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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
STATEMENT ON
SCHEDULE 13D
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
------------------------
WORLD COLOR PRESS, INC.
(Exact Name Of Subject Company)
PRINTING ACQUISITION INC.
An Indirect Wholly Owned Subsidiary of
QUEBECOR PRINTING INC.
(Bidders)
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COMMON STOCK, $0.01 PAR VALUE 98144310-4
(Title Of Class Of Securities) (CUSIP Number of Class of Securities)
</TABLE>
------------------------
LOUIS SAINT-ARNAUD
VICE PRESIDENT, LEGAL AFFAIRS & SECRETARY
QUEBECOR PRINTING INC.
612 SAINT-JACQUES STREET
MONTREAL, QUEBEC, CANADA
H3C 4M8
(514) 954-0101
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Bidders)
WITH A COPY TO:
JOHN A. WILLETT, ESQ.
ARNOLD & PORTER
399 PARK AVENUE
NEW YORK, NEW YORK 10022-4690
(212) 715-1000
CALCULATION OF FILING FEE
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Transaction Valuation*........................................................ $838,715,000
Amount of Filing Fee**........................................................ $ 167,743
</TABLE>
* Estimated for purposes of calculating the filing fee only. The filing fee
calculation assumes the purchase of 23,500,000 shares of common stock, par
value $0.01 per share (the "Shares"), of World Color Press, Inc. at a price
of $35.69 per Share in cash without interest.
** Calculated as 1/50 of 1% of the transaction value in accordance with
regulation 240.0-11 of the Securities Exchange Act of 1934, as amended.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
AMOUNT PREVIOUSLY PAID: Not Applicable FILING PARTY: Not Applicable
FORM OR REGISTRATION NO.: Not Applicable DATE FILED: Not Applicable
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 98144310-4 14D-1/13D
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1 NAMES OF REPORTING PERSONS QUEBECOR
PRINTING INC.
IRS IDENTIFICATION NOS OF ABOVE PERSONS NOT
APPLICABLE
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP / /
3 SEC USE ONLY
4 SOURCE OF FUNDS BK,
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(E) OR 2(F) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION CANADA
</TABLE>
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7 SOLE VOTING POWER 16,865,572.79*
NUMBER OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER NONE
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 16,865,572.79*
REPORTING
PERSON WITH
10 SHARED DISPOSITIVE POWER NONE
</TABLE>
<TABLE>
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 16,865,572.79*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.7%*
14 TYPE OF REPORTING PERSON CO
</TABLE>
* Beneficial ownership is based solely on the following agreements:
On July 12, 1999, the Reporting Person entered into a Tender, Voting and
Option Agreement (the "Tender Agreement") with KKR Partners II, L.P., APC
Associates, L.P., GR Associates L.P., KKR Associates (affiliates of Kohlberg
Kravis Roberts & Co.) and Robert G. Burton, Marc L. Reisch, Jennifer L.
Adams, Robert B. Lewis and James E. Lillie, who are senior executives of the
Company (together, the "Stockholders"), pursuant to which, among other
things, the Stockholders granted the Reporting Person an irrevocable option
to purchase all, but not less than all, of the Stockholders' shares,
representing an aggregate amount of 9,307,272.79, at a price of $35.69 per
share, exercisable only in the event of the Triggering Event (as defined in
Section 13 of the Offer to Purchase). This agreement is described more fully
in Section 13, "The Merger Agreement; Other Agreements," of the Offer to
Purchase attached hereto as Exhibit (a)(1).
On July 12, 1999, the Reporting Person also entered into a Stock Option
Agreement (the "Stock Option Agreement") with the Subject Company pursuant
to which the Subject Company granted the Reporting Person the option to
purchase up to 7,558,300 Shares exercisable only in the event of payment of
a certain Termination Amount (as defined in Section 13 of the Offer to
Purchase). This agreement is described more fully in Section 13, "The Merger
Agreement; Other Agreements," of the Offer to Purchase attached hereto as
Exhibit (a)(1).
1
<PAGE>
CUSIP NO. 98144310-4 14D-1/13D
<TABLE>
<C> <S>
1 NAMES OF REPORTING PERSONS PRINTING
ACQUISITION INC.
IRS IDENTIFICATION NOS OF ABOVE PERSONS 51-0391534
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP / /
3 SEC USE ONLY
4 SOURCE OF FUNDS BK,
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(E) OR 2(F) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
</TABLE>
<TABLE>
<C> <C> <S>
7 SOLE VOTING POWER 16,865,572.79*
NUMBER OF
SHARES
BENEFICIALLY 8 SHARED VOTING POWER NONE
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 16,865,572.79*
REPORTING
PERSON WITH
10 SHARED DISPOSITIVE POWER NONE
</TABLE>
<TABLE>
<C> <S>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 16,865,572.79*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 35.7%*
14 TYPE OF REPORTING PERSON CO
</TABLE>
* Beneficial ownership is based solely on the following agreements:
On July 12, 1999, Quebecor Printing Inc. ("Quebecor Printing"), of which
Reporting Person is an indirect wholly owned subsidiary, entered into a
Tender, Voting and Option Agreement (the "Tender Agreement") with KKR
Partners II, L.P., APC Associates, L.P., GR Associates L.P., KKR Associates
(affiliates of Kohlberg Kravis Roberts & Co.) and Robert G. Burton, Marc L.
Reisch, Jennifer L. Adams, Robert B. Lewis and James E. Lillie, who are
senior executives of the Company (together, the "Stockholders"), pursuant to
which, among other things, the Stockholders granted Quebecor Printing an
irrevocable option to purchase all, but not less than all, of the
Stockholders' shares, representing an aggregate amount of 9,307,272.79, at a
price of $35.69 per share, exercisable only in the event of the Triggering
Event (as defined in Section 13 of the Offer to Purchase). This agreement is
described more fully in Section 13, "The Merger Agreement; Other
Agreements," of the Offer to Purchase attached hereto as Exhibit (a)(1).
On July 12, 1999, Quebecor Printing also entered into a Stock Option
Agreement (the "Stock Option Agreement") with the Subject Company pursuant
to which the Subject Company granted Quebecor Printing the option to
purchase up to 7,558,300 Shares exercisable only in the event of payment of
a certain Termination Amount (as defined in Section 13 of the Offer to
Purchase). This agreement is described more fully in Section 13, "The Merger
Agreement; Other Agreements," of the Offer to Purchase attached hereto as
Exhibit (a)(1).
2
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SCHEDULE 14D-1/SCHEDULE 13D
This Tender Offer Statement on Schedule 14D-1 and statement on Schedule 13D
(the "Tender Offer Statement") filed by Quebecor Printing Inc. ("Quebecor
Printing"), a company amalgamated under the laws of Canada, and Printing
Acquisition Inc. ("Purchaser"), a Delaware corporation and an indirect wholly
owned subsidiary of Quebecor Printing, relates to the offer by Purchaser to
purchase up to 23,500,000 of the issued and outstanding shares of Common Stock
$0.01 par value (the "Shares"), of World Color Press, Inc., a Delaware
corporation (the "Company"), at $35.69 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated July 16, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
This Tender Offer Statement constitutes a Statement on Schedule 13D with
respect to the beneficial ownership of Shares resulting from the Stock Option
Agreement, a copy of which is attached as Exhibit (c)(4) hereto, and the Tender,
Voting and Option Agreement, a copy of which is attached as Exhibit (c)(2)
hereto. The item numbers and responses below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is World Color Press, Inc. (the
"Company"), a Delaware corporation, which has its principal executive
offices at 340 Pemberwick Rd., Greenwich, Connecticut, 06831.
(b) The exact title of the class of equity securities and amount being
sought in the Offer are 23,500,000 shares of Common Stock, $0.01 par value,
of the Company. As of July 8, 1999, there were 37,981,422 Shares issued and
outstanding and approximately 190 holders of record. The information set
forth under "Introduction" in the Offer to Purchase is incorporated herein
by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such
principal market is set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)--(d) and (g): This Statement is filed by Quebecor Printing and
Purchaser. The information set forth under "Introduction," Section 9
("Certain Information Concerning Quebecor Printing, Purchaser and QPUSA"),
and Annex I of the Offer to Purchase is incorporated herein by reference.
(e) and (f): During the last five years, neither Quebecor Printing nor
Purchaser nor, to the best knowledge of Quebecor Printing and Purchaser, any
of the persons listed in Annex I to the Offer to Purchase has been (i)
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a)--(b): The information set forth under Section 8 ("Certain Information
Concerning the Company"), Section 9 ("Certain Information Concerning
Quebecor Printing, Purchaser and QPUSA"), Section 11 ("Background of the
Offer; Past Contacts, Transactions or Negotiations with the Company"),
Section 12 ("Purpose of the Offer and Merger; Appraisal Rights; Plans for
the
3
<PAGE>
Company"), and Section 13 ("The Merger Agreement; Other Agreements") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)--(b): The information set forth under "Introduction" and Section 10
("Source and Amount of Funds") of the Offer to Purchase is incorporated
herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)--(e): The information set forth under "Introduction," Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with
the Company"), Section 12 ("Purpose of the Offer and Merger; Appraisal
Rights; Plans for the Company"), Section 13 ("The Merger Agreement; Other
Agreements"), and Section 14 ("Dividends and Distributions") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g): The information set forth under "Introduction" and Section 7
("Effect of the Offer on the Market for Shares, NYSE Listing, Stock
Quotation, Exchange Act Registration; Margin Regulation") of the Offer to
Purchase is incorporated herein by reference.
Except as contemplated by the Merger Agreement, the Tender Agreement or the
Stock Option Agreement neither Quebecor Printing nor Purchaser has any plans or
proposals which relate to or would result in (x) the acquisition by any person
of additional securities of the Company or the disposition of securities of the
Company, or (y) changes to the Company's charter, bylaws or instruments
corresponding thereto or other action which may impede the acquisition of
control of the Company by any person.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
The information set forth under "Introduction," Section 9 ("Certain
Information Concerning Quebecor Printing, Purchaser and QPUSA"), and Section 13
("Merger Agreement; Other Agreements") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth under "Introduction," Section 9 ("Certain
Information Concerning Quebecor Printing, Purchaser and QPUSA"), Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company"), and Section 13 ("The Merger Agreement; Other Agreements") of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth under "Introduction," Section 13 ("The Merger
Agreement; Other Agreements"), and Section 17 ("Fees and Expenses") of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Quebecor Printing's Consolidated Financial Statements and related Notes
thereto included in Quebecor Printing's Form 40-F for the fiscal year ended
December 31, 1998 and the information set forth under Section 9 ("Certain
Information Concerning Quebecor Printing, Purchaser and QPUSA") of the Offer to
Purchase are incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth under Section 13 ("The Merger Agreement; Other
Agreements") of the Offer to Purchase is incorporated herein by reference.
4
<PAGE>
(b) and (c): The information set forth under "Introduction," Section 1
("Terms of the Offer; Proration"), and Section 16 ("Certain Regulatory and
Legal Matters") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth under Section 7 ("Effect of the Offer on the
Market for Shares, NYSE Listing, Stock Quotation, Exchange Act Registration;
Margin Regulation") of the Offer to Purchase is incorporated herein by
reference.
(e) The information set forth under Section 16 ("Certain Regulatory and
Legal Matters") of the Offer to Purchase is incorporated herein by
reference.
(f) The information set forth in the Offer to Purchase and the related
Letter of Transmittal and the Agreement and Plan of Merger dated as of July
12, 1999 among Quebecor Printing, Purchaser and the Company, copies of which
are attached hereto as Exhibits (a)(1), (a)(2) and (c)(1), is incorporated
herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase dated July 16, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal and the
New York Times on July 16, 1999.
(a)(8) Text of Press Release issued by Quebecor Printing and the Company on
July 12, 1999.
(b)(1) Arrangement Letter (including the related term sheets and waiver
letters) dated as of July 12, 1999 from Royal Bank of Canada, Bank of
America Canada, Bank of Montreal and Canadian Imperial Bank of Commerce.
(c)(1) Agreement and Plan of Merger dated as of July 12, 1999 among Quebecor
Printing, Purchaser and the Company.
(c)(2) Tender, Voting and Option Agreement dated as of July 12, 1999 among
Quebecor Printing, KKR Partners II, L.P., APC Associates, L.P., GR
Associates L.P., KKR Associates and Robert G. Burton, Marc L. Reisch,
Jennifer L. Adams, Robert B. Lewis and James E. Lillie.
(c)(3) Confidentiality Agreement dated June 28, 1999 between Quebecor
Printing and the Company.
(c)(4) Stock Option Agreement dated as of July 12, 1999 between Quebecor
Printing and the Company.
(c)(5) Registration Rights Agreement dated as of July 12, 1999 between
Quebecor Printing and KKR Partners II, L.P., APC Associates, L.P., GR
Associates L.P., KKR Associates.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
5
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
July 16, 1999
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QUEBECOR PRINTING INC.
By: /s/ CHRISTIAN M. PAUPE
-----------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
PRINTING ACQUISITION INC.
By: /s/ CHRISTIAN M. PAUPE
-----------------------------------------
Name: Christian M. Paupe
Title: Treasurer
</TABLE>
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
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(a)(1) Offer to Purchase dated July 16, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal and the New York Times on July
16, 1999.
(a)(8) Text of Press Release issued by Quebecor Printing and the Company on July 12, 1999.
(b)(1) Arrangement Letter (including the related term sheet and waiver letters) dated as of July 12,
1999 from Royal Bank of Canada, Bank of America Canada, Bank of Montreal and Canadian Imperial
Bank of Commerce.
(c)(1) Agreement and Plan of Merger dated as of July 12, 1999 among Quebecor Printing, Purchaser and
the Company.
(c)(2) Tender, Voting and Option Agreement dated as of July 12, 1999 among Quebecor Printing, KKR
Partners II, L.P., APC Associates, L.P., GR Associates L.P., KKR Associates and Robert G.
Burton, Marc L. Reisch, Jennifer L. Adams, Robert B. Lewis and James E. Lillie.
(c)(3) Confidentiality Agreement dated June 28, 1999 between Quebecor Printing and the Company.
(c)(4) Stock Option Agreement dated as of July 12, 1999 between Quebecor Printing and the Company
(c)(5) Registration Rights Agreement dated as of July 12, 1999 between Quebecor Printing and KKR
Partners II, L.P., APC Associates, L.P., GR Associates L.P., KKR Associates.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
7
<PAGE>
Offer To Purchase For Cash
Up to 23,500,000 Shares of Common Stock
of
World Color Press, Inc.
at
$35.69 Net Per Share
by
Printing Acquisition Inc.
an indirect wholly owned subsidiary of
Quebecor Printing Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES OF
COMMON STOCK PAR VALUE $0.01 PER SHARE (THE "SHARES") OF WORLD COLOR PRESS, INC.
(THE "COMPANY") WHICH, TOGETHER WITH ANY SHARES OWNED BY QUEBECOR PRINTING OR
PURCHASER, WOULD CONSTITUTE MORE THAN 50% OF THE VOTING POWER OF THE COMPANY
(DETERMINED ON A FULLY-DILUTED BASIS) OF ALL THE SECURITIES OF THE COMPANY
ENTITLED TO VOTE GENERALLY IN A MERGER AND (ii) THE EXPIRATION OR TERMINATION OF
ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO THE SATISFACTION OF
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 12, 1999 BY AND AMONG QUEBECOR PRINTING INC., PRINTING
ACQUISITION INC., AND THE COMPANY. THE BOARD OF DIRECTORS OF THE COMPANY HAS
DETERMINED BY A UNANIMOUS VOTE THAT THE OFFER AND THE MERGER ARE FAIR TO,
ADVISABLE AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS, HAS
APPROVED THE OFFER AND THE MERGER, HAS APPROVED AND ADOPTED THE MERGER
AGREEMENT, AND HAS RESOLVED TO RECOMMEND ACCEPTANCE OF THE OFFER TO, AND
ADOPTION OF THE MERGER AGREEMENT BY, THE COMPANY'S STOCKHOLDERS.
IMPORTANT
Any stockholder of the Company wishing to tender Shares in the Offer must
either (i) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal and all other required documents to the
Depositary (as defined herein) together with certificates representing the
Shares tendered or follow the procedure for book-entry transfer set forth in
Section 3 or (ii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder. A
stockholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such person if such
stockholder wishes to tender such Shares.
Any stockholder of the Company who wishes to tender Shares and cannot
deliver certificates representing such Shares and all other required documents
to the Depositary on or prior to the Expiration Date or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
pursuant to the guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Joint Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from the Information Agent
or the Joint Dealer Managers. Stockholders may also contact their broker,
dealer, commercial bank and trust companies or other nominee.
The Joint Dealer Managers for the Offer are:
Credit Suisse First Boston RBC Dominion Securities
July 16, 1999
<PAGE>
TABLE OF CONTENTS
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INTRODUCTION............................................................................................... 1
1. Terms of the Offer; Proration. ........................................................................ 3
2. Acceptance for Payment and Payment for Shares. ........................................................ 5
3. Procedure for Tendering Shares. ....................................................................... 6
4. Withdrawal Rights. .................................................................................... 9
5. Certain Federal Income Tax Consequences. .............................................................. 10
6. Price Range of Shares; Dividends. ..................................................................... 11
7. Effect of the Offer on the Market for Shares, NYSE Listing, Stock Quotation, Exchange Act Registration;
Margin Regulation ..................................................................................... 12
8. Certain Information Concerning the Company. ........................................................... 13
9. Certain Information Concerning Quebecor Printing, Purchaser and QPUSA. ................................ 14
10. Source and Amount of Funds. ........................................................................... 17
11. Background of the Offer; Past Contacts, Transactions or Negotiations with the Company. ................ 18
12. Purpose of the Offer and the Merger; Appraisal Rights; Plans for the Company. ......................... 21
13. The Merger Agreement; Other Agreements................................................................. 23
14. Dividends and Distributions. .......................................................................... 34
15. Certain Conditions of the Offer. ...................................................................... 34
16. Certain Regulatory and Legal Matters. ................................................................. 35
17. Fees and Expenses. .................................................................................... 37
18. Miscellaneous. ........................................................................................ 38
Annex I--Certain Information Concerning the Directors and Executive Officers of Purchaser, Quebecor
Printing, Quebecor, Inc. and Caisse de Depot et Placement du Quebec...................................... I-1
</TABLE>
<PAGE>
TO ALL HOLDERS OF COMMON STOCK
OF WORLD COLOR PRESS, INC.
INTRODUCTION
Printing Acquisition Inc., a Delaware corporation ("Purchaser"), and an
indirect wholly owned subsidiary of Quebecor Printing Inc., a corporation
amalgamated under the laws of Canada ("Quebecor Printing"), hereby offers to
purchase up to 23,500,000 shares (representing approximately 62% of all
outstanding shares as of July 8, 1999) of Common Stock, par value $0.01 per
share (the "Shares"), of World Color Press, Inc., a Delaware corporation (the
"Company"), at a price of $35.69 per share net to the seller in cash, all upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer"). However, any tendering Stockholder or other
payee who fails to complete and sign the Substitute Form W-9 included in the
Letter of Transmittal may be subject to backup Federal income tax withholding of
31% of the gross proceeds payable to such Stockholder or other payee pursuant to
the Offer. Stockholders who hold their Shares through a bank or broker should
check with such institution as to whether they charge any service fees.
Tendering holders of the Shares will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of the Shares by Purchaser pursuant
to the Offer. Purchaser will pay all charges and expenses of Credit Suisse First
Boston Corporation ("CSFB") and RBC Dominion Securities Corporation ("RBCDS"),
which are acting as Joint Dealer Managers for the Offer, (in such capacity, the
"Joint Dealer Managers"), Harris Trust Company of New York (the "Depositary")
and Georgeson Shareholder Communications Inc. (the "Information Agent"),
incurred in connection with the Offer.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS HEREIN DEFINED) A
NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES OWNED BY QUEBECOR PRINTING OR
PURCHASER, WOULD CONSTITUTE MORE THAN 50% OF THE VOTING POWER OF THE COMPANY
(DETERMINED ON A FULLY-DILUTED BASIS) OF ALL THE SECURITIES OF THE COMPANY
ENTITLED TO VOTE GENERALLY IN A MERGER (THE "MINIMUM CONDITION") AND (II) THE
EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "H-S-R
ACT") (THE "H-S-R CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS
AND CONDITIONS. SEE SECTION 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED BY A UNANIMOUS VOTE
THAT THE OFFER AND THE MERGER ARE FAIR TO, ADVISABLE AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS STOCKHOLDERS, HAS APPROVED THE OFFER AND THE MERGER, HAS
APPROVED AND ADOPTED THE MERGER AGREEMENT, AND HAS RESOLVED TO RECOMMEND
ACCEPTANCE OF THE OFFER TO, AND ADOPTION OF THE MERGER AGREEMENT BY, THE
COMPANY'S STOCKHOLDERS.
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), financial advisor to
the Company, has delivered to the Board of Directors of the Company its written
opinion dated July 12, 1999 (the "Financial Advisor Opinion"), to the effect
that, as of such date and based upon and subject to the assumptions, limitations
and qualifications set forth therein, the consideration to be received by the
holders of Shares pursuant to the Offer and the Merger (as defined below) is
fair from a financial point of view to such holders. A copy of the Financial
Advisor Opinion is attached as an exhibit to the Company's Solicitation/
Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") in connection with the Offer and which is being mailed to holders
of Shares herewith. Holders of Shares should read the Financial Advisor Opinion
in its entirety.
The purpose of the Offer is for Quebecor Printing, through Purchaser, to
acquire a majority voting interest in the Company, as the first step in a
business combination.
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The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 12, 1999 (the "Merger Agreement") by and among Quebecor Printing,
Purchaser, and the Company. The Merger Agreement provides, among other things,
that as soon as practicable after the purchase of Shares pursuant to the Offer
and the satisfaction of the other conditions set forth in the Merger Agreement
and in accordance with the relevant provisions of the Delaware General
Corporation Law (the "DGCL"), Purchaser will be merged with and into the Company
(the "Merger"). See Section 13. Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving Corporation")
and will be an indirect wholly owned subsidiary of Quebecor Printing. At the
effective time of the Merger (the "Effective Time"), if Purchaser shall have
purchased, pursuant to the Offer, 23,500,000 Shares (the "Maximum Number"), each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares owned by the Company as treasury stock, Shares owned by Purchaser, and
Shares with respect to which appraisal rights are properly exercised under the
DGCL ("Dissenting Shares")) shall be canceled, extinguished and converted into
the right to receive a number (rounded to the nearest one-millionth of a share)
of fully paid and nonassessable Subordinate Voting Shares of Quebecor Printing
("Quebecor Printing Stock"), equal to the Exchange Ratio (as defined in Section
13). If Purchaser shall have purchased, pursuant to the Offer, less than the
Maximum Number, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Company as treasury stock, Shares
owned by Purchaser, and Dissenting Shares) shall be canceled, extinguished and
converted into the right to receive, (i) cash, in an amount equal to the product
of the Cash Proration Factor (as defined in Section 13) multiplied by $35.69 and
(ii) a number (rounded to the nearest one-millionth of a share) of fully paid
and non-assessable shares of Quebecor Printing Stock equal to the product of (x)
1 minus the Cash Proration Factor multiplied by (y) the Exchange Ratio. See
Section 5 for a description of certain federal income tax consequences of the
Offer and the Merger. Each Share held in the treasury of the Company and each
Share owned by Purchaser, in each case, immediately prior to the Effective Time,
shall automatically be canceled and retired without any conversion thereof and
no payment or distribution shall be made with respect thereto. Each share of
capital stock of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted and changed into one validly issued, fully
paid and nonassessable share of such capital stock of the Surviving Corporation.
THE OFFER DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION TO BUY ANY
SECURITIES OF QUEBECOR PRINTING. SUCH AN OFFER MAY BE MADE ONLY PURSUANT TO A
PROSPECTUS.
The Company has represented to Quebecor Printing that, as of July 8, 1999,
there were (a) 37,981,422 Shares issued and outstanding (including 330,285
shares of Company Restricted Stock), (b) 3,660,477 Shares reserved for issuance
upon conversion of the Company's 6% Convertible Senior Subordinated Notes due
October 1, 2007 and (c) employee and director stock options and awards
outstanding to purchase an aggregate of 4,798,818 Shares. Based upon such
information, if Shares representing at least 21,390,121 Shares in the aggregate
are validly tendered and not properly withdrawn prior to the expiration of the
Offer, the Minimum Condition would be satisfied. Consummation of the Merger is
conditioned upon, among other things, the approval and adoption by the requisite
vote of stockholders of the Company of the Merger Agreement. See Section
13--"The Merger Agreement; Other Agreements". Under the DGCL and Amended and
Restated Certificate of Incorporation (the "Company Charter") and By-Laws of the
Company, the affirmative vote of the majority of all votes entitled to be cast
by the Shares is the only vote that would be necessary to approve the Merger
Agreement and Merger at a meeting of the Company's stockholders. A proxy or
informative statement containing detailed information concerning the Merger will
be furnished to holders of Shares in connection with a special meeting of
stockholders to be called by the Company to vote on the Merger Agreement. If the
Minimum Condition is satisfied and Purchaser purchases a number of shares which,
together with any Shares owned by Quebecor Printing or Purchaser, Purchaser
would have sufficient voting power to approve the Merger without the affirmative
vote of any other stockholder.
In connection with the transactions contemplated by the Merger Agreement,
Quebecor Printing has entered into a Tender, Voting and Option Agreement dated
as of July 12, 1999 (the "Tender Agreement")
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with KKR Partners II, L.P., APC Associates, L.P., GR Associates L.P., KKR
Associates and Robert G. Burton, Marc L. Reisch, Jennifer L. Adams, Robert B.
Lewis and James E. Lillie, who are senior executives of the Company (together,
the "Stockholders"), pursuant to which, among other things, the Stockholders
agreed to validly tender in the Offer, and not withdraw, all Shares which they
now own (the "Stockholder Shares") (which, based on information provided by the
Stockholders with respect to Shares currently held, amounted to 9,307,273
Shares, and which constitute approximately 24% of the Shares currently
outstanding); provided, however, that no Stockholder who is a natural person
will be required to tender such Stockholder's Shares if so doing would subject
such Stockholder to liability under Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In addition, the Stockholders agreed in
the Tender Agreement that, at any meeting of the Company's stockholders (however
called), they would (i) attend in person or via proxy, (ii) vote the Stockholder
Shares in favor of the Merger and the Merger Agreement and (iii) vote the
Stockholder Shares against any action which would reasonably be expected to
result in a failure of the conditions to closing described in the Merger
Agreement. The Tender Agreement further provides that the obligations of the
Stockholders shall terminate on the first to occur of the (a) consummation of
the Merger, (b) termination of the Merger Agreement (c) irrevocable approval of
the respective shareholders of Quebecor Printing (if required), and (d)
termination of the Offer without the purchase of the Shares. Pursuant to the
Tender Agreement, Quebecor Printing also has the option, under certain
circumstances, to purchase Stockholder Shares. See Section 13 "--Other
Agreements".
Tendering Shares pursuant to the Offer will not affect the right of
stockholders to receive dividends declared by the Company, if any, with a record
date prior to the date on which Purchaser purchases the Shares pursuant to the
Offer. See Sections 6 and 14.
Certain United States federal income tax consequences of the sale of Shares
pursuant to the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE CAREFULLY READ BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; PRORATION.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares up to the
Maximum Number that are validly tendered prior to the Expiration Date and not
theretofore properly withdrawn in accordance with Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on August 12, 1999,
unless Purchaser shall have extended the period of time for which the Offer is
open as may be required by the terms of the Merger Agreement, or applicable law,
in which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by Purchaser, shall expire. See Sections 13 and
15.
Upon the terms and subject to the conditions of the Offer, if more than the
Maximum Number of Shares are validly tendered and not properly withdrawn prior
to the Expiration Date, Purchaser will accept for payment and pay for only
23,500,000 Shares on a pro rata basis (with appropriate adjustments to avoid the
purchase of fractional Shares) based on the number of Shares properly tendered
by each stockholder prior to the Expiration Date and not withdrawn. In the event
that proration of tendered Shares is required, because of the difficulty of
determining the precise number of Shares properly tendered and not withdrawn
(due in part to the guaranteed delivery procedures described in Section 3),
Purchaser does not expect that it will be able to announce the final results of
such proration or pay for any Shares until at least seven New York Stock
Exchange Inc. ("NYSE") trading days after the Expiration Date. Stockholders may
obtain such preliminary information from the Information Agent and may be able
to obtain such information from their broker. Purchaser will not pay for any
Shares accepted for payment pursuant to the Offer until the final Cash Proration
Factor is known.
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If Purchaser shall decide, in its sole discretion (exercised in accordance
with the terms of the Merger Agreement), to increase the consideration offered
in the Offer to holders of Shares and if, at the time that notice of such
increase is first published, sent or given to holders of Shares in the manner
specified below, the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including, the
date that such notice is first so published, sent or given, then the Offer will
be extended until the expiration of such period of ten business days. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday, and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the H-S-R Condition. The Offer is also subject to
satisfaction or waiver of other terms and conditions. See Section 15. Purchaser
reserves the right (but shall not be obligated), in accordance with applicable
rules and regulations of the Commission, in its sole discretion, to waive any of
the conditions to the Offer other than the Minimum Condition (which may be
waived only with the consent of the Company's Board of Directors). If the
Minimum Condition or any of the other conditions set forth in Section 15 have
not been satisfied by 12:00 midnight, New York City time, on August 12, 1999 (or
any other time then set as the Expiration Date), Purchaser may, subject to the
terms of the Merger Agreement as described below, elect to (1) extend the Offer
and, subject to applicable withdrawal rights, retain all tendered Shares until
the Expiration Date, as extended, (2) not extend the Offer and, subject to
complying with applicable rules and regulations of the Commission, accept for
payment all Shares so tendered, or (3) if permitted by the terms of the Merger
Agreement, terminate the Offer and not accept for payment any Shares and return
all tendered Shares to tendering stockholders. Under the terms of the Merger
Agreement, Purchaser may not, without the consent of the Company's Board of
Directors, (i) decrease or change the form of consideration payable in the
Offer, (ii) reduce the number of Shares sought pursuant to the Offer, (iii)
amend the conditions or impose additional conditions to the Offer, (iv) amend or
change any term of the Offer or (v) waive the Minimum Condition. If all the
conditions to consummation of the Offer are satisfied, Purchaser shall
consummate the Offer as promptly as possible. Notwithstanding the foregoing and
subject to the immediately preceding sentence, Purchaser (i) may at any time, in
its sole discretion, extend the Offer and (ii) may not terminate the Offer and
shall extend the Offer to the extent contemplated by the provisions of the
Merger Agreement. See Section 15. Subject to the terms of the Merger Agreement
described above, Purchaser reserves the right (but will not be obligated), at
any time and from time to time in its sole discretion, to extend the period
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension promptly thereafter. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering stockholder to withdraw its Shares. Subject to the terms
of the Merger Agreement, there can be no assurance that Purchaser will exercise
its right to extend the Offer.
Pursuant to the Merger Agreement, Purchaser is obligated to extend the Offer
from time to time in the event that, at a then-scheduled expiration date, all of
the conditions to the Offer have not been satisfied (other than incurable
breaches of representations, warranties and covenants; provided that the
determination of whether a breach is incurable is not in the sole discretion of
Purchaser) each such extension not to exceed (unless consented to by the
Company) the lesser of 10 additional business days or such fewer number of days
that the Company or Quebecor Printing reasonably believes are necessary to cause
such Offer condition to be satisfied; provided that, under no circumstances
shall any such extension be less than the minimum number of days required by the
Exchange Act or the rules and regulations promulgated thereunder or by
applicable law and provided further that, subject to the last sentence of this
paragraph, Purchaser shall not be required to extend the Offer for more than 15
business days after making a public announcement that all of the conditions to
the Offer other than the Minimum Condition have been satisfied. If on September
13, 1999 either or both of the Minimum Condition and any waiting periods under
the H-S-R Act applicable to the purchase of Shares pursuant to the Offer shall
not have expired or terminated, Purchaser shall (unless Quebecor Printing and
the Company otherwise agree)
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terminate the Offer and seek to consummate the Merger in accordance with the
Merger Agreement. Except as provided in the preceding sentence and unless the
Merger Agreement is terminated in accordance with its terms, Purchaser shall not
terminate the Offer without purchasing Shares pursuant to the Offer.
Subject to the terms of the Merger Agreement described above, Purchaser also
expressly reserves the right, in its sole discretion at any time and from time
to time, to delay payment for any Shares regardless of whether such Shares were
theretofore accepted for payment, or to terminate the Offer and not to accept
for payment or pay for any Shares not theretofore accepted for payment or paid
for, by giving oral or written notice of such delay, termination or amendment to
the Depositary and by making a public announcement thereof. Purchaser's right to
delay payment for any Shares or not to pay for any Shares theretofore accepted
for payment is subject to the applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act, relating to
Purchaser's obligation to pay for or return tendered Shares promptly after the
termination or withdrawal of the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rules
14d-4(c) and 14e-l(d) under the Exchange Act. Without limiting the obligation of
Purchaser under such rule or the manner in which Purchaser may choose to make
any public announcement, Purchaser currently intends to make announcements by
issuing a press release to the Dow Jones News Service and making any appropriate
filing with the Commission.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1
under the Exchange Act. The minimum period during which a tender offer must
remain open following material changes in the terms of the Offer or the
information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend upon the relevant facts and
circumstances, including the relative materiality of the changes to such terms
or information. With respect to a change in price or a change in percentage of
securities sought, a minimum ten business day period is generally required to
allow for adequate dissemination to stockholders and investor response.
The Company has provided Purchaser with the Company's list of stockholders
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the Letter of Transmittal will be
mailed to record holders of the Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the list of stockholders or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for up to the Maximum
Number of Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn in accordance with Section 4 promptly after the later to
occur of (a) the Expiration Date and (b) subject to compliance with Rule
14e-l(c) under the Exchange Act, the satisfaction or waiver of the conditions
set forth in Section 15. Subject to the terms of the Merger Agreement and
compliance with Rule 14e-1(c) under the Exchange Act, Purchaser expressly
reserves the right to delay payment for Shares in order to comply in whole or in
part with any applicable law, including, without limitation, the H-S-R Act. See
Sections 1 and 16.
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In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company, (the "Book-Entry Transfer Facility"), pursuant to the procedures set
forth in Section 3, (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with all required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined below) and (iii) all other documents required by the Letter of
Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that Book-Entry Transfer Facility has
received an express acknowledgment from the participant in Book-Entry Transfer
Facility tendering the Shares that such participant has received and agrees to
be bound by the terms of the Letter of Transmittal and that Purchaser may
enforce such agreement against the participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn if, as and when Purchaser gives oral
or written notice to the Depositary of Purchaser's acceptance of such Shares for
payment. In all cases, payment for Shares purchased pursuant to the Offer will
be made by deposit of the purchase price with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payment from
Purchaser and transmitting such payment to tendering stockholders. If, for any
reason whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 1, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares and such Shares may not be withdrawn, except to the extent that
the tendering stockholders are entitled to withdrawal rights as described in
Section 4 and as otherwise required by Rule 14e-1(c) under the Exchange Act.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason (including, without limitation,
proration due to tenders of more than 23,500,000 Shares), or if certificates are
submitted for more Shares than are tendered, certificates for such unpurchased
or untendered Shares will be returned without expense to the tendering
stockholder (or, in the case of Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility, such Shares will be credited to an account
maintained within the Book-Entry Transfer Facility), as promptly as practicable
after the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more direct or indirect subsidiaries of Quebecor
Printing the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but no such transfer or assignment shall relieve
Purchaser of its obligations under the Offer or prejudice any rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with all required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and all other required documents, must
be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase on or prior to the Expiration Date, and either
(i) certificates representing such Shares must be received by the Depositary or
such Shares must be tendered pursuant to the procedure for book-entry
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transfer set forth below, and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedure set forth below must be complied with. If
certificates for Shares are forwarded to the Depositary in multiple deliveries,
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each delivery. No alternative, conditional or contingent
tenders will be accepted. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at the Book-Entry Transfer Facility prior to the
Expiration Date, for Shares to be validly tendered (i) the Letter of Transmittal
(or a manually signed facsimile thereof), properly completed and duly executed,
with all required signature guarantees, or an Agent's Message in connection with
a book-entry transfer, and all other required documents, must, in any case, be
transmitted to and received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date
or (ii) the tendering stockholder (or his or her nominee) must comply with the
guaranteed delivery procedures described below.
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS MUST BE FORWARDED
TO AND RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK
COVER OF THIS OFFER TO PURCHASE. DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY
IS AT THE ELECTION AND RIGHT OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING IN THE CASE
OF A BOOK-ENTRY TRANSFER BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEE. Signatures on the Letter of Transmittal do not need to
be guaranteed if the Shares tendered thereby are tendered (i) by a registered
holder of Shares who has not completed either the box labeled "Special Delivery
Instructions" or the box labeled "Special Payment Instructions" on the Letter of
Transmittal or (ii) for the account of any Eligible Institution (as defined
below). All other signatures must be guaranteed by a member in good standing of
the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program, the New York Stock Exchange, Inc. Medallion Signature Program or by any
other "eligible guarantor institution," as such term is defined in Rule 17Ad-15
under the Exchange Act (each of the foregoing being referred to as an "Eligible
Institution" and, collectively, as "Eligible Institutions"). All other
signatures on the Letter of Transmittal must be guaranteed. If the certificates
evidencing tendered Shares are registered in the name of a person or persons
other than the signer of the Letter of Transmittal, or if payment is to be made
or delivered to, or certificates for unpurchased Shares are to be issued or
returned to, a person other than the registered owner or owners, then the
tendered certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the certificates, with the signatures on the
certificates or stock powers guaranteed by an Eligible Institution as provided
in the Letter of Transmittal. See Instructions 1 and 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. If a stockholder wishes to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit certificates and
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<PAGE>
all required documents to reach the Depositary on or prior to the Expiration
Date or the procedure for book-entry transfer cannot be completed on a timely
basis, such Shares may nevertheless be tendered validly upon compliance with all
of the following guaranteed delivery procedures:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by Purchaser herewith, is received
by the Depositary, as provided below, on or prior to the Expiration
Date; and
(iii) the certificates for all physically tendered Shares in proper form for
transfer (and/or a Book-Entry Confirmation for all such Shares),
together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof), and all required
signature guarantees, or, in the case of a book-entry transfer, an
Agent's Message, and all other documents required by the Letter of
Transmittal are received by the Depositary within three NYSE trading
days after the date of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, mail or facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or a Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
(iii) all other documents required by the Letter of Transmittal.
BACK-UP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT BACK-UP WITHHOLDING OF
UNITED STATES ("U.S.") FEDERAL INCOME TAX WITH RESPECT TO PAYMENT OF THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST
PROVIDE THE DEPOSITARY WITH HIS OR HER CORRECT TAXPAYER IDENTIFICATION NUMBER
("TIN") AND CERTIFY THAT HE OR SHE IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. SEE INSTRUCTION 8 SET FORTH IN THE LETTER OF TRANSMITTAL.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by Purchaser in its sole discretion,
and its determination will be final and binding on all parties. Purchaser
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of Purchaser, be unlawful. Purchaser also reserves the
absolute right to waive any of the conditions of the Offer, subject to the
limitations set forth in the Merger Agreement, or any defect or irregularity in
the tender of any Shares. In all cases, Purchaser's interpretation of the
Instructions to the Letter of Transmittal will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of Purchaser,
Quebecor Printing, any of their affiliates, the Joint Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability to any tendering stockholder for failure to give any such
notification.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above, including delivery through an Agent's Message, a tendering stockholder
irrevocably appoints designees of Purchaser as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to (i) the Shares
8
<PAGE>
tendered by such stockholder and accepted for payment by Purchaser and (ii) all
dividends, distributions (including, without limitation, distributions of
additional Shares) and rights declared, issued, paid or distributed in respect
of any such Shares on or after July 12, 1999 and payable or distributable to
such stockholder on a date prior to the transfer to the name of Purchaser (or a
nominee or transferee of Purchaser) on the Company's stock transfer record of
such Shares (collectively, "Distributions"). All such powers of attorney and
proxies are irrevocable and shall be considered coupled with an interest in the
tendered Shares. This appointment is effective when, and only to the extent
that, Purchaser accepts for payment the Shares deposited with the Depositary.
Upon acceptance for payment, all prior powers of attorney and proxies given by
the stockholder with respect to the Shares and all Distributions will, without
further action, be revoked and no subsequent powers of attorney and proxies may
be given or written consent executed (and, if given or executed, will not be
deemed effective). The designees of Purchaser will, with respect to the Shares
and all Distributions, be empowered to exercise all voting and other rights of
such stockholder as they in their sole discretion deem proper in respect of any
annual or special meeting of the Company's stockholders, or any adjournment or
postponement thereof or in connection with any action that may be taken by
consent in lieu of any meeting or otherwise. Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's payment for such Shares, Purchaser must be able to exercise
full voting and other rights of record or beneficial holder with respect to such
Shares and all Distributions, including voting at any meeting of stockholders
(whether annual or special or whether or not adjourned) or acting by written
consent.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer. Purchaser's acceptance of payment of Shares tendered
pursuant to the Offer will constitute the tendering stockholder's acceptance of
the terms and conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or by applicable law, tenders
of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant
to the Offer may be withdrawn at any time prior to the Expiration Date (other
than the Stockholder Shares, which may only be withdrawn as provided in the
Tender Agreement) and, unless theretofore accepted for payment pursuant to the
Offer, may also be withdrawn at any time after September 13, 1999 (or such later
date as may apply if the Offer is extended). If purchase of or payment for
Shares is delayed for any reason or if Purchaser is unable to purchase or pay
for Shares for any reason, then, without prejudice to Purchaser's rights under
the Offer, tendered Shares may be retained by the Depositary on behalf of
Purchaser and may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section 4,
subject to Rule 14e-l(c) under the Exchange Act, which provides that no person
who makes a tender offer shall fail to pay the consideration offered or return
the securities deposited by or on behalf of security holders promptly after the
termination or withdrawal of the tender offer. Any such delivery in an
acceptance for payment will be accompanied by an extension of the Offer to the
extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must, to be valid, specify the name of the person who
tendered the Shares to be withdrawn, the class and number of Shares to be
withdrawn and the name in which the certificates representing such Shares are
registered, if different from that of the person who tendered the Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, any
9
<PAGE>
notice of withdrawal must, to be valid, also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
and its determination will be final and binding on all parties. None of
Purchaser, Quebecor Printing, any of their affiliates or assigns, the Joint
Dealer Managers, the Depositary, the Information Agent nor any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability to any tendering stockholder for
failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of the principal federal income tax consequences
relating to the sale or exchange of Shares pursuant to the Offer and/or the
Merger (including Dissenting Shares). The discussion applies only to holders of
Shares in whose hands Shares are capital assets, and may not apply to Shares
received pursuant to the exercise of employee stock-options or otherwise as
compensation, or to holders of Shares who are subject to special provisions of
the tax law (such as insurance companies, tax-exempt organizations and non-U.S.
persons).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH
STOCKHOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES
DISCUSSED BELOW TO SUCH STOCKHOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER
AND THE MERGER TO SUCH STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for federal income tax purposes. In general, for federal income tax
purposes, a holder of Shares will recognize gain or loss equal to the difference
between (a) the amount realized (cash plus the fair market value of any Quebecor
Printing Stock), and (b) such stockholder's adjusted tax basis for the Shares
sold pursuant to the Offer. In addition, an exchange of Shares for the shares of
Quebecor Printing Stock and cash, if any, pursuant to the Merger also will be a
taxable transaction for federal income tax purposes. In this instance, an
exchanging stockholder will recognize gain or loss in an amount equal to the
difference between (i) the sum of (x) the fair market value, determined as of
the time of such exchange, of the shares of Quebecor Printing Stock and (y) the
amount of any cash, received pursuant to the Merger, and (ii) the aggregate tax
basis in the relevant Shares exchanged therefor. Gain or loss must be determined
separately for each block of Shares (I.E., Shares acquired at the same cost in a
single transaction) sold or exchanged pursuant to the Offer or the Merger. The
receipt of cash by holders of Dissenting Shares will be a taxable transaction
for federal income tax purposes. A holder of Dissenting Shares will recognize
gain or loss equal to the difference between (a) the amount of cash received and
(b) the adjusted tax basis of the Dissenting Shares. Any gain or loss realized
by a holder of Shares or Dissenting Shares will be capital gain or loss (other
than interest received on amounts due with respect to Dissenting Shares, which
will be taxed as ordinary income) and will be long-term capital gain or loss if,
on the date of sale or exchange, the Shares were held for more than one year. In
the case of an individual stockholder, net long-term capital gain may be subject
to a reduced rate of tax, and net capital losses may be subject to limits on
deductibility.
10
<PAGE>
Payments in connection with the Offer or the Merger may be subject to
"back-up withholding" at a rate of 31% unless the stockholder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a correct TIN, certifies as to no loss
of exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. Any amount withheld under these
rules will be credited against the stockholder's U.S. federal income tax
liability. Tendering stockholders may be able to prevent back-up withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Section 3. A stockholder who does not provide its correct TIN may be subject to
penalties imposed by the IRS.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF THE U.S. FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR STOCKHOLDERS IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATIONS. STOCKHOLDERS SHOULD
CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE
CHANGE OF CONTROL OFFER, INCLUDING THE EFFECT OF ANY FEDERAL, STATE, LOCAL
FOREIGN OR OTHER TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the NYSE under the trading symbols
"WRC". The following table sets forth for the periods indicated the high and low
sales prices per Share. Share prices are as reported in the Company's Annual
Report on Form 10-K for the year ended December 27, 1998 (the "Company Form
10-K") and, in the case of 1999, as reported on the NYSE based on published
financial sources.
<TABLE>
<CAPTION>
HIGH LOW
----- ---------
<S> <C> <C>
1997
First Quarter............................................................ $ 225/8 $ 181/8
Second Quarter........................................................... 261/4 195/8
Third Quarter............................................................ 327/16 231/2
Fourth Quarter........................................................... 303/16 2211/16
1998
First Quarter............................................................ $ 343/4 $ 253/8
Second Quarter........................................................... 351 /16 297/8
Third Quarter............................................................ 361/4 26
Fourth Quarter........................................................... 343/4 223/4
1999
First Quarter............................................................ $ 307/16 $ 211/4
Second Quarter........................................................... 283/16 20
Third Quarter (through July 14, 1999).................................... 357/8 277/16
</TABLE>
On July 9, 1999, the last full day of trading prior to the date of the
public announcement of the execution of the Merger Agreement and the
announcement that Quebecor Printing had submitted to the Company a proposal to
acquire all outstanding Shares for $35.69 cash per share (see Section 11), the
closing price per share for the Shares as reported on the NYSE was $29 13/16. On
July 15, 1999, the last full trading day prior to the commencement of the Offer,
the last reported sales price of the Shares on the NYSE was $35 3/4 per share.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
The Company has not declared or paid any dividends on the Shares during its
last three fiscal years and does not anticipate declaring and paying cash
dividends on the Shares at any time in the foreseeable future.
11
<PAGE>
Tendering Shares pursuant to the Offer will not affect the right of
stockholders to receive any dividends with respect to Shares declared by the
Company, if any, with a record date prior to the date on which Purchaser
purchases the Shares pursuant to the Offer. The Offer will expire at 12:00
midnight, New York City time, on August 12, 1999 unless extended as described
elsewhere in this Offer to Purchase.
7. EFFECT OF THE OFFER ON THE MARKET FOR SHARES, NYSE LISTING, STOCK QUOTATION,
EXCHANGE ACT REGISTRATION; MARGIN REGULATION.
MARKET FOR THE SHARES. The purchase of the Shares by Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and will reduce the number of holders of Shares, which could adversely affect
the liquidity and market value of the remaining Shares held by the public.
Following completion of the Offer, at least a majority and up to 62% of the
outstanding Shares will be owned by Purchaser. The purchase of Shares pursuant
to the Offer also can be expected to reduce the numbers of holders thereof.
NYSE LISTING. Purchaser does not anticipate that the Shares would be
subject to delisting on the NYSE solely as a result of completion of the Offer.
According to the NYSE's published guidelines, the NYSE would consider delisting
the Shares if, as a result of the Offer, (i) the number of holders of 100 shares
or more were reduced to less than 1,200, (ii) the number of Shares publicly held
(excluding those held by officers and directors of the Company, members of their
immediate families and persons owning 10% or more of the Shares outstanding)
were reduced to less than 600,000 or (iii) the aggregate market value of the
publicly-held Shares were reduced to less than $5 million. In addition, if
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be eligible for listing on the NYSE. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the NYSE for continued listing and the listing of the Shares is
discontinued, the market for Shares could be adversely affected. If the NYSE
were to delist the Shares, it is possible that the Shares would continue to
trade on another securities exchange or in the over-the-counter market and that
price or other quotations would be reported by such exchange or through the
Nasdaq Stock Market or other sources. The extent of the public market for the
Shares and the availability of such quotations would depend upon such factors as
the number of shareholders and/or the aggregate market value of the publicly-
traded Shares remaining at such time, the interest in maintaining a market in
the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act as described below and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer Price.
EXCHANGE ACT REGISTRATION. The Shares currently are registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of Shares.
Purchaser does not anticipate that such registration will be subject to
termination solely as a result of completion of the Offer. Termination of
registration of the Shares under the Exchange Act would make certain provisions
of the Exchange Act no longer applicable to the Company, such as the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act, the requirement
of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with stockholders' meetings and the related requirement of furnishing
an annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
144A promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), may be impaired or eliminated.
Purchaser currently intends not to seek delisting of the Shares from the
NYSE and the termination of the registration of the Shares under the Exchange
Act prior to the Effective Time, although such Shares may be delisted on the
NYSE as described above. If the NYSE listing and the Shares are not terminated
12
<PAGE>
prior to the Merger, then the Shares will be delisted from the NYSE and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
MARGIN REGULATIONS. The Shares currently are "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no longer
constitute "margin securities" for the purposes of the margin regulations of the
Federal Reserve Board and therefore could no longer be used as collateral for
loans made by brokers. If registration of Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the summary information concerning the
Company in this Section 8 and elsewhere in this Offer to Purchase is derived
from the Company's Annual Report on Form 10-K for the fiscal years ended
December 27, 1998 and December 28, 1997 (together, the "Company 10-K") and the
Company's Quarterly Report on Form 10-Q for the three months ended March 28,
1999 (the "Company 10-Q"), as filed with the Commission pursuant to the Exchange
Act, and other publicly available information. Although neither Purchaser nor
Quebecor Printing has any knowledge that would indicate that statements
contained herein based upon such documents are untrue, none of Purchaser,
Quebecor Printing, any of their affiliates, or the Joint Dealer Managers assumes
any responsibility for the accuracy or completeness of the information
concerning the Company, furnished by the Company, or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to Purchaser and Quebecor Printing.
The Company is an industry leader in the management and distribution of
print and digital information. It is the second largest diversified commercial
printer in the United States, providing digital prepress, press, binding,
distribution and multi-media services to customers in the commercial, magazine,
catalog, direct mail, book and directory product categories. Founded in 1903,
the Company operates 52 facilities with a network of sales offices nationwide.
The Company is a Delaware corporation with its principal executive offices
located at The Mill, 340 Pemberwill Road, Greenwich, Connecticut 06831.
SELECTED FINANCIAL INFORMATION. Set forth below is certain selected
historical consolidated financial information with respect to the Company
excerpted or derived from financial information contained in the audited
financial statements that were provided by the Company to Quebecor Printing and
Purchaser, and certain unaudited consolidated summary information with respect
to the three months ended March 28, 1999 and March 29, 1998, which is excerpted
or derived from the Company 10-Q. More comprehensive financial information is
included in (i) the Company 10-K and (ii) other reports and documents filed by
the Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports and such other documents and all the
financial information (including any related notes) contained therein. The
reports and other documents filed with the Commission should be available for
inspection and copies thereof should be obtainable in the manner set forth
below.
13
<PAGE>
WORLD COLOR PRESS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED FOR THE YEAR ENDED
(UNAUDITED) DECEMBER 31,(1)
---------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C>
MARCH 28, MARCH 29,
1999 1998 1998 1997 1996
---------- ---------- ------------ ------------ ------------
Net Sales...................................... $ 605,843 $ 550,407 $ 2,356,885 $ 1,981,225 $ 1,641,412
Net income (loss) after taxes.................. (12,126) 9,358 73,590 57,219 47,261
Net earnings (loss) per Share (fully
diluted)..................................... (0.31) 0.24 1.84 1.60 1.35
</TABLE>
- ------------------------
(1) There were no cash dividends paid or declared on common stock during any of
these three periods.
<TABLE>
<CAPTION>
AS OF MARCH AS OF DECEMBER 31,
28, ----------------------------------------
1999 1998 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(UNAUDITED)
BALANCE SHEET DATA
Cash and Cash Equivalents................................ $ 81,245 $ 199,932 $ 37,676 $ 33,182
Total Assets............................................. 2,422,081 2,433,886 1,933,571 1,822,432
Long-term Debt(1)........................................ 1,171,257 1,030,589 810,143 889,195
Shareholders' Equity..................................... 642,813 668,647 599,769 414,932
</TABLE>
- ------------------------
(1) Net of current portion of long-term debt.
AVAILABLE INFORMATION. The Company is subject to the information and
reporting requirements of the Exchange Act and in accordance therewith files
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. The Company is
required to disclose in such proxy statements certain information, as of
particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interests of such persons in transactions
with the Company. Such reports, proxy statements and other information should be
available for public inspection at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison
Street (Suite 1400), Chicago, Illinois 60661. Copies of this material may also
be obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains a web site on the Internet at http://www.sec.gov
that contains reports, proxy statements and other information relating to the
Company which have been filed via the Commission's EDGAR System. Certain
materials should also be available for inspection at the library of the NYSE, 20
Broad Street, New York, New York 10005.
9. CERTAIN INFORMATION CONCERNING QUEBECOR PRINTING, PURCHASER AND QPUSA.
GENERAL. Quebecor Printing, a corporation amalgamated under the laws of
Canada, was incorporated in 1989. Purchaser is a newly formed Delaware
corporation and a wholly owned subsidiary of Quebecor Printing (USA) Holdings
Inc. ("QPUSA"), a Delaware corporation which was incorporated in 1988 and which
is an indirect wholly owned subsidiary of Quebecor Printing. The name, business
address, citizenship and present principal occupation or employment of each of
the executive officers and directors of Purchaser and Quebecor Printing and
certain other persons are set forth on Annex I hereto.
14
<PAGE>
The principal executive office of Quebecor Printing is located at 612
Saint-Jacques Street, Montreal, Quebec, Canada, H3C 4M8. The principal executive
office of each of Purchaser and QPUSA is located at 300 Delaware Avenue, Suite
900, Wilmington, Delaware 19801.
Quebecor Printing is a diversified global commercial printing company, is
the largest commercial printer in Canada and Europe, and one of the largest in
the United States and South America. Quebecor Printing offers its customers
state-of-the-art web offset, gravure and sheetfed printing capabilities and
related printing services from prepress to distribution. Quebecor Printing's
product categories include magazines, inserts and circulars, books, catalogs,
specialty printing and direct mailing, related services, CD-ROM mastering and
replicating, as well as directories.
To date, Purchaser has not, and is not expected to, conduct any business
other than that incident to formation, the execution and delivery of the Merger
Agreement and the commencement of the Offer and Merger. Accordingly, no
meaningful financial information with respect to Purchaser is available. QPUSA
is a holding company and conducts no operations other than holding the
securities of other operating companies. The separate financial information of
QPUSA also is not meaningful to the Offer. Quebecor Printing files periodic
reports and other information with the Commission relating to its business,
financial statements and other matters. Quebecor Printing's Financial Statements
are prepared in accordance with Canadian GAAP. See Note 18 to the financial
statements incorporated as part of the Form 40-F (as defined below) for a
description of the differences between GAAP and Canadian GAAP. Such reports and
other information may be inspected, and copies may be obtained, at the offices
of the Commission and the library of the NYSE in the same manner as set forth
with respect to the Company in Section 8.
FINANCIAL INFORMATION. Set forth below is certain consolidated summary
information with respect to Quebecor Printing which is excerpted or derived from
the Quebecor Printing's (i) Report of Foreign Issuer on Form 6-K for the months
of January, February and March filed with the Commission on April 28, 1999 and
(ii) Annual Report on Form 40-F (the "Form 40-F") for the year ended December
31, 1998 filed with the Commission on May 7, 1999 (which pages are hereby
incorporated by reference herein). More comprehensive financial information is
included in such report and other documents filed by Quebecor Printing with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and other
documents should be available for inspection and copies thereof should be
obtainable from the Commission in the manner set forth in Section 8 although
certain information may not be available on-line through EDGAR.
15
<PAGE>
QUEBECOR PRINTING INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEAR ENDED
(UNAUDITED) DECEMBER 31,
---------------------- ----------------------------------------
1999 1998 1998 1997 1996
---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues....................................... $ 910,515 $ 881,879 $ 3,808,155 $ 3,483,199 $ 3,110,292
Net income..................................... 24,223 20,689 159,560 130,440 126,295
Net earnings per Share......................... 0.19 0.16 1.29 1.12 1.09
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, ----------------------------------------
1999 1998 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(UNAUDITED)
BALANCE SHEET DATA
Cash and Marketable Securities........................... $ 393 $ 309 $ 380 $ 806
Total Assets............................................. 3,722,040 3,842,116 3,475,538 2,913,410
Long-term Debt(1)........................................ 1,113,249 1,140,941 913,269 767,294
Shareholders' Equity..................................... 1,556,940 1,564,504 1,436,340 1,155,066
</TABLE>
- ------------------------
(1) Net of current portion of long-term debt.
Except as set forth in this Offer to Purchase, none of Purchaser, Quebecor
Printing, or to the best knowledge of Purchaser or Quebecor Printing, any of the
persons listed on Schedule I hereto or any associate or majority owned
subsidiary of Purchaser, Quebecor Printing or any of the persons so listed,
beneficially owns or has a right to acquire directly or indirectly any Shares.
Except as set forth in this Offer to Purchase, none of Purchaser or Quebecor
Printing, or, to the best knowledge of Purchaser and Quebecor Printing, any of
the persons listed in Annex I to this Offer to Purchase, owns any Shares and
none of them has effected any transaction in the Shares during the past 60 days.
Caisse de Depot et Placement du Quebec (the "Caisse"), a Quebec governmental
entity that manages provincial pension funds, has an equity investment in
Quebecor Printing, as well as certain rights under a shareholder's agreement
with Quebecor Inc., which entitles the Caisse to at least two representatives on
Quebecor Printing's board of directors, as well as certain other rights. The
Caisse has informed Quebecor Printing that it entered into the following
transactions in the Shares in the past 60 days: On May 21, 1999, the Caisse
purchased 67,000 Shares in a broker's transaction at a purchase price of $26.14
per Share. On May 24, 1999, the Caisse purchased 10,000 Shares in a broker's
transaction at a purchase price of $26.29 per Share. On May 25, 1999, the Caisse
purchased 23,000 Shares in a broker's transaction at a purchase price of $26.31
per Share. On July 12, 1999, the Caisse purchased, in broker's transactions,
10,000 Shares at a purchase price of $34.425 per Share and 260,000 Shares at a
purchase price of $34.55 per Share. On July 13, 1999, the Caisse purchased
100,000 Shares in a broker's transaction at a purchase price of $35.05 per
Share. On July 13, 1999, the Caisse sold 50,000 Shares in a broker's transaction
at a price of $35.34 per Share. On July 14, 1999, the Caisse sold, in broker's
transactions, 50,000 Shares at a price of $35.69 per Share and 51,500 Shares at
a price of $35.699 per Share. Following such transactions, the Caisse
beneficially owned 498,500 Shares.
Except as set forth in this Offer to Purchase, none of Purchaser or Quebecor
Printing, or, to the best knowledge of Purchaser or Quebecor Printing, any of
the persons listed in Annex I to this Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, None of Purchaser or Quebecor Printing, or, to the best
knowledge of Purchaser or Quebecor Printing, any of the persons listed in Annex
I to this Offer to Purchase has had any transactions
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with the Company, or any of its executive officers, directors or affiliates that
would require reporting under the rules of the Commission applicable to the
Offer.
Except as set forth in this Offer to Purchase, there have been no contacts,
negotiations or transactions between Purchaser or Quebecor Printing, nor their
respective subsidiaries, or, to the best knowledge of Purchaser or Quebecor
Printing, any of the persons listed in Annex I to this Offer to Purchase, on the
one hand, and the Company or its executive officers, directors or affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, election of directors, or a sale or other
transfer of a material amount of assets that would require reporting under the
rules of the Commission applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS.
If the Maximum Number of Shares are purchased by Purchaser pursuant to the
Offer, the aggregate purchase price for such Shares and all estimated
commissions, fees and expenses relating to the Offer will be approximately $850
million (not including approximately $600 million that will be advanced
following consummation of the Offer to repay indebtedness owing under the
Company's existing bank credit agreement and to pay the purchase price of any of
the Company's 6% Convertible Senior Subordinated Notes due 2007 tendered for
purchase). The Offer is not subject to a financing contingency.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$1.5 billion, Purchaser plans to obtain the necessary funds through capital
contributions and advances made by its direct parent, QPUSA. Its affiliate,
Quebecor Printing Delaware LLC will also advance funds to the Company to repay
indebtedness owing under its existing bank credit agreement.
The capital contributions and advances to be made to Purchaser by QPUSA are
expected to be borrowed under the Credit Facilities referred to below. QPUSA has
received a letter (the "Arrangement Letter") dated as of July 12, 1999 from
Royal Bank of Canada, Bank of America Canada, Bank of Montreal and Canadian
Imperial Bank of Commerce (collectively, the "Arrangers") pursuant to which the
Arrangers have committed to provide QPUSA with senior credit facilities (the
"Credit Facilities") in an aggregate principal amount of up to $1.25 billion on
a pro-rata basis. All or a portion of the Credit Facilities may be syndicated
either prior to or after the date of the first borrowing thereunder (the "Tender
Offer Funding Date"), A copy of the Arrangement Letter is filed as an exhibit to
the Schedule 14D-1 and incorporated herein by reference, and the following
summary of the Credit Facilities is qualified in its entirety by reference
thereto.
The Credit Facilities will consist of: (i) $650 million as a single draw
1-year term loan to be drawn on the Tender Offer Funding Date ("Tranche A")
($300 million may be extended at QPUSA's option for a 1-year term payable in
full at maturity); (ii) $450 million as a three year revolving credit facility
payable in full at maturity ("Tranche B"); and (iii) $150 million as a 364-day
non-revolving credit facility to be drawn within 120 days after the Tender Offer
Funding Date and payable in full at maturity ("Tranche C"). Proceeds of
borrowings under the Credit Facilities are (a) to be contributed by QPUSA to
Purchaser to finance the acquisition of the Company pursuant to the Offer and
the Merger, to pay transaction costs and to be available for general corporate
purposes and (b) to be loaned by QPUSA to the Company to repay indebtedness
owing under the Company's existing bank credit agreement and to pay the purchase
price of any 6% Convertible Senior Subordinated Notes due 2007 of the Company
tendered for purchase pursuant to an offer to be made in accordance with the
terms of the Indenture under which such notes were issued following a change in
control. The maximum aggregate amount available under the Credit Facilities to
finance the purchase of the Shares shall not exceed $890 million.
Amounts outstanding under the Credit Facilities will be guaranteed by
Quebecor Printing and by Quebecor Printing Holding Company, a Delaware
corporation and wholly owned subsidiary of Quebecor Printing, to the fullest
extent permitted by applicable law.
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Borrowings under the Credit Facilities bear interest at a rate per annum
based, at the option of QPUSA, on either US Libor or the US Base Rate plus a
margin set in accordance with Quebecor Printing's unsecured long term senior
debt rating. As of July 12, 1999, US Libor was 5.310% and the US Base Rate was
8.000%. The initial margin on US Libor loans is expected to be 1.125%, and the
initial margin on US Base Rate loans is expected to be .125%. The Credit
Facilities will also provide for a commitment fee, commencing on the date of the
execution of the Credit Agreement, and calculated on the unutilized, uncanceled
amount of the Credit Facilities at a per annum rate set in accordance with
Quebecor Printing's unsecured long term senior debt rating, and is initially
expected to be .15% for Tranches A and C and .20% for Tranche B.
The Credit Facilities will contain certain negative covenants applicable to
Quebecor Printing and its subsidiaries, including, without limitation,
restrictions on liens and indebtedness of subsidiaries and the following
financial covenants: maximum debt to total capitalization, maximum debt to
consolidated EBITDA and minimum interest coverage.
Borrowings under the Credit Facilities on the Tender Offer Funding Date are
subject to the satisfaction or waiver of certain conditions, including, without
limitation: (i) the execution and delivery of definitive documentation with
respect to the Credit Facilities, in form and substance reasonably satisfactory
to the Arrangers, (ii) the structure of the Offer and the terms and conditions
of the Offer to Purchase and the Merger Agreement shall be acceptable in form
and substance to the Arrangers, (iii) receipt of all necessary governmental and
all material third-party consents and approvals and (iv) the nonoccurrence of
any material adverse change. All borrowings under the Credit Facilities,
including borrowings on the Tender Offer Funding Date, are subject to the
satisfaction or waiver of certain conditions, including, without limitation: (i)
the accuracy of representations and warranties and (ii) the absence of any
default or event of default under the Credit Facilities.
The terms of the Credit Facilities will provide that net proceeds generated
from issuance of debt or equity by Quebecor Printing or its subsidiaries
(subject to certain exceptions) are to be applied to repay outstanding amounts
first under Tranche C and then Tranche A.
Pursuant to the Arrangement Letter, Quebecor Printing has agreed to pay
certain fees to the Arrangers, to reimburse the Arrangers for certain expenses
and to provide certain indemnities, as is customary for commitments of the type
described herein.
Quebecor Printing anticipates that the loans made to QPUSA under the Credit
Facilities will be repaid from a variety of sources, including, without
limitation, funds generated internally by Quebecor and its subsidiaries and the
public or private sale of debt or equity securities. No final decisions have
been made concerning the sources and methods Quebecor Printing and its
subsidiaries will employ to repay such indebtedness. Such decisions will be made
and may be modified by Quebecor Printing based on prevailing market conditions
and such other factors as Quebecor Printing may deem appropriate.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
The terms and conditions of the Offer to Purchase, the Merger Agreement and
related agreements are the result of arm's length negotiations between the
Company, Quebecor Printing and their representatives. The following is a summary
of the background to these negotiations and the execution of the Merger
Agreement.
On October 28, 1998, Pierre Karl Peladeau, at that time Executive Vice
President and Chief Operating Officer of Quebecor Printing, contacted Robert G.
Burton, Chairman and Chief Executive Officer of the Company, to explore a
possible strategic transaction. Messrs. Peladeau and Burton subsequently met on
November 4, 1998 to pursue their discussion of a potential business combination
between Quebecor Printing and the Company. There were no further contacts
between the parties until January, 1999.
On January 12, 1999, Messrs. Peladeau and Burton met at the Company's
corporate headquarters in Greenwich, Connecticut, along with Charles G. Cavell,
President and Chief Executive Officer of Quebecor
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Printing and Scott M. Stuart of Kohlberg Kravis Roberts & Co. L.P. ("KKR"), a
member of the Company's Board of Directors, to discuss Quebecor Printing's
interest in pursuing a possible strategic combination with the Company. Mr.
Stuart is a general partner of KKR Associates, L.P. ("KKR Associates") and an
affiliate of KKR. KKR provides advisory services to the Company, and KKR
Associates is the general partner of four partnerships that together with KKR
Associates own approximately 24% of the outstanding Shares. There were no
further contacts between the parties until April, 1999.
On April 19, 1999, Messrs. Peladeau and Stuart met in New York with a view
to initiate discussions regarding Quebecor Printing's possible interest in
acquiring the Company, the Company's business and the terms, conditions and
structure of a possible transaction.
On May 25, 1999, Mr. Peladeau, in his capacity as Vice Chairman of Quebecor
Printing, met with Mr. Stuart, Alexander Navab, Jr., a member of the Board of
Directors of the Company and executive of KKR, and Joseph Bae, an executive of
KKR, and reiterated the possible interest of Quebecor Printing in acquiring the
Company. The parties then discussed in broad terms the possible consideration
and other terms of such transaction. These discussions were not conclusive in
relation to terms and conditions.
On June 7, 1999, representatives of Quebecor Printing and the Company met in
Montreal to explore potential terms and conditions of a business combination.
Quebecor Printing was represented by Mr. Peladeau. Francois R. Roy, Executive
Vice President and Chief Financial Officer of Quebecor Inc. was also present at
the meeting. Messrs. Stuart, Navab and Bae were present on the Company's behalf.
These discussions were not conclusive in relation to terms and conditions.
During the period from June 16 to June 18 Messrs. Peladeau, Roy, Cavell and
Christian Paupe, Executive Vice President, Chief Administrative Officer and
Chief Financial Officer of Quebecor Printing met in Montreal with
representatives of RBC Dominion Securities Inc. ("RBCDSI") and CSFB to discuss
an analysis of the proposed combination, valuation, parameters, combination
characteristics, financial analysis, other issues and potential next steps.
On June 23, 1999, representatives of KKR on behalf of the Company and
representatives of Quebecor Printing met to discuss the rationale for, and
benefits of a possible business combination, potential transaction structures,
preliminary due diligence requirements, management issues and price
considerations for the proposed transaction and to establish a framework for
continuing the discussions between the two companies.
On June 24, 1999, separate meetings between Messrs. Peladeau and Burton and
Messrs. Peladeau, Stuart, Navab and Bae took place to discuss further terms and
conditions relating to the proposed transaction. During these discussions,
representatives of KKR on behalf of the Company and representatives of Quebecor
Printing were unable to agree upon the total value of consideration to be
offered and the percentages of stock and cash in such consideration.
Representatives of the Company also sought to protect the value of any stock of
Quebecor Printing to be received by the stockholders of the Company in a merger
with such mechanisms as a floating exchange ratio and a 'collar' for the stock
portion of the consideration. Following these discussions, representatives of
RBCDSI and CSFB met with representatives of KKR to continue discussion of
potential terms and conditions, including the inclusion of a collar for the
issuance of Quebecor Printing stock in the Merger.
On June 25, 1999, at a joint meeting of the Executive Committee of the Board
of Directors of Quebecor Inc. and the Board of Directors of Quebecor Printing,
the directors of Quebecor Printing and Quebecor Inc. approved the proposed
transaction in principle and authorized the management of Quebecor Printing to
pursue the negotiation of the final terms of the transaction subject to the
approval of the Board of Directors of Quebecor Printing.
On June 25, 1999, after an internal review by Quebecor Printing and Quebecor
Inc. of the proposed terms and conditions of the Merger and the status of
ongoing negotiations, Messrs. Peladeau and Stuart had a telephone conversation,
during which the preference of Quebecor Printing for the issuance of a fixed
number of shares in connection with the Merger was discussed.
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On June 27, 1999, Messrs. Peladeau and Stuart had a telephone conversation
wherein no specific agreements were reached regarding the principal economic
terms of the transaction. In particular, the parties were unable to agree upon
the total value of consideration to be offered, the percentages of stock and
cash in the transaction or whether any collar or similar mechanism would be
provided with respect to Quebecor Printing stock to be issued in the Merger.
Messrs. Peladeau and Stuart agreed however that representatives of management
and legal advisors of both parties should meet to discuss the financial and
legal terms of the proposed transaction, pursue their work on documentation and
propose a list of issues for consideration by senior management.
On June 28 and 29, 1999, representatives of RBCDSI had telephone
conversations with representatives of Morgan Stanley & Co. Incorporated to
discuss terms and conditions of the Offer and the Merger.
On June 30 and July 1, 1999 representatives of the parties continued to meet
to discuss certain terms of the transaction including the consideration to be
received by the Company's stockholders. Messrs. Peladeau, Roy, Paupe, and John
A. Willett of Arnold & Porter, representing Quebecor Printing, met with Messrs.
Stuart, Navab and David J. Sorkin of Simpson Thacher & Bartlett, representing
the Company, and discussed terms and conditions in relation to the proposed
transaction including the support from KKR for the transaction, the Tender,
Voting and Option Agreement, the Stock Option Agreement, termination fees,
management issues and other considerations. At this meeting, Quebecor Printing's
representatives increased their offer to the consideration to be received in the
Offer and the Merger subject to the approval of Quebecor Printing's Board of
Directors. Subject to the resolution of certain remaining issues, including
management related issues, the Company's representatives agreed to discuss this
revised proposal with the Board of Directors of the Company.
Beginning on July 1, 1999, the Company conducted its due diligence
investigation of Quebecor Printing.
During the July 4th weekend, Messrs. Peladeau and Stuart discussed
unresolved issues concerning the proposed business combination, and the Right
Honourable Brian Mulroney, a director of Quebecor Printing, had a discussion
with Henry Kravis, a senior executive of KKR, concerning management issues in
connection with a possible combination of Quebecor Printing and the Company.
On July 5, 1999, Quebecor Printing's Board of Directors authorized Quebecor
Printing to enter into the Merger Agreement on the terms and conditions
presented to the Board of Directors.
On July 6, 1999, the Board of Directors of the Company met to consider the
possible transaction. At the meeting, members of senior management and
representative of the Company's legal and financial advisors reviewed with the
Board, among other things, the status of the ongoing discussions between the
Company and Quebecor Printing, and management's views on the advisability of
pursuing a transaction with Quebecor Printing. The Company's legal and financial
advisors also discussed the proposed terms and structure of a business
combination with Quebecor Printing. The Board agreed that management should
pursue further discussions with Quebecor Printing, and agreed to reconvene when
all remaining open issues had been resolved and due diligence had been
completed. The Board took no further action at this meeting.
