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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
WORLD COLOR PRESS, INC.
(NAME OF SUBJECT COMPANY)
WORLD COLOR PRESS, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
981443104
(CUSIP NUMBER OF CLASS OF SECURITIES)
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JENNIFER L. ADAMS, ESQ.
VICE CHAIRMAN, CHIEF LEGAL AND
ADMINISTRATIVE OFFICER, AND SECRETARY
WORLD COLOR PRESS, INC.
THE MILL
340 PEMBERWICK ROAD
GREENWICH, CONNECTICUT 06831
(203) 532-4200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
DAVID J. SORKIN, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-2000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is World Color Press, Inc. (the "Company" or
"World Color") and the address of the principal executive offices of the Company
is The Mill, 340 Pemberwick Road, Greenwich, Connecticut 06831. The title of the
class of equity securities to which this Solicitation/ Recommendation Statement
on Schedule 14D-9 (this "Statement") relates is the Company's common stock, par
value $0.01 per share ("Common Stock" or "Shares").
ITEM 2. TENDER OFFER OF BIDDER
This Statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1, dated July 16, 1999 (as amended or
supplemented, the "Schedule 14D-1"), filed by Quebecor Printing Inc., a
corporation amalgamated under the laws of Canada ("Quebecor Printing" or
"Parent"), and Printing Acquisition Inc., a Delaware corporation and an indirect
wholly owned subsidiary of Quebecor Printing ("Purchaser"), with the Securities
and Exchange Commission (the "Commission"), relating to an offer to purchase
(the "Offer to Purchase") up to 23,500,000 (representing approximately 62% of
the issued and outstanding Shares as of July 8, 1999) of the Shares at a price
of $35.69 per Share net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated July 16,
1999 and in the related Letter of Transmittal (as amended or supplemented,
collectively, the "Offer Documents") filed with the Commission in connection
with the Schedule 14D-1.
The Offer is being made pursuant to the 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 that, among other things, subject
to the satisfaction or waiver of certain conditions, following completion of the
Offer, and in accordance with the Delaware General Corporation Law ("DGCL"),
Purchaser will be merged with and into the Company (the "Merger"). Following
consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a wholly owned
subsidiary of Quebecor Printing. As more fully described in Item 3(b)(i) below,
at the effective time of the Merger (the "Effective Time"), (i) if Purchaser
shall have purchased, pursuant to the Offer, an aggregate of 23,500,000 Shares
(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, each Share owned by Purchaser and shares to which dissenters rights are
applicable) shall be canceled, extinguished and converted into the right to
receive 1.6455 of fully paid and nonassessable shares of subordinate voting
shares, no par value of Parent (the "Subordinate Voting Shares"), and (ii) if
Purchaser shall have purchased, pursuant to the Offer, less than 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, Shares
owned by Purchaser or Shares to which dissenters rights are applicable) 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 Item
3(b)(i) below) multiplied by $35.69 and (ii) a number (rounded to the nearest
one-millionth of a share) of fully paid and nonassessable shares of Subordinate
Voting Shares equal to the product of (a) one minus the Cash Proration Factor
multiplied by (b) 1.6455. The Offer Documents state that the principal executive
office of Quebecor Printing is located at 612 St. Jacques Street, Montreal,
Quebec H3C 4M8 and the principal executive office of Purchaser is at 300
Delaware Ave, Suite 900, Wilmington, Delaware 19801.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
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(b)(i) THE MERGER AGREEMENT
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 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
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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).
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
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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.
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
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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, 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.
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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 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
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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
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
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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 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 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
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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.
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
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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; 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
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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 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
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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.
(ii) TENDER, VOTING AND OPTION AGREEMENT
GENERAL
The Tender, Voting and Option Agreement (the "TVO Agreement") establishes
certain rights and obligations of certain stockholders (the "Stockholders") in
connection with the Offer and the Merger. The Stockholders hold, in the
aggregate, approximately 24% of the issued and outstanding Shares as of July 8,
1999. The following summary is qualified in its entirety by reference to the
complete text of the TVO Agreement, a copy of which is attached as Exhibit 2
hereto and is incorporated herein by reference. Capitalized terms used but not
otherwise defined herein shall have the meaning given to them in the TVO
Agreement.
AGREEMENT TO TENDER SHARES
Each of the Stockholders has agreed in the TVO Agreement to tender into the
Offer and not to withdraw prior to the earlier of (i) the termination of the
Merger Agreement and (ii) the termination of the Offer without the purchase of
Shares pursuant thereto, all of the Shares (other than Shares granted under the
1998 Restricted Stock Plan of the Company) owned by such Stockholder as of July
12, 1999 (the "Subject Shares"). Notwithstanding the foregoing, no Stockholder
who is a natural person is required to tender any of such Stockholders' Shares
if such Stockholder would be subject to any liability under Section 16 of the
Exchange Act, as a result of any such tender of Shares purchased prior to July
12, 1999.
AGREEMENT TO VOTE SHARES
Each of the Stockholders has further agreed in the TVO Agreement to:
- be present, in person or by proxy, at all Company stockholders meetings,
so that all Shares then held by such Stockholder and entitled to vote may
be counted; and
- vote, or deliver a written consent covering, all the Shares then held by
such Stockholder to approve the Merger and Merger Agreement and against
any action which would reasonably be expected to result in a failure of
the conditions to the Merger to be satisfied.
INCONSISTENT AGREEMENTS
Each Stockholder has agreed not to enter into any voting agreement, or grant
a proxy or power of attorney with respect to the Subject Shares which is
inconsistent with the TVO Agreement.
WAIVER OF APPRAISAL RIGHTS
To the extent permitted by law, each Stockholder has agreed to waive any
appraisal, dissenters' or similar rights that such Stockholder may have under
Delaware law with respect to the Merger.
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RESTRICTION ON TRANSFER
Until the Merger is consummated or the Merger Agreement is terminated, each
Stockholder has agreed 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 other than to an affiliate of such Stockholder that agrees to comply
with the tender and voting requirements of the TVO Agreement.
OPTION OF PARENT
Under the TVO Agreement each Stockholder has granted to Parent an
irrevocable option to purchase all of such Stockholder's shares, in accordance
with the following terms:
- The exercise price for each Share subject to any such option shall be
$35.69, payable in cash.
- Parent may exercise any such option if, but only if, there has occurred a
Triggering Event (as defined in the Stock Option Agreement which is
described below).
- If Parent exercises any such option, it must exercise each option with
respect to the Subject Shares of all Stockholders.
- The ability of Parent to exercise any such option terminates upon the
earlier of:
(i) the Effective Time;
(ii) the 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;
(iii) the passage of nineteen business days after the date of the Triggering
Event; or
(iv) November 9, 1999, if all governmental and regulatory approvals for
Parent to exercise the option shall not have been obtained or if an
injunction or similar legal prohibition on exercise shall then be in
effect
- If it exercises any such option, Parent agrees to purchase Shares from any
holder of Shares with "tag-along" or similar rights granted by any
Stockholder who wishes to sell such Shares on the same terms as the
Stockholders;
- Parent must remit to the Stockholders on a pro rata basis 50% of any
consideration it receives in any sale or other disposition of shares
purchased pursuant to exercise of option in excess $35.69 per share.
NO SOLICITATION
- Each Stockholder agrees not to solicit or encourage the submission of
proposals relating to an Acquisition Proposal and to notify Parent of the
submission of or inquiry regarding any Acquisition Proposal.
TERMINATION OF TENDER AND VOTING OBLIGATIONS
The tender and voting obligations of each Stockholder terminate upon the
first to occur of the consummation of the Merger, the termination of the Merger
Agreement, the approval of the Merger and the Merger Agreement by the requisite
vote of the stockholders of the Company and the termination of the Offer without
the purchase of Shares pursuant thereto, other than a termination of the Offer
in connection with a One-Step Transaction.
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INDEMNIFICATION
In consideration of certain Stockholders affiliated with KKR (the "KKR
Stockholders") entering into the TVO Agreement, the Company has agreed to
indemnify such Stockholders against certain liabilities relating to or arising
out of the transactions contemplated by the Merger Agreement or any Acquisition
Proposal (as such term is defined in the Merger Agreement).
(iii) STOCK OPTION AGREEMENT
Concurrently with the execution of the Merger Agreement, Parent and the
Company entered into the Stock Option Agreement (the "Stock Option Agreement").
The following summary is qualified in its entirety reference to the complete
text of the Stock Option Agreement, a copy of which is attached as Exhibit 3
hereto and is incorporated herein by reference. Capitalized terms used but not
otherwise defined herein shall have the meaning given to them in the Stock
Option Agreement.
OPTION
The Company has granted to Parent an option (the "Option") to purchase up to
3,760,000 Shares (representing 9.9% of the outstanding Shares) if the
Termination Fee in the amount of $10,662,000 becomes payable or 7,558,300 Shares
(representing 19.9% of the outstanding Shares) if the Termination Fee in the
amount of $42,648,000 becomes payable (the "Option Amount"), in each case at
$35.69 per Share (the "Option Price").
EXERCISE
Each of the Company and Parent has agreed in the Stock Option Agreement to
the following:
- Parent may exercise the Option, in whole only, if, but only if, the
termination fee provided for in the Merger Agreement becomes payable (a
"Triggering Event") and notice of such exercise is received prior to the
occurrence of an Exercise Termination Event (as defined below).
- Each of the following is an "Exercise Termination Event":
(i) the Effective Time;
(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;
(iii) the passage of 30 days after the date of the Triggering Event;
(iv) November 9, 1999, if all governmental and regulatory approvals for
Parent to exercise the Option 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 Parent of the termination fee pursuant to the Merger
Agreement.
- The Company must promptly notify Parent in writing of the occurrence of
any Triggering Event;
COVENANTS OF THE COMPANY
In addition to its other agreements and covenants, the Company has agreed
to:
- maintain sufficient authorized but unissued or treasury Shares so that the
Option may be exercised without additional authorization of common stock;
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- not to avoid observance or performance of any covenants, stipulations or
conditions of the Company;
- promptly to take all action required to permit the holder of the Option to
exercise the Option and for the Company to issue Shares pursuant thereto.
ADJUSTMENTS
The Stock Option Agreement provides that the number of Shares purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment under the following conditions:
- In the event of any change in the distribution of the common stock the
type and number of Shares shall be adjusted so that if any additional
Shares are issued the number of Shares subject to the Option shall be
increased so that after issuance and together with Shares previously
issued pursuant to exercise of the Option, it equals the Option Percentage
of the number of Shares then issued and outstanding;
- Whenever the number of Shares purchasable upon exercise of the Option is
adjusted the Option Price shall be adjusted by multiplying the Option
Price by the fraction the numerator of which is the number of Shares
purchasable prior to the adjustment and the denominator of which is the
total number of Shares purchasable after the adjustment.
REGISTRATION
Within one year of the exercise of the Option, the Company has agreed to
file up to two registration statements and use all reasonable efforts to make
these statements effective in order to permit the sale of Shares in accordance
with the Securities Act of 1933, as amended (the "Securities Act"). If Shares
are listed on a securities exchange or market, the Company will file an
application and use its reasonable best efforts to obtain approval of such
listing.
SUBSTITUTE OPTION
The Stock Option Agreement provides that if prior to an Exercise Termination
Event the Company (i) enters into an agreement to merge with a person other than
Parent or a subsidiary ("Excluded Persons") and is not the surviving
corporation; (ii) merges with another non-Excluded Person but continues as the
surviving corporation although its stock represents less than 50% of all
outstanding stock; or (iii) sells or transfers all or substantially all of its
assets to a non-Excluded Person then the holder of the Option may exchange it
for those of (x) the continuing person in a merger with Issuer (other than the
Company); (y) the Company in a merger where the Company was continuing person;
and (z) the transferee of all or substantially all of the Company's consolidated
assets ("Acquiring Corporations"), or any person that controls the Acquiring
Corporation (such new Option, the "Substitute Option").
