Indenture or the
Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
93
<PAGE>
(a) change the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(b) reduce the rate or extend the time for payment of interest on any
Security;
(c) reduce the principal amount of any Security, or reduce the Purchase
Price or the Redemption Price;
(d) change the stated maturity or the Net Proceeds Payment Date (other
than in accordance with Section 4.10) of any Security;
(e) alter the redemption provisions of Article III or the terms or
provisions of Section 4.10 in a manner adverse to any Holder;
(f) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Securities or the rights of Holders to
recover the principal or premium of, interest on, or redemption payment with
respect to, any Security;
(g) make any changes in Section 6.4, 6.7 or this clause (g);
(h) make the principal of, or the interest on, any Security payable
with anything or in any manner other than as provided for in this Indenture and
the Securities as in effect on the date hereof;
(i) waive a Default or an Event of Default in the payment of principal
of or premium, if any, or interest on the Securities or that resulted from
failure to comply with Section 4.10;
(j) make the Securities subordinated in right of payment to any extent
or under any circumstances to any other indebtedness, except to the extent no
less favorable to the Holders than would be consistent with Article X and this
Indenture as in effect on the Issue Date; or
94
<PAGE>
(k) make any changes relating to (a) the right of the Trustee to file
proof of claim in any bankruptcy or similar proceeding, or (b) the limitation on
the right of Holders to direct the Trustee to institute legal proceedings with
respect to the Indenture or to such provision.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mal such notice, or any defect therein, shall not, however, in any
way impair or affect the validity or any such supplemental indenture.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 9.3 COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the person designated by the Company as the person to whom consents
should be sent received before the date on which the Trustee receives an
Officers' Certificate certifying that the
95
<PAGE>
Holders of the requisite principal amount of Securities have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date, and only those persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED, that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
Section 9.5 NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes, the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms. Any
failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment, supplement or waiver.
Section 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
96
<PAGE>
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; PROVIDED, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article IX is authorized or permitted by this Indenture.
97
<PAGE>
ARTICLE X
SUBORDINATION
Section 10.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agrees that the payment of the principal of, premium,
if any, and interest on the Securities is subordinated, to the extent and in the
manner provided in this Article X, to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness whether outstanding on the Issue Date or
thereafter incurred, including any interest accruing subsequent to a bankruptcy
or other similar proceeding whether or not such interest is an allowed claim
enforceable against the Company in a bankruptcy case under Title 11 of the
United States Code.
This Article X shall constitute a continuing offer to all persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
Section 10.2 NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) No direct or indirect payment by or on behalf of the Company of
principal of, premium, if any, or interest on the Company of principal of,
premium, if any, or interest on the Securities whether pursuant to the terms of
the Securities or upon acceleration or otherwise shall be made if, at the time
of such payment there exists a default in the payment of all or any portion of
principal of, premium, if any, or interest on any Designated Senior Debt (and
the Trustee has received written notice thereof), and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of Designated Senior Debt. In addition, during the
continuance of any other event of default with respect to (i) the Credit
Facility pursuant to which the maturity thereof may be accelerated, upon the
occurrence of (a) receipt by the Trustee of written notice from the Credit
Agent, or (b) if such event of default results from the acceleration of the
Securities, the date of such acceleration, no such payment may be made by or on
behalf of the Company upon or in respect of the Securities for a period
("Payment Blockage Period") commencing on the earlier of the date of receipt
98
<PAGE>
of such notice or the date of such acceleration and ending 179 days thereafter
(unless such Payment Blockage Period shall be terminated by written notice to
the Trustee from the Credit Agent), or (ii) any other Designated Senior Debt,
upon receipt by the Trustee of written notice from the trustee or other
representative for the holders of such Designated Senior Debt (or the holders of
at least a majority in aggregate principal amount of such other Designated
Senior Debt then outstanding), no such payment may be made by or on behalf of
the Company upon or in respect of the Securities for a Payment Blockage Period
commencing on the date of receipt of such notice and ending 119 days thereafter
(unless such Payment Blockage Period shall be terminated by written notice to
the Trustee from such trustee or other representative commencing the Payment
Blockage Period). Notwithstanding anything herein to the contrary, in no event
will a Payment Blockage Period extend beyond 179 days from the date on which
such Payment Blockage Period was commenced. Not more than one Payment Blockage
Period may be commenced with respect to the Securities during any period of 360
consecutive days; PROVIDED that the commencement of a Payment Blockage Period by
the holders of Designated Senior Debt other than under the Credit Facility shall
not bar the commencement of another Payment Blockage Period by the Credit Agent
within such period of 360 consecutive days. For all purposes of this paragraph,
no Event of Default which existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Debt initiating such Payment Blockage Period shall be, or be made, the
basis for the commencement of a second Payment Blockage Period by the
representative of such Designated Senior Debt whether or not within a period of
360 consecutive days unless such event of default shall have been cured or
waived for a period of not loss than 90 consecutive days.
(b) In furtherance of the provisions of Section 10.1, in the event
that, notwithstanding the foregoing provisions of this Section 10.2, any payment
on account of principal of, premium, if any, or interest on the Securities or to
redeem (or make a deposit in redemption of), defease or acquire any of the
Securities shall be made by or on behalf of the Company and received by the
Trustee, by any Holder or by any Paying Agent (or, if the Company is acting as
its own Paying Agent, money for any such payment shall be segregated and hold in
trust), at a time when such payment was prohibited by the provisions of this
Section 10.2, then, unless and until such payment is no longer prohibited by
this Section 10.2, such payment (subject to the provisions of Section 10.6)
shall be received and held in trust by the Trustee or such Holder or Paying
Agent for the benefit of the holders of Senior Indebtedness, or their respective
representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, and shall be immediately paid over or
delivered to the holders
99
<PAGE>
of the Senior Indebtedness remaining unpaid to the extent necessary to make
payment in full, in cash or cash equivalents, to the holders of all Senior
Indebtedness remaining unpaid, after giving effect to all concurrent payments
and such distributions to or for the holders of Senior Indebtedness.
The Company shall give prompt written notice to the Trustee and the
Holders of any default or event of default, and any cure or waiver thereof, or
any acceleration under any Senior Indebtedness or under any agreement pursuant
to which Senior Indebtedness may have been issued.
Section 10.3 SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR INDEBTEDNESS
ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF COMPANY.
Upon any distribution of assets of the Company of any kind or
character, whether in cash, property or securities upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company (including,
without limitation, in bankruptcy, insolvency or receivership proceedings or
upon any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the Company):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash or cash equivalents of all amounts payable under
Senior Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness whether
or not such interest is an allowed claim against the Company in a bankruptcy
case under Title 11 of the United States Code), before the Holders or the
Trustee on behalf of the Holders are entitled to receive any payment on account
of the principal of, premium, if any or interest on the Securities;
(b) any payment or distribution of assets or securities of the Company
of any kind or character, whether in cash, property or securities, to which the
Holders or the Trustee on behalf of the Holders would be entitled except for the
provisions of this Article X, shall be immediately paid by the Company or by any
liquidating trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or their
Representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full in cash or cash equivalents of all Senior Indebtedness remaining
unpaid after giving effect to all concurrent payments and distributions to or
for the holders of such Senior Indebtedness; and
100
<PAGE>
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or the
Holders or any Paying Agent (or, if the Company is acting as its own Paying
Agent, money for any such payment or distribution shall be segregated or held in
trust) on account of principal of, premium, if any, or interest on the
Securities before all Senior Indebtedness is paid in full in cash or cash
equivalents, such payment or distribution (subject to the provisions of Sections
10.6) shall be received and held in trust by the Trustee or such Holder or
Paying Agent for the benefit of the holders of the Senior Indebtedness, or their
respective representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, and shall be immediately paid over or
delivered to the holders of the Senior Indebtedness remaining unpaid to the
extent necessary to make payment in full of all Senior Indebtedness remaining
unpaid after giving effect to all concurrent payments and distributions to or
for the holders of such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company or
assignment for the benefit of creditors by the Company.
Section 10.4 HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS
Subject to the payment in full in cash or cash equivalents of all
Senior Indebtedness, the Holders of Securities shall be subrogated to the rights
of the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of Senior
Indebtedness by or on behalf of the Company, or by or on behalf of the Holders
by virtue of this Article X, which otherwise would have been made to the Holders
shall, as between the Company and the Holders, be deemed to be payment by the
Company to or on account of the Senior Indebtedness, it being understood that
the provisions of this Article X are and are intended solely for the purpose of
defining the relative rights of the Holders, on the one hand, and the holders of
Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article X shall have been
applied,
101
<PAGE>
pursuant to the provisions of this Article X, to the payment of amounts payable
under the Senior Indebtedness, then the Holders shall be entitled to receive
from the holders of such Senior Indebtedness any payments or distributions
received by such holders of Senior Indebtedness in excess of the amount
sufficient to pay all amounts payable under or in respect of the Senior
Indebtedness in full in cash or cash equivalents.
Section 10.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article X or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
X, of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets or securities of the Company referred to in this
Article X, the Trustee, subject to the provisions of Sections 7.1 and 7.2, and
the Holders shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X. Nothing in this Section 10.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7.
Section 10.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF
NOTICE.
Neither the Trustee nor any Paying Agent shall at any time be charged
with the knowledge of the existence of any facts which would prohibit the making
of any payment to or by the Trustee or Paying Agent, unless and until the
Trustee or Paying Agent shall have received written notice thereof from the
Company or one or
102
<PAGE>
more holders of Senior Indebtedness or from any trustee or agent therefor, and,
prior to the receipt of any such written notice, the Trustee or paying agent
shall be entitled to assume conclusively that no such facts exist. Unless at
least three Business Days prior to the date on which by the terms of this
Indenture any moneys are to be deposited by the Company with the Trustee or any
Paying Agent (whether or not in trust) for any purpose (including, without
limitation, the payment of the principal, premium, if any, the interest or other
amounts due on any Security), the Trustee or Paying Agent shall have received
with respect to such moneys the notice provided for in the preceding sentence,
the Trustee or Paying Agent shall have full power and authority to receive such
moneys and to apply the same to the purpose for which they were received, and
shall not be affected by any notice to the contrary which may be received by it
on or after such date. The foregoing shall not apply to the Paying Agent if the
Company is acting as Paying Agent. Nothing contained in this Section 10.6 shall
limit the right of the holders of Senior Indebtedness to recover payments as
contemplated by Section 10.2.
Section 10.7 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF COMPANY
OR HOLDERS OF SENIOR INDEBTEDNESS.
(a) No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in this Article X
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Company or by any act or failure to act, in good faith,
by any such holder, or by any noncompliance by the Company with the terms of
this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the holder of any Indebtedness of the
Company, without incurring responsibility to the holders of any Indebtedness of
the Company, and without impairing or releasing the subordination provisions
contained in this Article X, or the obligations hereunder of the holders of the
Indebtedness of the Company, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness or any Instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (b) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness or fail to perfect or delay the perfection of any
such lien; (c) release any Person liable in any manner for the collection of
Senior
103
<PAGE>
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other Person.
Section 10.8 HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article X and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attor ney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company) tending towards
liquidation of the business and assets of the Company, the immediate filing of a
claim for the unpaid balance of his Securities in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a
proper claim or proof of debt in the form required in such proceeding prior to
30 days before the expiration of the time to file such claim or claims, then the
holders of the Senior Indebtedness or their Representative are or is hereby
authorized to have the right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Securities. Nothing
herein contained shall be deemed to authorize the Trustee or the holders of
Senior Indebtedness or their Representative to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior Indebtedness or
their Representative to vote in respect of the claim of any Holder in any such
proceeding.
Section 10.9 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article X in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
Section 10.10 ARTICLE X NOT TO PREVENT EVENTS OF DEFAULT.
104
<PAGE>
The failure to make a payment on account of principal of or interest on
the Securities by reason of any provision of this Article X shall not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.1.
Section 10.11 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other person, cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article X or otherwise. With
respect to the holders of Senior Indebtedness, the Trustee undertakes to perform
or to observe only such of its covenants or obligations are as specifically set
forth in this Article and no implied covenants or obligations with respect to
holders of Senior Indebtedness shall be read into this Indenture against the
Trustee. Nothing in this Section 10.11 shall affect the obligation of any other
such person to hold such payment for the benefit of, and to pay such payment
over to, the holders of Senior Indebtedness or their Representative.
ARTICLE XI
MISCELLANEOUS
Section 11.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of the TIA, the imposed duties, upon
qualification of the Indenture under the TIA, shall control.
Section 11.2 NOTICES.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the other's address.
If to the Company
105
<PAGE>
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Attention: Jennifer L. Adams, Esq.