On July 6, 1999, representatives of the Company and Quebecor continued the
negotiation of the terms of the transaction and the draft Merger Agreement and
other related transaction documents. In addition, the parties discussed the
terms of the management arrangements to be entered into at the time of execution
of the Merger Agreement.
On July 7, 1999, Quebecor Printing began its due diligence investigation of
the Company.
On July 7, 1999, Messrs. Peladeau, Cavell and Paupe met with Mr. Burton and
Marc L. Reisch, President, Ms. Jennifer L. Adams, Vice Chairman, Chief Legal and
Administrative Officer and Mr. Robert B. Lewis, Executive Vice President and
Chief Financial Officer of the Company, to discuss terms and conditions of the
offer and the merger, due diligence and other issues in connection with the
proposed business combination.
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On July 8 and 9, 1999, Messrs. Paupe and Navab met and had telephone
conversations to discuss due diligence findings, to review the status of
Quebecor Printing financing for the Offer and to finalize terms and conditions
of the Offer and the Agreement and Plan of Merger.
On Friday, July 9, 1999, following the close of New York Stock Exchange
trading, the Board of Directors of the Company met to consider the proposed
transaction with Quebecor Printing. Representatives of the Company's senior
management and the Company's legal and financial advisors made presentations and
reviewed, among other things, the matters set forth below under "--Reasons for
the Recommendation." The Company's legal advisors reviewed with the Board the
transaction terms that had been negotiated since the Board meeting on July 6,
1999, including arrangements with management. Morgan Stanley made a presentation
including, among other things, a financial analysis of the proposed transaction
with Quebecor Printing and rendered its oral opinion, subsequently confirmed in
writing, that as of such date, and based upon and subject to the assumptions,
limitations and qualifications set forth therein, the consideration to be
received by the holders of Shares pursuant to the transactions contemplated by
the Merger Agreement, including the Offer and the Merger, is fair from a
financial point of view to such holders. Following discussion, the Board
unanimously determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are advisable and fair
to, and in the best interests of the stockholders of the Company, approved the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, approved the Stock Option Agreement and the transactions
contemplated thereby, approved the Tender, Voting and Option Agreement and the
transactions contemplated thereby and recommended that the stockholders of the
Company accept the Offer and tender their Shares to Purchaser and approve the
Merger Agreement and the transactions contemplated thereby, including the
Merger. In addition, members of the Board of Directors not affiliated with KKR
and who constitute a majority of the Board of Directors, approved the engagement
letters with Morgan Stanley and KKR.
Thereafter, the Merger Agreement and related agreements were signed, and
prior to the opening of business on Monday, July 12, 1999, the parties issued a
joint press release announcing execution of the Merger Agreement and related
agreements.
12. PURPOSE OF THE OFFER AND THE MERGER; APPRAISAL RIGHTS; PLANS FOR THE
COMPANY.
PURPOSE OF THE OFFER AND THE MERGER. The purpose of the Offer, the Merger
and the Merger Agreement is to enable Quebecor Printing to acquire control of,
and the entire equity interest in, the Company. Upon consummation of the Merger,
the Company will become an indirect wholly owned subsidiary of Quebecor
Printing. The Offer is being made pursuant to the Merger Agreement.
COMPANY STOCKHOLDER APPROVAL. Under the DGCL and the Company Charter and
By-Laws the approval of the Board of Directors of the Company and the
affirmative vote of the holders of a majority of the outstanding Shares are
required to approve and adopt the Merger Agreement and the Merger. The Company's
Board of Directors has determined by a unanimous vote that the Offer and Merger
are fair to, advisable and in the best interests of the Company and its
Stockholders. Therefore, the only remaining required corporate action of the
Company is the approval and adoption of the Merger Agreement and the Merger by
the affirmative vote of the holders of a majority of the outstanding Shares. If
the Minimum Condition is satisfied, Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement and the Merger
without the affirmative vote of any other stockholder.
The Merger Agreement provides that the Company will (i) take all action
necessary to convene a meeting of its stockholders (the "Stockholder Meeting")
promptly after consummation of the Offer (or if the One-Step Transaction (as
defined in Section 13 "--Conversion of Shares,") is triggered, as promptly as
practicable) for the purpose of voting upon the Merger and (ii) take all other
action reasonably necessary to secure the vote of stockholders in favor of
adoption of the Merger Agreement, subject to the fiduciary duties of its Board
of Directors.
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APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company may
have certain rights under the DGCL to dissent and demand appraisal of, and to
receive payment in cash of the fair value of, their Shares in connection with
such consummation. Such rights to dissent, if the statutory procedures are
complied with by dissenting shareholders, could lead to a judicial determination
of the fair value of the Shares (excluding any element of value arising from the
accomplishment or expectation of the Merger), to be required to be paid in cash
to such dissenting holders for their Shares. In addition, such dissenting
stockholders would be entitled to receive payment of a fair rate of interest
from the date of consummation of the Merger on the amount determined to be the
fair value of their Shares. In determining the fair value of the Shares, a
Delaware court would be required to take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market values of the Shares, including, among other
things, asset values and earning capacity. In WEINBERGER V. UOP, INC.
("WEINBERGER"), the Delaware Supreme Court states, among other things, that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. Therefore, the value so determined in
any appraisal proceeding could be different from the price being paid in the
Offer or pursuant to the Merger.
In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has a
fiduciary duty to other stockholders which requires that the Merger be fair to
such other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of consideration to be received by the stockholders and whether there was
fair dealing among the parties. The Delaware Supreme Court states in WEINBERGER
and RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that although the remedy ordinarily
available to minority stockholders in a cash-out merger is the right to
appraisal described above, a damages remedy or injunctive relief may be
available if a merger is found to be the product of procedural unfairness,
including fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRES STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF SECTION 262 OF THE DGCL, AND WILL ONLY BE AVAILABLE IN
CONNECTION WITH THE CONSUMMATION OF THE MERGER.
RULE 13E-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer or otherwise
in which Purchaser seeks to acquire the remaining Shares not held by it. Rule
13e-3 will not be applicable to the Merger if the Merger is consummated within
one year after the termination of the Offer and in the Merger stockholders
receive at least the same value per Share offered during the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction, be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction. The purchase of a
substantial number of Shares pursuant to the Offer may result in the Company
being able to terminate its Exchange Act registration, although Quebecor
Printing has no current intention to do so prior to the Effective Time. See
Section 7. If such registration were terminated, Rule 13e-3 would be
inapplicable to any such future Merger or such alternative transaction.
PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. Quebecor Printing intends
to operate the Company as a subsidiary of Quebecor Printing. The directors of
Purchaser will be the initial directors of the Surviving Corporation and the
then officers of the Company, other than the Chairman of
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the Board, and such other persons as are designated by Quebecor Printing, shall
be the initial officers of the Surviving Corporation. After the purchase of
Shares pursuant to the Offer and prior to the Effective Time, it is anticipated
that the Company will not declare any dividends on the Shares. See Section 14.
Quebecor Printing will evaluate the business, operations, capitalization and
management of the Company during the pendency of, and after the consummation of,
the Offer, and will take such actions as it deems appropriate under the
circumstances then existing with a view to optimizing the Company's potential in
conjunction with Quebecor Printing's business.
Except as indicated in this Offer to Purchase, Quebecor Printing does not
have any present plans or proposals which relate to or would result in an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries or any material change in the Company's capitalization or dividend
policy or any other material changes in the Company's corporate structure or
business, or the composition of the Company's board of directors or management.
13. THE MERGER AGREEMENT; OTHER AGREEMENTS.
The following summary of certain provisions of the Merger Agreement, a copy
of which is filed as an exhibit to the Schedule 14D-1, is qualified in its
entirety by reference to the text of the Merger Agreement.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
by Purchaser. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject only to the satisfaction or waiver by Purchaser
of the conditions set forth in Section 15 hereof. Under the terms of the Merger
Agreement, Purchaser may not, without the consent of the Company's Board of
Directors, (i) decrease or change the form of consideration payable in the
Offer, (ii) reduce the number of Shares sought pursuant to the Offer, (iii)
amend the conditions or impose additional conditions to the Offer, (iv) amend or
change any term of the Offer or (v) waive the Minimum Condition. If all the
conditions to consummation of the Offer are satisfied, Purchaser shall
consummate the Offer as promptly as possible. Pursuant to the Merger Agreement,
Purchaser is obligated to extend the Offer from time to time in the event that,
at a then-scheduled expiration date, all of the conditions to the Offer have not
been satisfied (other than incurable breaches of representations, warranties and
covenants) each such extension not to exceed (unless consented to by the
Company) the lesser of 10 additional business days or such fewer number of days
that their Company or Quebecor Printing reasonably believes are necessary to
cause such Offer condition to be satisfied. Purchaser may extend the period
during which the Offer is open by giving oral or written notice of such
extension to the Depositary and by making a public announcement of such
extension promptly thereafter. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering stockholder to withdraw its Shares.
If on September 13, 1999 either or both of the Minimum Condition and any
waiting periods under the H-S-R Act applicable to the purchase of Shares
pursuant to the Offer shall not have expired or terminated Purchaser shall
(unless Quebecor Printing and the Company otherwise agree) terminate the Offer
and seek to consummate the Merger in accordance with the Merger Agreement. In
the event that the Merger Agreement is terminated, Purchaser has agreed to, and
Quebecor Printing has agreed to cause Purchaser to, terminate the Offer promptly
without accepting any Shares for payment.
THE MERGER. The Merger Agreement provides that at the Effective Time, upon
the terms and subject to the conditions of the Merger Agreement, and in
accordance with the DGCL, Purchaser shall be merged with and into the Company.
Following the Effective Time, the separate corporate existence of Purchaser will
cease and the Company will continue as the Surviving Corporation and will
succeed to and assume all the rights and obligations of Purchaser in accordance
with the DGCL. The Company Charter, as in effect immediately prior to the
Effective Time, shall be amended and restated at the Effective Time so as to
read in its entirety in the form set forth as an exhibit to the Merger Agreement
and, as so amended, shall be the Certificate of Incorporation of the Surviving
Corporation immediately after the Effective Time. The
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By-Laws of Purchaser shall be the By-Laws of the Surviving Corporation. The
directors of Purchaser holding office immediately prior to the Effective Time
shall be the directors of the Surviving Corporation immediately after the
Effective Time. The officers of the Company holding office immediately prior to
the Effective Time shall be the officers, each to hold the same office held with
the Company, of the Surviving Corporation immediately after the Effective Time.
CONVERSION OF SHARES. The Merger Agreement provides that at the Effective
Time, if Purchaser shall have purchased the Maximum Number of Shares, each Share
issued and outstanding immediately prior thereto (other than Shares held in the
treasury of the Company, Shares owned by Purchaser and Dissenting Shares), by
virtue of the Merger without any action on the part of Purchaser, the Company or
the holders of any of the Shares, will be canceled, extinguished and converted
into the right to receive a number (rounded to the nearest one-millionth of a
share) of fully paid and nonassessable shares of Quebecor Printing Stock equal
to the Exchange Ratio (as defined below) upon the surrender of the certificate
formerly representing such Share. If Purchaser shall have purchased less than
the Maximum Number of Shares (the number of Shares so paid for and purchased in
the Offer being referred to herein as the "Purchased Share Number"), each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held in the treasury of the Company shares owned by Purchaser and
Dissenting Shares) shall be canceled, extinguished and converted into the right
to receive, (i) cash, in an amount equal to the product of the Cash Proration
Factor (as defined below) multiplied by $35.69 and (ii) a number (rounded to the
nearest one-millionth of a share) of fully paid and non-assessable shares of
Quebecor Printing Stock equal to the product of (x) 1 minus the Cash Proration
Factor multiplied by (y) the Exchange Ratio.
If on September 13, 1999, either or both of the Minimum Condition or the
H-S-R Condition have not been satisfied, Purchaser shall, unless Quebecor
Printing and the Company otherwise agree, terminate the Offer, and the parties
to the Merger Agreement shall, subject to its terms and conditions, seek to
consummate the Merger (such termination of the Offer and subsequent consummation
referred to herein as the "One-Step Transaction"). In such event, each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares owned by the Company as treasury stock and Shares owned by Purchaser)
shall be canceled, extinguished and converted into the right to receive, (i)
cash, in an amount equal to $22.00 and (ii) .6311 shares of Quebecor Printing
Stock. All Shares held as treasury shares by the Company and shares held by the
Purchaser or any of its affiliates will be canceled immediately prior to the
Effective Time. All shares of capital stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted and changed into an
equal number of shares of capital stock of the Surviving Corporation.
If prior to the Effective Time, Quebecor Printing or the Company, as the
case may be, should split, combine or otherwise reclassify the shares of
Quebecor Printing Stock or the Shares, or pay (or set a record date that is
prior to the Effective Time with respect to) a stock dividend or other stock
distribution in shares of Quebecor Printing Stock or Shares, or otherwise change
the shares of Quebecor Printing Stock or Shares into any other securities, or
make any other such stock dividend or distribution with respect to the shares of
Quebecor Printing Stock or the Shares in capital stock of Quebecor Printing or
the Company or of their respective subsidiaries in respect of the shares of
Quebecor Printing Stock or Shares, respectively, then the Merger Agreement
provides that the Merger Consideration and the Exchange Ratio will be
appropriately adjusted to reflect such split, combination, dividend or other
distribution or change to provide the holders of Shares, the same economic
effect as contemplated by the Merger Agreement prior to such event.
For purposes of the Merger Agreement, the "Exchange Ratio" is equal to
1.6455 shares of Quebecor Printing Stock per Share and the "Cash Proration
Factor" is a fraction, of which (A) the numerator is the equal to (x) the
Maximum Number minus (y) the Purchased Share Number, if any, and (B) the
denominator is equal to the number of Shares issued and outstanding immediately
prior the Effective Time (other than Shares owned by the Company as treasury
stock, Shares owned by Purchaser, and Dissenting Shares).
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The Merger Agreement provides that each holder of Shares exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of Quebecor Printing Stock will receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
share of Quebecor Printing Stock and (ii) $21.6875. The consideration provided
in the first and second paragraphs in this subsection "Conversion of Shares",
together with the consideration provided for in the preceding sentence, is
referred to herein as the "Merger Consideration".
DISSENTING SHARES. The Merger Agreement provides that, if required by the
DGCL, Dissenting Shares will not be canceled and converted into the right to
receive the appropriate Merger Consideration, and holders of such Dissenting
Shares will be entitled to receive payment of the appraised value of such
Dissenting Shares in accordance with the provisions of Section 262 of the DGCL,
unless and until such holders fail to perfect or effectively withdraw or lose
their rights to appraisal and payment under the DGCL. If, after the Effective
Time, any holder fails to perfect or effectively withdraws or loses such right,
such Dissenting Shares will thereupon be treated as if they had been canceled
and converted into, at the Effective Time, the right to receive the appropriate
Merger Consideration, without interest. See Section 12 "--Appraisal Rights".
COMPANY STOCK OPTIONS. Pursuant to the Merger Agreement, upon the
consummation of the Offer, each option to purchase Shares and any related stock
appreciation rights issued by the Company (the "Company Stock Options") which is
outstanding immediately prior to consummation of the Offer shall (except to the
extent that Quebecor Printing and the holder of a Company Stock Option otherwise
agree prior to the consummation of the Offer or unless the holder of such
Company Stock Option shall have elected otherwise by written notice to Quebecor
Printing prior to the date 10 business days prior to the consummation of the
Offer) be canceled in exchange for (A) a cash payment from the Surviving
Corporation (subject to any applicable withholding taxes) equal in value to (1)
the product of (x) the total number of Shares of Company Common Stock subject to
such Company Stock Option (the "Option Shares"), multiplied by (y) $22.00,
multiplied by (z) the excess of $35.69 over the exercise price per share of
Common Stock subject to such Company Stock Option, divided by (2) $35.69, and
(B) a number of shares of Quebecor Printing Stock to be issued promptly
following the Effective Time equal to (1) the product of (x) the number of
Option Shares, multiplied by (y) 0.6311, multiplied by (z) the excess of $35.69
over the exercise price per Share subject to such Company Stock Option, divided
by (2) $35.69. If the Offer is terminated pursuant to the One-Step Transaction
(as defined in "--Conversion of Shares" in Section 13 above), the conversion
shall occur at the Effective Time.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to Purchaser and
Quebecor Printing, including, but not limited to, representations and warranties
relating to the Company's organization and qualification, its subsidiaries,
capitalization, authority to enter into the Merger Agreement and carry out the
transactions contemplated thereby, filings made by the Company with the
Commission under the Securities Act and the Exchange Act litigation, employee
relations and benefits, taxes, stockholder vote, required compliance with laws,
properties, environmental matters, intellectual property, insurance and Year
2000 compliance.
Purchaser and Quebecor Printing have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to Purchaser and Quebecor Printing's organization and
authority to enter into the Merger Agreement, that Purchaser will have
sufficient funds available to it to purchase the Shares, that none of Purchaser
or Quebecor Printing owns (other than possibly through their employee benefit
plans) any Shares and with respect to Quebecor Printing, its subsidiaries,
capitalization, Commission filings, litigation, employee relations and benefits,
taxes, employee benefit plans, compliance with laws, environmental matters,
intellectual property, Year 2000 compliance, stockholder votes, necessary
consents and subscription rights.
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BOARD REPRESENTATION. The Merger Agreement provides that, promptly upon the
purchase of such number of Shares as satisfies the Minimum Condition and from
time to time thereafter, Purchaser will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as will give Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors of the Company equal to
the product of (a) the number of directors on the Board of Directors of the
Company (after giving effect to the appointment of such directors) and (b) the
percentage that the number of Shares purchased by Purchaser bears to the number
of Shares outstanding. The Company has agreed that, upon request of Purchaser,
it will promptly (i) increase the size of the Company's Board of Directors to
the extent permitted by its Company Charter and By-Laws (and amend the Company
Charter and By-Laws, if so required, to increase the size of the Board of
Directors to allow for such additional directors) and/or (ii) take all steps
necessary and appropriate to secure the resignations of such number of directors
as is necessary to enable Purchaser's designees to be elected to the Board of
Directors (and hold a meeting for such purpose); and (iii) cause Purchaser's
designees to be so elected. At the request of Purchaser, the Company has agreed
to promptly take, at its expense, all action required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder and necessary to effect any
such election, including the mailing to its stockholders of the information
required to be disclosed pursuant thereto. Purchaser will supply to the Company
in writing and be solely responsible for any information with respect to
themselves and their nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
COVENANTS RELATING TO THE CONDUCT OF BUSINESS.
THE COMPANY. Pursuant to the Merger Agreement, the Company has agreed that
prior to the Effective Time (unless Quebecor Printing shall otherwise agree in
writing (which consent shall not be unreasonably withheld)), except as set forth
in the Merger Agreement, it will use its reasonable efforts to carry on, its and
its subsidiaries' respective businesses in the ordinary course of business and
consistent with past practice, and except in connection with the adoption by the
Company of a shareholder rights plan that would not be applicable to, or
adversely affect the transactions contemplated by the Merger Agreement, neither
the Company nor any of its subsidiaries shall: (i) issue (except pursuant to
employee and non-employee director stock options outstanding on the date hereof)
sell, pledge, dispose of or encumber (or permit any of its subsidiaries to
issue, sell, pledge, dispose of or encumber): (A) any additional shares of, or
any options, warrants, conversion privileges or rights of any kind to acquire
any shares of, any capital stock of the Company or any of its subsidiaries, or
(B) any material assets of the Company or any of its subsidiaries except in the
ordinary course of business; (ii) amend or propose to amend the certificate or
articles of incorporation or By-Laws or similar governing instruments of the
Company or any of its subsidiaries; (iii) split, combine or reclassify any
outstanding Shares, or declare, set aside or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to the
Shares; (iv) redeem, purchase or acquire, or offer to acquire (or permit any of
its subsidiaries to redeem, purchase or acquire or offer to acquire) any Shares
or other securities of the Company; or (v) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this paragraph.
In addition, the Company agreed that neither the Company nor any of its
subsidiaries will (i) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business organization
or division or material assets thereof for aggregate consideration for all such
acquisitions in excess of $25,000,000; (ii) incur any indebtedness for borrowed
money or issue any debt securities except the borrowing of working capital in
the ordinary course of business and consistent with past practice; or (iii)
enter into or materially modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing.
Except as set forth in the Merger Agreement, or in the ordinary course of
business in accordance with past practice, neither the Company nor any of its
subsidiaries shall enter into or modify any employment,
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severance or similar agreements or arrangements with, or grant any bonuses,
salary increases, severance or termination pay to, any officers, directors or
employees. Except as set forth in the Merger Agreement, neither the Company nor
any of its subsidiaries shall adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any officer, director or employee, other than (i)
in the ordinary course of business consistent with past practice for the benefit
or welfare of any employee, (ii) for the purpose of accelerating the vesting of
restricted stock and stock options, (iii) to the extent required by law, or (iv)
with respect to new hires or promotions in the ordinary course of business.
The Company agreed to use reasonable efforts (i) to cause its current
insurance (or reinsurance) policies not to be canceled or terminated; and (ii)
to not permit any of the coverage thereunder to lapse, in any such case unless
prior to or promptly after such termination, cancellation or lapse, replacement
policies underwritten by insurance and reinsurance companies of nationally
recognized standing. The Company agreed to use reasonable efforts, and cause
each of its subsidiaries to use reasonable efforts, to keep substantially intact
their respective business organizations and goodwill, keep available the
services of their officers and employees as a group and maintain their present
relationships with suppliers and customers and others having business
relationships with them. The Company agreed not to make awards of restricted
stock or grants of options.
QUEBECOR PRINTING. Quebecor Printing agreed that prior to the Effective
Time, unless the Company shall otherwise agree in writing (which consent shall
not be unreasonably withheld prior to the consummation of the Offer), Quebecor
Printing would not (i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, except that
Quebecor Printing may continue the declaration and payment of regular quarterly
cash dividends (with usual record and payment dates and in accordance with its
past dividend policy), (B) split, combine or reclassify or otherwise alter the
Quebecor Printing Stock or any other class of Quebecor Printing's capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (C) purchase,
redeem or otherwise acquire any shares of Quebecor Printing Stock or any other
class of Quebecor Printing's capital stock or other securities convertible into
or exchangeable for such shares, and (ii) authorize for issuance, issue, deliver
or sell for below market value any shares of Quebecor Printing Stock or any
other class of Quebecor's capital stock other then non-voting preferred stock or
other securities convertible into or exchangeable for such shares (except upon
the conversion of Quebecor Printing multiple voting shares, the grant of options
or issued in the ordinary course of business pursuant to existing Quebecor
Printing options plans or exercise of stock options).
MEETINGS. The Company has agreed to take all action necessary in accordance
with and subject to applicable law and its Company Charter and By-Laws to
convene a meeting of its stockholders promptly after the consummation of the
Offer (or if the Offer has been terminated pursuant to the One-Step Transaction,
as promptly as practicable) to consider and vote upon the Merger Agreement. The
Company has agreed to use all reasonable efforts to obtain the necessary
adoption of the Merger Agreement by the stockholders of the Company, subject to
the exercise of fiduciary duties by the Company's Board of Directors under
applicable law. At any such meeting, Purchaser and Quebecor Printing has agreed
to vote or cause to be voted all of the Shares then owned by them and their
subsidiaries in favor of adoption of the Merger Agreement and the Company has
agreed to vote or cause to be voted all Shares with respect to which proxies in
the form distributed by the Company have been given, and not voted against the
adoption of the Merger Agreement, in favor of adoption of the Merger Agreement.
Between the date of consummation, if any, of the Offer and the date of the
Company stockholders meeting referred to above, Quebecor Printing and Purchaser
has agreed to not sell, transfer, dispose of or encumber in any manner or
otherwise subject to any voting or other agreement with any party any of the
Shares purchased in the Offer or any voting rights with respect thereto. Between
July 12, 1999 and the Effective Time, neither Quebecor
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Printing nor any of its subsidiaries has agreed to acquire, or agree to acquire,
whether in the open market or otherwise, any rights in any securities of the
Company other than pursuant to the Offer or the Merger.
COMPANY PROXY AGREEMENT. The Company has agreed to file with the Commission
under the Exchange Act within 20 business days from July 12, 1999, and has
agreed to use all reasonable efforts to have cleared by the Commission, in each
case at the earliest practicable date, a proxy statement (the "Company Proxy
Statement"), with respect to the adoption by the Company's stockholders of the
Merger Agreement in form and substance reasonably satisfactory to Purchaser and
its counsel. The Company has agreed to use its reasonable best efforts to
include the Company Proxy Statement in the Form F-4 (as defined below). Quebecor
Printing, Purchaser and the Company have agreed to cooperate with each other in
the preparation of the Company Proxy Statement; without limiting the generality
of the foregoing, each of Quebecor Printing and Purchaser will furnish to the
Company the information relating to it required by the Exchange Act and the
rules and regulations promulgated thereunder to be set forth in the Company
Proxy Statement. The Company Proxy Statement shall, subject to the exercise of
fiduciary duties by the Board of Directors under applicable law, contain the
determination and recommendation of the Board of Directors of the Company
referred to above.
PREPARATION OF THE FORM F-4 AND THE QUEBECOR PRINTING PROXY STATEMENT. The
Quebecor Printing Stock to be issued in the Merger will be registered under the
Securities Act on a Form F-4 registration statement (the "Form F-4"). As soon as
practicable following the date of the Merger Agreement, but in no event later
than 20 business days from July 12, 1999, Quebecor Printing has agreed to
prepare and file with the Commission the Form F-4. Quebecor Printing has agreed
to use its reasonable best efforts to respond promptly to any comments of the
Commission and to have the Form F-4 declared effective under the Securities Act
as promptly as practicable after such filing. Quebecor Printing has agreed to
use its reasonable best efforts to include the Company Proxy Statement in the
submission of the Form F-4 to the Commission. Quebecor Printing will advise the
Company, promptly after it receives notice thereof, of the time when the Form
F-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Quebecor
Printing Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the Commission for amendment of Form F-4 or
comments thereon and responses thereto or requests by the Commission for
additional information. Quebecor Printing has agreed to obtain, and has agreed
to provide evidence reasonably satisfactory to the Company of, all necessary
rulings or orders of Canadian securities regulatory authorities exempting the
distribution by Quebecor Printing of the shares of Quebecor Printing Stock
issuable in connection with the Merger and the resale of such shares from the
registration and prospectus delivery requirements and resale restrictions of
applicable Canadian securities laws on terms reasonably satisfactory to the
Company.
Quebecor Printing has agreed to use its reasonable best efforts to have any
approval by the shareholders of Quebecor Printing that may be required by the
rules and regulations of the NYSE, Montreal Exchange and Toronto Stock Exchange
waived by such exchanges, and if any such waiver is not obtained, Quebecor
Printing has agreed to, as soon as practicable following the date of the Merger
Agreement, take all action necessary in accordance with applicable law or
exchange rules to obtain such shareholder approval.
ADDITIONAL EFFORTS. Upon the terms and subject to the conditions set forth
in the Merger Agreement, the Company, Purchaser and Quebecor Printing agreed to
use all reasonable efforts to take all actions and to do all things necessary,
proper or advisable to consummate and make effective, as promptly as
practicable, the transactions contemplated by the Offer and the Merger
Agreement, including without limitation, cooperating with each other, using
reasonable efforts to obtain all necessary waivers, consents and approvals and
effecting all necessary registrations and filings, including without limitation,
submissions of information requested by governmental authorities.
Notwithstanding the foregoing, Quebecor Printing and Purchaser (i) shall on or
prior to November 9, 1999 (unless extended in the sole discretion of the
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Company) secure the expiration or termination of any applicable waiting period
under the H-S-R Act or the statutes, rules, regulations, administrative and
judicial doctrines and any other antitrust or competition laws of the United
States, any State thereof, any foreign country or the European Union (the
"Antitrust Laws"), (ii) shall take all action necessary or required, including
any litigation or appeals, to permit the consummation no later than November 9,
1999 (unless extended in the sole discretion of the Company) of the Offer, the
Merger and the other transactions contemplated by the Merger Agreement under the
Antitrust Laws, and (iii) shall avoid the imposition of any injunction or other
order under the Antitrust Laws (and to the extent an injunction or other order
has been issued, shall secure its immediate dissolution) that would prevent the
consummation of the Offer, the Merger or the transactions contemplated by the
Merger Agreement on or prior to November 9, 1999 (unless extended in the sole
discretion of the Company). The Company agreed to cooperate with Quebecor
Printing and Purchaser in connection with the satisfaction of this covenant;
provided, however, that the steps or actions referred to in this paragraph that
may be required to be taken by the Company shall be subject to the consummation
of the Offer (or if the Offer has been terminated pursuant to the One-Step
Transaction, to the closing of the Merger).
ACQUISITION PROPOSALS. The Company agreed in the Merger Agreement that from
the date of the Merger Agreement until its termination, except as described
below, (a) it and its subsidiaries will not directly or indirectly make,
solicit, initiate or encourage submission of proposals or offers from any
persons (including any of its officers or employees) with respect to an
Acquisition Proposal, and (b) it will immediately cease and cause to be
terminated all discussions or negotiations with third parties with respect to
any Acquisition Proposal and promptly notify Purchaser after receipt of any bona
fide Acquisition Proposal or any inquiry from any person relating thereto and
promptly provide Purchaser with a reasonable summary of the financial and other
material terms of such Acquisition Proposal. An "Acquisition Proposal" is
defined in the Merger Agreement as any proposal or offer involving liquidation,
dissolution, recapitalization, merger, consolidation or acquisition or purchase
of all or substantially all of the assets of, or equity interest in, the Company
or other similar transaction or business combination involving the Company or
its material subsidiaries. The Merger Agreement also provides that to the extent
that the Company's Board of Directors conclude, acting in good faith, after
receiving advice from outside legal counsel or its financial advisors that the
following action is necessary or appropriate in order to act in a manner which
is consistent with its fiduciary duties under applicable law, may furnish or
cause to be furnished information to third parties concerning itself and its
businesses, properties or assets, engage in discussions or negotiations with a
third party regarding an Acquisition Proposal initiated by a third party, or
following receipt of an Acquisition Proposal, take or disclose to its
stockholders a position contemplated by Rule 14e-2(a) under the Exchange Act or
otherwise make disclosure to the Company's stockholders or withdraw, modify or
amend its recommendation of the transactions contemplated by the Merger
Agreement and/or enter into an agreement providing for the consummation of such
Acquisition Proposal.
EMPLOYEE COMPENSATION AND BENEFITS. Effective no later than the Effective
Time, the Company (or Quebecor Printing as applicable) will enter into
agreements and adopt plans or programs, the terms and conditions of which shall
be consistent in all material respects with those set forth in a schedule to the
Merger Agreement.
For the two-year period immediately following the consummation of the Offer,
Quebecor Printing shall provide certain executives with an annual base salary
and target bonus no less than such executive was eligible to receive immediately
prior to the consummation of the Offer and with employee benefits pension
including welfare, fringe and other employee benefits that are comparable, on a
benefit by benefit basis, to benefits as provided by the Company immediately
prior to the consummation of the Offer. Notwithstanding the foregoing, during
the two-year period immediately following the consummation of the Offer, all
employees of the Surviving Corporation who were employees of the Company
immediately prior to the consummation of the Offer shall be entitled to
severance benefits upon termination without Cause (as defined in the Merger
Agreement) that are no less than those under the severance policies of the
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Company in effect immediately prior to the consummation of the Offer. Bonuses
for the fiscal year ended December 31, 1999 ("1999 Fiscal Year") shall be paid
to each participant ("Participant") under the Company's Management by Objective
bonus plan ("MBO Plan") as follows: (i) at the consummation of the Offer, a pro
rata bonus, if any, shall be paid based on achievement of the Participant's
performance targets under the MBO Plan, as determined by Marc L. Reisch, and the
portion of the 1999 Fiscal Year completed as of the consummation of the Offer
and (ii) the balance of such 1999 bonus, if any, shall be paid on January 31,
2000, based on achievement of the Participant's performance targets under the
MBO Plan, as determined by Mr. Reisch and Charles G. Cavell, and the portion of
the 1999 Fiscal Year after the consummation of the Offer; provided, however,
that if such Participant's employment is terminated after the consummation of
the Offer by Quebecor Printing or the Company for other than Cause (as defined
in the Merger Agreement) or by the Participant with Good Reason (as defined in
the Merger Agreement), the balance of such 1999 bonus, if any, shall be paid
promptly following termination based on the achievement of Participant's
performance targets as determined by Mr. Reisch at the consummation of the Offer
(pursuant to clause (i) above) and the portion of the 1999 Fiscal Year completed
after the consummation of the Offer. If the Offer is terminated pursuant to the
One-Step Transaction, references to "consummation of the Offer" shall be deemed
replaced by the term "Effective Time".
INDEMNIFICATION. The Merger Agreement provides that, from and after the
Effective Time, to the extent not covered by the insurance described below,
Purchaser will indemnify, defend and hold harmless all officers, directors and
employees of the Company or any of its subsidiaries against all losses,
expenses, claims, damages or liabilities arising out of claims brought or made
by third parties including, without limitation, derivative claims in connection
with the transactions contemplated by the Merger Agreement to the fullest extent
permitted or required under applicable law and shall advance expenses prior to
the final disposition of these claims and liabilities. Purchaser agreed to
continue to keep in effect all rights to indemnification now existing in favor
of the directors, officers or employees of the Company or any of its
subsidiaries (including, without limitation, any person who was or becomes a
director, officer or employee prior to the Effective Time (the "Indemnified
Parties") under the DGCL or as provided in the Company Charter or By-Laws with
respect to matters occurring on or prior to the Effective Time and for a period
of not less than six years after the Effective Time (or, in the case of claims
or other matters occurring on or prior to the expiration of such six year
period, which have not been resolved prior to the expiration of such six year
period, until such matters are finally resolved) and Purchaser shall honor, and
shall cause the Surviving Corporation to honor, all such rights. Purchaser shall
cause to be maintained in effect for not less than six years from the Effective
Time, an insurance and indemnification policy for the Company's current
directors, officers and employees that covers events occurring at or prior to
the Effective Time (the "D&O Insurance") that is no less favorable to the
Company's existing directors, officers or employees than the existing policy of
the Company or, if substantially equivalent insurance coverage is unavailable,
the best available coverage. Purchaser and the Surviving Corporation will not be
required, however, to pay an annual premium for the D&O Insurance in excess of
200% of the amount that the Company spent for these purposes in the last fiscal
year.
QUEBECOR PRINTING GUARANTEE. Quebecor Printing unconditionally and
irrevocably guaranteed to the Company the due, prompt and faithful performance
of, and compliance with, all agreements and obligations of Purchaser in this
Agreement. Quebecor Printing agreed that the Company shall have the right to
enforce this guarantee to ensure Purchaser's performance of, and compliance
with, all agreements and obligations of Purchaser in this Merger Agreement
without being required to first proceed against Purchaser.
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CONDITIONS PRECEDENT TO MERGER. The respective obligations of the Company,
Purchaser and Quebecor Printing to effect the Merger are subject to the
fulfillment at or prior to the Effective Time of the following conditions: (a)
unless the Offer has been terminated pursuant to the One-Step Transaction, the
Offer shall have been consummated in accordance with its terms; PROVIDED,
HOWEVER, that this condition shall be deemed to be satisfied if Purchaser fails
to accept for payment and pay for Shares pursuant to the Offer other than as a
result of a failure of a condition thereof; (b) if the Offer has been terminated
pursuant to the One-Step Transaction, the waiting period applicable to the
consummation of the Merger under the H-S-R Act shall have expired or been
terminated; (c) the requisite approval of the respective shareholders of
Quebecor Printing (if required) and of the Company shall have been obtained; (d)
the Form F-4 shall have become effective under the Securities Act and shall not
be the subject of any stop order or proceedings seeking a stop order and no stop
order or similar restraining order shall be threatened or entered by the
Commission or any state securities administration preventing the Merger, and all
necessary rulings or orders of Canadian securities authorities exempting the
distribution by Quebecor Printing of the shares of Quebecor Printing Stock
issuable in connection with the Merger and the resale of such shares from the
registration and prospectus delivery requirements and resale restrictions of
applicable Canadian securities laws shall have been received; (e) the shares of
Quebecor Printing Stock issuable to the Company's stockholders and holders of
Company Stock Options as contemplated by this Agreement shall have been approved
for listing on the NYSE, Toronto Stock Exchange and Montreal Exchange subject to
official notice of issuance; (f) there shall have been no law, statute, rule or
regulation in the United States, Canada, the European Union or any member state
of the European Union enacted or promulgated which is in effect and, in the
judgment of a majority of the continuing directors (or if the Offer has been
terminated pursuant to the One-Step Transaction, in the reasonable judgement of
the Company), has the effect of making the acquisition of Shares illegal or
otherwise prohibits consummation of the Merger; and (g) there shall not be in
effect any preliminary or final injunction or temporary restraining order or
other order or decree issued by any federal, provincial or state court or
administrative agency or authority in the United States, Canada, the European
Union or any member state of the European Union enjoining, restraining or
otherwise prohibiting the Offer, the Merger or the acquisition by Purchaser of
Shares.
ADDITIONAL CONDITIONS. If the Offer is terminated pursuant to the One-Step
Transaction, then the obligations of (a) Quebecor Printing and Purchaser to
consummate the Merger shall also be subject to the satisfaction at or prior to
the Effective Time of the following conditions: (i) the representations and
warranties of the Company set forth in this Agreement shall be true and correct
immediately prior to the Effective Time, except for failures to be true and
correct that would not be reasonably likely to have a material adverse effect,
PROVIDED, HOWEVER, that representations or warranties which by their terms are
given as of a specified date shall be true and correct as of such date and (ii)
the Company shall have performed and complied in all material respects with all
agreements and covenants required to be performed or complied with by it on or
before the Effective Time, and (b) the Company to consummate the Merger shall
also be subject to the satisfaction at or prior to the Effective Time of similar
conditions to those listed in clauses (a)(i) and (a)(ii) of this paragraph.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company: (a) by written mutual consent of Purchaser and the Company prior to
the consummation of the Offer (or, if the Offer has been terminated pursuant to
the One-Step Transaction, prior to the Effective Time); (b) by either Purchaser
or the Company: (i) unless the Offer has been terminated pursuant to the
One-Step Transaction, if the Offer shall not have been consummated by November
10, 1999, or, if all of the conditions listed in Section 15, other than the
Minimum Condition shall have been satisfied by November 10, 1999, such later
date as provides at least 15 business days from the date the Purchaser shall
have publicly announced that all of the Offer Conditions other than the Minimum
Condition have been satisfied; (ii) a permanent injunction or other final,
non-appealable order by any federal or state court in the United States or
federal or provincial court in Canada which prohibits the consummation of the
Merger shall have been issued and remain in effect;
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provided, however, that prior to invoking this right of termination each party
agrees to comply with the actions described in "--Additional Agreements," above;
and, provided further, that the occurrence of an event described in this clause
(b)(ii) related to the Antitrust Laws shall constitute a breach of the covenant
of Quebecor Printing and Purchaser described in clause (ii) (set forth in
"Additional Agreements" above); or (iii) if the Offer has been terminated
pursuant to One-Step Transaction and if the Merger has not been consummated on
or prior to November 19, 1999; (c) by Purchaser prior to the consummation of the
Offer (or, if the Offer has been terminated pursuant to the One-Step
Transaction, prior to the Effective Time): (i) if (1) the Board of Directors of
the Company shall have failed to recommend, or shall have withdrawn, its
approval or recommendation of the Offer (unless the Offer has been terminated
pursuant to the One-Step Transaction) or the Merger or shall have resolved to do
any of the foregoing; or (2) if the Company shall have entered into a definitive
agreement to accept an Acquisition Proposal; (ii) if the Board of Directors of
the Company shall have modified its approval of the Offer (unless the Offer has
been terminated pursuant to the One-Step Transaction or the Merger in a manner
adverse to Purchaser and the Minimum Condition shall not have been met on the
then scheduled expiration date of the Offer immediately following such
modification; or (iii) if the Offer shall have terminated or expired in
accordance with the terms of this Agreement (unless the Offer has been
terminated pursuant to the One-Step Transaction) without Purchaser or a
subsidiary of Quebecor Printing having purchased any Shares thereunder,
provided, however, that prior to invoking this right of termination Purchaser
has extended the Offer in accordance with its obligations to do so under the
Merger Agreement; or (d) by the Company prior to the consummation of the Offer
(or if the Offer has been terminated pursuant to the One-Step Transaction, prior
to the Effective Time): (i) (1) if the Company withdraws its recommendation of
the Offer (unless the Offer has been terminated pursuant to the One-Step
Transaction) or the Merger following the receipt of an Acquisition Proposal or
(2) if the Company shall have entered into a definitive agreement to accept an
Acquisition Proposal; or (ii) unless the Offer has been terminated pursuant to
the One-Step Transaction, if the Offer shall not have been consummated by
October 11, 1999 (and if the Offer has been terminated pursuant to the One-Step
Transaction if the Merger shall not have been consummated by October 11, 1999)
by reason of not having obtained all required approvals under Antitrust Laws,
provided, however, that such date shall be extended by each day that the Company
is not in substantial compliance with any second request issued on the
transactions contemplated by this Agreement but only if and to the extent that
Quebecor Printing and Purchaser are in substantial compliance when the Company
is not. Notwithstanding the above, neither the Company nor Purchaser are
permitted to terminate the Merger Agreement if the event which gave rise to such
termination right is a result of or arose in connection with any action or
inaction of the party seeking to terminate taken or not taken in breach of the
terms of the Merger Agreement.
FEES AND EXPENSES. Except as described in the next sentence, pursuant to
the Merger Agreement, each party to the Merger Agreement agreed to pay its own
respective costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby. See Section 17. The Company also
agreed in the Merger Agreement that, if the Merger Agreement is terminated
pursuant to: (a) clause (b)(ii) (set forth above in "Termination") and at the
time of such termination any person, entity or group (as defined in Section
13(d)(3) of the Exchange Act) (other than Purchaser) shall have become the
beneficial owner of more than 30% of the outstanding Shares (with appropriate
adjustments for reclassifications of capital stock, stock dividends, stock
splits, reverse stock splits and similar events) and such person, entity or
group (or any subsidiary of such person, entity or group) thereafter enters into
a definitive agreement with the Company to accept an Acquisition Proposal at any
time on or prior to the date which is six months after the termination of the
Merger Agreement and such transaction is thereafter consummated; (b) clause
(c)(i)(2) or (d) (1) (set forth above in "Termination"); (c) clauses (c)(i)(1),
(c)(ii) or (c)(iii) (set forth above in "Termination"), and in each case, prior
to the time of termination of the Merger Agreement, there shall exist a bona
fide Acquisition Proposal that has been made known to the Company or publicly
announced by a third party that is more favorable from a financial point of view
than the Offer and the Merger, the Company shall enter into a definitive written
agreement to accept an
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Acquisition Proposal from such party at any time on or prior to the date which
is six months after the termination of this Agreement and such transaction shall
thereafter be consummated; then the Company shall pay to Purchaser the
Termination Amount (as defined below). Such payment shall be made as promptly as
practicable but in no event later than (i) in the case of paragraph (b) of this
section, two business days following termination of this Agreement, (ii) in the
case of paragraph (a) of this section, upon consummation of such Acquisition
Proposal, and (iii) in the case of paragraph (c) of this section, upon entering
into a definitive agreement to accept such Acquisition Proposal. Each such
payment shall be made by wire transfer of immediately available funds to an
account designated by Purchaser without set-off or deduction. The term
"Termination Amount" as used herein shall mean (i) if (A) any third party has on
or prior to July 26, 1999, and, at such time, the Company was not in violation
of the provisions described in ("Acquisition Proposals" set forth above), (x)
made a bona fide Acquisition Proposal or (y) requested that the Company enter
into negotiations or discussions concerning an Acquisition Proposal or possible
Acquisition Proposal and has indicated a potential price or range of prices in
connection therewith, and (B) a payment is required to be made pursuant to this
section by the Company to Purchaser as a result of the Company entering into a
written agreement to accept an Acquisition Proposal with any such third party or
such third party acquiring 50% or more of the outstanding Shares, $10,662,000
and (ii), in each other circumstance, $42,648,000.
OTHER AGREEMENTS. The following summary of certain provisions of other
agreements entered into in connection with the Offer and the Merger, copies of
which were filed as exhibits to the Schedule 14D-1, is qualified in its entirety
by reference to the text of such other agreements.
CONFIDENTIALITY AGREEMENT. The Company and Quebecor Printing are also
parties to a Confidentiality Agreement dated June 28, 1999 containing customary
terms, including a standstill provision. The Confidentiality Agreement is filed
as an exhibit to the Tender Offer Statement on Schedule 14D-1.
TENDER, VOTING AND OPTION AGREEMENT. KKR Partners II, L.P., APC Associates,
L.P., GR Associates L.P., KKR Associates and Robert G. Burton, Marc L. Reisch,
Jennifer L. Adams, Robert B. Lewis and James E. Lillie, who are employees and
executive officers of the Company (together, the "Stockholders") entered into a
Tender, Voting and Option Agreement dated as of July 12, 1999 with Quebecor
Printing (the "Tender Agreement"). The Tender Agreement is described in the
"Introduction" to this Offer to Purchase. In addition to the provisions
described above, the Stockholders granted Quebecor Printing an irrevocable
option to purchase all, but not less than all, of the Stockholders' shares, at a
price of $35.69 per share, exercisable only in the event of a Triggering Event
(as defined in the next paragraph) and notice of the exercise is received prior
to (i) the Effective Time, (ii) termination of the Merger Agreement in
accordance with its terms prior to occurrence of a Triggering Event and at such
termination the conditions prerequisite to a Triggering Event occurring in the
future are incapable of being fulfilled, (iii) the passage of 19 business days
after the date of the Triggering Event, or (iv) November 9, 1999 if all
governmental and regulatory approvals necessary for Quebecor Printing to
exercise its rights under this option shall not then have been obtained.
STOCK OPTION AGREEMENT. Quebecor Printing and the Company entered into a
Stock Option Agreement dated as of July 12, 1999 (the "Option Agreement")
pursuant to which the Company granted Quebecor Printing the option (the
"Option") to purchase up to the Option Amount (as defined below) Shares at
$35.69 per share, up to the Option Percentage (as defined below). The Option is
only exercisable upon the date the Termination Amount (as defined in
"Termination" above) becomes payable (a "Triggering Event") and notice of such
exercise is received prior to the occurrence of an Exercise Termination Event
(defined as (i) the Effective Time, (ii) termination of the Merger Agreement in
accordance with its terms prior to occurrence of a Triggering Event and at such
termination the conditions prerequisite to a Triggering Event occurring in the
future are incapable of being fulfilled, (iii) the passage of 30 business days
after the date of the Triggering Event, (iv) November 9, 1999 if all
governmental and regulatory approvals necessary for Quebecor Printing to
exercise its rights under this option shall not then have been obtained, or (v)
receipt by Quebecor Printing of the Termination Amount). If, prior to the
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occurrence of an Exercise Termination Event, the Company enters into an
agreement to consolidate with or merge into any person other than Quebecor
Printing or any of its subsidiaries, and Company is not be the surviving
corporation or is to otherwise be acquired or enters into a similar transaction
with the result that the Shares would represent less than 50% of the outstanding
shares of the merged company, then this Option will be converted into an option
to acquire shares of the acquiring entity or its parent, upon terms described in
the Option Agreement. The Option Agreement contains customary terms for such
agreements, including certain registration rights with respect to the Shares
acquired upon the exercise of the Option. Option Amount is defined as (i) if the
Triggering Event giving rise to the exercise of the Option shall have occurred
as a result of the $10,662,000 Termination Amount provided for in the Merger
Agreement becoming payable, 3,760,000 shares of Common Stock and, (ii) if the
Triggering Event giving rise to the exercise of the Option shall have occurred
as a result of the $42,648,000 Termination Amount provided for in the Merger
Agreement becoming payable, 7,558,300 shares of Common Stock (See "--Fees and
Expenses," above). Option Percentage is defined as (i) if the Triggering Event
giving rise to the exercise of the Option shall have occurred as a result of the
$10,662,000 Termination Amount provided for in the Merger Agreement becoming
payable, 9.9% and, (ii) if the Triggering Event giving rise to the exercise of
the Option shall have occurred as a result of the $42,648,000 Termination Amount
provided for in the Merger Agreement becoming payable, 19.9%.
AGREEMENTS OF CERTAIN QUEBECOR PRINTING STOCKHOLDERS. Quebecor Inc., which
holds a majority of the voting securities of Quebecor Printing, has agreed that,
in the event that the transactions contemplated by the Merger Agreement are
subject to the approval of the shareholders of Quebecor Printing, Quebecor Inc.
would consent to such transactions either by voting in favor of a duly convened
meeting of shareholders, consenting in writing or otherwise. Caisse has
consented to the Credit Facilities, the Merger and the issuance and listing on
the NYSE, the Montreal Exchange and the Toronto Stock Exchange of the Quebecor
Printing Stock to be issued in connection with the Merger. In addition, Quebecor
Inc. and Caisse have waived preemptive rights that it has in connection with the
issuance of such shares.
REGISTRATION RIGHTS AGREEMENT. KKR Partners II, L.P., APC Associates, L.P.,
GR Associates L.P., and KKR Associates (the "KKR Stockholders") entered into a
Registration Rights Agreement with Quebecor Printing dated as of July 12, 1999
(the "Registration Rights Agreement") pursuant to which Quebecor Printing
granted the KKR Stockholders certain registration rights with respect to the
Quebecor Printing Stock that the KKR Stockholders may own upon the conversion or
issuance of shares of Quebecor Printing Stock pursuant to the Merger Agreement.
This agreement will become effective upon the issuance of shares of Quebecor
Printing Stock. Pursuant to the Registration Rights Agreement, Quebecor Printing
agreed, at its expense, to file a shelf registration statement with the
appropriate authorities covering shares of Quebecor Printing Stock issued to the
KKR Stockholders, and contains customary terms for such agreements, including
"piggyback" rights and indemnification provisions.
14. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that, except as expressly permitted, neither
the Company nor any of its subsidiaries will, among other things, prior to the
Effective Time declare, set aside or pay any dividends, or make other
distributions payable in cash, stock, property or otherwise with respect to the
Shares.
15. CERTAIN CONDITIONS OF THE OFFER.
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for
any Shares tendered pursuant to the Offer, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for, Shares
tendered pursuant to the Offer, and may terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for) to the extent permitted by
the Merger Agreement, if (i) at the expiration of the Offer the Minimum
Condition is not satisfied or (ii) if, at any time on or after July 12, 1999 and
prior to the acceptance for payment for any such
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Shares, any of the following conditions occurs or has occurred and continues to
exist (each of paragraphs (a) through (f) providing a separate and independent
condition to Purchaser's obligations pursuant to the Offer):
(a) there shall be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any Canadian
or United States federal, provincial or state court or United States federal
or administrative agency or authority, enjoining, restraining or otherwise
prohibiting the Offer, the Merger or the acquisition by Purchaser of Shares;
(b) any waiting periods under the H-S-R Act applicable to the purchase
of Shares pursuant to the Offer shall not have expired or been terminated;
(c) there shall have been any law, statute, rule or regulation in the
United States, Canada, the European Union or a member state of the European
Union, enacted, promulgated or proposed that has the effect of making the
acquisition of Shares illegal or otherwise prohibits consummation of the
Merger;
(d) any representation or warranty of the Company in the Merger
Agreement shall not be true and correct in any respect that is reasonably
likely to have a material adverse effect, in each case as if such
representation or warranty were made at the time of such determination
(except for any representations or warranties which by their terms are given
as of a specified date, provided that such representations or warranties
shall have been true and correct on such date, except for failures to be
true and correct that would not be reasonably likely to have a Material
Adverse Effect). "Material Adverse Effect" means any change or effect that
is or would be materially adverse to the business, financial condition or
results of operations of Quebecor Printing and its subsidiaries, taken as a
whole, other than any such effect attributable to or resulting from (i) the
public announcement or consummation of the transactions contemplated by the
Merger Agreement including, without limitation, the loss of customers or
employees resulting therefrom (ii) any change in general economic
conditions, financial market conditions or in conditions affecting Quebecor
Printing's industry generally, (iii) any act or omission of Quebecor
Printing or any of its subsidiaries taken with the prior consent of the
Company pursuant to Section 5.2 of the Merger Agreement, or (iv) actions
taken by Quebecor Printing or any of its subsidiaries at the specific
request of the Company);
(e) the Company shall fail to perform or comply in any material respect
with any covenant or agreement to be performed or complied with by the
Company under the Merger Agreement required to be performed or complied with
by it prior to the consummation of the Offer; or
(f) The Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition (except for any action or inaction by Purchaser, Quebecor
Printing or any of their respective affiliates constituting a breach of the
Merger Agreement), makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and (i) may
be asserted by Purchaser regardless of the circumstances giving rise to such
condition (except for any action or inaction by Purchaser, Quebecor Printing or
any of their respective affiliates constituting a breach of the Merger
Agreement) or (ii) (other than the Minimum Condition) may be waived by Purchaser
in whole at any time or in part from time to time in its reasonable discretion.
The failure by Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right and may be asserted at any time and from time to time.
16. CERTAIN REGULATORY AND LEGAL MATTERS.
GENERAL. Except as set forth in this Section 16, Purchaser is not aware of
any licenses or other regulatory permits that appear to be material to the
business of the Company and its subsidiaries, taken as
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a whole, that might be adversely affected by Purchaser's acquisition of Shares
(and the indirect acquisition of the Stock of the Company's subsidiaries as
contemplated herein, approval filings or other action by any domestic (Federal
or State), foreign or supranational governmental authority or administrative
agency which would be required for the acquisition or ownership of Shares by
Purchaser as contemplated herein. Should any such approval or other action be
required, it will be sought, but Purchaser has no current intention to delay the
purchase of Shares tendered pursuant to the Offer pending the outcome of any
such matter, subject, however, to Purchaser's right to decline to purchase
Shares if the conditions to the Offer have not been satisfied. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without conditions that Purchaser is not required to
accept.
ANTITRUST. Under the H-S-R Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the FTC and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. See Section 2 "--Acceptance for Payment and Payment of Shares."
On July 12, 1999, Purchaser filed with the FTC and the Antitrust Division a
Premerger Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer. Under the provisions of the H-S-R Act applicable to the
Offer, the purchase of Shares pursuant to the Offer may not be consummated until
the expiration of a 15-calendar day waiting period following such filing.
Accordingly, the waiting period under the H-S-R Act applicable to the purchase
of Shares pursuant to the Offer will expire at 11:59 p.m., New York City time,
on July 27, 1999, unless such waiting period is extended by request from the FTC
or the Antitrust Division for additional information or documentary material
prior to the expiration of the waiting period. If either the FTC or the
Antitrust Division were to request additional information or documentary
material from Quebecor Printing, the waiting period would expire at 11:59 p.m.,
New York City time, on the tenth calendar day after the date of substantial
compliance by Quebecor Printing with such request. Thereafter, the waiting
period could be extended only by court order or by an agreement involving
Quebecor Printing and the Company. If the acquisition of Shares is delayed
pursuant to a request by the FTC or the Antitrust Division for additional
information or documentary material pursuant to the H-S-R Act, the Offer may,
but need not, be extended and in any event the purchase of and payment for
Shares will be deferred until ten days after the request is substantially
complied with, unless the waiting period is sooner terminated by the FTC or
Antitrust Division. See Section 2 "--Acceptance for Payment and Payment of
Shares." Only one extension of such waiting period pursuant to a request for
additional information is authorized by the H-S-R Act and the rules promulgated
thereunder, except by court order. Any such extension of the waiting period will
not give rise to any withdrawal rights not otherwise provided for by applicable
law. See Section 4 "--Withdrawal Rights."
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as it either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by Purchaser or the divestiture of substantial assets of the Company or
its subsidiaries or Quebecor Printing or its subsidiaries. Private parties and
the Attorney Generals of the several States may also bring legal action under
the antitrust laws. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made, or, if such a challenge is made, of the
result thereof.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents
an "interested stockholder" (including a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers such as the Merger and
certain other
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actions) with a Delaware corporation for a period of three years following the
date such person became an interested stockholder. The Board of Directors of the
Company has taken all appropriate action so that none of Purchaser or Quebecor
Printing is an "interested stockholder" for purposes of the restrictions
contained in Section 203.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects in such states. Based on information supplied by the Company,
Purchaser does not believe that any other state takeover statutes apply to the
Offer or the Merger and, therefore, neither Purchaser nor Quebecor Printing
currently has complied with any other such state takeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and Purchaser might not
be able to accept for payment or pay for Shares tendered in the Offer, or be
delayed in consummating the Offer or the Merger. In such case, Purchaser may not
be obligated to accept for payment or pay for any Shares tendered pursuant to
the Offer.
FOREIGN APPROVALS. Based on information supplied by the Company, Purchaser
does not believe that any foreign takeover statutes or similar regulatory
provisions apply to the Offer or the Merger and, therefore, neither Purchaser
nor Quebecor Printing currently has complied with any such foreign takeover
statute or regulation. Purchaser reserves the right to challenge the
applicability or validity of any foreign law or regulation purportedly
applicable to the Offer or the Merger and nothing in this Offer to Purchase or
any action taken in connection with the Offer or the Merger is intended as a
waiver of such right. If it is asserted that any foreign takeover statute or
regulation is applicable to the Offer or the Merger and an appropriate court or
other body does not determine that it is inapplicable or invalid as applied to
the Offer or the Merger, Purchaser might be required to file certain information
with, or to receive approvals from, the relevant foreign authorities, and
Purchaser might not be able to accept for payment or pay for Shares tendered in
the Offer, or be delayed in consummating the Offer or the Merger. In such case,
Purchaser may not be obligated to accept for payment or pay for any Shares
tendered pursuant to the Offer.
17. FEES AND EXPENSES.
CSFB and RBCDS are acting as Joint Dealer Managers in connection with the
Offer and as financial advisors to Quebecor Printing in connection with Quebecor
Printing's proposed acquisition of the Company, for which services CSFB and
RBCDS will receive customary compensation. Quebecor Printing also has agreed to
reimburse CSFB and RBCDS for their out-of-pocket expenses, including the fees
and expenses of legal counsel and other advisors, incurred in connection with
their engagement, and to indemnify CSFB and RBCDS and certain related persons
against certain liabilities and expenses in connection with their engagement,
including certain liabilities under the federal securities laws. In the ordinary
course of business, CSFB and RBCDS and their affiliates may actively trade the
debt and equity securities of the Company for their own accounts and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities. In consideration of its advisory services to the
Purchaser and Quebecor Printing in connection with the negotiation of the Offer
and the Merger, Quebecor Inc. will receive a fee, in an amount not in excess of
the amount customarily paid for advisory services in transactions of this type,
payable upon consummation of the Offer, or, in the event of the One-Step
Transaction, payable at the Effective Time of the Merger. Such fee was discussed
at a meeting of the Executive Committee of the Board of Directors of Quebecor
Printing held on July 15, 1999 and it was determined that the payment of the fee
would be subject to the approval of the directors of Quebecor Printing who are
not affiliated with Quebecor Inc.
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Purchaser has retained Georgeson Shareholder Communications Inc. as
Information Agent, and Harris Trust Company of New York as Depositary, in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services hereunder and
reimbursement for their reasonable out-of-pocket expenses. The Information Agent
may contact holders of Shares by mail, telephone, facsimile, telegraph and
personal interviews and may request brokers, dealers, commercial banks, trust
companies and other nominees to forward materials relating to the Offer to
beneficial owners of Shares. The Information Agent and the Depositary will also
be indemnified by Purchaser against certain liabilities in connection with the
Offer, including certain liabilities under the federal securities laws. Neither
the Information Agent nor the Depositary has been retained to make solicitations
or recommendations in connection with the Offer.
Except as described herein, none of Purchaser or Quebecor Printing or any
officer, director, stockholder, agent or other representative of Purchaser or
Quebecor Printing will pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks, trust companies and other nominees will, upon
request, be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding offering materials to their customers.
18. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any jurisdiction in which the making of the Offer does not comply
with applicable law. If Purchaser becomes aware of any jurisdiction in which the
making of the Offer would not comply with applicable law, Purchaser will make a
good faith effort to comply with such law. If, after such good faith effort,
Purchaser cannot comply with such law, the Offer will not be made to, nor will
tenders be accepted from or on behalf of, holders of Shares residing in any such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by the Joint Dealer Managers or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR QUEBECOR PRINTING OTHER THAN AS
CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF ANY
SUCH INFORMATION OR REPRESENTATION IS GIVEN OR MADE, IT SHOULD NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Quebecor Printing have filed with the Commission a Statement
on Schedule 14D-1 pursuant to Section 14(d)(1) of the Exchange Act and Rule
14d-3 promulgated thereunder, furnishing certain additional information with
respect to the Offer, and may file amendments thereto. In addition, the Company
has filed with the Commission a Solicitation/Recommendation Statement on
Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendation of the Board with respect to the Offer and the reasons for such
recommendation and furnishing certain additional related information. The
Schedule 14D-9 is being mailed to stockholders of the Company herewith. The
Schedule 14D-1 and Schedule 14D-9 and any amendments thereto, including
exhibits, may be examined and copies may be obtained at the same places and in
the same manner as set forth with respect to the Company in Section 8 (except
that they will not be available at the regional offices of the Commission).
QUEBECOR PRINTING INC.
PRINTING ACQUISITION INC.
July 16, 1999
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ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER,
QUEBECOR PRINTING, QUEBECOR INC.
AND CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
A. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, citizenship, present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Purchaser. Unless otherwise indicated, the business address of each such person
is c/o Printing Acquisition Inc., 300 Delaware Avenue, Suite 900, Wilmington,
Delaware 19801.
DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
CHARLES G. CAVELL Canadian President of Purchaser; President President and Chief Operating Officer
and Chief Executive Officer of of Quebecor Printing (from 1989 until
Quebecor Printing and Chairman of December 1997)
the Board of Sun Media Corporation
PIERRE KARL PELADEAU Canadian Chairman of the Board of Purchaser; Executive Vice President and Chief
President and Chief Executive Operating Officer of Quebecor Printing
Officer of Quebecor Inc. and Vice (from April 1998 until April 1999)
Chairman of the Board of Quebecor Managing Director of Quebecor Printing
Printing Europe (from June 1994 until April
1998)
President of Quebecor Group Inc.
(currently known as Quebecor
Communications Inc.) (from July 1991
until June 1994)
CHRISTIAN M. PAUPE Canadian and Swiss Treasurer of Purchaser; Executive Executive Vice President and Chief
Vice President, Chief Financial Officer, Quebecor Printing
Administrative Officer and Chief (from January 4, 1999 until April 27,
Financial Officer of Quebecor 1999)
Printing Senior Executive Vice President and
Director of Levesque Beaubien
Geoffrion Inc. (from 1997 until
January 1999)
Senior Vice President of Southam Inc.
(from 1995 until 1997)
Vice President, Corporate Finance of
Bell Canada International Inc. (from
1993 until 1995)
LOUIS SAINT-ARNAUD Canadian Secretary of Purchaser; Vice Vice President, Legal Affairs and
President, Legal Affairs and Secretary of Quebecor Inc. and
Secretary of Quebecor Inc., Quebecor Communications Inc. (from
Quebecor Printing, Sun Media January 1988 until now)
Corporation and Quebecor
Communications Inc.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
RAYNALD LECAVALIER Canadian Assistant Secretary of Purchaser Director, Legal Affairs and Assistant
Director of Legal Affairs and Secretary, Quebecor Printing (from
Assistant Secretary of Quebecor July 1996 until now)
Printing Attorney, Legal Affairs of Canadian
National Railway Company (from April
1981 until July 1996)
CLAUDINE TREMBLAY Canadian Assistant Secretary of Purchaser, Same
Quebecor Printing and Quebecor Inc.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF QUEBECOR PRINTING
The following table sets forth the name, citizenship, present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Quebecor Printing. Unless otherwise indicated, the business address of each such
person is c/o Quebecor Printing Inc., 612 Saint-Jacques Street, Montreal,
Quebec, Canada H3C 4M8.
DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
CHARLES G. CAVELL Canadian See Part A of this Annex I See Part A of this Annex I
ROBERT COALLIER Canadian Vice President and Chief Financial Vice President, Communications Sector
Officer, of C-MAC Industries and Assistant to the President of
C-MAC Industries Capital Communications CDPQ Inc. (from
1010 West Sherbrooke St. September 1995 until July 1996)
Suite 1610 Director of Communications CDPQ Inc.
Montreal, Quebec (from March 1995 until September 1995)
Canada Director, Private Investments,
Industrial and Services Companies of
Caisse de depot et placement du Quebec
(from December 1992 until March 1995)
MARCELLO A. DE GIORGIS American and Corporate Director Same
Italian 29 Overlook Drive
Lakeville, Connecticut
06039
RAYMOND LEMAY Canadian Corporate Director of Quebecor Executive Vice President of Quebecor
Printing and Quebecor Inc. Inc. (from April 1990 until January
1999)
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
EILEEN A. MERCIER Canadian and President of Finvoy Management Inc. Senior Vice President and Chief
British Safety and Insurance Board Financial Officer, Abitibi-Price Inc.
200 Front Street West (from 1989 until 1995)
17(th) Floor
Toronto, Ontario
Canada
M5V 3J1
THE RIGHT HONOURABLE BRIAN Canadian Senior Partner at Ogilvy Renault Same
MULRONEY, P.C. 1981 McGill College Avenue, Suite
1100
Montreal, Quebec
Canada H3A 3C1
JEAN NEVEU Canadian Chairman of the Board of Quebecor President and Chief Executive Officer
Inc. and Quebecor Printing of Quebecor Inc. (from December 1997
until April 1999)
Chairman of the Board and Chief
Executive Officer of Quebecor Printing
(from January 1990 until December
1997)
ROBERT NORMAND Canadian Corporate Director Chief Financial Officer of Gaz
177 Grande Cote Metropolitain Inc. (from 1972 until
Rosemere, Quebec 1997)
Canada J7A 1H5
ERIK PELADEAU Canadian Chairman of the Board of Quebecor Chairman of the Board and Chief
Communications Inc. Executive Officer of Quebecor
Vice Chairman of Quebecor Inc. and Multimedia Inc. (from November 1995
Sun Media Corporation until December 1998)
Senior Vice President of Quebecor
Printing (from December 1992 until May
1995)
PIERRE KARL PELADEAU Canadian See Part A of this Annex I See Part A of this Annex I
ALAIN RHEAUME Canadian Executive Vice President and Chief Chief Financial Officer and Treasurer
Financial Officer of Microcell of Microcell Telecommunications Inc.
Telecommunications Inc. (from June 1996 until May 1998)
1250 Rene-Levesque Blvd. Deputy Minister, Finance for the
West, Suite 400 Quebec Government (from October 1992
Montreal, Quebec until June 1996)
Canada H3B 4W8
</TABLE>
I-3
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
CHRISTOPHER H. RUDGE Canadian and President of Quebecor Printing President of Quebecor Printing
British Canada Directory Group (from November 1993
Quebecor Printing Canada until March 1998)
275 Wellington Street E.
Aurora, Ontario
Canada L4G 6J9
GUY TRAHAN Canadian President of Quebecor Printing Executive Vice President of Quebecor
South America Printing Canada (from October 1994
Quebecor Printing South America until July 1997)
Maipu 939, 1(st) Floor President, East Group Canada of
(1006) Buenos Aires Argentina Quebecor Printing (from January 1994
until October 1994)
Group President, Quebecor Printing
(from October 1989 until January 1994)
MICHEL P. SALBAING Canadian, American Managing Director of Quebecor Senior Vice President and Chief
and French Printing Europe Financial Officer of Quebecor Printing
114 avenue Charles de Gaulle (from December 1997 until April 1998)
92522 Neuilly-sur-Seine France Vice President and Chief Financial
Officer, Quebecor Printing (from June
1996 until December 1997)
Vice President and Chief Financial
Officer of Societe Generale de
Financement du Quebec (from December
1994 until June 1996)
DAVID S. BOLES Canadian President, Retail and Sunday Senior Vice President / Group
Magazines of Quebecor Printing MGS--Retail Group of Quebecor Printing
(USA) Corp. (USA) Corp. (from February 1996 until
980 Washington Street February 1999)
Suite 222 Vice President / Group MGS-- Specialty
Dedham, Massachusetts Group of Quebecor Printing (USA) Corp.
02026-6732 (from September 1995 until February
1996)
Vice President / Group MGS--
St.Paul/Mt. Morris Group of Quebecor
Printing (USA) Corp. (from October
1993 until September 1995)
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
VINCENT NARDECCHIA American President, Magazines and Catalogs Senior Vice President Magazines and
Group of Quebecor Printing (USA) Catalogs Group of Quebecor Printing
Corp. (USA) Corp. (from January 1998 until
MCR Group January 1999)
451 International Boulevard Senior Vice President, Manufacturing
Clarksville, Tennessee 37040 of Quebecor Printing (USA) Corp. (from
October 1995 until January 1998)
Vice President / General Manager of
Quebecor Printing Buffalo Inc. (from
May 1993 until October 1995)
United States World Class Project
(from 1994 until 1996)
CHARLES L. MIOTKE American President, Target Publication Same
Services Group of Quebecor Printing
(USA) Corp.
Quebecor Printing Pendell Inc.
1700 James Savage Road
Midland, Michigan 48642
JERRY W. ALLEE American President, Book Group of Quebecor Executive Vice President of Quebecor
Printing (USA) Corp. Integrated Media (from June 1998 until
201 North Charles Street February 1999)
Suite 906 Vice President / General Manager,
Baltimore, Maryland 21201 Digital Operation of Quebecor Printing
(USA) Corp. (from March 1997 until
June 1998)
Senior Vice President of Bertelsmann
(from March 1994 until March 1997)
CHRISTIAN M. PAUPE Canadian and Swiss See Part A of this Annex I See Part A of this Annex I
GILBERT MARTINET Canadian Vice President, Manufacturing and Vice President, Manufacturing of
Environment of Quebecor Printing Quebecor Inc. (from February 1989
until 1991)
SEAN M. TWOMEY Canadian and Irish Vice President, Business Assistant to the President, Vice
Development of Quebecor Printing President (contract sales) and
Director (major contracts/ marketing)
for the Directory Group of Quebecor
Printing (from 1985 until January
1996)
LOUIS SAINT-ARNAUD Canadian See Part A of this Annex I See Part A of this Annex I
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
SERGE REYNAUD Canadian and Vice President, Human Resources of Director, organizational development
French Quebecor Printing of Domtar (from September 1996 until
May 1997)
Director, Human Resources for Europe
and Canada of Abbott Laboratories at
Chicago and Montreal (from 1991 until
1996)
SYLVAIN LEVERT Canadian Vice President, Corporate Services Director, Business Development,
and Logistics of Quebecor Printing Quebecor Printing (from July 1997
(Fribourg, Switzerland) until October 1998)
Quebecor Printing S.A. Corporate Controller, Quebecor
Route des Arseneaux 15, Printing (from January 1993 until July
Chayette 8 1997)
CH 1700
Fribourg, Switzerland
MARK D'SOUZA Canadian Vice President and Treasurer of Treasurer of Quebecor Printing (from
Quebecor Printing September 1997 until November 1998)
Quebecor Printing S.A. Director, Finance of Societe generale
Route des Arseaux 15, de financement du Quebec (from March
Chayette 8 1995 until September 1997)
CH 1700 Several positions in Corporate Finance
Fribourg, Switzerland at Royal Bank of Canada and Union Bank
of Switzerland (from July 1989 until
March 1995)
RAYNALD LECAVALIER Canadian See Part A of this Annex I See Part A of this Annex I
CARL GAUVREAU Canadian Corporate Controller of Quebecor Assistant to the Corporate Controller
Printing of Quebecor Printing (from September
1995 until July 1997)
Senior Manager of KPMG (from September
1991 until September 1995)
JEREMY ROBERTS Canadian Assistant Treasurer of Quebecor Assistant Treasurer of Bell Canada
Printing (from April 1996 until November 1997)
Quebecor Printing S.A. Several positions in Corporate Finance
Route des Arseaux 15, and Treasury with Bell Canada (from
Chayette 8 July 1987 until April 1996)
CH 1700
Fribroug, Switzerland
GAETAN LUSSIER Canadian Director, Internal Audit of Executive Vice President, finance and
Quebecor Printing administration, East Group and
801 East Sherbrooke Street specialty printing of Quebecor
Suite 802 Printing (from August 1994 until June
Montreal, Quebec 1995)
Canada Vice President, Finance of Quebecor
H2L 1K7 Printing (from January 1990 until
August 1994)
</TABLE>
I-6
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
CLAUDINE TREMBLAY Canadian See Part A of this Annex I See Part A of this Annex I
</TABLE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF QUEBECOR INC.
The following table sets forth the name, citizenship, present principal
occupation or employment, and material occupations, positions, offices or
employment for the past five years of each director and executive officer of
Quebecor Inc. Unless otherwise indicated, and the business address of each such
person is c/o Quebecor Inc., 612 Saint-Jacques Street, Montreal, Quebec, Canada,
H3C 4M8.
DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
CHARLES G. CAVELL Canadian See Part A of this Annex I See Part A of this Annex I
MICHELINE CHAREST Canadian and President and Co-Chief Same
British Executive Officer of CINAR
Corporation
1055 Rene-Levesque Blvd
East, Suite 800
Montreal, Quebec
Canada
H2L 4S5
MICHEL DESBIENS Canadian President and Chief Executive Same
Officer of Dononue Inc.