The Substitute Option shall:
- provide the holder thereof with no less advantageous terms than the
original option;
- be exercisable for shares of stock with the greatest voting power of the
issuer of the Substitute Option ("Substitute Shares") equal to the highest
of the (i) price per share of common stock for which a tender or exchange
offer has been made (ii) price per share of common stock to be paid by any
third party pursuant to an agreement with the Company, or (iii) the sum of
the net price of all or substantially all of the Company's assets divided
by the number of shares of the Company's common stock outstanding at time
of sale ("Assigned Value") multiplied by the number of shares of common
stock prior to the occurrence of the event which precipitated the
Substitute Option, divided by the average closing price per Substitute
Share for the preceding
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year which may not exceed the preceding day's closing price ("Average
Price"). Where the Company issues the Substitute Option the Average Price
shall be computed based on a share of common stock issued by the person
merging into Issuer or by any company which controls or is controlled by
such person;
- not yield a number of shares in excess of the Option Percentage of
substitute Shares then issued and outstanding at the time of exercise. In
the event the Substitute Option would be exercisable for more than the
Option Percentage of the substitute Shares then issued and outstanding,
the issuer of the Substitute Option shall make a cash payment to the
holder of such Substitute Option equal to the excess of: (i) the value of
the Substitute Option without giving effect to the limitation of this
clause over (ii) the value of the Substitute Option after giving effect to
the limitation of this clause.
EXTENSION
The Stock Option Agreement provides that a time extension may be sought
until November 9, 1999 when necessary:
- to obtain governmental and regulatory approval and to allow for the
expiration of statutory waiting periods
- during a period in which an injunction or legal prohibition shall be in
effect
- to extent necessary to avoid liability under Section 16 of the Exchange
Act
FILINGS; OTHER ACTIVITIES
Both parties have agreed to use their best efforts to make all filings and
to obtain the approval necessary from governmental and regulatory authorities to
enable the consummation of the transactions contemplated by the Stock Option
Agreement.
TOTAL PROFIT
The Stock Option Agreement provides that the difference between the net cash
amounts received by Parent for the sale of Option Shares and Parent's purchase
price for such shares together with any amounts Parent received for the transfer
of such Option to a third party ("Total Profit") may not exceed the termination
fee received as a result of the Triggering Event ("Total Profit Amount") less
the amount of any fee paid pursuant to the termination provisions of the Merger
Agreement. Parent has the discretion to exercise any of the following options to
prevent such an imbalance:
- reduce the number of shares subject to the Option;
- deliver for cancellation Option shares previously purchased by Parent; or
- pay cash to the Company.
The Option may not be exercised for a number of Shares that, if combined
with all Option Shares held by Parent and sold for cash at the closing market
price for common stock on the previous day ("Notional Total Profit") would
exceed the Total Profit Amount less the amount of any fee paid pursuant to the
termination provisions of the Merger Agreement.
(iv) REGISTRATION RIGHTS AGREEMENT
Concurrently with the execution of the Merger Agreement, Parent and the KKR
Stockholders entered into the Registration Rights Agreement (the "Registration
Rights Agreement") pursuant to which Parent granted the KKR Stockholders certain
registration rights with respect to the Subordinate Voting Shares that the KKR
Stockholders may own upon conversion or issuance of Subordinate Voting
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Shares pursuant to the Merger Agreement. The following summary is qualified in
its entirety by reference to the complete text of the Registration Rights
Agreement a copy of which is attached as Exhibit 4 hereto and incorporated
herein by reference. Capitalized terms used but not otherwise defined herein
shall have the meaning given to them in the Registration Rights Agreement.
SHELF REGISTRATION
The Registration Rights Agreement provides that Parent shall, as promptly as
practicable, file with the Commission a Registration Statement for an offering
to be made on a continuous basis pursuant to the Shelf Rules covering all of the
Registrable Securities (as defined below) (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
designated by them (including, without limitation, one or more underwritten
offerings). Parent cannot permit any securities other than the Registrable
Securities to be included in the Shelf Registration Statement or any Subsequent
Shelf Registration Statement (as defined below). Parent must use all reasonable
efforts to cause the initial Shelf Registration Statement to be declared
effective by the 30(th) day after consummation of the Merger and to keep the
Shelf Registration Statement continuously effective, subject to certain
extension provisions,(the "Effectiveness Period") or such shorter period ending
when (i) all Registrable Securities have been sold as contemplated in the
initial Registration Statement or (ii) a Subsequent Shelf Registration Statement
covering all the Registrable Securities has been declared effective.
If the initial Shelf Registration Statement (or any subsequent Shelf
Registration Statement) ceases to be effective during the Effectiveness Period,
Parent must use all reasonable efforts to obtain withdrawal of any order
suspending the effectiveness of such Shelf Registration Statement or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Securities (a "Subsequent Shelf Registration Statement"). Parent
must use its best efforts to cause the Subsequent Shelf Registration Statement
to be declared effective and to keep such Subsequent Shelf Registration
Statement effective for the remaining days left in the Effectiveness Period.
PIGGYBACK REGISTRATION. The Registration Rights Agreement provides that if
Parent proposes to register any of its equity securities, whether for its own
account or for the account of a third party, at any time in which the Shelf
Registration Statement is not yet or has ceased to be effective (subject to
certain exceptions), each KKR Stockholder may request that Parent include any or
all of their Registrable Securities in the registration. The Registration Rights
Agreement permits Parent to exclude shares in certain circumstances and provides
for certain priorities in registration.
CERTAIN OTHER PROVISIONS. All expenses incident to Parent's performance of
its registration obligations under the Registration Rights Agreement, including
the reasonable fees and expenses of one counsel retained in connection with each
registration by the KKR Stockholders of a majority of the Registrable Securities
being registered, will be paid by Parent. Underwriting commissions or discounts
or transfer taxes, if any, attributable to the sale of Registrable Securities by
the Stockholders will be paid by the KKR Stockholders.
The Registration Rights Agreement contains customary indemnification
provisions whereby Parent is obligated to indemnify and hold harmless the KKR
Stockholders and certain related parties, and the KKR Stockholders are obligated
under certain circumstances to indemnify and hold harmless Parent and certain
related parties, in each case in connection with liabilities relating to the
registration of the Registrable Securities.
(v) ARRANGEMENTS BETWEEN THE COMPANY, PARENT AND CERTAIN DIRECTORS AND
EXECUTIVE OFFICERS OF THE COMPANY.
Pursuant to the Merger Agreement, the Company or Parent, as applicable, has
agreed to enter into agreements and adopt plans or programs, effective no later
than the Effective Time with certain
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directors and executive officers of the Company. The expected terms and
conditions of such agreements include the following:
Robert G. Burton, the current Chief Executive Officer and Chairman of the
Board of the Company, shall resign as of the consummation of the Offer. At such
time, Mr. Burton shall receive payments under the Change in Control Agreement
("CIC Agreement") between Mr. Burton and the Company (as described below), dated
April 16, 1999, the World Color Press, Inc. Third Amended and Restated
Supplemental Retirement Program, effective April 1, 1995, and his 1999 bonus.
Mr. Burton shall become a member of the Board of Directors of Parent following
such resignation from the Company.
Marc L. Reisch, the current President of the Company, shall become the
Chairman, Chief Executive Officer and President of the North American Group
(U.S. and Canada) of Parent and a member of the Office of the President of
Parent. Mr. Reisch's salary and bonus target shall be increased to a level
commensurate with such positions and related authority. The corporate
headquarters of Parent shall remain in Montreal, but the corporate headquarters
of the North American Group and Mr. Reisch's principal office shall be in
Greenwich, Connecticut.
Parent and the Company have agreed to enter into individual agreements with
a limited group of executives, including Mr. Reisch ("Group A Executives"),
effective as of the consummation of the Offer ("Group A Agreements"). Each Group
A Agreement shall provide for a lump sum retention bonus equal to (i) 40% of the
cash payment portion of the Severance Benefits provided under such Group A
Executive's CIC Agreement, payable upon the consummation of the Offer and (ii)
60% of the cash payment portion of the Severance Benefits provided under such
Group A Executive's CIC Agreement, payable upon the first anniversary of the
consummation of the Offer, unless prior to such first anniversary the Group A
Executive's employment is terminated by Parent other than for Cause or by the
Group A Executive for Good Reason, in which case severance benefits described
below shall apply. Each Group A Agreement shall also provide for severance
benefits upon termination by Parent other than for Cause or by the Group A
Executive for Good Reason during the two years following the consummation of the
Offer including (i) an amount equal to the cash payment portion of the Severance
Benefits provided under such Group A Executive's CIC Agreement, reduced by the
amount of any retention bonus already paid; PROVIDED, HOWEVER, that if such
payment is equal to zero then the Group A Executive shall be entitled, as soon
reasonably practicable after termination, to one times the sum of his or her
then current annual base salary and target bonus, (ii) continuation of coverage
and participation in employee welfare and fringe benefit plans or programs until
the end of the three-year period (two-year period in the cases of three of the
Group A Executives) following termination (the "Severance Period"), subject to
mitigation upon re-employment and receipt of comparable benefits and (iii)
during the Severance Period, outplacement services no less favorable than the
executive outplacement provided by the Company consistent with past practices.
The Group A Agreements include a noncompetition/no raid covenant, which provides
that for one and one-half years (one year in the cases of three of the Group A
Executives) following termination, a Group A Executive shall not directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control, or be connected as a director, officer,
employee, partner, consultant or otherwise with any "competing business", other
than as a shareholder or beneficial owner, directly or indirectly, of five
percent or less of the outstanding securities of a publicly held competing
business, nor shall such Group A Executive solicit customers or employees from
the Company. For these purposes, "competing business" means any business, firm
or enterprise engaged in a business substantially similar to the Company's
printing business as it exists at the time of the consummation of the Offer
within the same geographical locations in which the Company operates on the date
of the consummation of the Offer. Group A Executives shall receive a full
gross-up for all excise taxes and related costs in connection with any payments
deemed "excess parachute payments."
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The Company has also agreed to enter into individual agreements with certain
other key executives ("Group B Executives"), effective as of the consummation of
the Offer ("Group B Agreements"). Such Group B Agreements shall provide for $10
million to be set aside to fund lump sum retention bonuses to each Group B
Executive, 40% of which shall be payable on the consummation of the Offer and
60% shall be payable on the earlier of the first anniversary thereof or
termination by Parent other than for Cause or by the Group B Executive for Good
Reason. Each Group B Agreement shall also provide for severance benefits upon
termination by Parent other than for Cause or by the Group B Executive for Good
Reason during the one year following the consummation of the Offer including (i)
a lump sum payment equal to the balance of the retention bonus and (ii)
continuation of coverage and participation in employee welfare and fringe
benefit plans or programs until the earlier of the first anniversary of
termination or the date on which the Group B Executive becomes re-employed and
receives comparable benefits. Group B Executives shall receive a full gross-up
for all excise taxes and related costs in connection with any payments deemed
"excess parachute payments."
The Company has entered into Change in Control Severance Agreements (the
"CIC Agreements"), dated as of April 16, 1999, with eight senior executives: Ms.
Adams, Ms. Hlavaty and Messrs. Burton, Reisch, Lewis, Lillie, Quinlan and
Carousso (the "Executives"). The following summary is qualified in its entirety
to the complete text of the CIC Agreements, copies of which are attached as
Exhibits 5-12 hereto and incorporated herein by reference.
The Agreements provide for severance benefits to any Executive whose
employment is terminated by the Company without Cause or by the Executive for
Good Reason (as those terms are defined in the CIC Agreement) within two years
after a Change of Control or in connection with a Potential Change in Control
which results in a Change in Control (as those terms are defined below) (a
"Covered Termination").
An Executive whose employment is subject to a Covered Termination is
entitled to receive (i) a lump sum payment equal to three times (two times in
the cases of Messrs. Quinlan and Carousso, and Ms. Hlavaty) the greater of base
salary plus target bonus in effect on (a) the date of such Covered Termination
or (b) the date of such Change in Control; (ii) immediate vesting of all
equity-based awards and, if the Executive elects, cash out of stock options, in
lieu of issuing shares upon exercise thereof, at the difference between the
aggregate exercise price of such options and the product of the aggregate number
of options times the greater of the (a) per share value received by shareholders
upon Change in Control and (b) fair market value per share upon Change in
Control; (iii) continuation for the three-year period (two-year period in the
cases of Messrs. Quinlan and Carousso, and Ms. Hlavaty) after termination of
life, disability, accident, health and dental benefits substantially similar to
those received prior to notice of termination (reduced by comparable benefits
received or made available without cost to the Executive during such period);
and (iv) a lump sum payment equal to the benefits under all defined benefit and
cash balance plans of the Company which the Executive would have accrued had he
or she remained employed for an additional three years, assuming no change in
base salary and bonus potential, assuming full bonus payout and without regard
to amendments effective after the applicable Change in Control or Potential
Change in Control. An Executive shall also be entitled to legal fees and
expenses as a result of a Covered Termination, as well as an additional payment,
if necessary, to make the Executive whole for any excise or income tax, imposed
by reason of a payment under the CIC Agreement being deemed to constitute an
"excess parachute payment" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended.