If to the Trustee:
The Bank of New York
101 Barclay St., Floor 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly given
at the time delivered by hand, if personally delivered, five Business Days after
being deposited in the mail, postage prepaid, if mailed, when receipt
acknowledged, if telecopied and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, to the Holder's address
shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time proscribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.3 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
106
<PAGE>
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 11.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate (which shall include the statements set
forth in Section 11.5 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel to the Trustee (which shall include the
statements set forth in Section 11.5 hereof) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been complied
with.
Section 11.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or opinion has
read and understands such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with; PROVIDED that with respect to
107
<PAGE>
matters of fact Opinions of Counsel may rely on an Officers' Certificate or
certificates of public officials.
Section 11.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.7 LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in The City of New York or at a place of payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section 11.8 NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consider ation for Issuance of
the Securities.
Section 11.9 GOVERNING LAW
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT,
108
<PAGE>
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE
SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF TIE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 11.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 11.11 SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
Section 11.12 COUNTERPART ORIGINALS.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together represent the same agreement.
Section 11.13 TABLE OF CONTENTS, HEADINGS, ETC.
<PAGE>
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 11.14 SEVERABILITY.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
Section 11.15 QUALIFICATION OF INDENTURE.
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all costs and expenses (including attorneys' fees for the Company
and the Trustee) incurred in connection therewith, including, but not limited
to, costs and expenses of qualifica tion of this Indenture and the Securities
and printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
Section 11.16 REGISTRATION RIGHTS.
Certain Holders of the Securities may be entitled to certain
registration rights with respect to such Securities pursuant to, and subject to
the terms of, a Registration Rights Agreement. As used in this Indenture, all
references to "interest" on the Securities shall include, for all purposes,
"Liquidated Damages" (as defined therein), if any, payable in respect of all or
a portion of such Securities under the terms of any Registration Rights
Agreement.
110
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
WORLD COLOR PRESS, INC.
By: /s/ Jennifer L. Adams
--------------------------------
Name: Jennifer L. Adams
Title: Executive Vice President
THE BANK OF NEW YORK, Trustee
By: /s/ Mary La Gumina
--------------------------------
Name: Mary La Gumina
Title: Assistant Vice President
111
<PAGE>
EXHIBIT A
FORM OF SECURITY
7 3/4% SENIOR SUBORDINATED NOTE DUE 2009
CUSIP:
No. $
-------------------
WORLD COLOR PRESS, INC.
promises to pay to
or registered assigns, the principal sum of ________________ dollars on February
15, 2009.
Interest Payment Dates: February 15 and August 15 commencing August 15, 1999.
Record Dates: February 1 and August 1
Reference is hereby made to the further provisions of this Senior Subordinated
Note due 2009 set forth on the reverse side hereof and such further provisions
shall have the same effect as if set forth on the front side hereof.
A-1
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be duly executed
by its duly authorized officers.
WORLD COLOR PRESS, INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION:
This is one of the Securities referred to in the within mentioned Indenture.
Dated: February 22, 1999
THE BANK OF NEW YORK, as Trustee
By:
---------------------------
Authorized Signatory
A-2
<PAGE>
[Reverse Side of Security]
7 3/4% SENIOR SUBORDINATED NOTE DUE 2009
[Insert the Global Security Legend, if applicable, pursuant to the
provisions of the Indenture.]
[Insert the Private Placement Legend, if applicable, pursuant to the
provisions of the Indenture.]
[Insert the Regulation S Temporary Global Security Legend, if
applicable, pursuant to the provisions of the Indenture.]
Capitalized terms used herein have the meaning assigned to them in the
Indenture (as defined in Section 4 below) unless otherwise indicated.
1. INTEREST. World Color Press, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security
at 7 3/4% per annum from February 22, 1999
[date of issuance of any Additional Securities] until maturity. The Company
will pay interest semiannually on February 15 and August 15 of each year, or
if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Securities will accrue
from the most recent date on which interest has been paid or, if no interest
has been paid, from the Issue Date; PROVIDED that if there is no existing
Default in the payment of interest, and if this Security is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding
Interest Payment Date; PROVIDED, FURTHER, that the first Interest Payment
Date shall be August 15, 1999. The Company shall pay interest on overdue
principal from time to time on demand at the same rate per annum on the
Securities to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods)
from time to time on demand at the same rate to the extent lawful. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
[Until this Regulation S Temporary Global Security is exchanged for one
or more Regulation S Permanent Global Securities, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Security shall in all other respects be
entitled to the same benefits as other Senior Subordinated Securities under the
Indenture.](1)
- --------
(1) Insert this paragraph in Regulation S Temporary Global Security only.
A-3
<PAGE>
2. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the February 1 or August 1 next preceding
the Interest Payment Date, even if such Securities are cancelled after such
record date and on or before such Interest Payment Date. The Securities will be
payable both as to principal and interest at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest may be made by check
mailed to the holders of the Securities at their addresses set forth in the
register of holders of Securities and PROVIDED that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest and premium on all Global Securities, and all other Securities the
Holders of which shall have provided wire transfer instructions to an account
within the United States to the Company or the Paying Agent at least five days
before the relevant Record Date. Until otherwise designated by the Company, the
Company's office or agency will be the corporate trust office of the Trustee
presently located at The Bank of New York, 101 Barclay Street, Floor 21W, N.Y.,
NY. 10286, Attn: Corporate Trust Trustee Administration.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may, subject to certain exceptions, act in
any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture
dated as of February 22, 1999 (the "Indenture") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77 aaa-77bbbb) (the "TIA"). The Securities
are subject to all such terms, and Holders are referred to the Indenture and the
TIA for a statement of such terms. The Securities are general unsecured
obligations of the Company. The Company shall be entitled, subject to its
compliance with Section 4.9 of the Indenture, to issue Additional Securities
pursuant to Section 2.14 of the Indenture. The Initial Securities issued on the
Issue Date, any Additional Securities and all Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
Indenture.
5. REDEMPTION.
(a) The Company may redeem all or any of the Securities, in whole or in
part, at any time on or after February 15, 2004, at the Redemption Price
A-4
<PAGE>
(expressed as a percentage of the principal amount therefor) set forth below if
the Securities are redeemed during the twelve-month period beginning on the date
indicated in the table below, in each case together with any accrued but unpaid
interest to the Redemption Date, as set forth in Section 3.7 of the Indenture.
<TABLE>
<CAPTION>
YEAR REDEMPTION
---- ----------
<S> <C>
February 15, 2004...........................103.875%
February 15, 2005...........................102.583%
February 15, 2006...........................101.292%
February 15, 2007 or thereafter.............100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to February 15, 2002,
the Company may also redeem up to 40% in aggregate principal amount of the
Securities originally issued (including the original principal amount of any
Additional Securities) with the net proceeds from any public offering of Equity
Interests of the Company (other than Redeemable Stock) at a redemption price
equal to 107.75% of the principal amount thereof plus accrued and unpaid
interest to the Redemption Date; PROVIDED that at least 60% in aggregate
principal amount of the Securities originally issued (including the original
principal amount of any Additional Securities) must remain outstanding after
each such redemption.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder
whose Securities are to be redeemed at its registered address. Securities in
denomina tions larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Securities held by a Holder are to be
redeemed. On and after the Redemption Date interest ceases to accrue on
Securities or portions thereof called for redemption.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Security or portion of a Security
selected for redemption, except the unredeemed portion of any Security being
redeemed in part. Also, it need not exchange or register the transfer of any
Securities for a period of 15 days before a selection of Securities to be
A-5
<PAGE>
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
8. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
9. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. Except as set forth in
the Indenture, if the Company irrevocably deposits with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender, U.S. Government Obligations
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Company will be discharged from certain provisions of the Indenture and the
Securities (including the restrictive covenants described in paragraph 12 below,
but excluding their obligation to pay the principal of, premium, if any and
interest on the Securities).
10. AMENDMENTS, SUPPLEMENTS AND WAIVERS. Subject to certain exceptions,
the Indenture or the Securities may be amended or supplemented with the consent
of the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding (including consents obtained in connection with a
tender offer or exchange offer for Securities). Without the consent of any
Holder, the Company and the Trustee may amend or supplement the Indenture or the
Securities to cure any ambiguity, defect or inconsistency (provided that such
action shall not adversely affect the interests of the Holders in any respect);
to add to the covenants of the Company for the benefit of Holders or to
surrender any right or power herein conferred upon the Company or to make any
other change that does not adversely affect the rights of any Holder; to provide
collateral for the Securities; to evidence the succession of another person to
the Company; to provide for uncertificated Securities; and to effect or maintain
the qualification of the Indenture under the TIA.
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Securities held by a non-consenting holder) (i) change
the percentage of the principal amount of this Security whose Holders must
consent to an amendment, supplement or waiver of any provision of any Security
or the Indenture; (ii) reduce the rate or extend the time for payment on this
Security; (iii) reduce the principal amount of any Security or reduce the
Purchase Price or the Redemption Price; (iv) change the Stated Maturity or the
Net Proceeds Payment Date (other than in accordance with Section 4.10 of the
Indenture); (v) alter the redemption provisions of Article Three of the
Indenture or the terms and provisions of Section 4.10 of the Indenture, in any
A-6
<PAGE>
case, in a manner adverse to any Holder; (vi) make changes in provisions
concerning waivers of Defaults or Events of Defaults of Holders of securities or
the rights of Holders to recover principal or premium of, interest on, or
redemption payment with respect to, any Security in the form and manner provided
in the Indenture; (vii) make any changes to Section 6.9 or 6.6 or the third
sentence of Section 9.2 of the Indenture.
The right of any Holder to participate in any consent required or
sought pursuant to any provision of the Indenture or this Security (and the
obligation of the Company to obtain any such consent otherwise required from
such Holder) may be subject to the requirement that such Holder shall have been
the Holder of record of any Securities with respect to which such consent is
required or sought as of a date identified by the Trustee in a notice furnished
to Holders in accordance with the terms of the Indenture.
11. DEFAULTS AND REMEDIES. Events of Default include: default in
payment of interest on any Security for 30 days; default in payment of principal
of or premium on the Securities at maturity, or upon acceleration, redemption or
otherwise; failure by the Company for 30 days after written notice to it from
the Trustee or Holders of at least 30% in principal amount of the then
outstanding Securities to comply with any of its other agreements in the
Indenture or the Securities; certain defaults under other Indebtedness; certain
final judgments that remain undischarged for 60 days after being entered; and
certain events of bankruptcy or insolvency. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 30% (or 25% in the case of an
Event of Default with respect to payment of principal of or interest on the
Securities) in aggregate principal amount of the then outstanding Securities may
declare all the Securities to be immediately due and payable for any amount
equal to 100% of the principal amount of the Securities plus premium, if any,
and accrued interest to the date of payment, except that in the case of an Event
of Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable immediately without further action
or notice and except that if any Senior Indebtedness is outstanding pursuant to
the Credit Facility, upon a declaration of acceleration, such principal,
premium, if any, and interest shall be due and payable upon the earlier of (x)
the day that is five business days after the provision to the Company and the
Credit Agent of such written notice, unless such Event of Default is cured or
waived prior to such date and (y) the date of acceleration of any Senior
Indebtedness under the Credit Facility. Holders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority is principal amount of the
then outstanding Securities may direct the Trustee in its exerciseof any trust
or power. The Trustee may withhold from Holders notice of any continuing
A-7
<PAGE>
Default or Event of Default (except a Default or an Event of Default in payment
of principal, premium, if any, or interest) if and so long as a committee of its
Trust Officers determines in good faith that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
12. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, pay dividends and make distributions with respect to, or repurchase or
otherwise acquire or retire for value, any of their Equity Interests, prepay
subordinated Indebtedness, make Restricted Investments, incur additional
Indebtedness, enter into transactions with Affiliates, incur Liens, sell assets,
merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of all or substantially all of its properties ro assets. The
limitations are subject to a number of important qualifications and exceptions.
The Company must annually report to the Trustee on compliance with such
limitations.
13. TRUSTEE DEALINGS WITH COMPANY. Subject to applicable provisions
under the TIA, the Trustee, in its individual or any other capacity, may make
loans to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates as if it
were not Trustee.
14. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
15. AUTHENTICATION. This Security shall not be valid until authenti
cated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. SUBORDINATION. The securities are subordinated to Senior
Indebtedness (as defined in the Indenture), which includes (i) the Senior Bank
Debt and (ii) any other Indebtedness permitted to be incurred pursuant to the
terms of Section 4.8 of the Indenture, unless the instrument under which such
Indebtedness is incurred
A-8
<PAGE>
expressly provides that it is on a parity with or subordinated in right of
payment to the Securities. Notwithstanding anything to the contrary in the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness that is
expressly subordinate or junior in right of payment to any Indebtedness of the
Company, (ii) Indebtedness that is represented by Redeemable Stock, (iii) any
liability for federal, state, or local taxes owed or owing by the Company, (iv)
Indebtedness of the Company to any Subsidiary or any Affiliate of the Company,
(v) trade payables, (vi) Indebtedness that is incurred in violation of the
Indenture (other than Senior Bank Debt), (vii) the 6% Convertible Notes and
(viii) the Company's 8 3/8% Senior Subordinated Notes due 2008. To the extent
provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid. the Company agrees, and each Holder by accepting a
Security consents and agrees, to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company will cause
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
19. ADDITIONAL RIGHTS OF HOLDERS OF SECURITIES. Certain Holders of the
Securities may be entitled to certain registration rights with respect to such
Securities pursuant to, and subject to the terms of, the Registration Rights
Agreement. As used in this Security, all references to "interest" on the
Security shall include, for all purposes, "Liquidated Damages" (as defined
therein), if any, payable in respect of the Security under the terms of the
applicable Registration Rights Agreement.(2)
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
WORLD COLOR PRESS, INC.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
- --------
(2) This paragraph should be included only for the Initial Securities.
A-9
<PAGE>
Attention: General Counsel
A-10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
to transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------------------ ---------------------
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in
A-11
<PAGE>
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY(3)
The following exchanges of a part of this Global Security for an
interest in another Global Security or for Definitive Securities, or exchanges
of a part of another Global Security or Definitive Securities for an interest in
this Global Security, have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized signatory of
Date of Principal Amount Principal Amount Security following Trustee or
Exchange of this Global of this Global such decrease (or Securities
Security Security increase) Custodian
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
(3) This schedule should only be added if the Security is issued in global form.
A-13
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Re: 7 3/4% SENIOR SUBORDINATED SECURITIES DUE 2009 OF WORLD COLOR
PRESS, INC.
Reference is hereby made to the Indenture, dated as of February 22,
1999 (the "Indenture"), between World Color Press, Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
___________, (the "Transferor") owns and proposes to transfer the
Securit[ies] or interest in such Securit[ies] specified in Annex A hereto, in
the principal amount of $__________ in such Securit[ies] or interests (the
"Transfer"), to ________________ (the "Transferee"), as further specified in
Annex A hereto. In connection with the Transfer, the Transferor hereby
certifies that:
[CHECK ALL THAT APPLY]
1. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A
144A GLOBAL SECURITY OR A DEFINITIVE SECURITY PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Security is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Security for its own account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Security will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Security and/or the Definitive Security and
in the Indenture and the Securities Act.
2. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A
REGULATION S TEMPORARY GLOBAL
B-1
<PAGE>
SECURITY, A REGULATION S PERMANENT GLOBAL SECURITY OR A DEFINITIVE SECURITY
PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being made
to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and
any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed in,
on or through the facilities of a designated offshore securities market and
neither such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser) and the interest transferred will be held immediately
thereafter through Euroclear or Cedel. Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Security will be subject to the restrictions
on Transfer enumerated in the Private Placement Legend printed on the Regulation
S Permanent Global Security, the Regulation S Temporary Global Security and/or
the Definitive Security and in the Indenture and the Securities Act.
3. / / CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN A DEFINITIVE SECURITY PURSUANT TO ANY PROVISION OF THE SECURITIES
ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in
compliance with the transfer restrictions applicable to beneficial interests
in Restricted Global Securities and Restricted Definitive Securities and
pursuant to and in accordance with the Securities Act and any applicable blue
sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) / / such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) / / such Transfer is being effected to the Company;
or
B-2
<PAGE>
(c) / / such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) / / such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that the Transfer complies
with the transfer restrictions applicable to beneficial interests in a
Restricted Global Security or Restricted Definitive Securities and the
requirements of the exemption claimed, which certification is supported by
(1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of
Securities at the time of transfer of less than $250,000, an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the Definitive Securities in the Indenture and the Securities Act.
4. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL SECURITY OR OF AN UNRESTRICTED DEFINITIVE SECURITY.
(a) / / CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will no longer be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Securities or on Restricted
Definitive Securities and in the Indenture and the Securities Act.
(b) / / CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any
B-3
<PAGE>
applicable blue sky securities laws of any State of the United States and (ii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are no longer required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Security will no longer be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Global Securities or on
Restricted Definitive Securities and in the Indenture and the Securities Act.
(c) / / CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule 144,
Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act. Upon consummation of
the proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Security will not be subject to
the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Securities or Restricted Definitive
Securities and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for the
benefit of the Trustee and the Registrar and the benefit of the Company.
---------------------------
[Insert Name of Transferor]
By:
------------------------
Name:
Title:
Dated:__________, ____
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the followings:
[CHECK ONE OF (a) OR (b)]
(a) / / a beneficial interest in a:
(i) / / 144A Global Security (CUSIP _____), or
(ii) / / Regulation S Global Security (CUSIP _____); or
(b) / / a Restricted Definitive Security.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) / / a beneficial interest in a:
(i) / / 144A Global Security (CUSIP _____), or
(ii) / / Regulation S Global Security (CUSIP _____), or
(iii) / / Unrestricted Global Security (CUSIP _____); or
(b) / / a Restricted Definitive Security; or
(c) / / an Unrestricted Definitive Security,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Re: 7 3/4% SENIOR SUBORDINATED SECURITIES DUE 2009 OF WORLD COLOR PRESS, Inc.
(CUSIP __________)
Reference is hereby made to the Indenture, dated as of February 22,
1999 (the "Indenture"), between World Color Press, Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
__________, (the "Owner") owns and proposes to exchange the
Securit[ies] or interest in such Securit[ies] specified herein, in the principal
amount of $_________ in such Securit[ies] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE SECURITIES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL SECURITY FOR UNRESTRICTED DEFINITIVE SECURITIES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL SECURITY
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
SECURITY. In connection with the Exchange of the Owner's beneficial interest
in a Restricted Global Security for a beneficial interest in an Unrestricted
Global Security in an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Global Securities and pursuant to and
in accordance with the United States Securities Act of 1933, as amended (the
"Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act and (iv) the beneficial interest
in an Unrestricted Global Security is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A
RESTRICTED GLOBAL SECURITY TO UNRESTRICTED DEFINITIVE SECURITY. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Security for an Unrestricted
C-1
<PAGE>
Definitive Security, the Owner hereby certifies (i) the Definitive Security is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Restricted Global Securities and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act and (iv) the Definitive Security is being
acquired in compliance with any applicable blue sky securities laws of any State
of the United States.
(c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE SECURITY TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL SECURITY. In connection with
the Owner's Exchange of a Restricted Definitive Security for a beneficial
interest in an Unrestricted Global Security, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Securities and
pursuant to and in accordance with the Securities Act, (iii) the restrictions
on transfer contained in the Indenture and the Private Placement Legend are
no longer required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE SECURITY TO
UNRESTRICTED DEFINITIVE SECURITY. In connection with the Owner's Exchange of
a Restricted Definitive Security for an Unrestricted Definitive Security, the
Owner hereby certifies (i) the Unrestricted Definitive Security is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Securities and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive
Security is being acquired in compliance with any applicable blue sky
securities laws of any State of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE SECURITIES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL SECURITIES FOR RESTRICTED DEFINITIVE SECURITIES OR BENEFICIAL
INTEREST IN RESTRICTED GLOBAL SECURITIES.
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL SECURITY TO RESTRICTED DEFINITIVE SECURITY. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Security for
a Restricted
C-2
<PAGE>
Definitive Security with an equal principal amount, the Owner hereby certifies
that the Restricted Definitive Security is being acquired for the Owner's own
account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Security
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Security and
in the Indenture and the Securities Act.
(b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE SECURITY TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL SECURITY. In connection with the
Exchange of the Owner's Restricted Definitive Security for a beneficial
interest in a [CHECK ONE] / / 144A Global Security or / / Regulation S Global
Security, with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Securities and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any State of the United States.
Upon consumma tion of the proposed Exchange in accordance with the terms of
the Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the relevant Restricted Global Security and in the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for the
benefit of the Trustee and the Registrar and the benefit of the Company.
----------------------------
[Insert Name of Owner]
By:
--------------------------
Name:
Title:
Dated: ___________, ____
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
World Color Press, Inc.
The Bank of New York, as Trustee
c/o The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Attn: Corporate Trust Trustee Administration
Re: 7 3/4% Senior Subordinated Notes due 2009 OF WORLD COLOR
PRESS, INC.
Reference is hereby made to the Indenture, dated as of February 22,
1999 (the "Indenture"), between World Color Press, Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $___________ aggregate
principal amount of:
(a) / / a beneficial interest in a Global Security, or
(b) / / a Definitive Security,
we confirm that:
1. We understand that any subsequent transfer of the Securities or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the Undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Securities or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
D-1
<PAGE>
2. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities and any
interest therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Securities or any
interest therein, we will do so only (A) to the Company, (B) in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes (or has furnished on its behalf
by a U.S. broker-dealer) to you and to the Company a signed letter substan
tially in the form of this letter and, if such transfer is in respect of a
principal amount of Securities, at the time of transfer of less than $250,000,
an Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act, (F)
pursuant to an effective registration statement under the Securities Act, or (G)
in accordance with another exemption from the registration requirements of the
Securities Act and based upon an opinion of counsel acceptable to the Company
and we further agree to provide to any person purchasing the Definitive Security
or beneficial interest in a Global Security from us in a transaction meeting the
requirements of clauses (A) through (E) or clause (G) of this paragraph a notice
advising such purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Securities or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may, reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Securities purchased
by us will bear a legend to the foregoing effect. We further understand that the
Securities purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Securities or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an
D-2
<PAGE>
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
The Trustee, the Registrar and the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby.
------------------------------------
[Insert Name of Accredited Investor]
By:
---------------------------------
Name:
Title:
Dated: __________, ____
D-3
<PAGE>
EXHIBIT 5.1
FORM OF OPINON OF LATHAM & WATKINS
March , 1999
World Color Press, Inc.
340 Pemberwick Road
Greenwich, Connecticut 06831
Re: $300,000,000 Senior Subordinated Notes due 2008
Ladies and Gentlemen:
In connection with the registration of $300,000,000 aggregate principal
amount of 8 3/8% Senior Subordinated Notes due 2008, (the "Securities") by World
Color Press, Inc., a Delaware corporation (the "Company'), under the Securities
Act of 1933, as amended (the "Act"), on Form S-4 filed with the Securities and
Exchange Commission (the "Commission") on March 8, 1999 (File No. 333- )
(the "Registration Statement"), you have requested our opinion with respect to
the matters set forth below.
In our capacity as your counsel in connection with such registration, we are
familiar with the proceedings taken by the Company in connection with the
authorization and issuance of the Securities. In addition, we have made such
legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records and instruments, as we have deemed necessary
or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as copies.
We are opining herein as to the effect on the subject transaction only of
the internal laws of the State of New York and the General Corporation Law of
the State of Delaware, and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware any other laws, or as to any matters of
municipal law or the laws of any local agencies within any state.
Capitalized terms used herein without definition have the meanings ascribed
to them in the Registration Statement.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that as of the date hereof:
(1) The Securities have been duly authorized by all necessary corporate action
of the Company, and when executed, authenticated and delivered by or on
behalf of the Company against payment therefor in accordance with the terms
of the Indenture, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
The opinions rendered in paragraphs 1 relating to the enforceability of the
Securities are subject to the following exceptions, limitations and
qualifications: (i) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors and (ii) the effect of general
principles of equity, whether enforcement is considered in a proceeding in
equity or law, and the discretion of the court before which any proceeding
therefor may be brought.
We have not been requested to express, and with your knowledge and consent,
do not render any opinion as to the applicability to the obligations of the
Company under the Indenture and the Securities under the Indenture of Section
548 of the United States Bankruptcy Code or applicable state law
<PAGE>
(including, without limitation, Article 10 of the New York Debtor and Creditor
Law) relating to fraudulent transfers and obligations.
To the extent that the obligations of the Company under the Indenture may be
dependent upon such matters, we assume for purposes of this opinion that the
Trustee is duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization; that the Trustee is duly qualified to
engage in the activities contemplated by the Indenture; that the Indenture has
been duly authorized, executed and delivered by the Trustee and constitutes the
legally valid, binding and enforceable obligation of the Trustee enforceable
against the Trustee in accordance with its terms; that the Trustee is in
compliance, generally and with respect to acting as a trustee under the
Indenture, with all applicable laws and regulations; and that the Trustee has
the requisite organizational and legal power and authority to perform its
obligations under the Indenture.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained under the heading "Legal
Matters."