500 West Sherbrooke St.
Suite 800
Montreal, Quebec
Canada
H3A 3C6
PIERRE LEGRAND Canadian Senior Partner at Ogilvy Renault Same
1981 McGill College Avenue, Suite
1100
Montreal, Quebec
Canada
H3A 3C1
RAYMOND LEMAY Canadian See Part B of this Annex I See Part B of this Annex I
JEAN NEVEU Canadian See Part B of this Annex I See Part B of this Annex I
ERIK PELADEAU Canadian See Part B of this Annex I See Part B of this Annex I
PIERRE KARL PELADEAU Canadian See Part A of this Annex I See Part A of this Annex I
CHARLES-ALBERT POISSANT Canadian Chairman of the Board of Donohue Chairman of the Board of Quebecor Inc.
Inc. (from December 1997 to April 1999)
500 West Sherbrooke St., Vice Chairman of Quebecor Inc. (from
Suite 800 August 1994 until December 1997)
Montreal, Quebec
Canada
H3A 3C6
THE RIGHT HONOURABLE BRIAN Canadian See Part B of this Annex I See Part B of this Annex I
MULRONEY, P.C.
</TABLE>
I-7
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
ALAIN BOUCHARD Canadian Chairman, President and Chief Same
Executive Officer of Alimentation
Couche-Tard Inc.
1600 St. Martin Blvd. East
Tower B, Suite 280
Laval, Quebec
Canada
H7G 4S7
PIERRE LAURIN Canadian Executive in Residence of Ecole des Vice Chairman and General Manager,
hautes etudes commerciales Merrill Lynch Canada Inc. (from 1992
3000 Cote Ste-Catherine Road, Suite until 1998)
5410-B, Montreal, Quebec, Canada,
H3T 2A7
CLAIRE LEGER Canadian Vice Chairman and Secretary of Le Same
Groupe alimentaire St-Hubert Inc.
1515 Chomedey Blvd., Suite 250
Laval, Quebec
Canada
H7V 3Y7
</TABLE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME CITIZENSHIP OCCUPATION/BUSINESS ADDRESS POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
FRANCOIS R. ROY Canadian Executive Vice President and Chief Vice President and Chief Financial
Financial Officer of Quebecor Inc. Officer Quebecor Inc. (from August
1998 til January 1999)
Executive Vice President and Chief
Financial Officer of Avenor Inc. (from
August 1997 until August 1998)
Vice President, Finance and Treasurer
of Quebecor Inc. (from August 1991 til
August 1997)
LOUIS SAINT-ARNAUD Canadian See Part A of this Annex I See Part A of this Annex I
</TABLE>
I-8
<PAGE>
D. DIRECTORS AND EXECUTIVE OFFICERS OF CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
DIRECTORS
<TABLE>
<CAPTION>
NAME CITIZENSHIP PRESENT PRINCIPAL OCCUPATION POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
JEAN-CLAUDE SCRAIRE Canadian Chairman Vice President of Groupe Immobilier
1981, avenue McGill College Caisse (1993-1995)
Montreal (Quebec) H3A 3C7
GUY MORNEAU Canadian Chairman of the Board Associate Deputy Minister, Ministere
and President des Ressources naturelles (1994-1995)
Regie des rentes du Quebec Assistant Secretary, Secretariat sur
2600, boul. Laurier, l'avenir du Quebec (1995-1996)
bureau 546 Associate Secretary General of
Quebec (Quebec) G1V 4T3 Governmental Politics (1996) Associate
Secretary General in charge of
Secretariat du Comite des priorites,
Ministere du Conseil executif
(1996-1998)
JEAN-CLAUDE BACHAND Canadian Lawyer Same
Byers Casgrain
1, Place Ville-Marie
Bureau 3900
Montreal (Quebec) H3B 4M7
CLAUDE BELAND Canadian President Same
La Confederation des Caisses
populaires et d'economie Desjardins
du Quebec
100, avenue des Commandeurs Levis
(Quebec) G6V 7N5
LUC BESSETTE Canadian President Same
Commission administrative des
regimes de retraite et d'assurances
475, rue Saint-Amable
Quebec (Quebec) G1R 5X3
RODRIGUE BIRON Canadian Rodrigue Biron & Associes 305, Same
chemin de la Place St-Laurent
St-Augustin-de-Desmaures
Cap-Rouge (Quebec) G1Y 3G9
</TABLE>
I-9
<PAGE>
<TABLE>
<CAPTION>
NAME CITIZENSHIP PRESENT PRINCIPAL OCCUPATION POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
YVES FILION Canadian Deputy Chief Executive Office and Assistant Director General and Chief
Chief Financial Officer of Financial Services, Hydro-Quebec
Hydro-Quebec (1996-1998) Executive Vice-president,
75, boul. Rene-Levesque Ouest Distribution and Commercialization,
Montreal (Quebec) H2Z 1A4 Hydro-Quebec (1996) Executive Vice-
president, Production, Transport and
Telecommunications, Hydro-Quebec
(1993-1995)
JEAN-YVES GAGNON Canadian General Manager Vice President of Administration and
Societe de l'assurance automobile Finance, Societe de l'assurance
du Quebec 333, boul. Jean-Lesage automobile du Quebec (1994-1995)
Quebec (Quebec) G1K 8J6
HENRI MASSE Canadian President Secretary General, Federation des
Federation des travailleurs et travailleurs et travailleuses du
travailleuses du Quebec 545, boul. Quebec (1993-1998)
Cremazie Est, 17(e)etage
Montreal, (Quebec) H2M 2V1
GILLES GODBOUT Canadian Deputy Minister Assistant Deputy Minister, Ministere
Ministere des Finances des finances
12, rue St-Louis Quebec (Quebec)
G1R 5L3
THOMAS O. HECHT Canadian Chairman Emeritus Same
Technologies IBEX Inc.
5485, rue Pare
Montreal (Quebec) H4P 1P7
GERALD LAROSE Canadian President Same
Confederation des syndicats
nationaux
1601, rue Delorimier
Montreal (Quebec) H2K 4M5
</TABLE>
OFFICERS
<TABLE>
<CAPTION>
NAME CITIZENSHIP PRESENT PRINCIPAL OCCUPATION POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
JEAN-CLAUDE SCRAIRE Canadian Chairman Vice President, Groupe Immobilier
Caisse de depot et placement du Caisse (1993-1995)
Quebec
1981, avenue McGill College
Montreal (Quebec) H3A 3C7
FERNAND PERREAULT Canadian Senior Vice-president President and Chief of Operations,
Caisse Real Estate Group and SITQ Immobilier (1987-1995)
Mortgage Investments Caisse de
depot et placement du Quebec 1981,
avenue McGill College
Montreal (Quebec) H3A 3C7
</TABLE>
I-10
<PAGE>
<TABLE>
<CAPTION>
NAME CITIZENSHIP PRESENT PRINCIPAL OCCUPATION POSITIONS FOR THE PAST FIVE YEARS
- ------------------------------ ------------------ ----------------------------------- --------------------------------------
<S> <C> <C> <C>
MICHEL NADEAU Canadian Senior Vice President Vice President, Caisse de depot et
Investment Planning and Strategic placement du Quebec (1984-1995)
Affairs, Caisse de depot et
placement du Quebec
1981, avenue McGill College
Montreal (Quebec) H3A 3C7
GINETTE DEPELTEAU Canadian Corporate Secretary--Director Assistant Secretary, Caisse de depot
Caisse de depot et placement du et placement du Quebec (1994-1998)
Quebec
1981, avenue McGill College
Montreal (Quebec) H3A 3C7
</TABLE>
I-11
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
Harris Trust Company of New York
(For Information (212) 701-7624)
<TABLE>
<S> <C> <C>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
Wall Street Station Receive Window Receive Window
P.O. Box 1023 Wall Street Plaza Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19(th) Floor 88 Pine Street, 19(th) Floor
New York, NY 10005 New York, NY 10005
BY FACSIMILE TRANSMISSION: FOR CONFIRMATION BY
TELEPHONE:
(For Eligible Institutions (212) 701-7624
Only)
(212) 701-7636
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or the Joint Dealer Managers at the addresses and telephone numbers set
forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and related materials may be
obtained from the Information Agent or the Dealer Managers as set forth below
and will be furnished promptly at Purchaser's expense. Stockholders may also
contact their broker, dealer, commercial bank, trust company or other nominee
for assistance concerning the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc.
Wall Street Plaza
New York, NY 10005
Banks and Brokers call collect: (212) 440-9800
All others call Toll Free: (800) 223-2064
The Joint Dealer Managers for the Offer are:
<TABLE>
<S> <C>
Credit Suisse First Boston Corporation RBC Dominion Securities Corporation
Eleven Madison Avenue One Liberty Plaza
New York, NY 10010-3629 165 Broadway
Call Toll Free (800) 646-4543 New York, NY 10006-1404
(212) 858-7139
</TABLE>
<PAGE>
Letter of Transmittal
to Tender Shares of Common Stock
of
World Color Press, Inc.
Pursuant to the Offer to Purchase Dated July 16, 1999
by
Printing Acquisition Inc.
a wholly owned indirect subsidiary of
Quebecor Printing Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
Harris Trust Company of New York
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
<S> <C> <C>
Wall Street Station Receive Window Receive Window
P.O. Box 1023 Wall Street Plaza Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor 88 Pine Street, 19th Floor
New York, NY 10005 New York, NY 10005
BY FACSIMILE TRANSMISSION: FOR CONFIRMATION BY
TELEPHONE:
(For Eligible Institutions (212) 701-7624
Only)
(212) 701-7636
</TABLE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
Name(s) and Address(es) of
Registered Holder(s) (Please Share Certificate(s) and Share(s) Tendered
fill in, if blank) (Please attach additional signed list, if necessary)
Total Number of
Share Certificate Shares Represented Number of Shares
Number(s) (1) By Certificate(s) Tendered (2)
Total Shares Tendered
(1) Need not be completed by stockholders who deliver Shares by book-entry transfer ("Book-Entry
Stockholders").
(2) Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered. See Instruction 4.
/ / CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILITATED. SEE INSTRUCTION 11.
</TABLE>
The names and addresses of the registered holders of the tendered Shares
should be printed, if not already printed above, exactly as they appear on the
Share Certificates tendered hereby.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFORE
BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE FORM
W-9 SET FORTH BELOW.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of World Color
Press, Inc. (the "Company") if certificates for Shares (as defined below) are to
be forwarded herewith or, unless an Agent's Message (as defined in Section 2 of
the Offer to Purchase) is utilized, if delivery of Shares is to be made by
book-entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined in Section 2 of the Offer to Purchase and pursuant
to the procedures set forth in Section 3 thereof).
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, or who cannot complete the
procedure for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), must tender their Shares
according to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
- --------------------------------------------------------------------------------
TENDER OF SHARES
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ____________________________________________
Account Number: ___________________________________________________________
-----------------------------------------------------------------------------
Transaction Code Number: __________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s): __________________________________________
Window Ticket Number (if any): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Eligible Institution that Guaranteed Delivery: ____________________
-----------------------------------------------------------------------------
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Printing Acquisition Inc., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Quebecor
Printing Inc., a corporation amalgamated under the laws of Canada ("Quebecor
Printing"), the above-described shares of common stock, par value $0.01 per
share (the "Shares"), of World Color Press, Inc., a Delaware corporation (the
"Company"), pursuant to Purchaser's offer to purchase up to 23,500,000 Shares
(representing approximately 62% of the issued and outstanding Shares as of July
8, 1999) at a purchase price of $35.69 per Share, net to the seller in cash (the
"Offer Price"), without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated July 16, 1999, and in this
Letter of Transmittal (which, together with any amendments or supplements
thereto or hereto, collectively constitute the "Offer"). Receipt of the Offer is
hereby acknowledged.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), and
effective upon acceptance for payment of the Shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to or upon the order of Purchaser all right, title and interest in
and to all the Shares that are being tendered hereby (and any and all dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect thereof on or after the date hereof (collectively, "Distributions")) and
irrevocably constitutes and appoints Harris Trust Company of New York (the
"Depositary") the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and all Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (i) deliver certificates for such Shares (and any
and all Distributions), or transfer ownership of such Shares (and any and all
Distributions) on the account books maintained by the Book-Entry Transfer
Facility, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of Purchaser, (ii) present such
Shares (and any and all Distributions) for transfer on the books of the Company
and (iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any and all Distributions), all in accordance with
the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Charles G. Cavell, Christian M. Paupe and Louis Saint-Arnaud in their
respective capacities as officers or directors of Purchaser, and any individual
who shall thereafter succeed to any such office of Purchaser, and each of them,
and any other designees of Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his or her substitute shall in his or her sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, and to otherwise act as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, all of the Shares (and any and all
Distributions) tendered hereby and accepted for payment by Purchaser. This
appointment will be effective if and when, and only to the extent that,
Purchaser accepts such Shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such Shares in accordance with the terms of the Offer.
Such acceptance for payment shall, without further action, revoke any prior
powers of attorney and proxies granted by the undersigned at any time with
respect to such Shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). Purchaser
reserves the right to require that, in order for Shares or other securities to
be deemed validly tendered, immediately upon Purchaser's acceptance for payment
of such Shares, Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares (and any and all Distributions),
including voting at any meeting of the Company's stockholders.
3
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that the undersigned owns the Shares tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that the tender of the
tendered Shares complies with Rule 14e-4 under the Exchange Act, and that when
the same are accepted for payment by Purchaser, Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claims. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby or deduct from such purchase price,
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all Shares purchased and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price of all Shares purchased and/or
return any certificates for Shares not tendered or not accepted for payment (and
any accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered". In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
of all Shares purchased and/or return any certificates evidencing Shares not
tendered or not accepted for payment (and any accompanying documents, as
appropriate) in the name(s) of, and deliver such check and/or return any such
certificates (and any accompanying documents, as appropriate) to, the person(s)
so indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions", please credit any Shares tendered herewith by book-entry
transfer that are not accepted for payment by crediting the account at the
Book-Entry Transfer Facility designated above. The undersigned recognizes that
Purchaser has no obligation, pursuant to the "Special Payment Instructions", to
transfer any Shares from the name of the registered holder thereof if Purchaser
does not accept for payment any of the Shares so tendered.
4
<PAGE>
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6, and 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment of certificates representing Shares not tendered or
accepted for payment are to be issued in the name of someone other than the
undersigned.
Issue: / / Check / / Certificate(s) to
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
___________________________________________________________________
(Include Zip Code)
__________________________________________________________________________
(Taxpayer Identification or Social Security Number)
(Also complete Substitute Form W-9 below)
- -------------------------------------------
- -------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the check for the purchase price of Shares
accepted for payment and/or certificates representing Shares not tendered or
accepted for payment are to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail: / / Check / / Certificate(s) to
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
____________________________________________________________________
(Include Zip Code)
- ------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDER: SIGN HERE
(Complete Substitute Form W-9 below)
____________________________________________________________________________
____________________________________________________________________________
(Signature(s) of Owner(s))
Name(s) ____________________________________________________________________
____________________________________________________________________________
Capacity (full title) ______________________________________________________
(See Instructions)
Address: _________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
(Include Zip Code)
__________________________________________________________________________
Area Code and Telephone Number _____________________________________________
Taxpayer Identification or Social Security Number __________________________
(See Substitute Form W-9)
Dated: __________________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please set forth full
title and see Instruction 5).
GUARANTEE OF SIGNATURE(S)
(If required--See Instructions 1 and 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE
BELOW.
Authorized Signature(s) ____________________________________________________
Name _______________________________________________________________________
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number _____________________________________________
Dated: __________________, 1999
----------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program or
by any other "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Exchange Act (each, an "Eligible Institution"). In all other
cases, all signatures on this Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders if certificates are to be forwarded herewith or, unless an Agent's
Message is utilized, if tenders are to be made pursuant to the procedure for
tender by book-entry transfer set forth in Section 3 of the Offer to Purchase.
Share Certificates evidencing tendered Shares, or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in connection with
a book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase). Stockholders whose Share Certificates are not immediately
available, or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis or who cannot deliver all other required documents to
the Depositary prior to the Expiration Date, may tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Purchaser,
must be received by the Depositary prior to the Expiration Date and (iii) the
Share Certificates (or a Book-Entry Confirmation) representing all tendered
Shares, in proper form for transfer, in each case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three New York Stock Exchange, Inc.
trading days after the date of execution of such Notice of the Guaranteed
Delivery. If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
The method of delivery of this letter of transmittal, share certificates and
all other required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and the risk of the tendering stockholder and the
delivery will be deemed made only when actually received by the Depositary
(including, in the case of book entry transfer, by book-entry confirmation). If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. in all cases, sufficient time should be allowed to
ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed scheduled attached hereto.
7
<PAGE>
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate are
to be tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". In this case, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Purchaser of the authority of such person so to act must be submitted. If this
Letter of Transmittal is signed by the registered holder(s) of the Shares listed
and transmitted hereby, no endorsements of certificates or separate stock powers
are required unless payment to be made or certificates for Shares not tendered
or not accepted for payment are to be issued in the name of a person other than
the registered holder(s). Signatures on any such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear(s)
on the certificate(s). Signature(s) on any such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for Shares
not tendered or not accepted for payment are to be registered in the name of,
any person other than the registered holder(s), or if tendered certificate(s)
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such other person) payable on account of the
transfer to such other person will be deducted from the purchase price of such
Shares purchased unless evidence satisfactory to Purchaser of the payment of
such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) evidencing the Shares
tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be returned
to a person other than the person(s) signing this Letter of Transmittal or to an
address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed.
8. SUBSTITUTE FORM W-9. A tendering stockholder is required to provide the
Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 which is provided under "Important Tax Information" below, and to
certify whether the stockholder is subject to backup withholding of Federal
income tax. If a tendering stockholder is subject to backup withholding, the
stockholder must cross out item (2) of the
8
<PAGE>
Certification box of the Substitute Form W-9. Failure to provide the information
on the Substitute Form W-9 may subject the tendering stockholder to Federal
income tax withholding of 31% of any payments made to the stockholder, but such
withholdings will be refunded if the tendering stockholder provides a TIN within
60 days.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or Joint Dealer Managers at the addresses and
phone numbers set forth below, or from brokers, dealers, commercial banks or
trust companies.
10. WAIVER OF CONDITIONS. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), Purchaser reserves the right,
in its sole discretion, to waive, at any time or from time to time, any of the
specified conditions of the Offer, in whole or in part, in the case of any
Shares tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST
BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH
THE PROCEDURES FOR GUARANTEED DELIVERY.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the transfer agent at (212) 701-7624. The stockholder will then be
instructed as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on the Substitute Form W-9 below. If such stockholder
is an individual, the TIN is such stockholder's Social Security Number. If a
tendering stockholder is subject to backup withholding, such stockholder must
cross out item (2) of the Certification box on the Substitute Form W-9. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder may be subject to backup withholding of 31%
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to withholding will be reduced
by the amount of tax withheld. If backup withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form certifying that the TIN provided on the Substitute Form W-9
is correct (or that such stockholder is awaiting a TIN).
What Number to Give the Depositary
The stockholder is required to give the Depositary the Social Security
Number or Employer Identification Number of the record owner of the shares. If
the shares are in more than one name, or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report. If the tendering stockholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, the
stockholder should write "Applied For" in the space provided for the TIN in Part
I, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I, the Depositary will withhold 31% of any payments made to the
stockholder, but such withholdings will be refunded if the tendering stockholder
provides a TIN within 60 days.
10
<PAGE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: HARRIS TRUST COMPANY OF NEW YORK
- -----------------------------------------------------------------------------------------------------
SUBSTITUTE
Form W-9
Department of the Treasury
Internal Revenue Service Name
-------------------------------------------------------------
Address -----------------------------------------------------
-------------------------------------------------------------
(Number and Street)
-------------------------------------------------------------
(Zip Code) (City) (State)
- -----------------------------------------------------------------------------------------------------
Payor's Request for Taxpayer
Identification Number ("TIN") and
Certification Part 1(a)--PLEASE PROVIDE YOUR TIN
IN THE BOX AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW TIN ------------------------
----------------------------
(Social Security Number or
Employer Identification Number)
--------------------------------------------------------------
Part 1(b)--PLEASE CHECK THE BOS AT RIGHT IF YOU HAVE APPLIED FOR, AND
ARE AWAITING RECEIPT OF, YOUR TIN / /
--------------------------------------------------------------
Part 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE
"EXEMPT" HERE (SEE INSTRUCTIONS)
--------------------------------------------------------------
Part 3--CERTIFICATION UNDER PENALTIES OF PERJURY, I CERTIFY THAT (X)
The number shown on this form is my correct TIN (or I am waiting for a
number to be issued to me), and (Y) I am not subject to backup
withholding because: (a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that
I am no longer subject to backup withholding.
Sign Here R SIGNATURE -------------------------------------------------
DATE --------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
Certification of Instructions--You must cross out Item (Y) of Part 3 above
if you have been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such Item (Y).
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(b) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and that (1) I mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal
Revenue Service Center or Social Security Administration Office or I intend
to mail or deliver an application in the near future. I understand that if I
do not provide a taxpayer identification number to the Payor by the time of
payment, 31 percent of all reportable payments made to me pursuant to this
Offer shall be withheld.
--------------------------------------------
--------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL WILL BE
ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER
REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE
COMPANY OR SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE FIRST
PAGE.
Questions and requests for assistance or for additional copies of the Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
other tender offer materials may be directed to the Information Agent or the
Joint Dealer Managers at their respective telephone numbers and locations listed
below, and will be furnished promptly at the Purchaser's expense. You may also
contact your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
Wall Street Plaza
New York, NY 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL FREE: (800) 223-2064
The Joint Dealer Managers for the Offer are:
<TABLE>
<S> <C> <C>
CREDIT SUISSE FIRST BOSTON CORPORATION RBC DOMINION SECURITIES CORPORATION
Eleven Madison Avenue One Liberty Plaza
New York, NY 10010-3629 165 Broadway
Call Toll Free (800) 646-4543 New York, NY 10006-1404
(212) 858-7139
</TABLE>
12
<PAGE>
Notice of Guaranteed Delivery
for
Tender of Shares of Common Stock
of
World Color Press, Inc.
to
Printing Acquisition Inc.
a wholly owned indirect subsidiary of
Quebecor Printing Inc.
(Not to be used for signature guarantees)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates for
Shares (as defined below) are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all required documents to reach Harris Trust Company of New York (the
"Depositary") on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase). This form may be delivered by hand, transmitted by facsimile
transmission or mailed (to the Depositary). See Section 3 of the Offer to
Purchase.
The Depositary for the Offer is:
Harris Trust Company of New York
<TABLE>
<CAPTION>
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
<S> <C> <C>
Wall Street Station Receive Window Receive Window
P.O. Box 1023 Wall Street Plaza Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor 88 Pine Street, 19th Floor
New York, NY 10005 New York, NY 10005
BY FACSIMILE TRANSMISSION: FOR CONFIRMATION BY
TELEPHONE:
(For Eligible Institutions (212) 701-7624
Only)
(212) 701-7636
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN
THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE
DEPOSITARY.
THIS NOTICE OF GUARANTEED DELIVERY TO THE DEPOSITARY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO
BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" (AS DEFINED IN THE OFFER TO PURCHASE)
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEES MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in the Offer to Purchase) and certificates for
Shares to the Depositary within the time period shown herein. Failure to do so
could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
GUARANTEE
(Not to be used for signature guarantees)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program, (a) represents that the above named person(s) "own(s)"
the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender
of Shares complies with Rule 14e-4 and (c) guarantees to deliver to the
Depositary either the certificates evidencing all tendered Shares, in proper
form for transfer, or to deliver Shares pursuant to the procedure for book-entry
transfer into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility"), in either case together with the Letter of
Transmittal (or a facsimile thereof) properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three New York Stock Exchange, Inc. trading days after the
date hereof.
<TABLE>
<S> <C>
Name of Firm:
(Authorized Signature)
Address: Title:
Name:
Zip Code
(Please type or print)
Area Code and
Telephone Number: Dated: , 1999
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Printing Acquisition Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Quebecor Printing Inc., a
corporation amalgamated under the laws of Canada, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated July 16, 1999 (the
"Offer to Purchase") and the related Letter of Transmittal (which, together with
any amendments or supplements thereto, constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares of common stock, par value $0.01
per share (the "Shares"), of World Color Press, Inc., a Delaware corporation
(the "Company"), set forth below, pursuant to the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares Tendered: SIGN HERE
Certificate No(s) (if available): Name(s) of Record Holder(s)
/ / Check if securities will be tendered by (Please Print)
book-entry transfer Address(es):
Name of Tendering Institution:
Account No.: (Zip Code)
Dated: , 1999 Area Code and Telephone No(s):
Signature(s):
</TABLE>
<PAGE>
CREDIT SUISSE FIRST BOSTON RBC DOMINION SECURITIES
Eleven Madison Avenue One Liberty Plaza
New York, NY 10010-3629 165 Broadway
New York, NY 10006-1404
Offer to Purchase for Cash
up to 23,500,000 Shares of Common Stock
of
World Color Press, Inc.
at
$35.69 Net Per Share
by
Printing Acquisition Inc.
a wholly owned indirect subsidiary of
Quebecor Printing Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
July 16, 1999
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by Printing Acquisition Inc., a Delaware corporation
(the "Purchaser") and a wholly owned indirect subsidiary of Quebecor Printing
Inc., a company amalgamated under the laws of Canada ("Quebecor Printing"), to
act as Joint Dealer Managers in connection with Purchaser's offer to purchase up
to 23,500,000 shares (representing approximately 62% of the issued and
outstanding shares as of July 8, 1999) of common stock, par value $0.01 per
share (the "Shares"), of World Color Press, Inc., a Delaware corporation (the
"Company"), at a purchase price of $35.69 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated July 16, 1999 (the "Offer to Purchase") and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") enclosed herewith.
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available, who cannot complete the procedures
for book-entry transfer on a timely basis, or who cannot deliver all other
required documents to Harris Trust Company of New York (the "Depositary") prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase), must
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date a number of Shares of
Common Stock par value $0.01 per share of World Color Press, Inc. (the
"Company") which, together with any shares owned by Quebecor Printing Inc. or
Printing Acquisition Inc. would constitute more than 50% of the voting power of
the company (determined on a fully-diluted basis) of all the securities of the
Company entitled to vote generally in a merger (ii) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. The Offer is also subject to the
satisfaction of certain other terms and conditions. See Section 15 of the Offer
to Purchase.
<PAGE>
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
1. Offer to Purchase dated July 16, 1999;
2. Letter of Transmittal for your use in accepting the Offer and tendering
Shares and for the information of your clients (manually signed facsimile
copies of the Letter of Transmittal may be used to tender Shares);
3. Notice of Guaranteed Delivery to be used to accept the Offer if Share
Certificates are not immediately available or if such certificates and all
other required documents cannot be delivered to the Depositary, or if the
procedures for book-entry transfer cannot be completed on a timely basis;
4. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
5. The Letter to stockholders of the Company from Robert G. Burton, the
Chairman and Chief Executive Officer of the Company, accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company, which includes the
recommendation of the Board of Directors of the Company (the "Board of
Directors") that stockholders accept the Offer and tender their Shares to
Purchaser pursuant to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
The Board of Directors of the Company has determined by a unanimous vote
that the Offer and the Merger (as defined below) are fair to, advisable and in
the best interests of, the Company and its stockholders, has approved the Offer
and the Merger, has approved and adopted the Merger Agreement (as defined
below), and has resolved to recommend acceptance of the Offer to, and adoption
of the Merger Agreement by, the Company's stockholders.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), among Quebecor Printing, Purchaser
and the Company. The Merger Agreement provides for, among other things, the
making of the Offer by Purchaser, and further provides that, following the
completion of the Offer, upon the terms and subject to the conditions of the
Merger Agreement, and in accordance with the Delaware General Corporation Law,
Purchaser will be merged with and into the Company (the "Merger"). Following the
Merger, the Company will continue as the surviving corporation and become a
wholly owned subsidiary of Quebecor Printing, and the separate corporate
existence of Purchaser will cease.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Depositary and (ii) Share Certificates representing the tendered Shares
should be delivered to the Depositary, or such Shares should be tendered by
book-entry transfer into the Depositary's account maintained at the Book-Entry
Transfer Facility (as described in the Offer to Purchase), all in accordance
with the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
If the holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary, the Information Agent and the Joint
Dealer Managers as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse
you for customary mailing and handling costs incurred by you in forwarding the
enclosed materials to your customers.
<PAGE>
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
RBC DOMINION SECURITIES CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF QUEBECOR PRINTING, PURCHASER, THE COMPANY, THE
JOINT DEALER MANAGERS, THE INFORMATION AGENT, THE DEPOSITARY, OR ANY AFFILIATE
OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE>
Offer to Purchase for Cash
up to 23,500,000 Shares of Common Stock
of
World Color Press, Inc.
at
$35.69 Net Per Share
by
Printing Acquisition Inc.
a wholly owned indirect subsidiary of
Quebecor Printing Inc.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
July 16, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated July 16,
1999 (the "Offer to Purchase") and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") in connection with the offer by Printing Acquisition Inc., a Delaware
corporation ("Purchaser") and a wholly owned indirect subsidiary of Quebecor
Printing Inc., a company amalgamated under the laws of Canada ("Quebecor
Printing"), to purchase up to 23,500,000 shares (representing 62% of the issued
and outstanding shares as of July 8, 1999) of common stock, par value $0.01 per
share (the "Shares"), of World Color Press, Inc., a Delaware corporation (the
"Company"), at a purchase price of $35.69 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Transmittal enclosed
herewith (which, as amended from time to time, together constitute the "Offer").
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot complete the
procedures for book-entry transfer on a timely basis, or who cannot deliver all
other required documents to Harris Trust Company of New York (the "Depositary"),
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase),
must tender their Shares according to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase. We are the holder of record of
Shares held for your account. A tender of such Shares can be made only by us as
the holder of record and pursuant to your instructions. The enclosed Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is invited to the
following:
1. The offer price is $35.69 per Share, net to the seller in cash without
interest.
2. The Offer is being made for up to 23,500,000 Shares.
3. The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), by and among Quebecor
Printing, Purchaser and the Company. The Merger Agreement provides, among
other things, that, subject to the terms and conditions set forth therein,
subsequent to the consummation of the Offer, Purchaser will merge with and
into the Company.
4. The Board of Directors of the Company has determined by a unanimous vote
that the Offer and the Merger are fair to, advisable and in the best
interests of, the Company and its stockholders, has approved the Offer and
the Merger, has approved and adopted the Merger Agreement, and has resolved
to
<PAGE>
recommend acceptance of the Offer to, and adoption of the Merger Agreement
by, the Company's stockholders.
5. The Offer, proration period and withdrawal rights expire at 12:00 Midnight,
New York City time, on Thursday, August 12, 1999, unless the Offer is
extended.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration date a number of Shares of
the Company which, together with any Shares owned by Quebecor Printing or
Purchaser would constitute more than 50% of the voting power of the Company
(determined on a fully-diluted basis) of all the securities of the Company
entitled to vote generally in a merger, (ii) the expiration or termination of
any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended. The Offer is also subject to the satisfaction of
certain other terms and conditions. See Section 15 of the Offer to Purchase.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of the Shares pursuant thereto, Purchaser shall make a
good faith effort to comply with such statute or seek to have such statute
declared inapplicable to the Offer. If, after such good faith effort, Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) holders of Shares in such state. In
those jurisdictions where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of Purchaser by the Credit Suisse First Boston Corporation and
RBC Dominion Securities Corporation in their capacity as Joint Dealer Managers
for the Offer or one or more registered brokers or dealers licensed under the
laws of such jurisdictions.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is enclosed. If you authorize the tender of your Shares, all such Shares will
be tendered unless otherwise specified on the reverse side of this letter. Your
instructions should be forwarded to us in ample time to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
<PAGE>
Instructions with Respect to
the Offer to Purchase for Cash
up to 23,500,000 Outstanding
Shares of Common Stock
of
World Color Press, Inc.
by
Printing Acquisition Inc.
a wholly owned indirect subsidiary of
Quebecor Printing Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated July 16, 1999 and the related Letter of Transmittal of
Printing Acquisition Inc. (the "Purchaser"), a Delaware corporation and an
indirect wholly owned subsidiary of Quebecor Printing Inc., a company
amalgamated under the laws of Canada, to purchase up to 23,500,000 shares
(representing approximately 62% of the issued and outstanding shares as of July
8, 1999) of common stock, par value $0.01 per share (the "Shares"), of World
Color Press, Inc., a Delaware corporation, at a purchase price of $35.69 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and the Letter of Transmittal.
Number of Shares Tendered:*___________________
Account No.:_________________________________
Dated: _______________________________, 1999
SIGN HERE
------------------------------------
------------------------------------
Signature(s)
------------------------------------
------------------------------------
------------------------------------
------------------------------------
Print Name(s) and Address(es)
------------------------------------
------------------------------------
Area Code and Telephone Number(s)
------------------------------------
------------------------------------
Taxpayer Identification or Social
Security Number(s)
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE
(YOU) TO GIVE THE PAYER.--Social security numbers have nine digits separated by
two hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<CAPTION>
- -------------------------------------------------
Give the
SOCIAL SECURITY
For this type of account: number of--
- -------------------------------------------------
<S> <C> <C>
1. Individual The individual
2. Two or more The actual owner
individuals (joint of the account or,
account) if combined funds,
the first
individual on the
account (1)
3. Custodian account The minor(2)
of a minor
(Uniform Gift to
Minors Act)
4. a. The usual The grantor-
revocable trustee(1)
savings trust
account
(grantor is
also trustee)
b. So-called The actual
trust account owner(1)
that is not a
legal or valid
trust under
state law
5. Sole The owner(3)
proprietorship
- -------------------------------------------------
- -------------------------------------------------
<CAPTION>
Give the EMPLOYER
IDENTIFICATION
For this type of account: number of--
<S> <C> <C>
- -------------------------------------------------
6. Sole The owner(3)
proprietorship
7. A valid trust, The legal
estate, or pension entity(4)
trust
8. Corporate The corporation
9. Association, club, The organization
religious,
charitable,
educational, or
other tax-exempt
organization
account
10. Partnership The partnership
11. A broker or The broker or
registered nominee nominee
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or
prison) that
receives
agricultural
program payments
- -------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- - An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(2).
- - The United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- - An international organization or any agency or instrumentality thereof.
- - A foreign government and any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
- - A corporation.
- - A financial institution.
- - A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.--Payments of
patronage dividends not paid in money.--Payments made by certain foreign
organizations.--Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
- - Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041,
6041A, 6042, 6044, 6045, 6049, 6050A and 6050N.
Exempt payees described above must file Form W-9 or a substitute Form W-9 to
avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 3 OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE--Section 6109 requires you to provide your correct taxpayer
identification number to payers, who must report the payments to the IRS. The
IRS uses the number for identification purposes and may also provide this
information to various government agencies for tax enforcement or litigation
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE>
Exhibit 99(a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made only by the Offer to Purchase dated July 16,
1999 and the related Letter of Transmittal and any amendments or supplements
thereto, and is being made to all holders of Shares. The Offer is not being made
to (nor will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the securities, blue sky or other laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any jurisdiction and extend the Offer
to holders of Shares in such jurisdiction. In those jurisdictions where
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Credit Suisse First Boston Corporation ("Credit Suisse First
Boston") and RBC Dominion Securities Corporation ("RBC Dominion Securities")
(together, the "Joint Dealer Managers") or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
up to 23,500,000 Shares of Common Stock
of
World Color Press, Inc.
at
$35.69 Net Per Share
by
Printing Acquisition Inc.
a wholly owned indirect subsidiary of
Quebecor Printing Inc.
Printing Acquisition Inc., a Delaware corporation (the "Purchaser") and a wholly
owned indirect subsidiary of Quebecor Printing Inc., a corporation amalgamated
under the laws of Canada ("Quebecor Printing"), is offering to purchase up to
23,500,000 (the "Maximum Number") shares of common stock, par value $.01 per
share (the "Shares"), of World Color Press, Inc., a Delaware corporation (the
"Company"), at a price of $35.69 per Share, net to the seller in cash, (less any
required withholding taxes) without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated July 16, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"). Tendering stockholders who have Shares registered in their names and
who tender directly to Harris Trust Company of New York (the "Depositary") will
not be charged brokerage fees or commissions or, subject to Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the
Offer. Following the consummation of the Offer, the Purchaser intends to effect
the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 12, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, the satisfaction or waiver of
certain conditions, including (1) there being validly tendered and not withdrawn
prior to the expiration of the Offer at least that number of Shares (including
shares owned by Quebecor Printing or Purchaser) that would constitute more than
50% of the voting power (determined on a fully diluted basis), of all the
securities of the Company entitled to vote generally in a merger (the "Minimum
Condition") and (2) the expiration or termination of any waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Offer
is also subject to the satisfaction of certain other terms and conditions. See
Section 15 of the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of July 12, 1999 (the "Merger Agreement") by and among Quebecor Printing, the
Purchaser and the Company. The purpose of the Offer is for Quebecor Printing,
through Purchaser, to acquire a majority voting interest in the Company as
the first step in a business combination. The Merger Agreement provides that,
among other things, the Purchaser will make the Offer and that as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
<PAGE>
Agreement and in accordance with relevant provisions of the General
Corporation Law of the State of Delaware, as amended (the "DGCL"), the Purchaser
will be merged with and into the Company, with the Company continuing as the
surviving corporation (the "Merger"). At the effective time of the Merger (the
"Effective Time"), if the Purchaser shall have purchased, pursuant to the Offer,
the Maximum Number of Shares, each Share issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company or by Quebecor Printing or Purchaser and other than Shares which are
held by stockholders, if any, who properly exercise their appraisal rights under
the DGCL) (the "Remaining Shares") will be cancelled and converted into the
right to receive 1.6455 fully paid and nonassessable Subordinate Voting Shares
of Quebecor Printing. If Purchaser shall have purchased, pursuant to the
Offer, less than the Maximum Number of Shares (the number of Shares so paid for
and purchased in the Offer being referred to herein as the "Purchased Share
Number"), the Remaining Shares will be cancelled and converted into the right to
receive (i) cash, in an amount equal to the product of the Cash Proration Factor
(as defined below) multiplied by $35.69 and (ii) a number (rounded to the
nearest one-millionth of a share) of fully paid and non-assessable shares of
Subordinate Voting Shares of Quebecor Printing equal to the product of (x) 1
minus the Cash Proration Factor multiplied by (y) 1.6455. The "Cash Proration
Factor" is a fraction, of which (A) the numerator is the equal to (x) the
Maximum Number minus (y) the Purchased Share Number, if any, and (B) the
denominator is equal to the number of Shares issued and outstanding immediately
prior to the Effective Time (other than Shares held in the treasury of the
Company or by Quebecor Printing or Purchaser and other than Shares which are
held by Stockholders, if any, who properly exercise their appraisal rights under
the DGCL).
Certain stockholders of the Company including KKR Associates, certain
investment partnerships controlled by KKR Associates and certain management
stockholders have entered into a Tender, Voting and Option Agreement with
Quebecor Printing pursuant to which such stockholders have agreed, among
other things, to tender pursuant to the Offer, and not withdraw, all of their
Shares, which together represent approximately 24.5% of all outstanding
Shares.
The Board of Directors of the Company has determined by a unanimous vote that
the Offer and the Merger are fair to, advisable and in the best interests of,
the Company and its stockholders, has approved the Offer and the Merger, has
approved and adopted the Merger Agreement, and has resolved to recommend
acceptance of the offer to, and adoption of the Merger Agreement by, the
Company's stockholders.
Upon the terms and subject to the conditions of the Offer, if more than the
Maximum Number of Shares are validly tendered and not withdrawn prior to the
Expiration Date (as defined below), Purchaser will accept for payment and pay
for only 23,500,000 Shares on a pro rata basis (with appropriate adjustments
to avoid purchase of fractional Shares) based on the number of Shares
properly tendered by each stockholder and not withdrawn prior to the
Expiration Date. In the event that proration of tendered Shares is required,
Purchaser does not expect that it will be able to announce the final results
of such proration or pay for any Shares until at least seven New York Stock
Exchange, Inc. trading days after the Expiration Date because of the
difficulty of determining the precise number of Shares properly tendered and
not withdrawn (due in part to the guaranteed delivery procedures described in
Section 3 of the Offer to Purchase). Preliminary results of proration will be
announced by press release as promptly as practicable after the Expiration
Date. Shareholders may obtain such preliminary information from the
Information Agent and may be able to obtain such information from their
broker.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant
to the Offer. In all cases, on the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent
for tendering stockholders for the purpose of receiving payment from the
Purchaser and transmitting such payment to tendering stockholders. Under no
circumstances will interest on the purchase price of Shares be paid by the
Purchaser because of any delay in making any payment. Payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase), pursuant to the procedures set forth in the Offer to
Purchase, (ii) a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) with all required signature guarantees
or, in the case of a book-entry transfer, an Agent's Message (as defined in
the Offer to Purchase) and (iii) any other documents required by the Letter
of Transmittal.
If any of the conditions set forth in the Offer to Purchase that relate to
the Purchaser's obligations to purchase the Shares are not satisfied by 12:00
Midnight, New York City time, on Thursday, August 12, 1999 (or any other time
then set as the Expiration Date), the Purchaser may, subject to the terms of
the Merger Agreement as described below, elect to, (i) extend the Offer and,
subject to applicable withdrawal rights, retain all tendered Shares until the
expiration of the Offer, as extended, (ii) subject to complying with
applicable rules and regulations of the Securities and Exchange Commission,
accept for payment all Shares so tendered and not extend the Offer or (iii)
terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering stockholders. The term "Expiration Date" means
12:00 Midnight, New York City time, on Thursday, August 12, 1999, unless the
Purchaser shall have extended
<PAGE>
the period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire. Subject to the terms and conditions set
forth in the Offer to Purchase and the Merger Agreement and the applicable rules
and regulations of the Securities and Exchange Commission, the Purchaser
reserves the right (but will not be obligated), at any time or from time to time
in its sole discretion, to (i) extend the period during which the Offer is open
or (ii) amend the Offer in any other respect by giving oral or written notice of
such extension or amendment to the Depositary and by making a public
announcement of such extension or amendment. Except to the extent required by
the Merger Agreement, there can be no assurance that the Purchaser will exercise
its right to extend or amend the Offer. Any extension of the period during which
the Offer is open will be followed, as promptly as practicable, by public
announcement thereof, such announcement to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of a
tendering stockholder to withdraw such stockholder's Shares.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment pursuant to
the Offer, also may be withdrawn at any time after Monday, September 13,
1999. Except as otherwise provided in Section 4 of the Offer to Purchase,
tenders of Shares made pursuant to the Offer are irrevocable. For a
withdrawal of Shares tendered ursuant to the Offer to be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth
on the back cover of the Offer to Purchase. Any notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name in which the certificates
representing such shares are registered if different from that of the person
who tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such
certificates have been tendered by an Eligible Institution (as defined in the
Offer to Purchase), the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been tendered pursuant
to the procedures for book-entry transfer as set forth in the Offer to
Purchase, any notice of withdrawal must also specify the name and number of
the account of the Book-Entry Transfer Facility to be credited with the
withdrawn Shares. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in
its sole discretion, and its determination will be final and binding on all
parties. The information required to be disclosed by Paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Company has provided to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other related materials are being mailed to record holders of Shares and
will be mailed to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares. The Offer to Purchase and the related Letter of
Transmittal contain important information that should be read carefully
before any decision is made with respect to the Offer.
Questions and requests for assistance and copies of the Offer to Purchase, the
Letter of Transmittal and all other tender offer materials may be directed to
the Information Agent or the Joint Dealer Managers at their respective addresses
and telephone numbers set forth below, and will be furnished promptly at the
Purchaser's expense. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Joint Dealer Managers and
the Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
- --Georgeson--logo--
Wall Street Plaza
New York, New York 10005
Banks and Brokers
Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Joint Dealer Managers for the Offer are:
Credit Suisse First Boston
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 646-4543
<PAGE>
RBC Dominion Securities
One Liberty Plaza
165 Broadway
New York, New York 10006-1404
(212) 858-7139
July 16, 1999
<PAGE>
Exhibit (a)(8)
[LETTERHEAD OF QUEBECOR PRINTING INC.]
FOR IMMEDIATE RELEASE Page 1 of 6
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
NEW YORK - Quebecor Printing Inc. and World Color Press, Inc. announced today
the signing of a definitive merger agreement pursuant to which Quebecor Printing
will acquire all of the shares of Greenwich, Connecticut-based World Color
Press, Inc., one of the United States' leading commercial printers, in a
transaction valued at approximately US $2.7 billion. The acquisition, the
largest in the history of the printing industry, makes the combined new Company,
to be known as Quebecor World Inc., the largest commercial printer in the world
serving customers in magazines, catalogs, books, retail inserts and circulars
and specialty/direct mail printing.
The definitive merger agreement provides for the acquisition by a subsidiary of
Quebecor Printing pursuant to a tender offer to purchase for cash up to 23.5
million shares of common stock representing approximately 62% of the outstanding
shares of World Color to be followed by a merger with World Color.
Quebecor Printing will pay approximately US $840 million in cash under the
tender offer, representing US $35.69 per share, and assume the debt of World
Color in the approximate amount of US $1.3 billion. In addition, Quebecor
Printing will issue approximately 23.8 million subordinate voting shares in the
merger, representing a fixed exchange ratio of 1.6455 subordinate voting shares
of Quebecor Printing per share of common stock of World Color. In addition,
approximately US $41 million in cash and 1.2 million Quebecor Printing
subordinate voting shares will be paid to World Color option holders.
The total consideration per share of World Color is equivalent to US $36.09 per
share and represents a premium of 30% on the basis of the weighted average
trading price of each of World Color common stock and Quebecor Printing
subordinate voting shares on the New York Stock Exchange for the 20 trading days
to July 9, 1999.
Quebecor Printing has entered into Lock-up Agreements with a number of World
Color management shareholders, affiliates of Kohlberg Kravis Roberts & Co. as
well as institutional shareholders pursuant to which such shareholders have
agreed to tender their common shares representing approximately 24.5% of all
outstanding common shares. The Board of Directors of World Color has determined
by a unanimous vote that the offer and the merger are fair and in the best
interests of World Color and its shareholders and recommended acceptance of the
offer. Morgan Stanley Dean Witter Inc. has acted as a financial advisor to World
Color and has rendered a fairness opinion.
The offer is subject to 50.1% of World Color shares being tendered to the offer
and regulatory approvals including the expiration of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act. Both the tender
offer and the merger are expected to be completed within four months.
RBC Dominion Securities Inc. and Credit Suisse First Boston Corporation are
acting as financial advisors to Quebecor Printing.
<PAGE>
[LETTERHEAD OF QUEBECOR PRINTING INC.]
July 12, 1999
FOR IMMEDIATE RELEASE Page 2 of 6
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
"Two of the fastest growing commercial printers have joined to create a new
industry leader, committed to continued growth, sensitive to customer needs and
positioned to set new highs in shareholder expectations," said Charles Cavell,
President and Chief Executive Officer of Quebecor Printing. "The World Color
management team enjoys a stellar reputation in our industry. The fit of our two
companies couldn't be better from the point of view of customers and
shareholders," he said.
Robert G. Burton, Chairman and Chief Executive Officer of World Color, said,
"World Color has accomplished a tremendous amount over the last ten years. We
have committed to and delivered results to our customers and shareholders year
after year. This merger brings together two major league teams and positions us
well to continue to deliver results that benefit employees, customers and
shareholders. Quebecor Printing, with its global presence and World Color, with
its solid position in the US, will create a tremendous team capable of meeting
the needs of our customers through the millennium. Together, our commitment to
shareholders, customers end employees through strategic acquisitions, selective
technology upgrades, cost control and flawless execution becomes even stronger."
Pierre Karl Peladeau, Vice Chairman of Quebecor Printing and President and Chief
Executive Officer of Quebecor Inc., said, "Quebecor is proud to be at the
forefront of bringing together two of the most successful printing companies in
the world. No two companies are better suited to merge for the good of improved
customer service and increased shareholder value."
In the new management structure, Charles Cavell will be President and Chief
Executive Officer of Quebecor World. World Color President and Chief Operating
Officer, Marc Reisch, will become Chairman, President and Chief Executive
Officer of Quebecor Printing's and World Color's combined North American
operations.
Marc Reisch stated, "This is a merger of two very focused growth companies. I
look forward to pulling the talent together from both organizations to form the
strongest, most responsive management group in the industry. I am confident that
our customers will be significant winners when the deal is completed."
In addition, a committee of the Office of the President made up of Charles
Cavell, Pierre Karl Peladeau, Marc Reisch, Quebecor Printing Canada President
Christopher Rudge and Christian Paupe, Executive Vice President of Quebecor
Printing, will be created to deal with strategic issues in relation to the
Company's global operations.
Robert G. Burton, Chairman and Chief Executive Officer of World Color, has
elected to pursue other business interests following the completion of the
tender offer. Mr. Burton will, however, become a member of the Quebecor World
Board of Directors and will be an active member of the integration team merging
the two companies.
<PAGE>
[LETTERHEAD OF QUEBECOR PRINTING INC.]
July 12, 1999
FOR IMMEDIATE RELEASE Page 3 of 6
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
BACKGROUND INFORMATION
The Printing Industry
The United Sales is the largest print market in the world. With sales of over US
$150 billion annually, the industry remains highly fragmented and competitive.
Growth from 1992 to 1998 has been 3.8% annually. There are over 52,000 printing
companies in the United States although there has been some consolidation among
the top 150 firms. The top ten printing companies have revenues of over US $1
billion each, 56 companies have revenues in the range or US $100 million to US
$1 billion each and 120 firms revenues from US $35 million to US $100 million
each.
Global Paint Market
(in millions of $US)
Market Size Merged Company Sales Merged Company Rank
----------- -------------------- -------------------
United States 153,400 4,681 #1
Europe 90,000 845 #1
Canada 10,500 614 #1
South America 8,000 98 #2
Source: Print Forecasts, InterGraf, OPI Management, Graphic Monthly
Company restructuring will continue as printers focus on core businesses and
adopt an increasingly disciplined approach to technology investment,
concentrating on those technologies that customers demand and for which they are
willing to sign enabling contracts. While initially seen by some as a threat,
the Internet is increasingly regarded as an opportunity for printers and as a
complement to printed products such as magazines, catalogs and flyers.
The merger with World Color will double Quebecor Printing's annual revenues from
US customers to US $4.7 billion representing 75% of the Company's 1998 pro forma
worldwide consolidated revenues of US $6.2 billion. The merger will result in
increased liquidity of Quebecor Printing stock allowing easier investor access
on the New York Stock Exchange and the Toronto and Montreal exchanges. At the
close of the transaction, the US end Canadian portions of the Quebecor World
stock's free float will be at similar levels.
<PAGE>
[LETTERHEAD OF QUEBECOR PRINTING INC.]
July 12, 1999
FOR IMMEDIATE RELEASE Page 4 of 6
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
Quebecor Printing
Quebecor Printing has grown twelve-fold over the past decade largely through
acquisitions. In 1990, the Company became the second largest printer in the
United States with the acquisition of Maxwell Graphics Holdings. It has
continued its growth in the United States through a number of key strategic
acquisitions including American Signatures (catalogs); Eagle Lithographing,
Sayers Communications and the Petty Company (direct mail and specialty); and the
Franklin Division of Brown Printing (magazines and catalogs).
Quebecor Printing's growth has been marked by a strategy of geographic and
product line diversification. With 115 facilities in 14 countries on four
continents, Quebecor Printing is a global printer, able to serve national and
international customers from a base of networked and technologically advanced
printing facilities. Its North American network that services major retailers,
catalog and magazine customers is among the most modern in the industry. The
Company's 1998 annual revenues were US $3.8 billion and with 26,000 employees
world-wide, it ranked, prior to this transaction, as the largest printer in
Europe and the second largest in North America and South America. Its customers
include Sears, Time, Fortune, People, Sports Illustrated, USA Weekend, Parade,
Simon & Schuster, Marks & Spencer, Christian Dior and Maclean Hunter.
World Color
Founded in 1903, World Color operates 58 facilities in the United States and has
16,000 employees. With 1998 pro forma revenues of US $2.5 billion, the Company's
three largest business segments are commercial, inserts and circulars (29%),
magazines (26%), and catalogs (23%). Books (9%), direct mail (8%) and
directories (5%) make up the balance of its product mix.
With a highly regarded management team, World Color has also expanded and
diversified by taking advantage of the acquisition opportunities in the
fragmented US print market. Since 1993, the Company has completed 25 accretive
acquisitions. Its most recent acquisitions include Magna Graphics, a pre-press
operation servicing customers in the educational textbook market; Dittier
Brothers, a direct mail and commercial printing operation; Acme Printing, an
award-winning commercial printer; Century Graphics Corporation and Great Western
Publishing, both retail insert printers; and Downey Printing, a directory
printer.
<PAGE>
[LETTERHEAD OF QUEBECOR PRINTING INC.]
July 12, 1999
FOR IMMEDIATE RELEASE Page 5 of 6
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
Strategy
Quebecor Printing has successfully completed over 60 acquisitions for a value of
US $2.5 billion. World Color provides the best potential for synergies due to
the high degree of similarity with Quebecor Printing's product mix; a similar
shareholder, customer and employee-oriented management philosophy; and a strong
complementary technology asset base. The Company has superior operating margins
and low sales, general and administrative costs.
A swift integration is planned upon the close of the transaction. Management
believes that the merger of the two companies will result in approximately US
$50 million in annual synergies, although there can be no assurance that these
savings will be realized. Printing facilities will be integrated in accordance
with client needs and commitments and will be linked to Quebecor Printing's
North American fiber-optic network to facilitate work transfer and improve
customer service and asset utilization. Sales force integration and the
elimination of duplicate head office and product group functions as well as
integration with Quebecor Printing's Switzerland-based world-wide procurement
center will be implemented.
World Color Press, Inc. (NYSE: WRC) headquartered in Greenwich, Connecticut,
is a leader in the management and distribution of print and digital media
information. The Company specializes in the production and distribution of
content for customers in the commercial, magazine, catalog, direct mail, book
and directory markets. Founded in 1903, World Color employs over 16,500
employees and operates 58 facilities with a network of sales offices nationwide.
Quebecor Printing Inc. (NYSE:PRW; ME:IQI; TSE:IQI), a diversified global
commercial printing company, is the largest commercial printer in Canada and
Europe and one of the largest in the United States and South America. The
Company is a market leader in most of its major product categories which include
magazines, inserts and circulars, books, catalogs, specialty printing,
directories, related services and CD-ROM mastering and replicating. The Company
has over 26,000 employees working in more then 115 printing and related
facilities in the United States, Canada, France, the United Kingdom, Spain,
Germany, Sweden, Finland, Chile, Argentina, Peru, Colombia, Mexico and India.
Quebecor Printing is a subsidiary of Quebecor Inc.
Quebecor Inc. (ME & TSE: QBR) is a communications holding company with revenues
of over $8 billion. With business activities spread throughout North America,
Europe, South America and Asia, the Company operates in five main sectors. The
Company has publishing (including distribution and retail), broadcasting and
multimedia activities through its subsidiaries Sun Media Corporation and
Quebecor Communications Inc. Through its subsidiary Quebecor Printing Inc., it
ranks as the largest commercial printer in Canada and Europe and one of the
largest in the United States and South America. Through its subsidiary Donohue
Inc., it is a major integrated forest products company engaged in forest
management to ensure its fiber supply, and in the manufacture and sale of
newsprint, specialty papers, market pulp and wood products. Quebecor employs
more than 43,000 people in 14 countries.
<PAGE>
[LETTERHEAD OF QUEBECOR PRINTING INC.]
July 12, 1999
FOR IMMEDIATE RELEASE Page 6 of 6
QUEBECOR PRINTING AND WORLD COLOR TO MERGE
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward looking statements
involve known and unknown risks and uncertainties which may cause the Company's
actual results in future periods to differ materially from forecasted results.
Those risks include, among others, changes in customers' demand for the
Company's products, changes in raw material and equipment costs and
availability, seasonal changes in customer orders, pricing actions by the
Company's competitors, changes in estimates of the readiness of the Company or
its vendors and customers with regard to Year 2000 issues and the significance
of costs thereof, and general changes in economic conditions. Those and other
risks are more fully described in the Company's filings with the Securities and
Exchange Commission.
-30-
For further information:
John Paul Macdonald James E. Lillie
Director, Corporate Communications Executive Vice President
Quebecor Printing Inc. Investor Relations and Corporate
(514) 877-5317 Communications
(800) 567-7070 World Color Press, Inc.
(203) 532-4242
<PAGE>
Exhibit 99.(b)(1)
dated as of July 12, 1999
Quebecor Printing Inc.
612 St. Jacques Street
Montreal, Quebec
Canada H3C 4M8
Attention: Mr. Christian Paupe
Executive Vice President,
Chief Financial Officer and Chief Administration Officer
Dear Sirs:
Re: Senior Credit Facilities - Arrangement Letter
You have advised us that Quebecor Printing Inc. (the "Company") desires to
establish senior credit facilities in the aggregate principal amount of up to
US$1,250,000,000 for the purpose of acquiring World Color Press, Inc., a
Delaware corporation (the "Target"), and related purposes.
You have indicated that the acquisition of the Target will be made by a
cash tender offer by Printing Acquisition Inc., a newly formed, indirectly
wholly owned subsidiary of the Company ("Acquisition Sub"), for 23,500,000 of
the shares, equal to approximately 62%, of the Target's publicly traded common
stock (the "Shares"), for a purchase price per Share of US$35.69, subject to a
condition (the "Minimum Condition") of more than 50% of the fully diluted Shares
being tendered pursuant to such offer (the "Tender Offer"), with the
consummation of the Tender Offer to be followed by a merger of Acquisition Sub
with the Target (the "Merger"), such transactions being referred to as the "Two
Step Transaction". The consideration paid for Shares to the stockholders of the
Target to consummate the Merger in the Two Step Transaction will be either (i)
if 23,500,000 Shares are purchased in the Tender Offer, 1.6455 shares of common
stock of the Company (the "Common Stock") per Share or (ii) if less than
23,500,000 Shares are purchased in the Tender Offer, a combination of cash and
shares of Common Stock per Share. If one or both of the Minimum Condition and
the condition relating to the termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, have not been
satisfied by September 13, 1999, the Tender Offer shall be terminated, unless
the Company and Target otherwise agree, without the acceptance of any Shares
previously tendered and the Company and the Target will seek to consummate the
Merger, such transaction being referred to as the "One Step Transaction". The
consideration paid for Shares to the existing stockholders of the Target to
consummate the Merger in the One Step Transaction will be a combination of
US$22.00 in cash and .6311 shares of the Common Stock per Share. The aggregate
cash consideration paid for Shares in both the Tender Offer (if applicable) and
the Merger (including any stock repurchase and payments in respect of the
<PAGE>
cancellation of stock options) shall not exceed US$890,000,000 in any event. The
Tender Offer, if applicable, and the Merger shall be pursuant to an Agreement
and Plan of Merger, dated as of July 12, 1999, among the Company, Acquisition
Sub and the Target (the "Merger Agreement") and a Tender, Voting and Option
Agreement, dated as of July 12, 1999, among the Company and KKR Associates
("KKR"), certain investment partnerships controlled by KKR and certain
management stockholders of Target owning approximately 24.5% of the Shares in
the aggregate (the "Tender, Voting and Option Agreement").
You have advised us that the Company will need (i) up to US$1,000,000,000
in credit facilities in order to consummate the Tender Offer and the Merger, to
pay restructuring and transaction costs and to be available for general
corporate purposes, (ii) up to US$100,000,000 to repay outstanding indebtedness
of Target under its existing bank credit agreement and (iii) up to
US$150,000,000 to pay the purchase price of any 6% Convertible Senior
Subordinated Notes due 2007 tendered for purchase.
Included with and attached to this letter are two term sheets (referred to
herein as the "Two Step Term Sheet" and the "One Step Term Sheet", respectively,
and collectively, the "Term Sheets") summarizing the principal terms and
conditions for up to US$1,250,000,000 in credit facilities (the "Credit
Facilities") in favor of Quebecor Printing (USA) Holdings Inc. ("US Holdings"),
an indirectly wholly owned subsidiary of the Company. If the Company and the
Target proceed with the Two Step Transaction, the Credit Facilities will be
governed by the Two Step Term Sheet and the One Step Term Sheet will terminate.
If the Company and Target proceed with the One Step Transaction, the Credit
Facilities will be governed by the One Step Term Sheet and the Two Step Term
Sheet will terminate.
The undersigned, Royal Bank of Canada, Bank of America Canada, Bank of
Montreal and Canadian Imperial Bank of Commerce, or any of their respective
affiliates (collectively, the "Arrangers"), are pleased to confirm their
commitments to you (the "Commitments") to provide up to US$1,250,000,000, on a
pro-rata basis, on the terms and subject to the conditions set forth herein and
in the Two Step Term Sheet or the One Step Term Sheet, as the case may be. The
Arrangers intend to syndicate the Credit Facilities to financial institutions
with a corresponding reduction in the Commitments of the Arrangers on a pro-rata
basis. Royal Bank of Canada, in consultation with the other Arrangers, (i) will
coordinate delivery of the Term Sheets and other pertinent information to be
provided by you to prospective lenders as well as negotiate the loan
documentation and coordinate its distribution to said lenders and (ii) will, in
consultation with you, manage all aspects of the syndication, including the
choice of lenders, the timing of all offers to potential lenders and the
acceptance of commitments, the amounts offered and the compensation provided.
You agree to take all actions as Royal Bank of Canada and the other
Arrangers may reasonably request to assist them in forming syndicates acceptable
to them. Your assistance in forming such syndicates shall include but not be
limited to: (i) making your senior management (including the Executive Vice
President, Chief Financial Officer and Chief Administration Officer, the Vice
President and Treasurer and the Vice President of Business Development) and
representatives available to participate in telephone conference calls and
information meetings
<PAGE>
with your existing syndicate and potential lenders following the announcement of
the transaction and at such times and places as the Arrangers may reasonably
request, (ii) using your best efforts to ensure that the syndication efforts
benefit from your lending relationships and (iii) providing the Arrangers with
all information available to the Company (and its advisors) reasonably deemed
necessary by the Arrangers to successfully complete the syndications, including
appropriate information regarding the Target.
To ensure an orderly and effective syndication of the Credit Facilities,
you agree that until the termination of the syndication (as evidenced by written
notification received by you from Royal Bank of Canada), you will not, and will
not permit any of your subsidiaries to, syndicate or issue, attempt to syndicate
or issue, announce or authorize the announcement of the syndication or issuance
of, or engage in discussions concerning the syndication or issuance of, any debt
facility in the bank market (including any renewals thereof), without the prior
written consent of the Arrangers.
The Commitments of the Arrangers shall terminate on August 22, 1999 unless
extended in writing at the sole discretion of the Arrangers.
The Commitments of the Arrangers are subject to the satisfaction of each
of the following conditions precedent in a manner acceptable to each of the
Arrangers in their sole discretion: (i) the absence of a material breach of any
representation, warranty, or agreement of the Company set forth herein; (ii) the
filing of the Merger Agreement, the Tender, Voting and Option Agreement and such
other agreements and other related documentation as required to consummate the
Tender Offer and/or the Merger with the Securities and Exchange Commission;
(iii) satisfaction of the Arrangers that prior to the earlier of the execution
of the credit agreement evidencing the Credit Facilities (the "Credit
Agreement") or the close of syndication of the Credit Facilities there shall be
no competing offering, placement, or arrangement of any debt securities (except
for commercial paper under the Company's existing commercial paper program) or
bank financing by or on behalf of the Company, US Holdings or Acquisition Sub;
(iv) since the date hereof, no material adverse change in or material disruption
of conditions in the financial, banking, or capital markets which the Arrangers,
in their sole discretion, deem material in connection with the syndication of
the Credit Facilities shall have occurred and be continuing; (v) since March 31,
1999, no material adverse change in the business, assets, liabilities (actual or
contingent), operations, condition, (financial or otherwise), or prospects of
the Company, US Holdings, Acquisition Sub or Target, in each case together with
its subsidiaries taken as a whole, or in the facts and information regarding
such entities as represented to date shall have occurred or become known to the
Arrangers; (vi) the payment in full of all fees, expenses and other amounts
payable under this letter and (vii) none of the Arrangers becoming aware after
the date hereof of (x) any material information or other matter which reflects
that any of the information delivered to the Arrangers or any representation or
warranty set forth in the
<PAGE>
following paragraph is false or misleading in any material respect or (y) in the
continuing review by the Arrangers of the Company, US Holdings, Acquisition Sub
and Target, and their respective subsidiaries, any additional information or
developments concerning conditions or events with respect to the Company, US
Holdings, Acquisition Sub and Target which reflects that any of the information
delivered to the Arrangers or any representation or warranty set forth in the
following paragraph is false or misleading in any material respect. In addition,
it is understood that the Commitments of the Arrangers are subject to the
condition that prior to the execution of the Credit Agreement Standard & Poor's,
a division of The McGraw-Hill Companies, Inc., through its rating evaluation
service, shall have issued a definitive rating of BBB- (or higher) for the
senior unsecured long-term indebtedness of the Company after giving effect to
the consummation of the Tender Offer, the Merger, the Credit Facilities and the
transactions contemplated thereby. In any such case, any Arranger may, in its
sole discretion, (x) suggest alternative financing amounts or structures that
ensure adequate protection for the Arrangers and lenders or (y) terminate the
Commitments and this letter.
The Company hereby represents, warrants, and covenants that (i) all
information, other than the Projections (as defined below), which has been or is
hereafter made available to the Arrangers by the Company or any of its
representatives in connection with the transactions contemplated hereby (the
"Information") is and will be complete and correct in all material respects and
does not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading and (ii) all financial projections concerning the Company, US
Holdings, Acquisition Sub and Target, and their respective subsidiaries that
have been or are hereafter made available to the Arrangers by the Company or any
of its representatives (the "Projections") have been or will be prepared in good
faith based upon assumptions the Company believes to be reasonable. The Company
agrees to furnish the Arrangers with such Information and Projections as the
Arrangers may reasonably request.
The Arrangers reserve the right to employ the services of their affiliates
in providing services contemplated by this letter and to allocate, in whole or
in part to any such affiliates certain fees payable to the Arrangers in such
manner as they and such affiliates may agree in their sole discretion. You
acknowledge that the Arrangers may share with any of their affiliates any
information relating to the Company, US Holdings, Acquisition Sub, Target and
their respective subsidiaries or any of the matters contemplated hereby on a
need to know basis. The Arrangers shall treat, and cause any such affiliate to
treat, all non-public information provided to it by the Company, US Holdings,
Acquisition Sub, Target and their respective subsidiaries or any of its
affiliates, as confidential information in accordance with customary banking
industry practices.
It is understood that the terms and conditions of this letter and the One
Step and Two Step Term Sheets require a waiver/amendment from the existing
lenders to the Company in the form attached hereto. You shall request the
administrative agent of the existing facility to solicit such waiver/amendment.
In the event that the waiver/amendment is not obtained from lenders under such
existing facility, then the Arrangers agree to purchase the commitment of any
non-consenting lender at par pursuant to an assignment on a pro-rata basis. If
assignments are not entered into with one or more non-consenting lenders, you
shall give notice of prepayment and cancellation terminating the existing credit
agreement and a new credit agreement will be entered into on substantially the
same terms and conditions, except that the overall structure, interest rates,
margins and fees shall not be changed other than as contemplated in the
waiver/amendment.
<PAGE>
To induce the Arrangers to provide the Commitments to you, you hereby
agree that the Arrangers and their affiliates' reasonable fees and expenses
arising in connection with this letter and the matters referred to herein
(including without limitation, syndication expenses, the fees and expenses of
Ogilvy Renault as Canadian counsel and Hughes Hubbard & Reed LLP as U.S.
counsel, filing and recording fees, due diligence, transportation, computer,
duplication, messenger, appraisal, audit, insurance and consultant costs and
expenses), shall be for your account, whether or not the Credit Facilities are
made available or definitive documents are executed. You further agree to
indemnify and hold harmless the Arrangers and each of their respective
affiliates and each of their respective directors, officers, employees, agents,
advisors, representatives, attorneys, and affiliates thereof (each of the
foregoing an "indemnified person") from and against any and all actions, suits,
proceedings (including, without limitation, any investigations, inquiries,
litigation or preparation of a defense in connection therewith), claims, losses,
damages, liabilities or expenses or any kind or nature whatsoever which may be
incurred by or asserted against or involve any such indemnified person as a
result of or arising out of or in any way related to or resulting from this
letter, the arrangement and syndication of the Credit Facilities, the Tender
Offer, the Merger, any eventual extension of the Credit Facilities, or any use
made or proposed to be made with the proceeds of the Credit Facilities and, upon
demand, to pay and reimburse each indemnified person for any reasonable legal or
other out-of-pocket expenses incurred in connection with investigating,
defending or preparing to defend any such action, suit, proceeding (including
any inquiries, investigations, litigation or preparation of a defense in
connection therewith) or claim (whether or not any such person is a party to any
action or proceeding out of which any such expenses arise), provided that you
shall have no obligation to indemnify any indemnified person for any of the
foregoing to the extent determined by a final non-appealable judgment of a court
of competent jurisdiction to have arisen from its gross negligence or willful
misconduct. This letter is addressed solely to you, and the Arrangers shall have
no liability to you or any other person for any indirect, consequential, special
or punitive damages which may be alleged as a result of this letter or any of
the transactions referred to herein.
As consideration for the Commitments in respect of the Credit Facilities
and their agreement to structure, arrange and coordinate with you in the
syndication of the Credit Facilities, you agree to pay to Royal Bank of Canada
and the other Arrangers the fees as set forth in the separate fee letter dated
as of the date hereof between Royal Bank of Canada and you.
The Company may terminate this letter at any time upon written notice
thereof to the Arrangers subject to the following sentence. The provisions of
the two preceding paragraphs shall survive any expiration or termination of this
letter or the Commitments.
This letter shall be governed by and construed in accordance with the laws
of the State of New York. This letter sets forth the entire agreement between
the parties with respect to the matters addressed herein and supersedes all
prior communications, written or oral, with respect hereto. This letter may be
executed in any number of counterparts, each of which, when executed, shall be
deemed to be an original and all of which, taken together, shall constitute one
and the same letter. Delivery of an executed counterpart on the signature page
to this letter by
<PAGE>
telecopier shall be as effective as delivery of a manually executed counterpart
of this letter.
This letter shall not be assignable by you and may not be amended or
waived except in a writing signed by you and the Arrangers. The obligations of
the Arrangers under this letter and of any lender are made solely for your
benefit and may not be relied upon or enforced by any other person or entity.
This letter is in substitution for and supersedes the letter dated July 8,
1999 previously delivered to you.
<PAGE>
If you are in agreement with the foregoing, please sign and return to
Royal Bank of Canada (including by way of telecopier) the enclosed copy of this
letter no later than 5:00 P.M. (Eastern Daylight Time) on July 12, 1999. This
letter shall become effective upon receipt by us of such signed copy.
Yours truly,
ROYAL BANK OF CANADA
/s/ Colin O.H. Lambert
----------------------
By: Colin O.H. Lambert
Title: Vice President
BANK OF AMERICA CANADA
/s/ Michael P. Hurtubise
----------------------
By: Michael P. Hurtubise
Title: Vice President
BANK OF MONTREAL
/s/ Michael Huband
----------------------
By: Michael Huband
Title: Director, Structured Finance
CANADIAN IMPERIAL BANK
OF COMMERCE, NEW YORK AGENCY
/s/ Howard Palmer
----------------------
By: Howard Palmer
Title: Executive Director
Accepted and Agreed this 12th day of July, 1999.
IMPRIMERIES QUEBECOR INC. -
QUEBECOR PRINTING INC.
/s/ Christian M. Paupe
----------------------
By: Christian M. Paupe
Title: Executive Vice President
/s/ Mark D'Souza
----------------------
By: Mark D'Souza
Title: Vice President, Treasurer
<PAGE>
CONFIDENTIAL
QUEBECOR PRINTING (USA) HOLDINGS INC.
[GRAPHIC OMITTED]
TWO STEP TRANSACTION
SUMMARY OF PRINCIPAL
TERMS AND CONDITIONS
US$1,250,000,000
credit facilities
[GRAPHIC OMITTED]
<PAGE>
as of July 12, 1999
<PAGE>
Confidential
QUEBECOR PRINTING (USA) HOLDINGS INC.
Summary of Principal Terms and Conditions
(Definitions of certain capitalized terms used herein are found in Appendix I)
Transaction
Description: The Credit Facilities are for the purpose of providing
funding to Quebecor Printing Inc. (the "Company") for
the purpose of acquiring World Color Press, Inc., a
Delaware corporation (the "Target"), in a two-step
transaction, and related purposes. The acquisition of
the Target will be made by a cash tender offer by
Printing Acquisition Inc., a newly formed, indirectly
wholly owned Subsidiary of the Company ("Acquisition
Sub"), for 23,500,000 shares, equal to approximately
62%, of the Target's publicly traded common stock (the
"Shares"), for a purchase price per Share of US$35.69,
subject to a condition of more than 50% of the fully
diluted Shares being tendered pursuant to such offer
(the "Tender Offer"), with the consummation of the
Tender Offer to be followed by a merger of Acquisition
Sub with the Target (the "Merger"). The consideration
paid for Shares to the existing stockholders of the
Target to consummate the Merger will be either (i) if
23,500,000 Shares are purchased in the Tender Offer,
1.6455 shares of common stock of the Company per Share
or (ii) if less than 23,500,000 Shares are purchased in
the Tender Offer, a combination of cash and shares of
common stock of the Company per Share. The aggregate
cash consideration paid for Shares in both the Tender
Offer and the Merger (including any stock repurchase and
payments in respect of the cancellation of stock
options) shall not exceed US$890,000,000 in any event.