Each CIC Agreement also provides that the Executive shall remain employed by
the Company until the earliest of (i) six months after a Potential Change in
Control, (b) Change in Control, (c) termination for Good Reason, death,
disability, retirement or by the Company for any reason. The Executive shall
also be subject to a noncompetition covenant for 18 months (12 months in the
case of Messrs. Quinlan and Carousso and Ms. Hlavaty) following the initial
receipt of severance benefits described above.
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"Change in Control" means (i) any Person (as defined in the Exchange Act),
other than any employee benefit plan then maintained by the Company, becomes the
beneficial owner of shares of the Company having 30 percent or more of the total
number of votes that may be cast for the election of directors of the Company,
(ii) as the result of, or in connection with, any contested election for the
Board of Directors of the Company, or any tender or exchange offer, merger or
other business combination or sale of assets or any combination of the foregoing
(a "Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company or its assets, or (iii) at any time
(a) the Company shall consolidate or merge with any other Person and the Company
shall not be the continuing or surviving corporation, (b) any Person shall
consolidate or merge with the Company and the Company shall be the continuing or
surviving corporation and in connection therewith, all or part of the
outstanding Company stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, (c) the Company
shall be a party to a statutory share exchange with any other Person after which
the Company is a subsidiary of any other Person, or (d) the Company shall sell
or otherwise transfer 50% or more of the assets or earning power of the Company
and its subsidiaries (taken as a whole) to any Person.
"Potential Change in Control" means (i) the Company enters into an
agreement, the consummation of which would be Change in Control; (ii) a public
announcement is made of an intention to take or consider taking actions which,
if consummated, would be a Change in Control; or (iii) Board of Directors of the
Company adopts a resolution to the effect that a Potential Change in Control has
occurred.
Certain other agreements between the Company and certain of its executive
officers, including agreements relating to the treatment of employee stock
options and fiscal year 1999 bonuses, are described in the description of the
merger agreement set forth is subparagraph (i) above. In addition, as described
below, pursuant to an engagement letter dated July 9, 1999, the Company has
agreed to pay KKR a fee in connection with the negotiation of the Offer and the
Merger. As set forth in the description of the TVO Agreement above, the Company
has also agreed to indemnify Stockholders affiliated with KKR against certain
liabilities in consideration for their entering into the TVO Agreement. Finally,
as described in Section 3(b)(iv), Parent and the KKR Stockholders have entered
into the Registration Rights Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS
The Company Board, at a special meeting held on July 9, 1999, unanimously
(i) 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, (ii) approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger (iii) approved the Stock Option Agreement and the transactions
contemplated thereby, (iv) approved the TVO Agreement and the transactions
contemplated thereby and (v) 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.
(B) BACKGROUND OF THE OFFER, REASONS FOR THE RECOMMENDATION
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.
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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 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 RBCDS 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
RBCDS and CSFB met
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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 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.
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 RBCDS 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
Honorable 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
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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.
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.
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REASONS FOR THE RECOMMENDATION
In reaching the determination described in paragraph (a) above, the Company
Board considered a number of factors including, without limitation, the
following:
(i) the amount of consideration to be received by the Company's stockholders
in the transactions contemplated by the Merger Agreement relative to the
earnings and cash flows of the Company, comparable precedent
transactions and public market prices of comparable companies, and the
implied premium of such consideration over the market price of the
Shares;
(ii) a review of the Company's business, financial performance and
operations as well as the potential for cost savings and other
synergies that could be created by combining the two companies;
(iii) the due diligence review of Quebecor Printing conducted by management
of the Company and the Company's legal, financial and accounting
advisors in connection with the receipt by Company stockholders of
Subordinate Voting Shares in the Merger
(iv) the terms of the Merger Agreement and the Stock Option Agreement,
including Quebecor Printing's representation in the Merger Agreement
that it will have available to it the financing necessary to complete
the Offer and the Merger and the absence of a financing condition in
the Merger Agreement and including Quebecor Printing's undertaking in
the Merger Agreement to secure all required antitrust clearances;
(v) a review of the possible alternatives to the transactions contemplated
by the Merger Agreement, including the possibilities of continuing to
operate the Company as an independent entity, as well as the risks and
uncertainties associated with those alternatives;
(vi) the fact that the holders of approximately 24% of the shares of Common
Stock were prepared to commit to tender their shares into the Offer
pursuant to the terms of the TVO Agreement and the review by the
Company Board of the terms of the TVO Agreement;
(vii) the increasing difficulty of the Company to identify attractive
acquisitions of significant scale;
(viii) the financial presentation of Morgan Stanley to the Board in connection
with the Offer and the Merger, including the opinion of Morgan Stanley,
delivered to the Company Board 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 the Shares
in the Offer and the Merger was fair from a financial point of view to
such holders (the full text of the Morgan Stanley written opinion dated
as of July 12, 1999 is attached as Annex B hereto and should be read in
its entirety);
(ix) the review by Morgan Stanley of the strategic alternatives available to
the Company, the potential synergies available to Quebecor Printing and
the absence of any contacts in spite of persistent rumors in the
printing industry of a transaction with Quebecor Printing during recent
months;
(x) the fact, notwithstanding the foregoing, that pursuant to the Merger
Agreement, the Company may respond to an unsolicited proposal, and may
terminate the Merger Agreement and accept such alternative proposal,
subject to compliance with the terms of the Merger Agreement and the
payment of the Termination Fee (as defined in the Merger Agreement) and
to Purchaser's right to exercise the option set forth in the Stock
Option Agreement;
(xi) the fact that the Termination Fee (and the number of Shares subject to
the Option) is significantly lower in connection with a termination of
the Merger Agreement as a result of
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entering into an acquisition proposal with any potential third party
acquiror of the Company that surfaces within two weeks of the signing
of the Merger Agreement.
In view of the wide variety of factors considered in connection with its
evaluation of the Offer and the Merger, the Board did not find it practicable
to, and did not, quantify or otherwise attempt to assign relative weights to the
specific factors considered in reaching its respective determinations.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
In connection with the Offer and the Merger and other matters arising in
connection therewith, Morgan Stanley has been retained as the financial advisor
to the Company.
Pursuant to an engagement letter dated July 9, 1999 (the "Engagement
Letter"), the Company has agreed to pay Morgan Stanley a fee of $7,500,000,
payable upon consummation of the Offer, or, in the event of the One-Step
Transaction, payable at the Effective Time of the Merger. The Company also has
agreed to reimburse Morgan Stanley for reasonable expenses and to indemnify
Morgan Stanley and certain related persons against certain liabilities,
including liabilities under the federal securities laws, arising out of its
engagement. Morgan Stanley and its affiliates have in the past provided
investment banking services to the Company and its affiliates in particular
action by lead manager is connection with a high yield offering for the Company
in February of 1999. Morgan Stanley has also provided certain investment banking
services to Quebecor Printing unrelated to the Offer and the Merger, for which
services Morgan Stanley has received compensation. In the ordinary course of
business, Morgan Stanley and its affiliates may actively trade or hold the
securities of the Company for its own account or for the accounts of customers
and, accordingly, may at any time hold a net long or short position in such
securities.
In consideration of its advisory services to the Company in connection with
the negotiation of the Offer and the Merger, pursuant to an engagement letter
dated July 9, 1999, KKR will receive a fee of $17,500,000 payable upon
consummation of the Offer, or, in the event of the One-Step Transaction, payable
at the Effective Time of the Merger. The directors of the Company who are not
affiliated with KKR, and who constitute a majority of the entire board of
directors, unanimously approved the payment of the fee to KKR.
Neither the Company nor any person acting on its behalf has employed,
retained or agreed to compensate any other person to make solicitations or
recommendations to the stockholders of the Company on behalf of the Company
concerning the Offer and the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Other than as set forth on Annex C to this Statement, to the best
knowledge of the Company, there were no transactions in the Shares effected
during the past 60 days by the Company or any executive officer, director,
affiliate or subsidiary of the Company.
(b) To the best knowledge of the Company, to the extent permitted by the
applicable securities laws, rules, and regulations, all of the Company's
executive officers, directors, and affiliates who own Shares presently intend to
tender such Shares to Purchaser pursuant to the Offer, other than Shares, if
any, held by such persons which, if tendered, could cause such person to incur
liability under the provisions of Section 16 of the Exchange Act. Pursuant to
the terms of the TVO Agreement and subject to the qualifications and limitations
set forth therein, the Stockholders have agreed to tender approximately 24% of
the Shares outstanding.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Statement, the Company is not engaged in any
negotiation in response to the Offer which relates to or would result in (i) an
extraordinary transaction, such as a
25
<PAGE>
merger or reorganization, involving the Company or any subsidiary of the
Company; (ii) a purchase, sale, or transfer of a material amount of assets by
the Company or any subsidiary of the Company; (iii) a tender offer for or other
acquisition of securities by or of the Company; or (iv) any material change in
the present capitalization or dividend policy of the Company.
(b) Except as set forth in this Statement, there are no transactions,
resolutions of the Board, agreements in principle, or signed contracts in
response to the Offer that relate to or would result in one or more of the
events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) The Information Statement attached as Annex A hereto is being furnished
in connection with the possible designation by the Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Company's Board
other than at a meeting of the Company's stockholders.
(b) As a Delaware corporation, the Company is subject to Section 203
("Section 203") of the DGCL. Under Section 203, certain "business combinations"
between a Delaware corporation whose stock is publicly traded or held of record
by more than 2,000 stockholders and an "interested stockholder" are prohibited
for a three-year period following the date that such a stockholder became an
interested stockholder, unless, among other possible exemptions, the transaction
in which the stockholder became an interested stockholder or the business
combination was approved by the board of directors of the corporation before
such other party to the business combination became an interested stockholder.
The term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an interested stockholder,
transactions with an interested stockholder involving the assets or stock of the
corporation or its majority-owned subsidiaries and transactions which increase
an interested stockholder's percentage ownership of stock. The term "interested
stockholder" is defined generally as a stockholder who, together with affiliates
and associates, owns (or, within three years prior, did own) 15% or more of a
Delaware corporation's voting stock. An owner includes a person who has the
right to acquire such stock, including upon the exercise of an option.
In accordance with the Merger Agreement and Section 203, at its meeting on
July 9, 1999, the Company Board unanimously approved the Offer and the Merger,
the Stock Option Agreement and the TVO Agreement and determined to make the
restrictions of Section 203 inapplicable to the Offer, the Merger, the Stock
Option Agreement and the TVO Agreement.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------- --------------------------------------------------------------------------------------------------------
<C> <S>
1 Agreement and Plan of Merger, dated as of July 12, 1999, among Quebecor Printing Inc., Printing
Acquisition and World Color Press, Inc. (incorporated by reference to Exhibit (c)(1) to the Tender Offer
Statement on Schedule 14D-1, dated July 16, 1999, filed by Quebecor Printing Inc. and Printing
Acquisition Inc. relating to the Common Stock of World Color Press, Inc.)
2 Tender, Voting and Option Agreement, dated as of July 12, 1999, Quebecor Printing Inc. and each of the
parties listed on the signature page thereto. (Incorporated by reference to Exhibit (c)(2) to the Tender
Offer Statement on Schedule 14D-1, dated July 16, 1999, filed by Quebecor Printing Inc. and Printing
Acquisition Inc. relating to the Common Stock of World Color Press, Inc.)
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------- --------------------------------------------------------------------------------------------------------
<C> <S>
3 Stock Option Agreement dated as of July 12, 1999 between Quebecor Printing Inc. and World Color Press,
Inc. (Incorporated by reference to Exhibit (c)(4) to the Tender Offer Statement on Schedule 14D-1, dated
July 16, 1999, filed by Quebecor Printing Inc. and Printing Acquisition Inc. relating to the Common
Stock of World Color Press, Inc.)