Very truly yours,
<PAGE>
Exhibit 10.1
EXECUTION
WORLD COLOR PRESS, INC.
SIXTH AMENDMENT
TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is dated as of November 11, 1998 and entered into by and
among WORLD COLOR PRESS, INC., a Delaware corporation ("Company"), the Lenders
party to the Credit Agreement referred to below on the date hereof (the
"Lenders") that are party hereto, and BANKERS TRUST COMPANY, as Administrative
Agent, and, for purposes of Section 6 hereof, THE SUBSIDIARIES OF COMPANY LISTED
ON THE SIGNATURE PAGES HERETO (each a "Guarantor" and collectively, the
"Guarantors"). All capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement (as defined
below).
RECITALS
WHEREAS, Company, the Lenders, BancAmerica Securities, Inc., as
Syndication Agent, Citibank, N.A., as Documentation Agent and Bankers Trust
Company, as Administrative Agent, are parties to that certain Second Amended and
Restated Credit Agreement dated as of June 6, 1996, as amended or modified by
that certain First Amendment to Second Amended and Restated Credit Agreement
dated as of June 10, 1996, as further amended or modified by that certain
Limited Waiver, Consent and Second Amendment to Second Amended and Restated
Credit Agreement dated as of June 9, 1997, as further amended or modified by
that certain Third Amendment to Second Amended and Restated Credit Agreement
dated as of June 27, 1997, as further amended or modified by that certain
Limited Waiver, Consent and Fourth Amendment to Second Amended and Restated
Credit Agreement dated as of September 29, 1997 and as further amended or
modified by that certain Fifth Amendment to Second Amended and Restated Credit
Agreement dated as of June 4, 1998 (as so amended and modified, the "Credit
Agreement").
WHEREAS, the parties hereto wish to amend and modify the Credit
Agreement to make certain amendments as set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1
AMENDMENTS AND CONSENT
A. Subsection 1.1 of the Credit Agreement is hereby amended by
amending and restating the following definition:
`Subordinated Indebtedness' means the Indebtedness evidenced by the
Senior Subordinated Notes, the Additional Subordinated Indebtedness
and any other
<PAGE>
Indebtedness of Company incurred with the consent of Administrative
Agent and Requisite Lenders in their sole discretion or that is
otherwise permitted under subsection 6.1 of the Credit Agreement,
including but not limited to Refinancing Indebtedness permitted
under 6.1(vi) of the Credit Agreement, and that is, in each case,
subordinate in right and time of payment to the Obligations.
B. Subsection 6.5(iii) and 6.5(iv) of the Credit Agreement is hereby
amended and restated as follows:
"(iii) Company may make Restricted Junior Payments to the holders of
the Senior Subordinated Notes and the holders of the Additional
Subordinated Indebtedness and other Subordinated Indebtedness from
the proceeds of the sale of Equity Securities of Company and the
proceeds of Refinancing Indebtedness of such Subordinated
Indebtedness permitted under subsection 6.1(vi) of the Credit
Agreement and the proceeds of Subordinated Indebtedness permitted
under subsection 6.1(xii) of the Credit Agreement that matures not
earlier than one year following the Commitment Termination Date;
(iv) Company may make scheduled interest payments on the Senior
Subordinated Notes (to the extent permitted by the subordination
provisions of the Senior Subordinated Note Indenture) and in respect
of the Additional Subordinated Indebtedness or other Subordinated
Indebtedness (to the extent permitted by the subordination
provisions of the instruments evidencing such Additional
Subordinated Indebtedness or such other Subordinated Indebtedness,
as the case may be, and the documents pursuant to which such
Additional Subordinated Indebtedness or such other Subordinated
Indebtedness as the case may be, is issued);"
SECTION 2
LIMITATION OF AMENDMENTS
Without limiting the generality of the provisions of subsection 9.7
of the Credit Agreement, the amendments set forth above shall be limited
precisely by their terms, shall not have any force or effect with respect to any
other matter except as expressly provided above, and nothing in this Amendment
shall be deemed to:
(a) constitute a waiver or modification of any other term, provision
or condition of the Credit Agreement or any other instrument or
agreement referred to therein; or
(b) prejudice any right or remedy that Administrative Agent or any
Lender may now have (except to the extent such right or remedy was
based upon existing defaults that will not exist after giving effect
to this Amendment) or may have in the future under or in connection
with the Credit Agreement or any other instrument or agreement
referred to therein.
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
2
<PAGE>
SECTION 3
CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "Sixth Amendment Effective Date"):
A. On or before the Sixth Amendment Effective Date, Company and the
Guarantors shall have delivered to Administrative Agent executed copies of this
Amendment.
B. On or before the Sixth Amendment Effective Date, Administrative
Agent and Requisite Lenders shall have delivered to Administrative Agent an
executed original or telefacsimile of a counterpart of this Amendment or shall
have orally confirmed to Administrative Agent that such Lender agreed to all of
the terms and conditions of this Amendment, as set forth herein.
C. On or before the Sixth Amendment Effective Date, Company shall
have delivered Resolutions of the Board of Directors of Company approving and
authorizing the execution, delivery and performance of this Amendment, certified
as of the Sixth Amendment Effective Date by its corporate secretary or an
assistant secretary as being in full force and effect without modification or
amendment and shall have delivered an Officer's Certificate in form and
substance satisfactory to the Administrative Agent certifying that the
Subordinated Indebtedness contemplated to be issued will be issued in compliance
with subsections 6.1 (vi), 6.1 (viii) and 6.1(xii) of the Credit Agreement.
D. On or before the Sixth Amendment Effective Date, Administrative
Agent shall have received for distribution to each Lender consenting to this
Amendment in accordance with its Pro Rata Share under the Credit Agreement a
non-refundable amendment fee equal to 0.05% of the sum of such Lender's (i)
Revolving Loan Exposure, (ii) Existing Term Exposure, (iii) Tranche A Exposure,
(iv) Tranche B Exposure and (v) Tranche D Exposure, in effect as of the date
hereof
SECTION 4
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender as of the date hereof, as of the Sixth Amendment
Effective Date that the following statements are true, correct and complete:
A. Corporate Power and Authority. Company has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
3
<PAGE>
C. No Conflict. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than Liens created under any
of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries,
except for such approvals which will be obtained on or before the Effective Date
and disclosed in writing to Lenders.
D. Governmental Consents. The execution and delivery by Company of
this Amendment and the performance by Company of the Amended Agreement do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or other governmental
authority or regulatory body.
F. Binding Obligation. This Amendment has been duly executed and
delivered by Company and, when executed and delivered, this Amendment and the
Amended Agreement will be the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 5
MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof', "herein" or words of
like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit
4
<PAGE>
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Amended
Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any
Lender under, the Credit Agreement or any of the other Loan Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 9.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Sections 1 hereof, the effectiveness of which is governed by
Section 3 hereof) shall become effective upon the execution of a counterpart
hereof by Company, Requisite Lenders, Syndication Agent, Distribution Agent and
Administrative Agent and receipt by Company and Administrative Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.
SECTION 6
ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each Guarantor hereby acknowledges that it has read this Amendment
and consents to the terms thereof and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Guarantor under the Guaranty and the other Loan Documents to which such
Guarantor is a party shall not be impaired or affected and
5
<PAGE>
the Guaranty and such other Loan Documents are, and shall continue to be, in
full force and effect and is hereby confirmed and ratified in all respects.
[Remainder of page intentionally left blank]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
WORLD COLOR PRESS, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
THE LANMAN COMPANIES, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
LANMAN LITHOTECH, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
CENTRAL FLORIDA PRESS, L.C.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
NORTHEAST GRAPHICS INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
S-1
<PAGE>
THE WESSEL COMPANY, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
IMAGE TECHNOLOGIES, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
SHEA COMMUNICATIONS COMPANY
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
KRUEGER ACQUISITION CORPORATION
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
KRI, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
RAI, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
S-2
<PAGE>
BCK 140 PARTNERSHIP
By: World Color Press, Inc.,
its General Partner
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
By: The Lanman Companies, Inc.,
its General Partner
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
WORLD COLOR BOOK SERVICES, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
THE JOHNSON & HARDIN CO.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
JOHNSON & HARDIN ENTERPRISES, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
MAGNA-GRAPHIC, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
S-3
<PAGE>
TACONIC HOLDINGS, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
CENTURY GRAPHICS CORPORATION
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
EDWIN ROAD PROPERTIES, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
LA-GNIAPPE ADVERTISING, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
LA-GNIAPPE INSERTS, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
DB ACQUISITION CORP.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
S-4
<PAGE>
DITTLER BROTHERS, INCORPORATED
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
ACME PRINTING COMPANY, INC.
By: /s/ Thomas J. Quinlan
---------------------------------
Name:
Title:
S-5
<PAGE>
BANKERS TRUST COMPANY,
individually as a Lender and as
Administrative Agent and as Collateral Agent
By: /s/ Robert R. Telesca
----------------------------------------
Name: ROBERT R. TELESCA
Title: ASSISTANT VICE PRESIDENT
S-6
<PAGE>
BANK OF AMERICA NT & SA,
as a Lender
By: /s/ John W. Pocalyko
----------------------------------------
Name: JOHN W. POCALYKO
Title: MANAGING DIRECTOR
S-7
<PAGE>
CITIBANK, N.A.,
as a Lender
By: /s/ James P. Garvin
----------------------------------------
Name: James P. Garvin
Title: Attorney-In-Fact
S-8
<PAGE>
ABN AMRO BANK, NV, NEW YORK BRANCH, as
Lender
By: ABN Amro North America, Inc.,
as Agent
By: /s/ Andrew Dry
---------------------------
Name: ANDREW DRY
Title: SENIOR VICE PRESIDENT
By: /s/ David C. Carrington
---------------------------
Name: David C. Carrington
Title: Vice President
S-9
<PAGE>
BANK OF MONTREAL,
as Lender
By: /s/ Jordan Fragiacono
----------------------------------------
Name: Jordan Fragiacono
Title: Director
S-10
<PAGE>
THE BANK OF NOVA SCOTIA
as Lender
By: /s/ J. Alan Edwards
----------------------------------------
Name: J. ALAN EDWARDS
Title: AUTHORIZED SIGNATORY
S-11
<PAGE>
BANK OF SCOTLAND,
as Lender
By: /s/ Annie Chin Tai
----------------------------------------
Name: ANNIE CHIN TAI
Title: SENIOR VICE PRESIDENT
S-12
<PAGE>
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY, as Lender
By: /s/ Nicholas Campbell
----------------------------------------
Name: Nicholas Campbell
Title: Vice President
S-13
<PAGE>
PARIBAS,
as Lender
By: /s/ John J McCormick, III
----------------------------------------
Name: John J McCormick, III
Title: Vice President
By: /s/ Duane P. Helkowski
----------------------------------------
Name: Duane P. Helkowski
Title: Vice President
S-14
<PAGE>
CIBC, INC., as Lender
By: /s/ CYD Petre
----------------------------------------
Name: CYD PETRE
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
S-15
<PAGE>
FLEET NATIONAL BANK,
as Lender
By: /s/ Jeffrey C. Lynch
----------------------------------------
Name: Jeffrey C. Lynch
Title: SVP
S-16
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
as Lender
By: /s/ Teiji Teramoto
----------------------------------------
Name: TEIJI TERAMOTO
Title: Vice President & Manager
S-17
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LTD., as
Lender
By: /s/ Takuya Honjo
----------------------------------------
Name: TAKUYA HONJO
Title: SENIOR VICE PRESIDENT
S-18
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
as Lender
By: /s/ Mark A. Thompson
----------------------------------------
Name: Mark A. Thompson
Title: Senior Vice President &
Team Leader
S-19
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
as Lender
By: /s/ Donald V. Davis
----------------------------------------
Name: Donald V. Davis
Title: Vice President
S-20
<PAGE>
THE SANWA BANK, LIMITED
as Lender
By: /s/ Dominick J. Sorresso
----------------------------------------
Name: DOMINIC J. SORRESSO
Title: VICE PRESIDENT
S-21
<PAGE>
BANKBOSTON, N.A.(formerly know as The First
National Bank of Boston), as Lender
By: /s/ Julie V. Jacehan
----------------------------------------
Name: Julie V. Jacehan
Title: Director
S-22
<PAGE>
CREDIT SUISSE FIRST BOSTON (formerly known as
Credit Suisse), as Lender
By: /s/ Chris T. Horgan
----------------------------------------
Name: CHRIS T HORGAN
Title: VICE PRESIDENT
By: /s/ Kristin Lepri
----------------------------------------
Name: KRISTIN LEPRI
Title: ASSOCIATE
S-23
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
as Lender
By: /s/ Ronald Wolinsky
----------------------------------------
Name: Ronald Wolinsky
Title: Vice President & Group Leader
S-24
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES,
as Lender
By: /s/ Laura G. Fazio
----------------------------------------
Name: LAURA G. FAZIO
Title: First Vice President
By: /s/ Brian Haughney
----------------------------------------
Name: Brian Haughney
Title: Assistant Treasurer
S-25
<PAGE>
THE SAKURA BANK, LIMITED, as Lender
By: /s/ Yoshikazu Nagura
----------------------------------------
Name: YOSHIKAZU NAGURA
Title: Vice President
S-26
<PAGE>
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Lender
By: /s/ Suresh S. Tata
----------------------------------------
Name: Suresh S. Tata
Title: Senior Vice President
S-27
<PAGE>
BANK POLSKA, as Lender
By: /s/ H. B. El-Tawil
----------------------------------------
Name: H. B. El Tawil
Title: V.P.