The Tender Offer and the Merger shall be pursuant to an
Agreement and Plan of Merger, dated as of July 12, 1999,
among the Company, Acquisition Sub and the Target (the
"Merger Agreement") and a Tender, Voting and Option
Agreement, dated as of July 12, 1999, among the Company
and KKR Associates ("KKR"), certain investment
partnerships controlled by KKR and certain management
stockholders of Target owning approximately 24.5% of the
Shares in the aggregate (the "Tender, Voting and Option
Agreement").
Borrower: Quebecor Printing (USA) Holdings Inc. ("US Holdings"), a
Delaware corporation and an indirectly wholly owned
Subsidiary of the Company.
Guarantors: Each of the Company and Quebecor Printing Holding
Company, a Delaware corporation ("QPHC") will provide an
unconditional joint and several guarantee of the
obligations under the Credit Facilities, to the fullest
extent permitted by applicable law (the "Guarantee
Agreement").
Loan Parties: The Borrower together with the Guarantors.
Lead Arranger and
Administrative Agent: Royal Bank of Canada or any of its affiliates.
<PAGE>
Co-Syndication
Agents: Bank of America Canada, Bank of Montreal and Canadian
Imperial Bank of Commerce or any of their respective
affiliates.
Arrangers: Lead Arranger and Co-Syndication Agents.
Arrangers'
Commitments: The Arrangers will each commit US$312,500,000.
Lenders: The Arrangers and a group of financial institutions (all
being resident in the US or in other non-withholding tax
jurisdictions) to be agreed to by the Arrangers in
consultation with the Company.
Credit Facilities: US$1,250,000,000.
Purpose: All proceeds (a) to be loaned or funded by Borrower to
Acquisition Sub to finance the acquisition of the Target
pursuant to the Tender Offer and the Merger, to pay
transaction and restructuring costs and to be available
for general corporate purposes and (b) to be loaned by
Borrower to Target to repay indebtedness owing under
Target's existing bank credit agreement and to pay the
purchase price of any Convertible Notes tendered for
purchase.
Availability: Tranche A: US$650,000,000 as a single draw 1-year term
loan to be drawn on the Tender Offer Funding Date.
US$300,000,000 may be extended at Borrower's option for
a 1-year term payable in full at maturity ("Tranche A
Extension Period").
Tranche B: US$450,000,000 (US$100,000,000 of which shall
be used to repay indebtedness owing under Target's
existing bank credit agreement) as a three (3) year
revolving credit facility payable in full at maturity.
Tranche C: US$150,000,000 (which shall be used to
purchase the Convertible Notes) as a 364-day
non-revolving credit facility to be drawn within 120
days after the Tender Offer Funding Date and payable in
full at maturity.
The maximum aggregate amount available under both
Tranche A and B to finance the acquisition of the Shares
(including any stock repurchase and payments in respect
of the cancellation of stock options) shall not exceed
US$890,000,000.
Borrowing Options: US Libor and US Base Rate.
Fees and Interest
Rates: As set forth in Appendix II.
Conversion: A borrowing may be converted into another basis of
borrowing provided that Libor Loans may only be
converted on their respective maturity dates and the
minimum amounts required for an original borrowing are
met.
Prepayment or
Cancellation: The Borrower shall first prepay Tranche C and then
Tranche A in amount(s) equal to all net cash proceeds
from Capital Market Transactions.
<PAGE>
Confidential
The Borrower may prepay and/or cancel undrawn portions
of the Credit Facilities without penalty upon five (5)
business days prior written notice to the Administrative
Agent, and in minimum amounts of US$10 million or any
integral multiple of US$1 million in excess thereof.
Amounts cancelled may not be reinstated.
The Borrower shall reimburse each Lender for any loss,
cost or expense (including without limitation the cost
to each Lender of redeploying funds obtained to fund or
maintain outstanding Libor Loans) incurred in respect of
outstanding Libor Loans as a result of the prepayment of
all or any portion thereof prior to the expiry of a
related Libor interest period.
Documentation: The Credit Facilities shall be subject to the
negotiation, execution and delivery of loan
documentation* satisfactory to all parties thereto. The
terms and conditions of such loan documentation shall
contain clauses customary to these types of facilities
and will include, without limitation, conditions
precedent, representations and warranties, affirmative
and negative covenants, including negative pledge and
pari passu clauses, protective covenants, standard
illegality, increased cost and yield protection
provisions and events of default.
The negotiation, execution and delivery of the Guarantee
Agreement shall be satisfactory to all parties thereto
in form and substance.
Security: The Credit Facilities and the Guarantee Agreement are
unsecured and all amounts outstanding under the Credit
Facilities and Guarantee Agreement shall rank pari passu
with each Loan Party's other unsecured and
unsubordinated indebtedness.
Tender Offer
Funding Date: The date of the initial funding of the Credit
Facilities, which shall not be later than September 8,
1999, except if a formal request for additional
information (a "Second Request") is made by either the
Federal Trade Commission or the Department of Justice,
then not later than December 8, 1999.
Conditions Precedent
to Initial Funding of
the Credit Facilities: The following conditions shall have been satisfied prior
to, or concurrently with, the initial funding of Credit
Facilities:
- ----------
* Including one or more Credit Agreements.
<PAGE>
Confidential
(a) The structure of the Tender Offer and the terms
and conditions of the Offer to Purchase shall be
acceptable in form and substance to the Arrangers.
Following the commencement of the Tender Offer,
the terms and conditions of the Offer to Purchase
shall not have been amended, waived or modified
without the approval of the Arrangers and the
Lenders (other than non-material amendments,
waivers or modifications to such terms (other than
the conditions to purchase the Shares) that do not
in the aggregate materially affect the interests
of the Arrangers and the Lenders in the Credit
Facilities or the likelihood of consummation of
the Merger ("Non-Material Changes")); provided
that the Tender Offer may be extended for up to 30
additional business days without the approval of
the Arrangers and the Lenders; provided further
that if there is a Second Request, the Tender
Offer may be extended until December 8, 1999 if
necessary for HSR antitrust clearance without the
approval of the Arrangers and the Lenders but in
any event not beyond the Tender Offer Funding
Date. The purchase price per Share in the Tender
Offer shall not exceed US$35.69 per Share (the
"Per Share Purchase Price") and the aggregate
amount paid for all shares accepted for payment in
the Tender Offer shall not exceed US$890,000,000.
All conditions precedent to the consummation of
the Tender Offer shall have been satisfied to the
satisfaction of the Arrangers and the Lenders. The
expiration of the Tender Offer shall occur prior
to the Tender Offer Funding Date.
(b) The number of Shares accepted for payment in the
Tender Offer by Acquisition Sub shall be equal to
no less than the minimum number of Shares,
determined on a fully diluted basis, necessary to
approve the consummation of the Merger in
accordance with the provisions of any applicable
corporate statute, anti-takeover statute or
provision in the Target's certificate of
incorporation, by-laws, etc. or other applicable
legal requirement (the "Minimum Number of
Shares"). The Board of Directors of the Target
shall have published its recommendation that the
stockholders of the Target tender their Shares
pursuant to the Tender Offer.
(c) The Company and KKR, certain investment
partnerships controlled by KKR and certain
management stockholders of Target owning
approximately 24.5% of the Shares in the aggregate
shall have entered into the Tender, Voting and
Option Agreement, which has been received by the
Arrangers. None of the terms of the Tender, Voting
and Option Agreement shall have been amended,
waived or modified without the approval of the
Arrangers and the Lenders (other than Non-Material
Changes), and there shall not have occurred or
exist any material breach or default thereunder.
<PAGE>
Confidential
(d) The Company, Acquisition Sub and the Target shall
have entered into the Merger Agreement, which has
been received by the Arrangers, and the Merger
Agreement shall have been approved by all
necessary corporate action of the Company,
Acquisition Sub and the Target, except approval by
the Target's stockholders and (if required by the
rules of the New York Stock Exchange, Inc. (the
"NYSE")) approval by the Company's shareholders.
None of the terms of the Merger Agreement shall
have been amended, waived or modified without the
approval of the Arrangers and the Lenders (other
than Non-Material Changes), and there shall not
have occurred or exist any material breach or
default thereunder. The representations and
warranties contained in the Merger Agreement shall
be true and correct in all material respects on
the Tender Offer Funding Date. All documentation
relating to the Tender Offer and the Merger shall
be in form and substance satisfactory to the
Arrangers and the Lenders.
<PAGE>
Confidential
(e) All governmental and third party consents and
approvals necessary in connection with the Tender
Offer and the Merger and the related financings
(except the approval of the Merger by the Target's
stockholders) shall have been obtained (without
the imposition of any conditions that are not
acceptable to the Arrangers and the Lenders) and
shall remain in effect, and all applicable waiting
periods (including any required for HSR antitrust
clearance) shall have expired or been earlier
terminated without, in any such case, any action
having been taken or agreed to by the Company,
Borrower, Acquisition Sub and/or Target or having
been required by any Canadian, US or foreign
governmental authority (i) which has resulted in
or which could reasonably be expected to result in
a Material Adverse Effect (assuming for purposes
of this clause (i) that Target is a Restricted
Entity) or (ii) that would prevent or materially
delay the consummation of the Merger following the
consummation of the Tender Offer; and no law or
regulation shall be applicable in the judgment of
the Arrangers or the Lenders that restrains,
prevents or imposes materially adverse conditions
upon the Tender Offer, the Merger or any related
transactions. The Company shall have received all
consents required for entering into the Merger
Agreement and for the consummation of the
transactions contemplated thereby, and Quebecor
Inc. and Caisse de depot et placement du Quebec
shall have delivered a written consent to approve
the Merger Agreement and the consummation of the
transactions contemplated thereby (including the
issuance of Company stock pursuant to the Merger).
The Merger shall not be subject to the
restrictions imposed by Section 203 of the
Delaware General Corporation Law or any other
state or foreign takeover statute.
<PAGE>
Confidential
(f) Except with respect to actions, suits,
investigations, litigation or proceedings of the
Company, the Target and their respective
Subsidiaries disclosed in the most recent Forms
10-K issued by the Company and the Target and the
Forms 10-Q issued subsequent to such Forms 10-K
prior to the date of the Arrangement Letter (the
"Public Information") and in the disclosure
schedules to the Merger Agreement (the "Merger
Disclosure") (the "Existing Actions"), there shall
exist no action, suit, investigation, litigation
or proceeding pending or threatened in any court
or before any arbitrator or governmental
instrumentality that (i) has or could reasonably
be expected to have a material adverse effect on
business, condition (financial or other),
operations, performance or properties of (A) the
Company and its Subsidiaries taken as a whole
(other than the Target and its Subsidiaries) and
(B) the Target and its Subsidiaries taken as a
whole or (ii) enjoins, seeks to enjoin, delays the
consummation of, or imposes material adverse
conditions on, the Tender Offer or the Merger or
any transaction contemplated thereby or (iii)
could reasonably be expected to have a Material
Adverse Effect on the Credit Facilities or a
material adverse effect on the Tender, Voting and
Option Agreement. There has occurred no change or
development in the Existing Actions from that
disclosed in the Public Information or the Merger
Disclosure, which change or development, when
aggregated with all such changes or developments,
has or could reasonably be expected to have the
consequences referred to in the preceding
sentence.
(g) All documentation evidencing the Credit Facilities
(the "Loan Documents") shall have been completed
in form and substance satisfactory to the
Arrangers and the Lenders and duly executed by
each Loan Party.
(h) On the Tender Offer Funding Date, QPI LLC shall
advance to Target an amount which together with
the US$100,000,000 loan made by US Holdings to
Target from proceeds drawn under Tranche B shall
be used to repay, concurrently with the initial
funding of the Credit Facilities, indebtedness of
the Target owing under Target's existing bank
credit agreement and the credit facilities
thereunder shall be concurrently cancelled.
(i) The Arrangers and the Lenders shall have received
a copy of the fairness opinion received by the
Target relating to the Tender Offer and the
Merger.
(j) All capital stock of Borrower and Acquisition Sub
shall be owned directly or indirectly by the
Company free and clear of any lien, charge or
encumbrance.
<PAGE>
Confidential
(k) There shall have occurred no Material Adverse
Change with respect to the Company (excluding the
Target and its Subsidiaries) or the Target since
March 31, 1999.
(l) The Administrative Agent shall have received for
each Lender (i) satisfactory opinions of counsel
to the Borrower, counsel to Acquisition Sub and
counsel to the Guarantors as to the transactions
contemplated hereby (including, without
limitation, compliance with all applicable laws
and regulations, including all applicable
requirements and regulations of the Board of
Governors of the Federal Reserve System (including
Regulations T, U and X thereunder) and no breach
of, or default under, agreements for borrowed
money in a principal amount of US$20,000,000 or
more, including the Existing Indentures and (ii)
such charter documents, corporate resolutions,
certificates and other documents as the
Administrative Agent shall reasonably request,
including, without limitation, a certificate of
insurance, an officer's compliance certificate
regarding, inter alia, financial statements,
defaults, no breach of or default under Existing
Indentures, and a listing of all actions, suits,
arbitration proceedings pending or, to the best
knowledge of the Company, threatened involving any
of the Loan Parties, which, separately, represents
an exposure in excess of US$6,500,000 as
reasonably determined by the Company.
(m) There shall exist no default under any of the Loan
Documents, and the representations and warranties
of the Loan Parties therein shall be true and
correct immediately prior to, and after giving
effect to, funding.
(n) All accrued reasonable fees and expenses of the
Arrangers (including the fees and expenses of
counsel to the Arrangers and the Administrative
Agent, if any) shall have been paid.
(o) S&P, through its rating evaluation service, shall
have issued a definitive rating of BBB- (or
higher) for the senior unsecured long-term
indebtedness of the Company after giving effect to
the consummation of the Tender Offer, the Merger,
the Credit Facilities and the transactions
contemplated thereby.
(p) Either (i) the QPI Amendment has become effective
or (ii) the Existing QPI Facility has been
terminated and replaced with a new facility on
substantially the same terms and conditions except
for the inclusion of the amendments contemplated
by the QPI Waiver Letter.
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Condition Precedent
to all Borrowings: (a) Notice of Borrowing;
(b) Bringdown and accuracy of representations and
warranties; and
(c) No default or Event of Default.
Representations and
Warranties: Each Loan Party shall provide representations and
warranties (provided that each representation and
warranty, when made by a Loan Party other than the
Company shall apply only to such Loan Party and its
Subsidiaries which are Restricted Entities), which shall
include, without limitation, the following:
To be Made as of the Execution and Delivery of the
Credit Agreement:
(a) Each of the Loan Parties is a corporation (or a
partnership, as the case may be) which is duly
incorporated (or constituted, as applicable) and
has the necessary corporate power and authority to
carry on its business as presently conducted and
as proposed to be conducted in connection with and
following the consummation of the Tender Offer,
the Merger and the other transactions contemplated
in the Transaction Documents and, to the extent
applicable, enter into and perform the Loan
Documents to which it is a party;
(b) the Credit Agreement and Guarantee Agreement and
all ancillary Loan Documents are duly authorized
by all necessary corporate and other actions and
constitute valid and legally binding obligations
of the Loan Parties;
(c) the execution, delivery and performance of the
Credit Agreement and Guarantee Agreement will not
result in any violation of the charter or the
by-laws of any Loan Party, result in a breach of
any indenture, trust, deed, loan, credit, note or
similar agreement (except, prior to the Tender
Offer Funding Date, for any breach under the
Existing QPI Facility for which a waiver has been
requested pursuant to the QPI Waiver Letter) or of
any applicable law or regulation or any order,
injunction, decree, determination or award of any
court or governmental authority, or result in the
creation of any lien upon the assets of the
Company or any Restricted Entity;
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(d) the audited consolidated financial statements of
the Company for the fiscal year ended December 31,
1998 are complete and correct, have been prepared
in accordance with Canadian generally accepted
accounting principles and fairly represent the
financial condition of the Company and its
Subsidiaries as of the date thereof; since
December 31, 1998, there has been no change in the
consolidated financial condition of the Company
from that set forth in the said consolidated
financial statements which could have a Material
Adverse Effect;
(e) except with respect to the Existing Actions, there
are no actions, suits or arbitration proceedings
pending or, to the best knowledge of each Loan
Party, threatened involving the Company or any
Restricted Entity which could, if determined
adversely, separately or in the aggregate, have a
Material Adverse Effect on the business of the
Company and its Restricted Entities, taken as a
whole or purports to affect the legality, validity
or enforceability of any of the Loan Documents;
(f) the Company and each Restricted Entity and their
respective businesses and operations (i) are
materially in compliance with all applicable laws,
including environmental, investment, competition
and anti-trust laws, etc., (ii) have all necessary
consents, authorizations, approvals, orders,
certificates, and permits from, and have made all
necessary filings (including tax filings, subject
to materiality and good faith contestations) with,
all federal, provincial, territorial, state and
local authorities to conduct their business,
except to the extent that the failure to obtain or
file same or that any non-compliance with
applicable laws would not have a Material Adverse
Effect;
(g) no event has occurred and is continuing which
constitutes an Event of Default or would
constitute an Event of Default but for the
requirement that notice be given or time elapse or
both;
(h) the Company has taken such reasonable measures to
ensure that passage to the Year 2000 will not
result in major disruptions of its operations or
those of its Restricted Entities; the
effectiveness of these measures, however, is
contingent on the Year 2000 compliance of
suppliers, customers and other third parties
dealing with the Company and its related
companies, including its Subsidiaries;
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(i) all Subsidiaries of the Company, their
jurisdiction of incorporation and their issued
capital shall be set forth in a schedule to the
Credit Agreement. Neither the Company nor any of
its Subsidiaries which is a Restricted Entity is,
directly or indirectly, bound by or subject to,
any consensual restriction limiting the ability
(whether by covenant, event of default,
subordination or otherwise) of the Company or any
Restricted Entity to (i) pay or make the maximum
dividends permitted by law to its parent entity,
(ii) pay any obligation owed to the Company or any
Restricted Entity, (iii) make any loans or
advances to or investments in the Company or in
any Restricted Entity, (iv) transfer any of its
property or assets to the Company or any
Restricted Entity or (v) create any lien upon its
property or assets whether now owned or hereafter
acquired or upon any income or profits therefrom,
except any such restrictions applicable to (a)
Imprimeries Didier-Quebecor, S.A. (France) and its
Subsidiaries and (b) any other Restricted Entity
(other than a Loan Party), whose assets, singly or
when taken together with the assets of all
Restricted Entities (other than a Loan Party)
subject to such restrictions, do not exceed at any
time 10 % of the consolidated assets of the
Company, as determined in accordance with GAAP,
and (c) the Target and its Subsidiaries, when it
becomes a Restricted Entity, with respect to any
restriction contained in Sections 4.7 (Limitations
on Restricted Payments), 4.8 (Dividend and Payment
Restrictions), 4.10 (Limitations on Sales of
Assets), 4.11 (Transactions with Affiliates), 4.12
(Limitations on Liens), 4.13 (Investments in
Unrestricted Subsidiaries) and 4.15 (Limitation on
Other Subordinated Indebtedness) of the 7 3/4%
Indenture and the 8 3/8% Indenture. No Restricted
Entity has outstanding any securities convertible
in capital stock nor rights to subscribe or other
agreements for the subscription of Capital
Securities that, if exercised or converted, would
change the Restricted Entity into a Non-Restricted
Entity;
(j) no required filings;
(k) ownership of property, including intellectual
property, and absence of liens except Permitted
Encumbrances;
(l) labor matters not to have a Material Adverse
Effect;
(m) accuracy of financial statements and other
information;
(n) material compliance with benefit and pension plan
laws and ERISA;
(o) environmental matters would not result in a
Material Adverse Effect;
(p) solvency of Loan Parties; and
(q) pari passu ranking.
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To be Made as of the Tender Offer Funding Date:
(a) Each of the Tender Offer Documents, as amended to
that date, filed with the Commission or other
securities authority complies as to form in all
material respects with the provisions of the
Securities Exchange Act and the rules and
regulations thereunder;
(b) the number of Shares owned beneficially and of
record by Acquisition Sub, together with the
number of Shares accepted by Acquisition Sub for
payment in the Tender Offer, is greater than or
equal to the Minimum Number of Shares. The price
per Share to be paid by Acquisition Sub in respect
of shares accepted for payment in the Tender Offer
does not exceed the Per Share Purchase Price and
the aggregate amount paid for all Shares accepted
for payment in the Tender Offer does not exceed
US$890,000,000. All conditions precedent to the
consummation of the Tender Offer have been
satisfied (or waived with the consent of the
Arrangers and the Lenders);
(c) each of the Company, Acquisition Sub and Target
has the requisite corporate power and authority to
(A) execute, deliver and perform each of the
Tender Offer Documents and Merger Documents to
which it is a party and (B) to file the Tender
Offer Documents and Merger Documents filed by it,
or to be filed by it, with any governmental
authority;
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(d) the execution, delivery and performance (or
filing, as the case may be), of each of the Tender
Offer Documents and Merger Documents which have
been executed and to which the Company,
Acquisition Sub or Target is a party and the
consummation of the transactions contemplated
thereby, have been duly approved by the board of
directors of each of the Company, Acquisition Sub
and Target, and the borrowings to be made by US
Holdings to be loaned or funded to Acquisition Sub
and the Target and the consummation of the
transactions contemplated hereby have been
approved by the board of directors of US Holdings,
and such approvals have not been rescinded,
revoked or modified in any manner. No other
corporate action or proceedings on the part of the
Company, Acquisition Sub, Borrower or Target is
necessary to consummate such transactions, except
for, prior to the Merger Date, the approval of the
Merger by Target's shareholders and (if required
as provided below in this paragraph (d)), by the
Company's shareholders. Except as may be required
by the rules of the NYSE, no vote of the
shareholders of the Company is required to approve
the Merger Agreement and the transactions
contemplated thereby. To the extent that any such
vote is required, the vote of Quebecor Inc. will
be sufficient to approve, and Quebecor Inc. has
agreed in writing with the Company to vote to
approve the Merger Agreement and the transactions
contemplated;
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(e) each of the Tender Offer Documents and Merger
Documents to which the Company, Acquisition Sub or
Target is a party has been duly executed or
delivered (or filed) on behalf of the Company,
Acquisition Sub or Target, as the case may be, and
constitutes its legal, valid and binding
obligation, enforceable against such Person in
accordance with its terms, is in full force and
effect and no term or condition thereof has been
amended, modified or waived from the terms and
conditions contained in the Tender Offer Documents
and Merger Documents delivered to the
Administrative Agent without the prior written
consent of the Arrangers and the Lenders (other
than Non-Material Changes). Each of the Company
and its Subsidiaries and (to the best knowledge of
the Borrower) all other parties thereto have
performed and complied, or shall perform and
comply, with all the material terms, provisions,
agreements and conditions set forth in the Tender
Offer Documents and the Merger Documents and
required to be performed or complied with by such
parties on or before the Tender Offer Funding
Date, and no material breach of any covenant by
any such party exists thereunder and no action has
been taken by any competent governmental authority
which restrains, prevents or imposes material
adverse conditions upon, or seeks to restrain,
prevent or impose material adverse conditions
upon, the Merger;
(f) each of the representations and warranties of the
Company, the Acquisition Sub and Target contained
in the Merger Agreement is true and correct in all
material respects other than, with respect to
Target's representations and warranties, such
failures to be true and correct that will not
constitute a Material Adverse Change with respect
to Target;
(g) there has occurred no Material Adverse Effect;
(h) the information contained in the Tender Offer
Documents, the representations and warranties of
each of Company and its Subsidiaries contained in
the Transaction Documents and Loan Documents, and
all certificates and documents delivered to the
Arrangers and the Lenders pursuant to the terms of
the Loan Documents, do not contain any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements contained herein or therein, in light
of the circumstances under which they were made,
not misleading. None of the Loan Parties has
intentionally withheld any fact from the Arrangers
or any Lender in regard to any matter which shall
have or is reasonably likely to have a Material
Adverse Effect;
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(i) none of the Company or any of its Subsidiaries is
engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock
(as defined in Regulation U of Board of Governors
of the Federal Reserve System);
(j) the consummation of the Tender Offer, the Merger
and the transactions contemplated by the
Transaction Documents will not impair the
ownership of or rights under (or the license or
other right to use, as the case may be) any
permits and governmental approvals, patents,
trademarks, trade names, copyrights, technology,
know-how or processes by any of the Company and
its Subsidiaries in any manner which has or is
likely to have a Material Adverse Effect;
(k) the financial forecasts Number 31 received by the
Arrangers on July 7, 1999 giving effect to the
transactions contemplated in the Merger Agreement
prepared by the Management of the Company
("Management") and the pro forma estimated balance
sheets of (i) the Company and its Subsidiaries at
the Tender Offer Funding Date giving effect to the
transactions contemplated in the Tender Offer and
(ii) the Company and its Subsidiaries (including
the Target and its Subsidiaries) at the Merger
Date giving effect to the transactions
contemplated in the Merger Agreement, have been
prepared in good faith, are based on facts and
assumptions believed to be reasonable by
Management, and employ methodology believed to be
reasonable by Management under the circumstances;
and
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(l) the execution, delivery, and performance by the
Company, Acquisition Sub, Borrower or Target of
the Transaction Documents and the Loan Documents
to which it is or may become a party, the
consummation of the transactions contemplated
thereby and compliance with the terms and
provisions thereof and the making and repayment of
the Loans and the intercompany loans related
thereto contemplated hereby, do not and will not
(i) constitute a tortious interference with any
contractual obligation of any Person, (ii)
conflict with, violate, result in a breach of, or
constitute (with or without notice or lapse of
time or both) a default under the charter, the
by-laws, or any indenture (including, without
limitation, the Existing Indentures), trust deed,
loan, credit, note or similar agreement or
instrument of any Loan Party, Restricted Entity or
Target, (iii) violate or conflict with any
applicable law or regulation or any order,
injunction, decree, determination or award of any
court or governmental authority, or (iv) result in
the creation of any lien upon the assets of any
Loan Party, Restricted Entity or Target, other
than, with respect to Target's representations and
warranties set forth in clauses (ii) (other than
with respect to the charter, by-laws and Existing
Indentures), (iii) and (iv) above of this
paragraph (l), such exceptions as will not result
in a Material Adverse Change with respect to
Target or prevent or materially delay the
consummation of the Merger following the
consummation of the Tender Offer.
To be Made on the Merger Date:
(a) The Company, Borrower and Acquisition Sub
collectively have cash or cash equivalents on hand
sufficient to pay an amount within the range of
Target's reasonable possible liability with
respect to any exercise of dissenters' rights as
to the Merger;
(b) the Merger Agreement has been approved by the
Minimum Number of Shares at a meeting of Target's
stockholders duly called and held prior to the
Merger Date and (if required by the NYSE) by the
required vote of the Company's shareholders;
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(c) the terms and conditions of the Merger as set
forth in the Merger Documents have not been
amended, waived or modified without the approval
of the Arrangers and the Lenders (other than
Non-Material Changes). As of the Merger Date, all
conditions precedent to the consummation of the
Merger pursuant to the Merger Agreement have been
satisfied (or waived, with the consent of the
Arrangers and the Majority Lenders). As of the
Merger Date, no material breach of any convenant
by any of the parties to the Merger Agreement has
occurred and no action has been taken by any
competent authority which restrains, prevents or
imposes material adverse conditions upon, or seeks
to restrain, prevent or impose material adverse
conditions upon, the Merger. Each of the
representations and warranties of the Company,
Acquisition Sub and Target contained in the Merger
Agreement is true and correct in all material
respects;
(d) the Certificate of Merger executed by Acquisition
Sub and Target has been filed with the Secretary
of State of Delaware and has been filed or
recorded in each other place wherein it is
required to be so filed or recorded, in each case
evidencing the consummation of the Merger. Such
Certificate of Merger complies as to form and
substance with the laws of the State of Delaware
and the Merger has been duly consummated in
compliance with all applicable law; and
(e) since March 31, 1999, there has been no event,
change or other occurrence that has or could
reasonably be expected to have a Material Adverse
Effect or a Material Adverse Change with respect
to Target.
Covenants: See Appendix III
Financial Covenants: See Appendix III
Events of Default: See Appendix IV
Participations and
Assignments: To be permitted with the Company's consent, not to be
unreasonably withheld, for amounts not less than US$10
million, provided that following a partial assignment,
the relevant Lender shall have retained a commitment of
not less than US$10 million.
Majority Lenders: Lenders constituting more than 50% of total Loans
outstanding under the Credit Facilities, or if no Loans
are outstanding, Lenders constituting more than 50% of
total commitments.
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Confidential
Waivers and
Amendments: The consent of all Lenders shall be required under the
Loan Documents for any amendment or waiver relating to:
(a) any decrease in rates/margin or fees or payments;
(b) amount of any Lender's commitment;
(c) term of the Credit Facilities;
(d) a change of the Borrower or an assignment or
transfer of its rights or obligations under the
Credit Facilities;
(e) the types of Borrowings available;
(f) a change in the definition of Majority Lenders;
and
(g) a change in a Guarantor and/or the Guarantee
Agreement.
Expenses: All costs and expenses of the Arrangers (including but
not limited to legal fees and disbursements) relating to
due diligence, appraisal, audit, insurance, duplication,
transportation, computer, messenger, consultants' cost
and expenses, the negotiation and preparation of the
Loan Documents and syndication and operation of the Loan
Documents are for the account of the Borrower,
regardless of whether or not the Loan Documents are
signed. All reasonable expenses of the Administrative
Agent and the Lenders in enforcing or preserving the
rights under the Loan Documents are for the account of
the Borrower.
Taxes: All payments by the Borrower will be made free and clear
of all present and future taxes, with no withholdings or
deductions whatsoever and the Borrower will provide the
appropriate indemnity in this regard. The Borrower will
also be responsible for the due payment of any levies,
duties or charges in connection with the Loan Documents.
Increased Costs: Loan Documents will include usual and customary
provisions requiring the Borrower to reimburse the
Lenders for any increased costs (including costs of
complying with capital adequacy guidelines) which are
incurred as a result of regulatory changes announced
subsequent to the signing date of the Credit Agreement.
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Confidential
Indemnity: Standard indemnification by the Loan Parties of the
Arrangers, Administrative Agent and Co-Syndication
Agents, and the Lenders and their respective affiliates
and their respective directors, officers, employees,
attorneys, agents and controlling persons against any
loss, liability, cost or expense arising out of or in
connection with any investigation, litigation or
proceeding or the preparation of any defense with
respect thereto arising out of or in connection with the
Loan Documents, the Transaction Documents, the Tender
Offer, the Merger or other transactions contemplated
hereby or thereby, or any use made or proposed to be
made with the proceeds of the Credit Facilities except
if resulting from gross negligence or willful
misconduct.
Governing Law: The laws of the State of New York shall govern the Loan
Documents.
Jurisdiction and
Jury Waiver: The Borrower and each Guarantor will submit to the
non-exclusive jurisdiction and venue of the federal and
state courts of the State of New York and shall have no
right to trial by jury.
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APPENDIX I
CERTAIN DEFINITIONS
Acquisition Sub: shall have the meaning set forth in the Transaction
Description.
Arrangement
Letter: means the letter agreement dated July 12, 1999 addressed
to the Company from Royal Bank of Canada, Bank of
America Canada, Bank of Montreal and Canadian Imperial
Bank of Commerce, New York Agency.
Benefit Plan: of any Person, means, at any time, any employee benefit
plan (including a multiemployer benefit plan), the
funding requirements of which (under section 302 of
ERISA or section 412 of the Internal Revenue Code of
1986 of the United States of America) are, or at any
time within six years immediately preceding the time in
question were, in whole or in part, the responsibility
of such Person.
Capital Security: means, with respect to any Person, (a) any share of
capital stock of such Person or (b) any security
convertible into, or any option, warrant or other right
to acquire, any share of capital stock of such Person.
Capital Market
Transactions: means any issuance by any Loan Party or Restricted
Entity of debt or equity, including preferred equity, in
the public and/or private markets other than commercial
paper issued under a commercial paper program of the
Company.
Capitalization: means the sum of Debt and Equity.
Convertible
Indenture: means the Indenture pursuant to which the Convertible
Notes were issued by Target.
Convertible Notes: means the 6% Convertible Senior Subordinated Notes due
2007.
Credit Agreement: means the credit agreement(s) evidencing the Credit
Facilities.
Debt: means, without duplication, the aggregate of all
Indebtedness of the Company and its Subsidiaries,
determined on a consolidated basis, in accordance with
Canadian GAAP.
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Confidential
EBITDA: means, for any period for any Person, the sum of (a) the
net income of such Person for such period before
extraordinary or unusual items and (b) to the extent
deducted in determining the net income of such Person
for such period, interest expense, income taxes (minus
income tax credits), non controlling interest and
depreciation expense and amortization expense of such
Person; provided that any determination of EBITDA with
respect to the Company, for any period which includes a
quarter prior to the Tender Offer Funding Date, shall
include EBITDA of Target based on Target's Form 10-K or
Form 10-Q, as applicable, with respect to any such
quarter which precedes the Tender Offer Funding Date.
8 3/8% Indenture: means the Indenture pursuant to which the 8 3/8% Notes
were issued by Target.
8 3/8% Notes: means the 8 3/8% Senior Subordinated Notes due 2008.
Equity: means the sum of shareholders' equity of the Company and
non-controlling interests of the Company, in each case
determined on a consolidated basis, in accordance with
Canadian GAAP.
Existing Indentures: means the Convertible Indenture, the 8 3/8% Indenture
and the 7 3/4% Indenture.
Existing QPI
Facility: means the Credit Agreement dated as of the 28th day of
April, 1999 made among the Company, and US Holdings, and
USGP, and each of the financial institutions named on
the signature pages thereof, and Royal Bank of Canada
("Royal Bank"), as Administrative Agent, and Royal Bank,
ABN Amro Bank Canada ("ABN Amro"), Bank of America
Canada ("B of A") and Canadian Imperial Bank of Commerce
("CIBC"), as Arrangers, and ABN Amro, B of A and CIBC,
as Joint Syndication Agents, as amended through the date
of the Credit Agreement contemplated hereby.
Financial Company
Restricted Entity: means any Restricted Entity which is a special purpose
finance Subsidiary wholly-owned directly or indirectly
by the Company whose activity is limited to raising
private or public indebtedness, provided that the net
proceeds from all such private or public indebtedness
are remitted to the Company, US Holdings or USGP.
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Guarantee: of any Person means, without duplication, all
guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other
obligations (contingent or otherwise) of such Person: to
pay, purchase, provide funds (whether by the advance of
money, the purchase of or subscription for shares or
other securities, the purchase of assets or services,
the indemnification in respect of letters of credit and
letters of guarantee issued in respect of Indebtedness)
for the payment of, or to make investments in any other
Person or to maintain the capital, working capital,
solvency or general financial condition of any other
Person or to indemnify against the consequences of
default in the payment of, or otherwise be responsible
for, any Indebtedness, damages, losses or liabilities of
any other Person (and "guarantor" shall be construed
accordingly).
The amount of each Guarantee shall be deemed to be an
amount equal to the outstanding amount of the primary
obligation of the obligor to whom the Guarantee relates,
unless the Guarantee is limited to a determinable amount
in which case the amount of such Guarantee shall be
deemed to be such determinable amount.
The word "Guarantee" when used as a verb has the
correlative meaning.
Hedge Agreement: means any swap agreement, cap agreement,
collar agreement, futures contract, forward contract or
similar agreement or arrangement designed to protect
against or mitigate the effect of fluctuations in
interest rates, foreign exchange rates or the prices of
commodities.
HSR: means the Hart-Scott-Rodino Antitrust Improvements Act
1976, as amended, and the rules and regulations
thereunder.
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Indebtedness: of any Person means, without duplication, (in each case,
whether such obligation is with full or limited
recourse):
(a) any obligation of such Person for borrowed money,
(b) any obligation of such Person evidenced by a bond,
debenture, note or other similar instrument,
(c) any obligation of such Person to pay the deferred
purchase price of property or services, except a
trade account payable that arises in the ordinary
course of business,
(d) any obligation of such Person as lessee under a
capitalized lease,
(e) any obligation of such Person to reimburse any
other Person in respect of amounts drawn or
drawable under any letter of credit or other
guarantee (excluding letters of guarantee for the
performance of obligations and any form of "bid
bond") issued by such other Person, whether
contingent or non-contingent,
(f) redeemable preferred shares which are redeemable
at the option of the holder prior to the maturity
of the Credit Facilities,
(g) any obligation of such Person to purchase
securities or other property that arises out of or
in connection with the sale of the same or
substantially similar securities or property,
(h) any Indebtedness of others secured by a lien on
any asset of such Person, and
(i) any indebtedness of others Guaranteed by such
Person.
Loans: means the loans to be made by the Lenders to the
Borrower under the Credit Facilities.
Material Adverse
Change: means, with respect to any Person, any event, change or
other occurrence that has resulted in, or could
reasonably be expected to result in, a material adverse
change in the business, condition (financial or
otherwise), operations, performance or properties of
such Person and its Subsidiaries taken as a whole.
- ----------
* In the Credit Agreement, appropriate representations, warranties and
covenants will contain the following language "any event, change or other
occurrence that has resulted, or could reasonably be expected to result
in,"
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Material(ly) Adverse
Effect: means:
(a) a material adverse change in the assets,
properties, operations, financial condition or
business prospects of the Company and the
Restricted Entities, taken as a whole,* or
(b) any material impairment:
(i) in the ability of any Loan Party to timely
pay any amounts due under the Loan
Documents,
(ii) in the ability of any Loan Party to fulfill
any other covenant or obligation of a
material nature arising under the Loan
Documents, or
(iii) in the validity or enforceability of the
Loan Documents.
Merger: shall have the meaning set forth in the Transaction
Description.
Merger Agreement: shall have the meaning set forth in the Transaction
Description.
Merger Date: means the date upon which the Merger is consummated.
Merger Documents: means the Merger Agreement, any related certificate of
merger (the "Certificate of Merger") all schedules and
exhibits thereto, and any other documents publicly filed
in connection with the Merger.
Minimum Number
of Shares: shall have the meaning set forth in paragraph (b) of the
Conditions Precedent to the Initial Funding of the
Credit Facilities.
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* In the Credit Agreement, appropriate representations, warranties and
covenants will contain the following language "any event, change or other
occurrence that has resulted, or could reasonably be expected to result
in,"
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Confidential
Non-Recourse
Creditor: means (i) a creditor of a Non-Recourse Subsidiary or of
a Project Vehicle whose recourses are limited, in
respect of any debt or liability of such Non-Recourse
Subsidiary or Project Vehicle to such creditor, to the
cash flow and other assets of such Non-Recourse
Subsidiary or Project Vehicle, to the capital stock of
such Non-Recourse Subsidiary or to the participation of
the Company or any of its Restricted Entities in the
Project Vehicle carrying out the specific Project for
which such Non-Recourse Subsidiary or Project Vehicle
was formed, the whole to the exclusion of any and all
other recourses whether by way of Guarantees or
otherwise against the Company or any of its Restricted
Entities or against any third party having recourse
against the Company or any of its Restricted Entities in
respect of such debt or liability or, (ii) a creditor to
whom is owed by the Company or any of its Restricted
Entities, Indebtedness for borrowed money to finance the
Start-up Costs of a Project carried out by the Company
or such Restricted Entity and whose recourses in respect
of such Indebtedness for borrowed money are limited to
the cash flow and the other assets of such Project (to
the exclusion of any other cash flow or asset).
Non-Recourse
Indebtedness: means Indebtedness for borrowed money (i) contracted for
the purpose of financing the Start-up Costs of a
specific Project carried out (alone or in association
with others) by the Company, any of its Restricted
Entities or by a Non-Recourse Subsidiary or a Project
Vehicle and (ii) due or otherwise owing by the Company
or such Restricted Entity or Non-Recourse Subsidiary or
Project Vehicle to a creditor being a Non-Recourse
Creditor by reason of the Company or such Restricted
Entity or Non-Recourse Subsidiary or Project Vehicle
being indebted or liable to such creditor in respect of
such Indebtedness for borrowed money.
Non-Recourse
Subsidiary: means a direct or indirect Subsidiary of the Company who
meets all of the following conditions:
(i) it was formed to carry out a specific Project,
whether alone or in association with others; and
(ii) its only assets consist of (a) assets relating to
such Project or (b) shares or any other form of
participating interest held, directly or
indirectly, in a Project Vehicle, which in turn
owns assets relating to such Project; and
<PAGE>
Confidential
(iii) it owes to one or more creditors Indebtedness for
borrowed money or it owns (directly or indirectly)
shares or any other form of participating interest
in a Project Vehicle which owes Indebtedness for
borrowed money to one or more creditors, in all
cases contracted for the purpose of financing the
Start-up Costs of such Project or purchasing the
participation of other participants in such
Project, where the recourses of such creditor(s)
in relation to such Indebtedness for borrowed
money are limited to (a) the assets of such
Project or Project Vehicle, (b) capital stock of
such Subsidiary or (c) recourses against such
Subsidiary or Project Vehicle; and
(iv) neither the Company nor any other Restricted
Entity is liable or has issued a Guarantee or has
otherwise obligated itself either directly or
indirectly in respect of debts and liabilities of
such Subsidiary or Project Vehicle otherwise than
by giving to the creditor of such debts or
liabilities and in relation thereto a recourse
limited to (a) the capital stock of such
Subsidiary or (b) the participation of the Company
or any of its Restricted Entities in the Project
Vehicle carrying out the specific Project for
which such Subsidiary or Project Vehicle was
formed,
it being understood and agreed that upon the debts or
liabilities of such Subsidiary to such creditor(s) in
respect of such Indebtedness for borrowed money and any
such Guarantee being repaid, released or otherwise
satisfied, such Subsidiary shall then cease, for all
purposes of the Credit Agreement, to be a Non-Recourse
Subsidiary.
Non-Restricted
Entity: means:
(a) each Person less than 50% plus 1 of the capital
stock of which is owned by the Company, directly
or indirectly through a Restricted Entity, and
(b) each Subsidiary of a Non-Restricted Entity.
Offer to Purchase: means the Offer to Purchase of Acquisition Sub that sets
forth terms and conditions of the Tender Offer in the
form filed with the Securities and Exchange Commission
pursuant to Section 14(d) of the Securities Exchange
Act.
Operating
Restricted Entity: means any Restricted Entity other than the US Holdings,
USGP, QPHC and a Financial Company Restricted Entity.
<PAGE>
Confidential
Permitted
Encumbrances: means:
(a) any lien for taxes, rates, assessments or
governmental charges or levies (i) not at the time
due and delinquent, or (ii) which are due and
delinquent but the validity of which is being
contested in good faith at the time and in respect
of which the Company or the relevant Restricted
Entity shall have set aside on its books reserves
deemed to be adequate therefor and not resulting
in a qualification by the auditors of the Company;
(b) any lien securing the claim of a materialman,
mechanic, carrier, warehouseman or landlord for
labor, materials, supplies or rentals incurred in
the ordinary course of business, but only if
payment thereof shall not at the time be required
to be made in accordance with the Credit Agreement
and foreclosure, distraint, sale or other similar
proceedings shall not have been commenced;
(c) any lien consisting of a deposit or pledge made in
the ordinary course of business in connection
with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or
similar legislation;
(d) any lien existing on (i) any property or asset of
any Person at the time such Person becomes a
Restricted Entity or (ii) any property or asset at
the time such property or asset is acquired by the
Company or a Restricted Entity, but only, in the
case of either (i) or (ii), if and so long as (A)
such lien is and will remain confined to the
property or asset subject to it at the time such
Person becomes a Restricted Entity or such
property or asset is acquired and to fixed
improvements thereafter erected on such property
or asset, (B) such lien secures only the
obligation secured thereby at the time such Person
becomes a Restricted Entity or such property or
asset is acquired and (C) the obligation secured
by such lien is not in default and provided that
such lien is discharged by the Company or the
applicable Restricted Entity, as the case may be,
within 180 days after such Person becomes a
Restricted Entity or such property or asset is
acquired, as the case may be;
(e) easements, rights-of-way, zoning restrictions and
other similar encumbrances incurred in the
ordinary course of business which are not material
in amount, and which, in the aggregate, do not
materially detract from the value of the property
subject thereto or interfere with the ordinary
conduct of the business of the Company or any of
the Restricted Entities;
(f) liens on equipment acquired by the Company or any
Restricted Entity in the ordinary course of
business, provided that (i) such lien secures only
the purchase price of such equipment, (ii) such
lien is confined to such equipment so acquired and
(iii) such lien is discharged by the Company or
the Restricted Entity, as the case may be, or is
otherwise terminated within 180 days after the
installation of such acquired equipment;
(g) cautionary liens on short-term assets transferred
in securitization or factoring transactions;
(h) any lien on the assets of a specific Project
securing Non-Recourse Indebtedness incurred for
purposes of financing such Project and any lien on
the assets of, or the shares or other form of
participating interest held in, any wholly-owned
Non-Recourse Subsidiary to secure Non-Recourse
Indebtedness incurred by such wholly-owned
Non-Recourse Subsidiary to finance the Project
being carried out by such Non-Recourse Subsidiary
or by the Project Vehicle formed to carry out the
Project which such Non-Recourse Indebtedness is
financing;
(i) liens securing existing Indebtedness of
Imprimeries Didier-Quebecor, S.A. (France) and its
Subsidiaries, provided such liens are restricted
to the assets of the debtor of such Indebtedness;
and
(j) liens securing obligations under off-balance sheet
operating leases which are not capitalized leases,
provided such liens are restricted to the relevant
lease or sub-lease and the assets covered thereby.
<PAGE>
Confidential
Person: means any individual, sole proprietorship, corporation,
partnership, trust, unincorporated organization, mutual
company, joint stock company, estate, union, employee
organization, government or any agency or political
subdivision thereof.
Project: means the acquisition, construction and development of
newly acquired assets (which must include tangible
assets) forming an economic unit capable (on the basis
of reasonable initial assumptions) to generate
sufficient cash flow to cover the operating costs and
debt service required to finance the undertaking
relating to such assets over a period of time which is
less than the projected economic life of the assets and
includes any commercial operation for which such assets
were so acquired, constructed or developed and which is
subsequently carried on with such assets by such
economic unit.
Project Vehicle: means a corporate entity or an unincorporated
entity, whether or not having a legal personality
(including a joint-venture, a partnership, a trust, a
co-ownership scheme or other business combination or
risk-sharing scheme) in which the Company or any of its
Restricted Entities owns shares or any other form of
ownership or participating interest and which meets all
of the following conditions:
(i) it was formed to carry out a specific
Project;
(ii) its only assets consist of assets relating
to such Project;
(iii) if such entity is a Subsidiary, it is a
Non-Recourse Subsidiary; and
(iv) neither the Company nor any of its
Restricted Entities is liable or has issued
a Guarantee or has otherwise obliged itself
either directly or indirectly for or in
respect of debts or liabilities incurred to
finance such entity or the Project carried
out by such entity otherwise than by giving
to the creditor of such debts or liabilities
and in relation thereto a recourse limited
to (a) the assets of such Project or (b) its
shares or other form of ownership or
participating interest in such entity.
QPI Amendment: means the amendment to the Existing QPI Facility
contemplated by the QPI Waiver Letter.
QPI LLC: means Quebecor Printing Delaware LLC, a Delaware limited
liability company, all the non-voting common membership
interests of which are owned by USGP and all the voting
preferred membership interests of which are owned by
Quebecor Printing Nova Scotia ULC, a wholly owned
Subsidiary of USGP.
<PAGE>
Confidential
QPI Waiver Letter: means the letter from Royal Bank of Canada to the
lenders under the Existing QPI Facility, in
substantially the form attached to the Arrangement
Letter, describing certain amendments to be made to the
Existing QPI Facility.
Restricted Entity: means any Subsidiary whose capital stock is at
least 50% plus 1 owned directly or indirectly by the
Company (including the US Holdings, USGP, QPHC, any
Operating Restricted Entity and any Financial Company
Restricted Entity).
7 3/4% Indenture: means the Indenture pursuant to which the 7 3/4% Notes
were issued by Target.
7 3/4% Notes: means the 7 3/4% Senior Subordinated Notes due 2009.
S&P: means Standard & Poor's, a division of the McGraw-Hill
Companies, Inc.
Shares: shall have the meaning set forth in the Transaction
Description.
Start-up Costs: means, in relation to a Project, (i) the costs of
acquisition, construction and/or development of the
newly acquired assets forming part of such Project and
which have to be constructed, acquired or developed to
form the economic unit required to be formed to
initially constitute such Project and (ii) the principal
amount of money which, at the inception of the
commercial operations to be conducted with such assets,
is then reasonably estimated as being the amount
required to provide the Project with a sufficient
initial working capital.
Subordinated Notes: means the 7 3/4% Notes and the 8 3/8% Notes.
Subsidiary: means, with respect to any Person, any other Person
(a) securities of which having ordinary voting power
to elect a majority of the board of directors (or
other person having similar functions), or
(b) other ownership interests of which ordinarily
constituting a majority voting interest, are at
the time, directly or indirectly, owned or
controlled by such first Person, or by one or more
of its Subsidiaries, or by such first Person and
one or more of its Subsidiaries.
Target: shall have the meaning set forth in the Transaction
Description.
Tender Offer: shall have the meaning set forth in the Transaction
Description.
Tender Offer
Documents: means the Offer to Purchase, the related letter of
transmittal, any other tender offer material which is
furnished to stockholders of Target in connection with
the Tender Offer, and the Tender, Voting and Option
Agreement.
Tender, Voting and
Option Agreement: shall have the meaning set forth in the Transaction
Description.
<PAGE>
Confidential
Transaction
Documents: means the Merger Agreement and such other agreements and
other related documentation as required to consummate
the Tender Offer and Merger, including the Tender,
Voting and Option Agreement.
USGP: means Quebecor Printing Capital GP, a Delaware general
partnership.
US Holdings
Merger: means the merger of the surviving corporation of the
Merger with and into US Holdings.
<PAGE>
Confidential
APPENDIX II
FEES AND INTEREST RATES
Commitment Fees: Commencing on the date of execution of the Credit
Agreement, calculated on the unutilized, uncancelled
amount of the Credit Facilities only, at the per annum
rate set out below, on a 360-day basis, payable
quarterly in arrears.
Interest Rates,
Margins and Fees: The margins and the commitment fees will be determined
based on the senior unsecured debt ratings of the
Company as assigned by S&P and Moody's Investors
Service, Inc. ("Moody's") as outlined below which are
denoted in basis points (bps).
If the ratings by both S&P and Moody's are investment
grade (BBB- and Baa3, respectively) or higher, then the
pricing will be determined based on the higher of the
two ratings, provided that if the ratings are more than
one rating category apart, the pricing shall be
established on the basis of one rating category above
the lower rating category of the two.
If the rating by one of S&P and Moody's is investment
grade or higher and the rating of the other is
non-investment grade, pricing shall be based on Ratings
Level V.
If the ratings by both S&P and Moody's are
non-investment grade, pricing shall be based on Ratings
Level VI:*
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Ratings Level I II III IV V VI
- ---------------------------------------------------------------------------------------------------------
BBB-/Ba1 BB+
S&P Rating A- BBB+ BBB BBB- or Ba1 or
Moody's Rating A3 Baa1 Baa2 Baa3 BB+/Baa3 Lower
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Commitment Fees for Tranches A and C 8.5 10.0 12.5 15.0 20.0 30.0
- ---------------------------------------------------------------------------------------------------------
Commitment Fees for Tranche B 12.5 15.0 17.5 20.0 25.0 37.5
- ---------------------------------------------------------------------------------------------------------
LIBOR Margin for all Facilities 50.0 65.0 80.0 100.0 125.0 175.0
- ---------------------------------------------------------------------------------------------------------
US Base Rate Margin 0 0 0 0 25.0 75.0
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* From the date of execution of the Credit Agreement until a Ratings Level
has been confirmed by both S&P and Moody's, pricing will be based on
Ratings Level IV.
<PAGE>
During the period from the Tender Offer Funding Date to
the date of the US Holdings Merger, the LIBOR Margin and
the US Base Rate Margin in effect will be increased by
12.5 bps and, in addition, during the Tranche A
Extension Period, the LIBOR Margin and US Base Rate
Margin in effect with respect to Tranche A will be
increased by 25.0 bps.
<PAGE>
Confidential
APPENDIX III
AFFIRMATIVE AND NEGATIVE COVENANTS
FINANCIAL COVENANTS
INFORMATION COVENANTS
- --------------------------------------------------------------------------------
AFFIRMATIVE COVENANTS
Each loan party shall and, in the case of paragraphs (b), (c), (d), (e), (f),
(g), (j) and (k) below, shall cause each of its subsidiaries that is a
restricted entity to:
(a) punctually pay all amounts due at the times and places, and in the manner
specified,
(b) preserve and maintain its corporate or other existence and, if applicable,
all of its other franchises, licenses, rights, privileges, consents and
approvals, except as otherwise permitted hereunder and except to the
extent that the failure to comply with this provision could not reasonably
be expected to have a Material Adverse Effect,
(c) conduct its business in a proper and efficient manner in accordance with
normal industry standards, keep proper books or records and accounts, and
preserve, protect and obtain all intellectual property, and preserve and
maintain in good repair, working order and condition all other properties,
used or useful in the conduct of its business, and obtain and maintain all
licenses, permits and regulatory approvals required for the operations of
its business, except to the extent that the failure to comply with this
provision could not reasonably be expected to have a Material Adverse
Effect,
(d) comply with applicable law, including without limitation, ERISA, the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized
Crime Control Act of 1970 of the United States of America and all
environmental laws and obtain and maintain all necessary environmental
permits, except to the extent that the failure to comply with this
provision could not reasonably be expected to have a Material Adverse
Effect,
(e) pay or discharge when due all taxes and all liabilities that might become
or result in a lien on any of its properties, except to the extent that
the failure to comply with this provision could not reasonably be expected
to have a Material Adverse Effect,
(f) take all action and obtain and maintain all consents and governmental
approvals required so that its obligations under the loan documents will
at all times be legal, valid and binding and enforceable in accordance
with their respective terms,
(g) maintain insurance with such financially sound, independent and reputable
insurance companies, against at least such risks and in at least such
amounts as is customarily
<PAGE>
Confidential
maintained by similar businesses, duly and punctually pay or cause to be
paid the premiums and other sums of money payable in connection therewith
and promptly deliver to the Administrative Agent from time to time upon
reasonable request evidence of such insurance coverage,
(h) use all funds advanced under the Credit Facilities for the purposes
specified under the headings "Purpose" and "Availability",
(i) maintain the Guarantee Agreement in full force and effect and not
terminate or attempt to terminate any Guarantee Agreement until the full,
final and indefeasible payment and termination of the Credit Facilities,
(j) keep under review its operations with a view of assessing its computer
systems consisting of hardware, software and business application systems
containing embedded microchips, and take such reasonable measures to
ensure that its computer systems which are critical to its operations will
be millennium compliant by November 30, 1999, and will continue to
properly function on and after December 31, 1999 provided that the
effectiveness of these measures is contingent on Year 2000 compliance of
suppliers, customers and other third parties dealing with the Company and
its related companies, including its Subsidiaries,
(k) comply with environmental laws, except where non compliance could not
reasonably be expected to have a Material Adverse Effect, and indemnify
the Arrangers and Lenders in respect of any environmental claim (to be
expanded in the Credit Agreement), and
(l) take all action necessary to maintain that all (i) intercompany advances
made by Borrower and QPI LLC to repay Target's indebtedness owing under
its existing bank credit agreement shall, after the Merger, rank senior to
the indebtedness evidenced by the Convertible Notes and the Subordinated
Notes and (ii) indebtedness evidenced by the Convertible Notes and the
Subordinated Notes shall, after the US Holdings Merger, rank pari passu or
junior to all amounts outstanding under the Credit Facilities and all
obligations under the Guarantee Agreement.
The Company Shall:
(a) cause each of S&P and Moody's to review, on a continuing basis, the credit
rating given to the Company (with any change in the credit rating given to
the Company by either S&P or Moody's, to be notified by the Company to the
Administrative Agent in accordance with the Credit Agreement),
(b) after the consummation of the Tender Offer, use its commercially
reasonable best efforts to cause Target to (i) comply in all material
respects with all of its material obligations under the Merger Agreement
and (ii) maintain in full force and effect until the earlier of
<PAGE>
Confidential
one year after the date of consummation of the Merger and (if the
aggregate amount of the Commitments of the Arrangers is then less than
US$675,000,000) the occurrence of the US Holdings Merger, Target's
existing accounts receivable securitization program on substantially the
same terms and conditions and in the same amounts as are in effect as of
the date of execution of the Merger Agreement, provided, if the aggregate
amount of the Commitments of the Arrangers is greater than US$675,000,000,
then the amount of the securitization program may not exceed
US$400,000,000,
(c) after consummation of the Tender Offer, cause the consummation of the
Merger in accordance with the Merger Agreement and all applicable
requirements of law as promptly as practicable,
(d) after the consummation of the Merger, promptly cause the deregistration
and the delisting of the Shares,
(e) prior to the consummation of the Merger, cause US Holdings to take such
action as necessary to cause the amount of proceeds of Loans that have
been lent to Acquisition Sub to equal 75% of the maximum amount of the
Restricted Payments permitted under and as defined in Section 4.8 of the
7 3/4% Indenture and the 8 3/8% Indenture and otherwise in compliance with
the terms of such Indentures to the extent such maximum amount is at least
US$100,000,000. If such maximum amount is less than US$100,000,000, then
the amount of the proceeds of Loans lent to Acquisition Sub may be zero,
and
(f) (i) on a date not less than three business days prior to the Merger Date
and on each date that the officer's certificate referred to in paragraph
(c) of the Information Covenants is required to be delivered, deliver or
cause US Holdings to deliver to the Administrative Agent for each Lender
an officer's certificate setting forth in reasonable detail the
calculation of the maximum amount of Restricted Payments permitted under
and as defined in Section 4.8 of the 7 3/4% Indenture and the 8 3/8%
Indenture and demonstrating compliance therewith and, in addition,
otherwise confirming compliance with the other negative covenants of such
Indentures and (ii) not less than three business days prior to the Merger
Date, deliver or cause US Holdings to deliver to the Administrative Agent
for each Lender an unqualified opinion of Arnold & Porter that no breach
or default has occurred under any of the Existing Indentures as a result
of the loans to be made by US Holdings to Acquisition Sub described in
paragraph (e) above or the repayment of any thereof.
<PAGE>
Confidential
NEGATIVE COVENANTS
Each Loan Party shall:
(a) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, at any time, assume, create,
incur or suffer to exist any lien upon any of its property, rights,
revenues or assets, whether now owned or hereafter acquired or upon any
income or profits therefrom, except that the Company and the Restricted
Entities (other than, prior to consummation of the Merger, Acquisition
Sub) may create, incur, assume or suffer to exist (i) Permitted
Encumbrances, (ii) liens securing intercompany loans or advances amongst
the Loan Parties and the Restricted Entities and (iii) other liens where
the aggregate amount secured thereby does not exceed 10% of the Company's
Equity,
(b) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, except as permitted under
paragraph (e) below convey, sell, alienate, assign, lease, license,
transfer or otherwise dispose of the whole or any substantial portion of
its property or assets or any interest therein, whether now owned or
possessed or hereafter acquired or possessed, or enter into any sale and
leaseback transaction with respect to such property or assets, in each
case if a Material Adverse Effect could result therefrom or could exist
immediately after the relevant transaction,
(c) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, make or acquire any loan or
investment in Non-Restricted Entities or permit any loan or investment
from such Loan Party or any of its Subsidiaries which is a Restricted
Entity to be outstanding, directly or indirectly, in Non-Restricted
Entities in aggregate amounts exceeding a sum equivalent to 20% of the
Company's Equity at any time, excluding transactions (including accounts
receivable) in the ordinary course of business with a term of less than 90
days,
(d) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, permit any of the Operating
Restricted Entities to incur, assume, create or become in any way liable
for any Indebtedness (except for intercompany loans raised from a Loan
Party or a Restricted Entity) in an amount exceeding, in the aggregate,
prior to the Merger Date, 15% and thereafter, until the consummation of
the US Holdings Merger, 10% and after the US Holdings Merger, 15%
(assuming compliance with paragraph (l) of the Affirmative Covenants) of
the Company's Equity, excluding the Indebtedness evidenced by the
Subordinated Notes and the Convertible Notes and the existing
Indebtedness, identified in Schedule 11.2.4 to the Existing QPI Facility,
of Imprimeries Didier-Quebecor, S.A. (France) and its Subsidiaries, except
that this restriction shall not apply, following an acquisition of a
newly-acquired Subsidiary of the Company which will be an Operating
Restricted Entity ("New Operating Restricted Entity") to the extent that
the Indebtedness of such New Operating Restricted Entity ("Acquired
Indebtedness") is repaid or otherwise extinguished within 180 days of the
date such New
<PAGE>
Confidential
Operating Restricted Entity is so acquired and provided further that such
Acquired Indebtedness was not incurred in contemplation of such
acquisition,
(e) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, wind-up, liquidate or
dissolve its business, affairs or assets or enter into any transaction of
reorganization, amalgamation, merger or consolidation, or convey, sell,
lease or otherwise dispose of all or any substantial part of its business,
property or assets (or agree to do any of the foregoing at any future
time) except (i) as permitted under paragraph (b) above, (ii) that any
Restricted Entity, other than a Loan Party, may effect any of the
foregoing transactions if the transaction could not reasonably be expected
to have a Material Adverse Effect and (iii) that any of the Loan Parties
may merge into or convey, lease or transfer all or substantially all of
its assets to any Person, provided that, immediately after giving effect
to the transaction, no event or circumstance shall have occurred and be
continuing which constitutes a default or Event of Default and that (i)
the resulting entity or the Person which acquires such assets is bound by
the provisions of the Loan Documents to which such Loan Party is a party
by operation of law or pursuant to an agreement in form and substance
satisfactory to the Administrative Agent and (ii) the Lenders receive an
opinion of counsel to the Company acceptable to them confirming that the
resulting entity or the Person which acquires such assets is bound by the
relevant Loan Documents,
(f) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, permit to exist, at any
time, any consensual restriction limiting the ability (whether by
covenant, event of default, subordination or otherwise) of the Company or
any Restricted Entity to (i) pay or make the maximum dividends permitted
by law to its parent entity, (ii) pay any obligation owed to the Company
or any Restricted Entity, (iii) make any loans or advances to or
investments in the Company or in any Restricted Entity, (iv) transfer any
of its property or assets to the Company or any Restricted Entity or (v)
create any lien upon its property or assets whether now owned or hereafter
acquired or upon any income or profits therefrom, except that the covenant
contained in this paragraph (f) shall not apply to (a) Imprimeries
Didier-Quebecor, S.A. (France) and its Subsidiaries and (b) any other
Restricted Entity (other than a Loan Party), whose assets, singly or when
taken together with the assets of all Restricted Entities (other than a
Loan Party) subject to such restrictions, do not exceed at any time 10 %
of the consolidated assets of the Company, as determined in accordance
with GAAP, and (c) the Target and its Subsidiaries, when it becomes a
Restricted Entity, with respect to any restriction contained in Sections
4.7 (Limitations on Restricted Payments), 4.8 (Dividend and Payment
Restrictions), 4.10 (Limitations on Sales of Assets), 4.11 (Transactions
with Affiliates), 4.12 (Limitations on Liens), 4.13 (Investments in
Unrestricted Subsidiaries) and 4.15 (Limitation on Other Subordinated
Indebtedness) of the 7 3/4% Indenture and the 8 3/8% Indenture,
(g) not use the Credit Facilities or any proceeds of borrowings thereunder (i)
to make an
<PAGE>
Confidential
acquisition or an investment in any newly-acquired Subsidiary unless such
transaction is uncontested and approved by the board of directors of such
Person, or (ii) to purchase or carry, reduce, retire or refinance any
credit incurred to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any such margin stock
(other than the purchase of the Shares pursuant to the Tender Offer),
(h) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, make any change whereby the
nature of the business carried on by the Company and the Restricted
Entities (taken as a whole) would be materially altered from that carried
on as of the Formal Date (as defined in the Existing QPI Facility), and
(i) not, nor will it allow any of its Subsidiaries which is a Restricted
Entity to, directly or indirectly, acquire or enter into any Hedge
Agreement except, as bona fide hedges and not for speculative purposes,
other than such speculative hedge agreements to which the Target is a
party as of the Tender Offer Funding Date which such speculative hedge
agreements shall be terminated as soon as commercially practicable.
Notwithstanding anything contained herein, prior to the consummation of the
Merger, the Company will not allow Acquisition Sub to (i) carry on any business
or activity unrelated to the consummation of the Tender Offer and Merger or (ii)
incur, assume, create, suffer to exist or become in any way liable for any
Indebtedness other than intercompany Indebtedness to US Holdings related to the
consummation of the Tender Offer and the Merger.
<PAGE>
Confidential
FINANCIAL COVENANTS
The Company shall not:
(a) permit the ratio of the consolidated EBITDA of the Company to the
consolidated interest expense of the Company to be less than 3.50 to 1.00
for any period of four consecutive fiscal quarters of the Company,
starting with the period of four quarters ending on June 30, 1999;
(b) permit the ratio of the Company's Debt to the Company's Capitalization to
exceed (i) 70% from the Tender Offer Funding Date until the Merger Date,
(ii) 65% after the Merger Date until December 31, 1999, (iii) 60% from
January 1, 2000 until December 31, 2000 and (iv) 55% after December 31,
2000, in each case, on the basis of calculations made at the end of each
fiscal quarter, starting with the quarter ending June 30, 1999; or
(c) permit the ratio of the Company's Debt to consolidated EBITDA to exceed,
for any period of four consecutive fiscal quarters of the Company,
starting with the period of four quarters ending on the last day of the
quarter which includes the Tender Offer Funding Date, (i) 4.00 to 1.00
from the Tender Offer Funding Date until the Merger Date, (ii) 3.75 to
1.00 after the Merger Date until December 31, 2000, and (iii) 3.00 to 1.00
after December 31, 2000, until Tranche A and Tranche C have been paid in
full and cancelled and the ratio of the Company's Debt to the Company's
Capitalization is less than 55% at the end of any fiscal quarter ending
after the date of such repayment and cancellation.
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INFORMATION COVENANTS
(Note: In the final loan documentation, the following provisions may be inserted
in the general representation and warranty section, in the general
covenants section or in the Guarantee Agreement, as applicable).
The Company shall furnish to the Administrative Agent in a sufficient number of
copies for distribution to each of the lenders:
(a) Quarterly Financial Statements. As soon as practicable and in any event
within 60 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Company, commencing with the
quarterly period ending June 30, 1999, the consolidated balance sheet of
the Company and the related consolidated statements of income, retained
earnings and cash flows for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to normal
year-end auditing adjustments.
(b) Year-End Financial Statements; Accountants' Certificate. As soon as
available and in any event within 90 days after the end of each fiscal
year of the Company, commencing with the fiscal year ending December 31,
1999:
(i) the consolidated balance sheet of the Company as at the end of such
fiscal year and the related consolidated statements of income,
retained earnings and cash flows for such fiscal year, setting forth
in comparative form the figures as at the end of and for the
previous fiscal year; and
(ii) an audit report of KPMG, or any one of the 5 largest firms of
accountants nationally recognized in the United States of America or
in Canada, as the case may be, which report shall include an opinion
of such auditors which opinion shall not be qualified and shall
state that such financial statements were prepared in accordance
with generally accepted accounting principles in effect in Canada
and that the audit by such auditors in connection with such
financial statements has been made in accordance with generally
accepted auditing standards.
(c) Officer's Certificate as to Financial Statements and Defaults. At the time
that financial statements are furnished, a certificate of compliance of
the chief executive officer, chief financial officer or treasurer of the
Company, in a form acceptable to the Arrangers, with the information
specified thereon being true and correct in all material respects as of
the date the certificate is delivered to the Administrative Agent.
(Note: the certificate of compliance will confirm accuracy of financial
statements, absence of contingent liabilities and anticipated loss having
material adverse effect, the calculations of financial ratios, absence of
defaults, the list of Restricted Entities (list of Restricted Entities to
be provided annually only) and Non-Restricted Entities, the investments
therein by the Company and the indebtedness of the Restricted Entities.)
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(d) Reports and Filings.
(i) promptly upon receipt thereof, (y) copies of all material special
audits, opinions or other material reports, if any, submitted to any
Loan Party by its independent certified public accountants in their
capacity as auditors of such Loan Party, and (z) copies of all
notices, confirmation, reports or other instruments issued to any
Loan Party by either or both S&P and Moody's, as the case may be,
and
(ii) promptly upon transmission thereof, copies of all such financial
statements and reports as the Company shall send to its
stockholders, copies of all material information made publicly
available by any Loan Party and copies of all registration
statements, annual information forms, regular or periodic reports,
prospectus, offering circulars or similar materials filed by any
Loan Party with any securities exchange, securities commission or
similar governmental authority or commission, other than filings
made with state regulatory authorities in connection with
shareholdings by employees of the Company or Restricted Entities.
(e) Requested Information. From time to time and promptly upon request of any
Lender, such information regarding the loan documents to which a Loan
Party is a party, or the loans, the business, assets, liabilities,
financial condition, results of operations or business prospects of a Loan
Party as such Lender may reasonably request, in each case in form and
substance and certified in a manner satisfactory to the requesting Lender.
(f) Notice of Defaults, Material Adverse Changes and Other Matters. Promptly
and in any event within (i) one business day after a Loan Party obtains
knowledge or should have obtained knowledge of any event or condition
specified in clause (A) hereof, (ii) three business days after the date a
Loan Party obtains knowledge or should have obtained knowledge of any
event or conditions specified in clause (E) hereof and (iii) five business
days after a Loan Party obtains knowledge or should have obtained
knowledge of any event or condition specified in clauses (B), (C), (D) and
(F) hereof, notice of:
(A) any default,
(B) any change in the name of, or, any amendment of the certificate of
incorporation or by-laws of any Loan Party,
(C) the commencement of, or the occurrence or non-occurrence of any
change or event relating to, any action, suit or proceeding that
would cause the representation and warranty relating to the absence
of litigation to be incorrect if made at such time,
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(D) the occurrence or non-occurrence of any change or event that would
cause the representation and warranty relating to the absence of
adverse change to be incorrect if made at such time,
(E) any change in the S&P/Moody's credit rating which would result in an
increase of any of the margins, and
(F) any event or condition relating to ERISA, whether or not such event
or condition shall constitute an Event of Default.
(g) Environmental Matters. Promptly and in any event within five business days
after the existence of any of the following conditions, a certificate of
the chief executive officer, chief financial officer, treasurer or other
responsible officer of the Company specifying in detail the nature of such
condition and the Company's or the relevant Restricted Entity's or their
respective environmental affiliate's proposed response thereto:
(i) the receipt by the Company or any Restricted Entity or any of their
respective environmental affiliates of any communication (written or
oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any
Restricted Entity or any environmental affiliate thereof is not in
compliance with applicable environmental laws,
(ii) the Company or any Restricted Entity or any of their respective
environmental affiliates shall obtain actual knowledge that there
exists any environment claim pending or threatened against the
Company or any Restricted Entity or such environmental affiliate, or
(iii) any release, emission, discharge or disposal of any material of
environmental concern that could form the basis of any environmental
claim against the Company or any Restricted Entity or any of their
respective environment affiliates,
in each case of clauses (i), (ii) and (iii) above to the extent that any
such non-compliance, environmental claim or release, emission, discharge
or disposal, either singly or in the aggregate, could reasonably be
expected to have a Materially Adverse Effect on the Company and the
Restricted Entities taken as a whole.
(h) Budget. No later than on the 60th day following the commencement of each
fiscal year of the Company, commencing with the 2000 fiscal year, a
summary consolidated budget including a yearly statement of earnings, cash
flows and a year-end consolidated balance sheet.
Accuracy of Financial Statements and Information.
1
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(a) Historical Financial Statements. The Company hereby represents and
warrants that (i) the consolidated financial statements of the Company for
the 1998 fiscal year provided to the Administrative Agent and the Lenders
prior to the date of the Loan Documents are complete and correct and
present fairly, in accordance with generally accepted accounting
principles in Canada, the consolidated financial position of the Company
and its Subsidiaries at their respective dates and the consolidated
results of operations, retained earnings and, as applicable, changes in
financial position or cash flows of the Company, for the respective
periods to which such statements relate, and (ii) except as disclosed or
reflected in such financial statements, as at December 31, 1998, neither
the Company nor any Restricted Entities had any liability, contingent or
otherwise, or any unrealized or anticipated loss, that, singly or in the
aggregate, could reasonably be expected to have a Materially Adverse
Effect on the Company and the Restricted Entities taken as a whole.
(b) Future Financial Statements. The financial statements delivered to the
Lenders shall be completed and correct and present fairly, in accordance
with generally accepted accounting principles (except for changes therein
or departures therefrom that are described in the certificate or report
accompanying such statements and that have been approved in writing by the
Company's then current independent certified public accountants), the
consolidated financial position of the Company as at their respective
dates and the consolidated results of operations, retained earnings and
cash flows of the Company, for the respective periods to which such
statements relate, and the furnishing of the same to the Lenders shall
constitute a representation and warranty by the Company made on the date
the same are furnished to the Lenders to that effect and to the further
effect that, except as disclosed or reflected in such financial
statements, as at the respective dates thereof, the Company nor any of the
Restricted Entities had any liability, contingent or otherwise, or any
unrealized or anticipated loss, that, singly or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect on the Company
and the Restricted Entities taken as a whole.