4 Registration Rights Agreement, dated as of July 12, 1999, by and among Quebecor Printing Inc., APC
Associates, L.P., GR Associates, L.P., WCP Associates, L.P., KKR Associates, L.P. and KKR Partners II,
L.P. (Incorporated by reference to Exhibit (c)(5) to the Tender Offer Statement on Schedule 14D-1, dated
July 16, 1999, filed by Quebecor Printing Inc. and Printing Acquisition Inc. relating to the Common
Stock of World Color Press, Inc.)
5 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Jennifer L. Adams.
6 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Robert G. Burton.
7 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Paul Carousso.
8 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Robert Lewis.
9 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and James Lillie.
10 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Thomas Quinlan.
11 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Marc L. Reisch.
12 Agreement, dated as of April 16, 1999, between World Color Press, Inc. and Marie Hlavaty.
13 Opinion of Morgan Stanley & Co. Incorporated, dated July 12, 1999 (included as Annex B to the Schedule
14D-9).*
14 Joint Press Release of Quebecor Printing Inc. and World Color Press, Inc., dated July 12, 1999
(incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K of World Color Press, Inc.,
filed with the Securities and Exchange Commission on July 13, 1999).
15 Letter to Stockholders of World Color Press, Inc., dated July 16, 1999.*
</TABLE>
- ------------------------
* Included with Schedule 14D-9 mailed to stockholders.
27
<PAGE>
SIGNATURE
After reasonable 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.
<TABLE>
<S> <C> <C>
WORLD COLOR PRESS, INC.
By: /s/ JENNIFER L. ADAMS
-----------------------------------------
Name: Jennifer L. Adams
Title: Vice Chairman, Chief Legal and
Administrative Officer and Secretary
</TABLE>
Dated: July 16, 1999
28
<PAGE>
ANNEX A
WORLD COLOR PRESS, INC.
THE MILL
340 PEMBERWICK ROAD
GREENWICH, CONNECTICUT 06831
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE ACT
OF 1934 AND RULE 14f-1 THEREUNDER
This Information Statement is being mailed on or about July 16, 1999 as a
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of World Color Press, Inc. ("World Color" or the "Company") to
holders of the common stock, $0.01 par value (the "Common Stock" or "Shares"),
of the Company. You are receiving this Information Statement in connection with
the possible election of persons designated by Printing Acquisition Inc.
("Purchaser"), a Delaware corporation and a wholly owned subsidiary of Quebecor
Printing Inc. ("Quebecor Printing"), to a majority of the seats on the Board of
Directors (the "Board of Directors" or the "Board") of the Company. On July 16,
1999, the Company, Quebecor Printing, and Purchaser entered into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which Purchaser is
required to commence a tender offer (the "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 price of $35.69 per Share net to the seller in cash,
without interest, 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 (as amended or supplemented, collectively, the
"Offer Documents"), copies of which have been mailed to stockholders of the
Company and are filed as Exhibits (a)(1) and (a)(2) respectively, to the
Schedule 14D-1 (as amended from time to time, the "Schedule 14D-1") filed by
Quebecor Printing and Purchaser with the Securities and Exchange Commission (the
"Commission"). The Merger Agreement contemplates that, following consummation of
the Offer, Purchaser will be merged (the "Merger") with and into the Company
with the Company as the surviving corporation. Stockholders of the Company
receiving subordinated voting shares of Quebecor Printing and/or cash in
exchange for their Shares on the terms and subject to the conditions of the
Merger Agreement. The Offer, the Merger, the Merger Agreement, the Tender and
Voting Agreement and the Registration Rights Agreement are more fully described
in the Solicitation/Recommendation Statement on Schedule 14D-9 to which this
Information Statement forms Annex A, which was filed by the Company with the
Commission on July 16, 1999 and which is being mailed to stockholders of the
Company along with this Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 promulgated thereunder. The information set forth herein
supplements certain information set forth in the Schedule 14D-9. Information set
forth herein related to Quebecor Printing, Purchaser or the Quebecor Designees
(as defined herein) has been provided by Quebecor Printing. You are urged to
read this Information Statement carefully. You are not, however, required to
take any action in connection with the matters set forth herein.
GENERAL
The Common Stock is the only class of equity securities of the Company
outstanding which is entitled to vote at a meeting of the stockholders of the
Company. As of July 8, 1999, there were 37,981,422 shares of Common Stock
outstanding (including 330,285 shares of Restricted Stock), and each share of
such Common Stock is entitled to one vote. The Board of Directors presently
consists of seven members. Directors are generally elected at the annual
stockholders meeting.
<PAGE>
RIGHTS TO DESIGNATE DIRECTORS AND QUEBECOR DESIGNEES
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of the Shares pursuant to the Offer, Purchaser will be entitled to designate up
to such number of directors of the Company (the "Quebecor Designees"), rounded
up to the next whole number, as shall give Purchaser representation on the Board
of Directors equal to the product of the total number of directors of the Board
multiplied by the percentage that the aggregate number of Shares owned by
Purchaser or any of its affiliates bears to the total number of Shares then
outstanding. The Company is required, at such time, to cause the Quebecor
Designees to be elected to the Board of Directors, including either increasing
the size of the Board of Directors or securing the resignations of incumbent
directors or both.
Following the election or appointment of the Quebecor Designees to the Board
of Directors and prior to the effective time of the Merger: (i) any amendment or
waiver of any term or condition of the Merger Agreement or the Amended and
Restated Certificate of Incorporation or Bylaws of the Company affecting
indemnification; (ii) any termination of the Merger Agreement by the Company;
(iii) any extension by the Company of the time for performance of any of the
obligations or other acts of Purchaser or Quebecor Printing under the Merger
Agreement; (iv) any waiver or assertion of any of the Company's rights under the
Merger Agreement; or (v) any other consent or action by the Board of Directors
with respect to the Merger Agreement requires the separate concurrence of a
majority of the continuing directors of the Company who hold office as of the
date of the Merger 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"). The number of
Disinterested Directors shall not be less than two.
The Quebecor Designees will be selected by Quebecor from among the
individuals listed below. Each of the following individuals has consented to
serve as a director of the Company if appointed or elected. None of the Quebecor
Designees currently is a director of, or holds any positions with, the Company.
Quebecor has advised the Company that, to the best of Quebecor's knowledge,
except as set forth below, none of the Quebecor Designees or any of their
affiliates beneficially owns any equity securities or rights to acquire any such
securities of the Company, nor has any such person been involved in any
transaction with the Company or any of its directors, executive officers or
affiliates that is required to be disclosed pursuant to the rules and
regulations of the Commission other than with respect to transactions between
Quebecor and the Company that have been described in the Schedule 14D-1 or the
Schedule 14D-9.
The name, age, present principal occupation or employment and five-year
employment history of each of the individuals are set forth below. Unless
otherwise indicated, each such individual has held his or her present position
as set forth below for the past five years and each occupation refers to
employment with Quebecor Printing, unless otherwise noted. Unless otherwise
noted, each such person is a citizen of the Canada, and the business address of
each person listed below is c/o Quebecor Printing Inc. 612 St. James Street,
Montreal, Quebec H3C 4M8.
A-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------------------------ ---------------------------------------------------------------------
<S> <C>
Charles G. Cavell......................... Mr. Cavell, 57, President of Purchaser; President and Chief Executive
Officer of Quebecor Printing since January 1998; previously president
and chief operating officer of Quebecor Printing from 1989 to
December 1997. Chairman of the Board of Sun Media Corporation;
Pierre Karl Peladeau...................... Mr. Peladeau, 37, Chairman of the Board of Purchaser; President and
Chief Executive Officer of Quebecor Inc.; Vice Chairman of the Board
of Quebecor Printing since May 1999; previously executive vice
president and chief operating officer of Quebecor Printing from April
1998 until April 1999; managing director of Quebecor 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........................ Mr. Paupe, 41, Treasurer of Purchaser; Executive Vice President,
Chief Administrative Officer and Chief Financial Officer of Quebecor
Printing since May 1999; previously executive vice president and
chief financial officer of Quebecor Printing from January 1999 until
April 1999; 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. Mr. Paupe is a Swiss and Canadian citizen.
Francois R. Roy........................... Mr. Roy, 44, Executive Vice President and Chief Financial Officer of
Quebecor Inc. since February 1999; previously vice president and
chief financial officer of Quebecor Inc. from August 1998 until
January 1999 and vice president, finance and treasurer from August
1991 until August 1997; executive vice president and chief financial
officer of Avenor Inc. from August 1997 until August 1998.
Louis Saint-Arnaud........................ Mr. Saint-Arnaud, 52, Secretary of Purchaser; Vice President, Legal
Affairs and Secretary of Quebecor Inc., Quebecor Printing, Sun Media
Corporation and Quebecor Communications Inc.
</TABLE>
A-3
<PAGE>
CURRENT DIRECTORS OF THE COMPANY
The name, age, present principal occupation or employment and five-year
employment history of the current directors of the Company are set forth below.
Unless otherwise noted, each person is a citizen of the United States, and the
business address of each such person is c/o World Color Press, Inc., The Mill,
340 Pemberwick Road, Greenwich, Connecticut 06831. Some of the current directors
may resign effective immediately following the consummation of the Offer by
Purchaser.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AND EMPLOYMENT HISTORY/OTHER PUBLIC COMPANY DIRECTORSHIPS AGE DIRECTOR SINCE
- --------------------------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
GERALD S. ARMSTRONG is General Partner of Arena Capital Partners, LLC, a private investment 55 1987
firm, a position he has held since February 1998. Prior thereto since 1993, he was a
Partner and a Director of Stonington Partners, Inc., a private investment firm. Mr.
Armstrong is also a director of Ann Taylor Stores Corporation and Blue Bird Corporation.
ROBERT G. BURTON has been Chairman of the Board of Directors and Chief Executive Officer of 61 1991
the Company since May 1991.
PATRICE M. DANIELS is a Managing Director, High Yield and Acquisition Financing for CIBC 38 1998
Oppenheimer Corp., a position she has held since March 1997. From July 1987 until March
1997, she was employed by Bankers Trust Company, most recently as a Managing Director.
MARK J. GRIFFIN is a Founder of the Eagle Hill School in Greenwich, Connecticut and has been 51 1996
headmaster of the school since 1975. He is also a psychologist in private practice since
1990.
ALEXANDER NAVAB, JR. has been an Executive of Kohlberg Kravis Roberts & Co. L.P. ("KKR") and 33 1995
a limited partner of KKR Associates, L.P. ("KKR Associates") since 1993. He and is also a
director of Borden, Inc., KSL Recreation Corporation, Newsquest Plc Regal Cinemas, Inc.
MARC L. REISCH is President of the Company, a position he has held since November 1998. Prior 43 1996
thereto Mr. Reisch was Vice Chairman, Group President from January 1998 until November
1998. He was Group President, Sales and Chief Operating Officer of the Company from August
1996 until January 1998 and Executive Vice President, Chief Operating and Financial Officer
from June 1996 until August 1996. He was Executive Vice President, Chief Operating and
Financial Officer and Treasurer from July 1995 until June 1996 and Executive Vice
President, Chief Financial Officer and Treasurer from October 1993 to July 1995.
SCOTT M. STUART has been a member of the limited liability company which is the general 40 1992
partner of KKR since January 1996. Prior thereto, from January 1995 to January 1996 he was
a general partner of KKR. Mr. Stuart is a general partner of KKR Associates since January
1995, and prior thereto an Executive of KKR and a limited partner of KKR Associates since
1986. He is also a director of AEP Industries, Inc., Borden, Inc., The Boyds Collection,
Ltd., KSL Recreation Corporation and Newsquest Plc.
</TABLE>
A-4
<PAGE>
EXECUTIVE OFFICERS
The table below sets forth certain information regarding our current
executive officers as of July 9, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Robert G. Burton.................... 61 Chairman of the Board of Directors and Chief Executive Officer
Jennifer L. Adams................... 40 Vice Chairman, Chief Legal and Administrative Officer and Secretary
Jerome V. Brofft.................... 54 Senior Vice President, Purchasing
Paul B. Carousso.................... 30 Vice President, Controller
Robert B. Lewis..................... 35 Executive Vice President, Chief Financial Officer
James E. Lillie..................... 38 Executive Vice President, Investor Relations and Corporate
Communications
Heidi J. Nolte...................... 42 Senior Vice President, Chief Information Officer
Thomas J. Quinlan III............... 36 Senior Vice President, Treasurer
Marc L. Reisch...................... 43 President
</TABLE>
ROBERT G. BURTON has been Chairman of the Board of Directors and Chief
Executive Officer since May 1991.