S-28
<PAGE>
THE TOKAI BANK, LTD., NEW YORK BRANCH, as
Lender
By: /s/ Shinichi Nakatani
----------------------------------------
Name: Shinichi Nakatani
Title: Assistant General Manager
S-29
<PAGE>
MERITA BANK PLC NEW YORK BRANCH
as Lender
By: /s/ Frank Maffei
----------------------------------------
Name: FRANK MAFFEI
Title: VICE PRESIDENT
By: /s/ Clifford Abramsky
----------------------------------------
Name: Clifford Abramsky
Title: VP
S-30
<PAGE>
BAYERISCHE HYPO-und VEREINSBANK AG, NEW YORK
BRANCH, as Lender
By: /s/ Rulf Enke
---------------------------
Name: Rulf Enke
Title: Associate Director
By: /s/ A. Babcock
---------------------------
Name: A. Babcock
Title: Managing Director
S-31
<PAGE>
THE BANK OF NEW YORK,
as Lender
By: /s/ Kenneth P. Sneider Jr.
----------------------------------------
Name: Kenneth P. Sneider Jr
Title: Vice President
S-32
<PAGE>
FIRST UNION NATIONAL BANK,
as Lender
By: /s/ Matthew O. Riley
----------------------------------------
Name: MATTHEW O. RILEY
Title: VICE PRESIDENT
S-33
<PAGE>
ERSTE DER OESTERREICHI SCHEN
STARKASSEN AG, as Lender
By: /s/ Rima Terradista
----------------------------------------
Name: RIMA TERRADISTA
Title: Vice President
By: /s/ John S. Runnion
----------------------------------------
Name: JOHN S. RUNNION
Title: FIRST VICE PRESIDENT
S-34
<PAGE>
BANK LEUMI TRUST COMPANY NEW YORK,
as Lender
By: /s/ Sami Ambar
----------------------------------------
Name: Sami Ambar
Title: Vice President
S-35
<PAGE>
CREDIT AGRICOLE INDOSUEZ,
as Lender
By: /s/ Craig Welch
----------------------------------------
Name: Craig Welch
Title: FVP
By: /s/ Rene LeBlanc
----------------------------------------
Name: Rene LeBlanc
Title: VP, TL.
S-36
<PAGE>
LEHMAN COMMERCIAL PAPER INC.,
as Lender
By: /s/ Michele Swanson
----------------------------------------
Name: Michele Swanson
Title: Authorized Signatory
S-37
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.,
as Lender
By: /s/ Michael T. McLanghlan
----------------------------------------
Name: Michael T. McLanghlan
Title: Principal
S-38
<PAGE>
THE TOYO TRUST AND BANKING CO. LTD.,
as Lender
By: /s/ T. Mikamo
----------------------------------------
Name: T. MiKamo
Title: Vice President
S-39
<PAGE>
ALLIED IRISH BANKS PLC, CAYMAN ISLANDS
BRANCH, as Lender
By: /s/ Marcia Meeker
----------------------------------------
Name: Marcia Meeker
Title: Vice President
By: /s/ William J. Strickland
----------------------------------------
Name: William J. Strickland
Title: Senior Vice President
S-40
<PAGE>
GULF INTERNATIONAL BANK B.S.C.
as Lender
By: /s/ Abdel-Fattah Tahoun
----------------------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By: /s/ Thomas E. Fitzherbert
----------------------------------------
Name: Thomas E. Fitzherbert
Title: Vice President
S-41
<PAGE>
THE MITSUI TRUST AND BANKING COMPANY,
LIMITED, as Lender
By:
----------------------------------------
Name:
Title:
S-42
<PAGE>
STB DELAWARE FUNDING TRUST I, as Lender
By: /s/ Donald C. Hargadon
----------------------------------------
Name: Donald C. Hargadon
Title: Assistant Vice President
S-43
<PAGE>
Exhibit 10.2
EXECUTION
WORLD COLOR PRESS, INC.
SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is dated as of November 23, 1998 and entered into
by and among WORLD COLOR PRESS, INC., a Delaware corporation ("Company"), the
Lenders party to the Credit Agreement referred to below on the date hereof (the
"Lenders") that are party hereto, and BANKERS TRUST COMPANY, as Administrative
Agent, and, for purposes of Section 6 hereof, THE SUBSIDIARIES OF COMPANY LISTED
ON THE SIGNATURE PAGES HERETO (each a "Guarantor" and collectively, the
"Guarantors"). All capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement (as defined
below).
RECITALS
WHEREAS, Company, the Lenders, BancAmerica Securities, Inc., as
Syndication Agent, Citibank, N.A. ,as Documentation Agent and Bankers Trust
Company, as Administrative Agent, are parties to that certain Second Amended and
Restated Credit Agreement dated as of June 6, 1996, as amended or modified by
that certain First Amendment to Second Amended and Restated Credit Agreement
dated as of June 10, 1996, as further amended or modified by that certain
Limited Waiver, Consent and Second Amendment to Second Amended and Restated
Credit Agreement dated as of June 9, 1997, as further amended or modified by
that certain Third Amendment to Second Amended and Restated Credit Agreement
dated as of June 27, 1997, as further amended or modified by that certain
Limited Waiver, Consent and Fourth Amendment to Second Amended and Restated
Credit Agreement dated as of September 29, 1997, as further amended or modified
by that certain Fifth Amendment to Second Amended and Restated Credit Agreement
dated as of June 4, 1998, and as further amended or modified by that certain
Sixth Amendment to Second Amended and Restated Credit Agreement dated as of
November 11, 1998 (as so amended and modified, the "Credit Agreement").
WHEREAS, Company has incurred $300,000,000 of Subordinated
Indebtedness pursuant to the issuance of new 8 3/8% senior subordinated notes, a
portion of the proceeds of such issuance has been allocated to refinance all of
the outstanding Senior Subordinated Notes and the Company has given notice for
the redemption of the Senior Subordinated notes;
WHEREAS, as the Senior Subordinated Notes will not be redeemed in
full until after December 27, 1998, the last day of Company's fourth Fiscal
Quarter,
<PAGE>
Company is requesting that (i) Requisite Lenders hereby agree that the Senior
Subordinated Notes shall not, and shall not be deemed to, constitute
Indebtedness for the purposes of the calculation of the Leverage Ratio for
subsection 6.6B of the Credit Agreement as of December 27, 1998, the last day of
Company's fourth Fiscal Quarter; provided that the Senior Subordinated Notes
shall be redeemed on or before January 15, 1999 and (ii) to the extent Company
elects to defease the Senior Subordinated Notes, Requisite Lenders hereby agree
that the Company may make such defeasance;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1
AMENDMENTS AND CONSENTS
Requisite Lenders hereby agree that (i) the Senior Subordinated
Notes shall not, and shall not be deemed to, constitute Indebtedness for the
purposes of the calculation of the Leverage Ratio for subsection 6.6B of the
Credit Agreement as of December 27, 1998, the last day of Company's fourth
Fiscal Quarter; provided that the Senior Subordinated Notes shall be redeemed on
or before January 15, 1999 and (ii) to the extent Company elects to defease the
Senior Subordinated Notes, Company may make such defeasance.
SECTION 2
LIMITATION OF AMENDMENTS
Without limiting the generality of the provisions of subsection 9.7
of the Credit Agreement, the amendments and consents set forth above shall be
limited precisely by their terms, shall not have any force or effect with
respect to any other matter except as expressly provided above, and nothing in
this Amendment shall be deemed to:
(a) constitute a waiver or modification of any other term, provision
or condition of the Credit Agreement or any other instrument or agreement
referred to therein; or
(b) prejudice any right or remedy that Administrative Agent or any
Lender may now have (except to the extent such right or remedy was based
upon existing defaults that will not exist after giving effect to this
Amendment) or may have in the future under or in connection with the
Credit Agreement or any other instrument or agreement referred to therein.
2
<PAGE>
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
SECTION 3
CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "Seventh Amendment Effective Date"):
A. On or before the Seventh Amendment Effective Date, Company and the
Guarantors shall have delivered to Administrative Agent executed copies of this
Amendment.
B. On or before the Seventh Amendment Effective Date, Administrative Agent
and Requisite Lenders shall have delivered to Administrative Agent an executed
original or telefacsimile of a counterpart of this Amendment or shall have
orally confirmed to Administrative Agent that such Lender agreed to all of the
terms and conditions of this Amendment, as set forth herein.
SECTION 4
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender as of the date hereof, as of the Seventh Amendment
Effective Date that the following statements are true, correct and complete:
A. Corporate Power and Authority. Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. No Conflict. The execution and delivery by Company of this Amendment
and the performance by Company of the Amended Agreement do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on Company
or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a
3
<PAGE>
default under any Contractual Obligation of Company or any of its Subsidiaries,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Company or any of its Subsidiaries (other than Liens
created under any of the Loan Documents in favor of Administrative Agent on
behalf of Lenders), or (iv) require any approval of stockholders or any approval
or consent of any Person under any Contractual Obligation of Company or any of
its Subsidiaries, except for such approvals which will be obtained on or before
the Effective Date and disclosed in writing to Lenders.
D. Governmental Consents. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body.
E. Binding Obligation. This Amendment has been duly executed and delivered
by Company and, when executed and delivered, this Amendment and the Amended
Agreement will be the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. Incorporation of Representations and Warranties From Credit Agreement.
The representations and warranties contained in Section 4 of the Credit
Agreement are and will be true, correct and complete in all material respects to
the same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
G. Absence of Default. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.
SECTION 5
MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Effective Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of
like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or
words of like
4
<PAGE>
import referring to the Credit Agreement shall mean and be a reference to
the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any
Lender under, the Credit Agreement or any of the other Loan Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 9.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Sections 1
hereof, the effectiveness of which is governed by Section 3 hereof) shall become
effective upon the execution of a counterpart hereof by Company, Requisite
Lenders, Syndication Agent, Distribution Agent and Administrative Agent and
receipt by Company and Administrative Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
5
<PAGE>
SECTION 6
ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each Guarantor hereby acknowledges that it has read this Amendment and
consents to the terms thereof and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Guarantor under the Guaranty and the other Loan Documents to which such
Guarantor is a party shall not be impaired or affected and the Guaranty and such
other Loan Documents are, and shall continue to be, in full force and effect and
is hereby confirmed and ratified in all respects.
[Remainder of page intentionally left blank]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
WORLD COLOR PRESS, NC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
THE LANMAN COMPANIES, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
LANMAN LITHOTECH, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
CENTRAL FLORIDA PRESS, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
NORTHEAST GRAPHICS INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
S-1
<PAGE>
THE WESSEL COMPANY, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
IMAGE TECHNOLOGIES, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
SHEA COMMUNICATIONS COMPANY
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
KRUEGER ACQUISITION CORPORATION
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
KRI, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
RAI, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
S-2
<PAGE>
BCK 140 PARTNERSHIP
By: World Color Press, Inc.,
its General Partner
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
By: The Lanman Companies, Inc.,
its General Partner
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
WORLD COLOR BOOK SERVICES, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
THE JOHNSON & HARDIN CO.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
JOHNSON & HARDIN ENTERPRISES, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
MAGNA-GRAPHIC, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
S-3
<PAGE>
TACONIC HOLDINGS, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
CENTURY GRAPHICS CORPORATION
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
EDWIN ROAD PROPERTIES, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
LA-GNIAPPE ADVERTISING, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
LA-GNIAPPE INSERTS, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
DB ACQUISITION CORP.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
S-4
<PAGE>
DITTLER BROTHERS, INCORPORATED
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
ACME PRINTING COMPANY, INC.