Additional Covenants Relating to Disclosure.
Each Loan Party further agrees that it will, and will cause each of its
Subsidiaries which is a Restricted Entity to, permit the Administrative Agent
and any person designated in writing from time to time by the Administrative
Agent, at the Loan Parties' expense, to have the right, on reasonable written
notice and at such reasonable time or times as will not interfere with the
normal operations of the Loan Party or such Subsidiaries, to visit and inspect
any of the properties of such Loan Party and such Subsidiaries and to discuss
the affairs, finances and accounts of the Loan Party or such Subsidiaries with
their respective officers; and that the Administrative Agent, its
representatives and its independent accountants shall also have the right to
examine the books of account, records, reports and other documents of the Loan
Parties and such Subsidiaries, all at such reasonable time or times as will not
interfere with the normal operation of the Loan Parties and such Subsidiaries.
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APPENDIX IV
EVENTS OF DEFAULT
Those customarily found in the Arrangers' credit agreements for acquisition
financings and others appropriate in the judgment of the Arrangers, including,
without limitation, the following:
(a) Payment Default. any payment of principal or of interest on any of the
loans or of fees or any other amounts owing under the Loan Documents shall
not be made when and as due (whether at maturity, by reason of notice of
repayment or acceleration or otherwise) and in accordance with the terms
of the Credit Agreement and, except in the case of payments of principal,
such failure shall continue for three business days;
(b) Representation and Warranty. any representation and warranty made by any
Loan Party in any of the Loan Documents or any certificate or other
document delivered pursuant thereto shall at any time prove to have been
materially incorrect or misleading in any material respect when made or
deemed to have been made;
(c) Other Breaches.
any Loan Party shall default in the performance or observance of:
(i) any term, covenant, condition or agreement contained in paragraph
(b) (insofar as such paragraph requires the preservation of the
corporate existence of any Loan Party), (f), (g) and (h) under
Affirmative Covenants, and such default, if capable of being
remedied, shall continue unremedied for a period of ten business
days after the earlier of the date on which (y) such Loan Party
shall have actual knowledge of such default and (z) notice shall
have been given by the Administrative Agent to the Borrower
requiring that such default be cured; or,
(ii) any term, covenant, condition or agreement contained in the Credit
Agreement (other than a term, covenant, condition or agreement a
default in the performance or observance of which is elsewhere in
this Appendix specifically dealt with) and such default, if capable
of being remedied, shall continue unremedied for a period of 30 days
after the earlier of the date on which (y) such Loan Party shall
have actual knowledge of such default and (z) notice shall have been
given by the Administrative Agent to the Borrower requiring that
such default be cured;
(d) Cross-Default.
(i) with respect to any Indebtedness of a Loan Party or any other
Restricted Entity
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(other than under the Credit Facilities and Non-Recourse
Indebtedness) in the aggregate outstanding principal amount of
US$25,000,000,
(A) failure to pay, in accordance with its terms and when due and
payable (subject to any applicable grace period), any of the
principal or interest of such Indebtedness, or any such Indebtedness
shall, in whole or in part, have been required to be repaid prior to
the stated maturity thereof, in accordance with the provision of any
agreement evidencing, providing for the creation of or concerning
such Indebtedness, or
(B) (1) any event shall have occurred and be continuing that accelerates
such maturity or requires such repayment or permits (or, with the
passage of time or the giving of notice or both, would permit) any
holder or holders of such Indebtedness, any trustee or agent acting
on behalf of such holder or holders or any other Person so to
accelerate such maturity or require any such repayment, and said
holder or holders, trustee or agent, acting on behalf of such holder
or holders have accelerated said maturity or required such repayment
and (2) if the agreement evidencing, providing for the creation of
or concerning such Indebtedness provides for a cure period for such
event, such event shall not be cured prior to the end of such cure
period,
(ii) any default by any Loan Party under the Guarantee Agreement, and
(iii) any Event of Default under (and as defined in) (A) the Existing QPI
Facility, or (B) after the Tender Offer Funding Date, any of the
Existing Indentures;
provided further that no Event of Default shall be deemed to have occurred
if the failure to pay or perform under the relevant agreement is waived,
rescinded or annulled in writing by the relevant creditor(s).
(e) Bankruptcy.
(i) Voluntary. the Borrower, any Guarantor or any Restricted Entity
shall (A) commence any proceedings (including a notice of intention
or a proposal under the Bankruptcy and Insolvency Act (Canada) and
an application for a compromise or arrangement under the Companies'
Creditors Arrangement Act (Canada) or any successor or equivalent
legislations) or a voluntary case under the US Federal bankruptcy
laws (as now or hereafter in effect), (B) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, (C) consent to or fail to contest in a timely
and appropriate manner an order for relief or any petition filed
against it in any proceedings or involuntary case under such
bankruptcy laws or other laws, (D) apply for, or consent to, or fail
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Confidential
to contest in a timely and appropriate manner, the appointment of,
or the taking of possession by, a receiver, custodian, trustee,
liquidator or the like of itself or of a substantial part of its
assets, domestic or foreign, (E) admit in writing its inability to
pay, or generally not be paying, its debts (other than those that
are the subject of bona fide disputes) as they become due, (F) make
a general assignment for the benefit of creditors, or (G) take any
corporate action for the purpose of effecting any of the foregoing;
(ii) Involuntary. (A) any proceedings or case shall be commenced against
the Borrower, any Guarantor or any Restricted Entity or all or a
substantial part of the property of the Borrower, any Guarantor or
any Restricted Entity seeking (1) relief under the laws referred to
in paragraph (i) above (as now or hereafter in effect) or under any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, or
(2) the appointment of a trustee, receiver, custodian, liquidator or
the like of the Borrower, any Guarantor or any Restricted Entity,
and such proceedings or case shall continue undismissed and unstayed
for a period of 45 days, or (B) an order granting the relief
requested in such proceedings or case against the Borrower, any
Guarantor or any Restricted Entity shall be made, granted or
entered;
provided, however, in the case of any Restricted Entity other than the
Borrower or any Guarantor, that the foregoing circumstances or events have
a Material Adverse Effect;
(f) Judgments. a final judgment or order shall be entered against the Borrower
or any Guarantor or Restricted Entity by any court, and (i) in the case of
a judgment or order for the payment of money, (A) such judgment or order
shall be for the payment of money in excess of US$25,000,000 (to the
extent not fully covered by valid and collectible insurance provided by
solvent, unaffiliated insurers) and (B) either (y) such judgment or order
shall continue undischarged and unstayed for a period of 60 days or (z)
enforcement proceedings shall have been commenced upon such judgment or
order, and (ii) in the case of any judgment or order for other than the
payment of money, such judgment or order could, together with all other
such judgments or orders, have a Materially Adverse Effect on the Company
and the Restricted Entities taken as a whole;
(g) ERISA. (i) any termination event shall occur with respect to any Benefit
Plan of the Borrower or any US Guarantor or Restricted Entity or any of
their respective ERISA affiliates, (ii) any accumulated funding deficiency
(as defined in section 302 of ERISA) shall exist at any time with respect
to any such Benefit Plan in an amount in excess of an amount equivalent to
4% of the Company's Equity at such time, (iii) any Person shall engage in
any prohibited transaction involving any such Benefit Plan, (iv) the
Borrower or any US Guarantor or Restricted Entity or any of its ERISA
affiliates shall be in "default" (as defined in ERISA Section 4219(c)(5))
with respect to payments owing to any such Benefit Plan that is a
multiemployer Benefit Plan as a result of such Person's
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Confidential
complete or partial withdrawal (as described in ERISA Section 4203 or
4205) therefrom, (v) the Borrower or any US Guarantor or Restricted Entity
or any of its ERISA affiliates shall fail to pay when due an amount that
is payable by it to the PBGC or to any such Benefit Plan under Title IV of
ERISA, or (vi) a proceeding shall be instituted by a fiduciary of any such
Benefit Plan against the Borrower or any US Guarantor or Restricted Entity
or any of its ERISA affiliates to enforce ERISA Section 515 and such
proceeding shall not have been dismissed within 30 days thereafter, except
that no event or condition referred to in clauses (i) through (vi) shall
constitute an Event of Default if it, together with all other such events
or conditions at the time existing, has not subjected, and in the
reasonable determination of the Majority Lenders will not subject, the
Borrower or any US Guarantor or Restricted Entity to aggregate
liabilities, at any time, that exceed an amount equivalent to 4% of the
Company's Equity at such time;
(h) Invalidity or Unenforceability. a court of competent jurisdiction shall
render a judgment or order, or any law, ordinance, decree or regulation
shall be enacted, the effect of which is to render any material provision
of the Loan Documents invalid, not binding or unenforceable or any Loan
Document shall cease to be in full force and effect and valid and
enforceable, provided that if such matter is (in the opinion of the
Administrative Agent) capable of being remedied, the Borrower shall have
failed, within 30 days thereafter to furnish or cause to be furnished to
the Lenders replacement documents evidencing and, where applicable,
securing the Indebtedness under the Loan Documents which are adequate in
the opinion of the Administrative Agent, or if any Loan Party gives notice
of termination of, or otherwise attempts to terminate or deny its
liability under a Loan Document;
(i) Environmental Claims. the Borrower, any Guarantor or Restricted Entity or
any environmental affiliate thereof shall have failed to obtain any
environmental approval necessary for the management, use, control,
ownership or operation of its business, property or assets or any such
environmental approval shall be revoked, terminated, or otherwise cease to
be in full force and effect, in each case, if the existence of such
condition could reasonably be expected to have a Materially Adverse Effect
on the Company and the Restricted Entities, taken as a whole; and
(j) Material Adverse Effect. an event or circumstance shall exist which has a
Material Adverse Effect.
<PAGE>
CONFIDENTIAL
QUEBECOR PRINTING (USA) HOLDINGS INC.
[GRAPHIC OMITTED]
ONE STEP TRANSACTION
SUMMARY OF PRINCIPAL
TERMS AND CONDITIONS
US$1,250,000,000
credit facilities
[GRAPHIC OMITTED]
as of July 12, 1999
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Confidential
QUEBECOR PRINTING (USA) HOLDINGS INC.
Summary of Principal Terms and Conditions
(Definitions of certain capitalized terms used herein are found in Appendix I)
Transaction
Description: The Credit Facilities are for the purpose of providing
funding to Quebecor Printing Inc. (the "Company") for
the purpose of acquiring World Color Press, Inc., a
Delaware corporation (the "Target"), in a one-step
transaction, and related purposes. The acquisition of
the Target will be made by a merger of Printing
Acquisition Inc., a newly formed, indirectly wholly
owned Subsidiary of the Company ("Acquisition Sub"),
with the Target (the "Merger"). The consideration paid
to the existing stockholders of the Target for their
shares of common stock ("Shares") upon the consummation
of the Merger will be a combination of US$22.00 in cash
(the "Cash Portion Per Share") and .6311 shares of
common stock of the Company per Share. The aggregate
cash consideration paid for Shares in the Merger
(including any stock repurchase and payments in respect
of the cancellation of stock options) shall not exceed
US$890,000,000 in any event. The Merger shall be
pursuant to an Agreement and Plan of Merger, dated as of
July 12, 1999, among the Company, Acquisition Sub and
the Target (the "Merger Agreement") and a Tender, Voting
and Option Agreement, dated as of July 12, 1999, among
the Company and KKR Associates ("KKR"), certain
investment partnerships controlled by KKR and certain
management stockholders of Target owning approximately
24.5% of the Shares in the aggregate (the "Tender,
Voting and Option Agreement").
Borrower: Quebecor Printing (USA) Holdings Inc. ("US Holdings"), a
Delaware corporation and an indirectly wholly owned
Subsidiary of the Company.
Guarantors: Each of the Company and Quebecor Printing Holding
Company, a Delaware corporation ("QPHC") will provide an
unconditional joint and several guarantee of the
obligations under the Credit Facilities, to the fullest
extent permitted by applicable law (the "Guarantee
Agreement").
Loan Parties: The Borrower together with the Guarantors.
Lead Arranger and
Administrative
Agent: Royal Bank of Canada or any of its affiliates.
Co-Syndication
Agents: Bank of America Canada, Bank of Montreal and Canadian
Imperial Bank of Commerce or any of their respective
affiliates.
Arrangers: Lead Arranger and Co-Syndication Agents.
Arrangers'
Commitments: The Arrangers will each commit US$312,500,000.
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Lenders: The Arrangers and a group of financial institutions (all
being resident in the US or in other non-withholding tax
jurisdictions) to be agreed to by the Arrangers in
consultation with the Company.
Credit Facilities: US$1,250,000,000.
Purpose: All proceeds (a) to be loaned or funded by Borrower to
Acquisition Sub to finance the acquisition of the Target
pursuant to the Merger, to pay transaction and
restructuring costs and to be available for general
corporate purposes and (b) to be loaned by Borrower to
Target to repay indebtedness owing under Target's
existing bank credit agreement and to pay the purchase
price of any Convertible Notes tendered for purchase.
Availability: Tranche A: US$650,000,000 as a single draw term loan to
be drawn on the Merger Funding Date and payable in full
on September 8, 2000, except if a second request for
additional information is made by either the Federal
Trade Commission or the Department of Justice with
respect to HSR, on the earlier of the first anniversary
of the Merger Funding Date and December 8, 2000;
provided that US$300,000,000 may be extended at
Borrower's option for a 1-year term payable in full on
September 8, 2001, the second anniversary of the Merger
Funding Date or December 8, 2001, as the case may be
("Tranche A Extension Period").
Tranche B: US$450,000,000 (US$100,000,000 of which shall
be used to repay indebtedness owing under Target's
existing bank credit agreement) as a three (3) year
revolving credit facility payable in full at maturity.
Tranche C: US$150,000,000 (which shall be used to
purchase the Convertible Notes) as a 364-day
non-revolving credit facility to be drawn within 120
days after the Merger Funding Date and payable in full
at maturity.
The maximum aggregate amount available under both
Tranche A and B to finance the acquisition of the Shares
(including any stock repurchase and payments in respect
of the cancellation of stock options) pursuant to the
Merger shall not exceed US$890,000,000.
Borrowing Options: US Libor and US Base Rate.
Fees and Interest
Rates: As set forth in Appendix II.
Conversion: A borrowing may be converted into another basis of
borrowing provided that Libor Loans may only be
converted on their respective maturity dates and the
minimum amounts required for an original borrowing are
met.
Prepayment or
Cancellation: The Borrower shall first prepay Tranche C and then
Tranche A in amount(s) equal to all net cash proceeds
from Capital Market Transactions.
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The Borrower may prepay and/or cancel undrawn portions
of the Credit Facilities without penalty upon five (5)
business days prior written notice to the Administrative
Agent, and in minimum amounts of US$10 million or any
integral multiple of US$1 million in excess thereof.
Amounts cancelled may not be reinstated.
The Borrower shall reimburse each Lender for any loss,
cost or expense (including without limitation the cost
to each Lender of redeploying funds obtained to fund or
maintain outstanding Libor Loans) incurred in respect of
outstanding Libor Loans as a result of the prepayment of
all or any portion thereof prior to the expiry of a
related Libor interest period.
Documentation: The Credit Facilities shall be subject to the
negotiation, execution and delivery of loan
documentation* satisfactory to all parties thereto. The
terms and conditions of such loan documentation shall
contain clauses customary to these types of facilities
and will include, without limitation, conditions
precedent, representations and warranties, affirmative
and negative covenants, including negative pledge and
pari passu clauses, protective covenants, standard
illegality, increased cost and yield protection
provisions and events of default.
The negotiation, execution and delivery of the Guarantee
Agreement shall be satisfactory to all parties thereto
in form and substance.
Security: The Credit Facilities and the Guarantee Agreement are
unsecured and all amounts outstanding under the Credit
Facilities and Guarantee Agreement shall rank pari passu
with each Loan Party's other unsecured and
unsubordinated indebtedness.
Merger Funding Date: The date of the initial funding of the Credit
Facilities, which shall not be later than January 31,
2000.
Conditions
Precedent to
Initial Funding of
the Credit
Facilities: The following conditions shall have been satisfied prior
to, or concurrently with, the initial funding of Credit
Facilities:
- ----------
* Including one or more Credit Agreements.
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(a) The Company, Acquisition Sub and the Target shall
have entered into the Merger Agreement, which has
been received by the Arrangers, and the Merger
Agreement shall have been approved by all
necessary corporate action of the Company,
Acquisition Sub and the Target. None of the terms
of the Merger Agreement shall have been amended,
waived or modified without the approval of the
Arrangers and the Lenders (other than non-material
amendments, waivers or modifications to such terms
(other than the conditions to consummation of the
Merger) that do not in the aggregate materially
affect the interests of the Arrangers and the
Lenders in the Credit Facilities or the likelihood
of consummation of the Merger ("Non-Material
Changes")), and there shall not have occurred or
exist any material breach or default thereunder.
The representations and warranties contained in
the Merger Agreement shall be true and correct in
all material respects. All documentation relating
to the Merger shall be in form and substance
satisfactory to the Arrangers and the Lenders.
(b) The Merger Agreement shall have been approved by
the vote of stockholders owning a Minimum Number
of Shares, all required approvals by stockholders
of the Company, Acquisition Sub and Target in
connection therewith shall have been obtained, and
the Merger shall have been duly consummated in
compliance with all applicable laws and in
accordance with the Merger Agreement.
(c) The Company and KKR, certain investment
partnerships controlled by KKR and certain
management stockholders of Target owning
approximately 24.5% of the Shares in the aggregate
shall have entered into the Tender, Voting and
Option Agreement, which has been received by the
Arrangers. None of the terms of the Tender, Voting
and Option Agreement shall have been amended,
waived or modified without the approval of the
Arrangers and the Lenders (other than Non-Material
Changes), and there shall not have occurred or
exist any material breach or default thereunder.
(d) The Company, Borrower and Acquisition Sub
collectively shall have cash or cash equivalents
on hand sufficient to pay an amount within the
range of Target's reasonable possible liability
with respect to any exercise of dissenters' rights
as to the Merger.
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(e) All governmental and third party consents and
approvals necessary in connection with the Merger
and the related financings shall have been
obtained (without the imposition of any conditions
that are not acceptable to the Arrangers and the
Lenders) and shall remain in effect, and all
applicable waiting periods (including any required
for HSR antitrust clearance) shall have expired or
been earlier terminated without, in any such case,
any action having been taken or agreed to by the
Company, Borrower, Acquisition Sub and/or Target
or having been required by any Canadian, US or
foreign governmental authority which has resulted
in or which could reasonably be expected to result
in a Material Adverse Effect (assuming for these
purposes that Target is a Restricted Entity) and
no law or regulation shall be applicable in the
judgment of the Arrangers or the Lenders that
restrains, prevents or imposes materially adverse
conditions upon the Merger or any related
transaction. The Company shall have received all
consents required for entering into the Merger
Agreement and for the consummation of the
transactions contemplated thereby, and Quebecor
Inc. and Caisse de depot et placement du Quebec
shall have delivered a written consent to approve
the Merger Agreement and the consummation of the
transactions contemplated thereby (including the
issuance of Company stock pursuant to the Merger).
The Merger shall not be subject to the
restrictions imposed by Section 203 of the
Delaware General Corporation Law or any other
state or foreign takeover statute.
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(f) Except with respect to actions, suits,
investigations, litigation or proceedings of the
Company, the Target and their respective
Subsidiaries disclosed in the most recent Forms
10-K issued by the Company and the Target and the
Forms 10-Q issued subsequent to such Forms 10-K
prior to the date of the Arrangement Letter (the
"Public Information") and in the disclosure
schedules to the Merger Agreement (the "Merger
Disclosure") (the "Existing Actions"), there shall
exist no action, suit, investigation, litigation
or proceeding pending or threatened in any court
or before any arbitrator or governmental
instrumentality that (i) has or could reasonably
be expected to have a material adverse effect on
business, condition (financial or other),
operations, performance or properties of (A) the
Company and its Subsidiaries taken as a whole
(other than the Target and its Subsidiaries) and
(B) the Target and its Subsidiaries taken as a
whole or (ii) enjoins, seeks to enjoin, delays the
consummation of, or imposes material adverse
conditions on, the Merger or any transaction
contemplated thereby or (iii) could reasonably be
expected to have a Material Adverse Effect on the
Credit Facilities or a material adverse effect on
the Tender, Voting and Option Agreement. There has
occurred no change or development in the Existing
Actions from that disclosed in the Public
Information or the Merger Disclosure, which change
or development, when aggregated with all such
changes or developments, has or could reasonably
be expected to have the consequences referred to
in the preceding sentence.
(g) All documentation evidencing the Credit Facilities
(the "Loan Documents") shall have been completed
in form and substance satisfactory to the
Arrangers and the Lenders and duly executed by
each Loan Party.
(h) Concurrently with the Merger, QPI LLC shall
advance to Target an amount which together with
the US$100,000,000 loan made by US Holdings to
Target from proceeds drawn under Tranche B shall
be used to repay, concurrently with the initial
funding of the Credit Facilities, indebtedness of
the Target owing under Target's existing bank
credit agreement and the credit facilities
thereunder shall be concurrently cancelled.
(i) The Arrangers and the Lenders shall have received
a copy of the fairness opinion received by the
Target relating to the Merger.
(j) All capital stock of Borrower and Acquisition Sub
shall be owned directly or indirectly by the
Company free and clear of any lien, charge or
encumbrance.
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(k) There shall have occurred no Material Adverse
Change with respect to the Company (excluding the
Target and its Subsidiaries) or the Target since
March 31, 1999.
(l) The Administrative Agent shall have received for
each Lender (i) satisfactory opinions of counsel
to the Borrower, counsel to Acquisition Sub and
counsel to the Guarantors as to the transactions
contemplated hereby (including, without
limitation, compliance with all applicable laws
and regulations, including all applicable
requirements and regulations of the Board of
Governors of the Federal Reserve System (including
Regulations T, U and X thereunder) and no breach
of, or default under, agreements for borrowed
money in a principal amount of US$20,000,000 or
more, including the Existing Indentures and (ii)
such charter documents, corporate resolutions,
certificates and other documents as the
Administrative Agent shall reasonably request,
including, without limitation, a certificate of
insurance, an officer's compliance certificate
regarding, inter alia, financial statements,
defaults, no breach of or default under Existing
Indentures, and a listing of all actions, suits,
arbitration proceedings pending or, to the best
knowledge of the Company, threatened involving any
of the Loan Parties, which, separately, represents
an exposure in excess of US$6,500,000 as
reasonably determined by the Company.
(m) There shall exist no default under any of the Loan
Documents, and the representations and warranties
of the Loan Parties therein shall be true and
correct immediately prior to, and after giving
effect to, funding.
(n) All accrued reasonable fees and expenses of the
Arrangers (including the fees and expenses of
counsel to the Arrangers and the Administrative
Agent, if any) shall have been paid.
(o) S&P, through its rating evaluation service, shall
have issued a definitive rating of BBB- (or
higher) for the senior unsecured long-term
indebtedness of the Company after giving effect to
the consummation of the Merger, the Credit
Facilities and the transactions contemplated
thereby.
(p) Either (i) the QPI Amendment has become effective
or (ii) the Existing QPI Facility has been
terminated and replaced with a new facility on
substantially the same terms and conditions except
for the inclusion of the amendments contemplated
by the QPI Waiver Letter.
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(q) US Holdings shall have taken such action as
necessary to cause the amount of proceeds of Loans
that are being lent to Acquisition Sub to equal
75% of the maximum amount of the Restricted
Payments permitted under and as defined in Section
4.8 of the 7 3/4% Indenture and the 8 3/8%
Indenture and otherwise in compliance with the
terms of such Indentures to the extent such
maximum amount is at least US$100,000,000. If such
maximum amount is less than US$100,000,000, then
the amount of the proceeds of Loans lent to
Acquisition Sub may be zero.
(r) (i) US Holdings shall have delivered to the
Administrative Agent for each Lender an officer's
certificate setting forth in reasonable detail the
calculation of the maximum amount of Restricted
Payments permitted under and as defined in Section
4.8 of the 7 3/4% Indenture and the 8 3/8%
Indenture and demonstrating compliance therewith
and, in addition, otherwise confirming compliance
with the other negative covenants of such
Indentures, in each case, as of the Merger Date
and (ii) US Holdings shall have delivered to the
Administrative Agent for each Lender an
unqualified opinion of Arnold & Porter dated the
Merger Date that no breach or default has occurred
under any of the Existing Indentures as a result
of the loans to be made by US Holdings to
Acquisition Sub described in paragraph (q) above
or the repayment of any thereof.
Condition Precedent
to all Borrowings: (a) Notice of Borrowing;
(b) Bringdown and accuracy of representations and
warranties; and
(c) No default or Event of Default.
Representations and
Warranties: Each Loan Party shall provide representations and
warranties (provided that each representation and
warranty, when made by a Loan Party other than the
Company shall apply only to such Loan Party and its
Subsidiaries which are Restricted Entities), which shall
include, without limitation, the following:
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To be Made as of the Execution and Delivery of the
Credit Agreement:
(a) Each of the Loan Parties is a corporation (or a
partnership, as the case may be) which is duly
incorporated (or constituted, as applicable) and
has the necessary corporate power and authority to
carry on its business as presently conducted and
as proposed to be conducted in connection with and
following the consummation of the Merger and the
other transactions contemplated in the Transaction
Documents and, to the extent applicable, enter
into and perform the Loan Documents to which it is
a party;
(b) the Credit Agreement and Guarantee Agreement and
all ancillary Loan Documents are duly authorized
by all necessary corporate and other actions and
constitute valid and legally binding obligations
of the Loan Parties;
(c) the execution, delivery and performance of the
Credit Agreement and Guarantee Agreement will not
result in any violation of the charter or the
by-laws of any Loan Party, result in a breach of
any indenture, trust, deed, loan, credit, note or
similar agreement (except, prior to the Merger
Funding Date, for any breach under the Existing
QPI Facility for which a waiver has been requested
pursuant to the QPI Waiver Letter) or of any
applicable law or regulation or any order,
injunction, decree, determination or award of any
court or governmental authority, or result in the
creation of any lien upon the assets of the
Company or any Restricted Entity;
(d) the audited consolidated financial statements of
the Company for the fiscal year ended December 31,
1998 are complete and correct, have been prepared
in accordance with Canadian generally accepted
accounting principles and fairly represent the
financial condition of the Company and its
Subsidiaries as of the date thereof; since
December 31, 1998, there has been no change in the
consolidated financial condition of the Company
from that set forth in the said consolidated
financial statements which could have a Material
Adverse Effect;
(e) except with respect to the Existing Actions, there
are no actions, suits or arbitration proceedings
pending or, to the best knowledge of each Loan
Party, threatened involving the Company or any
Restricted Entity which could, if determined
adversely, separately or in the aggregate, have a
Material Adverse Effect on the business of the
Company and its Restricted Entities, taken as a
whole or purports to affect the legality, validity
or enforceability of any of the Loan Documents;
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(f) the Company and each Restricted Entity and their
respective businesses and operations (i) are
materially in compliance with all applicable laws,
including environmental, investment, competition
and anti-trust laws, etc., (ii) have all necessary
consents, authorizations, approvals, orders,
certificates, and permits from, and have made all
necessary filings (including tax filings, subject
to materiality and good faith contestations) with,
all federal, provincial, territorial, state and
local authorities to conduct their business,
except to the extent that the failure to obtain or
file same or that any non-compliance with
applicable laws would not have a Material Adverse
Effect;
(g) no event has occurred and is continuing which
constitutes an Event of Default or would
constitute an Event of Default but for the
requirement that notice be given or time elapse or
both;
(h) the Company has taken such reasonable measures to
ensure that passage to the Year 2000 will not
result in major disruptions of its operations or
those of its Restricted Entities; the
effectiveness of these measures, however, is
contingent on the Year 2000 compliance of
suppliers, customers and other third parties
dealing with the Company and its related
companies, including its Subsidiaries;
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(i) all Subsidiaries of the Company, their
jurisdiction of incorporation and their issued
capital shall be set forth in a schedule to the
Credit Agreement. Neither the Company nor any of
its Subsidiaries which is a Restricted Entity is,
directly or indirectly, bound by or subject to any
consensual restriction limiting the ability
(whether by covenant, event of default,
subordination or otherwise) of the Company or any
Restricted Entity to (i) pay or make the maximum
dividends permitted by law to its parent entity,
(ii) pay any obligation owed to the Company or any
Restricted Entity, (iii) make any loans or
advances to or investments in the Company or in
any Restricted Entity, (iv) transfer any of its
property or assets to the Company or any
Restricted Entity or (v) create any lien upon its
property or assets whether now owned or hereafter
acquired or upon any income or profits therefrom,
except any such restrictions applicable to (a)
Imprimeries Didier-Quebecor, S.A. (France) and its
Subsidiaries and (b) any other Restricted Entity
(other than a Loan Party), whose assets, singly or
when taken together with the assets of all
Restricted Entities (other than a Loan Party)
subject to such restrictions, do not exceed at any
time 10 % of the consolidated assets of the
Company, as determined in accordance with GAAP,
and (c) the Target and its Subsidiaries, when it
becomes a Restricted Entity, with respect to any
restriction contained in Sections 4.7 (Limitations
on Restricted Payments), 4.8 (Dividend and Payment
Restrictions), 4.10 (Limitations on Sales of
Assets), 4.11 (Transactions with Affiliates), 4.12
(Limitations on Liens), 4.13 (Investments in
Unrestricted Subsidiaries) and 4.15 (Limitation on
Other Subordinated Indebtedness) of the 7 3/4%
Indenture and the 8 3/8% Indenture. No Restricted
Entity has outstanding any securities convertible
in capital stock nor rights to subscribe or other
agreements for the subscription of Capital
Securities that, if exercised or converted, would
change the Restricted Entity into a Non-Restricted
Entity;
(j) no required filings;
(k) ownership of property, including intellectual
property, and absence of liens except Permitted
Encumbrances;
(l) labor matters not to have a Material Adverse
Effect;
(m) accuracy of financial statements and other
information;
(n) material compliance with benefit and pension plan
laws and ERISA;
(o) environmental matters would not result in a
Material Adverse Effect;
(p) solvency of Loan Parties; and
(q) pari passu ranking.
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To be Made as of the Merger Funding Date:
(a) The terms and conditions of the Merger as set
forth in the Merger Documents have not been
amended, waived or modified without the approval
of the Arrangers and the Lenders (other than
Non-Material Changes). As of the Merger Date, all
conditions precedent to the consummation of the
Merger pursuant to the Merger Agreement have been
satisfied (or waived, with the consent of the
Arrangers and the Lenders). As of the Merger Date,
no material breach of any convenant by any of the
parties to the Merger Agreement has occurred and
no action has been taken by any competent
authority which restrains, prevents or imposes
material adverse conditions upon, or seeks to
restrain, prevent or impose material adverse
conditions upon, the Merger. Each of the
representations and warranties of the Company,
Acquisition Sub and Target contained in the Merger
Agreement is true and correct in all material
respects;
(b) the Certificate of Merger executed by Acquisition
Sub and Target has been filed with the Secretary
of State of Delaware and has been filed or
recorded in each other place wherein it is
required to be so filed or recorded, in each case
evidencing the consummation of the Merger. Such
Certificate of Merger complies as to form and
substance with the laws of the State of Delaware
and the Merger has been duly consummated in
compliance with all applicable law;
(c) since March 31, 1999, there has been no event,
change or other occurrence that has or could
reasonably be expected to have a Material Adverse
Effect or a Material Adverse Change with respect
to Target.
(d) The amount of cash to be paid with respect to one
Share in the Merger does not exceed the Cash
Portion Per Share and the aggregate amount paid
for all Shares pursuant to the Merger Agreement
(including any stock repurchase or cancellation of
options) does not exceed US$890,000,000.
(e) each of the Company, Acquistion Sub and Target has
the requisite corporate power and authority to (i)
execute, deliver and perform each of the Merger
Documents to which it is a party and (ii) to file
the Merger Documents filed by it, or to be filed
by it, with any governmental authority;
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(f) the execution, delivery and performance (or
filing, as the case may be), of each of the Merger
Documents which have been executed and to which
the Company if required for the stockholders,
Acquisition Sub or Target is a party and the
consummation of the transactions contemplated
thereby, have been duly approved by the board of
directors and the stockholders of each of the
Company (if required for the stockholders),
Acquisition Sub and Target, and the borrowings to
be made by US Holdings to be loaned or funded to
Acquisition Sub and the Target and the
consummation of the transactions contemplated
hereby have been approved by the board of
directors of US Holdings, and such approvals have
not been rescinded, revoked or modified in any
manner. No other corporate action or proceedings
on the part of the Company, Acquisition Sub,
Borrower or Target is necessary to consummate such
transactions.
(g) each of the Merger Documents to which the Company,
Acquisition Sub or Target is a party has been duly
executed or delivered (or filed) on behalf of the
Company, Acquisition Sub or Target, as the case
may be, and constitutes its legal, valid and
binding obligation, enforceable against such
Person in accordance with its terms, is in full
force and effect and no term or condition thereof
has been amended, modified or waived from the
terms and conditions contained in the Merger
Documents delivered to the Administrative Agent
without the prior written consent of the Arrangers
and the Lenders (other than Non-Material Changes).
Each of the Company and its Subsidiaries and (to
the best knowledge of the Borrower) all other
parties thereto have performed and complied, or
shall perform and comply, with all the material
terms, provisions, agreements and conditions set
forth in the Merger Documents and required to be
performed or complied with by such parties on or
before the Merger Funding Date, and no material
breach of any covenant by any such party exists
thereunder and no action has been taken by any
competent governmental authority which restrains,
prevents or imposes material adverse conditions
upon, or seeks to restrain, prevent or impose
material adverse conditions upon, the Merger;
(h) each of the representations and warranties of the
Company, the Acquisition Sub and Target contained
in the Merger Agreement is true and correct in all
material respects other than, with respect to
Target's representations and warranties, such
failures to be true and correct that will not
constitute a Material Adverse Change with respect
to Target;
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Confidential
(i) the representations and warranties of each of
Company and its Subsidiaries contained in the
Transaction Documents and Loan Documents, and all
certificates and documents delivered to the
Arrangers and the Lenders pursuant to the terms of
the Loan Documents, do not contain any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the
statements contained herein or therein, in light
of the circumstances under which they were made,
not misleading. None of the Loan Parties has
intentionally withheld any fact from the Arrangers
or any Lender in regard to any matter which shall
have or is reasonably likely to have a Material
Adverse Effect;
(j) none of the Company or any of its Subsidiaries is
engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock
(as defined in Regulation U of Board of Governors
of the Federal Reserve System);
(k) the consummation of the Merger and the
transactions contemplated by the Transaction
Documents will not impair the ownership of or
rights under (or the license or other right to
use, as the case may be) any permits and
governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how or
processes by any of the Company and its
Subsidiaries in any manner which has or is likely
to have a Material Adverse Effect;
(l) the financial forecasts Number 31 received by the
Arrangers on July 7, 1999 giving effect to the
transactions contemplated in the Merger Agreement
prepared by the Management of the Company
("Management") and the pro forma estimated balance
sheets of the Company and its Subsidiaries
(including the Target and its Subsidiaries) at the
Merger Date giving effect to the transactions
contemplated in the Merger Agreement, have been
prepared in good faith, are based on facts and
assumptions believed to be reasonable by
Management, and employ methodology believed to be
reasonable by Management under the circumstances;
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(m) the execution, delivery, and performance by the
Company, Acquisition Sub, Borrower or Target of
the Transaction Documents and the Loan Documents
to which it is or may become a party, the
consummation of the transactions contemplated
thereby and compliance with the terms and
provisions thereof and the making and repayment of
the Loans and the intercompany loans related
thereto contemplated hereby, do not and will not
(i) constitute a tortious interference with any
contractual obligation of any Person, (ii)
conflict with, violate, result in a breach of, or
constitute (with or without notice or lapse of
time or both) a default under the charter, the
by-laws, or any indenture (including, without
limitation, the Existing Indentures), trust deed,
loan, credit, note or similar agreement or
instrument of any Loan Party, Restricted Entity or
Target, (iii) violate or conflict with any
applicable law or regulation or any order,
injunction, decree, determination or award of any
court or governmental authority, or (iv) result in
the creation of any lien upon the assets of any
Loan Party, Restricted Entity or Target, other
than, with respect to Target's representations and
warranties set forth in clauses (ii) (other than
with respect to the charter, by laws and Existing
Indentures), (iii) and (iv) of this paragraph (m),
such exceptions as will not result in a Material
Adverse Change with respect to Target; and
(n) the Company, Borrower and Acquisition Sub
collectively have cash or cash equivalents on hand
sufficient to pay an amount within the range of
Target's reasonable possible liability with
respect to any exercise of dissenters' rights as
to the Merger.
Covenants: See Appendix III
Financial Covenants: See Appendix III
Events of Default: See Appendix IV
Participations and
Assignments: To be permitted with the Company's consent, not to be
unreasonably withheld, for amounts not less than US$10
million, provided that following a partial assignment,
the relevant Lender shall have retained a commitment of
not less than US$10 million.
Majority Lenders: Lenders constituting more than 50% of total Loans
outstanding under the Credit Facilities, or if no Loans
are outstanding, Lenders constituting more than 50% of
total commitments.
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Waivers and
Amendments: The consent of all Lenders shall be required under the
Loan Documents for any amendment or waiver relating to:
(a) any decrease in rates/margin or fees or payments;
(b) amount of any Lender's commitment;
(c) term of the Credit Facilities;
(d) a change of the Borrower or an assignment or
transfer of its rights or obligations under the
Credit Facilities;
(e) the types of Borrowings available;
(f) a change in the definition of Majority Lenders;
and
(g) a change in a Guarantor and/or the Guarantee
Agreement.
Expenses: All costs and expenses of the Arrangers (including but
not limited to legal fees and disbursements) relating to
due diligence, appraisal, audit, insurance, duplication,
transportation, computer, messenger, consultants' cost
and expenses, the negotiation and preparation of the
Loan Documents and syndication and operation of the Loan
Documents are for the account of the Borrower,
regardless of whether or not the Loan Documents are
signed. All reasonable expenses of the Administrative
Agent and the Lenders in enforcing or preserving the
rights under the Loan Documents are for the account of
the Borrower.
Taxes: All payments by the Borrower will be made free and clear
of all present and future taxes, with no withholdings or
deductions whatsoever and the Borrower will provide the
appropriate indemnity in this regard. The Borrower will
also be responsible for the due payment of any levies,
duties or charges in connection with the Loan Documents.
Increased Costs: Loan Documents will include usual and customary
provisions requiring the Borrower to reimburse the
Lenders for any increased costs (including costs of
complying with capital adequacy guidelines) which are
incurred as a result of regulatory changes announced
subsequent to the signing date of the Credit Agreement.
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Indemnity: Standard indemnification by the Loan Parties of the
Arrangers, Administrative Agent and Co-Syndication
Agents, and the Lenders and their respective affiliates
and their respective directors, officers, employees,
attorneys, agents and controlling persons against any
loss, liability, cost or expense arising out of or in
connection with any investigation, litigation or
proceeding or the preparation of any defense with
respect thereto arising out of or in connection with the
Loan Documents, the Transaction Documents, the Merger or
other transactions contemplated hereby or thereby, or
any use made or proposed to be made with the proceeds of
the Credit Facilities except if resulting from gross
negligence or willful misconduct.
Governing Law: The laws of the State of New York shall govern the Loan
Documents.
Jurisdiction and
Jury Waiver: The Borrower and each Guarantor will submit to the
non-exclusive jurisdiction and venue of the federal and
state courts of the State of New York and shall have no
right to trial by jury.
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Confidential
APPENDIX I
CERTAIN DEFINITIONS
Acquisition Sub: shall have the meaning set forth in the Transaction
Description.
Arrangement Letter: means the letter agreement dated July 12, 1999 addressed
to the Company from Royal Bank of Canada, Bank of
America Canada, Bank of Montreal and Canadian Imperial
Bank of Commerce, New York Agency.
Benefit Plan: of any Person, means, at any time, any employee benefit
plan (including a multiemployer benefit plan), the
funding requirements of which (under section 302 of
ERISA or section 412 of the Internal Revenue Code of
1986 of the United States of America) are, or at any
time within six years immediately preceding the time in
question were, in whole or in part, the responsibility
of such Person.
Capital Security: means, with respect to any Person, (a) any share of
capital stock of such Person or (b) any security
convertible into, or any option, warrant or other right
to acquire, any share of capital stock of such Person.
Capital Market
Transactions: means any issuance by any Loan Party or Restricted
Entity of debt or equity, including preferred equity, in
the public and/or private markets other than commercial
paper issued under a commercial paper program of the
Company.
Capitalization: means the sum of Debt and Equity.
Cash Portion Per
Share: shall have the meaning set forth in the Transaction
Description.
Convertible
Indenture: means the Indenture pursuant to which the Convertible
Notes were issued by Target.
Convertible Notes: means the 6% Convertible Senior Subordinated Notes due
2007.
Credit Agreement: means the credit agreement(s) evidencing the Credit
Facilities.
Debt: means, without duplication, the aggregate of all
Indebtedness of the Company and its Subsidiaries,
determined on a consolidated basis, in accordance with
Canadian GAAP.
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EBITDA: means, for any period for any Person, the sum of (a) the
net income of such Person for such period before
extraordinary or unusual items and (b) to the extent
deducted in determining the net income of such Person
for such period, interest expense, income taxes (minus
income tax credits), non controlling interest and
depreciation expense and amortization expense of such
Person; provided that any determination of EBITDA with
respect to the Company, for any period which includes a
quarter prior to the Merger Date, shall include EBITDA
of Target based on Target's Form 10-K or Form 10-Q, as
applicable, with respect to any such quarter which
precedes the Merger Date.
8 3/8% Indenture: means the Indenture pursuant to which the 8 3/8% Notes
were issued by Target.
8 3/8% Notes: means the 8 3/8% Senior Subordinated Notes due 2008.
Equity: means the sum of shareholders' equity of the Company and
non-controlling interests of the Company, in each case
determined on a consolidated basis, in accordance with
Canadian GAAP.
Existing Indentures: means the Convertible Indenture, the 8 3/8% Indenture
and the 7 3/4% Indenture.
Existing QPI
Facility: means the Credit Agreement dated as of the 28th day of
April, 1999 made among the Company, and US Holdings, and
USGP, and each of the financial institutions named on
the signature pages thereof, and Royal Bank of Canada
("Royal Bank"), as Administrative Agent, and Royal Bank,
ABN Amro Bank Canada ("ABN Amro"), Bank of America
Canada ("B of A") and Canadian Imperial Bank of Commerce
("CIBC"), as Arrangers, and ABN Amro, B of A and CIBC,
as Joint Syndication Agents, as amended through the date
of the Credit Agreement contemplated hereby.
Financial Company
Restricted Entity: means any Restricted Entity which is a special purpose
finance Subsidiary wholly-owned directly or indirectly
by the Company whose activity is limited to raising
private or public indebtedness, provided that the net
proceeds from all such private or public indebtedness
are remitted to the Company, US Holdings or USGP.
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Guarantee: of any Person means, without duplication, all
guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other
obligations (contingent or otherwise) of such Person: to
pay, purchase, provide funds (whether by the advance of
money, the purchase of or subscription for shares or
other securities, the purchase of assets or services,
the indemnification in respect of letters of credit and
letters of guarantee issued in respect of Indebtedness)
for the payment of, or to make investments in any other
Person or to maintain the capital, working capital,
solvency or general financial condition of any other
Person or to indemnify against the consequences of
default in the payment of, or otherwise be responsible
for, any Indebtedness, damages, losses or liabilities of
any other Person (and "guarantor" shall be construed
accordingly).
The amount of each Guarantee shall be deemed to be an
amount equal to the outstanding amount of the primary
obligation of the obligor to whom the Guarantee relates,
unless the Guarantee is limited to a determinable amount
in which case the amount of such Guarantee shall be
deemed to be such determinable amount.
The word "Guarantee" when used as a verb has the
correlative meaning.
Hedge Agreement: means any swap agreement, cap agreement, collar
agreement, futures contract, forward contract or similar
agreement or arrangement designed to protect against or
mitigate the effect of fluctuations in interest rates,
foreign exchange rates or the prices of commodities.
HSR: means the Hart-Scott-Rodino Antitrust Improvements Act
1976, as amended, and the rules and regulations
thereunder.
<PAGE>
Confidential
Indebtedness: of any Person means, without duplication, (in each case,
whether such obligation is with full or limited
recourse):
(a) any obligation of such Person for borrowed money,
(b) any obligation of such Person evidenced by a bond,
debenture, note or other similar instrument,
(c) any obligation of such Person to pay the deferred
purchase price of property or services, except a trade
account payable that arises in the ordinary course of
business,
(d) any obligation of such Person as lessee under a
capitalized lease,
(e) any obligation of such Person to reimburse any other
Person in respect of amounts drawn or drawable under any
letter of credit or other guarantee (excluding letters
of guarantee for the performance of obligations and any
form of "bid bond") issued by such other Person, whether
contingent or non-contingent,
(f) redeemable preferred shares which are redeemable at
the option of the holder prior to the maturity of the
Credit Facilities,
(g) any obligation of such Person to purchase securities
or other property that arises out of or in connection
with the sale of the same or substantially similar
securities or property,
(h) any Indebtedness of others secured by a lien on any
asset of such Person, and
(i) any indebtedness of others Guaranteed by such
Person.
Loans: means the loans to be made by the Lenders to the
Borrower under the Credit Facilities.
Material Adverse
Change: means, with respect to any Person, any event, change or
other occurrence that has resulted in, or could
reasonably be expected to result in, a material adverse
change in the business, condition (financial or
otherwise), operations, performance or properties of
such Person and its Subsidiaries taken as a whole.
- ----------
* In the Credit Agreement, appropriate representations, warranties and
covenants will contain the following language "any event, change or other
occurrence that has resulted, or could reasonably be expected to result
in,"
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Material(ly)
Adverse Effect: means:
(a) a material adverse change in the assets,
properties, operations, financial condition or
business prospects of the Company and the
Restricted Entities, taken as a whole,* or
(b) any material impairment:
(i) in the ability of any Loan Party to timely
pay any amounts due under the Loan
Documents,
(ii) in the ability of any Loan Party to fulfill
any other covenant or obligation of a
material nature arising under the Loan
Documents, or
(iii) in the validity or enforceability of the
Loan Documents.
Merger: shall have the meaning set forth in the Transaction
Description.
Merger Agreement: shall have the meaning set forth in the Transaction
Description.
Merger Date: means the date upon which the Merger is consummated.
Merger Documents: means the Merger Agreement, any related certificate of
merger (the "Certificate of Merger") all schedules and
exhibits thereto, and any other documents publicly filed
in connection with the Merger.
Minimum Number of
Shares: means the number of Shares equal to no less than the
minimum number of Shares, determined on a fully diluted
basis, necessary to approve the consummation of the
Merger in accordance with the provisions of any
applicable corporate statute, anti-takeover statute or
provision in the Target's certificate of incorporation,
by-laws, etc. or other applicable legal requirement.
- ----------
* In the Credit Agreement, appropriate representations, warranties and
covenants will contain the following language "any event, change or other
occurrence that has resulted, or could reasonably be expected to result
in,"
<PAGE>
Confidential
Non-Recourse
Creditor: means (i) a creditor of a Non-Recourse Subsidiary or of
a Project Vehicle whose recourses are limited, in
respect of any debt or liability of such Non-Recourse
Subsidiary or Project Vehicle to such creditor, to the
cash flow and other assets of such Non-Recourse
Subsidiary or Project Vehicle, to the capital stock of
such Non-Recourse Subsidiary or to the participation of
the Company or any of its Restricted Entities in the
Project Vehicle carrying out the specific Project for
which such Non-Recourse Subsidiary or Project Vehicle
was formed, the whole to the exclusion of any and all
other recourses whether by way of Guarantees or
otherwise against the Company or any of its Restricted
Entities or against any third party having recourse
against the Company or any of its Restricted Entities in
respect of such debt or liability or, (ii) a creditor to
whom is owed by the Company or any of its Restricted
Entities, Indebtedness for borrowed money to finance the
Start-up Costs of a Project carried out by the Company
or such Restricted Entity and whose recourses in respect
of such Indebtedness for borrowed money are limited to
the cash flow and the other assets of such Project (to
the exclusion of any other cash flow or asset).
Non-Recourse
Indebtedness: means Indebtedness for borrowed money (i) contracted for
the purpose of financing the Start-up Costs of a
specific Project carried out (alone or in association
with others) by the Company, any of its Restricted
Entities or by a Non-Recourse Subsidiary or a Project
Vehicle and (ii) due or otherwise owing by the Company
or such Restricted Entity or Non-Recourse Subsidiary or
Project Vehicle to a creditor being a Non-Recourse
Creditor by reason of the Company or such Restricted
Entity or Non-Recourse Subsidiary or Project Vehicle
being indebted or liable to such creditor in respect of
such Indebtedness for borrowed money.
Non-Recourse
Subsidiary: means a direct or indirect Subsidiary of the Company who
meets all of the following conditions:
(i) it was formed to carry out a specific Project,
whether alone or in association with others; and
(ii) its only assets consist of (a) assets relating to
such Project or (b) shares or any other form of
participating interest held, directly or
indirectly, in a Project Vehicle, which in turn
owns assets relating to such Project; and
<PAGE>
Confidential
(iii) it owes to one or more creditors Indebtedness for
borrowed money or it owns (directly or indirectly)
shares or any other form of participating interest
in a Project Vehicle which owes Indebtedness for
borrowed money to one or more creditors, in all
cases contracted for the purpose of financing the
Start-up Costs of such Project or purchasing the
participation of other participants in such
Project, where the recourses of such creditor(s)
in relation to such Indebtedness for borrowed
money are limited to (a) the assets of such
Project or Project Vehicle, (b) capital stock of
such Subsidiary or (c) recourses against such
Subsidiary or Project Vehicle; and
(iv) neither the Company nor any other Restricted
Entity is liable or has issued a Guarantee or has
otherwise obligated itself either directly or
indirectly in respect of debts and liabilities of
such Subsidiary or Project Vehicle otherwise than
by giving to the creditor of such debts or
liabilities and in relation thereto a recourse
limited to (a) the capital stock of such
Subsidiary or (b) the participation of the Company
or any of its Restricted Entities in the Project
Vehicle carrying out the specific Project for
which such Subsidiary or Project Vehicle was
formed,
it being understood and agreed that upon the debts or
liabilities of such Subsidiary to such creditor(s) in
respect of such Indebtedness for borrowed money and any
such Guarantee being repaid, released or otherwise
satisfied, such Subsidiary shall then cease, for all
purposes of the Credit Agreement, to be a Non-Recourse
Subsidiary.
Non-Restricted
Entity: means:
(a) each Person less than 50% plus 1 of the capital
stock of which is owned by the Company, directly
or indirectly through a Restricted Entity, and
(b) each Subsidiary of a Non-Restricted Entity.
Operating
Restricted Entity: means any Restricted Entity other than the US Holdings,
USGP, QPHC and a Financial Company Restricted Entity.
<PAGE>
Permitted
Encumbrances: means:
(a) any lien for taxes, rates, assessments or
governmental charges or levies (i) not at the time
due and delinquent, or (ii) which are due and
delinquent but the validity of which is being
contested in good faith at the time and in respect
of which the Company or the relevant Restricted
Entity shall have set aside on its books reserves
deemed to be adequate therefor and not resulting
in a qualification by the auditors of the Company;
(b) any lien securing the claim of a materialman,
mechanic, carrier, warehouseman or landlord for
labor, materials, supplies or rentals incurred in
the ordinary course of business, but only if
payment thereof shall not at the time be required
to be made in accordance with the Credit Agreement
and foreclosure, distraint, sale or other similar
proceedings shall not have been commenced;
(c) any lien consisting of a deposit or pledge made in
the ordinary course of business in connection
with, or to secure payment of, obligations under
workers' compensation, unemployment insurance or
similar legislation;
(d) any lien existing on (i) any property or asset of
any Person at the time such Person becomes a
Restricted Entity or (ii) any property or asset at
the time such property or asset is acquired by the
Company or a Restricted Entity, but only, in the
case of either (i) or (ii), if and so long as (A)
such lien is and will remain confined to the
property or asset subject to it at the time such
Person becomes a Restricted Entity or such
property or asset is acquired and to fixed
improvements thereafter erected on such property
or asset, (B) such lien secures only the
obligation secured thereby at the time such Person
becomes a Restricted Entity or such property or
asset is acquired and (C) the obligation secured
by such lien is not in default and provided that
such lien is discharged by the Company or the
applicable Restricted Entity, as the case may be,
within 180 days after such Person becomes a
Restricted Entity or such property or asset is
acquired, as the case may be;
(e) easements, rights-of-way, zoning restrictions and
other similar encumbrances incurred in the
ordinary course of business which are not material
in amount, and which, in the aggregate, do not
materially detract from the value of the property
subject thereto or interfere with the ordinary
conduct of the business of the Company or any of
the Restricted Entities;
(f) liens on equipment acquired by the Company or any
Restricted Entity in the ordinary course of
business, provided that (i) such lien secures only
the purchase price of such equipment, (ii) such
lien is confined to such equipment so acquired and
(iii) such lien is discharged by the Company or
the Restricted Entity, as the case may be, or is
otherwise terminated within 180 days after the
installation of such acquired equipment;
(g) cautionary liens on short-term assets transferred
in securitization or factoring transactions;
(h) any lien on the assets of a specific Project
securing Non-Recourse Indebtedness incurred for
purposes of financing such Project and any lien on
the assets of, or the shares or other form of
participating interest held in, any wholly-owned
Non-Recourse Subsidiary to secure Non-Recourse
Indebtedness incurred by such wholly-owned
Non-Recourse Subsidiary to finance the Project
being carried out by such Non-Recourse Subsidiary
or by the Project Vehicle formed to carry out the
Project which such Non-Recourse Indebtedness is
financing;
(i) liens securing existing Indebtedness of
Imprimeries Didier-Quebecor, S.A. (France) and its
Subsidiaries, provided such liens are restricted
to the assets of the debtor of such Indebtedness;
and
(j) liens securing obligations under off-balance sheet
operating leases which are not capitalized leases,
provided such liens are restricted to the relevant
lease or sub-lease and the assets covered thereby.
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Confidential
Person: means any individual, sole proprietorship, corporation,
partnership, trust, unincorporated organization, mutual
company, joint stock company, estate, union, employee
organization, government or any agency or political
subdivision thereof.
Project: means the acquisition, construction and development of
newly acquired assets (which must include tangible
assets) forming an economic unit capable (on the basis
of reasonable initial assumptions) to generate
sufficient cash flow to cover the operating costs and
debt service required to finance the undertaking
relating to such assets over a period of time which is
less than the projected economic life of the assets and
includes any commercial operation for which such assets
were so acquired, constructed or developed and which is
subsequently carried on with such assets by such
economic unit.
Project Vehicle: means a corporate entity or an unincorporated entity,
whether or not having a legal personality (including a
joint-venture, a partnership, a trust, a co-ownership
scheme or other business combination or risk-sharing
scheme) in which the Company or any of its Restricted
Entities owns shares or any other form of ownership or
participating interest and which meets all of the
following conditions:
(i) it was formed to carry out a specific
Project;
(ii) its only assets consist of assets relating
to such Project;
(iii) if such entity is a Subsidiary, it is a
Non-Recourse Subsidiary; and
(iv) neither the Company nor any of its
Restricted Entities is liable or has issued
a Guarantee or has otherwise obliged itself
either directly or indirectly for or in
respect of debts or liabilities incurred to
finance such entity or the Project carried
out by such entity otherwise than by giving
to the creditor of such debts or liabilities
and in relation thereto a recourse limited
to (a) the assets of such Project or (b) its
shares or other form of ownership or
participating interest in such entity.
QPI Amendment: means the amendment to the Existing QPI Facility
contemplated by the QPI Waiver Letter.
QPI LLC: means Quebecor Printing Delaware LLC, a Delaware limited
liability company, all the non-voting common membership
interests of which are owned by USGP and all the voting
preferred membership interests of which are owned by
Quebecor Printing Nova Scotia ULC, a wholly owned
Subsidiary of USGP.
<PAGE>
Confidential
QPI Waiver Letter: means the letter from Royal Bank of Canada to the
lenders under the Existing QPI Facility, in
substantially the form attached to the Arrangement
Letter, describing certain amendments to be made to the
Existing QPI Facility.
Restricted Entity: means any Subsidiary whose capital stock is at least 50%
plus 1 owned directly or indirectly by the Company
(including the US Holdings, USGP, QPHC, any Operating
Restricted Entity and any Financial Company Restricted
Entity).
7 3/4% Indenture: means the Indenture pursuant to which the 7 3/4% Notes
were issued by Target.
7 3/4% Notes: means the 7 3/4% Senior Subordinated Notes due 2009.
S&P: means Standard & Poor's, a division of the McGraw-Hill
Companies, Inc.
Shares: shall have the meaning set forth in the Transaction
Description.
Start-up Costs: means, in relation to a Project, (i) the costs of
acquisition, construction and/or development of the
newly acquired assets forming part of such Project and
which have to be constructed, acquired or developed to
form the economic unit required to be formed to
initially constitute such Project and (ii) the principal
amount of money which, at the inception of the
commercial operations to be conducted with such assets,
is then reasonably estimated as being the amount
required to provide the Project with a sufficient
initial working capital.
Subordinated Notes: means the 7 3/4% Notes and the 8 3/8% Notes.
Subsidiary: means, with respect to any Person, any other Person
(a) securities of which having ordinary voting power
to elect a majority of the board of directors (or
other person having similar functions), or
(b) other ownership interests of which ordinarily
constituting a majority voting interest, are at
the time, directly or indirectly, owned or
controlled by such first Person, or by one or more
of its Subsidiaries, or by such first Person and
one or more of its Subsidiaries.
Target: shall have the meaning set forth in the Transaction
Description.
Tender, Voting and
Option Agreement: shall have the meaning set forth in the Transaction
Description.
Transaction
Documents: means the Merger Agreement and such other agreements and
other related documentation as required to consummate
the Merger, including the Tender, Voting and Option
Agreement.
USGP: means Quebecor Printing Capital GP, a Delaware general
partnership.
<PAGE>
Confidential
US Holdings Merger: means the merger of the surviving corporation of the
Merger with and into US Holdings.
<PAGE>
Confidential
APPENDIX II
FEES AND INTEREST RATES
Commitment Fees: Commencing on the date of execution of the Credit
Agreement, calculated on the unutilized, uncancelled
amount of the Credit Facilities only, at the per annum
rate set out below, on a 360-day basis, payable
quarterly in arrears.
Interest Rates,
Margins and Fees: The margins and the commitment fees will be determined
based on the senior unsecured debt ratings of the
Company as assigned by S&P and Moody's Investors
Service, Inc. ("Moody's") as outlined below which are
denoted in basis points (bps).
If the ratings by both S&P and Moody's are investment
grade (BBB- and Baa3, respectively) or higher, then the
pricing will be determined based on the higher of the
two ratings, provided that if the ratings are more than
one rating category apart, the pricing shall be
established on the basis of one rating category above
the lower rating category of the two.
If the rating by one of S&P and Moody's is investment
grade or higher and the rating of the other is
non-investment grade, pricing shall be based on Ratings
Level V.
If the ratings by both S&P and Moody's are
non-investment grade, pricing shall be based on Ratings
Level VI:*
- --------------------------------------------------------------------------------
Ratings Level I II III IV V VI
- --------------------------------------------------------------------------------
BBB-/Ba1 BB+
S&P Rating A- BBB+ BBB BBB- or Ba1 or
Moody's Rating A3 Baa1 Baa2 Baa3 BB+/Baa3 Lower
- --------------------------------------------------------------------------------
Commitment Fees for Tranches A
and C 8.5 10.0 12.5 15.0 20.0 30.0
- --------------------------------------------------------------------------------
Commitment Fees for Tranche B 12.5 15.0 17.5 20.0 25.0 37.5
- --------------------------------------------------------------------------------
LIBOR Margin for all Facilities 50.0 65.0 80.0 100.0 125.0 175.0
- --------------------------------------------------------------------------------
US Base Rate Margin 0 0 0 0 25.0 75.0
- --------------------------------------------------------------------------------
- ----------
* From the date of execution of the Credit Agreement until a Ratings Level
has been confirmed by both S&P and Moody's, pricing will be based on
Ratings Level IV.
<PAGE>
During the period from the Merger Funding Date to the date
of the US Holdings Merger, the LIBOR Margin and the US Base
Rate Margin in effect will be increased by 12.5 bps and, in
addition, during the Tranche A Extension Period, the LIBOR
Margin and US Base Rate Margin in effect with respect to
Tranche A will be increased by 25.0 bps.
<PAGE>
Confidential
Confidential
APPENDIX III
AFFIRMATIVE AND NEGATIVE COVENANTS
FINANCIAL COVENANTS
INFORMATION COVENANTS
- --------------------------------------------------------------------------------
AFFIRMATIVE COVENANTS
Each Loan Party shall and, in the case of Paragraphs (b), (c), (d), (e), (f),
(g), (j) and (k) below, shall cause each of its subsidiaries that is a
Restricted Entity to:
(a) punctually pay all amounts due at the times and places, and in the manner
specified,
(b) preserve and maintain its corporate or other existence and, if applicable,
all of its other franchises, licenses, rights, privileges, consents and
approvals, except as otherwise permitted hereunder and except to the
extent that the failure to comply with this provision could not reasonably
be expected to have a Material Adverse Effect,
(c) conduct its business in a proper and efficient manner in accordance with
normal industry standards, keep proper books or records and accounts, and
preserve, protect and obtain all intellectual property, and preserve and
maintain in good repair, working order and condition all other properties,
used or useful in the conduct of its business, and obtain and maintain all
licenses, permits and regulatory approvals required for the operations of
its business, except to the extent that the failure to comply with this
provision could not reasonably be expected to have a Material Adverse
Effect,
(d) comply with applicable law, including without limitation, ERISA, the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized
Crime Control Act of 1970 of the United States of America and all
environmental laws and obtain and maintain all necessary environmental
permits, except to the extent that the failure to comply with this
provision could not reasonably be expected to have a Material Adverse
Effect,
(e) pay or discharge when due all taxes and all liabilities that might become
or result in a lien on any of its properties, except to the extent that
the failure to comply with this provision could not reasonably be expected
to have a Material Adverse Effect,
(f) take all action and obtain and maintain all consents and governmental
approvals required so that its obligations under the loan documents will
at all times be legal, valid and binding and enforceable in accordance
with their respective terms,
(g) maintain insurance with such financially sound, independent and reputable
insurance companies, against at least such risks and in at least such
amounts as is customarily
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Confidential
maintained by similar businesses, duly and punctually pay or cause to be
paid the premiums and other sums of money payable in connection therewith
and promptly deliver to the Administrative Agent from time to time upon
reasonable request evidence of such insurance coverage,
(h) use all funds advanced under the Credit Facilities for the purposes
specified under the headings "Purpose" and "Availability",
(i) maintain the Guarantee Agreement in full force and effect and not
terminate or attempt to terminate any Guarantee Agreement until the full,
final and indefeasible payment and termination of the Credit Facilities,
(j) keep under review its operations with a view of assessing its computer
systems consisting of hardware, software and business application systems
containing embedded microchips, and take such reasonable measures to
ensure that its computer systems which are critical to its operations will
be millennium compliant by November 30, 1999, and will continue to
properly function on and after December 31, 1999 provided that the
effectiveness of these measures is contingent on Year 2000 compliance of
suppliers, customers and other third parties dealing with the Company and
its related companies, including its Subsidiaries,
(k) comply with environmental laws, except where non compliance could not
reasonably be expected to have a Material Adverse Effect, and indemnify
the Arrangers and Lenders in respect of any environmental claim (to be
expanded in the Credit Agreement), and
(l) take all action necessary to maintain that all (i) intercompany advances
made by Borrower and QPI LLC to repay Target's indebtedness owing under
its existing bank credit agreement shall, after the Merger, rank senior to
the indebtedness evidenced by the Convertible Notes and the Subordinated
Notes and (ii) indebtedness evidenced by the Convertible Notes and the
Subordinated Notes shall, after the US Holdings Merger, rank pari passu or
junior to all amounts outstanding under the Credit Facilities and all
obligations under the Guarantee Agreement.
The Company Shall:
(a) cause each of S&P and Moody's to review, on a continuing basis, the credit
rating given to the Company (with any change in the credit rating given to
the Company by either S&P or Moody's, to be notified by the Company to the
Administrative Agent in accordance with the Credit Agreement),
(b) after the consummation of the Merger, use its commercially reasonable best
efforts to cause Target to (i) comply in all material respects with all of
its material obligations under the Merger Agreement and (ii) maintain in
full force and effect until the earlier of
<PAGE>
Confidential
one year after the date of consummation of the Merger and (if the
aggregate amount of the Commitments of the Arrangers is then less than
US$675,000,000) the occurrence of the US Holdings Merger, Target's
existing accounts receivable securitization program on substantially the
same terms and conditions and in the same amounts as are in effect as of
the date of execution of the Merger Agreement, provided, if the aggregate
amount of the Commitments of the Arrangers is greater than US$675,000,000,
then the amount of the securitization program may not exceed
US$400,000,000,
(c) after the consummation of the Merger, promptly cause the deregistration
and the delisting of the Shares, and
(d) on each date that the officer's certificate referred to in paragraph (c)
of the Information Covenants is required to be delivered, deliver or cause
US Holdings to deliver to the Administrative Agent for each Lender an
officer's certificate setting forth in reasonable detail the calculation
of the maximum amount of Restricted Payments permitted under and as
defined in Section 4.8 of the 7 3/4% Indenture and the 8 3/8% Indenture
and demonstrating compliance therewith and, in addition, otherwise
confirming compliance with the other negative covenants of such
Indentures.
<PAGE>
Confidential
NEGATIVE COVENANTS
Each Loan Party Shall:
(a) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, at any time, assume, create,
incur or suffer to exist any lien upon any of its property, rights,
revenues or assets, whether now owned or hereafter acquired or upon any
income or profits therefrom, except that the Company and the Restricted
Entities (other than, prior to consummation of the Merger, Acquisition
Sub) may create, incur, assume or suffer to exist (i) Permitted
Encumbrances, (ii) liens securing intercompany loans or advances amongst
the Loan Parties and the Restricted Entities and (iii) other liens where
the aggregate amount secured thereby does not exceed 10% of the Company's
Equity,
(b) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, except as permitted under
paragraph (e) below convey, sell, alienate, assign, lease, license,
transfer or otherwise dispose of the whole or any substantial portion of
its property or assets or any interest therein, whether now owned or
possessed or hereafter acquired or possessed, or enter into any sale and
leaseback transaction with respect to such property or assets, in each
case if a Material Adverse Effect could result therefrom or could exist
immediately after the relevant transaction,
(c) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, make or acquire any loan or
investment in Non-Restricted Entities or permit any loan or investment
from such Loan Party or any of its Subsidiaries which is a Restricted
Entity to be outstanding, directly or indirectly, in Non-Restricted
Entities in aggregate amounts exceeding a sum equivalent to 20% of the
Company's Equity at any time, excluding transactions (including accounts
receivable) in the ordinary course of business with a term of less than 90
days,
(d) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, permit any of the Operating
Restricted Entities to incur, assume, create or become in any way liable
for any Indebtedness (except for intercompany loans raised from a Loan
Party or a Restricted Entity) in an amount exceeding, in the aggregate,
prior to the Merger Date, 15% and thereafter, until the consummation of
the US Holdings Merger, 10% and after the US Holdings Merger, 15%
(assuming compliance with paragraph (l) of the Affirmative Covenants) of
the Company's Equity, excluding the Indebtedness evidenced by the
Subordinated Notes and the Convertible Notes and the existing
Indebtedness, identified in Schedule 11.2.4 to the Existing QPI Facility,
of Imprimeries Didier-Quebecor, S.A. (France) and its Subsidiaries, except
that this restriction shall not apply, following an acquisition of a
newly-acquired Subsidiary of the Company which will be an Operating
Restricted Entity ("New Operating Restricted Entity") to the extent that
the Indebtedness of such New Operating Restricted Entity ("Acquired
Indebtedness") is repaid or otherwise extinguished within 180 days of the
date such New
<PAGE>
Confidential
Operating Restricted Entity is so acquired and provided further that such
Acquired Indebtedness was not incurred in contemplation of such
acquisition,
(e) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, wind-up, liquidate or
dissolve its business, affairs or assets or enter into any transaction of
reorganization, amalgamation, merger or consolidation, or convey, sell,
lease or otherwise dispose of all or any substantial part of its business,
property or assets (or agree to do any of the foregoing at any future
time) except (i) as permitted under paragraph (b) above, (ii) that any
Restricted Entity, other than a Loan Party, may effect any of the
foregoing transactions if the transaction could not reasonably be expected
to have a Material Adverse Effect and (iii) that any of the Loan Parties
may merge into or convey, lease or transfer all or substantially all of
its assets to any Person, provided that, immediately after giving effect
to the transaction, no event or circumstance shall have occurred and be
continuing which constitutes a default or Event of Default and that (i)
the resulting entity or the Person which acquires such assets is bound by
the provisions of the Loan Documents to which such Loan Party is a party
by operation of law or pursuant to an agreement in form and substance
satisfactory to the Administrative Agent and (ii) the Lenders receive an
opinion of counsel to the Company acceptable to them confirming that the
resulting entity or the Person which acquires such assets is bound by the
relevant Loan Documents,
(f) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, permit to exist, at any
time, any consensual restriction limiting the ability (whether by
covenant, event of default, subordination or otherwise) of the Company or
any Restricted Entity to (i) pay or make the maximum dividends permitted
by law to its parent entity, (ii) pay any obligation owed to the Company
or any Restricted Entity, (iii) make any loans or advances to or
investments in the Company or in any Restricted Entity, (iv) transfer any
of its property or assets to the Company or any Restricted Entity or (v)
create any lien upon its property or assets whether now owned or hereafter
acquired or upon any income or profits therefrom, except that the covenant
contained in this paragraph (f) shall not apply to (a) Imprimeries
Didier-Quebecor, S.A. (France) and its Subsidiaries and (b) any other
Restricted Entity (other than a Loan Party), whose assets, singly or when
taken together with the assets of all Restricted Entities (other than a
Loan Party) subject to such restrictions, do not exceed at any time 10 %
of the consolidated assets of the Company, as determined in accordance
with GAAP, and (c) the Target and its Subsidiaries, when it becomes a
Restricted Entity, with respect to any restriction contained in Sections
4.7 (Limitations on Restricted Payments), 4.8 (Dividend and Payment
Restrictions), 4.10 (Limitations on Sales of Assets), 4.11 (Transactions
with Affiliates), 4.12 (Limitations on Liens), 4.13 (Investments in
Unrestricted Subsidiaries) and 4.15 (Limitation on Other Subordinated
Indebtedness) of the 7 3/4% Indenture and the 8 3/8% Indenture,
(g) not use the Credit Facilities or any proceeds of borrowings thereunder (i)
to make an
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acquisition or an investment in any newly-acquired Subsidiary unless such
transaction is uncontested and approved by the board of directors of such
Person, or (ii) to purchase or carry, reduce, retire or refinance any
credit incurred to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any such margin stock
(other than the purchase of the Shares pursuant to the Merger),
(h) not, nor will it allow or suffer any of its Subsidiaries which is a
Restricted Entity to, directly or indirectly, make any change whereby the
nature of the business carried on by the Company and the Restricted
Entities (taken as a whole) would be materially altered from that carried
on as of the Formal Date (as defined in the Existing QPI Facility), and
(i) not, nor will it allow any of its Subsidiaries which is a Restricted
Entity to, directly or indirectly, acquire or enter into any Hedge
Agreement except, as bona fide hedges and not for speculative purposes,
other than such speculative hedge agreements to which the Target is a
party as of the Merger Date which such speculative hedge agreements shall
be terminated as soon as commercially practicable.
Notwithstanding anything contained herein, prior to the consummation of the
Merger, the Company will not allow Acquisition Sub to (i) carry on any business
or activity unrelated to the consummation of the Merger or (ii) incur, assume,
create, suffer to exist or become in any way liable for any Indebtedness other
than intercompany Indebtedness to US Holdings related to the consummation of the
Merger.
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FINANCIAL COVENANTS
The Company Shall Not:
(a) permit the ratio of the consolidated EBITDA of the Company to the
consolidated interest expense of the Company to be less than 3.50 to 1.00
for any period of four consecutive fiscal quarters of the Company,
starting with the period of four quarters ending on June 30, 1999;
(b) permit the ratio of the Company's Debt to the Company's Capitalization to
exceed (i) 65% after the Merger Date until December 31, 1999, (ii) 60%
from January 1, 2000 until December 31, 2000 and (iii) 55% after December
31, 2000, in each case, on the basis of calculations made at the end of
each fiscal quarter, starting with the quarter ending June 30, 1999; or
(c) permit the ratio of the Company's Debt to consolidated EBITDA to exceed,
for any period of four consecutive fiscal quarters of the Company,
starting with the period of four quarters ending on the last day of the
quarter which includes the Merger Funding Date, (i) 3.75 to 1.00 after the
Merger Date until December 31, 2000, and (ii) 3.00 to 1.00 after December
31, 2000, until Tranche A and Tranche C have been paid in full and
cancelled and the ratio of the Company's Debt to the Company's
Capitalization is less than 55% at the end of any fiscal quarter ending
after the date of such repayment and cancellation.
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INFORMATION COVENANTS
(Note: In the final loan documentation, the following provisions may be inserted
in the general representation and warranty section, in the general
covenants section or in the Guarantee Agreement, as applicable).