JENNIFER L. ADAMS has been Vice Chairman, Chief Legal and Administrative
Officer and Secretary since January 1998. Prior to holding that position, Ms.
Adams held the position of Executive Vice President, Chief Legal and
Administrative Officer and Secretary since July 1995 and the position of
Executive Vice President, General Counsel and Secretary of World Color from
October 1993 until July 1995.
JEROME V. BROFFT has been Senior Vice President, Purchasing since October
1995. Prior to holding that position, Mr. Brofft held the position of Vice
President, Purchasing and Logistics from February 1995 until October 1995 and
the position of Vice President, Purchasing from May 1992 until February 1995.
PAUL B. CAROUSSO has been Vice President, Controller since December 1998.
Prior to holding that position, Mr. Carousso was Vice President, Assistant
Controller from July 1998. Mr. Carousso held the position of Assistant
Controller from July 1996 until July 1998 and the position of Manager, Financial
Reporting from October 1994 until July 1996. Prior to joining World Color, Mr.
Carousso was an auditor with Ernst & Young LLP.
ROBERT B. LEWIS has held the position of Executive Vice President, Chief
Financial Officer since December 1998. Prior to holding that position, Mr. Lewis
held the position of Senior Vice President, Controller from December 1997 and
the position of Vice President, Corporate Controller from August 1997 until
December 1997. Mr. Lewis held the position of Vice President, Corporate
Accounting from November 1996 until August 1997 and the position of Vice
President, Strategic Planning since joining World Color in August 1996. Prior to
joining World Color, Mr. Lewis was with L.P. Thebault (a commercial printer)
since 1989, most recently as Vice President, Budgetary Operations.
JAMES E. LILLIE has been Executive Vice President, Investor Relations and
Corporate Communications since July 1998. Prior to holding that position, Mr.
Lillie held the position of Executive Vice President, Operations since January
1998. Mr. Lillie held the position of Corporate Vice President, Human Resources
from May 1996 until January 1998 and held the position of Regional Vice
President, Human Resources from January 1996 through April 1996. Mr. Lillie held
the position of
A-5
<PAGE>
Vice President, General Manufacturing Manager of World Color's Bradley Printing
facility from January 1995 to January 1996 and the position of Vice President
and Senior Human Resources and Administration Executive at Alden Press, from the
time Alden was acquired by World Color in February 1993.
HEIDI J. NOLTE has been Senior Vice President, Chief Information Officer of
World Color since July 1997. Prior to holding that position, Ms. Nolte was Vice
President, Chief Information Officer since joining World Color in September
1994. Prior to joining World Color, Ms. Nolte was Senior Director, MIS at U.S.
Surgical where she had been employed since 1979.
THOMAS J. QUINLAN III has been Senior Vice President, Treasurer since July
1998. Prior to holding that position, Mr. Quinlan held the position of Vice
President, Treasurer since July 1997. Mr. Quinlan was Assistant Treasurer of
World Color from February 1994 until July 1997. Prior to joining World Color,
Mr. Quinlan was Manager of Treasury Administration at Marsh & McLennan Companies
Inc.
MARC L. REISCH was appointed President of World Color in November 1998.
Prior to holding that position, Mr. Reisch held the position of Vice Chairman,
Group President since January 1998. Mr. Reisch held the position of Group
President, Sales and Chief Operating Officer from August 1996 until January 1998
and held the position of Executive Vice President, Chief Operating and Financial
Officer from June 1996 until August 1996. Mr. Reisch held the position of
Executive Vice President, Chief Operating and Financial Officer and Treasurer
from July 1995 until June 1996. Prior to holding that position, Mr. Reisch was
Executive Vice President, Chief Financial Officer and Treasurer since October
1993.
A-6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 9, 1999, including beneficial ownership
by (i) each stockholder of the Company who owns more than 5% of the outstanding
shares of the Common Stock, (ii) each director and nominee of the Company, (iii)
the Chief Executive Officer of the Company, (iv) the Company's four highest paid
executive officers (exclusive of the Chief Executive Officer) and (v) all
directors and executive officers of the Company as a group. Except as otherwise
noted, the persons named in the table below have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them. The following table does not include options which will be accelerated in
connection with the transactions contemplated by the Merger Agreement.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
OF THE COMMON OUTSTANDING SHARES
NAME STOCK OWNED(1) OF THE COMMON STOCK
- ------------------------------------------------------------------------- ----------------- --------------------
<S> <C> <C>
KKR Associates(2)........................................................ 9,016,489 23.7%
Scott M. Stuart(2)....................................................... -- --
Alexander Navab, Jr...................................................... -- --
Gerald S. Armstrong...................................................... 63,058(3) *
Patrice M. Daniels....................................................... 1,510 *
Mark J. Griffin.......................................................... 2,445 *
Robert G. Burton......................................................... 561,789(4) 1.5
Marc L. Reisch........................................................... 217,317(5) *
Jennifer L. Adams........................................................ 170,672(6) *
James E. Lillie.......................................................... 25,088(7) *
Robert B. Lewis.......................................................... 25,722(8) *
All directors and executive officers as a group.......................... 1,151,801(9) 3.0%
</TABLE>
- ------------------------
* Signifies less than 1%
(1) For purposes of this table, "beneficial ownership" includes any shares which
such person has the right to acquire within 60 days of July 9, 1999. For
purposes of computing the percentage of outstanding shares held by each
person or group of persons named above on a given date, any security which
such person or persons has the right to acquire within 60 days after such
date is deemed to be outstanding for purposes of computing the percentage
ownership of such person, but is not deemed to be outstanding in computing
the percentage ownership of any other person.
(2) Shares shown as owned by KKR Associates are owned of record by KKR
Associates, APC Associates, L.P. ("APC Associates"), GR Associates, L.P.
("GR Associates"), WCP Associates, L.P. ("WCP Associates") and KKR Partners
II, L.P. ("KKR Partners II"). The sole general partner of each of APC
Associates, GR Associates, WCP Associates and KKR Partners II is KKR
Associates which possesses sole voting and investment power with respect to
the shares of the Common Stock shown as owned by KKR Associates. Henry R.
Kravis, George R. Roberts, Scott M. Stuart (a director of the Company),
Robert I. MacDonnell, Paul E. Raether, Michael W. Michelson, Michael T.
Tokarz, James H. Greene, Jr., Edward A. Gilhuly, Perry Golkin and Clifton S.
Robbins, as the general partners of KKR Associates, may be deemed to share
beneficial ownership of the Shares shown as beneficially owned by KKR
Associates. Each of such persons disclaims beneficial ownership of such
shares, other than to the extent of his economic interest in such shares.
The address of KKR Associates is 9 West 57th Street, New York, New York
10019.
(3) Includes an aggregate of 1,500 Shares owned of record by children of Mr.
Armstrong, of which Shares Mr. Armstrong may be deemed to have indirect
ownership.
A-7
<PAGE>
(4) Includes 237,000 options that are exercisable within 60 days as well as
3,000 Shares owned of record as joint tenants by Mr. Burton's wife and son,
and 1,575 Shares owned of record by children of Mr. Burton, all of which
Shares Mr. Burton may be deemed to have indirect ownership. Mr. Burton
disclaims beneficial ownership of such Shares. Also includes 101,356 shares
of stock granted under the 1998 Restricted Stock Plan of World Color Press,
Inc. ("Restricted Stock").
(5) Includes 120,539 options that are exercisable within 60 days and 73,177
shares of Restricted Stock.
(6) Includes 107,888 options that are exercisable within 60 days as well as an
aggregate of 1,380 shares owned of record by children of Ms. Adams, of which
shares Ms. Adams may be deemed to have indirect ownership. Ms. Adams serves
as the custodian for such shares. Also includes 43,252 shares of Restricted
Stock.
(7) Includes 6,804 options that are exercisable within 60 days. Also includes
7,500 shares of Restricted Stock.
(8) Includes 1,500 options that are exercisable within 60 days. Also includes
15,000 shares of Restricted Stock.
(9) Includes an aggregate of 524,439 options that are exercisable within 60 days
as well as the shares that may be deemed to be owned indirectly by each of
Mr. Armstrong, Mr. Burton and Ms. Adams as set forth in notes (3), (4) and
(6) and an aggregate of 250,285 shares of Restricted Stock owned by the
named executive officers.
BOARD MEETING ATTENDANCE AND COMPENSATION OF DIRECTORS
The Board met four times during the Company's most recently completed fiscal
year, which ended on December 27, 1998 (fiscal 1998). All of the directors were
present for 75% or more of the total meetings of the Board and Board committees
of which they were members. Directors meet their responsibilities not only by
attending Board and Committee meetings, but also through communication with the
Chairman and Chief Executive Officer and other members of management on matters
affecting the Company.
DIRECTOR COMPENSATION
The following table displays all components of director compensation for
directors who are not also employees of the Company. Directors who are also
employees of the Company receive no remuneration for serving as directors.
<TABLE>
<S> <C> <C>
Annual Board Retainer...................................................... $ 25,000
Annual Option Grant(1)..................................................... 5,000 options
Annual Retainer for each member of the Audit and Compensation Committees... $ 1,000
Annual Retainer for Committee Chair (in addition to member retainer) of
each of the Audit and Compensation Committees............................ $ 2,000
Board Attendance Fee (per in person meeting)............................... $ 1,000
</TABLE>
- ------------------------
(1) Options having an exercise price at fair market value are to be granted
following each annual meeting and vest on the earlier of the first
anniversary of the grant date and the day before the next annual meeting.
A-8
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
There are three committees of the Board as of July 9, 1999: an Audit,
Compensation and Executive Committee. Membership as of July 9, 1999 was as
follows:
<TABLE>
<CAPTION>
AUDIT COMPENSATION EXECUTIVE
- ------------------------------ ------------------------------ -------------------------
<S> <C> <C>
Ms. Daniels, Chairman Mr. Armstrong, Chairman* Mr. Burton, Chairman
Mr. Armstrong Mr. Stuart Mr. Armstrong
Dr. Griffin Dr. Griffin* Mr. Stuart
Ms. Daniels* Mr. Navab
</TABLE>
- ------------------------
* Subcommittee member
AUDIT COMMITTEE Two meetings during 1998
- Recommends to the Board a firm of independent public accountants to serve
as the Company's auditors.
- Meets with the Company's independent public accountants to review
procedures, fees and scope of the annual audit.
- Reviews the audit reports of the Company's outside and internal auditors
and the recommendations made by each.
- Reviews the Company's accounting and financial control structure.
COMPENSATION COMMITTEE Four meetings during 1998
- Reviews recommendations for and determines annual salary and bonus of
selected senior officers of the Company, including the Chief Executive
Officer.
- Establishes and reviews performance standards under the Company's
compensation and incentive programs for senior officers.
- Reviews recommendations for and determines grants under the Company's
equity incentive plans.
COMPENSATION COMMITTEE SUBCOMMITTEE Four meetings during 1998
- Exercises ultimate decision-making authority for purposes of Section
16(a) of the Exchange Act, and Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").
EXECUTIVE COMMITTEE One meeting during 1998
- Exercises all of the powers and authority of the Board in the management
of the business and affairs of the Company when the Board is not in
session except for:
- Approving, adopting or recommending to stockholders any action or matter
expressly required by the General Corporation Law of the State of
Delaware to be submitted to stockholders for approval.
- Adopting, amending or repealing any bylaw of the Company.
- Taking any specific actions delegated to other committees of the Board.
A-9
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes of
ownership with the Commission and each exchange on which the Company's
securities are registered. Officers, directors and greater than ten percent
stockholders are required by Commission regulations to furnish the Company with
copies of all ownership forms they file.