By: /s/ Thomas J. Quinlan
-------------------------------------
Name: Thomas J. Quinlan
Title: Senior Vice President,
Treasurer
S-5
<PAGE>
BANKERS TRUST COMPANY,
individually as a Lender and as Administrative
Agent and as Collateral Agent
By: /s/ Mary Jo Jolly
-------------------------------------
Name: MARY JO JOLLY
Title: ASSISTANT VICE PRESIDENT
S-6
<PAGE>
BANK OF AMERICA NT & SA,
as a Lender
By: /s/ John W. Pocalyko
-------------------------------------
Name: JOHN W. POCALYKO
Title: MANAGING DIRECTOR
S-7
<PAGE>
CITIBANK, N.A.,
as a Lender
By: /s/ Timothy L. Freeman
-------------------------------------
Name: TIMOTHY L. FREEMAN
Title: Attorney-In-Fact
S-8
<PAGE>
ABN AMRO BANK, N.V., NEW YORK BRANCH, as
Lender
By: ABN AMRO BANK, NV.
as Agent
By: /s/ Andrew M. Dry
-------------------------------------
Andrew M. Dry
Senior Vice President
By: /s/ Thomas Rogers
-------------------------------------
Thomas Rogers
Vice President
S-9
<PAGE>
BANK OF MONTREAL,
as Lender
By: /s/ Jordan Fragiacono
-------------------------------------
Name: Jordan Fragiacono
Title: Director
S-10
<PAGE>
THE BANK OF NOVA SCOTIA
as Lender
By: /s/ J. Alan Edwards
-------------------------------------
Name: J. ALAN EDWARDS
Title: AUTHORIZED SIGNATORY
S-11
<PAGE>
BANK OF SCOTLAND,
as Lender
By: /s/ Annie Chin Tat
-------------------------------------
Name: ANNIE CHIN TAT
Title: SENIOR VICE PRESIDENT
S-12
<PAGE>
BANK OF TOKYO - MITSUBISHI TRUST COMPANY, as
Lender
By: /s/ Nicholas Campbell
-------------------------------------
Name: NICHOLAS CAMPBELL
Title: VICE PRESIDENT
S-13
<PAGE>
PARIBAS,
as Lender
By: /s/ John J. McCormick
-------------------------------------
Name: John J. McCormick III
Title: Vice President
By:
-------------------------------------
Name:
Title:
S-14
<PAGE>
CIBC, INC., as Lender
By: /s/ Cyd Petre
-------------------------------------
Name: CYD PETRE
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
S-15
<PAGE>
FLEET NATIONAL BANK,
as Lender
By: /s/ Jeff Lynch
-------------------------------------
Name: Jeff Lynch
Title: SVP
S-16
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
as Lender
By: /s/ Teiji Teramoto
-------------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
S-17
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LTD., as
Lender
By: /s/ Takuya Honjo
-------------------------------------
Name: TAKUYA HONJO
Title: SENIOR VICE PRESIDENT
S-18
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
as Lender
By: /s/ Mark A. Thompson
-------------------------------------
Name: Mark A. Thompson
Title: Senior Vice President &
Team Leader
S-19
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
as Lender
By: /s/ Donald V. Davis
-------------------------------------
Name: Donald V. Davis
Title: Vice President
S-20
<PAGE>
THE SANWA BANK, LIMITED,
as Lender
By: /s/ Dominic Sorresso
-------------------------------------
Name: DOMINIC SORRESSO
Title: Vice President
S-21
<PAGE>
BANKBOSTON, N.A. (formerly know as The First
National Bank of Boston), as Lender
By: /s/ Julie V. Jalelian
-------------------------------------
Name: Julie V. Jalelian
Title: Director
S-22
<PAGE>
CREDIT SUISSE FIRST BOSTON (formerly known as
Credit Suisse), as Lender
By: /s/ Chris Horgan
-------------------------------------
Name: CHRIS T. HORGAN
Title: VICE PRESIDENT
By: /s/ Kristin Lepri
-------------------------------------
Name: KRISTIN LEPRI
Title: ASSOCIATE
S-23
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
as Lender
By: /s/ Christopher Fahey
-------------------------------------
Name: Christopher Fahey
Title: Vice President
S-24
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES,
as Lender
By: /s/ Laura G. Fazio
-------------------------------------
Name: LAURA G. FAZIO
Title: First Vice President
By: /s/ Brian Haughney
-------------------------------------
Name: Brian Haughney
Title: Assistant Treasurer
S-25
<PAGE>
THE SAKURA BANK, LIMITED, as Lender
By: /s/ Yoshikazu Nagura
-------------------------------------
Name: YOSHIKAZU NAGURA
Title: Vice President
S-26
<PAGE>
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Lender
By: /s/ Suresh S. Tata
-------------------------------------
Name: SURESH S. TATA
Title: Senior Vice President
S-27
<PAGE>
BANK POLSKA KASA OPIEKI S.A.
PEKAO S.A. GROUP, NEW YORK BRANCH
By: /s/ Hussein B. El-Tawil
-------------------------------------
Name: Hussein B. El-Tawil
Title: Vice President
S-28
<PAGE>
THE TOKAI BANK, LTD., NEW YORK BRANCH, as Lender
By: /s/ Shinichi Nakatani
-------------------------------------
Name: Shinichi Nakatani
Title: Assistant General Manager
S-29
<PAGE>
MERITA BANK PLC NEW YORK BRANCH
as Lender
By: /s/ Frank Maffei
-------------------------------------
Name: FRANK MAFFEI
Title: VICE PRESIDENT
By: /s/ Clifford Abramsky
-------------------------------------
Name CLIFFORD ABRAMSKY
Title VICE PRESIDENT
S-30
<PAGE>
BAYERISCHE HYPO-UND VEREINSBANK AG,
NEW YORK BRANCH, as Lender
By: /s/ Ralf Enke
---------------------------
Name: Ralf Enke
Title: Associate Director
By: /s/ Alan Babcock
---------------------------
Name: Alan Babcock
Title: [Illegible] Director
S-31
<PAGE>
THE BANK OF NEW YORK
as Lender
By: /s/ Ken Sneider
-------------------------------------
Name: Ken P. Sneider Jr.
Title: Vice President
S-32
<PAGE>
FIRST UNION NATIONAL BANK,
as Lender
By: /s/ Stephen T. Dorosh
-------------------------------------
Name: Stephen T. Dorosh
Title: Vice President
S-33
<PAGE>
ERSTE DER OESTERREICHI SCHEN SPARKASSEN AG, as
Lender
By: /s/ Rima Terradista
-------------------------------------
Name: RIMA TERRADISTA
Title: Vice President
By: /s/ John S. Runnion
-------------------------------------
Name: JOHN S. RUNNION
Title: FIRST VICE PRESIDENT
S-34
<PAGE>
BANK LEUMI TRUST COMPANY NEW YORK,
as Lender
By: /s/ Sami Ambar
-------------------------------------
Name: Sami Ambar
Title: Vice President
S-35
<PAGE>
CREDIT AGRICOLE INDOSUEZ,
as Lender
By: Craig Welch
-------------------------------------
Name: Craig Welch
Title: FVP
By: /s/ Rene LeBlanc
-------------------------------------
Name: Rene LeBlanc
Title: VP, TL.
S-36
<PAGE>
LEHMAN COMMERCIAL PAPER INC.,
as Lender
By: /s/ Michele Swanson
-------------------------------------
Name: Michele Swanson
Title: Authorized Signatory
S-37
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.,
as Lender
By: /s/ Michael T. McLaughlin
-------------------------------------
Name: Michael T. McLaughlin
Title: Principal
S-38
<PAGE>
THE TOYO TRUST AND BANKING CO. LTD.,
as Lender
By: /s/ T. Mikamo
-------------------------------------
Name: T. Mikamo
Title: Vice President
S-39
<PAGE>
ALLIED IRISH BANKS PLC, CAYMAN ISLANDS
BRANCH, as Lender
By: /s/ W. J. Strickland
-------------------------------------
Name: W. J. Strickland
Title: SVP
By: /s/ Marcia Meeker
-------------------------------------
Name: MARCIA MEEKER
Title: V.P.
S-40
<PAGE>
GULF INTERNATIONAL BANK B.S.C,
as Lender
By: /s/ Abdel-Fattah Tahoun
-------------------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By: /s/ Thomas E. Fitzherbert
-------------------------------------
Name: Thomas E. Fitzherbert
Title: Vice President
S-41
<PAGE>
THE MITSUI TRUST AND BANKING COMPANY,
LIMITED, as Lender
By:
-------------------------------------
Name:
Title:
S-42
<PAGE>
STB DELAWARE FUNDING TRUST I, as Lender
By: /s/ Donald C. Hargadon
-------------------------------------
Name: Donald C. Hargadon
Title: Assistant Vice President
S-43
<PAGE>
Exhibit 10.3
EXECUTION
WORLD COLOR PRESS, INC.
LIMITED CONSENT AND EIGHTH AMENDMENT
TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
This LIMITED CONSENT AND EIGHTH AMENDMENT TO SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (this "Amendment" or this "Eighth Amendment") is dated
as of February 3, 1999 and entered into by and among WORLD COLOR PRESS, INC., a
Delaware corporation ("Company"), the Lenders party to the Credit Agreement
referred to below on the date hereof (the "Lenders") that are party hereto, and
BANKERS TRUST COMPANY, as Administrative Agent, and, for purposes of Section 7
hereof, THE SUBSIDIARIES OF COMPANY LISTED ON THE SIGNATURE PAGES HERETO (each a
"Guarantor" and collectively, the "Guarantors"). All capitalized terms used
herein without definition shall have the same meanings herein as set forth in
the Credit Agreement (as defined below).
RECITALS
WHEREAS, Company, the Lenders, BancAmerica Securities, Inc., as
Syndication Agent, Citibank, N.A., as Documentation Agent and Bankers Trust
Company, as Administrative Agent, are parties to that certain Second Amended and
Restated Credit Agreement dated as of June 6, 1996, as amended or modified by
that certain First Amendment to Second Amended and Restated Credit Agreement
dated as of June 10, 1996, as further amended or modified by that certain
Limited Waiver, Consent and Second Amendment to Second Amended and Restated
Credit Agreement dated as of June 9, 1997, as further amended or modified by
that certain Third Amendment to Second Amended and Restated Credit Agreement
dated as of June 27, 1997, as further amended or modified by that certain
Limited Waiver, Consent and Fourth Amendment to Second Amended and Restated
Credit Agreement dated as of September 29, 1997, as further amended or modified
by that certain Fifth Amendment to Second Amended and Restated Credit Agreement
dated as of June 4, 1998, as further amended or modified by that certain Sixth
Amendment to Second Amended and Restated Credit Agreement dated as of November
11, 1998, and as further amended or modified by that certain Seventh Amendment
to Second Amended and Restated Credit Agreement dated as of November 23, 1998
(as so amended and modified, the "Credit Agreement").
WHEREAS, the parties hereto wish to amend and modify the Credit
Agreement to make certain amendments as set forth below.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
<PAGE>
SECTION 1
LIMITED CONSENT
Administrative Agent and Requisite Lenders hereby consent to
Company's issuance of additional debt Securities and agree that the form and
substance thereof is satisfactory and that such debt Securities will be deemed
to be "Additional Subordinated Indebtedness" incurred pursuant to subsection
6.1(x) of the Credit Agreement without the need for any further consent of
Administrative Agent or any or all of the Lenders; provided that (i) any such
Additional Subordinated Indebtedness is issued on or before June 30, 1999 and is
unsecured, (ii) the maturity date and any scheduled amortization of any such
Additional Subordinated Indebtedness is no less than one year following the
Commitment Termination Date, (iii) the covenants, subordination and other
provisions (other than any interest rate or other pricing term) of such
Additional Subordinated Indebtedness are no more burdensome in any material
respect to Company and Lenders than the 5300,000,000 of 8-3/8% Subordinated
Indebtedness of Company issued in November, 1998, and (iv) the proceeds of the
issuance of any such Additional Subordinated Indebtedness shall be applied as
provided in the second paragraph of this Section 1.