The Company shall furnish to the Administrative Agent in a sufficient number of
copies for distribution to each of the lenders:
(a) Quarterly Financial Statements. As soon as practicable and in any event
within 60 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Company, commencing with the
quarterly period ending June 30, 1999, the consolidated balance sheet of
the Company and the related consolidated statements of income, retained
earnings and cash flows for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to normal
year-end auditing adjustments.
(b) Year-End Financial Statements; Accountants' Certificate. As soon as
available and in any event within 90 days after the end of each fiscal
year of the Company, commencing with the fiscal year ending December 31,
1999:
(i) the consolidated balance sheet of the Company as at the end of such
fiscal year and the related consolidated statements of income,
retained earnings and cash flows for such fiscal year, setting forth
in comparative form the figures as at the end of and for the
previous fiscal year; and
(ii) an audit report of KPMG, or any one of the 5 largest firms of
accountants nationally recognized in the United States of America or
in Canada, as the case may be, which report shall include an opinion
of such auditors which opinion shall not be qualified and shall
state that such financial statements were prepared in accordance
with generally accepted accounting principles in effect in Canada
and that the audit by such auditors in connection with such
financial statements has been made in accordance with generally
accepted auditing standards.
(c) Officer's Certificate as to Financial Statements and Defaults. At the time
that financial statements are furnished, a certificate of compliance of
the chief executive officer, chief financial officer or treasurer of the
Company, in a form acceptable to the Arrangers, with the information
specified thereon being true and correct in all material respects as of
the date the certificate is delivered to the Administrative Agent.
(Note: the certificate of compliance will confirm accuracy of financial
statements, absence of contingent liabilities and anticipated loss having
material adverse effect, the calculations of financial ratios, absence of
defaults, the list of Restricted Entities (list of Restricted Entities to
be provided annually
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Confidential
only) and Non-Restricted Entities, the investments therein by the Company
and the indebtedness of the Restricted Entities.)
(d) Reports and Filings.
(i) promptly upon receipt thereof, (y) copies of all material special
audits, opinions or other material reports, if any, submitted to any
Loan Party by its independent certified public accountants in their
capacity as auditors of such Loan Party, and (z) copies of all
notices, confirmation, reports or other instruments issued to any
Loan Party by either or both S&P and Moody's, as the case may be,
and
(ii) promptly upon transmission thereof, copies of all such financial
statements and reports as the Company shall send to its
stockholders, copies of all material information made publicly
available by any Loan Party and copies of all registration
statements, annual information forms, regular or periodic reports,
prospectus, offering circulars or similar materials filed by any
Loan Party with any securities exchange, securities commission or
similar governmental authority or commission, other than filings
made with state regulatory authorities in connection with
shareholdings by employees of the Company or Restricted Entities.
(e) Requested Information. From time to time and promptly upon request of any
Lender, such information regarding the loan documents to which a Loan
Party is a party, or the loans, the business, assets, liabilities,
financial condition, results of operations or business prospects of a Loan
Party as such Lender may reasonably request, in each case in form and
substance and certified in a manner satisfactory to the requesting Lender.
(f) Notice of Defaults, Material Adverse Changes and Other Matters. Promptly
and in any event within (i) one business day after a Loan Party obtains
knowledge or should have obtained knowledge of any event or condition
specified in clause (A) hereof, (ii) three business days after the date a
Loan Party obtains knowledge or should have obtained knowledge of any
event or conditions specified in clause (E) hereof and (iii) five business
days after a Loan Party obtains knowledge or should have obtained
knowledge of any event or condition specified in clauses (B), (C), (D) and
(F) hereof, notice of:
(A) any default,
(B) any change in the name of, or, any amendment of the certificate of
incorporation or by-laws of any Loan Party,
(C) the commencement of, or the occurrence or non-occurrence of any
change or event relating to, any action, suit or proceeding that
would cause the representation and warranty relating to the absence
of litigation to be incorrect if made at such time,
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(D) the occurrence or non-occurrence of any change or event that would
cause the representation and warranty relating to the absence of
adverse change to be incorrect if made at such time,
(E) any change in the S&P/Moody's credit rating which would result in an
increase of any of the margins, and
(F) any event or condition relating to ERISA, whether or not such event
or condition shall constitute an Event of Default.
(g) Environmental Matters. Promptly and in any event within five business days
after the existence of any of the following conditions, a certificate of
the chief executive officer, chief financial officer, treasurer or other
responsible officer of the Company specifying in detail the nature of such
condition and the Company's or the relevant Restricted Entity's or their
respective environmental affiliate's proposed response thereto:
(i) the receipt by the Company or any Restricted Entity or any of their
respective environmental affiliates of any communication (written or
oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Company or any
Restricted Entity or any environmental affiliate thereof is not in
compliance with applicable environmental laws,
(ii) the Company or any Restricted Entity or any of their respective
environmental affiliates shall obtain actual knowledge that there
exists any environment claim pending or threatened against the
Company or any Restricted Entity or such environmental affiliate, or
(iii) any release, emission, discharge or disposal of any material of
environmental concern that could form the basis of any environmental
claim against the Company or any Restricted Entity or any of their
respective environment affiliates,
in each case of clauses (i), (ii) and (iii) above to the extent that any
such non-compliance, environmental claim or release, emission, discharge
or disposal, either singly or in the aggregate, could reasonably be
expected to have a Materially Adverse Effect on the Company and the
Restricted Entities taken as a whole.
(h) Budget. No later than on the 60th day following the commencement of each
fiscal year of the Company, commencing with the 2000 fiscal year, a
summary consolidated budget including a yearly statement of earnings, cash
flows and a year-end consolidated balance sheet.
Accuracy of Financial Statements and Information.
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Confidential
(a) Historical Financial Statements. The Company hereby represents and
warrants that (i) the consolidated financial statements of the Company for
the 1998 fiscal year provided to the Administrative Agent and the Lenders
prior to the date of the Loan Documents are complete and correct and
present fairly, in accordance with generally accepted accounting
principles in Canada, the consolidated financial position of the Company
and its Subsidiaries at their respective dates and the consolidated
results of operations, retained earnings and, as applicable, changes in
financial position or cash flows of the Company, for the respective
periods to which such statements relate, and (ii) except as disclosed or
reflected in such financial statements, as at December 31, 1998, neither
the Company nor any Restricted Entities had any liability, contingent or
otherwise, or any unrealized or anticipated loss, that, singly or in the
aggregate, could reasonably be expected to have a Materially Adverse
Effect on the Company and the Restricted Entities taken as a whole.
(b) Future Financial Statements. The financial statements delivered to the
Lenders shall be completed and correct and present fairly, in accordance
with generally accepted accounting principles (except for changes therein
or departures therefrom that are described in the certificate or report
accompanying such statements and that have been approved in writing by the
Company's then current independent certified public accountants), the
consolidated financial position of the Company as at their respective
dates and the consolidated results of operations, retained earnings and
cash flows of the Company, for the respective periods to which such
statements relate, and the furnishing of the same to the Lenders shall
constitute a representation and warranty by the Company made on the date
the same are furnished to the Lenders to that effect and to the further
effect that, except as disclosed or reflected in such financial
statements, as at the respective dates thereof, the Company nor any of the
Restricted Entities had any liability, contingent or otherwise, or any
unrealized or anticipated loss, that, singly or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect on the Company
and the Restricted Entities taken as a whole.
Additional Covenants Relating to Disclosure.
Each Loan Party further agrees that it will, and will cause each of its
Subsidiaries which is a Restricted Entity to, permit the Administrative Agent
and any person designated in writing from time to time by the Administrative
Agent, at the Loan Parties' expense, to have the right, on reasonable written
notice and at such reasonable time or times as will not interfere with the
normal operations of the Loan Party or such Subsidiaries, to visit and inspect
any of the properties of such Loan Party and such Subsidiaries and to discuss
the affairs, finances and accounts of the Loan Party or such Subsidiaries with
their respective officers; and that the Administrative Agent, its
representatives and its independent accountants shall also have the right to
examine the books of account, records, reports and other documents of the Loan
Parties and such Subsidiaries, all at such reasonable time or times as will not
interfere with the normal operation of the Loan Parties and such Subsidiaries.
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Confidential
APPENDIX IV
EVENTS OF DEFAULT
- --------------------------------------------------------------------------------
Those customarily found in the Arrangers' credit agreements for acquisition
financings and others appropriate in the judgment of the Arrangers, including,
without limitation, the following:
(a) Payment Default. any payment of principal or of interest on any of the
loans or of fees or any other amounts owing under the Loan Documents shall
not be made when and as due (whether at maturity, by reason of notice of
repayment or acceleration or otherwise) and in accordance with the terms
of the Credit Agreement and, except in the case of payments of principal,
such failure shall continue for three business days;
(b) Representation and Warranty. any representation and warranty made by any
Loan Party in any of the Loan Documents or any certificate or other
document delivered pursuant thereto shall at any time prove to have been
materially incorrect or misleading in any material respect when made or
deemed to have been made;
(c) Other Breaches.
any Loan Party shall default in the performance or observance of:
(i) any term, covenant, condition or agreement contained in paragraph
(b) (insofar as such paragraph requires the preservation of the
corporate existence of any Loan Party), (f), (g) and (h) under
Affirmative Covenants, and such default, if capable of being
remedied, shall continue unremedied for a period of ten business
days after the earlier of the date on which (y) such Loan Party
shall have actual knowledge of such default and (z) notice shall
have been given by the Administrative Agent to the Borrower
requiring that such default be cured; or,
(ii) any term, covenant, condition or agreement contained in the Credit
Agreement (other than a term, covenant, condition or agreement a
default in the performance or observance of which is elsewhere in
this Appendix specifically dealt with) and such default, if capable
of being remedied, shall continue unremedied for a period of 30 days
after the earlier of the date on which (y) such Loan Party shall
have actual knowledge of such default and (z) notice shall have been
given by the Administrative Agent to the Borrower requiring that
such default be cured;
(d) Cross-Default.
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Confidential
(i) with respect to any Indebtedness of a Loan Party or any other
Restricted Entity (other than under the Credit Facilities and
Non-Recourse Indebtedness) in the aggregate outstanding principal
amount of US$25,000,000,
(A) failure to pay, in accordance with its terms and when due and
payable (subject to any applicable grace period), any of the
principal or interest of such Indebtedness, or any such Indebtedness
shall, in whole or in part, have been required to be repaid prior to
the stated maturity thereof, in accordance with the provision of any
agreement evidencing, providing for the creation of or concerning
such Indebtedness, or
(B) (1) any event shall have occurred and be continuing that accelerates
such maturity or requires such repayment or permits (or, with the
passage of time or the giving of notice or both, would permit) any
holder or holders of such Indebtedness, any trustee or agent acting
on behalf of such holder or holders or any other Person so to
accelerate such maturity or require any such repayment, and said
holder or holders, trustee or agent, acting on behalf of such holder
or holders have accelerated said maturity or required such repayment
and (2) if the agreement evidencing, providing for the creation of
or concerning such Indebtedness provides for a cure period for such
event, such event shall not be cured prior to the end of such cure
period,
(ii) any default by any Loan Party under the Guarantee Agreement, and
(iii) any Event of Default under (and as defined in) (A) the Existing QPI
Facility, or (B) after the Merger Date, any of the Existing
Indentures;
provided further that no Event of Default shall be deemed to have occurred
if the failure to pay or perform under the relevant agreement is waived,
rescinded or annulled in writing by the relevant creditor(s).
(e) Bankruptcy.
(i) Voluntary. the Borrower, any Guarantor or any Restricted Entity
shall (A) commence any proceedings (including a notice of intention
or a proposal under the Bankruptcy and Insolvency Act (Canada) and
an application for a compromise or arrangement under the Companies'
Creditors Arrangement Act (Canada) or any successor or equivalent
legislations) or a voluntary case under the US Federal bankruptcy
laws (as now or hereafter in effect), (B) file a petition seeking to
take advantage of any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, (C) consent to or fail to contest in a timely
and appropriate manner an
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Confidential
order for relief or any petition filed against it in any proceedings
or involuntary case under such bankruptcy laws or other laws, (D)
apply for, or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession
by, a receiver, custodian, trustee, liquidator or the like of itself
or of a substantial part of its assets, domestic or foreign, (E)
admit in writing its inability to pay, or generally not be paying,
its debts (other than those that are the subject of bona fide
disputes) as they become due, (F) make a general assignment for the
benefit of creditors, or (G) take any corporate action for the
purpose of effecting any of the foregoing;
(ii) Involuntary. (A) any proceedings or case shall be commenced against
the Borrower, any Guarantor or any Restricted Entity or all or a
substantial part of the property of the Borrower, any Guarantor or
any Restricted Entity seeking (1) relief under the laws referred to
in paragraph (i) above (as now or hereafter in effect) or under any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, or
(2) the appointment of a trustee, receiver, custodian, liquidator or
the like of the Borrower, any Guarantor or any Restricted Entity,
and such proceedings or case shall continue undismissed and unstayed
for a period of 45 days, or (B) an order granting the relief
requested in such proceedings or case against the Borrower, any
Guarantor or any Restricted Entity shall be made, granted or
entered;
provided, however, in the case of any Restricted Entity other than the
Borrower or any Guarantor, that the foregoing circumstances or events have
a Material Adverse Effect;
(f) Judgments. a final judgment or order shall be entered against the Borrower
or any Guarantor or Restricted Entity by any court, and (i) in the case of
a judgment or order for the payment of money, (A) such judgment or order
shall be for the payment of money in excess of US$25,000,000 (to the
extent not fully covered by valid and collectible insurance provided by
solvent, unaffiliated insurers) and (B) either (y) such judgment or order
shall continue undischarged and unstayed for a period of 60 days or (z)
enforcement proceedings shall have been commenced upon such judgment or
order, and (ii) in the case of any judgment or order for other than the
payment of money, such judgment or order could, together with all other
such judgments or orders, have a Materially Adverse Effect on the Company
and the Restricted Entities taken as a whole;
(g) ERISA. (i) any termination event shall occur with respect to any Benefit
Plan of the Borrower or any US Guarantor or Restricted Entity or any of
their respective ERISA affiliates, (ii) any accumulated funding deficiency
(as defined in section 302 of ERISA) shall exist at any time with respect
to any such Benefit Plan in an amount in excess of an amount equivalent to
4% of the Company's Equity at such time, (iii) any Person shall engage in
any prohibited transaction involving any such Benefit Plan, (iv) the
Borrower or any US Guarantor or Restricted Entity or any of its ERISA
affiliates shall be in
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"default" (as defined in ERISA Section 4219(c)(5)) with respect to
payments owing to any such Benefit Plan that is a multiemployer Benefit
Plan as a result of such Person's complete or partial withdrawal (as
described in ERISA Section 4203 or 4205) therefrom, (v) the Borrower or
any US Guarantor or Restricted Entity or any of its ERISA affiliates shall
fail to pay when due an amount that is payable by it to the PBGC or to any
such Benefit Plan under Title IV of ERISA, or (vi) a proceeding shall be
instituted by a fiduciary of any such Benefit Plan against the Borrower or
any US Guarantor or Restricted Entity or any of its ERISA affiliates to
enforce ERISA Section 515 and such proceeding shall not have been
dismissed within 30 days thereafter, except that no event or condition
referred to in clauses (i) through (vi) shall constitute an Event of
Default if it, together with all other such events or conditions at the
time existing, has not subjected, and in the reasonable determination of
the Majority Lenders will not subject, the Borrower or any US Guarantor or
Restricted Entity to aggregate liabilities, at any time, that exceed an
amount equivalent to 4% of the Company's Equity at such time;
(h) Invalidity or Unenforceability. a court of competent jurisdiction shall
render a judgment or order, or any law, ordinance, decree or regulation
shall be enacted, the effect of which is to render any material provision
of the Loan Documents invalid, not binding or unenforceable or any Loan
Document shall cease to be in full force and effect and valid and
enforceable, provided that if such matter is (in the opinion of the
Administrative Agent) capable of being remedied, the Borrower shall have
failed, within 30 days thereafter to furnish or cause to be furnished to
the Lenders replacement documents evidencing and, where applicable,
securing the Indebtedness under the Loan Documents which are adequate in
the opinion of the Administrative Agent, or if any Loan Party gives notice
of termination of, or otherwise attempts to terminate or deny its
liability under a Loan Document;
(i) Environmental Claims. the Borrower, any Guarantor or Restricted Entity or
any environmental affiliate thereof shall have failed to obtain any
environmental approval necessary for the management, use, control,
ownership or operation of its business, property or assets or any such
environmental approval shall be revoked, terminated, or otherwise cease to
be in full force and effect, in each case, if the existence of such
condition could reasonably be expected to have a Materially Adverse Effect
on the Company and the Restricted Entities, taken as a whole; and
(j) Material Adverse Effect. an event or circumstance shall exist which has a
Material Adverse Effect.
<PAGE>
[LETTERHEAD OF QUEBECOR PRINTING INC.]
[Date]
Royal Bank of Canada
200 Bay Street
South Tower, Royal Bank Building
Toronto, Ontario
Canada M5J 2J5
Attention: Senior Manager, Global Syndications
Telecopier: (416) 974-5637
Dear Sirs:
Subject: Quebecor Printing Inc.
US$1,000,000,000 Credit Agreement dated
April 28, 1999 (the "Existing Credit Agreement")
On July 12, 1999, we, Quebecor Printing Inc. (the "Company"), announced
our proposed acquisition of World Color Press, Inc., a Delaware corporation (the
"Target"), in a two step transaction (the "Two Step Transaction") consisting, as
step one, of a tender offer by Printing Acquisition Inc., a newly-formed,
indirectly wholly-owned subsidiary of the Company ("Acquisition Sub") for the
acquisition of 23,500,000 shares, equal to approximately 62%, of the Target's
publicly-traded common stock (the "Shares"), for a purchase price per Share of
US$35.69, to be followed, as step two, by a merger of the Acquisition Sub with
the Target (the "Merger"). The tender offer is conditional to more than 50% of
the Shares being tendered under step one (the "Minimum Condition"). The
consideration paid for Shares to shareholders of the Target to consummate the
Merger in the Two Step Transaction will be either (i) if 23,500,000 Shares are
purchased in the tender offer, 1.6455 shares of common stock of the Company (the
"Common Stock") per Share or (ii) if less than 23,500,000 Shares are purchased
in the tender offer, a combination of cash and shares of Common Stock per Share.
If one or both of the Minimum Condition and the condition relating to the
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, have not been satisfied by September 13,
1999, the tender offer shall be terminated without the acceptance of any Shares
previously tendered and the Company and the Target will seek to consummate the
Merger in a one step transaction (the "One Step Transaction"). The consideration
paid for Shares to the existing shareholders of the Target to consummate the
Merger in the One Step Transaction will be a combination of US$22.00 in cash and
.6311 shares of the Common Stock per Share. The aggregate cash consideration
paid for Shares in both the tender offer (if applicable) and the Merger
(including any stock repurchase and payments in respect of the cancellation of
stock options) shall not exceed US$890,000,000 in any event.
<PAGE>
2
As the proposed acquisition may bring about a temporary increase in the
consolidated debt of the Company beyond what is currently permitted by the
Existing Credit Agreement, we are asking that Royal Bank of Canada, as Agent
under our Existing Credit Agreement, solicit an amendment/waiver from the
lenders under the Existing Credit Agreement with respect to the ratio of Debt to
Capitalization set forth in section 11.2.10(b) thereof. We request that such
ratio be increased:
(a) in the case of the Two Step Transaction, (i) to 70% from the time of
the funding of the tender offer in step one of the proposed
transaction until the date of the Merger under step two, (ii) to 65%
thereafter until December 31, 1999, (iii) to 60% from January 1,
2000 until December 31, 2000 and (iv) to 55% at all times thereafter
as provided in the Existing Credit Agreement; and
(b) in the case of the One Step Transaction, (i) to 65% from and after
the date of the Merger until December 31, 1999, (ii) to 60% from
January 1, 2000 until December 31, 2000 and (iii) to 55% at all
times thereafter as provided in the Existing Credit Agreement.
We would also ask you, as Agent, to approach the lenders under the
Existing Credit Agreement to obtain their consent to the amendment/waiver of the
provisions of:
(a) section 11.2.4 of the Existing Credit Agreement dealing with
Indebtedness of Operating Restricted Entities, which section
is to be amended (i) by reducing the threshold of permitted
Indebtedness of Operating Restricted Entities from 15% to 10%
of the Company's Equity from and after the date of the Merger
until the merger of the surviving corporation of the Merger,
with and into Quebecor Printing (USA) Holdings Inc. (at which
time the threshold is to revert back to 15%), and (ii) by
excluding from such Indebtedness not only the Indebtedness of
Imprimeries Didier-Quebecor, S.A. (France) and its
Subsidiaries but also the Indebtedness of the Target relating
to the Target's 8 3/8% senior subordinated notes due 2008 and
7 3/4% senior subordinated notes due 2009, in an aggregate
amount of approximately US$600 million (the "Subordinated
Notes") and also excluding the Indebtedness of the Target
relating to the Target's 6% convertible senior subordinated
notes due 2007 in an amount of approximately US$152 million;
(b) section 11.2.6 of the Existing Credit Agreement dealing with
consensual restrictions on the payment of Dividends and
similar matters, which section is to be changed by excluding
from the application of such section, with respect to the
Target and its subsidiaries, when it becomes a Restricted
Entity, any consensual restriction contained in sections 4.7
(Limitations on Restricted Payments), 4.8 (Dividend and
Payment Restrictions), 4.10 (Limitations on Sales of Assets),
4.11 (Transactions with Affiliates), 4.12 (Limitation on
Liens), 4.13 (Investments in
<PAGE>
3
Unrestricted Subsidiaries) and 4.15 (Limitations on Other
Subordinated Indebtedness) of the indentures relating to the
Target's Subordinated Notes ;
(c) section 11.2.7 of the Existing Credit Agreement relating to
the use of proceeds therefrom to finance "margin stock", which
section should be modified to allow such proceeds to be used
to purchase the Shares; and
(d) section 11.2.9 of the Existing Credit Agreement relating to
speculative Hedge Agreements, which section is to be waived
but only insofar as speculative Hedge Agreements acquired or
entered into by the Target may be concerned, which speculative
Hedge Agreements shall be terminated as soon as commercially
practicable.
Finally, we would ask you, as Agent, to obtain from the lenders under the
Existing Credit Agreement, all other appropriate waivers or amendments of a
technical nature to other terms and conditions (including representations and
warranties) of the Existing Credit Agreement which would be required to the
implementation of our proposed acquisition of the Target, as well as all other
waivers or amendments which we may bring to your attention prior to the closing
of the proposed acquisition. More particularly (but without limitation), we also
ask you to obtain the consent of the lenders to a waiver and amendment of
section 2.1.2 of the Existing Credit Agreement relating to the absence of
restrictions on voting and distribution rights applicable to subsidiaries and
which, due to an oversight, needs to be conformed to the provisions of the
negative covenant contained in section 11.2.6 of the Existing Credit Agreement
(as such section is to be amended as provided above).
In consideration for the consents which the lenders will grant as above
requested, the Company has agreed, by way of a separate letter agreement, to pay
to each consenting lender under the Existing Credit Agreement an amendment fee
equal to 0.15% of the amount of its commitment under the Existing Credit
Agreement, with one-third of such fee (i.e. 0.05%) being payable upon the
signing of an amending agreement giving effect to the requested changes and the
balance of two-thirds of such fee (i.e. 0.10%) being payable at the time of the
funding of the tender offer in step one of the proposed acquisition of the
Target in the event of a Two Step Transaction or at the time of the funding of
the Merger in the event of a One Step Transaction.
We understand that financial projections relating to our proposed
acquisition of the Target will be provided to the lenders under the Existing
Credit Agreement at the time they receive an invitation to participate in the
new syndicated credit facility being arranged to finance, in part, our
acquisition of the Target.
We confirm that we have reviewed a draft of the letter which you propose
to send to the lenders under the Existing Credit Agreement and to which this
letter is to be attached, and we confirm that we are in agreement with the
provisions thereof, including the provisions thereof relating to (i) the payment
of a performance fee, (ii) an adjustment in the method of establishing pricing
on the basis of credit agency ratings and (iii) the pricing to apply until such
time as the Company's credit rating has been confirmed following the launch of
the proposed acquisition.
<PAGE>
4
Given our scheduling constraints, we would appreciate receiving answers on
the above by _______________, 1999. We thank you for your assistance.
Yours very truly,
QUEBECOR PRINTING INC.
By:
By:
<PAGE>
- --------------------------------------------------------------------------------
Please return to Royal Bank of Canada no later than _________________, 1999
Telecopier: (416) 974-5637
- --------------------------------------------------------------------------------
AMENDMENT AND WAIVER CONSENT
Royal Bank of Canada
200 Bay Street
South Tower, Royal Bank Building
Toronto, Ontario
Canada M5J 2J5
Attention: Senior Manager, Global Syndications
Telecopier: (416) 974-5637
Dear Sirs:
Subject: Quebecor Printing Inc.
US$1,000,000,000 Credit Agreement dated
April 28, 1999 (the "Existing Credit Agreement")
- --------------------------------------------------------
We, the undersigned, confirm to you that we have completed our review of the
amendment and waiver requests contained in your letter to us dated
_______________, 1999 and accept the proposed amendments and waivers in respect
of the Existing Credit Agreement as set forth in your said letter.
Our acceptance of the proposed amendments is subject only to our satisfactory
review of documentation embodying essentially the terms set forth in your said
letter dated _______________, 1999 and subsequent correspondence relating
thereto.
Dated this _______ day of _______________, 1999.
Very truly yours,
Lender:_________________________________________
by:__________________________________________
by:__________________________________________
<PAGE>
AGREEMENT AND PLAN OF MERGER
AMONG
QUEBECOR PRINTING INC.
PRINTING ACQUISITION INC.
AND
WORLD COLOR PRESS, INC.
Dated as of
July 12, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE I THE OFFER........................................................................................ 1
1.1. THE OFFER..................................................................................... 1
1.2. COMPANY ACTION................................................................................ 3
1.3. DIRECTORS..................................................................................... 4
ARTICLE II THE MERGER...................................................................................... 5
2.1. THE MERGER.................................................................................... 5
2.2. EFFECT OF THE MERGER.......................................................................... 5
2.3. CONSUMMATION OF THE MERGER.................................................................... 5
2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND OFFICERS.............................. 5
2.5. CONVERSION OF SECURITIES...................................................................... 6
2.6. STOCK OPTIONS................................................................................. 7
2.7. CLOSING OF COMPANY TRANSFER BOOKS............................................................. 9
2.8. EXCHANGE OF CERTIFICATES...................................................................... 9
2.9. FUNDING OF PAYING AGENT....................................................................... 10
2.10. TAKING OF NECESSARY ACTION; FURTHER ACTION.................................................... 10
2.11. DISSENTING SHARES............................................................................. 10
2.12. FRACTIONAL SHARES............................................................................. 11
2.13. NO FURTHER OWNERSHIP RIGHTS IN COMMON......................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER......................................... 11
3.1. ORGANIZATION AND QUALIFICATION................................................................ 11
3.2. AUTHORITY RELATIVE TO THIS AGREEMENT.......................................................... 12
3.3. FINANCING ARRANGEMENTS........................................................................ 13
3.4. OWNERSHIP OF SHARES........................................................................... 13
3.5. SUBSIDIARIES.................................................................................. 13
3.6. CAPITALIZATION................................................................................ 14
3.7. COMMISSION FILINGS............................................................................ 14
3.8. LITIGATION.................................................................................... 15
3.9. EMPLOYEES AND LABOR........................................................................... 15
3.10. TAXES AND TAX RETURNS......................................................................... 15
3.11 EMPLOYEE BENEFIT PLANS........................................................................ 15
3.12. COMPLIANCE WITH LAWS.......................................................................... 17
</TABLE>
i
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<S> <C> <C>
3.13. ENVIRONMENTAL MATTERS......................................................................... 18
3.14. INTELLECTUAL PROPERTY......................................................................... 20
3.15. YEAR 2000..................................................................................... 20
3.16. NO STOCKHOLDER VOTE REQUIRED.................................................................. 20
3.17. PARENT CONSENTS............................................................................... 21
3.18. SUBSCRIPTION RIGHTS........................................................................... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................... 21
4.1. ORGANIZATION AND QUALIFICATION................................................................ 21
4.2. SUBSIDIARIES.................................................................................. 21
4.3. CAPITALIZATION................................................................................ 22
4.4. AUTHORITY RELATIVE TO THIS AGREEMENT.......................................................... 22
4.5. COMMISSION FILINGS............................................................................ 23
4.6. LITIGATION.................................................................................... 24
4.7. EMPLOYEES AND LABOR........................................................................... 25
4.8. TAXES AND TAX RETURNS......................................................................... 25
4.9 EMPLOYEE BENEFIT PLANS........................................................................ 25
4.10. STOCKHOLDER VOTE REQUIRED..................................................................... 27
4.11. COMPLIANCE WITH LAWS.......................................................................... 27
4.12. PROPERTIES.................................................................................... 28
4.13. ENVIRONMENTAL MATTERS......................................................................... 28
4.14. INTELLECTUAL PROPERTY......................................................................... 28
4.15. INSURANCE..................................................................................... 29
4.16. YEAR 2000..................................................................................... 29
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................................................... 29
5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER......................................... 29
5.2. CERTAIN ACTIONS BY PARENT PENDING THE MERGER.................................................. 31
ARTICLE VI ADDITIONAL AGREEMENTS........................................................................... 31
6.1. ACTION OF COMPANY STOCKHOLDERS................................................................ 31
6.2. COMPANY PROXY STATEMENT....................................................................... 32
6.3. PREPARATION OF THE FORM F-4 AND THE PARENT PROXY STATEMENT; PARENT STOCKHOLDERS MEETING....... 32
6.4. EXPENSES...................................................................................... 33
6.5. ADDITIONAL AGREEMENTS......................................................................... 33
6.6. LIMITATION ON NEGOTIATIONS.................................................................... 34
</TABLE>
ii
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<S> <C> <C>
6.7. NOTIFICATION OF CERTAIN MATTERS............................................................... 35
6.8. LISTING....................................................................................... 35
6.9. ACCESS TO INFORMATION......................................................................... 35
6.10. STOCKHOLDER CLAIMS............................................................................ 35
6.11. TREATMENT OF EMPLOYEE COMPENSATION AND BENEFITS............................................... 36
6.12. INDEMNIFICATION RIGHTS........................................................................ 37
6.13. PARENT GUARANTEE.............................................................................. 38
6.14. AFFILIATES.................................................................................... 39
ARTICLE VII CONDITIONS..................................................................................... 39
7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.................................. 39
7.2. ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT THE MERGER.............. 40
7.3. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER....................... 40
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER............................................................. 41
8.1. TERMINATION................................................................................... 41
8.2. AMENDMENT..................................................................................... 42
8.3. FEES UPON TERMINATION......................................................................... 42
8.4. EFFECT OF TERMINATION......................................................................... 43
8.5. WAIVER........................................................................................ 44
ARTICLE IX GENERAL PROVISIONS.............................................................................. 44
9.1. BROKERS....................................................................................... 44
9.2. PUBLIC STATEMENTS............................................................................. 44
9.3. NOTICES....................................................................................... 44
9.4. INTERPRETATION................................................................................ 45
9.5. REPRESENTATIONS AND WARRANTIES................................................................ 45
9.6. SEVERABILITY.................................................................................. 46
9.7. MISCELLANEOUS................................................................................. 46
9.8. COUNTERPARTS.................................................................................. 46
9.9. SURVIVAL...................................................................................... 47
9.10. THIRD PARTY BENEFICIARIES..................................................................... 47
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 12, 1999 (the "AGREEMENT") by
and among QUEBECOR PRINTING INC., a corporation amalgamated under the laws of
Canada ("PARENT"), PRINTING ACQUISITION INC., a Delaware corporation and a
subsidiary of Parent ("PURCHASER"), and WORLD COLOR PRESS, INC., a Delaware
corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined that it would
be fair to, advisable and in the best interests of the Company's stockholders to
enter into this Agreement and the Board of Directors of Parent and Purchaser
have approved this Agreement providing for the acquisition of the Company by
Purchaser pursuant to a tender offer (the "OFFER") by Purchaser to purchase for
cash up to 23,500,000 (the "MAXIMUM NUMBER") of the outstanding shares of Common
Stock, par value $0.01, of the Company (the "SHARES"), at a price of $35.69 in
cash per Share; followed by a merger (the "MERGER") of Purchaser with and into
the Company, all upon the terms and subject to the conditions set forth herein;
and
WHEREAS, in furtherance thereof, the respective Boards of Directors of
Parent, Purchaser and the Company have approved this Agreement, the Offer and
the Merger; and
WHEREAS, contemporaneously with the execution and delivery of this Agreement
and as a condition to Parent's willingness to enter this Agreement, (i) Parent
and certain stockholders of the Company are entering into the Tender, Voting and
Option Agreement in substantially the form of EXHIBIT C hereto (the "TENDER,
VOTING AND OPTION AGREEMENT"), and (ii) the Company, Parent and Purchaser are
entering in to the Stock Option Agreement in substantially the form of EXHIBIT D
hereto (the "STOCK OPTION AGREEMENT").
NOW THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
ARTICLE I
THE OFFER
1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1, Purchaser shall, as soon as reasonably practical
after the date hereof, commence within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder (the "EXCHANGE ACT"), the Offer but in any event within
five business days (as such term is defined in Rule 14e-1 under the Exchange
Act) from the date of public announcement of the execution hereof. The Offer
will be subject only to the satisfaction or waiver of the conditions set forth
in Annex I hereto (the "OFFER CONDITIONS"), any of which conditions may be
waived in the sole discretion of Purchaser (other than the Minimum Condition (as
such term is defined in Annex I), which may only be waived with the consent of
the Board of Directors of the Company). Assuming all of the conditions to
consummation of the Offer are satisfied, Purchaser shall consummate the Offer as
promptly as possible.
(b) Parent and Purchaser covenant and agree that upon the terms and subject
to the conditions of this Agreement (including the Offer Conditions), Purchaser
shall accept for payment all Shares, up to the Maximum Number of Shares, that
are validly tendered on or prior to the expiration of the Offer and not timely
withdrawn, as soon as it is permitted to do so under applicable law, and shall
pay for such Shares promptly thereafter. Purchaser may, at any time, assign to
one or more corporations, which are direct or indirect wholly owned subsidiaries
of Parent, the right to purchase all or any portion of
1
<PAGE>
the Shares tendered pursuant to the Offer, but any such transfer or assignment
shall not relieve Purchaser and Parent of their obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for Shares
properly tendered and accepted for payment in accordance with the terms of this
Agreement.
(c) The Offer shall initially be scheduled to expire 20 business days
following the commencement thereof; PROVIDED that, unless this Agreement shall
have been terminated pursuant to Section 8.1, Purchaser shall, subject to
Section 1.1(e), extend the Offer from time to time in the event that, at a
then-scheduled expiration date, the Offer Conditions have not been satisfied
(other than incurable breaches of representations, warranties and covenants,
PROVIDED that the determination of whether a breach is incurable is not in the
sole discretion of Purchaser) each such extension not to exceed (unless
otherwise consented to by the Company) the lesser of 10 additional business days
or such fewer number of days that the Company and Parent reasonably believe are
necessary to cause such Offer Condition to be satisfied; PROVIDED that, under no
circumstances shall any such extension be less than the minimum number of days
required by the Exchange Act or the rules and regulations promulgated thereunder
or by applicable law and PROVIDED further that Purchaser shall not be required
to extend the Offer more than 15 business days after making a public
announcement that all of the Offer Conditions other than the Minimum Condition
have been satisfied. Except as provided in Section 1.1(d) and Section 1.1(e),
Purchaser shall not terminate the Offer without purchasing Shares pursuant to
the Offer. As soon as reasonably practical on the date the Offer is commenced,
Purchaser shall file with the Securities and Exchange Commission (the
"COMMISSION") a Tender Offer Statement on SCHEDULE 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer, that shall comply in all material respects with the provisions of such
Schedule and all applicable Federal securities laws, and shall contain an Offer
to Purchase and forms of the related letter of transmittal and summary
advertisement (which Schedule 14D-1, Offer to Purchase and other documents are
referred to herein collectively as the "TENDER OFFER DOCUMENTS"). Parent and
Purchaser agree that the Company and its counsel shall be given an opportunity
to review the Schedule 14D-1 before it is filed with the Commission. Parent,
Purchaser and the Company each agree promptly to correct any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the Commission and the other Offer Documents as so corrected to be
disseminated to holders of Shares in each case as and to the extent required by
applicable securities laws. Parent will provide the Company with a copy of any
comments Parent or Purchaser may receive from the Commission or its staff with
respect to the Tender Offer Documents promptly following receipt thereof.
Purchaser shall not, without the prior written consent of the Board of Directors
of the Company, (i) decrease or change the form of the consideration payable in
the Offer, (ii) reduce the number of Shares sought pursuant to the Offer, (iii)
amend the Offer Conditions or impose additional conditions to the Offer, (iv)
amend or change any term of the Offer or (v) waive the Minimum Condition.
(d) In the event that this Agreement has been terminated pursuant to Section
8.1, Purchaser shall, and Parent shall cause Purchaser to, promptly terminate
the Offer without accepting any Shares for payment.
(e) If on September 13, 1999, either or both of the Minimum Condition or
paragraph (b) of the Offer Conditions has not been satisfied, Purchaser shall,
unless Parent and the Company otherwise agree, terminate the Offer, and the
parties shall, subject to the terms and conditions hereof, seek to consummate
the Merger in accordance with Section 2.5(c).
1.2 COMPANY ACTION. The Company hereby consents to the Offer and
represents that its Board of Directors has determined by a unanimous vote that
the Offer and the Merger are fair to, advisable and in the best interests of,
the Company and its stockholders, has approved the Offer and the Merger, has
approved and adopted this Agreement, and has resolved to recommend acceptance of
the Offer to,
2
<PAGE>
and adoption of this Agreement by, the Company's stockholders (it being
understood that, notwithstanding anything in this Agreement to the contrary, if
the Company's Board of Directors shall conclude, acting in good faith, after
receiving advice from outside counsel or its financial advisor, that failure to
modify or withdraw its recommendation would constitute a breach of their
fiduciary duties under applicable law, the Board of Directors may so modify or
withdraw its recommendation and such modification or withdrawal shall not
constitute a breach of this Agreement). The Company further represents that
Morgan Stanley & Co. Incorporated has delivered its written opinion to the Board
of Directors of the Company that, as of the date hereof, the consideration to be
received by holders of Shares pursuant to the Offer and the Merger is fair to
such holders from a financial point of view. Contemporaneously with the
commencement of the Offer, but in no event prior to such date as the Purchaser
has filed the Tender Offer Documents with the Commission, the Company shall file
with the Commission and mail to holders of record and beneficial owners of
Shares a Solicitation/ Recommendation Statement on SCHEDULE 14D-9 with respect
to the Offer (such SCHEDULE 14D-9, as amended from time to time, the "SCHEDULE
14D-9"), which shall contain the recommendation of the Company's Board of
Directors set forth in the preceding sentence. Parent, Purchaser and the Company
each agree promptly to correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the Commission and disseminated
to holders of Shares, in each case as and to the extent required by applicable
securities laws. The Company shall from time to time furnish Purchaser with such
additional information, if any, including updated or additional lists of
stockholders, mailing labels and lists of securities positions, and other
assistance as the Purchaser may reasonably request in order to be able to
communicate the Offer to the stockholders of the Company. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents, Parent, Purchaser and each of their respective affiliates
and associates shall hold in confidence the information contained in any of such
lists, labels or additional information and, if this Agreement is terminated,
shall promptly redeliver to the Company all copies (of whatever nature) of such
information then in their possession.
1.3. DIRECTORS.
(a) Promptly upon the purchase by Purchaser of Shares pursuant to the Offer,
Purchaser shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as will give
Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(a) the number of directors on the Board of Directors of the Company (after
giving effect to the appointment of such directors) and (b) the percentage that
such number of Shares so purchased bears to the number of Shares outstanding,
and the Company shall, upon request by Purchaser, promptly (i) increase the size
of the Board of Directors of the Company to the extent permitted by its Amended
and Restated Certificate of Incorporation and By-Laws (and amend the By-Laws, if
so required, to increase the size of the Board of Directors to allow for such
additional directors); and/or (ii) use reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Board of Directors of the Company (and shall hold
a Board meeting for such purpose); and (iii) shall cause Purchaser's designees
to be so elected. At any time after the execution hereof, at the request of
Purchaser, the Company shall promptly take, at its expense, all action necessary
to effect any such election, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in form and substance reasonably satisfactory to
Purchaser and its counsel. Purchaser shall supply the Company and be solely
responsible for any information included in the filings with the Commission with
respect to themselves and their nominees, officers, directors and affiliates
required by said Section 14(f) and Rule 14f-1.
3
<PAGE>
(b) Following the election or appointment of Purchaser's designees pursuant
to this Section 1.3 and prior to the Effective Time, any amendment or waiver of
any term or condition of this Agreement, any amendment of the provisions of the
Amended and Restated Certificate of Incorporation or By-Laws of the Company
affecting indemnification, any termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Purchaser or Parent or waiver or assertion of any
of the Company's rights hereunder, and any other consent or action by the Board
of Directors with respect to this Agreement, will require the separate
concurrence of a majority of the continuing directors of the Company who hold
office as of the date of this Agreement or if there are no such continuing
directors, then a majority of the directors of the Company then in office who
were not designated by Purchaser (the "Disinterested Directors") and such
concurrence shall constitute the authorization of the Board of Directors of the
Company. The number of Disinterested Directors shall be not less than two. Any
person who is a director on the date of this Agreement, but who, in order to
carry out the provisions of this Section 1.3, is not a director at the Effective
Time, shall be entitled to receive all payments at the time such director
resigns as if he or she had been a director as of the Effective Time.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in Section 2.3), in
accordance with this Agreement and the General Corporation Law of the State of
Delaware, as amended (the "DELAWARE LAW"), Purchaser shall be merged with and
into the Company, the separate existence of Purchaser (except as may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation. The Company, in its capacity as the corporation
surviving the Merger, sometimes is referred to herein as the "Surviving
Corporation."
2.2 EFFECT OF THE MERGER. The Surviving Corporation shall possess all the
rights, privileges, powers and franchises, of a public as well as a private
nature, and be subject to all the restrictions, disabilities and duties, of each
of Purchaser and the Company (collectively, the "CONSTITUENT CORPORATIONS"); the
Surviving Corporation shall be vested with the rights, privileges, powers and
franchises, all properties and assets and all debts due on whatever account, and
all other things in action or belonging to, and all and every other interest of,
each of the Constituent Corporations; and all debts, liabilities and duties of
each of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it, all with the
effect set forth in Section 259 of the Delaware Law.
2.3 CONSUMMATION OF THE MERGER. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in Article VII, and in no
event later than five business days after such satisfaction or waiver, the
parties to this Agreement will cause a Certificate of Merger to be filed with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with, the relevant provisions of the Delaware Law.
The Merger shall be effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware or at such later time
as specified in the Certificate of Merger (the "EFFECTIVE TIME").
2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND OFFICERS. The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be amended and restated at the Effective Time so as to
read in its entirety in the form set forth as EXHIBIT A hereto and, as so
amended, shall be the Certificate of Incorporation of the Surviving Corporation
immediately after the Effective Time. The By-Laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation immediately after the Effective Time and the directors of the
Company shall submit their resignations at the Effective Time. The directors of
Purchaser holding office immediately prior to the Effective Time shall be the
directors of the Surviving
4
<PAGE>
Corporation immediately after the Effective Time. The officers of the Company
holding office immediately prior to the Effective Time shall be the officers
(holding the same offices as they held with the Company) of the Surviving
Corporation immediately after the Effective Time until such time as their
successors shall have been duly appointed.
2.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holder of any of the following securities:
(a) If Purchaser shall have purchased, pursuant to the Offer, the Maximum
Number of Shares, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 2.5(d))
shall be canceled, extinguished and converted into the right to receive a number
(rounded to the nearest one-millionth of a share) of fully paid and
nonassessable, Subordinate Voting Shares of Parent ("PARENT STOCK"), equal to
the Exchange Ratio (as defined below).
(b) If Purchaser shall have purchased, pursuant to the Offer, less than the
Maximum Number of Shares (the number of Shares so paid for and purchased in the
Offer being referred to herein as the "PURCHASED SHARE NUMBER"), each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 2.5(d) and other than Shares with
respect to which the provisions of Section 2.11 are applicable) shall be
cancelled, extinguished and converted into the right to receive, (i) cash, in an
amount equal to the product of the Cash Proration Factor (as defined below)
multiplied by $35.69 and (ii) a number (rounded to the nearest one-millionth of
a share) of fully paid and non-assessable shares of Parent Stock equal to the
product of (x) 1 minus the Cash Proration Factor multiplied by (y) the Exchange
Ratio.
(c) If the Offer is terminated pursuant to Section 1.1(e), each Share issued
and outstanding immediately prior to the Effective Time (other than any Shares
to be canceled pursuant to Section 2.5(d)) shall be canceled, extinguished and
converted into the right to receive, (i) cash, in an amount equal to $22.00 and
(ii) .6311 shares of Parent Stock.
(d) Each Share held in the treasury of the Company and each Share owned by
Purchaser, in each case immediately prior to the Effective Time, shall
automatically be canceled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto.
(e) Each share of capital stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted and changed into one
validly issued, fully paid and nonassessable share of such capital stock of the
Surviving Corporation.
(f) If prior to the Effective Time, Parent or the Company, as the case may
be, should (in the case of Parent, after obtaining the consent required by
Section 5.2 hereof; in the case of the Company, after obtaining the consent
required by Section 5.1 hereof) split, combine or otherwise reclassify the
Parent Stock or the Shares, or pay (or set a record date that is prior to the
Effective Time with respect to) a stock dividend or other stock distribution in
Parent Stock or the Shares, or otherwise change the Parent Stock or Shares into
any other securities, or make any other such stock dividend or distribution with
respect to the Parent Stock or the Shares in capital stock of Parent or the
Company or of their respective subsidiaries in respect of the Parent Stock or
the Shares, respectively, then the Merger Consideration and the Exchange Ratio
will be appropriately adjusted to reflect such split, combination, dividend or
other distribution or change to provide the holders of Shares the same economic
effect as contemplated by this Agreement prior to such event.
(g) Share certificates surrendered for exchange by any person constituting
an affiliate of the Company for purposes of Rule 145 under the Securities Act
shall not be exchanged for certificates representing Parent Stock until Parent
has received a written agreement from such person as provided in Section 6.14.
5
<PAGE>
(h) For purposes of this Agreement, "EXCHANGE RATIO" is equal to 1.6455
shares of Parent Stock per Share. The "CASH PRORATION FACTOR" shall be a
fraction, of which (A) the numerator is equal to (x) the Maximum Number minus
(y) the Purchased Share Number, if any, and (B) the denominator is equal to the
number of Shares issued and outstanding immediately prior to the Effective Time
(excluding Shares to be canceled pursuant to Section 2.5(d) and other than
Shares with respect to which the provisions of Section 2.11 are applicable) (the
"FINAL OUTSTANDING NUMBER"). The consideration provided for in Sections 2.5(a),
(b), or (c), as applicable, together with the consideration provided for in
Section 2.12, is referred to herein as the "MERGER CONSIDERATION".
(i) At the Effective Time, all Shares shall no longer be outstanding and
shall be cancelled and retired and shall cease to exist (in the case of the
Shares to be cancelled pursuant to Section 2.5(d), without the payment of any
consideration therefor), and each certificate (a "CERTIFICATE") formerly
representing any of such Shares, other than the Shares to be cancelled pursuant
to Section 2.5(d), shall thereafter represent only the right to receive the
Merger Consideration.
2.6 STOCK OPTIONS. As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if appropriate, any
committee administering the Stock Plans (as defined below)) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(a) adjust the terms of all outstanding employee or director stock options
to purchase Shares and any related stock appreciation rights ("COMPANY STOCK
OPTIONS") granted under any stock option or stock purchase plan, program or
arrangement of the Company (the "STOCK PLANS"), to provide that, at the
consummation of the Offer, each Company Stock Option outstanding immediately
prior to the consummation of the Offer shall (except to the extent that Parent
and the holder of a Company Stock Option otherwise agree prior to the
consummation of the Offer or unless the holder of such Company Stock Option
shall have elected otherwise by written notice to Parent prior to the date 10
business days prior to the consummation of the Offer) be cancelled in exchange
for (A) a cash payment from the Surviving Corporation to be made promptly
following the consummation of the Offer (subject to any applicable withholding
taxes) equal in value to (1) the product of (x) the total number of shares of
Company Common Stock subject to such Company Stock Option (the "OPTION SHARES"),
multiplied by (y) $22.00, multiplied by (z) the excess of $35.69 over the
exercise price per share of Common Stock subject to such Company Stock Option,
divided by (2) $35.69, and (B) a number of shares of Parent Stock to be issued
promptly following the Effective Time equal to (1) the product of (x) the number
of Option Shares, multiplied by (y) 0.6311, multiplied by (z) the excess of
$35.69 over the exercise price per share of Common Stock subject to such Company
Stock Option, divided by (2) $35.69; PROVIDED, HOWEVER, that if the Offer is
terminated pursuant to Section 1.1(e), references to "consummation of the Offer"
above shall be deemed replaced by the term "Effective Time." The calculation of
the amounts described in (A) and (B) of this Section 2.6(a) may also be
expressed with the following formulas:
<TABLE>
<S> <C>
($35.69 - Exercise Price)
(A) = (Option Shares) X ($22.00) X $35.69
($35.69 - Exercise Price)
(B) = (Option Shares) X (0.6311) X $35.69
</TABLE>
(b) except as provided herein or as otherwise agreed to by the parties, the
Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time, and the
Company shall ensure that following the Effective Time no holder of a Company
Stock Option nor any participant in any Stock Plan shall have any right
thereunder to acquire equity securities of the Company or the Surviving
Corporation; and
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<PAGE>
(c) prior to the expiration date of the Offer (or if the Offer is terminated
pursuant to Section 1.1(e), immediately prior to the Effective Time), any
restrictions imposed pursuant to any Stock Plan on any shares of Common Stock of
the Company (such shares, "COMPANY RESTRICTED STOCK") shall (subject, if the
Offer has not been terminated pursuant to Section 1.1(e), to the consummation of
the Offer) lapse and each share of Company Restricted Stock shall be subject to
the same terms and conditions of this Agreement as the Shares; PROVIDED,
HOWEVER, that in the event the Offer is terminated, such restrictions shall be
deemed to have not lapsed until immediately prior to the Effective Time.
(d) To the extent that Parent is not a "FOREIGN PRIVATE ISSUER" within the
meaning of Rule 3b-4(c) under the Exchange Act, Parent shall take all steps to
cause any acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (i) is a
director or officer of the Company or (ii) at the Effective Time will become a
director or officer of Parent to become exempt under Rule 16b-3 promulgated
under the Exchange Act.
2.7 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed with respect to Shares issued and
outstanding immediately prior to the Effective Time and no further transfer of
such Shares shall thereafter be made on such stock transfer books. If, after the
Effective Time, valid certificates previously representing such Shares are
presented to the Surviving Corporation or the Paying Agent (as defined in
Section 2.8), they shall be exchanged as provided in Section 2.8.
2.8 EXCHANGE OF CERTIFICATES. Prior to the Effective Time, Purchaser shall
designate a bank or trust company, reasonably satisfactory to the Company, to
act as agent (the "PAYING AGENT") for the holders of Shares to receive the funds
and certificates necessary to effect the exchange for the Merger Consideration
of certificates which, immediately prior to the Effective Time, represented
Shares entitled to payment pursuant to Section 2.5(a), 2.5(b) or 2.5(c). As soon
as practicable after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail a transmittal form (the "LETTER OF TRANSMITTAL") (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing such Shares shall pass, only upon proper
delivery to the Paying Agent) to each holder of record of certificates
theretofore representing such Shares advising such holder of the procedure for
surrendering to the Paying Agent such certificates for payment of the Merger
Consideration in respect thereof. If any certificate of Parent Stock is to be
issued in the name of, or if cash is to be remitted to, a person other than the
person in whose name the certificates for Shares surrendered for exchange are
registered on the books of the Company, it shall be a condition of the exchange
that the certificate so surrendered shall be properly endorsed and the person
requesting such exchange shall pay to the Paying Agent all transfer or other
taxes required by reason of the issuance of such check in the name of a person
other than the registered owner of the certificates surrendered, or shall
establish to the satisfaction of the Paying Agent that such taxes have been paid
or are not applicable. Notwithstanding the foregoing, neither the Paying Agent
nor any party hereto shall be liable to a holder of certificates theretofore
representing Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar laws. Upon the surrender and
exchange of a certificate theretofore representing Shares, together with such
Letter of Transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder shall be entitled to receive a certificate for the
number of full shares of Parent Stock and the amount of cash, if any, without
interest thereon, to which he or she is entitled hereunder, less only such
amount required to be withheld under applicable backup withholding federal
income tax regulations, and such certificate shall forthwith be cancelled. Until
so surrendered and exchanged, each such certificate shall represent solely the
right to receive the Merger Consideration into which the Shares it theretofore
represented shall have been converted pursuant to Sections 2.5(a), 2.5(b) or
2.5(c), without interest, and the Surviving Corporation shall not be required to
pay the holder thereof the Merger Consideration to which such holder otherwise
would be entitled; provided that customary and appropriate certifications and
indemnities
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<PAGE>
allowing for payment against lost or destroyed certificates shall be permitted.
If any certificates representing any Shares shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
earlier date on which any payment in respect thereof would otherwise escheat to
or become the property of any governmental unit or agency), the payment in
respect of such certificates shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
2.9 FUNDING OF PAYING AGENT. Parent or Purchaser shall transmit by wire,
or other acceptable means, to the Paying Agent prior to the Effective Time funds
required for the cash portion of the exchange of Shares and cancellation of
Company Options in accordance with this Agreement. The Paying Agent shall agree
to hold such funds in trust and deliver such funds (in the form of checks of the
Paying Agent) in accordance with this Section and Section 2.8. Any portion of
such funds which has not been paid to holders of the Shares or Options pursuant
to Section 2.8 within six months after the Effective Time shall promptly be paid
to the party which provided such funds, and thereafter holders of certificates
representing the right to receive the cash into which Shares or Options formerly
represented by such certificates shall have been converted pursuant to Section
2.5(a), 2.5(b), 2.5(c) or 2.6 who have not theretofore complied with Section 2.8
shall look solely to the Surviving Corporation or the Paying Agent for payment
of the amount of cash to which they are entitled pursuant to this Agreement.
2.10 TAKING OF NECESSARY ACTION; FURTHER ACTION. Parent, Purchaser and the
Company shall use all reasonable efforts to take all such actions as may be
necessary or appropriate in order to effectuate the Offer and the Merger as
promptly as possible. If, at any time after the Effective Time, any further
actions are necessary or desirable to carry out the purposes of this Agreement
or to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, immunities, powers and franchises of
either or both of the Constituent Corporations, the officers and directors of
the Surviving Corporation are fully authorized in the name of either or both of
the Constituent Corporations or otherwise to take, and shall take, all such
actions.
2.11 DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, if stockholders of the Company are entitled to appraisal rights under
Section 262 of the Delaware Law, Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by stockholders who
(i) have not voted such Shares in favor of the Merger and (ii) have delivered
timely a written demand for appraisal of such Shares in the manner provided in
Section 262 of the Delaware Law shall not be cancelled and converted into the
right to receive the Merger Consideration described in Section 2.5(a), 2.5(b) or
2.5(c), unless and until such holder shall have failed to perfect, or
effectively shall have withdrawn or lost, such holder's right to appraisal and
payment under the Delaware Law. If such holder shall have so failed to perfect,
or effectively shall have withdrawn or lost such right, such holder's Shares
shall thereupon be deemed to have been cancelled and converted as described in
Sections 2.5(a), 2.5(b) and 2.5(c), at the Effective Time, and each Share shall
represent solely the right to receive the appropriate Merger Consideration. From
and after the Effective Time, no stockholder who has demanded appraisal rights
as provided in Section 262(d) of the Delaware Law shall be entitled to vote his
or her Shares for any purpose or to receive payment of dividends or other
distributions with respect to his or her Shares (except dividends and other
distributions payable to stockholders of record at a date which is prior to the
Effective Time). The Company will give Purchaser prompt notice of all written
demands received by the Company for appraisal of Shares.
2.12. FRACTIONAL SHARES.
(a) No certificates or scrip or shares of Parent Stock representing
fractional shares of Parent Stock shall be issued upon the surrender for
exchange of Certificates and such fractional interests will not entitle the
owner thereof to vote or to have any rights of a stockholder of Parent or a
holder of shares of Parent Stock.
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<PAGE>
(b) Notwithstanding any other provision of this Agreement, each holder of
Shares exchanged pursuant to the Merger and each holder of Company Stock Options
who would otherwise have been entitled pursuant to this Agreement to receive a
fraction of a share of Parent Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
share of Parent Stock multiplied by (ii) $21.6875.
2.13. NO FURTHER OWNERSHIP RIGHTS IN COMMON. From and after the Effective
Time, the holders of Shares which were outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided in this Agreement or by applicable law. All shares of
Parent Stock issued and cash paid upon the surrender of Certificates in
accordance with the terms hereof shall be deemed to have been issued or paid in
full satisfaction of all rights pertaining to the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the Company as follows:
3.1. ORGANIZATION AND QUALIFICATION. Parent has been duly incorporated and
is validly existing as a corporation and in good standing under the laws of
Canada and has full corporate power and authority to own its properties and
conduct its business as presently owned and conducted, except where such failure
to be so incorporated, existing and in good standing or to have such power and
authority, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect (as defined below). Parent is duly qualified as a
foreign corporation and in good standing in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Purchaser has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of the State of
Delaware and has the full corporate power and authority to conduct its business
as presently conducted, except where such failure to be so incorporated,
existing and in good standing or to have such power and authority, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect (as defined below). Purchaser has been formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has no liabilities other than liabilities that, upon
merger of Purchaser and the Company, would not result in a breach or violation
by the Surviving Corporation of the covenants contained in (i) the Indenture
dated as of February 22, 1999, between the Company and The Bank of New York, as
Trustee, relating to the 7 3/4% Senior Subordinated Notes Due 2009; (ii) the
Indenture dated as of November 20, 1998, between the Company and The Bank of New
York, as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2008;
(iii) the Indenture dated as of October 8, 1997, between the Company and State
Street Bank, as Trustee, relating to the 6% Convertible Senior Subordinated
Notes Due 2007, (iv) Participation Agreement, dated as of December 21, 1993
among World Color Press, Inc., General Electric Capital Corporation, State
Street Bank and Trust Company of Connecticut, National Association and State
Street Bank and Trust Company of California, N.A. and ancillary documents
related thereto; (v) Participation Agreement, dated as of July 1, 1998 among
World Color Press, Inc., General Electric Capital Corporation, State Street Bank
and Trust Company of Connecticut, National Association and State Street Bank and
Trust Company of California, N.A. and ancillary documents related thereto; (vi)
Master Lease Agreement, dated as of May 11, 1998 by and between BancBoston
Leasing Inc. and World Color Press, Inc., and ancillary documents related
thereto; or (vii) Chattel Leasing Loan and Security Agreement, dated as of
December 20, 1994, by and among World Color
9
<PAGE>
Press, Inc., the lenders named on the signature pages thereto and such other
lenders that may become parties thereto, and BancBoston Leasing Inc., and
ancillary documents related thereto. The copies of the Articles of Amalgamation
of the Parent, dated January 1, 1990, as amended, the Certificate of
Incorporation of the Purchaser, and the By-Laws of each of Parent and the
Purchaser previously delivered to the Company are true, correct and complete as
of the date hereof. When used in connection with Parent or any of its
subsidiaries, the term "Material Adverse Effect" means any change or effect that
is or would be materially adverse to the business, financial condition or
results of operations of Parent and its subsidiaries, taken as a whole, other
than any such effect attributable to or resulting from (i) the public
announcement or consummation of the transactions contemplated by this Agreement
including, without limitation, the loss of customers or employees resulting
therefrom (ii) any change in general economic conditions, financial market
conditions or in conditions affecting Parent's industry generally, (iii) any act
or omission of Parent or any of its subsidiaries taken with the prior consent of
the Company pursuant to Section 5.2 or (iv) actions taken by Parent or any of
its subsidiaries at the specific request of the Company.
3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Purchaser
has the requisite corporate power and authority to enter into this Agreement and
to carry out its respective obligations hereunder. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly authorized by
the Boards of Directors of Parent and Purchaser, and no other corporate
proceedings (other than such consents which have already been obtained) on the
part of Parent or Purchaser are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Purchaser and constitutes a valid and binding obligation
of each such company, enforceable in accordance with its terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors rights generally or by equitable
principles. None of Parent or Purchaser is subject to or obligated under any
provision of (a) its respective Certificate of Incorporation or By-Laws, (b) any
contract, (c) any license, franchise or permit or (d) any law, regulation,
order, judgment or decree, which would be breached or violated or in respect of
which a right of termination or acceleration or any encumbrance on any of its or
any of its subsidiaries assets could be created by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby, other than consent requirements that have already been
satisfied and, in the cases of clauses (b), (c) and (d), any such breaches or
violations which will not, individually or in the aggregate, have a Material
Adverse Effect. Other than in connection with or in compliance with the
provisions of the Delaware Law, the Exchange Act, the securities or blue-sky
laws of the various states of the United States and the provinces of Canada and
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (the
"H-S-R ACT"), no authorization, consent or approval of or filing with, any
public body, court or authority is necessary on the part of Parent or Purchaser
for the consummation by Parent and Purchaser of the transactions contemplated by
this Agreement, except for such authorizations, consents, approvals and filings
as to which the failure to obtain or make would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
Purchaser or on the ability of Parent or Purchaser to perform their respective
obligations hereunder.
3.3. FINANCING ARRANGEMENTS. Purchaser shall have funds available to it on
the Expiration Date sufficient to purchase the Shares and enable the Surviving
Corporation to pay all amounts payable in consideration of the cancellation of
the Company Stock Options in accordance with the terms of this Agreement and the
refinancing of all indebtedness of the Company and its subsidiaries required to
be refinanced in connection with the transactions contemplated by this
Agreement.
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<PAGE>
3.4. OWNERSHIP OF SHARES. As of the date hereof, none of Parent, Purchaser
or any of their subsidiaries owns (beneficially or otherwise) any Shares (except
for Shares that may be held in any of their pension or employee benefit plans).
3.5. SUBSIDIARIES. Each material subsidiary of Parent has been duly
incorporated or organized and is validly existing as a corporation or other
legal entity and is in good standing in its respective jurisdiction of
organization and has full corporate or organizational power and authority to own
its properties and conduct its businesses as presently owned and conducted,
except where such failure to be so incorporated or organized, existing and in
good standing or to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Each material subsidiary of Parent is duly qualified as a foreign corporation or
other legal entity and in good standing in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary except where the failure to be so qualified,
would not reasonably be expected to have a Material Adverse Effect.
3.6. CAPITALIZATION.
(a) As of July 8, 1999, the authorized equity capitalization of Parent
consists of an unlimited number of Multiple Voting Shares, no par value, of
which 62,984,552 are outstanding, an unlimited number of Subordinate Voting
Shares, no par value, of which 59,603,587 are outstanding and an unlimited
number of preferred shares, of which 12,000,000 are outstanding. All of the
outstanding shares of Parent's capital stock are validly issued, fully paid and
nonassessable. The aggregate number of outstanding awards of shares of Parent
Stock that have been issued pursuant to Parent's stock option plans as of July
8, 1999 is 2,568,613.
(b) Except as described in paragraph (a) above, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating Parent or any of its subsidiaries to issue or sell any
shares of capital stock of Parent or of any of its subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any shares of
capital stock of Parent or any of its subsidiaries. The holders of the
outstanding Subordinate Voting Shares are not entitled to any preemptive or
other similar rights.
3.7. COMMISSION FILINGS. Parent has made available to the Company copies
of Parent's (i) Annual Reports on Form 40-F for the fiscal years ended December
31, 1997 and 1998, (ii) Parent's Current Reports on Form 6-K for 1999, (iii)
proxy statements relating to Parent's meetings of stockholders (whether annual
or special) during the years 1997 through 1999, inclusive, and (iv) filings
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), since
January 1, 1997, in each case as filed with the Commission. Since January 1,
1997, Parent has filed all reports, registration statements and other documents
required to be filed under the Exchange Act and the rules and regulations
thereunder, and all such reports, registration statements and other documents
complied (except to the extent revised or superseded by a subsequent public
filing with the Commission prior to the date hereof), in all material respects,
with the requirements of the Exchange Act, such compliance to be determined, to
the extent applicable, in accordance with the standards applied to Parent
Reports in the following two sentences. As of their respective dates, Parent's
Annual Report for 1998, Parent's Current Reports on Form 6-K with respect to
events which occurred in 1999 and Parent's 1999 Proxy Statement (together, the
"PARENT REPORTS") (except to the extent revised or superseded by a subsequent
public filing with the Commission prior to the date hereof) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of Parent (including any related notes and schedules) included in the
reports referred to in clauses (i) and (ii) of the first sentence of this
paragraph have been prepared in accordance with Canadian generally accepted
accounting principles ("CANADIAN GAAP") applied on a consistent basis during the
periods
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<PAGE>
involved (except as may be indicated in the notes thereto) and (except to the
extent revised or superseded by financial statements included in a subsequent
public filing with the Commission prior to the date hereof) fairly present the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended, subject, in the case of the unaudited
consolidated interim financial statements, to normal year-end adjustments and
any other adjustments described therein, and the fact that the interim financial
statements were prepared in accordance with the rules and regulations of the
Commission and, therefore, certain information required by Canadian GAAP may
have been omitted. Except as set forth in Parent Reports, since March 31, 1999,
(i) there has not been a Material Adverse Effect, and (ii) except as permitted
by this Agreement, there has been (1) no declaration, setting aside or payment
of any dividend or other distribution by Parent in respect of Parent Stock, and
(2) no material change in the accounting principles as reflected in the first
footnote of the audited financial statements of Parent for the fiscal year
ending December 31, 1998.
3.8. LITIGATION. Except as disclosed in the Parent Reports, there are no
claims, actions, proceedings, or investigations pending or, to the knowledge of
Parent, threatened in writing against Parent or any of its subsidiaries or any
of their officers or directors (in their capacity as such) before any court or
governmental or regulatory authority or body which would reasonably be expected
to result in a Material Adverse Effect and neither Parent nor any of its
subsidiaries or any of their officers or directors (in their capacity as such)
are subject to any writs, injunctions or decrees which would reasonably be
expected to result in a Material Adverse Effect.
3.9. EMPLOYEES AND LABOR. Except as disclosed in Parent Reports, there is
no pending or, to the knowledge of Parent or any subsidiary, threatened, dispute
between Parent or any subsidiary and their present or past employees other than
such disputes as do not or would not reasonably be expected to result in a
Material Adverse Effect.
3.10. TAXES AND TAX RETURNS. Except for such failures to file or pay as
would not reasonably be expected to result in a Material Adverse Effect or as
disclosed in Parent Reports, Parent and each of its subsidiaries have timely
filed all tax returns, declarations and information statements that they are
required to file and have timely paid all taxes shown thereon except to the
extent that such taxes are being contested in good faith. Parent's consolidated
liability for taxes is adequately provided for by reserves except for any
failure to provide reserves that would not reasonably be expected to result in a
Material Adverse Effect. As used in this Agreement, the term "TAXES" includes
all taxes of any nature whatsoever and however denominated, including, without
limitation, income, capital, franchise, sales, gross receipts, occupation, use,
severance, real and personal property, employment, excise, goods and services,
stamp, impost, governmental fees, environmental, transfer, duties and all other
charges, as well as penalties and interest thereon, imposed by any government or
instrumentality, whether federal, state, provincial, local, foreign or other.
3.11. EMPLOYEE BENEFIT PLANS.
(a) No liability under Title IV of ERISA or under sections 82-86 of the
Ontario Pension Benefits Act (the "PBA") and related regulation under that Act
has been incurred by Parent or any Parent ERISA Affiliate that has not been
satisfied in full, other than liability that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect and no
condition exists that presents a material risk to Parent or any Parent ERISA
Affiliate of incurring a liability under such Title or such provisions of the
PBA, other than liability for premium payments to the Pension Benefit Guaranty
Corporation or Pension Benefits Guarantee Fund assessments and contributions in
the ordinary course of business, which premiums, assessments or contributions
have been or will be paid when due, and other than liability that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
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(b) Neither Parent nor any Parent ERISA Affiliate, nor any of the Parent
Plans, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in any prohibited transactions (within the meaning of
Section 406 of ERISA and Section 4975 of the Code) or engaged in any
transactions prohibited by any applicable Canadian federal or provincial pension
benefits standards legislation or by the Income Tax Act (Canada) (the "ITA")
with respect to any Parent Plan registered under such legislation in connection
with which Parent or any Parent ERISA Affiliate could, either directly or
indirectly, incur any liability (or liabilities) that either individually or the
aggregate would reasonably be expected to have a Material Adverse Effect. The
term "PARENT PLAN" means each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, medical, life or
other insurance, profit-sharing, or pension plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Parent or by any trade or business, whether or not
incorporated, that together with Parent would be deemed a "single employer" with
Parent under Section 414 of the Code (a "PARENT ERISA AFFILIATE") for the
benefit of any employee or director or former employee or former director of
Parent or any Parent ERISA Affiliate.
(c) There has been no change in either the financial position or funded
status of the Parent Plans that are subject to Title IV of ERISA or applicable
Canadian federal or provincial pension benefits standards legislation since the
date of the information relating to the financial position and funded status of
such plans contained in the most recent Parent Form 40-F filed with the SEC or
actuarial reports filed with applicable regulatory authorities under Canadian
federal or provincial pension benefits standards legislation, other than such
changes that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.
(d) To the knowledge of the Parent, each of the Parent Plans that is
intended to satisfy the requirements of Section 125, 401(a) or 501(c)(9) of the
Code satisfies such requirements except where the failure to do so would not
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Parent Plans has been operated and
administered in compliance with its terms and applicable laws, including but not
limited to ERISA, the Code, the ITA and applicable Canadian federal or
provincial pension benefits standards legislation, except where the failure to
do so would not individually or in the aggregate reasonably be expected to have
a Material Adverse Effect.
(e) With respect to any Parent Plan that is a "multiemployer pension plan,"
as such term is defined in Section 3(37) of ERISA, the aggregate withdrawal
liability that Parent and the Parent ERISA Affiliates would incur if Parent and
the Parent ERISA Affiliates incurred a complete withdrawal under each such plan
on the date hereof would not reasonably be expected to have a Material Adverse
Effect.
(f) There are no actions, suits or claims pending, or, to the knowledge of
Parent, threatened or anticipated (other than routine claims for benefits)
against any Parent Plan, the assets of any Parent Plan or against Parent or any
Parent ERISA Affiliate with respect to any Parent Plan that would individually
or in the aggregate reasonably be expected to have a Material Adverse Effect.
(g) The consummation of the transactions contemplated by this Agreement will
not, by the terms of any Parent Plan, result in, and is not, under the terms of
any Parent Plan, a precondition to, (i) any current or former employee or
director of Parent or any Parent ERISA Affiliate becoming entitled to severance
pay, unemployment compensation or any similar payment, or (ii) any acceleration
in the time of payment or vesting, or increase the amount, of any compensation
due to any such current or former employee or director, or (iii) the renewal or
extension of the term of any agreement regarding compensation for any such
current or former employee or director.
(h) Any payment of surplus out of any Parent Plan and any contribution
holidays taken by the Parent or any of its subsidiaries under any Parent Plan
were authorized under the terms of the Parent
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Plan and under applicable law, except any such payments or contribution holidays
which in the aggregate would not reasonably be expected to have a Material
Adverse Effect.
3.12. COMPLIANCE WITH LAWS. Except as disclosed in Parent Reports, Parent
and its subsidiaries are in compliance in all material respects with all laws,
regulations, rules, orders, policies, guidelines and other requirements of all
governmental authorities applicable to their businesses in effect as of the date
hereof except where the failure to do so would not individually or in the
aggregate be reasonably be expected to have a Material Adverse Effect. Parent
and its subsidiaries each hold or have filed in a timely manner applications or
renewals for all permits, licenses, certificates, grants or other authorizations
of foreign, federal, state and local governmental agencies (being collectively
referred to herein as "AUTHORIZATIONS") required for the conduct of its business
as now conducted, and are in compliance with all provisions and conditions
thereof, except for those Authorizations or any such noncompliance which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Such Authorizations constitute all Authorizations
required to permit Parent and its subsidiaries to conduct their business in all
material respects in the manner so conducted from and after the Effective Time
except for such Authorizations the lack of which would not reasonably be
expected to result in a Material Adverse Effect. To the knowledge of Parent,
there is no reasonable ground to believe that any of the foregoing
Authorizations will not, in the ordinary course be renewable upon their
expiration except for those Authorizations for which the failure to renew would
not reasonably be expected to result in a Material Adverse Effect. Anything in
this Section 3.12 notwithstanding, it is understood and agreed that the
foregoing shall not be deemed inaccurate by reason of the ordinary expiration of
Authorizations, the renewal of which is expected to be obtained in the ordinary
course or for which the failure to renew would not reasonably be expected to
result in a Material Adverse Effect.
3.13. ENVIRONMENTAL MATTERS.
(a) Parent and its subsidiaries are in compliance with all applicable
Environmental Laws, except as otherwise disclosed in Parent Reports and except
for noncompliance, which individually or in the aggregate, would not reasonably
be expected to result in a Material Adverse Effect.