Based solely on a review of copies of reporting forms furnished to it, or
written representations that no forms were required, to the Company's knowledge,
all filing requirements applicable to its officers, directors and beneficial
owners under Section 16(a) of the Exchange Act were complied with during fiscal
1998 and as of July 9, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company pays fees to KKR of $750,000 per year for management consulting
and financial advisory services. In addition, pursuant to an engagement letter
dated July 9, 1999, the Company has agreed to pay a fee to KKR in consideration
of its advisory services to the Company in connection with the negotiation of
the Offer and the Merger. See Item 5 of the Schedule 14D-9 for a description of
such fee. In consideration of the KKR Stockholders entering into the TVO
Agreement, the Company has also agreed to idemnify such Stockholders against
certain liabilities relating to or arising out of the transactions contemplated
by the Merger Agreement or any Acquisition Proposal (as defined in the Merger
Agreement) Mr. Stuart, a director of the Company and a member of the
Compensation Committee, is a member of the limited liability company which is a
general partner of KKR and is a general partner of KKR Associates. Mr. Navab, a
director of the Company, is an executive of KKR and a limited partner of KKR
Associates.
CIBC, Inc., an affiliate of CIBC Oppenheimer Corp., is a lender under the
Company's credit facility and CIBC Oppenheimer Corp. was a co-lead manager in
the Company's November 1998 issuance of $300.0 million of its 8 3/8% Senior
Subordinated Notes due 2008 and a co-manager in the Company's February 1999
issuance of $300.0 million of its 7 3/4% Senior Subordinated Notes due 2009. Ms.
Daniels, who is a director of the Company and a member of the Compensation
Committee, is a Managing Director of CIBC Oppenheimer Corp.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
World Color pays fees to KKR of $750,000 per year for management consulting
and financial advisory services. The Company believes these fees are no less
favorable than those which could be obtained for comparable services from
unaffiliated third parties. In addition, pursuant to an engagement letter dated
July 9, 1999, the Company has agreed to pay a fee to KKR in consideration of its
advisory services to the Company in connection with the negotiation of the Offer
and the Merger. See Item 5 of the Schedule 14D-9 for a description of such fee.
In consideration of the KKR Stockholders entering into the TVO Agreement, the
Company has also agreed to idemnify such Stockholders against certain
liabilities relating to or arising out of the transactions contemplated by the
Merger Agreement or any Acquisition Proposal (as defined in the Merger
Agreement). Members of the limited liability company which is the general
partner of KKR and employees of KKR who also serve as directors of the Company
do not receive additional compensation for service in such capacity, other than
customary directors' fees. Mr. Stuart, who is a director of World Color, is a
member of the limited liability company which is the general partner of KKR and
a general partner of KKR Associates. Mr. Navab, who is a director of World
Color, is an executive of KKR and a limited partner of KKR Associates.
A-10
<PAGE>
CIBC, Inc., an affiliate of CIBC Oppenheimer Corp., is a lender under the
Company's credit facility and CIBC Oppenheimer Corp. was a co-lead manager in
the Company's November 1998 issuance of $300.0 million of its 8 3/8% Senior
Subordinated Notes due 2008 and a co-manager in the Company's February 1999
issuance of $300.0 million of its 7 3/4% Senior Subordinated Notes due 2009. Ms.
Daniels, who is a director of World Color, is a Managing Director of CIBC
Oppenheimer Corp.
From time to time, the Company has loaned certain key employees of the
Company money to purchase common stock of the Company. As of July 9, 1999, the
aggregate principal amount of loans outstanding to executive officers was
$170,000, $175,000, $170,000 and $100,000 due from Messrs. Lewis, Lillie,
Quinlan and Carousso, respectively. Each of these loans bears interest at a rate
reasonably determined by the Company at the beginning of each year of the loan.
The interest rate in effect for 1999 is 7%.
In connection with the Company's Common Stock buyback program and in an
effort to provide for an orderly disposition of options held since at least 1991
and expiring over the next two to three years, the Company repurchased from
Messrs. Armstrong, Burton and Reisch and Ms. Adams shares issued out of the
Company's treasury upon exercise of stock options. Specifically, the Company
repurchased from Mr. Armstrong 7,500 shares on each of August 31, 1998, and
October 27, 1998 and 31,726 shares on April 6, 1999. The Company repurchased
from Mr. Burton 92,707 shares on August 31, 1998 and 90,886 shares on October
27, 1998 and 180,311 shares on April 6, 1999. The Company repurchased from Mr.
Reisch 18,542 shares on August 31, 1998 and 13,728 shares on October 27, 1998.
The Company repurchased from Ms. Adams 9,270 shares on each of August 31, 1998
and October 27, 1998. The shares repurchased on August 31, 1998 were repurchased
at the fair market value of the Company's Common Stock of $31.71 per share. The
shares repurchased on October 27, 1998 were repurchased at the fair market value
of the Company's Common Stock of $30.91 per share. The shares repurchased on
April 6, 1999 were repurchased at a fair market value of the Company's Common
Stock of $21.19 per share. In addition, on April 1, 1999, the Company
repurchased 3,644, 1,823 and 1,748 shares of Restricted Stock from Mr. Burton,
Mr. Reisch and Ms. Adams, respectively, to cover tax withholding due in
connection with the vesting of certain shares of Restricted Stock granted to
these executive officers. The shares repurchased on April 1, 1999 were
repurchased at the fair market value of the Company's Common Stock of $21.28 per
share.
The Company believes that any past transactions with its affiliates have
been at prices and on terms no less favorable to the Company than transactions
with independent third parties. The Company may enter into transactions with its
affiliates in the future. However, the Company intends to enter into such
transactions only at prices and on terms no less favorable to the Company than
transactions with independent third parties. In addition, the Company's debt
instruments generally prohibit the Company from entering into any such affiliate
transaction on other than arm's length terms.
A-11
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing over the period from January 25,
1996 (the date of the Company's initial public offering) to December 27, 1998
the Company's cumulative total stockholder return with the cumulative total
return of companies in a peer group selected in good faith by the Company,
companies in the Russell 2000 Index and companies in the Standard & Poor's 500
Index. The companies in the peer group are R.R. Donnelley & Sons Co., Banta
Corp., Quebecor Printing Inc., Big Flower Press Holdings, Inc. and Cadmus
Communications Corp. (collectively, the "Peer Group"). All of these companies
are in the printing industry. Companies in the Russell 2000 Index have similar
market capitalization to the Company and since June 30, 1996, the Company has
been one of the companies included in the Russell 2000 Index. Therefore, the
Company has included, and will include in the future, as appropriate, a
comparison to the Russell 2000 Index. Accordingly, the Company does not intend
to include a comparison to the companies in the Standard & Poor's 500 Index in
the future. The total return information presented in the graph assumes the
reinvestment of dividends, in the event dividends are paid. The returns of each
component company in the Peer Group have been weighted by relative stock market
capitalization.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C> <C>
25-Jan-96 29-Dec-96 28-Dec-97 27-Dec-98
World Color Press, Inc. 100.00 100.66 136.52 142.77
Peer Group 100.00 89.75 103.21 120.55
Russell 2000 Index 100.00 115.70 135.78 130.55
Standard & Poor's 500 Index 100.00 119.78 150.77 197.43
</TABLE>
A-12
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation awarded, paid to or
earned by the Company's Chief Executive Officer and the four other most highly
paid executive officers in fiscal years 1996, 1997 and 1998.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION RESTRICTED NUMBER OF
----------------------------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) GRANTED COMPENSATION
- --------------------------------- --------------- ---------- ------------ ------------ ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Burton................. 1998 $ 801,102 $ 2,000,000 $ 1,965,000 175,000 --
Chairman of the Board of 1997 675,583 1,600,000 -- 375,000 --
Directors and Chief Executive 1996 632,500 1,200,000 -- 75,000 --
Officer
Marc L. Reisch................... 1998 $ 463,462 $ 700,000 $ 1,361,563 125,000 --
President 1997 393,250 500,000 -- 40,000 --
1996 342,667 420,000 -- 40,000 --
Jennifer L. Adams................ 1998 $ 324,308 $ 440,000 $ 751,563 65,000 --
Vice Chairman, Chief Legal and 1997 310,833 400,000 -- 40,000 --
Administrative Officer and 1996 272,832 305,000 -- 30,000 --
Secretary
Robert B. Lewis.................. 1998 $ 185,673 $ 150,000 -- 20,000 --
Executive Vice President, Chief 1997 119,567 65,000 -- 7,500 --
Financial Officer 1996 39,692(2) 15,000(2) --
James E. Lillie.................. 1998 $ 241,186 $ 250,000 -- 20,000 --
Executive Vice President, 1997 162,186 93,000 -- 5,000 --
Investor Relations and 1996 151,594 60,000 -- 4,000 --
Corporate Communications
</TABLE>
- ------------------------
(1) On May 28, 1998, the Company granted Mr. Burton, Mr. Reisch and Ms. Adams
40,000 shares of Restricted Stock, 25,000 shares of Restricted Stock and
25,000 shares of Restricted Stock, respectively. The fair market value of
the Company's Common Stock on such date was $30.063 per share. On November
16, 1998, the Company granted Mr. Burton and Mr. Reisch an additional 25,000
shares of Restricted Stock and 20,000 shares of Restricted Stock,
respectively. The fair market value of the Company's Common Stock on such
date was $30.50 per share. Under the Company's 1998 Restricted Stock Plan,
shares vest over a five year period. The value of the shares of Restricted
Stock held by Mr. Burton, Mr. Reisch and Ms. Adams at the end of the fiscal
year was $1,763,125, $1,220,625 and $678,125, respectively. The Company does
not anticipate declaring and paying dividends in the foreseeable future,
however in the event it does commence paying dividends, holders of shares of
Restricted Stock will not receive dividends on the unvested shares of
Restricted Stock.
(2) Mr. Lewis commenced employment with the Company in August 1996.
A-13
<PAGE>
OPTION GRANT TABLE
The following table provides information with respect to the stock option
grants made during the Company's most recently completed fiscal year to the
Company's executive officers named in the Summary Compensation Table above.
OPTION GRANTS IN 1998
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF
TOTAL OPTIONS EXERCISE
GRANTED PRICE GRANT
OPTIONS TO EMPLOYEES PER SHARE EXPIRATION DATE
NAME GRANTED(1) IN 1998 ($/SH.) DATE VALUE(2)
- ---------------------------------------------- ----------- ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Robert G. Burton.............................. 175,000 18.7% $ 29.125 10/01/2008 $ 2,597,000
Marc L. Reisch................................ 75,000 8.0% $ 29.125 10/01/2008 $ 1,113,000
Marc L. Reisch(3)............................. 50,000 5.3% $ 29.8125 11/16/2008 $ 761,500
Jennifer L. Adams............................. 65,000 6.9% $ 29.125 10/01/2008 $ 964,600
Robert B. Lewis............................... 12,500 1.3% $ 29.125 10/01/2008 $ 185,500
Robert B. Lewis(4)............................ 7,500 0.8% $ 29.782 12/01/2008 $ 112,875
James E. Lillie............................... 20,000 2.1% $ 29.125 10/01/2008 $ 296,800
</TABLE>
- ------------------------
(1) The options vest in 20% annual increments over a period of five years from
the date of grant, subject to accelerated vesting in the event of
termination of employment upon death, permanent disability or a permitted
retirement and upon a change in control of the Company. Transfer of shares
of Common Stock issuable upon the exercise of options ("Option Shares") is
restricted for five years after option grant. The options are exercisable
for ten years from the date of the grant, with certain exceptions,
including, without limitation, in the case of the termination of the
optionholder's employment with the Company. Under certain circumstances, the
optionholder has the right to resell Option Shares and the Company has the
right to repurchase a specified percentage of options and Option Shares.
(2) The present value as of the dates of grant, November 16, 1998, in the case
of Mr. Reisch's supplemental grant, December 1, 1998, in the case of Mr.
Lewis' supplemental grant and October 1, 1998 in the case of all other
grants to the named officers, has been calculated using the Black-Scholes
method using assumptions about stock price volatility, dividend yield and
future interest rates. The assumptions used in calculating the grant date
values are set forth in the following table:
<TABLE>
<CAPTION>
VOLATILITY RISK-FREE INTEREST
GRANT DATE FACTOR RATE
- ----------------------------------------------------------------- ----------- -------------------
<S> <C> <C>
October 1, 1998.................................................. 0.281 5.08%
November 16, 1998................................................ 0.281 5.12%
December 1, 1998................................................. 0.281 4.94%
</TABLE>
For each grant, the assumed expected life of the options was ten years, and
the assumed dividend yield of the options was zero. The present values as of
the grant dates set forth in the table are only theoretical values and may
not accurately determine present value. The actual value, if any, that may
be realized by each individual will depend on the market price of the Common
Stock on the date of exercise.