Company, the Administrative Agent and Requisite Lenders hereby
consent and agree that, notwithstanding anything to the contrary in the Credit
Agreement, including but not limited to subsection 2.1, subsection 2.4 or the
definitions of Scheduled Existing Term Loan Repayment Amount, Scheduled Tranche
A Repayment Amount, Scheduled Tranche B Repayment Amount or Scheduled Tranche D
Repayment Amount therein, all proceeds of Additional Subordinated Indebtedness
described in the preceding paragraph shall be applied by Company to the extent
Company is required to repay Loans pursuant to subsection 2.4A(ii)(c), (a) first
to repay all Tranche D Acquisition Term Loans then outstanding in full, it being
understood that such repayments will not reduce the Tranche D Term Loan
Commitments and that any and all amounts so repaid may be reborrowed from time
to time to but excluding the Tranche D Acquisition Commitment Termination Date
and that this clause (a) shall only be applicable to the proceeds of one
issuance of Additional Subordinated Indebtedness pursuant to the preceding
paragraph, (b) second to repay all Revolving Loans then outstanding in full, it
being understood that such repayments will not reduce the Revolving Loan
Commitments and that this clause (b) shall only be applicable to the proceeds of
one issuance of Additional Subordinated Indebtedness pursuant to the preceding
paragraph, (c) third to repay Tranche A Acquisition Term Loans and Tranche B
Acquisition Term Loans in an amount equal to the amount of such Loans scheduled
to be paid in 1999 that have not been paid, it being understood that such
repayments shall be applied to reduce on a pro rata basis the Scheduled Tranche
A Repayment Amount and Scheduled Tranche B Repayment Amount due in 1999 in
forward order of the scheduled amortization set forth in such definitions for
such period, (d) fourth to repay Existing Term Loans, Tranche A Acquisition Term
Loans and Tranche B Acquisition Term Loans in an amount equal to the amount of
such Loans scheduled to be paid during the first two Fiscal Quarters of 2000
that have not been paid, it being understood that such repayments shall be
applied to reduce on a pro rata basis the Scheduled Existing Term Loan Repayment
Amount, the Scheduled Tranche A Repayment Amount and the Scheduled Tranche B
Repayment Amount in forward order of the scheduled amortization set forth in
such definitions for such period, and (e) fifth to repay all outstanding Tranche
A Acquisition Term Loans, Tranche B Acquisition Term Loans and Existing Term
Loans on a pro rata basis and in accordance with and to the
2
<PAGE>
extent required pursuant to subsections 2.4A (ii)(c), 2.4A (iii)(b) and 2.4D of
the Credit Agreement. All repayments described in clauses (a), (b), (c), (d) and
(e) of the preceding sentence shall occur on the dates and to the extent that
the proceeds of the Additional Subordinated Indebtedness described in the first
paragraph of this Section 1 are required under subsection 2.4A(ii)(c) of the
Credit Agreement to be used to prepay Loans, it being understood that such
proceeds may be applied within 90 days of Company's receipt thereof to
consummate Acquisitions to the extent permitted under subsection 2.4A(ii)(c).
SECTION 2
AMENDMENTS
A. Subsection 1.1 of the Credit Agreement is hereby amended by
deleting the reference to "June 29, 1999" contained in the definition of
"Tranche D Acquisition Commitment Termination Date" therein and substituting a
reference to "March 31, 2000" therefore.
B. Subsection 1.1 of the Credit Agreement is hereby amended by
amending and restating the grid set forth in the definition "Scheduled Tranche D
Repayment Amount" as follows:
- --------------------------------------------------------------------------------
FISCAL YEAR PERCENTAGE
AMORTIZATION
- --------------------------------------------------------------------------------
Second Fiscal Quarter, 2000 16.66%
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter, 2000 16.66%
- --------------------------------------------------------------------------------
Second Fiscal Quarter, 2001 16.66%
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter, 2001 16.66%
- --------------------------------------------------------------------------------
Second Fiscal Quarter, 2002 16.66%
- --------------------------------------------------------------------------------
Fourth Fiscal Quarter, 2002 16.70%
- --------------------------------------------------------------------------------
TOTAL 100.0%
- --------------------------------------------------------------------------------
3
<PAGE>
C. Subsection 6.6B of the Credit Agreement is hereby amended by
deleting the maximum Leverage Ratio of "3.40:1.00" applicable as of the last day
of each of the first three Fiscal Quarters in 1999 and deleting the maximum
Leverage Ratio of "3.15:1.00" applicable as of the last day of the fourth Fiscal
Quarter in 1999 and substituting "4.25:1.00" in place thereof for the maximum
Leverage Ratio as of the last day of each Fiscal Quarter in 1999.
SECTION 3
LIMITATION OF CONSENT AND AMENDMENTS
Without limiting the generality of the provisions of subsection 9.7
of the Credit Agreement, the consent and the amendments set forth above shall be
limited precisely by their terms, shall not have any force or effect with
respect to any other matter except as expressly provided above, and nothing in
this Amendment shall be deemed to:
(a) constitute a waiver or modification of any other term, provision
or condition of the Credit Agreement or any other instrument or
agreement referred to therein; or
(b) prejudice any right or remedy that Administrative Agent or any
Lender may now have (except to the extent such right or remedy was
based upon existing defaults that will not exist after giving effect
to this Amendment) or may have in the future under or in connection
with the Credit Agreement or any other instrument or agreement
referred to therein.
Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
SECTION 4
CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the "Eighth Amendment Effective Date"):
A. On or before the Eighth Amendment Effective Date, Company and the
Guarantors shall have delivered to Administrative Agent executed copies of this
Amendment.
B. On or before the Eighth Amendment Effective Date, Administrative
Agent and Requisite Lenders shall have delivered to Administrative Agent an
executed original or telefacsimile of a counterpart of this Amendment.
C. On or before the Eighth Amendment Effective Date, Company shall
have delivered Resolutions of the Board of Directors of Company approving and
authorizing the execution, delivery and performance of this Amendment, certified
as of the Eighth Amendment Effective Date by its corporate secretary or an
assistant secretary as being in full force and effect without modification or
amendment.
4
<PAGE>
D. On or before the Eighth Amendment Effective Date, Administrative
Agent shall have received for distribution to each Lender that has executed the
Eighth Amendment on or prior to such date under the Credit Agreement a
non-refundable amendment fee equal to 0.125% of the sum of such Lender's (i)
Revolving Loan Exposure, (ii) Existing Term Loan Exposure, (iii) Tranche A
Exposure, and (iv) Tranche B Exposure, in effect as of the date hereof.
E. On or before the Eighth Amendment Effective Date, Administrative
Agent shall have received for distribution to each Lender having Tranche D
Commitments that has executed the Eighth Amendment on or prior to such date
under the Credit Agreement a non-refundable amendment fee equal to 0.375% of
such Lender's Tranche D Exposure in effect as of the date hereof.
SECTION 5
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender as of the date hereof, as of the Eighth Amendment
Effective Date that the following statements are true, correct and complete:
A. Corporate Power and Authority. Company has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. No Conflict. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than Liens created under any
of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of Company or any of its Subsidiaries,
except for such approvals which will be obtained on or before the Effective Date
and disclosed in writing to Lenders.
D. Governmental Consents. The execution and delivery by Company of
this Amendment and the performance by Company of the Amended Agreement do not
and will
5
<PAGE>
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body.
E. Binding Obligation. This Amendment has been duly executed and
delivered by Company and, when executed and delivered, this Amendment and the
Amended Agreement will be the legally valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. Incorporation of Representations and Warranties From Credit
Agreement. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
G. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
SECTION 6
MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Eight Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof', "herein" or
words of like import referring to the Credit Agreement, and each reference
in the other Loan Documents to the "Credit Agreement", "thereunder",
"thereof' or words of like import referring to the Credit Agreement shall
mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of Agent or any
Lender under, the Credit Agreement or any of the other Loan Documents.
B. Fees and Expenses. Company acknowledges that all costs, fees and
expenses as described in subsection 9.3 of the Credit Agreement incurred by
Administrative Agent and its counsel with respect to this Amendment and the
documents and transactions contemplated hereby shall be for the account of
Company.
6
<PAGE>
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. Counterparts; Effectiveness. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment (other than the
provisions of Sections 1 hereof, the effectiveness of which is governed by
Section 3 hereof) shall become effective upon the execution of a counterpart
hereof by Company, Requisite Lenders, Syndication Agent, Distribution Agent and
Administrative Agent and receipt by Company and Administrative Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.
SECTION 7
ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each Guarantor hereby acknowledges that it has read this Amendment
and consents to the terms thereof and further hereby confirms and agrees that,
notwithstanding the effectiveness of this Amendment, the obligations of such
Guarantor under the Guaranty and the other Loan Documents to which such
Guarantor is a party shall not be impaired or affected and the Guaranty and such
other Loan Documents are, and shall continue to be, in full force and effect and
is hereby confirmed and ratified in all respects.
[Remainder of page intentionally left blank]
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
WORLD COLOR PRESS, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
THE LANMAN COMPANIES, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
LANMAN LITHOTECH, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
CENTRAL FLORIDA PRESS, L.C.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
NORTHEAST GRAPHICS INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
THE WESSEL COMPANY, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
S-1
<PAGE>
IMAGE TECHNOLOGIES, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
SHEA COMMUNICATIONS COMPANY
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
KRUEGER ACQUISITION CORPORATION
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
KRI, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
RAI, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
BCK 140 PARTNERSHIP
By: World Color Press, Inc.,
its General Partner
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
By: The Lanman Companies, Inc.,
its General Partner
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
S-2
<PAGE>
WORLD COLOR BOOK SERVICES, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
THE JOHNSON & HARDIN CO.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
JOHNSON & HARDIN ENTERPRISES, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
MAGNA-GRAPHIC, INC
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
TACONIC HOLDINGS, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
CENTURY GRAPHICS CORPORATION
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
EDWIN ROAD PROPERTIES, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
S-3
<PAGE>
LA-GNIAPPE ADVERTISING, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
LA-GNIAPPE INSERTS, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
DB ACQUISITION CORP.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
DITTLER BROTHERS, INCORPORATED
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
ACME PRINTING COMPANY, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
WORLD COLOR SYSTEMS INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
WCX, LLC
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
S-4
<PAGE>
WCY, LLC
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
WCZ, LLC
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
WORLD COLOR TENNESSEE INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
KRI DRESDEN INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
WCP TN L.P.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
KRI TN L.P.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
S-5
<PAGE>
GREAT WESTERN PUBLISHING, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
INFINITI GRAPHICS, INC.
By: /s/ Thomas J. Quinlan
----------------------------------------
Name: Thomas J. Quinlan
Title: SVP, Treasurer
S-6
<PAGE>
BANKERS TRUST COMPANY,
individually as a Lender and as
Administrative Agent and as Collateral Agent
By: /s/ Mary Jo Jolly
----------------------------------------
Name: MARY JO JOLLY
Title: ASSISTANT VICE PRESIDENT
S-7
<PAGE>
BANK OF AMERICA NT & SA,
as a Lender
By: /s/ John W. Pocalyko
----------------------------------------
Name: JOHN W. POCALYKO
Title: MANAGING DIRECTOR
S-8
<PAGE>
CITIBANK, N.A.,
as a Lender
By: /s/ Timothy L. Freeman
----------------------------------------
Name: Timothy L. Freeman
Title: Vice President
S-9
<PAGE>
ABN AMRO BANK, NV, NEW YORK BRANCH, as
Lender
By: ABN Amro North America, Inc.,
as Agent
By: /s/ David Carrington
----------------------------------------
Name: David Carrington
Title: Vice President
By: /s/ Thomas Rogers
----------------------------------------
Name: Thomas Rogers
Title: Vice President
S-10
<PAGE>
BANK OF MONTREAL,
as Lender
By: /s/ L.A. Durning
----------------------------------------
Name: L.A. DURNING
Title: PORTFOLIO MANAGER
S-11
<PAGE>
THE BANK OF NOVA SCOTIA
as Lender
By: /s/ J. Alan Edwards
----------------------------------------
Name: J. ALAN EDWARDS
Title: AUTHORIZED SIGNATORY
S-12
<PAGE>
BANK OF SCOTLAND,
as Lender
By: /s/ Janet Taffe
----------------------------------------
Name: JANET TAFFE
Title: ASST. VICE PRESIDENT
S-13
<PAGE>
BANK OF TOKYO - MITSUBISHII TRUST
COMPANY, as Lender
By: /s/ Nicholas J. Campbell, Jr.
----------------------------------------
Name: Nicholas J. Campbell, Jr.