(b) Except as disclosed in Parent Reports, to the knowledge of Parent: (i)
there have been no Releases of Hazardous Material in, on, under or affecting the
properties or any surrounding site that Parent or its subsidiaries have operated
or owned and (ii) neither Parent nor any of its subsidiaries has disposed of any
Hazardous Material or any substance in a manner that has led, or would
reasonably be anticipated to lead, to a Release except in each case under clause
(i) or (ii) for those which individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect, and except in
each case for Releases made in compliance in all material respects with
Environmental Laws. Except as disclosed in Parent Reports, neither Parent nor
any of its subsidiaries or, to Parent's knowledge, any predecessors thereof, has
received any notice that it is a "POTENTIALLY RESPONSIBLE PARTY" under any
Environmental Law, except for any notice the basis of which has been determined
and Parent's liability, if any, has been paid or provided for in the financial
statements included as part of Parent Reports and except for any notice
concerning a liability whose amount, individually or in the aggregate, is not
reasonably expected to have a Material Adverse Effect.
(c) For purposes of this Agreement:
(1) "ENVIRONMENTAL LAW" means any applicable law in effect as of the
date hereof regulating or prohibiting Releases of Hazardous Material into
any part of the environment, or pertaining to the protection of natural
resources, the environment and public and employee health and safety
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") (42 U.S.C. (S) 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the
Clean Water Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C.
(S) 7401
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et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 7401 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et
seq., the Oil Pollution Act (33 U.S.C. (S) 2701 et seq.), the Safe Drinking
Water Act (42 U.S.C. (S) 300 (et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. (S) 136 et seq.), the Canadian Environmental
Protection Act (R.S.C. 1985, c. 16), the Transportation of Dangerous Goods
Act (Canada) (S.C. 1992, c. 34), the Dangerous Goods Transportation Act
(Ontario) (R.S.O. 1990, c. D.1), the Environmental Protection Act (Ontario)
(R.S.O. 1990, c. E.19), the Occupational Health and Safety Act (Ontario)
(R.S.O. 1990, c. O.1), the Ontario Water Resources Act (R.S.O. 1990, c.
O.40), the Environment Quality Act (Quebec) (R.S.Q., c. Q-2) and the
Transportation of Dangerous Substances Regulation (Quebec) (R.R.Q. 1981, c.
C-24.2, Reg 4.2) and the regulations promulgated pursuant thereto, and any
such applicable federal, provincial, state or local statutes, and the
regulations promulgated pursuant thereto, as such laws have been amended or
supplemented through the Effective Time;
(2) "HAZARDOUS MATERIAL" means any substance, pollutant, material or
waste which is regulated by Environmental Law, including, without
limitation, coal tar, asbestos, polychlorinated biphenyls, petroleum, and
any material or substance which is defined as a "HAZARDOUS WASTE,"
"HAZARDOUS MATERIAL," "HAZARDOUS SUBSTANCE," "HAZARDOUS AIR POLLUTANT,"
"EXTREMELY HAZARDOUS SUBSTANCE" or "RESTRICTED HAZARDOUS WASTE,"
"CONTAMINANT," "POLLUTANT," "TOXIC WASTE" or "TOXIC SUBSTANCE" under any
provision of Environmental Law; and
(3) "RELEASE" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration in or into the indoor or outdoor environment (whether on site or
off site), or in, into or out of any property owned, operated or leased by
the applicable party or its subsidiaries or predecessors thereof.
3.14. INTELLECTUAL PROPERTY. Except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in Parent Reports filed and publicly available prior to the date of
this Agreement: (a) Parent and each of its subsidiaries owns, is licensed or
otherwise has the right to use, all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as currently conducted; (b)
the use of any Intellectual Property by Parent and its subsidiaries does not
infringe on or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Parent or any subsidiary acquired
the right to use any Intellectual Property; (c) to the knowledge of Parent, no
person is challenging, infringing on or otherwise violating any right of Parent
or any of its subsidiaries with respect to any Intellectual Property owned by
and/or licensed to Parent or its subsidiaries; and (d) neither Parent nor any of
its subsidiaries has received any written notice of any pending claim with
respect to any Intellectual Property used by Parent and its subsidiaries and to
its knowledge no Intellectual Property owned and/or licensed by Parent or its
subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property. For
purposes of this Agreement, "Intellectual Property" shall mean trademarks,
service marks, brand names, certification marks, trade dress and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; proprietary writings and other works, whether
copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
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3.15. YEAR 2000. To the knowledge of Parent, the software, operations,
systems and processes (including, to the knowledge of Parent, software,
operations, systems and processes obtained from third parties) which, in whole
or in part, are used, operated, relied upon, or integral to, Parent's or any of
its subsidiaries, conduct of their business, are Year 2000 Compliant (as
hereinafter defined), to the extent that and except as disclosed in Parent
Reports filed and publicly available prior to the date of this Agreement or
where the failure to be Year 2000 Compliant would not, individually or in the
aggregate, have a Material Adverse Effect. For purposes of this Agreement, "YEAR
2000 COMPLIANT" means the ability to process (including calculate, compare,
sequence, display or store), transmit or receive data or data/time data from,
into and between the twentieth and twenty-first centuries, and the years 1999
and 2000, and leap year calculations without error or malfunction.
3.16. NO STOCKHOLDER VOTE REQUIRED. Except as may be required by the rules
of the New York Stock Exchange, Inc. (the "NYSE"), the Montreal Exchange ("ME")
or the Toronto Stock Exchange ("TSE"), no vote of the stockholders of Parent is
required to approve this Agreement and the transactions contemplated hereby. To
the extent that any such vote is required, the vote of Quebecor Inc. will be
sufficient to approve the transaction at a properly called meeting of the
stockholders of Parent.
3.17. PARENT CONSENTS. Parent has received all consents required under the
Shareholders Agreement between Quebecor Inc. and Caisse de Depot et placement du
Quebec and Parent's By-laws to Parent's entering into this Agreement and the
consummation of the transactions contemplated hereby.
3.18. SUBSCRIPTION RIGHTS. Parent has received confirmation that none of
the subscription rights attaching to its Multiple Voting Shares would be
exercised by the holders thereof in connection with the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
4.1. ORGANIZATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation and in good standing under
the laws of the State of Delaware and has full corporate power and authority to
own its properties and conduct its business as presently owned and conducted
except where such failure to be so incorporated, existing and in good standing
or to have such power and authority, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (as defined below). The
Company is duly qualified as a foreign corporation and in good standing in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary except where the
failure to be so qualified, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The copies of the
Amended and Restated Certificate of Incorporation and By-Laws of the Company
previously delivered to Purchaser are true, correct and complete as of the date
hereof. When used in connection with the Company or any of its subsidiaries, the
term "Material Adverse Effect" means any change or effect that is or would be
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, other than any such
effect attributable to or resulting from (i) the public announcement or
consummation of the transactions contemplated by this Agreement including,
without limitation, the loss of customers or employees resulting therefrom, (ii)
any change in general economic conditions, financial market conditions or in
conditions affecting the Company's industry generally, (iii) any act or omission
of the Company or any of its subsidiaries taken with the prior consent of
Purchaser pursuant to Section 5.1 or (iv) actions taken by the Company at the
specific request of Purchaser or Parent.
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4.2. SUBSIDIARIES. The Company has listed all subsidiaries required to be
so listed on Exhibit 21 ("EXHIBIT 21") to the Company's Annual Report on Form
10-K for the year ended December 31, 1998. The Company has listed all of its
material subsidiaries (the "MATERIAL SUBSIDIARIES"), including the subsidiaries
required to be listed on Exhibit 21, on Section 4.2 of the Company Disclosure
Schedule, and each such subsidiary has been duly incorporated or organized and
is validly existing as a corporation or other legal entity and is in good
standing in its respective jurisdiction of organization and has full corporate
or organizational power and authority to own its properties and conduct its
businesses as presently owned and conducted, except where such failure to be so
incorporated or organized, existing and in good standing or to have such power
and authority, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Each Material Subsidiary is duly
qualified as a foreign corporation or other legal entity and in good standing in
each jurisdiction in which the character of its properties owned or leased or
the nature of its activities makes such qualification necessary except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect. The copies of the Certificate of Incorporation and By-Laws or
comparable organizational documents of each Material Subsidiary that is not
wholly owned by the Company has been previously delivered to Purchaser and are
true, correct and complete as of the date hereof.
4.3. CAPITALIZATION.
(a) As of July 8, 1999, the authorized equity capitalization of the Company
consists of 100,000,000 Shares, par value $.01 per share, of which 37,981,422
are outstanding (including 330,285 shares of Company Restricted Stock), and
50,000,000 shares of preferred stock, par value $.01 per share, of which none
are outstanding. All of the outstanding shares of the Company's capital stock
are validly issued, fully paid (except for the unvested portion of Company
Restricted Stock) and nonassessable. The aggregate number of Shares covered by
outstanding Company Stock Options that have been issued pursuant to the
Company's Stock Option Plans as of July 8, 1999 is 4,798,818. As of July 8,
1999, the Company has granted stock awards totaling 337,500 under the Company's
Restricted Stock Plan. The Company has reserved 3,660,477 Shares for issuance
upon conversion of the 6% Convertible Senior Subordinated Notes.
(b) Except as described in paragraph (a) above, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating the Company or any of its subsidiaries to issue or sell
any shares of capital stock of the Company or of any of its subsidiaries or
securities or obligations of any kind convertible into or exchangeable for any
shares of capital stock of the Company or any of its subsidiaries. The holders
of the outstanding Shares are not entitled to any preemptive or other similar
rights. Upon consummation of the Merger in accordance with the terms of this
Agreement, Purchaser will own the entire equity interest in the Company, and
there will be no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating the Company or any of its
subsidiaries to issue or sell any shares of capital stock of the Company or any
of its subsidiaries other than such rights, options, warrants, conversion
privileges or other agreements, arrangements or commitments, that are the result
of actions taken or caused to be taken by or on behalf of Purchaser.
4.4. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the requisite
corporate power and authority to enter into this Agreement and the Stock Option
Agreement and, subject to adoption of this Agreement by its stockholders as set
forth in Section 6.1, to perform its obligations hereunder and thereunder.
Assuming the accuracy of Purchaser's representation as to the ownership of
Shares and that no pension or employee benefit plan of any of Parent, Purchaser
or any of their subsidiaries owns (beneficially or otherwise) any Shares, the
execution and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement and the Stock Option Agreement have been duly authorized by the
Board of Directors of the Company prior to Parent or Purchaser becoming an
"INTERESTED STOCKHOLDER"
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as defined in Section 203 of the Delaware Law; and, except for adoption of this
Agreement by its stockholders as set forth in Section 6.1, no other corporate
proceedings on the part of the Company are necessary to authorize or consummate
this Agreement and the transactions contemplated hereby. The Board of Directors
of the Company has approved Purchaser and or any other direct or indirect wholly
owned subsidiary of Parent which would be able to make the representations and
warranties in Article III applicable to Purchaser to which Parent may assign its
rights hereunder becoming "INTERESTED STOCKHOLDERS" as defined in Section 203 of
the Delaware Law pursuant to the terms of this Agreement. This Agreement and the
Stock Option Agreement have been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms except to the extent that enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement of
creditors rights' generally or by equitable principles. Except as set forth in
SECTION 4.4 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries is subject to or obligated under any provision of (a) its
certificate or articles of incorporation or by-laws, (b) any contract, (c) any
license, franchise or permit, or (d) any law, regulation, order, judgment or
decree, which would be breached or violated or in respect of which a right of
termination or acceleration or any encumbrance on any of its or any of its
subsidiaries' assets could be created by its execution, delivery and performance
of this Agreement and the consummation by it of the transactions contemplated
hereby, other than, in the case of clauses (b), (c) and (d), any such breaches,
violations, rights or encumbrances which will not, and would not reasonably be
expected to individually or in the aggregate, have a Material Adverse Effect.
Other than in connection with or in compliance with the provisions of the
Delaware Law, the Exchange Act, the securities or blue-sky laws of the various
states of the United States and the H-S-R Act, and except as set forth in
SECTION 4.4 of the Company Disclosure Schedule, no authorization (other than
such Authorizations that are the subject of Section 4.11), consent or approval
of, or filing with, any public body, court or authority is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
other than any authorization, consent or approval the failure to obtain, or any
filing the failure to perform, would not reasonably be expected to have a
Material Adverse Effect.
4.5. COMMISSION FILINGS. The Company has made available to Purchaser
copies of the Company's (i) Annual Reports on Form 10-K for the fiscal years
ended December 27, 1997 and 1998, (ii) Quarterly Reports on Form 10-Q for the
quarter ended March 31, 1999, (iii) proxy statements relating to the Company's
meetings of stockholders (whether annual or special) during the years 1997
through 1999, inclusive, and (iv) filings under the Securities Act, since
January 1, 1997, in each case as filed with the Commission. Except as set forth
in SECTION 4.5 of the Company Disclosure Schedule, since January 1, 1997, the
Company has filed all reports, registration statements and other documents
required to be filed under the Exchange Act and the rules and regulations
thereunder, and all such reports, registration statements and other documents
complied (except to the extent revised or superseded by a subsequent filing with
the Commission prior to the date hereof), in all material respects, with the
requirements of the Exchange Act, such compliance to be determined, to the
extent applicable, in accordance with the standards applied to the Company
Reports in the following two sentences. As of their respective dates, the
Company's Annual Report on Form 10-K for 1998, the Company's Quarterly Reports
on Form 10-Q in 1999, the Company's Current Reports on Form 8-K with respect to
events which occurred in 1999 and the Company's 1999 Proxy Statement (together,
the "COMPANY REPORTS") (except to the extent revised or superseded by a
subsequent filing with the Commission prior to the date hereof) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company (including any related notes and schedules)
included in the reports referred to in clauses (i) and (ii) of the first
sentence of this paragraph have been prepared in accordance with United States
generally accepted
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accounting principles ("U.S. GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and (except
to the extent revised or superseded by financial statements included in a
subsequent filing with the Commission prior to the date hereof) fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended, subject, in the case of
the unaudited consolidated interim financial statements, to normal year-end
adjustments and any other adjustments described therein, and the fact that the
interim financial statements were prepared in accordance with the rules and
regulations of the Commission and, therefore, certain information required by
U.S. GAAP may have been omitted. Except as set forth in SECTION 4.5 of the
Company Disclosure Schedule, or in the Company Reports, since March 31, 1999,
(i) there has not been a Material Adverse Effect, and (ii) except as permitted
by this Agreement, there has been (1) no declaration, setting aside or payment
of any dividend or other distribution by the Company in respect of the Company's
Common Stock, and (2) no material change in the accounting principles as
reflected in the first footnote of the audited financial statements of the
Company for the fiscal year ending December 27, 1998.
4.6. LITIGATION. Except as disclosed in the Company Reports or in Section
4.6 of the Company Disclosure Schedule, there are no claims, actions,
proceedings, or investigations pending or, to the knowledge of the Company,
threatened in writing against the Company or any of its subsidiaries or any of
their officers or directors (in their capacity as such) before any court or
governmental or regulatory authority or body which would reasonably be expected
to result in a Material Adverse Effect and neither the Company nor any of its
subsidiaries or any of their officers or directors (in their capacity as such)
are subject to any writs, injunctions or decrees which would reasonably be
expected to result in a Material Adverse Effect.
4.7. EMPLOYEES AND LABOR.
(a) Except as disclosed in the Company Reports or in Section 4.7 of the
Company Disclosure Schedule, there is no pending or, to the knowledge of the
Company or any subsidiary, threatened, dispute between the Company or any
subsidiary and their present or past employees other than such disputes as do
not or would not reasonably be expected to result in a Material Adverse Effect.
(b) Except as disclosed in the Company Reports or set forth in Section 4.7
of the Company Disclosure Schedule, there are no written employment, consulting
or severance agreements between the Company or any of its subsidiaries on the
one hand, and any director or officer or, to the knowledge of any Group A
Executive (as defined in the Company Disclosure Schedule) after due inquiry,
other employee of the Company, on the other hand, which obligate the Company to
pay to any director, officer or employee more than $200,000 per annum or
$1,000,000 in the aggregate per agreement and which require more than six months
notice for termination.
4.8. TAXES AND TAX RETURNS. Except for such failures to file or pay as
would not reasonably be expected to result in a Material Adverse Effect or as
disclosed in the Company Reports, the Company and each of its subsidiaries have
timely filed all tax returns, declarations and information statements that they
are required to file and have timely paid all taxes shown thereon except to the
extent that such taxes are being contested in good faith. The Company's
consolidated liability for taxes is adequately provided for by reserves except
for any failure to provide reserves that would not reasonably be expected to
result in a Material Adverse Effect. As used in this Agreement, the term "TAXES"
includes all taxes of any nature whatsoever and however denominated, including,
without limitation, income, capital, franchise, sales, gross receipts,
occupation, use, severance, real and personal property, employment, excise,
goods and services, stamp, impost, governmental fees, environmental, transfer,
duties and all other charges, as well as penalties and interest thereon, imposed
by any government or instrumentality, whether federal, state, provincial, local,
foreign or other.
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4.9. EMPLOYEE BENEFIT PLANS.
(a) With respect to each of the material Company Plans (as hereinafter
defined), the Company has made available within 10 business days of the date
hereof to Parent true and complete copies of each of the following documents:
(i) the Company Plan and related documents (including all amendments thereto);
(ii) the most recent annual report, financial statement, and actuarial report,
if any; (iii) the most recent summary plan description, together with each
summary of material modifications, if any, required under ERISA with respect to
such Company Plan; and (iv) the most recent determination letter, if any,
received from the IRS with respect to each Company Plan that is intended to be
tax-qualified under the Code. The term "Company Plan" means each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
pay, medical, life or other insurance, profit-sharing, or pension plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or by any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
with the Company under Section 414 of the Code (a "COMPANY ERISA AFFILIATE") for
the benefit of any employee or director or former employee or former director of
the Company or any Company ERISA Affiliate.
(b) No liability under Title IV of ERISA has been incurred by the Company or
any Company ERISA Affiliate that has not been satisfied in full, other than a
liability that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and no condition exists that
presents a material risk to the Company or any Company ERISA Affiliate of
incurring a liability under such Title, other than liability for premium
payments to the Pension Benefit Guaranty Corporation and contributions in the
ordinary course of business, which premiums have been or will be paid when due,
and other than a liability that, individually or in the aggregate, would not
reasonably be expected have a Material Adverse Effect.
(c) Neither the Company nor any Company ERISA Affiliate, nor any of the
Company Plans, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in any prohibited transactions (within the
meaning of Section 406 of ERISA and Section 4975 of the Code) in connection with
which the Company or any Company ERISA Affiliate could, either directly or
indirectly, incur any liability (or liabilities) that either individually or in
the aggregate would reasonably be expected to have a Material Adverse Effect.
(d) There has been no change in either the financial position or funded
status of the Company Plans that are subject to Title IV of ERISA since the date
of the information relating to the financial position and funded status of such
plans contained in the most recent Company Form 10-K filed with the SEC, other
than such changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(e) To the knowledge of the Company, each of the Company Plans that is
intended to satisfy the requirements of Section 125, 401(a) or 501(c)(9) of the
Code satisfies such requirements except where the failure to do so would not
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Company Plans has been operated and
administered in compliance with its terms and applicable laws, including but not
limited to ERISA and the Code, except where the failure to do so would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(f) With respect to any Company Plan that is a "multiemployer pension plan,"
as such term is defined in Section 3(37) of ERISA, the aggregate withdrawal
liability that the Company ERISA Affiliates would incur if the Company and the
Company ERISA Affiliates incurred a complete withdrawal under each such plan on
the date hereof would not reasonably be expected to have a Material Adverse
Effect.
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(g) There are no actions, suits or claims pending, or, to the knowledge of
the Company, threatened or anticipated (other than routine claims for benefits)
against any Company Plan, the assets of any Company Plan or against the Company
or any Company ERISA Affiliate with respect to any Company Plan that would
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(h) Except as set forth in Section 4.9 of the Company Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not, by
the terms of any Company Plan, result in, and is not, by the terms of any
Company Plan, a precondition to (i) any current or former employee or director
of the Company or any Company ERISA Affiliate becoming entitled to severance
pay, unemployment compensation or any similar payment, or (ii) any acceleration
in the time of payment or vesting, or increase the amount, of any compensation
due to any such current or former employee or director, or (iii) the renewal or
extension of the term of any agreement regarding compensation for any such
current or former employee or director.
4.10. STOCKHOLDER VOTE REQUIRED. Under the Delaware Law and the Company's
Amended and Restated Certificate of Incorporation and By-Laws, the Company's
stockholders are required to adopt this Agreement in accordance with the terms
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares at a meeting called for such purpose.
4.11. COMPLIANCE WITH LAWS. The Company and its subsidiaries are in
compliance in all material respects with all laws, regulations, rules, orders,
policies, guidelines and other requirements of all governmental authorities
applicable to their businesses in effect as of the date hereof except where the
failure to do so would not individually or in the aggregate be reasonably
expected to have a Material Adverse Effect. The Company and its subsidiaries
each hold or have filed in a timely manner applications or renewals for all
Authorizations) required for the conduct of its business as now conducted, and
are in compliance with all provisions and conditions thereof, except for those
Authorizations or any such noncompliance which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect). Such
Authorizations constitute all Authorizations required to permit the Company and
its subsidiaries to operate the businesses of the Principal Properties or
conduct their business in all material respects in the manner so conducted from
and after the Effective Time except for such Authorizations the lack of which
would not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Company, there is no reasonable ground to believe that any of
the foregoing Authorizations will not, in the ordinary course, be renewable upon
their expiration except for those Authorizations, for which the failure to renew
would not reasonably be expected to result in a Material Adverse Effect.
Anything in this Section 4.11 notwithstanding, it is understood and agreed that
the foregoing shall not be deemed inaccurate by reason of the ordinary
expiration of Authorizations, the renewal of which is expected to be obtained in
the ordinary course or for which the failure to renew would not reasonably be
expected to result in a Material Adverse Effect.
4.12. PROPERTIES.
(a) For purposes of this Agreement "PRINCIPAL PROPERTIES" means all of the
properties listed in SECTION 4.12 of the Company Disclosure Schedule and each
reference to real property includes the improvements thereon.
(b) SECTION 4.12 of the Company Disclosure Schedule sets forth the general
location and size of each of the Principal Properties. Except as set forth in
SECTION 4.12 of the Company Disclosure Schedule, the Company and its
subsidiaries, as applicable, hold rights to or interests in each of the
Principal Properties, either in fee simple or under valid, subsisting and
enforceable leases, as the case may be, together with any easements,
rights-of-way or other surface access rights, necessary for the current
operation of each of the Principal Properties, except for any rights or
interests the absence of which would not be reasonably expected to result in a
Material Adverse Effect. Except as set forth in
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SECTION 4.12 of the Company Disclosure Schedule, each Principal Property is held
free and clear of all liens and encumbrances which would not reasonably be
expected to have a Material Adverse Effect.
4.13. ENVIRONMENTAL MATTERS.
(a) The Company and its subsidiaries are in compliance with all applicable
Environmental Laws, except as otherwise disclosed in the Company Reports and
except for noncompliance, which individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(b) Except as disclosed in the Company Reports or as set forth in SECTION
4.13 of the Company Disclosure Schedule, to the knowledge of the Company, (i)
there have been no Releases of Hazardous Material in, on, under or affecting the
properties or any surrounding site that the Company or its subsidiaries have
operated or owned and (ii) neither the Company nor any of its subsidiaries has
disposed of any Hazardous Material or any substance in a manner that has led, or
would reasonably be anticipated to lead, to a Release, except in each case under
clause (i) or (ii) for those which individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect, and except in
each case for Releases made in compliance in all material respects with
Environmental Laws. Except as disclosed in the Company Reports or in SECTION
4.13 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries or, to the Company's knowledge, any predecessors thereof, has
received any notice that it is a "POTENTIALLY RESPONSIBLE PARTY" under any
Environmental Law, except for any notice the basis of which has been determined
and the Company's liability, if any, has been paid or provided for in the
financial statements included as part of the Company Reports and except for a
notice concerning a liability whose amount, individually or in the aggregate, is
not reasonably expected to have a Material Adverse Effect.
4.14. INTELLECTUAL PROPERTY. Except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in the Company Reports filed and publicly available prior to the date
of this Agreement or in Section 4.14 of the Company Disclosure Schedule: (a) the
Company and each of its subsidiaries owns, is licensed or otherwise has the
right to use, all Intellectual Property (as defined below) used in or necessary
for the conduct of its business as currently conducted; (b) the use of any
Intellectual Property by the Company and its subsidiaries does not infringe on
or otherwise violate the rights of any person and is in accordance with any
applicable license pursuant to which the Company or any subsidiary acquired the
right to use any Intellectual Property; (c) to the knowledge of the Company, no
person is challenging, infringing on or otherwise violating any right of the
Company or any of its subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its subsidiaries; and (d) neither the
Company nor any of its subsidiaries has received any written notice of any
pending claim with respect to any Intellectual Property used by the Company and
its subsidiaries and to its knowledge no Intellectual Property owned and/or
licensed by the Company or its subsidiaries is being used or enforced in a
manner that would result in the abandonment, cancellation or unenforceability of
such Intellectual Property.
4.15. INSURANCE. Except as set forth in Section 4.15 of the Company
Disclosure Schedule, all material insurance policies maintained by the Company
or its subsidiaries are in full force and effect and, to the Company's
knowledge, are not currently terminable, and the consummation of the
transactions contemplated by this Agreement would not be expected to give rise
to a right of termination, on the part of the insurance carriers, other than
those policies the absence or termination of which would not reasonably be
expected to have a Material Adverse Effect. In the judgment of the Company, such
policies, with respect to their amounts and types of coverage, are adequate to
insure against risks to which the Company and its subsidiaries are normally
exposed, or to which they reasonably could be expected to be exposed, in the
operation of their business.
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4.16. YEAR 2000. To the knowledge of the Company, the software,
operations, systems and processes (including, to the knowledge of the Company,
software, operations, systems and processes obtained from third parties) which,
in whole or in part, are used, operated, relied upon, or integral to, the
Company's or any of its subsidiaries, conduct of their business, are Year 2000
Compliant (as hereinafter defined), to the extent that and except as disclosed
in the Company Reports filed and publicly available prior to the date of this
Agreement or where the failure to be Year 2000 Compliant would not, individually
or in the aggregate, have a Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The Company
covenants and agrees that, prior to the Effective Time, unless Purchaser shall
otherwise agree in writing (which consent shall not be unreasonably withheld) or
as otherwise expressly contemplated or permitted by this Agreement (including
Section 5.1 of the Company Disclosure Schedule and Section 6.11 of the Company
Disclosure Schedule):
(a) The Company shall use reasonable efforts to conduct the businesses and
affairs of the Company and its subsidiaries only in the ordinary course of
business and consistent with past practice;
(b) except as set forth in Section 5.1 of the Company Disclosure Schedule
and except in connection with the adoption by the Company of a shareholder
rights plan that would not be applicable to, or adversely affect the
transactions contemplated hereby among the parties to this Agreement, neither
the Company nor any of its subsidiaries shall: (i) issue (except pursuant to
employee and non-employee director stock options outstanding on the date hereof)
sell, pledge, dispose of or encumber (or permit any of its subsidiaries to
issue, sell, pledge, dispose of or encumber): (A) any additional shares of, or
any options, warrants, conversion privileges or rights of any kind to acquire
any shares of, any capital stock of the Company or any of its subsidiaries, or
(B) any material assets of the Company or any of its subsidiaries except in the
ordinary course of business; (ii) amend or propose to amend the certificate or
articles of incorporation or bylaws or similar governing instruments of the
Company or any of its subsidiaries; (iii) split, combine or reclassify any
outstanding Shares, or declare, set aside or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to the
Shares; (iv) redeem, purchase or acquire, or offer to acquire (or permit any of
its subsidiaries to redeem, purchase or acquire or offer to acquire) any Shares
or other securities of the Company; or (v) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this Section 5.1(b);
(c) neither the Company nor any of its subsidiaries shall (i) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division or material
assets thereof for aggregate consideration for all such acquisitions in excess
of $25,000,000; (ii) incur any indebtedness for borrowed money or issue any debt
securities except the borrowing of working capital in the ordinary course of
business and consistent with past practice; or (iii) enter into or materially
modify any contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(d) except as set forth in Section 5.1 of the Company Disclosure Schedule,
or in the ordinary course of business in accordance with past practice, neither
the Company nor any of its subsidiaries shall enter into or modify any
employment, severance or similar agreements or arrangements with, or grant any
bonuses, salary increases, severance or termination pay to, any officers,
directors or employees;
(e) except as set forth in Section 5.1 of the Company Disclosure Schedule,
or contemplated by this Agreement (including Section 2.6(a)), neither the
Company nor any of its subsidiaries shall adopt or
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amend any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any officer,
director or employee, other than (i) in the ordinary course of business
consistent with past practice for the benefit or welfare of any employee, (ii)
for the purpose of accelerating the vesting of restricted stock and stock
options, (iii) to the extent required by law or (iv) with respect to new hires
or promotions in the ordinary course of business;
(f) the Company shall use reasonable efforts (i) to cause its current
insurance (or reinsurance) policies not to be cancelled or terminated; and (ii)
to not permit any of the coverage thereunder to lapse, in any such case unless
prior to or promptly after such termination, cancellation or lapse, replacement
policies underwritten by insurance and reinsurance companies of nationally
recognized standing;
(g) the Company shall use reasonable efforts, and cause each of its
subsidiaries to use reasonable efforts, to keep substantially intact their
respective business organizations and good will, keep available the services of
their officers and employees as a group and maintain their present relationships
with suppliers and customers and others having business relationships with them;
and
(h) the Company shall make no awards of restricted stock or grants of
options.
5.2. CERTAIN ACTIONS BY PARENT PENDING THE MERGER. Parent covenants and
agrees that prior to the Effective Time, unless the Company shall otherwise
agree in writing (which consent shall not be unreasonably withheld prior to the
consummation of the Offer), Parent shall not (i) (A) declare, set aside or pay
any dividends on, or make any other distributions in respect of, any of its
capital stock, except that Parent may continue the declaration and payment of
regular quarterly cash dividends (with usual record and payment dates and in
accordance with its past dividend policy), (B) split, combine or reclassify or
otherwise alter the Parent Stock or any other class of Parent's capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase, redeem
or otherwise acquire any shares of Parent Stock or any other class of Parent's
capital stock or other securities convertible into or exchangeable for such
shares, and (ii) authorize for issuance, issue, deliver or sell for below market
value any shares of Parent Stock or any other class of Parent's capital stock,
other than non-voting preferred stock, or other securities convertible into or
exchangeable for such shares (except upon (x) the conversion of Multiple Voting
Shares, (y) the grant of options issued in the ordinary course of business
pursuant to the existing stock option plans of Parent, or (z) the exercise of
stock options).
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. ACTION OF COMPANY STOCKHOLDERS. The Company shall take all action
necessary in accordance with and subject to applicable law and its Amended and
Restated Certificate of Incorporation and By-Laws to convene a meeting of its
stockholders promptly after the consummation of the Offer (or if the Offer has
been terminated pursuant to Section 1.1(e), as promptly as practicable) to
consider and vote upon this Agreement. The Company shall use all reasonable
efforts to obtain the necessary adoption of this Agreement by the stockholders
of the Company, subject to the exercise of fiduciary duties by the Board of
Directors under applicable law. At any such meeting, Purchaser and Parent shall
vote or cause to be voted all of the Shares then owned by them and their
subsidiaries in favor of adoption of this Agreement and the Company shall vote
or cause to be voted all Shares with respect to which proxies in the form
distributed by the Company have been given, and not voted against the adoption
of this Agreement, in favor of adoption of this Agreement. Between the date of
consummation, if any, of the Offer and the date of the Company stockholders
meeting referred to above, Parent and Purchaser shall not sell, transfer,
dispose of or encumber in any manner or otherwise
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subject to any voting or other agreement with any party any of the Shares
purchased in the Offer or any voting rights with respect thereto. Between the
date hereof and the Effective Time, neither Parent nor any of its subsidiaries
shall acquire, or agree to acquire, whether in the open market or otherwise, any
rights in any securities of the Company other than pursuant to the Offer or the
Merger.
6.2. COMPANY PROXY STATEMENT. The Company shall file with the Commission
under the Exchange Act within 20 business days from the date hereof, and shall
use all reasonable efforts to have cleared by the Commission, in each case at
the earliest practicable date, a proxy statement (the "COMPANY PROXY
STATEMENT"), with respect to the adoption by the Company's stockholders of this
Agreement in form and substance reasonably satisfactory to Purchaser and its
counsel. The Company shall use its reasonable best efforts to include the
Company Proxy Statement in the Form F-4 (as defined in Section 6.3). Parent,
Purchaser and the Company will cooperate with each other in the preparation of
the Company Proxy Statement; without limiting the generality of the foregoing,
each of Parent and Purchaser will furnish to the Company the information
relating to it required by the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Company Proxy Statement. The
Company Proxy Statement shall, subject to the exercise of fiduciary duties by
the Board of Directors under applicable law, contain the determination and
recommendation of the Board of Directors of the Company referred to in SECTION
1.2.
6.3. PREPARATION OF THE FORM F-4 AND THE PARENT PROXY STATEMENT; PARENT
STOCKHOLDERS MEETING.
(a) The Parent Stock to be issued in the Merger shall be registered under
the Securities Act on a Form F-4 registration statement (the "Form F-4"). As
soon as practicable following the date of this Agreement, but in no event later
than 20 business days from the date hereof, Parent shall prepare and file with
the Commission the Form F-4. Parent shall use its reasonable best efforts to
respond promptly to any comments of the commission and to have the Form F-4
declared effective under the Securities Act as promptly as practicable after
such filing. Parent shall use its reasonable best efforts to include the Company
Proxy Statement in the Submission of the Form F-4 to the Commission. Parent will
advise the Company, promptly after it receives notice thereof, of the time when
the Form F-4 has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of the
Parent Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of Form F-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
Parent shall obtain, and shall provide evidence reasonably satisfactory to the
Company of, all necessary rulings or orders of Canadian securities regulatory
authorities exempting the distribution by Parent of the shares of Parent Stock
issuable in connection with the Merger and the resale of such shares from the
registration and prospectus delivery requirements and resale restrictions of
applicable Canadian securities laws on terms reasonably satisfactory to the
Company.
(b) Parent shall use its reasonable best efforts to have any approval by the
shareholders of Parent that may be required by the rules and regulations of the
NYSE, ME and TSE waived by such exchanges. If any such waiver is not obtained,
Parent shall, as soon as practicable following the date of this Agreement, take
all action necessary in accordance with Canadian law or the rules of the NYSE,
ME and TSE to convene and hold a meeting of its stockholders (together with any
adjournment or postponement thereof, the "PARENT STOCKHOLDER MEETING") for the
purpose of obtaining the approval (the "PARENT STOCKHOLDER APPROVAL") of a
majority of votes cast by the stockholders of Parent of the issuance of the
Parent Stock in connection with the Merger (the "ISSUANCE"), and shall, through
its Board of Directors, recommend to its stockholders the approval of the
Issuance, and shall use reasonable best efforts to cause a proxy statement to be
mailed to Parent shareholders and to solicit from its stockholders proxies in
favor the issuance.
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6.4. EXPENSES. All costs and expenses incurred in connection with the
Offer, this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, except as set forth in Section 8.3.
6.5. ADDITIONAL AGREEMENTS. (a) Subject to the conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by the Offer and this Agreement,
including, without limitation, cooperating with each other, using reasonable
efforts to obtain all necessary waivers, consents and approvals and effecting
all necessary registrations and filings, including, without limitation,
submissions of information requested by governmental authorities.
(b) Notwithstanding the foregoing, Parent and Purchaser (i) shall on or
prior to November 9, 1999 (unless extended in the sole discretion of the
Company) secure the expiration or termination of any applicable waiting period
under the H-S-R Act or the statutes, rules, regulations, administrative and
judicial doctrines and any other antitrust or competition laws of the United
States, any State thereof, any foreign country or the European Union (the
"ANTITRUST LAWS"), (ii) shall take all action necessary or required, including
any litigation or appeals, to permit the consummation no later than November 9,
1999 (unless extended in the sole discretion of the Company) of the Offer, the
Merger and the other transactions contemplated by this Agreement under the
Antitrust Laws, and (iii) shall avoid the imposition of any injunction or other
order under the Antitrust Laws (and to the extent an injunction or other order
has been issued, shall secure its immediate dissolution) that would prevent the
consummation of the Offer, the Merger or the transactions contemplated by this
Agreement on or prior to November 9, 1999 (unless extended in the sole
discretion of the Company). The Company shall cooperate with Parent and
Purchaser in connection with the satisfaction of the covenant of Parent and
Purchaser in this Section 6.5; PROVIDED, HOWEVER, that the steps or actions
referred to in this Section 6.5 that may be required to be taken by the Company
shall be subject to the consummation of the Offer (or if the Offer has been
terminated pursuant to Section. 1.1(e), to the closing of the Merger).
6.6. LIMITATION ON NEGOTIATIONS.
(a) From the date hereof until the termination hereof, except as set forth
in Section 6.6(c) below, the Company and its subsidiaries will not, directly or
indirectly, make, solicit, initiate or encourage submission of proposals or
offers from any persons (including any of its officers or employees) relating to
an Acquisition Proposal. As used herein, the term "ACQUISITION PROPOSAL" means
any proposal or offer involving a liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or substantially all of
the assets of, or equity interest in, the Company or other similar transaction
or business combination involving the Company or its material subsidiaries.
(b) The Company shall:
(i) immediately cease and cause to be terminated all discussions or
negotiations with third parties with respect to any Acquisition
Proposal, if any, existing on the date hereof; and
(ii) promptly notify Purchaser after receipt of any bona fide
Acquisition Proposal or any inquiry from any person relating to an
Acquisition Proposal and promptly provide Purchaser with a
reasonable summary of the financial and other material terms of
such Acquisition Proposal.
(c) To the extent that the Board of Directors of the Company shall conclude,
acting in good faith, after receiving advice from outside counsel or its
financial advisor, that the following action is necessary
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or appropriate in order for the Board of Directors to act in a manner which is
consistent with its fiduciary duties under applicable law, the Company may:
(i) furnish or cause to be furnished information concerning the Company
and its businesses, properties or assets to a third party;
(ii) engage in discussions or negotiations with a third party concerning
an Acquisition Proposal initiated by such third party;
(iii) following receipt of an Acquisition Proposal, take and disclose to
its stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or otherwise make disclosure to the Company's
stockholders; and
(iv) following receipt of an Acquisition Proposal, (1) through its Board
of Directors, withdraw, modify or amend its recommendation referred
to in Section 1.2, and/or (2) enter into an agreement providing for
the consummation of such Acquisition Proposal; PROVIDED, that no
action shall be taken by the Company pursuant to this subsection
(iv) with respect to any Acquisition Proposal until a time that is
after the third business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company
has received such an Acquisition Proposal, and specifying the
material terms and conditions of, and identifying the person
making, such Acquisition Proposal.
(d) The Company will direct its financial and other advisors and
representatives to comply with each of the covenants contained in this Section
6.8.
6.7. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the others of (to the extent it has knowledge thereof) (i) the occurrence or
failure to occur of any event, which occurrence or failure would cause or may
cause any representation or warranty on its part contained in this Agreement to
be untrue or inaccurate in any respect which would have a Material Adverse
Effect; and (ii) any failure of such party, or any officer, director, employee
or agent thereof, to comply with or satisfy in all material respects any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.8. LISTING. Parent shall use its reasonable best efforts to have the
shares of Parent Stock issued pursuant to this Agreement admitted for listing on
the NYSE, the TSE and the ME (together, the "LISTING"). Any fees in connection
with the Listing payable prior to the Effective Time shall be paid by Parent.
Parent will take no action, for at least three years from the Effective Time, to
cause the Listing to be terminated, except with respect to the NYSE listing, in
accordance with the applicable requirements of the NYSE, including compliance
with Rule 500 of the NYSE, as interpreted in Section 806 of the NYSE Listed
Company Manual as in effect on the date hereof.
6.9. ACCESS TO INFORMATION. Subject to and in accordance with the
Antitrust Laws, from the date hereof to the Effective Time, each party hereto
shall, and shall cause its subsidiaries, officers, directors, employees and
agents to, afford the officers, employees and agents of the other parties hereto
reasonable access at all reasonable times to its officers, employees, agents,
premises, books and records, and properties and shall furnish the other parties
hereto all financial, operating, personal, compensation, tax and other data and
information, that the other party, through its officers, employees or agents,
may reasonably request.
6.10. STOCKHOLDER CLAIMS. The Company shall not settle or compromise any
claim brought by any present, former or purported holder of any securities of
the Company in connection with the Offer or the Merger prior to the Effective
Time, without the prior written consent of Purchaser, which consent may not be
unreasonably withheld, and shall notify Purchaser promptly upon receipt of all
written demands for appraisal rights.
6.11. TREATMENT OF EMPLOYEE COMPENSATION AND BENEFITS.
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(a) Effective no later than the Effective Time, the Company (or Parent, as
applicable) shall enter into agreements and adopt plans or programs, the terms
and conditions of which shall be consistent in all material respects with those
set forth in Section 6.11 of the Company Disclosure (a) Schedule.
(b) For the two-year period immediately following the consummation of the
Offer, Parent shall provide each Group A and Group B executive (as described in
Section 6.11 of the Company Disclosure Schedule) with an annual base salary and
target bonus no less than such executive was eligible to receive immediately
prior to the consummation of the Offer and with employee benefits including
pension, welfare, fringe and other employee benefits that are comparable, on a
benefit by benefit basis, to these benefits as provided by the Company
immediately prior to the consummation of the Offer. Notwithstanding the
foregoing, during the two-year period immediately following the consummation of
the Offer, all employees of Parent who were employees of the Company immediately
prior to the consummation of the Offer shall be entitled to severance benefits
upon termination without Cause (as defined below) that are no less than those
under the severance policies of the Company in effect immediately prior to the
consummation of the Offer.
(c) Bonuses for the fiscal year ended December 31, 1999 ("1999 Fiscal Year")
shall be paid to each participant ("Participant") under the Company's Management
by Objective bonus plan ("MBO Plan") as follows: (i) at the consummation of the
Offer, a pro rata bonus, if any, shall be paid based on achievement of the
Participant's performance targets under the MBO Plan, as determined by Marc L.
Reisch, and the portion of the 1999 Fiscal Year completed as of the consummation
of the Offer and (ii) the balance of such 1999 bonus, if any, shall be paid on
January 31, 2000, based on achievement of the Participant's performance targets
under the MBO Plan, as determined by Mr. Reisch and Charles G. Cavell, and the
portion of the 1999 Fiscal Year after the consummation of the Offer; provided,
however, that if such Participant's employment is terminated after the
consummation of the Offer by Parent or the Company for other than Cause (as
defined in Section 6.11(d)) or by the Participant with Good Reason (as defined
in Section 6.11(d)), the balance of such 1999 bonus, if any, shall be paid
promptly following termination based on the achievement of Participant's
performance targets as determined by Mr. Reisch at the consummation of the Offer
(pursuant to (i) above) and the portion of the 1999 Fiscal Year completed after
the consummation of the Offer.
(d) For purposes of this Section 6.11, (1) "Cause" shall mean the Company
Employee's (i) conviction or guilty plea or plea of nolo contendere of a felony
involving fraud or dishonesty, (ii) theft or embezzlement of property from
Parent or (iii) willful and continued refusal by the Company Employee
substantially to perform the duties of his position (other than any such failure
resulting from the Company Employee's incapacity due to physical or mental
illness or any such actual or anticipated failure after the Company Employee's
issuance of a notice of termination for Good Reason) within a reasonable period
of time after receipt of written notice from Parent specifying the manner in
which Parent believes the Company Employee is not substantially performing the
duties of his position. For this definition, no act or failure to act shall be
deemed willful unless done, or omitted to be done, by the Company Employee not
in good faith and without reasonable belief that the Company Employee's act, or
failure to act was in the best interests of Parent and (2) Good Reason shall
mean (i) the Company Employee is not elected, reelected, or otherwise continued
in the office of Parent or any of its subsidiaries which he held immediately
prior to the consummation of the Offer, or he is removed as a member of the
Board of Directors of Parent or any of its subsidiaries if the Company Employee
was a Director immediately prior to the consummation of the Offer; (ii) the
Company Employee's duties, responsibilities, status or authority are materially
reduced, diminished or adversely altered from those in effect on the
consummation of the Offer or the Company Employee is assigned duties
inconsistent with the Company Employee's status as a senior officer of Parent;
(iii) the Company Employee's future or current compensation or benefits are
reduced; (iv) Parent reduces the potential earnings of the Company Employee
under any performance-based bonus, equity or other incentive plan of Parent in
effect immediately prior to consummation of the Offer; (v) Parent requires
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that the Company Employee's employment be based at a location more than ten
miles away from the location at which it is based at consummation of the Offer;
(vi) any purchaser, assign, surviving corporation, or successor of Parent or its
business or assets (whether by acquisition, merger, liquidation, consolidation,
reorganization, sale or transfer of assets of business or otherwise) fails or
refuses to expressly assume in writing this Agreement and all of the duties and
obligations of Parent thereunder (vii) Parent fails to pay any amounts due to
the Company Employee; (viii) Parent requires the Company Employee to travel
substantially more than he traveled prior to consummation of the Offer; or (ix)
Parent breaches any of the provisions of this Agreement.
(e) If the Offer is terminated pursuant to Section 1.1(e), references to
"consummation of the Offer" in this Section 6.11 shall be deemed replaced by the
term "Effective Time".
6.12. INDEMNIFICATION RIGHTS.
(a) From and after the Effective Time, to the extent not covered by the
insurance set forth in the next succeeding sentence, Parent shall indemnify,
defend and hold harmless the officers, directors and employees of the Company or
any of its subsidiaries against all losses, expenses, claims, damages or
liabilities arising out of claims brought or made by third parties, including,
without limitation, derivative claims, in connection with the transactions
contemplated by this Agreement to the fullest extent permitted or required under
applicable law and shall advance expenses prior to the final disposition of such
claims and liabilities to which this sentence applies. Parent agrees that all
rights to indemnification now existing in favor of the directors, officers or
employees of the Company or any of its subsidiaries (including, without
limitation, any person who was or becomes a director, officer or employee prior
to the Effective Time (the "INDEMNIFIED PARTIES")) under the Delaware Law or as
provided in the Company's Amended and Restated Certificate of Incorporation or
by By-Laws with respect to matters occurring on or prior to the Effective Time
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years after the Effective Time (or, in the case of
claims or other matters occurring on or prior to the expiration of such six year
period which have not been resolved prior to the expiration of such six year
period, until such matters are finally resolved) and Parent shall honor, and
shall cause the Company to honor, all such rights. Parent shall cause to be
maintained in effect for not less than six years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by the Company (provided that Parent may substitute therefor policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the Company's directors, officers or employees) with respect to
matters occurring on or prior to the Effective Time; provided that in no event
shall Parent or the Company be required to expend annually more than 200% of the
amount that the Company spent for these purposes in the last fiscal year to
maintain or procure insurance coverage pursuant hereto; and provided further
that if Parent or the Company are unable to obtain the insurance called for by
this section, Parent or the Company will obtain as much comparable insurance as
is available for such amount per year.
(b) Without limiting the foregoing, in the event any claim, action, suit,
proceeding or investigation to which the provisions of this Section 6.12 are
applicable is brought against any Indemnified Party (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be subject to the approval of the
Surviving Corporation (such approval to not be unreasonably withheld; it being
hereby agreed that the retention of any of Simpson Thacher & Bartlett, Richards,
Layton & Finger or Osler, Hoskin & Harcourt by the Indemnified Parties shall not
require the approval of the Surviving Corporation)); (ii) after the Effective
Time, the Surviving Corporation shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received; and (iii) after the Effective Time, the Surviving Corporation will use
reasonable efforts to assist in the vigorous defense of any such matter,
provided that the Surviving Corporation shall not be liable for any settlement
of any claim effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.12, upon learning of any such
29
<PAGE>
claim, action, suit, proceeding or investigation, shall notify the Surviving
Corporation (but the failure so to notify the Surviving Corporation shall not
relieve it from any liability which it may have under this Section 6.12 except
to the extent such failure materially prejudices the Surviving Corporation). The
Surviving Corporation shall be liable for the fees and expenses hereunder with
respect to only one law firm, in addition to local counsel in each applicable
jurisdiction, to represent the Indemnified Parties as a group with respect to
each such matter unless there is, under applicable standards of professional
conduct, a conflict between the positions of any two or more Indemnified Parties
that would preclude or render inadvisable joint or multiple representation of
such parties.
6.13. PARENT GUARANTEE. Parent unconditionally and irrevocably guarantees
to the Company the due, prompt and faithful performance of, and compliance with,
all agreements and obligations of Purchaser in this Agreement. Parent hereby
agrees that the Company shall have the right to enforce the guarantee set forth
in this Section 6.13 to ensure Purchaser's performance of, and compliance with,
all agreements and obligations of Purchaser in this Agreement without being
required to first proceed against Purchaser.
6.14. AFFILIATES. Prior to the Effective Time of the Merger, the Company
shall deliver to Parent a letter identifying all persons who are, at the time
this Agreement is submitted for adoption by the shareholders of the Company,
"AFFILIATES" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its reasonable efforts to cause each such person to
deliver to Parent as of the Closing Date, a written agreement substantially in
the form attached as EXHIBIT B hereto.
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) Unless the Offer has been terminated pursuant to Section 1.1(e), the
Offer shall have been consummated in accordance with its terms; PROVIDED,
HOWEVER, that this condition shall be deemed to be satisfied if Purchaser fails
to accept for payment and pay for Shares pursuant to the Offer other than as a
result of a failure of a condition thereof;
(b) If the Offer has been terminated pursuant to Section 1.1(e), the waiting
period applicable to the consummation of the Merger under the H-S-R Act shall
have expired or been terminated;
(c) the requisite approval of the respective shareholders of Parent (if
required), and of the Company shall have been obtained;
(d) the Form F-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order
and no stop order or similar restraining order shall be threatened or entered by
the SEC or any state securities administration preventing the Merger, and all
necessary rulings or orders of Canadian securities authorities exempting the
distribution by Parent of the shares of Parent Stock issuable in connection with
the Merger and the resale of such shares from the registration and prospectus
delivery requirements and resale restrictions of applicable Canadian securities
laws shall have been received;
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<PAGE>
(e) the shares of Parent Stock issuable to the Company's stockholders and
holders of Company Stock Options as contemplated by this Agreement shall have
been approved for listing on the NYSE, TSE and ME subject to official notice of
issuance;
(f) there shall have been no law, statute, rule or regulation in the United
States, Canada, the European Union or member state of the European Union enacted
or promulgated which is in effect and, in the judgment of a majority of the
Continuing Directors (or if the Offer has been terminated pursuant to Section
1.1(e), in the reasonable judgement of the Company), has the effect of making
the acquisition of Shares illegal or otherwise prohibits consummation of the
Merger; and
(g) there shall not be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any federal,
provincial or state court or administrative agency or authority in the United
States, Canada, the European Union or any member state of the European Union
enjoining, restraining or otherwise prohibiting the Offer, the Merger or the
acquisition by Purchaser of Shares.
7.2. ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT
THE MERGER. If the Offer is terminated pursuant to Section 1.1(e), then the
obligations of Parent and Purchaser to consummate the Merger shall also be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct immediately prior to the Effective Time,
except for failures to be true and correct that would not be reasonably likely
to have a Material Adverse Effect, PROVIDED, HOWEVER, that representations or
warranties which by their terms are given as of a specified date shall be true
and correct as of such date (except for failures to be true and correct that
would not be reasonably likely to have a Material Adverse Effect).
(b) The Company shall have performed and complied in all material respects
with all agreements and covenants required to be performed or complied with by
it on or before the Effective Time.
7.3. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. If the Offer is terminated pursuant to Section 1.1(e), then the
obligations of the Company to consummate the Merger shall also be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of Parent and Purchaser set forth in
this Agreement shall be true and correct immediately prior to the Effective
Time, except for failures to be true and correct that would not be reasonably
likely to have a Material Adverse Effect, PROVIDED, HOWEVER, that
representations or warranties which by their terms are given as of a specified
date shall be true and correct as of such date (except for failures to be true
and correct that would not be reasonably likely to have a Material Adverse
Effect).
(b) Parent and Purchaser shall have performed and complied in all material
respects with all agreements and covenants required to be performed or complied
with by them on or before the Effective Time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company:
(a) by written mutual consent of Purchaser and the Company prior to the
consummation of the Offer (or, if the Offer has been terminated pursuant to
Section 1.1(e), prior to the Effective Time);
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<PAGE>
(b) by either Purchaser or the Company:
(i) Unless the Offer has been terminated pursuant to Section 1.1(e), if
the Offer shall not have been consummated by November 10, 1999, or,
if all of the Offer Conditions other than the Minimum Condition
shall have been satisfied by November 10, 1999, such later date as
provides at least 15 business days from the date the Purchaser shall
have publicly announced that all of the Offer Conditions other than
the Minimum Condition have been satisfied; or
(ii) a permanent injunction or other final, non-appealable order by any
federal or state court in the United States or federal or
provincial court in Canada which prohibits the consummation of the
Merger shall have been issued and remain in effect; PROVIDED,
HOWEVER, that prior to invoking this right of termination each
party agrees to comply with Section 6.5 hereof; and, PROVIDED
FURTHER, that the occurrence of an event described in this Section
8.1(b)(ii) related to the Antitrust Laws shall constitute a breach
of the covenant of Parent and Purchaser in Section 6.5(b); or
(iii) if the Offer has been terminated pursuant to Section 1.1(e) and if
the Merger has not been consummated on or prior to November 19,
1999;
(c) by Purchaser prior to the consummation of the Offer (or, if the Offer
has been terminated pursuant to Section 1.1(e), prior to the Effective Time):
(i) if (1) the Board of Directors of the Company shall have failed to
recommend, or shall have withdrawn, its approval or recommendation
of the Offer (unless the Offer has been terminated pursuant to
Section 1.1.(e)) or the Merger or shall have resolved to do any of
the foregoing; or (2) if the Company shall have entered into a
definitive agreement to accept an Acquisition Proposal;
(ii) if the Board of Directors of the Company shall have modified its
approval of the Offer (unless the Offer has been terminated
pursuant to Section 1.1.(e)) or the Merger in a manner adverse to
Purchaser and the Minimum Condition shall not have been met on the
then scheduled expiration date of the Offer immediately following
such modification;
(iii) if the Offer shall have terminated or expired in accordance with
the terms of this Agreement (unless the Offer has been terminated
pursuant to Section 1.1.(e)) without Purchaser or a subsidiary of
Parent having purchased any Shares thereunder, PROVIDED, HOWEVER,
that prior to invoking this right of termination Purchaser agrees
to comply with Section 1.1(c) hereof; or
(d) by the Company prior to the consummation of the Offer (or if the Offer
has been terminated pursuant to Section 1.1(e), prior to the Effective
Time):
(i) if the Company withdraws its recommendation of the Offer (unless the
Offer has been terminated pursuant to Section 1.1(e)) or the Merger
pursuant to Section 6.6(c)(iv)(1), or takes the actions described in
Section 6.6(c)(iv)(2), and such action is taken pursuant to, and in
compliance with, such provision; or
(ii) Unless the Offer has been terminated pursuant to Section 1.1(e), if
the Offer shall not have been consummated by October 11, 1999 (and
if the Offer has been terminated pursuant to Section 1.1(e), if the
Merger shall not have been consummated by October 11, 1999) by
reason of not having obtained all required approvals under
Antitrust Laws, PROVIDED, HOWEVER, that such date shall be extended
by each day that the Company is not in substantial compliance with
any second request issued on the transactions contemplated by this
Agreement but only if and to the extent that Parent and Purchaser
are in substantial compliance when the Company is not.
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<PAGE>
Notwithstanding the above, neither the Company nor Purchaser shall be
permitted to terminate this Agreement if the event which gave rise to such
termination right is a result of or arose in connection with any action or
inaction of the party seeking to terminate taken or not taken in breach of the
terms hereof.
8.2. AMENDMENT. Subject to applicable law, this Agreement may be amended
by an instrument signed by each of the parties hereto before or after approval
of the Merger by the stockholders of the Company, if required; PROVIDED,
HOWEVER, that after consummation of the Offer (or, if the Offer has been
terminated pursuant to Section 1.1(e), after the approval of the Merger by the
stockholders of the Company), no amendment may be made which decreases the
amount of the Merger Consideration or effects any change which would adversely
affect the stockholders of the Company (other than Purchaser and its affiliates)
without the approval of the stockholders of the Company (other than Purchaser
and its affiliates).
8.3. FEES UPON TERMINATION. The Company agrees that if this Agreement is
terminated pursuant to:
(a) Section 8.1(b)(i) and at the time of such termination any person, entity
or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Parent
or any of its affiliates) shall have become the beneficial owner of more than
30% of the outstanding Shares (with appropriate adjustments for
reclassifications of capital stock, stock dividends, stock splits, reverse stock
splits and similar events) and such person, entity or group (or any subsidiary
of such person, entity or group) thereafter shall enter into a definitive
written agreement with the Company to accept an Acquisition Proposal at any time
on or prior to the date which is six months after the termination of this
Agreement and such transaction is thereafter consummated;
(b) Sections 8.1(c)(i)(2) or Section 8.1(d)(i); or
(c) Sections 8.1(c)(i)(1), 8.1(c)(ii) or 8.1(c)(iii), and in each case,
prior to the time of termination of this Agreement, there shall exist a bona
fide Acquisition Proposal that has been made known to the Company or publicly
announced by a third party that is more favorable from a financial point of view
than the Offer and the Merger, the Company shall enter into a definitive written
agreement to accept an Acquisition Proposal from such party at any time on or
prior to the date which is six months after the termination of this Agreement
and such transaction shall thereafter be consummated;
(d) then the Company shall pay to Purchaser the Termination Amount (as
defined below). Such payment shall be made as promptly as practicable but in no
event later than (i) in the case of paragraph (b) of this Section, two business
days following termination of this Agreement, (ii) in the case of paragraph (a)
of this Section, upon consummation of such Acquisition Proposal, and (iii) in
the case of paragraph (c) of this Section, upon entering into a definitive
agreement to accept such Acquisition Proposal. Each such payment shall be made
by wire transfer of immediately available funds to an account designated by
Purchaser without set-off or deduction. The term "Termination Amount" as used
herein shall mean (i) if (A) any third party has on or prior to July 26, 1999,
and, at such time, the Company was not in violation of Section 6.6 hereof, (x)
made a bona fide Acquisition Proposal or (y) requested that the Company enter
into negotiations or discussions concerning an Acquisition Proposal or possible
Acquisition Proposal and has indicated a potential price or range of prices in
connection therewith, and (B) a payment is required to be made pursuant to this
Section 8.3 by the Company to Purchaser as a result of the Company entering into
a written agreement to accept an Acquisition Proposal with any such third party
or such third party acquiring 50% or more of the outstanding Shares, $10,662,000
and (ii), in each other circumstance, $42,648,000.
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<PAGE>
8.4. EFFECT OF TERMINATION.
(a) The provisions of Sections 6.4 (expenses), 6.12 (indemnification) and
8.3 (termination fees) shall survive the termination of this Agreement. The
provisions of the Confidentiality Agreement shall also survive the termination
of this Agreement.
(b) The rights of termination provided for in Section 8.1 shall not be an
exclusive remedy hereunder but shall be in addition to any other legal or
equitable remedies that may be available to any non-defaulting party hereto
arising out of any default hereunder by any other party hereto, and any party
hereto shall continue to have the right following termination hereof to all
legal and equitable remedies against any other party hereto for any breach of
any representation, warranty, covenant or agreement contained herein by such
other party prior to the termination hereof; PROVIDED, HOWEVER, that in the
event that the amount set forth in Section 8.3 shall have been paid to
Purchaser, there shall be no liability on the part of either the Company or its
respective officers or directors, except for a willful and intentional breach of
any representation, warranty, covenant or agreement contained herein.
8.5. WAIVER. At any time prior to the Effective Time and subject to the
provisions of this Agreement, any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto or
(ii) waive compliance with any of the agreements of any other party or with any
conditions to its own obligations, in each case only to the extent such
obligations, agreements and conditions are intended for its benefit.
ARTICLE IX
GENERAL PROVISIONS
9.1. BROKERS. (a) The Company represents and warrants that no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission, or to the reimbursement of any of its expenses, in connection
with the Offer or the Merger or any similar transaction based upon arrangements
made by or on behalf of the Company, except for the arrangements between the
Company and Morgan Stanley & Co. Incorporated and the arrangements between the
Company and Kohlberg Kravis Roberts & Co., L.P.
(b) Parent and Purchaser represent and warrant to the Company that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission, or to the reimbursement of any of its expenses, in
connection with the Offer or the Merger or any similar transaction based upon
arrangements made by or on behalf of Parent or Purchaser, except for the
arrangements between Parent and RBC Dominion Securities and Credit Suisse First
Boston Corporation.
9.2. PUBLIC STATEMENTS. Except as required by applicable law or stock
exchange regulation, none of Parent or Purchaser, on the one hand, or the
Company, on the other hand, shall make any public announcement or statement with
respect to the Offer, the Merger or this Agreement without the approval of the
Company or Purchaser, respectively, which approval shall not be unreasonably
withheld. Moreover, the parties hereto agree to consult with each other prior to
issuing each public announcement or statement with respect to the Offer, the
Merger or this Agreement.
9.3. NOTICES. All notices and other communications hereunder shall be
given by telephone and immediately confirmed in writing and shall be deemed
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser:
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<PAGE>
QUEBECOR PRINTING INC.
612 St. Jacques Street
Montreal, Quebec H3C 4M8
Attention: Vice President, Legal Affairs & Secretary
with copies to:
Arnold & Porter
399 Park Avenue
New York, New York 10022-4690
Attention: John A. Willett, Esq.
(b) if to the Company:
WORLD COLOR PRESS, INC.
The Mill
340 Pemberwick Road
Greenwich, CT 06831
Attention: General Counsel
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: David J. Sorkin, Esq.
9.4. INTERPRETATION. When a reference is made in this Agreement to a
subsidiary of Parent or the Company, the word "SUBSIDIARY" means any
"MAJORITY-OWNED SUBSIDIARY" (as defined in Rule 12b-2 promulgated under the
Exchange Act) of Parent or the Company, as the case may be; PROVIDED, HOWEVER,
that the Company shall in no event and at no time be considered a subsidiary of
Purchaser for purposes of this Agreement. "Affiliate" of a person means a person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
References to Sections and Articles refer to sections and articles of this
Agreement unless otherwise stated. Any reference to dollars or "$" shall refer
to U.S. dollars.
9.5. REPRESENTATIONS AND WARRANTIES. Any matters disclosed in any of a
party's representations and warranties or the section of such party's disclosure
schedule with respect to such representations and warranties shall be deemed
disclosed for purposes of the other representations and warranties of such party
as long as the applicability of such matters to such representations and
warranties is reasonably apparent.
9.6. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify the Agreement to preserve, to the extent legally
permitted, each party's anticipated benefits and obligations under this
Agreement.
9.7. MISCELLANEOUS. This Agreement (including the agreements that are
exhibits hereto) and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter hereof.
35
<PAGE>
This Agreement (a) is not intended to confer upon any other person any rights or
remedies hereunder, except as set forth in Section 9.10; and (b) shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any portion of their rights under this Agreement to any of their
subsidiaries (PROVIDED, HOWEVER, that in the event of any such assignment,
Parent shall cause such assignee to execute and become a party to this agreement
and such assignee shall be vested with all the rights and obligations assigned
to it by the assignor as if it were named in this Agreement), but no such
assignment shall relieve Parent or Purchaser, as applicable, of their
obligations hereunder, and except that this Agreement may be assigned by
operation of law to any corporation with or into which Purchaser may be merged
as long as the surviving corporation in such merger complies with the
representations and warranties and covenants of Purchaser set forth herein and
(c) shall be governed in all respects, including validity, interpretation and
effect, by the internal laws of the State of Delaware, without giving effect to
the principles of conflict of laws thereof. The parties hereto expressly consent
to the personal jurisdiction of the courts of the United States of America and
of the courts of the State of Delaware, in each case sitting in the State of
Delaware. Each of the parties hereto irrevocably waives and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) the defense of sovereign
immunity, (b) any claim that it is not personally subject to the jurisdiction in
any federal court located in the State of Delaware or Chancery or other Courts
of the State of Delaware for any reason other than the failure to serve process
in accordance with this Section 9.7, (c) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to
judgement, attachment in aid of execution of judgement, execution of judgement
or otherwise), and (d) to the fullest extent permitted by applicable law, that
(i) the suit, action or proceeding in any such court is brought in an
inconvenient forum (ii) the venue of such suit, action or proceeding is improper
or (iii) this Agreement, or the subject matter hereof, may not be enforced in or
by such courts. Parent further designates Purchaser as its duly appointed agent
for the service of summonses and other legal processes in the State of Delaware
(a "Service Agent").
9.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but together shall be
construed as one document.
9.9. SURVIVAL. The representations, warranties, covenants and agreements
of the parties set forth herein shall terminate as of the Effective Time, except
as provided in Sections 6.11 and 6.12.
9.10. THIRD PARTY BENEFICIARIES. The parties entitled to the employee
benefits pursuant to the terms of Section 6.11 and indemnification pursuant to
the terms of Section 6.12 are expressly made third party beneficiaries solely of
Section 6.11 and Section 6.12, respectively, of this Agreement. In addition,
holders of Company Stock Options and Company Restricted Stock are expressly made
third party beneficiaries solely of Section 2.6 of this Agreement.
36
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed on the date first written above by their respective
officers thereunder duly authorized.
<TABLE>
<S> <C> <C>
QUEBECOR PRINTING INC.
By:
-----------------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By:
-----------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
PRINTING ACQUISITION INC.
By:
-----------------------------------------
Name: Charles G. Cavell
Title: President
By:
-----------------------------------------
Name: Christian M. Paupe
Title: Treasurer
WORLD COLOR PRESS, INC.
By: /s/ ROBERT G. BURTON
-----------------------------------------
Name: Robert G. Burton
Title: Chairman and Chief Executive
Officer
</TABLE>
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed on the date first written above by their respective
officers thereunder duly authorized.
<TABLE>
<S> <C> <C>
QUEBECOR PRINTING INC.
By: /s/ CHARLES G. CAVELL
-----------------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By: /s/ CHRISTIAN M. PAUPE
-----------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
PRINTING ACQUISITION INC.
By: /s/ CHARLES G. CAVELL
-----------------------------------------
Name: Charles G. Cavell
Title: President
By: /s/ CHRISTIAN M. PAUPE
-----------------------------------------
Name: Christian M. Paupe
Title: Treasurer
WORLD COLOR PRESS, INC.
By:
-----------------------------------------
Name:
Title:
</TABLE>
<PAGE>
ANNEX I
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex I have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered shares of Common Stock promptly after termination or withdrawal of the
Offer), pay for any Shares tendered pursuant to the Offer, and may postpone the
acceptance for payment, or, subject to the restriction referred to above,
payment for, Shares tendered pursuant to the Offer, and may terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for) to the
extent permitted by the Merger Agreement, if (i) at the expiration of the Offer,
a number of Shares which, together with any Shares owned by Parent or Purchaser,
would constitute more than 50% of the voting power (determined on a
fully-diluted basis), of all the securities of the Company entitled to vote
generally in a merger shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer (the "MINIMUM CONDITION"), or (ii) if, at
any time on or after July 12, 1999 and prior to the acceptance for payment for
any such Shares, any of the following conditions occurs or has occurred and
continues to exist (each of paragraphs (a) through (f) providing a separate and
independent condition to Purchaser's obligations pursuant to the Offer):
(a) there shall be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any Canadian or
United States federal, provincial or state court or United States federal or
administrative agency or authority, enjoining, restraining or otherwise
prohibiting the Offer, the Merger or the acquisition by Purchaser of Shares;
(b) any waiting periods under the H-S-R Act applicable to the purchase of
Shares pursuant to the Offer shall not have expired or been terminated;
(c) there shall have been any law, statute, rule or regulation in the United
States, Canada, the European Union or any member state of the European Union,
enacted, promulgated or proposed that has the effect of making the acquisition
of Shares illegal or otherwise prohibits consummation of the Merger;
(d) any representation or warranty of the Company in the Merger Agreement
shall not be true and correct in any respect that is reasonably likely to have a
Material Adverse Effect, in each case as if such representation or warranty were
made at the time of such determination (except for any representations or
warranties which by their terms are given as of a specified date, PROVIDED that
such representations or warranties shall have been true and correct on such
date, except for failures to be true and correct that would not be reasonably
likely to have a Material Adverse Effect);
(e) the Company shall fail to perform or comply in any material respect with
any covenant or agreement to be performed or complied with by the Company under
the Merger Agreement required to be performed or complied with by it prior to
the consummation of the Offer;
(f) The Merger Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition (except for any action or inaction by Purchaser, Parent or any of
their respective affiliates constituting a breach of the Merger Agreement),
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and (i) may
be asserted by Purchaser regardless of the circumstances giving rise to such
condition (except for any action or inaction by Purchaser, Parent or any of
their respective affiliates constituting a breach of the Merger Agreement) or
(ii) (other than the Minimum Condition) may be waived by Purchaser in whole at
any time or in part from time to time in its reasonable discretion. The failure
by Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right and may be asserted at any time and from time to time.
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
QUEBECOR WORLD (USA) INC.
FIRST
The name of the corporation is Quebecor World (USA) Inc. (the
"Corporation"). The Corporation was originally incorporated under the name of
World Color Press, Inc. The original certificate of incorporation of the
Corporation was filed with the Delaware Secretary of State on September 24,
1984.
SECOND
The address of its registered office in the State of Delaware is Corporation
Trust Center, 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "DGCL").
FOURTH
The total number of shares of common stock which the Corporation shall have
the authority to issue is three thousand (3,000), par value $1.00 per share,
amounting in the aggregate to $3,000.
FIFTH
The Corporation is to have perpetual existence.
SIXTH
In furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, alter or repeal the by-laws
of the Corporation.
SEVENTH
Elections of directors need not be by written ballot unless the by-laws of
the Corporation shall so provide. Meetings of stockholders may be held within or
without the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the by-laws of the Corporation.
EIGHTH
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
<PAGE>
NINTH
No director of the Corporation shall be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
The undersigned hereby declare that this Amended and Restated Certificate of
Incorporation has been duly adopted in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, under penalties of perjury, the undersigned have
examined this Amended and Restated Certificate of Incorporation, and to the best
of their knowledge it is true, correct and complete, and the undersigned further
declare that the undersigned have authority to sign this Amended and Restated
Certificate of Incorporation on behalf of Quebecor World (USA) Inc., all as of
this (th) day of .
<TABLE>
<S> <C> <C>
QUEBECOR WORLD (USA) INC.
By: /s/
-----------------------------------------
Name:
Title:
</TABLE>
ATTEST:
- ----------------------------
Name:
Its Secretary
<PAGE>
EXHIBIT B
FORM OF COMPANY AFFILIATE LETTER
QUEBECOR PRINTING INC.
[Address]
Ladies and Gentlemen:
The undersigned, a holder of shares of common stock, par value $0.01 per
share ("Company Common Stock"), of World Color Press, Inc., a Delaware
corporation (the "Company"), is entitled to receive in connection with the
merger (the "Merger") between the Company and a direct wholly owned subsidiary
of Quebecor Printing Inc. ("Parent") subordinate voting shares, no par value
("Parent Stock"), of Parent. The undersigned acknowledges that the undersigned
may be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Act"), although nothing contained herein should be construed as an admission of
such fact.
If in fact the undersigned is an affiliate under the Act, the undersigned's
ability to sell, assign or transfer the shares received by the undersigned
pursuant to the Merger may be restricted unless such transaction is registered
under the Act or an exemption from such registration is available. The
undersigned understands that such exemptions are limited and the undersigned has
obtained advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale of such
securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent Stock received
by the undersigned pursuant to the Merger except (i) pursuant to an effective
registration statement under the Act; (ii) in conformity with the limitations
specified by Rules 144 and Rule 145(d); or (iii) in a transaction that, in the
opinion of Simpson Thacher & Bartlett or other counsel reasonably satisfactory
to Parent or as described in a "no-action" or interpretive letter from the Staff
of the Securities and Exchange Commission (the "SEC"), is not required to be
registered under the Act.
In the event of a sale or other disposition by the undersigned of Parent
Stock pursuant to Rule 145(d)(1), the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Parent Stock disposed of by the
undersigned, but that upon receipt of such evidence of compliance including,
without limitation, an opinion of Simpson Thacher & Bartlett or another counsel
reasonably satisfactory to them, the transfer agent shall effectuate the
transfer of the shares sold as indicated in the letter.
The undersigned acknowledges and agrees that the following legend will be
placed on certificates representing the Parent Stock received by the undersigned
pursuant to the Merger or held by a transferee thereof, which legend will be
removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from Simpson Thacher &
Bartlett or another independent counsel reasonably satisfactory to Parent to the
effect that such legends are no longer required for the purposes of the Act or
the fourth paragraph of this letter:
"The Securities represented by this certificate were issued in a
transaction to which Rule 145 under the United States Securities Act of 1933
(the "Act") applies. The securities represented by this certificate may be
transferred in the United States only in accordance with Rule 145(d) or
pursuant to an effective registration statement or exemption from
registration under the Act."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of the Parent Stock
and (ii) the receipt by Parent of this letter is an inducement and a condition
to Parent's obligations to consummate the Merger.