(3) Mr. Reisch received an option grant on the date he was promoted to President
of the Company in addition to a regular annual option grant.
(4) Mr. Lewis received an option grant on the date he was promoted to Executive
Vice President, Chief Financial officer of the Company in addition to a
regular annual option grant.
A-14
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
AGGREGATE OPTION EXERCISES IN FISCAL 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
SHARES UNDERLYING UNEXERCISED OPTIONS AT
UNDERLYING OPTIONS AT DECEMBER 27, DECEMBER 27, 1998(1)
OPTIONS VALUE -------------------------- ---------------------------
NAME EXERCISED RESULTED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- ------------ ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Burton....................... 276,479 $ 6,694,271 441,941 558,000 $ 6,636,960 $ 1,703,875
Marc L. Reisch......................... 55,211 $ 1,315,660 120,539 208,000 $ 1,684,883 $ 462,375
Jennifer L. Adams...................... 27,810 $ 673,755 107,888 142,857 $ 1,453,777 $ 452,873
Robert B. Lewis........................ -- -- 1,500 26,000 $ 563 $ 2,250
James E. Lillie........................ -- -- 5,753 28,502 $ 58,093 $ 46,812
</TABLE>
- ------------------------
(1) Fair market value of the Common Stock at December 27, 1998, minus the
exercise price of "in-the-money" options. The fair market value of the
Common Stock at December 27, 1998 is based upon the December 24, 1998
closing price of $27.125 per share. Each of the options exercised were
granted in 1991 and subject to expiration in 2001.
COMPENSATION UNDER RETIREMENT PLANS
PENSION PLAN BENEFITS
The retirement plan of the Company in which the executive officers, among
others, participate is named the World Color Press Cash Balance Plan (the "Cash
Balance Plan"), and provides for the determination of a participant's accrued
benefit on a cash balance formula. Although the Cash Balance Plan is a defined
benefit pension plan, each participant is credited with a hypothetical
individual account in order to better describe his or her benefit. A
participant's cash balance account is credited each month with an amount equal
to 4% (on an annualized basis) of the participant's annual base wages plus
monthly interest at an annual rate equal to the interest on one-year U.S.
Treasury securities. A participant in the Cash Balance Plan becomes fully vested
in his/her accrued benefit after the completion of five years of service.
Benefits under the Cash Balance Plan are limited to the extent required by
provisions of the Code, and the Employee Retirement Income Security Act of 1974,
as amended. If payment of actual retirement benefits is limited by such
provisions, an amount equal to any reduction in retirement benefits will be paid
as a supplemental benefit under World Color's unfunded Supplemental Executive
Retirement Plan, as amended, and World Color's Supplemental Retirement Plan
(together, the "Supplemental Benefit Plans"). The following table sets forth the
estimated combined annual retirement benefits under the Cash Balance Plan and
the Supplemental Benefit Plans (exclusive of Social Security payments) payable
on a straight single life annuity basis to each of Messrs. Reisch, Lewis and
Lillie and Ms. Adams, assuming continued service until age 65 and current
compensation levels remain unchanged and, in the case of Mr. Burton, assuming
continued active service until April 1, 2002. Mr. Burton's total benefit is not
affected by changes in compensation.
A-15
<PAGE>
PENSION TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL
BENEFITS
NAME PAYABLE UPON RETIREMENT
- --------------------------------------------------------------------- -----------------------
<S> <C>
Robert G. Burton..................................................... $ 1,000,000
Marc L. Reisch....................................................... $ 431,964
Jennifer L. Adams.................................................... $ 315,411
Robert B. Lewis...................................................... $ 115,009
James E. Lillie...................................................... $ 89,635
</TABLE>
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
World Color which provides for the payment of an aggregate of 18 months of
base salary upon termination without cause. Certain officers of the Company are
parties to agreements described below in the section entitled "Change of Control
Employment Agreements."
BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board is responsible for the various
aspects of the Company's compensation package offered to its executive officers,
including the named executive officers. The following is the report of the
Compensation Committee:
POLICIES GOVERNING EXECUTIVE COMPENSATION. The Committee's rationales in
determining executive compensation are as follows: (a) to establish a direct
relationship between executive compensation and the annual, intermediate-term
and long-term performance of the Company; (b) to provide performance-based
compensation opportunities (including equity awards) that allow executive
officers to earn rewards for maximizing stockholder value; (c) to attract and
retain the key executives necessary for the Company's long-term success; and (d)
to reward individual initiative and the achievement of specified goals. In
applying these general policies, the Committee's objective has been to ensure
that well in excess of half of the compensation packages for the Company's most
senior executive officers, including the named executive officers, is
incentive-based because these individuals have substantial control and
responsibility for the Company's direction and performance. The Committee
considers the Company's performance, the individual executive's performance,
comparative compensation material (including compensation levels and equity
awards by the Company's peer group), the overall competitive environment for
executives, the level of compensation necessary to retain executive talent and
the recommendations of professional compensation consultants and management in
making its determinations on compensation.
The companies used to define the market for executive compensation
comparison purposes include a broad range of printing and publishing companies
similar in revenue size to the Company, as well as certain other printing
companies which are direct competitors of the Company. In addition, comparative
market compensation data are collected from general industry compensation
surveys. The companies used to define the market for pay comparison purposes are
more varied than those in the peer group used in the performance graph because
the Committee believes that the Company's competitors for executive talent are
more varied than solely companies within the printing industry. In fact, the
Company's top three most highly compensated executives came from industries
other than the printing industry.
EXECUTIVE COMPENSATION GENERALLY. The Company's executive compensation
package currently consists of a mix of salary, bonus awards, stock option grants
and restricted stock awards as well as benefits under the employee benefit plans
offered by the Company. The Company is currently
A-16
<PAGE>
considering implementing other long term compensation programs and may do so
prior to the end of 1999.
SALARY. The Compensation Committee periodically reviews the base salary of
the Chief Executive Officer and his direct reports. The Compensation Committee
considers various factors in assessing specific salaries including the
executive's historical performance and future potential, job content, level of
responsibility and accountability. For 1998, the base salaries for the Chief
Executive Officer and his direct reports ranged from at or below the median
salaries to above the median salaries at the companies deemed the market for
executive compensation comparison purposes.
BONUS. No bonus payouts are made under the Company's bonus plan unless the
Company achieves its financial goals. Potential payout amounts (expressed as a
percentage of salary) and related financial performance goals are established at
the beginning of the relevant performance period by the Compensation Committee,
after assessing recommendations of management and considering the factors
described above.
The Company's financial performance is measured for bonus purposes in terms
of earnings per share (EPS) and other financial goals. All bonus payouts are
contingent upon achieving the Company's financial goals and, with respect to
executive officers responsible for various operations, contingent upon achieving
operation-specific financial goals. In addition, the Compensation Committee, in
its discretion, may increase or decrease any payout to be made to a particular
executive officer to reflect any special circumstances that the Committee deems
significant.
EQUITY GRANTS. To further align the interests of management with the
interests of stockholders, the Company's executive compensation package also
includes stock option grants. Options granted by the Company have a per share
exercise price of 100% of the fair market value of a share of the Common Stock
and, accordingly, the value of the option is dependent on the future market
value of the Common Stock.
The number of shares of Common Stock subject to options granted to the
Company's executive officers has historically been based on the salary,
responsibilities and performance of each officer. The Compensation Committee has
also considered the amounts and terms of prior grants in making new option
grants in each year. In addition, the Compensation Committee reviews the number
and value of options granted by selected peer companies in making option grants
to the Company's executive officers.
In 1998, the Compensation Committee also awarded certain of the named
executives Restricted Stock. The awards vest over a period of five years. The
Restricted Stock was granted, in lieu of cash bonuses, in order to help secure
the employment of these key executives and to further align the interests of
senior management with the interests of stockholders.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Tax laws limit the deduction a
publicly held company is allowed for compensation paid to certain executive
officers. Generally, amounts paid in excess of $1 million to a covered
executive, other than performance-based compensation, cannot be deducted. The
Compensation Committee considers ways to maximize deductibility of executive
compensation, but the Compensation Committee retains the flexibility to
compensate executive officers in a manner commensurate with performance and the
competitive environment for executive talent regardless of the ultimate
deductibility of such compensation.
COMPENSATION OF ROBERT G. BURTON, CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER. The Committee established the 1998 compensation of
Robert G. Burton, Chairman of the Board of Directors and Chief Executive
Officer, using substantially the same criteria that were used to determine
compensation levels for other executive officers, discussed at the beginning of
this report. In determining the compensation of the Chief Executive Officer as
well as the other senior executive
A-17
<PAGE>
officers, the Compensation Committee also considered, among other things, the
eight year, industry-leading track record of performance at or above budgeted
and Wall Street expectations. From the appointment of Robert G. Burton in 1991
through 1998 management has grown net sales and adjusted operating income at a
compounded annual growth rate ("CAGR") of 21% and 38%, respectively. Since 1993
management has grown net income at a CAGR of 53% and diluted earnings per share
at a CAGR of 43%. Over the eight years of Mr. Burton's leadership, adjusted
EBITDA has grown at a CAGR of 25% and operating margins have improved since 1993
to 1998's operating margin of 9.1%. 1998 marked another year of record financial
performance for the Company. Net sales grew 19% from $1,981.2 million in 1997 to
$2,356.9 million in 1998, operating income grew 20% from $178.6 million to
$214.2 million, net income grew 29% from $57.2 million to $73.6 million and
diluted net income per share grew from $1.60 per share in 1997 to $1.84 per
share in 1998. The Compensation Committee believes this consistently exceptional
performance as well as the desire to retain superior executive talent warranted
the total compensation packages of the Chief Executive Officer and his direct
reports. We believe World Color and its shareholders have benefited greatly from
Mr. Burton's vision, direction and day to day contributions as the senior
executive at World Color.
In February 1999, in order to secure the future employment of Robert G.
Burton, the Company's Chief Executive Officer, and in lieu of all future equity
grants over the next five years, the Compensation Committee awarded Mr. Burton a
one-time equity grant of 875,000 options to purchase Common Stock of the Company
with an exercise price equal to the fair market value of the Common Stock as of
the date of the grant. The stock options vest over a period of five years.
The foregoing report has been approved by all members of the Committee.
WORLD COLOR PRESS, INC.
COMPENSATION COMMITTEE
Gerald S. Armstrong
Patrice M. Daniels
Mark J. Griffin
Scott M. Stuart
DATED: March 12, 1999
A-18
<PAGE>
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
As described in Item 3(v) of the Schedule 14D-9, pursuant to the Merger
Agreement, the Company or Parent, as applicable, has agreed to enter into
agreements and adopt plans or programs, effective no later than the Effective
Time. The expected terms and conditions of such agreements include the
following:
Robert G. Burton, the current Chief Executive Officer and Chairman of the
Board of the Company, shall resign as of the consummation of the Offer. At such
time, Mr. Burton shall receive payments under the Change in Control Agreement
("CIC Agreement") between Mr. Burton and the Company (as described below) dated
April 16,1999, the World Color Press, Inc. Third Amended and Restated
Supplemental Retirement Program, effective April 1, 1995, and his 1999 bonus.
Mr. Burton shall become a member of the Board of Directors of Parent following
such resignation from the Company.
Marc L. Reisch, the current President of the Company, shall become the
Chairman, Chief Executive Officer and President of the North American Group
(U.S. and Canada) of Parent and a member of the Office of the President of
Parent. Mr. Reisch's salary and bonus target shall be increased to a level
commensurate with such positions and related authority. The corporate
headquarters of Parent shall remain in Montreal, but the corporate headquarters
of the North American Group and Mr. Reisch's principal office shall be in
Greenwich, Connecticut.