Title: Vice President
S-14
<PAGE>
PARIBAS,
as Lender
By: /s/ John J. McCormick
----------------------------------------
Name: JOHN J. McCORMICK, III
Title: Vice President
By: /s/
----------------------------------------
Name:
Title:
S-15
<PAGE>
CIBC, INC., as Lender
By: /s/ Cyd Petre
----------------------------------------
Name: CYD PETRE
Title: EXECUTIVE DIRECTOR
CIBC Oppenheimer Corp., AS AGENT
S-16
<PAGE>
FLEET NATIONAL BANK,
as Lender
By: /s/ Jeffrey C. Lynch
----------------------------------------
Name: Jeffrey C. Lynch
Title: SVP
S-17
<PAGE>
MORGAN GUARANTY, as Lender
By: /s/ Mary Ann Snyder
----------------------------------------
Name: Mary Ann Snyder
Title: VP
S-18
<PAGE>
THE INDUSTRIAL BANK OF JAPAN, LTD., as Lender
By: /s/ Takuya Honjo
----------------------------------------
Name: TAKUYA HONJO
Title: SENIOR VICE PRESIDENT
S-19
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
as Lender
By: /s/ Brady S. Sadek
----------------------------------------
Name: Brady S. Sadek
Title: Senior Vice President
S-20
<PAGE>
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Donald V. Davis
----------------------------------------
Name: Donald V. Davis
Title: Vice President
S-21
<PAGE>
THE SANWA BANK, LIMITED,
as Lender
By: /s/ Dominic Sorresso
----------------------------------------
Name: DOMINIC SORRESSO
Title: Vice President
S-22
<PAGE>
BANKBOSTON, N.A., as Lender
By: /s/ Julie V. Jalelian
----------------------------------------
Name: Julie V. Jalelian
Title: Director
S-23
<PAGE>
CREDIT SUISSE FIRST BOSTON, as Lender
By: /s/ Kristin Lepri
----------------------------------------
Name: KRISTIN LEPRI
Title: ASSOCIATE
By: /s/ Chris T Horgan
----------------------------------------
Name: CHRIS T HORGAN
Title: VICE PRESIDENT
S-24
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.,
as Lender
By: /s/ Christopher Fahey
----------------------------------------
Name: Christopher Fahey
Title: Vice President
S-25
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES,
as Lender
By: /s/ William E. Lambert
----------------------------------------
Name: William E. Lambert
Title: Assistant Vice President
By: /s/ Brian Haughney
----------------------------------------
Name: Brian Haughney
Title: Assistant Treasurer
S-26
<PAGE>
THE SAKURA BANK, LIMITED, as Lender
By: /s/ Yoshikazu Nagura
----------------------------------------
Name: YOSHIKAZU NAGURA
Title: Vice President
S-27
<PAGE>
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH, as Lender
By: /s/ Suresh S. Tata
----------------------------------------
Name: SURESH S. TATA
Title: SENIOR VICE PRESIDENT
S-28
<PAGE>
BANK POLSKA KASA OPIEKI S.A. PEKAO S.A.
GROUP, NEW YORK BRANCH, as Lender
By: /s/ Hussein B. El-Tawil
----------------------------------------
Name: Hussein B. El-Tawil
Title: Vice President
S-29
<PAGE>
THE TOKAI BANK, LTD., NEW YORK BRANCH, as
Lender
By: /s/ Michihiko Nakamura
----------------------------------------
Name: Michihiko Nakamura
Title: Joint General Manager
S-30
<PAGE>
MERITA BANK PLC NEW YORK BRANCH
as Lender
By: /s/ Frank Maffei
----------------------------------------
Name: FRANK MAFFEI
Title: VICE PRESIDENT
By: /s/ Clifford Abramsky
----------------------------------------
Name: Clifford Abramsky
Title: VP
S-31
<PAGE>
BAYERISCHE HYPO-UND VEREINSBANK AG,
NEW YORK BRANCH, as Lender
By: /s/ Marianne Weinzinger
----------------------------------------
Name: Marianne Weinzinger
Title: Director
By: /s/ Ivana Albanese-Rizzo
----------------------------------------
Name: IVANA ALBANESE-RIZZO
Title: DIRECTOR
S-32
<PAGE>
THE BANK OF NEW YORK,
as Lender
By: /s/ Kenneth P. Sneider, Jr.
----------------------------------------
Name: Kenneth P. Sneider, Jr.
Title: Vice President
S-33
<PAGE>
FIRST UNION NATIONAL BANK,
as Lender
By: /s/ James J. McKenna
----------------------------------------
Name: James J. McKenna
Title: Executive Vice Presdent
S-34
<PAGE>
ERSTE DER OESTERREICHI SCHEN
SPARKASSEN AG, as Lender
By: /s/ Rima Terradista
----------------------------------------
Name: RIMA TERRADISTA
Title: Vice President
By: /s/ John S. Runnion
----------------------------------------
Name: JOHN S. RUNNION
Title: FIRST VICE PRESIDENT
S-35
<PAGE>
BANK LEUMI TRUST COMPANY NEW YORK,
as Lender
By: /s/ Sami Ambar
----------------------------------------
Name: Sami Ambar
Title: Vice President
S-36
<PAGE>
CREDIT AGRICOLE INDOSUEZ,
as Lender
By: /s/ Craig Welch
----------------------------------------
Name: Craig Welch
Title: FVP
By: /s/ Sarah Mclintock
----------------------------------------
Name: Sarah Mclintock
Title: VP
S-37
<PAGE>
LEHMAN COMMERCIAL PAPER INC.,
as Lender
By: /s/ Michele Swanson
----------------------------------------
Name: Michele Swanson
Title: Authorized Signatory
LEHMAN SYNDICATED LOAN FUNDING TRUST
BY: LEHMAN COMMERCIAL PAPER INC.
/s/ Michele Swanson
----------------------------------------
NAME: MICHELE SWANSON
TITLE: AUTHORIZED SIGNATORY
S-38
<PAGE>
MORGAN STANLEY SENIOR FUNDING, INC.,
as Lender
By: /s/ Michael Hart
----------------------------------------
Name: MICHAEL HART
Title: PRINCIPAL
S-39
<PAGE>
THE TOYO TRUST AND BANKING CO. LTD.,
as Lender
By: /s/ K. Yamauchi
----------------------------------------
Name: K. Yamauchi
Title: Vice President
S-40
<PAGE>
ALLIED IRISH BANKS PLC, CAYMAN ISLANDS
BRANCH, as Lender
By: /s/ William J. Strickland
----------------------------------------
Name: William J. Strickland
Title: Senior Vice President
By: /s/ Marcia Meeker
----------------------------------------
Name: Marcia Meeker
Title: V.P.
S-41
<PAGE>
GULF INTERNATIONAL BANK B.S.C.,
as Lender
By: /s/ Abdel-Fattah Tahoun
----------------------------------------
Name: Abdel-Fattah Tahoun
Title: Senior Vice President
By: /s/ Mireille Khalidi
----------------------------------------
Name: Mireille Kahalidi
Title: Assistant Vice President
S-42
<PAGE>
THE MITSUI TRUST AND BANKING COMPANY,
LIMITED, as Lender
By: /s/ Margaret Holloway
----------------------------------------
Name: MARGARET HOLLOWAY
Title: VICE PRESIDENT & MANAGER
S-43
<PAGE>
EXHIBIT 12.1
WORLD COLOR PRESS, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS
----------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes,
extraordinary charge and cumulative
effect of changes in accounting
methods............................... $ (83,094) $ 39,556 $ 16,461 $ 80,794 $ 98,560 $ 62,682 $ 82,251
Interest and debt issuance cost, net.... 25,080 23,825 37,897 58,417 80,039 61,099 65,368
Portion of operating lease rentals
deemed to be interest................. 7,063 9,274 8,466 9,619 11,846 8,885 11,555
Amortization of interest previously
capitalized........................... 1,056 1,163 1,314 1,335 1,239 929 1,038
Income (loss) available to cover fixed
charges............................. $ (49,895) $ 73,818 $ 64,138 $ 150,165 $ 191,685 $ 133,595 $ 160,211
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Fixed charges:
Interest expense and debt issuance
cost, net........................... $ 25,080 $ 23,825 $ 37,897 $ 58,417 $ 80,039 $ 61,099 $ 65,368
Portion of operating lease rentals
deemed to be interest............... 7,063 9,274 8,466 9,619 11,846 8,885 11,555
Capitalized interest.................. 976 1,276 1,810 252 941 603 1,874
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges................. $ 33,119 $ 34,375 $ 48,173 $ 68,288 $ 92,825 $ 70,587 $ 78,797
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of earnings to fixed charges...... -- 2.1 1.3 2.2 2.1 1.9 2.0
Deficiency of earnings available to
cover fixed charges................... $ (83,014)
---------
---------
</TABLE>
<PAGE>
EXHIBIT 21.2
SUBSIDIARIES
(AS OF 3/8/99)
Northeast Graphics Inc.
The Wessel Company, Inc.
The Lanman Companies, Inc.
Lanman Lithotech, Inc.
Central Florida Press, L.L.C.
RAI, Inc.
KRI, Inc.
World Color Book Services, Inc.
Shea Communications Company
The Johnson & Hardin Co.
Magna Graphic, Inc.
Century Graphics Corporation
Dittler Brothers, Incorporated
Acme Printing Company, Inc.
Great Western Publishing, Inc.
Infiniti Graphics, Inc.
World Color Systems, Inc.
WCX, LLC
WCY, LLC
WCZ, LLC
KRI TN, L.P.
KRI Dresden, Inc.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of World Color Press, Inc.
on Form S-4 of our reports dated February 4, 1998, included and incorporated by
reference in the Annual Report on Form 10-K of World Color Press, Inc. for the
year ended December 28, 1997, and to the use of our report dated February 4,
1998, appearing in the Prospectus which is part of this Registration Statement.
We also consent to the reference to us under the headings "Summary Financial
Data" and "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
New York, New York
March 8, 1999
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) / /
---------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
ONE WALL STREET, NEW YORK, 10286
N.Y. (Zip code)
(Address of principal
executive offices)
</TABLE>
------------------------
WORLD COLOR PRESS, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 37-1167902
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
no.)
THE MILL 06831
340 Pemberwick Road (Zip code)
Greenwich, Connecticut
(Address of principal executive
offices)
</TABLE>
------------------------
8 3/8% Senior Subordinated Notes due 2008
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 4th day of March, 1999.
THE BANK OF NEW YORK
By: /s/Mary LaGumina
_______________________________
Name: Mary LaGumina
Title: ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF ONE WALL STREET, NEW YORK, N.Y. 10286
AND FOREIGN AND DOMESTIC SUBSIDIARIES,
a member of the Federal Reserve System, at the close of business December
31, 1998, published in accordance with a call made by the Federal Reserve Bank
of this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR
AMOUNTS IN
THOUSANDS
-------------
<S> <C> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............................ $ 3,951,273
Interest-bearing balances..................................................... 4,134,162
Securities:
Held-to-maturity securities................................................... 932,468
Available-for-sale securities................................................. 4,279,246
Federal funds sold and Securities purchased under agreements to resell............ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned income...................................... 37,861,802
LESS: Allowance for loan and lease losses..................................... 619,791
LESS: Allocated transfer risk reserve......................................... 3,572
Loans and leases, net of unearned income, allowance, and reserve.............. 37,238,439
Trading Assets.................................................................... 1,551,556
Premises and fixed assets (including capitalized leases).......................... 684,181
Other real estate owned........................................................... 10,404
Investments in unconsolidated subsidiaries and associated companies............... 196,032
Customers' liability to this bank on acceptances outstanding...................... 895,160
Intangible assets................................................................. 1,127,375
Other assets...................................................................... 1,915,742
-------------
Total assets...................................................................... $ 60,077,664
-------------
-------------
LIABILITIES
Deposits:
In domestic offices........................................................... $ 27,020,578
Noninterest-bearing........................................................... 11,271,304
Interest-bearing.............................................................. 15,749,274
In foreign offices, Edge and Agreement subsidiaries, and IBFs................. 17,197,743
Noninterest-bearing........................................................... 103,007
Interest-bearing.............................................................. 17,094,736
Federal funds purchased and Securities sold under agreements to repurchase........ 1,761,170
Demand notes issued to the U.S.Treasury........................................... 125,423
Trading liabilities............................................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less................................... 1,903,700
With remaining maturity of more than one year through three years............. 0
With remaining maturity of more than three years.................................. 31,639
Bank's liability on acceptances executed and outstanding.......................... 900,390
Subordinated notes and debentures................................................. 1,308,000
Other liabilities................................................................. 2,708,852
-------------
Total liabilities................................................................. 54,583,127
-------------
-------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DOLLAR
AMOUNTS IN
THOUSANDS
-------------
<S> <C> <C>
EQUITY CAPITAL
Common stock...................................................... 1,135,284
Surplus........................................................... 764,443
Undivided profits and capital reserves............................ 3,542,168
Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 82,367
Cumulative foreign currency translation adjustments............... (29,725)
----------
Total equity capital.............................................. 5,494,537
----------
Total liabilities and equity capital.............................. $60,077,664
----------
----------
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
<TABLE>
<C> <C> <S> <C>
Thomas A. Reyni
Gerald L. Hassell Directors
Alan R. Griffith
</TABLE>