Very truly yours,
<PAGE>
ANNEX I TO EXHIBIT B
[Date]
Quebecor Printing Inc.
On the undersigned sold subordinate voting shares,
no par value, of Quebecor Printing Inc. ("Parent"). The shares were received by
the undersigned in connection with the merger of a direct wholly owned
subsidiary of Parent with and into World Color Press, Inc.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the shares sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the shares were sold in "brokers'
transactions" within the meaning of Section 4(4) of the Act or in transactions
directly with a "market maker" as that term is defined in Section 3(a)(38) of
the Securities Exchange Act of 1934, as amended. The undersigned further
represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the shares in anticipation or in connection with
such transactions, and that the undersigned has not made any payment in
connection with the offer or sale of the shares to any person other than to the
broker who executed the order in respect of such sale.
Very truly yours,
<PAGE>
Exhibit 99.(c)(2)
TENDER, VOTING AND OPTION AGREEMENT
TENDER, VOTING AND OPTION AGREEMENT (this "Agreement"), dated as of
July 12, 1999, by and among Quebecor Printing Inc., a company formed under the
laws of Canada ("Parent") and each of the parties listed on the signature page
hereto (each, a "Stockholder" and collectively, the "Stockholders").
WHEREAS, Parent, World Color Press, Inc., a company organized under
the laws of Delaware (the "Company") and Printing Acquisition Inc., a Company
organized under the laws of Delaware and a wholly-owned subsidiary of Parent
("Acquisition Sub") are parties to that certain Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"; capitalized terms used and
not otherwise defined herein having the meaning set forth in the Merger
Agreement);
WHEREAS, Parent and the Company are parties to that certain Stock
Option Agreement dated as of the date hereof (the "Stock Option Agreement");
WHEREAS, pursuant to the Merger Agreement, Acquisition Sub will
commence a tender offer (the "Offer") to acquire up to 23,500,000 shares of the
outstanding common stock, par value $0.01 per share, of the Company ("Company
Common Stock"), at a price of $35.69 per share in cash (the "Per Share Amount")
upon the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement and make the Offer, Parent has required that each of the Stockholders
enter into this Agreement; and
WHEREAS, each Stockholder has agreed that the number of shares of
Company Common Stock ("Shares") set forth opposite the name of such Stockholder
on Schedule A hereto (the "Subject Shares") shall be subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereby agree as follows:
SECTION 1. AGREEMENTS OF THE STOCKHOLDERS
(a) AGREEMENT TO TENDER. Until the earlier of the termination of the
Merger Agreement and the termination of the Offer without the purchase of Shares
pursuant thereto, each Stockholder hereby agrees to validly tender pursuant to
the Offer and not to withdraw all of such Stockholder's Subject Shares. Each
Stockholder will receive the same Per Share Amount received by the other
stockholders of the Company in the Offer with respect to the Shares tendered by
it in the Offer. On the first business day after the date the Shares are
accepted
<PAGE>
2
for payment and purchased by Acquisition Sub pursuant to the Offer, Acquisition
Sub or Parent shall make payment by wire transfer of immediately available funds
to each Stockholder in an amount in cash equal to the aggregate purchase price
for such Stockholder's Subject Shares in the Offer to an account designated by
such Stockholder. Notwithstanding the foregoing, no Stockholder who is a natural
person will be required to tender any of such Stockholder's Shares if such
Stockholder would be subject to liability under Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as a result of any such
tender of Shares purchased prior to the date of this Agreement.
(b) VOTING. Subject to the receipt of proper notice and the absence
of a preliminary or permanent injunction or other final order by any court or
other administrative or judicial authority barring such action, each Stockholder
shall do the following:
(1) be present, in person or represented by proxy, at each meeting
(whether annual or special, and whether or not an adjourned or postponed
meeting) of the stockholders of the Company, however called, or in
connection with any written consent of the stockholders of the Company, so
that all Subject Shares then held by such Stockholder and entitled to vote
may be counted for the purposes of determining the presence of a quorum at
such meetings; and
(2) at each such meeting held before the Effective Time and with
respect to each such written consent, vote (or cause to be voted), or
deliver a written consent (or cause a consent to be delivered) covering,
all the Subject Shares then held by such Stockholder to approve the Merger
and the Merger Agreement and any action required in furtherance thereof
and against any action which would reasonably be expected to result in a
failure of the conditions described in Article VIII of the Merger
Agreement to be satisfied.
(c) NO INCONSISTENT AGREEMENTS. Each Stockholder shall not enter
into any voting agreement or grant a proxy or power of attorney with respect to
the Subject Shares which is inconsistent with this Agreement.
(d) WAIVER OF APPRAISAL RIGHTS. To the extent permitted by
applicable law, each Stockholder hereby agrees to waive any appraisal,
dissenters' or similar rights that such Stockholder may have under Delaware law
with respect to the Merger.
(e) TRANSFER OF SUBJECT SHARES. From the date hereof until the
earlier of the termination of the Merger Agreement and the consummation of the
Merger, each Stockholder agrees not to transfer (other than pursuant to the
Offer) record ownership or beneficial ownership, or both, of any Subject Shares
to any Person or "group" (as determined pursuant to Rule 13d-5 under the
Exchange Act) other than to an affiliate of such Stockholder that agrees to
comply with the requirements of Section 1 hereof with respect to the transferred
Shares. For the purposes of this Agreement, the term "transfer" means a sale, an
assignment, a grant, a transfer, a pledge, the creation of a lien or other
disposition of any Subject Shares or any interest of any nature in any Subject
Shares, including, without limitation, the "beneficial
<PAGE>
3
ownership" of such Subject Shares (as determined pursuant to Regulation 13D-G
under the Exchange Act).
SECTION 2. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS. Each
Stockholder severally represents and warrants to Parent as follows:
(a) EXISTENCE AND POWER. Each Stockholder that is a partnership (1)
is a partnership duly formed, validly existing and in good standing under
the laws of the State of its formation and (2) has full partnership
authority to execute and deliver this Agreement.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by each
Stockholder of this Agreement and the performance by it of its obligations
under this Agreement have, (1) in the case of each Stockholder that is a
partnership, been duly authorized by all necessary action and (2) do not
and will not conflict with or result in a violation pursuant to, (A) in
the case of each Stockholder that is a partnership, any provision of its
organizational documents or partnership agreement, or (B) any loan or
credit agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to such Stockholder, the Subject Shares or any of
such Stockholder's other material properties or assets.
(c) BINDING EFFECT. This Agreement constitutes a valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors' rights generally, by general equity
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law), or by an implied covenant of good faith
and fair dealing.
(d) OWNERSHIP. As of the date hereof, each Stockholder is the record
owner or beneficial owner of the Subject Shares set forth opposite its
name on Schedule A, free and clear of liens (other than liens arising
hereunder). As of the date of this Agreement, each Stockholder does not
own beneficially or of record any Shares other than the Subject Shares,
Shares issuable upon the exercise of outstanding stock options and Shares
of Company Restricted Stock (as defined in the Merger Agreement). No
Stockholder has appointed or granted any proxy which is still effective
with respect to its Subject Shares. As of the date hereof, each
Stockholder has sole voting power or power to direct the vote of the
Subject Shares set forth opposite its name on Schedule A and on the record
date and the date of the Company's stockholders' meeting at which the
Merger shall be presented for approval, each Stockholder will have sole
voting power or power to direct the vote of such Stockholder's Subject
Shares then held by such Stockholder.
<PAGE>
4
(e) LITIGATION. There is no action, suit, investigation, complaint
or other proceeding pending against any Stockholder or, to the knowledge
of any Stockholder, threatened against any Stockholder or any other Person
that restricts in any material respect or prohibits (or, if successful,
would restrict or prohibit) the exercise by any party or beneficiary of
its rights under this Agreement or the performance by any party of its
obligations under this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
represents and warrants to each Stockholder as follows:
(a) EXISTENCE AND POWER. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Canada and (2) has
full corporate power and authority to execute and deliver this Agreement.
(b) AUTHORIZATION; CONTRAVENTION. The execution and delivery by the
Parent of this Agreement and the performance by it of its obligations
under this Agreement have been duly authorized by all necessary corporate
action and do not and will not conflict with or result in a violation
pursuant to (A) any provision of its organizational documents or (B) any
loan or credit agreement, note, mortgage, bond, indenture, lease, benefit
plan or other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Parent or any of its material properties
or assets.
(c) BINDING EFFECT. This Agreement constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws relating to or
affecting creditors' rights generally, by general equity principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law), or by an implied covenant of good faith and fair
dealing.
(d) LITIGATION. There is no action, suit, investigation, complaint
or other proceeding pending against Parent or any of its affiliates or, to
the knowledge of Parent, threatened against it or any other Person
(including its affiliates) that restricts in any material respect or
prohibits (or, if successful, would restrict or prohibit) the exercise by
any party or beneficiary of its rights under this Agreement or the
performance by any party of its obligations under this Agreement.
SECTION 4. OPTION OF PARENT. Each Stockholder hereby grants to
Parent an irrevocable option (collectively, with respect to all the
Stockholders' Subject Shares, the "Option") to purchase all, but not less than
all, of such Stockholder's Subject Shares, upon the following terms and
conditions:
<PAGE>
5
(1) The exercise price for each Share subject to the Option shall be
the Per Share Amount, payable in cash. Parent may exercise the Option if, but
only if, there has occurred a Triggering Event (as defined in the Stock Option
Agreement) and notice of such exercise is received prior to the occurrence of a
KKR Option Termination Event (as defined below); provided, however, that a
Triggering Event will be deemed to occur if all of the conditions prerequisite
to the payment of the Termination Amount pursuant to Section 8.3(a) of the
Merger Agreement have been satisfied except for the consummation of the
transaction described in such Section 8.3(a). For purposes of clarification, the
date of a Triggering Event shall not be the date on which the Termination Amount
is paid, but the date on which the Termination Amount becomes payable.
Notwithstanding anything to the contrary, Parent may exercise the Option only
for all of the Stockholders' Subject Shares in the aggregate.
(2) Each of the following shall be a "KKR Option Termination Event":
(a) the Effective Time (as defined in the Merger Agreement); (b) termination of
the Merger Agreement in accordance with the provisions thereof if such
termination occurs prior to the occurrence of a Triggering Event and at the time
of such termination the conditions prerequisite to a Triggering Event occurring
in the future are incapable of being fulfilled; (c) the passage of nineteen
business days after the date of the Triggering Event; or (d) November 9, 1999,
if all governmental and regulatory approvals for Parent to exercise its rights
under this Section 4 shall not then have been obtained or if an injunction or
similar legal prohibition on exercise shall then be in effect.
(3) In the event of any change in the number or kind of such
Stockholder's Subject Shares by reason of stock dividends, stock splits,
recapitalizations, combinations, reclassifications, exchanges or changes of
shares, then the exercise price for such Stockholder's Subject Shares shall be
adjusted appropriately so that the total amount to be paid upon exercise in
whole of the Option with respect to such Stockholder's Subject Shares would
remain unchanged.
(4) In the event Parent wishes to exercise the Option, it shall send
a written notice (the "Notice") to each Stockholder specifying a date (not later
than October 10, 1999) for the closing (the "Closing") of such purchase of all
of such Stockholder's Subject Shares. The Closing will take place at such
location in New York City as Parent shall specify in the Notice. At the Closing,
payment for such Stockholder's Subject Shares then being purchased shall be made
to such Stockholder by wire transfer in immediately available funds in the
amount of the aggregate exercise price, against delivery to Parent of a
certificate or certificates registered in its name evidencing such Subject
Shares. Such Subject Shares will be imprinted with any legends required by
applicable securities laws. In the event that the Closing does not occur on or
prior to October 10, 1999 (the "End Date"), and notwithstanding anything in this
Agreement to the contrary, the Option and the exercise of the Option shall
terminate and be void.
(5) Parent agrees that, in the event that the Option is exercised,
it will agree to purchase from any holder of Shares with tag-along or similar
rights granted by any Stockholder that wishes to sell its Shares to Parent, all
shares of Company Common Stock of such holder on the same terms of the purchase
of the Subject Shares pursuant to the exercise of the Option.
<PAGE>
6
(6) Once the Option is exercised, Parent must pay to the
Stockholders the aggregate exercise price for all the Subject Shares not later
than the date specified for the Closing notwithstanding the existence of any
law, regulation, injunction, order or other impediment to the delivery to Parent
of the Subject Shares or the ownership by Parent of the Subject Shares.
(7) Notwithstanding anything to the contrary, in the event that
Parent or any affiliate of Parent receives any per share consideration in any
sale or other disposition of Shares purchased pursuant to exercise of the Option
that is in excess of the Per Share Amount (such amount in excess of the Per
Share Amount, the "Excess Per Share Amount"), Parent shall immediately remit to
the Stockholders on a pro rata basis 50% of the Excess Per Share Amount with
respect to each share of Company Common Stock so sold or otherwise disposed of.
(8) Notwithstanding anything to the contrary, no Stockholder who is
a natural person shall be required to sell any of such Stockholder's Shares to
Parent upon exercise of the Option if such Stockholder would be subject to
liability under Section 16 of the Exchange Act as a result of any such sale of
Shares purchased prior to the date of this Agreement.
SECTION 5. NO SOLICITATIONS. Each Stockholder agrees that it will
not, directly or indirectly, make, solicit, initiate or encourage the submission
of proposals or offers from any persons relating to an Acquisition Proposal.
Each Stockholder will immediately cease and cause to be terminated all
discussions or negotiations with third parties with respect to any Acquisition
Proposal. Each Stockholder agrees that it will promptly notify Parent after
receipt of any bona fide Acquisition Proposal or any inquiry from any person
relating to an Acquisition Proposal. Nothing contained herein shall prevent a
Stockholder or a representative of a Stockholder from discharging its fiduciary
duties as a member of the board of directors of the Company.
SECTION 6. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (1) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (2) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (3) on the tenth business
day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be given
to Parent at its address stated in Section 9.3 of the Merger Agreement, and all
notices to any Stockholder shall be given to such Stockholder at the address
stated below:
(1) if to any of:
KKR PARTNERS II, L.P.
APC ASSOCIATES, L.P.
<PAGE>
7
GR ASSOCIATES, L.P.
WCP ASSOCIATES, L.P.
KKR ASSOCIATES, to:
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Scott Stuart
Telecopier No.: (212) 750-0003
Telephone No.: (212) 750-8300
(2) if to any of the other Stockholders, to:
c/o World Color Press, Inc.
The Mill
240 Pemberwick Road
Greenwich, CT 06831
Telecopier No.:
Telephone No.:
(b) NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(1) No failure or delay by Parent in exercising any right, power or
privilege under this Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other further exercise of the right,
power or privilege or the exercise of any other right, power or privilege.
The rights and remedies provided in this Agreement shall be cumulative and
not exclusive of any rights or remedies provided by law.
(2) In view of the uniqueness of the agreements contained in this
Agreement and the transactions contemplated hereby and thereby and the
fact that Parent would not have an adequate remedy at law for money
damages in the event that any obligation under this Agreement is not
performed in accordance with its terms, each of the Stockholders therefore
agrees that Parent shall be entitled to specific enforcement of the terms
of this Agreement in addition to any other remedy to which Parent may be
entitled, at law or in equity.
(c) AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of this Agreement, and no consent to any departure by
any of the Stockholders or Parent from any provision of this Agreement, shall be
effective unless it shall be in writing and
<PAGE>
8
signed and delivered by all the Stockholders and Parent, and then it shall be
effective only in the specific instance and for the specific purpose for which
it is given.
(d) SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
(1) No party shall assign any of its rights or delegate any of its
obligations under this Agreement; provided that Parent may assign its
rights under Section 4 of this Agreement to receive the Subject Shares at
the Closing; provided, further, that no such assignment shall in any way
relieve Parent of any of its obligations under Section 4 or any other
section of this Agreement. Any assignment or delegation in contravention
of this Section 6(d) shall be void AB INITIO and shall not relieve the
assigning or delegating party of any obligation under this Agreement.
(2) The provisions of this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto, the express beneficiaries
thereof (to the extent provided therein) and their respective permitted
heirs, executors, legal representatives, successors and assigns, and no
other Person.
(e) GOVERNING LAW. This Agreement and all rights, remedies,
liabilities, powers and duties of the parties hereto and thereto, shall be
governed in accordance with the laws of the State of Delaware.
(f) STOCKHOLDER CAPACITY. No person executing this Agreement who is
or becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his capacity as such director or officer.
Each Stockholder signs solely in his capacity as the record holder and
beneficial owner of, or the trustee of a trust whose beneficiaries are the
beneficial owners of, such Stockholder's Subject Shares and nothing herein shall
limit or affect any actions taken by a Stockholder in his capacity as an officer
or director of the Company to the extent specifically permitted by the Merger
Agreement.
(g) SEVERABILITY OF PROVISION. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
(h) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding of the Stockholders and Parent, and supersedes all prior
agreements or understandings, with respect to the subject matters of this
Agreement.
<PAGE>
9
(i) SURVIVAL. Except as otherwise specifically provided in this
Agreement, each representation, warranty or covenant of a party contained in
this Agreement shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party or
beneficiary of a related condition precedent to the performance by the other
party or beneficiary of an obligation under this Agreement.
(j) SUBMISSION TO JURISDICTION; WAIVERS. Each Stockholder and Parent
irrevocably agrees that any legal action or proceeding with respect to any
voting document or for recognition and enforcement of any judgment in respect
hereto or thereof brought by the other party hereto or its successors or assigns
may be brought and determined in the courts of the State of New York, and each
Stockholder and Parent hereby irrevocably submit with regard to any such action
or proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each
Stockholder and Parent hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to serve process in accordance with this Section 6(i),
(b) that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable law, that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVERS, (B) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH
WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 6(i).
(k) LIMITED LIABILITY OF PARTNERS. Notwithstanding any other
provision of this Agreement, no general partner or limited partner, nor any
future general or limited partner of any Stockholder, shall have any personal
liability for performance of any
<PAGE>
obligation of such stockholder under this Agreement. Any liability of a
Stockholder under this Agreement shall be satisfied solely out of the assets of
such Stockholder.
(l) TERMINATION. Unless terminated by mutual agreement of the
parties, the obligations of the Stockholders under Sections 1(b), 1(c), 1(d) and
1(e) of this Agreement shall terminate upon the first to occur of (i)
consummation of the Merger, (ii) the termination of the Merger Agreement, (iii)
the full and irrevocable satisfaction of the condition set forth in Section
7.1(c) of the Merger Agreement, and (iv) termination of the Offer (other than a
termination of the Offer pursuant to Section 1.1(e) of the Merger Agreement)
without the purchase of Shares pursuant thereto. The Option and the obligations
of the Stockholders under Section 4 hereof shall terminate on the earlier of the
date of a KKR Option Termination Event and the End Date. This Agreement (other
than the agreements set forth in Section 4 and Section 6(l) hereof, which shall
survive in accordance with their terms), shall automatically terminate at such
time as all of the obligations of the Stockholders pursuant to Sections 1 and 2
shall have terminated in accordance with their terms.
(m) ACCESS. After the consummation of the Offer, Stockholders who
own in the aggregate at least 1% of the outstanding subordinate voting shares of
Parent shall have the right, but only to the extent such right is required in
order for such Stockholders to treat their investment in the Company as a
"venture capital investment" (within the meaning of the plan asset regulations
of the Department of Labor Reg. ' 25103-101), to (i) meet with officers and
directors of Parent at reasonable times and upon reasonable advance notice on a
quarterly basis to discuss their investment in Parent and be informed concerning
the nature or operation of the business of Parent; and (ii) be provided with
certain financial, operating and other data and information as such Stockholders
may reasonably request.
(n) EXPENSES. Whether or not the Option is exercised, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party.
(o) UNITED STATES DOLLARS. All references herein to "$" or "dollars"
shall refer to United States Dollars.
(p) COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were on the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
QUEBECOR PRINTING INC.
By: /s/ Charles G. Cavell
----------------------------------
Name: Charles G. Cavell
<PAGE>
Title: President & Chief Executive Officer
By: /s/ Christian M. Paupe
----------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
KKR PARTNERS II, L.P.
By: KKR Associates,
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
APC ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
GR ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
<PAGE>
WCP ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
KKR ASSOCIATES
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
/s/ Robert G. Burton
--------------------------------------
Robert G. Burton
/s/ Marc L. Reisch
--------------------------------------
Marc L. Reisch
/s/ Jennifer L. Adams
--------------------------------------
Jennifer L. Adams
/s/ Robert B. Lewis
--------------------------------------
Robert B. Lewis
/s/ James E. Lillie
--------------------------------------
James E. Lillie
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Name of Stockholder Number of Subject Shares
- ------------------- ------------------------
<S> <C>
KKR Partners II, L.P. 9,701 (excluding 5,000 shares of
Restricted Stock)
APC Associates, L.P. 2,201,379
GR Associates, L.P. 1,534,465
WCP Associates, L.P. 4,583,212
KKR Associates 692,107
Robert G. Burton 223,329.09 (excluding 101,356 shares
of Restricted Stock)
Marc L. Reisch 23,600.84 (excluding 73,177 shares of
Restricted Stock)
Jennifer L. Adams 19,508 (excluding 43,252 shares of
Restricted Stock)
Robert B. Lewis 9,209.23 (excluding 15,000 shares of
Restricted Stock)
James E. Lillie 10,761.63 (excluding 7,500 shares of
Restricted Stock)
</TABLE>
<PAGE>
Exhibit 99.(c)(3)
WORLD COLOR PRESS, INC.
THE MILL
340 PEMBERWICK ROAD
GREENWICH, CONNECTICUT 06821
June 28, 1999
QUEBECOR PRINTING INC.
612 Saint-Jacques Street
Montreal, Quebec
Canada, HC3 4M8
Ladies and Gentlemen:
In connection with your having expressed an interest in, and our
consideration of, a possible negotiated transaction (the "Transaction")
involving Quebecor Printing Inc. ("Quebecor") or any of its subsidiaries, on the
one hand, and World Color Press, Inc. ("WCP") or any of its subsidiaries, on the
other hand, Quebecor and WCP have furnished and expect to furnish to each other
certain oral and written nonpublic, confidential information. All such
information furnished to a party or any of its Representatives (as defined
below) by the other party or any of its Representatives (irrespective of the
form of communication and whether such information is so furnished before, on or
after the date hereof), and all analyses, compilations, data, studies, notes,
interpretations, memoranda or other documents prepared by a party or its
Representatives containing or based in whole or in part on any such furnished
information are collectively referred to herein as the "Information". The term
"Information" does not include any information which (i) at the time of
disclosure or thereafter is generally available to the public (other than as a
result of a disclosure directly or indirectly by a party or its Representatives
in violation of this agreement), (ii) is or becomes available to a party on a
nonconfidential basis from a source other than the other party or its
Representatives, provided that, to the receiving party's best knowledge, such
source was not prohibited from disclosing such information to such receiving
party by a legal, contractual or fiduciary obligation owed to the other party or
(iii) was in a party's possession or knowledge prior to its being furnished by
or on behalf of the other party, provided that the source of such information
was not, to the best knowledge of such party, prohibited from disclosing such
information to such party by a legal, contractual or fiduciary obligation owed
to the other party.
In consideration of such Information being furnished, each party agrees to
the following:
<PAGE>
2
1. The Information will be used solely for the purpose of evaluating the
Transaction and will not be used in any way, directly or indirectly, to
compete with the other party or its subsidiaries or Affiliates (as defined
in Section 5(a) below), and the Information will be kept strictly
confidential in accordance with the terms hereof and will not be disclosed
by a party or any of its Representatives, except (a) as required in the
opinion of such party's outside counsel by applicable law, regulation or
legal process, including, without limitation, securities laws or
regulations or the regulations of any applicable stock exchange
(including, without limitation, the applicable regulations of the New York
Stock Exchange, the Montreal Stock Exchange and the Toronto Stock
Exchange) and only after compliance with Section 3 below, and (b) that a
party may disclose the Information or portions thereof to those of its
directors, officers and employees and representatives of its legal,
accounting and financial advisors and its rating agencies and lenders and
representatives of their respective legal advisors (the persons to whom
such disclosure is permissible being collectively referred to herein as
"Representatives") who need to know such information for the sole purpose
of evaluating the Transaction; provided, that such party's Representatives
(i) are informed of the confidential and proprietary nature of the
Information and (ii) agree to keep the Information confidential and to be
bound by the confidentiality provisions of this agreement. Each party
agrees to be responsible for any breach of the confidentiality provisions
of this agreement by any of its Affiliates or Representatives (it being
understood that such responsibility shall be in addition to and not by way
of limitation of any right or remedy a party may have against the other
party's Affiliates or Representatives with respect to any such breach).
2. Without the prior written consent of the other party, neither party (nor
any of their respective Representatives) will disclose to any person
(except to the extent otherwise required in the opinion of the applicable
party's outside counsel, by applicable law, regulation or legal process,
including, without limitation, securities laws or regulations or the
regulations of any applicable stock exchange (including, without
limitation, the applicable regulations of the New York Stock Exchange, the
Montreal Stock Exchange and the Toronto Stock Exchange) and only after
compliance with Section 3 below), either the fact that any investigations,
discussions or negotiations are taking place concerning a possible
Transaction, or that either party has received Information or Information
has been made available to it, or any of the terms, conditions or other
facts with respect to any such possible Transaction, including the status
thereof. The term "person" as used in this agreement will be interpreted
broadly to include the media and any corporation, company, group,
partnership or other entity or individual.
3. If a party or any of its Affiliates or Representatives becomes legally
compelled (including by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose any
of the Information or the information referred to in Section 2 above, the
party compelled to make such disclosure shall provide the other party with
prompt written notice of such requirement prior to such disclosure so that
such other party may seek a protective order or other appropriate remedy
and/or waive in writing compliance with the revisions of this agreement.
If such protective order or other remedy is not obtained and such a
written waiver has not been received from the
<PAGE>
3
other party that would permit such compelled disclosure, each party (and
their respective Representatives) agrees to disclose only that portion of
the Information which it is advised by an opinion of its outside counsel
is legally required to be disclosed and to take all reasonable steps to
preserve the confidentiality of the Information and the information
referred to in Section 2 above (including, without limitation, by
cooperating with the other party to obtain an appropriate protective order
or other reliable assurance that confidential treatment will be accorded
the Information and the information referred to in Section 2 above).
4. If either party decides, in its sole discretion, that it does not wish to
proceed with the Transaction with the other party, the party so deciding
will promptly inform the other party of that decision. At any time upon
the written request of either party for any reason, each party will
promptly deliver to the other party or destroy all written Information
(and all copies, extracts or other reproductions in whole or in part
thereof) furnished to it or its Representatives by or on behalf of the
other party. All other Information shall be destroyed and no copy thereof
shall be retained, and in no event shall either party be obligated to
disclose or provide the Information prepared by it or its Representatives
to the other party. Such destruction shall be certified to by the officer
of a party upon request of the other party. Notwithstanding the return or
destruction of the Information, each party and its Representatives will
continue to be bound by its obligations of confidentiality and other
obligations hereunder.
5. (a) Each party agrees that, for a period beginning on the date
hereof and ending eighteen months from the date that a party delivers a
written notice of termination to the other party (The "Standstill
Period"), neither it nor any of its Affiliates (for purposes of this
agreement, an "Affiliate" of a party is any person that (i) directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such party and (ii) has been provided
with Information by or on behalf of such party) will, unless consented to
by the Board of Directors of the other party in writing:
(i) acquire, offer or propose to acquire, or agree or seek to
acquire, directly or indirectly, by purchase or otherwise, any securities
(or direct or indirect rights or options to acquire any securities) of the
other party or any subsidiary thereof, or, except in the ordinary course
of business, any assets of the other party or any subsidiary or division
thereof, provided that, notwithstanding the foregoing, a party may acquire
beneficial ownership (as defined in the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of securities of the other party in an
amount not to exceed, in the aggregate, 1% of either the issued and
outstanding voting securities or the issued and outstanding nonvoting
securities of such other party, so long as such acquisition is made
consistent with applicable securities laws and regulations; or
(ii) enter into or agree, offer, propose or seek to enter into, or
otherwise be involved in or part of, directly or indirectly, any
acquisition transaction or other business combination relating to all or
part of the other party or any of its
<PAGE>
4
subsidiaries or any acquisition transaction for all or part of the assets
of the other party or any of its subsidiaries or any of their respective
businesses; or
(iii) make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" (as such terms are used in the rules of
the Securities and Exchange Commission) to vote, or seek to advise or
influence any person or entity with respect to the voting of, any voting
securities of the other party; become a "participant" in any "election
contest" (as such terms are defined or used in the rules under the
Exchange Act) with respect to the other party; seek to advise, encourage
or influence any person or entity with respect to any voting securities of
the other party; demand a copy of the other party's stock ledger, list of
stockholders or other books and records; or call or attempt to call any
meeting of the stockholders of the other party; or
(iv) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any
voting securities of the other party or any of its subsidiaries; or
(v) seek or propose, alone or in concert with others, to influence
or control the other party's management or policies; or
(vi) directly or indirectly enter into any discussions,
negotiations, arrangements or understandings with any other person with
respect to any of the foregoing activities or propose any of such
activities to any other person; or
(vii) advise, assist, encourage, act as a financing source for or
otherwise invest in any other person in connection with any of the
foregoing activities; or
(viii) disclose any intention, plan or arrangement inconsistent with
any of the foregoing.
(b) Each party agrees that, during the Standstill Period, neither it
nor any of its Affiliates will: (i) request the other party or its
advisors, directly or indirectly, to amend or waive any provision of this
Section 5 (including this sentence); or (ii) take any initiative with
respect to the other party or any of its subsidiaries which involves
making a public announcement or could require such other party or any of
its subsidiaries to make a public announcement regarding (1) such
initiative, (2) any of the activities referred to in Section 5(a), (3) the
possibility of the Transaction or any similar transaction or (4) the
possibility of any person (including, without limitation, such party)
acquiring control of such other party, whether by means of a business
combination or otherwise.
Notwithstanding the foregoing, if any person or group of persons acting
together or in concert has made or announced its or their intention to
make any general, partial, tender or other type of offer for any voting
securities of a party, the other party may request the
<PAGE>
5
board of directors of the party subject to any such offer to waive the
provisions of this Section 5.
6. Each party agrees that, for a period commencing on the date of this
agreement and ending eighteen months after the termination of the
discussions between the parties hereto, without the prior written consent
of the other party, neither it nor any of its Representatives (on such
party's behalf) or Affiliates will (or will assist or encourage others
to), directly or indirectly, solicit to hire or hire (or cause or seek to
cause to leave the employ of the other party or any of its subsidiaries):
(i) any executive (vice-president or above) or other key employee employed
by the other party or any of its subsidiaries; or (ii) any other employee
of the other party or any of its subsidiaries with whom it has had contact
or whose performance became known to it in connection with the process
contemplated by this agreement; provided, however, that the foregoing
provision will not prevent a party from hiring any such person (i) who
contacts such party on his or her own initiative without any direct or
indirect solicitation by or encouragement from such party, (ii) as a
result of placing general advertisements in trade journals, newspapers or
similar publications which are not directed at the other party or its
Affiliates or such employees, or (iii) as a result of the efforts of
executive recruiters who contact such persons on their own initiative
without any encouragement from or on behalf of such party relating to the
other party or its Affiliates or such employees.
7. Each party understands and acknowledges that neither party nor any of
their respective Representatives or Affiliates is making any
representation or warranty, express or implied, as to the accuracy or
completeness of the Information, and neither party nor any of their
respective Representatives or Affiliates will have any liability to the
other party or any other person resulting from the use of the Information
(for the sole purpose of evaluating the Transaction) by it or its
Affiliates or Representatives. Only those representations or warranties
that are made in a definitive agreement relating to the Transaction (a
"Definitive Agreement") when, as, and if it is executed, and subject to
such limitations and restrictions as may be specified in such Definitive
Agreement, will have any legal effect. The term "Definitive Agreement"
does not include a non-binding executed letter of intent or any other
non-binding preliminary written agreement, nor does it include any written
or oral acceptance of any offer or bid.
8. Each party understands and agrees that no contract or agreement providing
for the Transaction shall be deemed to exist unless and until a Definitive
Agreement has been executed and delivered, and each party also agrees that
unless and until a Definitive Agreement between Quebecor or any of its
subsidiaries, on the one hand, and WCP or any of its subsidiaries, on the
other hand, with respect to the Transaction has been executed and
delivered, neither party nor any of its respective stockholders,
Affiliates or Representatives has any legal obligation of any kind
whatsoever with respect to such Transaction by virtue of this agreement or
any other written or oral expression with respect to such Transaction
except, in the case of this agreement and the letter agreement of even
data herewith between the parties relating to exclusivity, for the matters
specifically agreed to herein and therein. Each party hereby confirms that
it is not acting
<PAGE>
6
as a broker for or Representative of any person and is considering the
Transaction only for its own account. Neither this paragraph nor any other
provision in this agreement may be waived, amended or assigned except in a
writing signed by both parties, which writing shall specifically refer to
this paragraph (or such other provision) and explicitly make such waiver,
amendment or assignment.
9. Each party hereby acknowledges that it is aware, and that it will advise
its Representatives, that the United States securities laws prohibit any
person who has material, non-public information concerning the matters
which are the subject of this agreement from purchasing or selling
securities of a company which may be a party to a transaction of the type
contemplated by this agreement or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities.
10. Each party agrees that money damages would not be a sufficient remedy for
any breach or threatened breach of this agreement by it and that the other
party shall be entitled to equitable relief, including injunction and
specific performance, in the event of any such breach or threatened
breach, in addition to all other remedies available at law or in equity
without the necessity of posting any bond or other security or proving
that monetary damages would be an inadequate remedy. Such remedies shall
not be deemed to be the exclusive remedies for a breach of this agreement
but shall be in addition to all other remedies available at law or in
equity.
11. Each party agrees that no failure or delay by the other party in
exercising any right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power
or privilege hereunder.
12. If any provision of this agreement is found to violate any statute,
regulation, rule, order or decree of any governmental authority, court,
agency or exchange, such invalidity shall not be deemed to affect any
other provision hereof or the validity of the remainder of this
agreement, and such invalid provision shall be deemed deleted here from to
the minimum extent necessary to cure such violation.
13. Each party agrees that all (a) contacts or communications by it or its
Representatives with the other party regarding the Information or the
Transaction, (b) requests for additional Information, (c) requests for
management meetings and (d) discussions or questions regarding procedures
shall be made through the chief financial officer, general counsel,
outside counsel or financial advisor of the other party, or as such chief
financial officer or general counsel may otherwise direct.
14. Except as set forth in a definitive agreement relating to the Transaction,
each party hereto hereby acknowledges that it shall be responsible for all
of the fees, costs and expenses incurred by it and its affiliates in
connection with all matters relating to the Transaction,
<PAGE>
7
regardless of whether such definitive agreement is entered into or the
Transaction is consummated.
15. This agreement is for the benefit of each party and its respective
successors and permitted assigns and shall be governed by, and construed
in accordance with, the law of the State of New York. Neither this
agreement nor any of the rights or obligations hereunder may be assigned,
by operation of law or otherwise, by either party without the prior
written consent of the other party, and any attempted assignment or
transfer by either party not in accordance herewith shall be null and
void.
If you agree with the foregoing, please sign and return a copy of this
letter, which will constitute our agreement with respect to the subject matter
of this letter.
Very truly yours,
WORLD COLOR PRESS, INC.
By: /s/ Jennifer Adams
----------------------------------
Name: Jennifer Adams
Title: Vice Chairman, Chief Legal
Admin. Officer
CONFIRMED AND AGREED
as of the date first written above:
QUEBECOR PRINTING INC.
By: /s/ Louis St. Arnaud
---------------------------------------
Name: Louis St. Arnaud
Title: VICE-PRESIDENT, LEGAL AFFAIRS &
SECRETARY
<PAGE>
Exhibit 99.(c)(4)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 12, 1999, between QUEBECOR
PRINTING INC., a corporation formed under the laws of Canada ("Grantee"), and
WORLD COLOR PRESS, INC., a corporation organized under the laws of Delaware
("Issuer").
W I T N E S S E T H :
WHEREAS, concurrently herewith, Grantee and Issuer are entering into
an Agreement and Plan of Merger (the "Merger Agreement");
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement and pursuant to the transactions contemplated thereby and in
consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant of
the Option and the Merger Agreement prior to the execution hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to the Option Amount (as defined in Section 19 below) of fully paid and
nonassessable shares of the common stock, $0.01 par value per share, of Issuer
("Common Stock") at a price per share in cash equal to $35.69 (such price, as
adjusted if applicable, the "Option Price"); provided, however, that in no event
shall the number of shares for which this Option is exercisable exceed the
Option Percentage (as defined in Section 19 below) of the issued and outstanding
shares of Common Stock at the time of exercise without giving effect to the
shares of Common Stock issued or issuable under the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 4(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that, after such issuance, such number together with any
shares of Common Stock previously issued pursuant hereto, equals the Option
Percentage of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer or Grantee to breach any provision of the Merger
Agreement.
2. Exercise; Closing. (a) Grantee or any other person that shall
become a holder of the Option in accordance with the terms of this Agreement
(such person being referred to herein as
<PAGE>
2
the "Holder") may exercise the Option, in whole only, if, but only if, the
Termination Amount provided for in Section 8.3 of the Merger Agreement has
become payable (a "Triggering Event") and notice of such exercise is received
prior to the occurrence of an Exercise Termination Event (as hereinafter
defined); provided, however, that a Triggering Event will be deemed to occur if
all of the conditions prerequisite to the payment of the Termination Amount
pursuant to Section 8.3(a) of the Merger Agreement have been satisfied except
for the consummation of the transaction described in such Section 8.3(a). For
purposes of clarification, the date of a Triggering Event shall not be the date
on which the Termination Amount is paid, but the date on which the Termination
Amount becomes payable.
(b) Each of the following shall be an "Exercise Termination Event":
(i) the Effective Time (as defined in the Merger Agreement); or
(ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of a
Triggering Event and at the time of such termination the conditions
prerequisite to a Triggering Event occurring in the future are incapable
of being fulfilled; or
(iii) the passage of 30 days after the date of the Triggering Event;
or
(iv) November 9, 1999, if all governmental and regulatory approvals
for Grantee to exercise its rights under this Section 2 shall not then
have been obtained or if an injunction or similar legal prohibition on
exercise shall then be in effect; or
(v) the receipt by Grantee of the Termination Amount.
(c) Issuer shall notify Grantee promptly in writing of the
occurrence of any Triggering Event, it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to exercise
the Option.
(d) In the event the Holder is entitled to and wishes to exercise
the Option, it shall send to Issuer a written notice (the date of which being
herein referred to as the "Notice Date") specifying a place and date not earlier
than two business days nor later than twenty business days from the Notice Date
for the closing of such purchase of the applicable Option Amount of Shares (the
"Closing Date"); provided, that the Closing Date may be extended by the Holder
until November 9, 1999 to the extent provided in clauses (i) and (ii) of Section
7.
(e) At the closing referred to in subsection (d) of this Section 2,
the Holder shall (i) pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option by delivery of a
certified check or bank draft and (ii) present and surrender this Agreement to
Issuer.
<PAGE>
3
(f) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (e) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder.
(g) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The shares represented by this certificate have not been registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), or any state securities law, and such securities may not be
offered, sold, transferred, pledged, hypothecated or otherwise
disposed of except pursuant to an effective registration statement
or pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and
applicable state securities laws."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the Securities and
Exchange Commission, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act or other applicable securities laws.
(h) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (f) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Holder shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and
covenants herein, Issuer agrees:
(a) that it shall at all times maintain, free from any subscription
or preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights of third parties to purchase
Common Stock from Issuer or to cause Issuer to issue shares of Common Stock;
(b) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; and
<PAGE>
4
(c) promptly to take all action as may from time to time be required
(including complying with all applicable notification, filing reporting and
waiting period requirements under the HSR Act or otherwise, and cooperating
fully with the Holder in preparing any applications or notices and providing
such information to any regulatory authority as it may require) in order to
permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto.
4. Adjustments. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of the Option pursuant
to Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 4.
(a) In the event of any change in, or distributions in respect of,
the Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges of
shares or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof shall be appropriately adjusted and
proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise become outstanding as
a result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to the
Option shall be increased so that, after such issuance and together with
shares of Common Stock previously issued pursuant to the exercise of the
Option (as adjusted on account of any of the foregoing changes in the
Common Stock), it equals the Option Percentage of the number of shares of
Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 4, the Option
Price shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
5. Registration. (a) After the exercise of the Option, Issuer shall,
if requested by the Holder at any time and from time to time within one year of
the exercise of the Option, prepare and file up to two registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of Common Stock that have
been acquired by exercise of the Option and Issuer shall use all reasonable
efforts to qualify such shares under any applicable state securities laws.
Issuer shall use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective for such period not in excess of 90 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness may be suspended
for one or more periods of time not exceeding 90 days if the Board of Directors
of Issuer shall have determined that the filing of such registration statement
or the maintenance of its effectiveness would require disclosure of nonpublic
information that would materially affect Issuer. Any registration statement
prepared and filed under
<PAGE>
5
this Section 5, and any sale covered thereby, shall be at Issuer's expense
except for underwriting discounts or commissions and brokers' fees.
Notwithstanding the foregoing, Issuer shall pay the reasonable fees and
disbursements of one counsel selected by the Holder to represent the Holder in
connection with each such registration statement. The Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. The Issuer shall not be obligated to file a
registration statement within a period of 180 days after the effective date of
any other registration statement relating to any registration request under this
Section 5. In connection with any registration pursuant to this Section 5,
Issuer and the Holder shall provide each other and any underwriter of the
offering with customary representations, warranties, covenants, indemnification
and contribution in connection with such registration.
(b) In connection with any registration pursuant to this Section 5,
Issuer shall enter into such customary arrangements and take such other actions,
including the use of its reasonable efforts to obtain a "cold comfort" letter or
similar letter from Issuer's independent public accounts, as the Holder or any
underwriter, if any, reasonably requests in order to expedite or facilitate the
disposition of the shares of Common Stock acquired by exercise of the Option.
(c) If shares to be acquired upon exercise of the Option are then
listed on the NYSE or any other securities exchange or market, Issuer, upon the
request of the Holder, will promptly file an application to list the shares to
be acquired upon exercise of the Option on the NYSE or such other securities
exchange or market and will use its reasonable best efforts to obtain approval
of such listing as soon as practicable.
6. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or any of its subsidiaries
(collectively, "Excluded Persons") and Issuer shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than an Excluded Person, to merge into Issuer and Issuer shall be
the continuing or surviving or acquiring corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any person, other than an Excluded Person,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is
the continuing or surviving or acquiring person, and (iii) the
transferee of all or substantially all of Issuer's
consolidated assets.
<PAGE>
6
(ii) "Substitute Shares" shall mean the shares of capital stock (or
similar equity interest) with the greatest voting power in
respect of the election of directors (or other persons
similarly responsible for direction of the business and
affairs) of the issuer of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (i) the price per
share of Common Stock at which a tender or exchange offer
therefor has been made, (ii) the price per share of Common
Stock to be paid by any third party pursuant to an agreement
with Issuer, or (iii) in the event of a sale of all or
substantially all of Issuer's assets, the sum of the net price
paid in such sale for such assets and the current market value
of the remaining net assets of Issuer as determined by a
nationally recognized investment banking firm selected by the
Holder and reasonably acceptable to Issuer, divided by the
number of shares of Common Stock of Issuer outstanding at the
time of such sale, which determination, absent manifest error,
shall be conclusive for all purposes of this Agreement.
(iv) "Average Price" shall mean the average closing price per
Substitute Share, on the principal trading market on which
such shares are traded as reported by a recognized source, for
one year immediately preceding the consolidation, merger or
sale in question, but in no event higher than the closing
price of the Substitute Shares on such market on the day
preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common
stock issued by the person merging into Issuer or by any
company which controls or is controlled by such person, as the
Holder may elect.
(c) The Substitute Option shall have the same terms (including those
terms set forth in Section 5) as the Option, provided that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to the
Holder. The issuer of the Substitute Option shall also enter into an agreement
with the Holder of the Substitute Option in substantially the same form as this
Agreement which agreement shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
Substitute Shares as is equal to the Assigned Value multiplied by the number of
shares of Common Stock for which the Option was exercisable immediately prior to
the event described in the first sentence of this Section 6(a), divided by the
Average Price. The exercise price of the Substitute Option per Substitute Share
shall then be equal to the Option Price multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
this Section 6(a) and the denominator of which shall be the number of Substitute
Shares for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the number of shares purchasable upon exercise of the Substitute Option exceed
the Option Percentage of the Substitute Shares then issued and outstanding at
the time of exercise (without giving effect to
<PAGE>
7
Substitute Shares issued or issuable under the Substitute Option). In the event
that the Substitute Option would be exercisable for more than the Option
Percentage of the Substitute Shares then issued and outstanding prior to
exercise but for this clause (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to the Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by the Holder, which determination, absent manifest error, shall be conclusive
for all purposes of this Agreement.
7. Extension. The periods for exercise of certain rights under
Sections 2 and 5 shall be extended until no later than November 9, 1999: (i) to
the extent necessary to obtain all governmental and regulatory approvals for the
exercise of such rights (for so long as the Holder is using reasonable efforts
to obtain such regulatory approvals), and for the expiration of all statutory
waiting periods; (ii) during any period for which an injunction or similar legal
prohibition on exercise shall be in effect and (iii) to the extent necessary to
avoid liability under Section 16(b) of the Securities Exchange Act of 1934, as
amended, by reason of such exercise.
8. Representations and Warranties. (a) Issuer hereby represents and
warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly
executed and delivered by Issuer and constitutes a valid and
legally binding obligation of Issuer enforceable in accordance
with its terms.
(ii) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from
the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon
the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all
such shares, upon issuance pursuant to the Option, will be
duly authorized, validly issued, fully paid, nonassessable,
and will be delivered free and clear of all claims, liens,
encumbrances and security interests (other than those created
by this Agreement) and not subject to any preemptive rights.
(iii) The execution, delivery and performance of this Agreement does
not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or
result in (i) a breach or violation of or a default
<PAGE>
8
under, its articles or certificate of incorporation or
by-laws, or the comparable governing instruments of any of its
subsidiaries, or (ii) a breach or violation of or a default
under, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse
of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental
or non-governmental permit or license to which it or any of
its subsidiaries is subject.
(b) Grantee hereby represents and warrants to Issuer that Grantee
has full corporate power and authority to enter into this Agreement and, subject
to obtaining the approvals referred to in this Agreement, to consummate the
transactions contemplated by this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Grantee; and
this Agreement has been duly executed and delivered by Grantee and constitutes a
valid and legally binding obligation of Grantee enforceable in accordance with
its terms.
9. Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder to an affiliate of
Grantee.
10. Filings; Other Actions. Each of Grantee and Issuer will use its
best efforts to make all filings with, and to obtain consents of, all third
parties and regulatory and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, notices and filings under the HSR Act.
11. Total Profit. (a) Notwithstanding any other provision of this
Agreement, in no event shall the Grantee's Total Profit (as hereinafter defined)
exceed the Total Profit Amount (as defined in Section 19 below) less the amount
of any fee paid pursuant to the applicable provision of Section 8.3 of the
Merger Agreement and, if it otherwise would exceed such amount, the Grantee, at
its sole election, shall either (i) reduce the number of shares of Common Stock
subject to this Option, (ii) deliver to Issuer for cancellation Option Shares
previously purchased by Grantee, (iii) pay cash to Issuer, or (iv) any
combination thereof, so that Grantee's actually realized Total Profit shall not
exceed such amount after taking into account the foregoing actions. The
Grantee's obligation pursuant to this Section 11 shall exist whether the Option
is exercised before or after any fee is paid pursuant to Section 8.3 of the
Merger Agreement.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) of more than the
Total Profit Amount less the amount of any fee paid pursuant to the applicable
provision of Section 8.3 of the Merger Agreement.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount
<PAGE>
9
(before taxes) of the following: (i) (x) the net cash amounts received by
Grantee pursuant to the sale of Option Shares (or any other securities into
which such Option Shares are converted or exchanged) to any unaffiliated party,
less (y) the Grantee's purchase price of such Option Shares, (ii) any amounts
received by Grantee on the transfer of the Option (or any portion thereof) to
any unaffiliated party, and (iii) any amount equivalent to the foregoing with
respect to the Substitute Option.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares (or any
other securities into which such Option Shares are converted or exchanged) held
by Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day.
12. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief.
13. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated.
14. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
17. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
18. Entire Agreement. Except as otherwise expressly provided herein
or in the Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings
<PAGE>
10
with respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assignees. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assignees,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
19. Captions; Certain Definitions; Capitalized Terms. The Article,
Section and paragraph captions herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Option Amount" shall mean (i) if the Triggering Event giving rise
to the exercise of the Option shall have occurred as a result of the $10,662,000
Termination Amount provided for in Section 8.3 of the Merger Agreement becoming
payable, 3,760,000 shares of Common Stock and, (ii) if the Triggering Event
giving rise to the exercise of the Option shall have occurred as a result of the
$42,648,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, 7,558,300 shares of Common Stock.
"Option Percentage" shall mean (i) if the Triggering Event giving
rise to the exercise of the Option shall have occurred as a result of the
$10,662,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, 9.9% and, (ii) if the Triggering Event giving rise
to the exercise of the Option shall have occurred as a result of the $42,648,000
Termination Amount provided for in Section 8.3 of the Merger Agreement becoming
payable, 19.9%
"Total Profit Amount" shall mean (i) if the Triggering Event giving
rise to the exercise of the Option shall have occurred as a result of the
$10,662,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, 10,662,000 and, (ii) if the Triggering Event giving
rise to the exercise of the Option shall have occurred as a result of the
$42,648,000 Termination Amount provided for in Section 8.3 of the Merger
Agreement becoming payable, $42,648,000.
Capitalized terms used in this Agreement and not defined herein shall have the
meanings assigned thereto in the Merger Agreement. All references herein to "$"
or "dollars" shall refer to United States Dollars.
<PAGE>
11
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
QUEBECOR PRINTING INC.
By: /s/ Charles G. Cavell
--------------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By: /s/ Christian M. Paupe
--------------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
WORLD COLOR PRESS, INC.
By: /s/ Jennifer L. Adams
--------------------------------------
Name: Jennifer L. Adams
Title: Vice Chairman
Chief Legal and Administrative
Officer
<PAGE>
Exhibit 99.(c)(5)
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of July 12, 1999, is
made and entered into by QUEBECOR PRINTING INC., a corporation formed under the
laws of Canada (the "Company"), APC Associates, L.P., a Delaware limited
partnership, GR Associates, L.P., a Delaware limited partnership, WCP
Associates, L.P., a Delaware limited partnership, KKR Associates, L.P., a New
York limited partnership, and KKR Partners II, L.P., a Delaware limited
partnership (collectively, the "Partnerships").
1. Background. The Company has entered into an Agreement and Plan of
Merger, dated as of July 12, 1999, by and among the Company, Printing
Acquisition Inc. (the "Sub") and World Color Press, Inc. ("World Color") (the
"Merger Agreement"), which contemplates that the Sub will commence a tender
offer to purchase for cash up to 23,500,000 of the outstanding shares of common
stock of World Color (including such shares held by the Partnerships), at a
price of $35.69 in cash per share, followed by a merger of the Sub into World
Color, pursuant to which each remaining share of common stock of World Color
will be converted into the number of subordinate voting shares of the Company
(the "Subordinate Voting Shares") specified in the Merger Agreement. This
Agreement shall become effective upon the issuance of the Subordinate Voting
Shares to be issued pursuant to the Merger Agreement.
2. Definitions and Interpretation.
As used in this Agreement, the following capitalized terms shall
have the following respective meanings:
Commissions - The relevant securities commissions and regulatory
authorities of each province of Canada and the SEC.
Exchange Act - The Securities Exchange Act of 1934, as amended.
Holder - Subject to Section 8(c) hereof, any party hereto (other
than the Company) and any holder of Registrable Securities who agrees in
writing to be bound by the provisions of this Agreement.
Jurisdiction - Any jurisdiction where securities of the same class
and series as the Registrable Securities are registered.
Person - Any individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or
agency thereof.
Registrable Securities - Any Subordinate Voting Shares issued
pursuant to the Merger Agreement and any Subordinate Voting Shares or
other securities which may be issued or distributed in respect thereof by
way of stock dividend or stock split or other distribution,
recapitalization or reclassification. As to any particular Registrable
Securities, once issued such Securities shall cease to be Registrable
Securities with respect to the
<PAGE>
2
Securities Laws of a particular jurisdiction when (i) a Registration
Statement with respect to the sale of such Securities shall have become
effective under the Securities Laws and such Securities shall have been
disposed of in accordance with such Registration Statement, (ii) they
shall have been distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, (iii) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer pursuant to the Securities Laws of the
relevant jurisdiction shall have been delivered by the Company and
subsequent disposition of them shall not require registration or
qualification of them under the Securities Laws of the relevant
jurisdiction then in force, (iv) they shall have ceased to be outstanding
or (v) the first date on which the aggregate market value of such
Registrable Securities is less than $5,000,000.
Registration Expenses - Any and all expenses incident to performance
of or compliance with this Agreement, including, without limitation, (i)
all Commissions and Securities Exchanges registration and filing fees,
(ii) all fees and expenses of complying with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses, (iv) all fees and
expenses incurred in connection with the listing of the Registrable
Securities on any Securities Exchange pursuant to clause (ix) of Section
5, (v) the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements of
one counsel selected by the Holders of a majority of the Registrable
Securities being registered to represent all Holders of the Registrable
Securities being registered in connection with each such registration, and
(vii) any fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, including liability insurance if the
Company so desires or if the underwriters so require, and the reasonable
fees and expenses of any special experts retained by the Company in
connection with the requested registration, but excluding underwriting
discounts and commissions, fees and expenses of counsel for the
underwriters (except as otherwise set forth in clause (ii) above) and
transfer taxes, if any.
Registration Statement - Any registration statement or prospectus of
the Company or any document prepared in lieu thereof under applicable
Securities Laws (including offering memoranda and other offering
documents) under which securities of the Company are offered, including
amendments and supplements to such documents, including post-effective
amendments, and all exhibits and all materials incorporated by reference
in such documents.
Securities Act - The Securities Act of 1933, as amended.
Securities Exchanges - The securities exchanges on which securities
of the same class and series as the Registrable Securities are listed or
quoted.
<PAGE>
3
Securities Laws - Provincial securities legislation, including rules
and policies thereunder, in Canada and the United States federal and state
securities laws and regulations and the securities legislation of such
other relevant Jurisdictions.
SEC - The United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
Shelf Rules - The rules and procedures established pursuant to the
Securities Laws for the distribution of securities of certain issuers on a
continuous or delayed basis, including as currently provided under
National Policy No. 44 adopted by the Canadian Securities Administrators.
In this Agreement any reference to the registration of securities, or to a
Registration Statement being declared or becoming effective, shall also mean to
the extent applicable the obtaining of a final receipt from the Commissions in
the relevant Jurisdictions for a prospectus qualifying the distribution of
securities.
3. Shelf Registration.
(a) Shelf Registration. The Company shall as promptly as practicable
file with the Commissions a Registration Statement for an offering to be made on
a continuous basis pursuant to the Shelf Rules covering all of the Registrable
Securities (the "Shelf Registration Statement"). The Shelf Registration
Statement shall permit registration of such Registrable Securities for resale in
the United States and Canada by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Company shall not permit any securities other than the Registrable Securities to
be included in the Shelf Registration Statement or any Subsequent Shelf
Registration Statement. The Shelf Registration Statement may be filed pursuant
to the rules established under the Securities Laws governing the
Multi-jurisdictional Disclosure System jointly administered by the Commissions,
provided, however, that if for any reason a Shelf Registration Statement filed
pursuant to the rules established under the Securities Laws governing the
Multi-jurisdictional Disclosure System will not permit the sale of the
Registrable Securities in the United States, the Company shall be required to
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable
Securities.
The Company shall use all reasonable efforts to cause the initial
Shelf Registration Statement to be declared effective by the relevant
Commissions under the Securities Laws by the 30th day after the consummation of
the merger contemplated by the Merger Agreement and to keep the Shelf
Registration Statement continuously effective under the Securities Act until the
first anniversary of its effective date, subject to extension pursuant to clause
(d) of this Section 3 or the last paragraph of Section 5 hereof (the
"Effectiveness Period"), or such shorter period ending when (i) all Registrable
Securities covered by the Shelf Registration Statement have been sold in the
manner set forth and as contemplated in the initial Shelf Registration Statement
or (ii) a Subsequent Shelf Registration Statement covering all of the
Registrable Securities has been declared effective under the Securities Laws.
<PAGE>
4
(b) Subsequent Shelf Registrations. If the initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the securities registered thereunder), the
Company shall use all reasonable efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 7 days
of such cessation of effectiveness amend the Shelf Registration Statement in a
manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional "shelf" Registration Statement pursuant to the
Shelf Rules covering all of the Registrable Securities (a "Subsequent Shelf
Registration Statement") to permit registration of the Registrable Securities
for resale in the United States and Canada. If a Subsequent Shelf Registration
Statement is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective under the relevant
Securities Laws as soon as practicable after such filing and to keep such
Registration Statement continuously effective for a period equal to the number
of days in the Effectiveness Period less the aggregate number of days during
which the Shelf Registration Statement or any Subsequent Shelf Registration
Statement was previously continuously effective. As used herein the term "Shelf
Registration Statement" means the Shelf Registration Statement and any
Subsequent Shelf Registration Statement.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement, if required by the Securities Laws, or if
reasonably requested by the Holders of a majority of the Registrable Securities
then outstanding or by any underwriter of such Registrable Securities.
(d) Suspension of Sales. At any time while the Shelf Registration
Statement is effective and a prospectus relating thereto is required to be
delivered under the Securities Laws within the Effectiveness Period, that the
Company becomes aware that the Shelf Registration Statement or any prospectus
included therein, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing, to the extent that the amendment or supplement to
such Shelf Registration Statement or prospectus necessary to correct such untrue
statement of a material fact or omission to state a material fact would require
disclosure of material information which the Company has a bona fide business
purpose for preserving as confidential and the Company provides the Holders
written notice thereof promptly after the Company makes such determination, the
Holders shall suspend sales of Registrable Securities pursuant to the Shelf
Registration Statement and the Company shall not be required to comply with its
obligations under Section 5 (vii) until the earlier of (A) the date upon which
such material information is disclosed to the public or ceases to be material or
(B) 90 days after the Holders' receipt of such written notice. If the Holders'
disposition of Registrable Securities is discontinued pursuant to the foregoing
sentence, the Effectiveness Period shall be extended by the number of days
during the period from and including the date of the giving of such notice and
including the date when each seller of Registrable Securities covered by the
Shelf Registration Statement shall have received copies of the supplemented or
amended prospectus contemplated by clause (vii) of Section 5.
<PAGE>
5
(e) Expenses. The Company will pay all Registration Expenses in
connection with the registration of Registrable Securities pursuant to this
Section 3.
(f) Selection of Underwriters. In connection with any underwritten
offering of Registrable Securities pursuant to the Shelf Registration Statement,
the Holders of a majority of the Registrable Securities to be registered
thereunder shall have the right to select the investment banker or bankers and
managers to administer the offering; provided, however, that such investment
banker or bankers and managers shall be reasonably satisfactory to the Company.
(g) POP System. The Company represents and warrants that it is
eligible to use the prompt offering qualification system for the distribution of
its Subordinate Voting Shares in the provinces of Ontario and Quebec by means of
a short form prospectus as contemplated by National Policy No. 47 adopted by the
Canadian Securities Administrators, and covenants to use its best efforts to
maintain such eligibility during the term of this Agreement.
4. Incidental Registrations.
(a) Right to Include Registrable Securities. At any time in which
the Shelf Registration Statement is not yet or has ceased to be effective if the
Company proposes to register its Subordinate Voting Shares under the Securities
Laws (other than a registration on Form F-4 or F-8, or any successor or other
forms promulgated for similar purposes), whether or not for sale for its own
account, pursuant to a registration statement on which it is permissible to
register Registrable Securities for sale to the public under the Securities
Laws, it will each such time give prompt written notice to all Holders of
Registrable Securities of its intention to do so and of such Holders' rights
under this Section 4. Upon the written request of any such Holder made within 15
days after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such Holder), the Company
will use its reasonable efforts to effect the registration under the Securities
Laws of all Registrable Securities which the Company has been so requested to
register by the Holders thereof; provided that (i) if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company (or any stockholder of the Company in the case of a
demand registration by such stockholder) shall determine for any reason not to
proceed with the proposed registration of the securities to be sold by it, the
Company may, at its election, give written notice of such determination to each
Holder of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) if such registration involves an underwritten
offering, all Holders of Registrable Securities requesting to be included in the
registration must sell their Registrable Securities to the underwriters selected
by the Company (or by any stockholders other than the Holders entitled to select
the underwriters) on the same terms and conditions as apply to the other sellers
included in such registration, with such differences, including any with respect
to indemnification and liability insurance, as may be customary or appropriate
in combined primary and secondary offerings. If a registration requested
pursuant to this Section 4(a) involves an underwritten public offering, any
Holder of Registrable Securities requesting to be included in such registration
may elect, in writing
<PAGE>
6
prior to the effective date of the registration statement filed in connection
with such registration, not to register such securities in connection with such
registration.
(b) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 4.
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 4 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, so as to be likely to have an adverse effect on the
successful marketing of such offering (including the price at which such
securities can be sold), then the Company will include in such registration (i)
first, 100% of the securities the Company proposes to sell, (ii) second, up to
100% of the securities requested to be registered by any stockholder exercising
a demand registration right and (iii) third, to the extent of the number of
Registrable Securities (and Subordinate Voting Shares held by other Persons with
similar registration rights) requested to be included in such registration
which, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the number of Registrable Securities (and
such Subordinate Voting Shares) which the Holders (and such other Persons) have
requested to be included in such registration, such amount to be allocated pro
rata among all requesting Holders (and such other Persons) on the basis of the
relative number of shares of Registrable Securities then held by each such
Holder (or Subordinate Voting Shares then held by such other Person) (provided
that any shares thereby allocated to any such Holder (or such other Person) that
exceed such Holder's (or such other Person's) request will be reallocated among
the remaining requesting Holders (and such other Persons) in like manner).
5. Registration Procedures. If and whenever the Company is required
to use its reasonable efforts to effect or cause the registration of any
Registrable Securities under the Securities Laws as provided in this Agreement
or, as applicable, the Holders sell or seek to sell Registrable Securities under
the Shelf Registration Statement as provided in Section 3 of this Agreement, the
Company will, as expeditiously as possible:
(i) prepare and file with the Commissions a Registration Statement
with respect to such Registrable Securities and use its reasonable efforts
to cause such Registration Statement to become effective; provided, the
Company may discontinue any registration of its securities which is being
effected pursuant to Section 4 at any time prior to the effective date of
the registration statement relating thereto;
(ii) prepare and file with the Commissions such amendments and
supplements to such Registration Statement and any prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective for the Effectiveness Period in the case of the Shelf
Registration Statement or for a period not in excess of 60 days (or such
shorter period during which the distribution of securities thereunder
continues) in the case of Registration Statements filed pursuant to
Section 4 of this Agreement, cause the related prospectus to be
supplemented by any prospectus supplement required by applicable law, and
as so supplemented to be filed pursuant to the Securities Laws and to
comply with the
<PAGE>
7
provisions of the Securities Laws with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement (so long as such
intended methods of disposition are commercially reasonable); provided,
that before filing a Registration Statement or prospectus, or any
amendments or supplements thereto, or any prospectus supplement, the
Company will furnish to one counsel selected by the Holders of a majority
of the Registrable Securities covered by such Registration Statement to
represent all Holders of Registrable Securities covered by such
Registration Statement, copies of all documents proposed to be filed,
which documents will be subject to the review of such counsel;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such Registration Statement and of each amendment and
supplement thereto (in each case including all exhibits and documents
incorporated by reference), such number of copies of the prospectus
included in such Registration Statement (including each preliminary
prospectus) and of each amendment and supplement thereto, in conformity
with the requirements of the Securities Laws, and such other documents as
such seller may reasonably request in order to facilitate the disposition
of the Registrable Securities by such seller;
(iv) if requested by the managing underwriter or underwriters (if
any) or the Holders of a majority in aggregate principal amount of the
Registrable Securities being sold in connection with an underwritten
offering, (a) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any), their counsel, such Holders or Holders' Counsel
determine is reasonably necessary to be included therein, (b) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (c) supplement or make
amendments to such registration statement.
(v) use its reasonable efforts to register or qualify such
Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
clause (v), it would not be obligated to be so qualified, to subject
itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(vi) use its reasonable efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
<PAGE>
8
(vii) notify each seller of any such Registrable Securities covered
by such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Laws within the
appropriate period mentioned in clause (ii) of this Section 5, of the
Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing, and at the request of any such seller,
prepare and furnish to such seller a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(viii) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commissions, and make available to
its security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration statement,
an earnings statement which shall satisfy the provisions of Section 11(a)
of the Securities Act and the rules and regulations promulgated
thereunder;
(ix) use its reasonable efforts to list such Registrable Securities
on any Securities Exchange on which the Subordinate Voting Shares are then
listed, if such Registrable Securities are not already so listed and if
such listing is then permitted under the rules of such exchange, and to
provide a transfer agent and registrar for such Registrable Securities
covered by such registration statement not later than the effective date
of such Registration Statement;
(x) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of a
majority of shares of such Registrable Securities or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(xi) use its reasonable efforts to obtain a "cold comfort" letter or
letter from the Company's independent public accountants in customary form
and covering matters of the type customarily covered by "cold comfort"
letters as the seller or sellers of a majority of shares of such
Registrable Securities shall reasonably request (provided that Registrable
Securities constitute at least 25% of the securities covered by such
Registration Statement);
(xii) make available for inspection by representatives of the
sellers of such Registrable Securities covered by such registration
statement, by any underwriter participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by such sellers or any such
underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause all of the
Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant
or
<PAGE>
9
agent in connection with such registration statement (subject to each
party referred to in this clause (xii) entering into customary
confidentiality agreements in a form reasonably acceptable to the
Company); and
(xiii) use its reasonable efforts (taking into account the interests
of the Company) to make available the senior executive officers of the
Company to participate in customary "road show" presentations that may be
reasonably requested by the Holders and the managing underwriter in any
underwritten offering; provided that the participation of such senior
executive officers shall not interfere with the conduct of their duties to
the Company.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company with such
information regarding such seller and pertinent to the disclosure requirements
relating to the registration and the distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in clause (vii) of this Section 5, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by clause (vii) of this
Section 5, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the periods mentioned in clause (ii) of this
Section 5 shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to clause (vii) of this
Section 5 and including the date when each seller of Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by clause (vii) of this Section
5.
6. Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section 3
or 4, the Company will, and it hereby does, indemnify and hold harmless, to the
extent permitted by law, the seller of any Registrable Securities covered by
such registration statement, each affiliate of such seller and their respective
directors and officers or general and limited partners (and the directors,
officers, affiliates and controlling Persons thereof), each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act (collectively, the "Indemnified
Parties"), against any and all losses, claims, damages or liabilities, joint or
several, and expenses to which such seller, any such director or officer or
general or limited partner or affiliate or any such underwriter or controlling
Person may become subject under the Securities Laws, common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Indemnified Party is a party
thereto) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact contained in any registration
<PAGE>
10
statement under which such securities were registered under the Securities Laws,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereto, or (b) 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 in the light of the circumstances then
existing, and the Company will reimburse such Indemnified Party for any legal or
any other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided, that
the Company shall not be liable to any Indemnified Party in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information with respect to such seller furnished to the Company by such
seller for use in the preparation thereof; and provided, further, that the
Company will not be liable to any Indemnified Party (including any person
controlling such Indemnified Party), who is obligated to deliver a prospectus in
transactions in a security as to which a Registration Statement has been filed
pursuant to the Securities Laws, under the indemnity agreement in this Section
6(a) with respect to any preliminary prospectus or the final prospectus or the
final prospectus as amended or supplemented, as the case may be, to the extent
that any such loss, claim, damage or liability of such Indemnified Party results
from the fact that such Registrable Securities were sold to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus (including any documents incorporated by
reference therein) or of the final prospectus as then amended or supplemented
(including any documents incorporated by reference therein), whichever is most
recent, if the Company has previously furnished copies thereof to such
Indemnified Party. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any
Indemnified Party and shall survive the transfer of such securities by such
seller.
(b) Indemnification by the Sellers. In the event of any registration
of any securities of the Company under the Securities Act pursuant to Section 3
or 4, each prospective seller of Registrable Securities and any underwriter
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 6) the Company and all other
prospective sellers and any underwriter, as the case may be, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information with respect to such seller or underwriter furnished to the
Company by such seller or underwriter for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment or
supplement, or a document incorporated by reference into any of the foregoing.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any of the prospective
sellers, or any of their respective affiliates, directors, officers or
controlling Persons and shall survive the transfer of such securities by such
seller.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim
<PAGE>
11
for indemnification may be made pursuant to this Section 6, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action;
provided, that the failure of the indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 6, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, the indemnifying
party will be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent that
it may wish, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim (in which event such indemnified
party and any other indemnified party to which such conflict of interest applies
shall be reimbursed for the reasonable expenses incurred in connection with
retaining one separate legal counsel for all such indemnified parties in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances). No indemnifying party will, without the prior
written consent of the indemnified party (which consent shall not be
unreasonably withheld), consent to entry of any judgment or enter into any
settlement in respect of any such indemnifiable claim, unless any such judgment
or settlement includes as an unconditional term thereof, the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified
in the preceding subdivisions of this Section 6 (with appropriate modifications)
shall be given by the Company and each seller of Registrable Securities with
respect to any required registration or other qualification of securities under
any federal, provincial or state law or regulation or governmental authority
other than the Securities Act.
(e) Non-Exclusivity. The obligations of the parties under this
Section 6 shall be in addition to any liability which any party may otherwise
have to any other party.
7. Rule 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder (or, if the Company is not
required to file such reports, it will, upon the request of any Holder of
Registrable Securities, make publicly available such information), and it will
take such further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell shares of Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of any
Holder of Registrable Securities, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding anything contained in this Section 7, the
<PAGE>
12
Company may deregister under Section 12 of the Exchange Act if it then is
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder.
8. Miscellaneous.
(a) Holdback Agreement. If any registration described in Section 3
or 4 hereof shall be in connection with an underwritten public offering, each
Holder of Registrable Securities agrees (whether or not such Holder participates
in such registration) if requested (pursuant to timely written notice) by the
Company or the managing underwriter or underwriters in such underwritten
offering, not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, or any other sale, pledge,
assignment or other transfer or disposition of any equity securities of the
Company, or of any security convertible into or exchangeable or exercisable for
any equity security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or 90 days (or such lesser
period as the managing underwriters may permit) after the effective date of such
registration, and the Company hereby also so agrees.
(b) Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Holders of
a majority of the Registrable Securities then outstanding. Each Holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any consent authorized by this Section 7(b), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(c) Successors, Assigns and Transferees. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Whether or not any express
assignment shall have been made, the provisions of this Agreement which are for
the benefit of the parties hereto other than the Company may only be assigned
to, and shall also be for the benefit of and enforceable by, any subsequent
Holder of any Registrable Securities, which is an affiliate of the Partnerships,
subject to the provisions contained herein.
(d) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
telecopier or hand delivery:
(i) if to the Company, to:
Quebecor Printing Inc.
612 St. Jacques Street
Montreal, Quebec H3C 4M8
Attention: Vice President, Legal Affairs & Secretary
<PAGE>
13
With a copy to:
John A. Willett, Esq.
Arnold & Porter
399 Park Avenue
New York, New York 10022-4690
Telecopier No. 212-715-1399
Telephone No. 212-715-1000
(ii) if to any of the partnerships, to:
APC Associates, L.P.
GR Associates, L.P.
WCP Associates, L.P.
KKR Partners II, L.P. and
KKR Associates, L.P.
c/o Kohlberg Kravis Roberts & Co.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Scott Stuart
Telecopier No.: (212) 750-0003
Telephone No.: (212) 750-8300
With a copy to:
David Sorkin, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 455-2502
Telephone No.: (212) 455-2000
(iii) if to any other holder of Registrable Securities, to the
address of such other holder as shown in the stock record book
of the Company, or to such other address as any of the above
shall have designated in writing to all the other above.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, (3) when telexed, answer-back received or (4) when
telecopied, receipt acknowledged.
<PAGE>
14
(e) Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(f) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired, it
being intended that all rights, powers and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.
(h) Governing Law. This Agreement and the rights and duties of the
parties hereunder shall be governed by, and construed in accordance with, the
law of the State of New York. The parties to this Agreement hereby agree to
submit to the jurisdiction of the courts of the state of New York in any action
or proceeding arising out of or relating to this Agreement.
(i) Specific Performance. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction in the United States or any state thereof, in
addition to any other remedy to which they may be entitled at law or equity.
<PAGE>
15
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the date
first written above.
QUEBECOR PRINTING INC.
By: /s/ Charles G. Cavell
----------------------------------
Name: Charles G. Cavell
Title: President & Chief Executive Officer
By: /s/ Christian M. Paupe
----------------------------------
Name: Christian M. Paupe
Title: Executive Vice President
KKR PARTNERS II, L.P.
By: KKR Associates,
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
APC ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
GR ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
<PAGE>
16
WCP ASSOCIATES, L.P.
By: KKR Associates
Its General Partner
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
KKR ASSOCIATES
By: /s/ Scott M. Stuart
----------------------------------
Name: Scott M. Stuart
Title: General Partner