Parent and the Company have agreed to enter into individual agreements with
a limited group of executives, including Mr. Reisch ("Group A Executives"),
effective as of the consummation of the Offer ("Group A Agreements"). Each Group
A Agreement shall provide for a lump sum retention bonus equal to (i) 40% of the
cash payment portion of the Severance Benefits provided under such Group A
Executive's CIC Agreement, payable upon the consummation of the Offer and (ii)
60% of the cash payment portion of the Severance Benefits provided under such
Group A Executive's CIC Agreement, payable upon the first anniversary of the
consummation of the Offer, unless prior to such first anniversary the Group A
Executive's employment is terminated by Parent other than for Cause or by the
Group A Executive for Good Reason, in which case severance benefits described
below shall apply. Each Group A Agreement shall also provide for severance
benefits upon termination by Parent other than for Cause or by the Group A
Executive for Good Reason during the two years following the consummation of the
Offer including (i) an amount equal to the cash payment portion of the Severance
Benefits provided under such Group A Executive's CIC Agreement, reduced by the
amount of any retention bonus already paid; PROVIDED, HOWEVER, that if such
payment is equal to zero then the Group A Executive shall be entitled, as soon
reasonably practicable after termination, to one times the sum of his or her
then current annual base salary and target bonus, (ii) continuation of coverage
and participation in employee welfare and fringe benefit plans or programs until
the end of the three-year period (two-year period in the cases of three of the
Group A Executives) following termination (the "Severance Period"), subject to
mitigation upon re-employment and receipt of comparable benefits and (iii)
during the Severance Period, outplacement services no less favorable than the
executive outplacement provided by the Company consistent with past practices.
The Group A Agreements include a noncompetition/no raid covenant, which provides
that for one and one-half years (one year in the cases of three of the Group A
Executives) following termination, a Group A Executive shall not directly or
indirectly, own, manage, operate, join, control or participate in the ownership,
management, operation or control, or be connected as a director, officer,
employee, partner, consultant or otherwise with any "competing business", other
than as a shareholder or beneficial owner, directly or indirectly, of five
percent or less of the outstanding securities of a publicly held competing
business, nor shall such Group A Executive solicit customers or employees from
the Company. For these purposes, "competing business" means any business, firm
or enterprise engaged in a business substantially similar to the Company's
printing business as it exists at the time of the consummation of the Offer
within the same
A-19
<PAGE>
geographical locations in which the Company operates on the date of the
consummation of the Offer. Group A Executives shall receive a full gross-up for
all excise taxes and related costs in connection with any payments deemed
"excess parachute payments."
The Company has also agreed to enter into individual agreements with certain
other key executives of the Company executives ("Group B Executives"), effective
as of the consummation of the Offer ("Group B Agreements"). Such Group B
Agreements shall provide for $10 million to be set aside to fund lump sum
retention bonuses to each Group B Executive, 40% of which shall be payable on
the consummation of the Offer and 60% shall be payable on the earlier of the
first anniversary thereof or termination by Parent other than for Cause or by
the Group B Executive for Good Reason. Each Group B Agreement shall also provide
for severance benefits upon termination by Parent other than for Cause or by the
Group B Executive for Good Reason during the one year following the consummation
of the Offer including (i) a lump sum payment equal to the balance of the
retention bonus and (ii) continuation of coverage and participation in employee
welfare and fringe benefit plans or programs until the earlier of the first
anniversary of termination or the date on which the Group B Executive becomes
re-employed and receives comparable benefits. Group B Executives shall receive a
full gross-up for all excise taxes and related costs in connection with any
payments deemed "excess parachute payments."
The Company has entered into Change in Control Severance Agreements (the
"CIC Agreements"), dated as of April 16, 1999, with eight senior executives: Ms.
Adams, Ms. Hlavaty and Messrs. Burton, Reisch, Lewis, Lillie, Quinlan and
Carousso (the "Executives").
The Agreements provide for severance benefits to any Executive whose
employment is terminated by the Company without Cause or by the Executive for
Good Reason (as those terms are defined in the CIC Agreement) within two years
after a Change of Control or in connection with a Potential Change in Control
which results in a Change in Control (as those terms are defined below) (a
"Covered Termination").
An Executive whose employment is subject to a Covered Termination is
entitled to receive (i) a lump sum payment equal to three times (two times in
the cases of Messrs. Quinlan and Carousso, and Ms. Hlavaty) the greater of base
salary plus target bonus in effect on (a) the date of such Covered Termination
or (b) the date of such Change in Control; (ii) immediate vesting of all
equity-based awards and, if the Executive elects, cash out of stock options, in
lieu of issuing shares upon exercise thereof, at the difference between the
aggregate exercise price of such options and the product of the aggregate number
of options times the greater of the (a) per share value received by shareholders
upon Change in Control and (b) fair market value per share upon Change in
Control; (iii) continuation for the three-year period (two-year period in the
cases of Messrs. Quinlan and Carousso, and Ms. Hlavaty) after termination of
life, disability, accident, health and dental benefits substantially similar to
those received prior to notice of termination (reduced by comparable benefits
received or made available without cost to the Executive during such period);
and (iv) a lump sum payment equal to the benefits under all defined benefit and
cash balance plans of the Company which the Executive would have accrued had he
or she remained employed for an additional three years, assuming no change in
base salary and bonus potential, assuming full bonus payout and without regard
to amendments effective after the applicable Change in Control or Potential
Change in Control. An Executive shall also be entitled to legal fees and
expenses as a result of a Covered Termination, as well as an additional payment,
if necessary, to make the Executive whole for any excise or income tax, imposed
by reason of a payment under the CIC Agreement being deemed to constitute an
"excess parachute payment" as defined in Section 280G of the Internal Revenue
Code of 1986, as amended.
Each CIC Agreement also provides that the Executive shall remain employed by
the Company until the earliest of (i) six months after a Potential Change in
Control, (b) Change in Control, (c) termination for Good Reason, death,
disability, retirement or by the Company for any reason. The
A-20
<PAGE>
Executive shall also be subject to a noncompetition covenant for 18 months (12
months in the case of Messrs. Quinlan and Carousso and Ms. Hlavaty) following
the initial receipt of severance benefits described above.
"Change in Control" means (i) any Person (as defined in the Securities
Exchange Act of 1934), other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company having 30
percent or more of the total number of votes that may be cast for the election
of directors of the Company, (ii) as the result of, or in connection with, any
contested election for the Board of Directors of the Company, or any tender or
exchange offer, merger or other business combination or sale of assets or any
combination of the foregoing (a "Transaction"), the persons who were directors
of the Company before the Transaction shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the Company or its
assets, or (iii) at any time (a) the Company shall consolidate or merge with any
other Person and the Company shall not be the continuing or surviving
corporation, (b) any Person shall consolidate or merge with the Company and the
Company shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, (c) the Company shall be a party to a statutory share exchange with
any other Person after which the Company is a subsidiary of any other Person, or
(d) the Company shall sell or otherwise transfer 50% or more of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to any
Person.
"Potential Change in Control" means (i) the Company enters agreement, the
consummation of which would be Change in Control; (ii) a public announcement is
made of an intention to take or consider taking actions which, if consummated,
would be a Change in Control; or (iii) Board of Directors of the Company adopts
a resolution to the effect that a Potential Change in Control has occurred.
Certain other agreements between the Company and certain of its executive
officers, including agreements relating to the treatment of employee stock
options and fiscal year 1999 bonuses, are described in the description of the
merger agreement set forth is subparagraph (i) above. In addition, as described
below, pursuant to an engagement letter dated July 9, 1999, the Company has
agreed to pay KKR a fee in connection with the negotiation of the Offer and the
Merger. As set forth in the description of the TVO Agreement above, the Company
has also agreed to indemnify Stockholders affiliated with KKR against certain
liabilities in consideration for their entering into the TVO Agreement.
A-21
<PAGE>
ANNEX B
[LOGO]
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212)761-4000
July 12, 1999
Board of Directors
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Members of the Board:
We understand that World Color Press, Inc. ("World Color Press" or the
"Company"), Quebecor Printing Inc. ("Quebecor Printing") and Printing
Acquisition Inc., a wholly owned indirect subsidiary of Quebecor Printing
("Merger Subsidiary"), have entered into an Agreement and Plan of Merger, dated
as of July 12, 1999 (the "Merger Agreement"), which provides, among other
things, for (i) the commencement by Merger Subsidiary of a tender offer (the
"Tender Offer") for up to 23,500,000 of the issued and outstanding shares of
Common Stock, par value $0.01 per share, of the Company (the "Common Stock") for
$35.69 per share net to the seller in cash (the "Tender Offer Consideration"),
and (ii) the subsequent merger (the "Merger") of the Company with and into the
Merger Subsidiary pursuant to which each issued and outstanding share of Common
Stock shall be converted into 1.6455 Quebecor Printing Subordinated Voting
shares (the "Merger Consideration"). The "Consideration" shall consist of the
Tender Offer Consideration and Merger Consideration taken together (or, if less
than 23,500,000 shares of Common Stock are purchased in the Offer, the amount of
consideration as set forth in the Merger Agreement); provided that if the Tender
Offer is terminated pursuant to Section 1.1.(e) of the Merger Agreement, the
Consideration for each share of Common Stock shall consist of cash in an amount
equal to $22.00 and .6311 Quebecor Subordinate Voting shares. Pursuant to the
Merger, the Company will become a wholly owned subsidiary of Quebecor Printing
as more fully set forth in the Merger Agreement. We further understand that
certain of the holders of Common Stock and Quebecor Printing have entered into a
Tender, Voting and Option Agreement, dated as of July 12, 1999. The terms and
conditions of the Tender Offer and the Merger are more fully set forth in the
Merger Agreement.
You have asked for our opinion as to whether the Consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of World Color Press and Quebecor Printing;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning World Color Press and Quebecor
Printing prepared by the respective managements of World Color
Press and Quebecor Printing;
(iii) analyzed certain financial projections for World Color Press and
Quebecor Printing prepared by the respective managements of World
Color Press and Quebecor Printing;
(iv) discussed the past and current operations and financial condition
and the prospects of World Color Press and Quebecor Printing with
senior executives of World Color Press and Quebecor Printing;
B-1
<PAGE>
(v) reviewed the reported prices and trading activity for the common
stock of World Color Press and Quebecor Printing;
(vi) compared the financial performance of World Color Press and
Quebecor Printing and the prices and trading activity of World
Color Press and Quebecor Printing with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of World Color Press, Quebecor Printing and certain other parties
and their financial and legal advisors;
(ix) reviewed the Merger Agreement, the Tender, Voting and Option
Agreement and certain related documents; and
(x) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of World
Color Press and Quebecor Printing. We have not made any independent valuation or
appraisal of the assets or liabilities of World Color Press and Quebecor
Printing, nor have we been furnished with any such appraisals. We have assumed
that the Tender Offer and the Merger will be consummated in accordance with the
terms set forth in the Merger Agreement. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company
in connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for World Color Press and Quebecor
Printing and have received fees for the rendering of these services. In
particular, we acted as lead manager in connection with a high yield offering
for World Color Press in February of 1999.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by the Company in respect of the Tender Offer and the Merger
with the Securities and Exchange Commission. In addition, Morgan Stanley
expresses no opinion or recommendation as to whether or not the stockholders of
the Company should tender their shares in connection with the Tender Offer or
how such stockholders should vote at the shareholders' meeting held in
connection with the Merger.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Consideration to be received by the holders of shares of Common
Stock pursuant to the Merger Agreement is fair from a financial point of view to
such holders.
<TABLE>
<S> <C> <C>
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ STUART J. EPSTEIN
-----------------------------------------
Stuart J. Epstein
MANAGING DIRECTOR
</TABLE>
B-2
<PAGE>
ANNEX C
TRANSACTIONS IN COMPANY COMMON STOCK
BY EXECUTIVE OFFICERS OF WORLD COLOR PRESS, INC.*
<TABLE>
<CAPTION>
TRANSACTION PRICE PER TRANSACTION
NAME DATE SHARE SHARES TYPE
- --------------------------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Robert G. Burton............................................... 5/27/99 $ 26.5625 86.8777 Buy
6/10/99 25.1633 91.7086 Buy
6/24/99 25.9751 88.8424 Buy
7/09/99 28.5625 80.7944 Buy
Jennifer L. Adams.............................................. 6/10/99 25.1633 27.5127 Buy
6/24/99 25.9751 26.6528 Buy
7/09/99 28.5625 24.2384 Buy
James E. Lillie................................................ 5/27/99 26.5625 18.8235 Buy
6/10/99 25.1633 19.8702 Buy
6/24/99 25.9751 25.0240 Buy
7/09/99 28.5625 22.7571 Buy
Robert B. Lewis................................................ 5/27/99 26.5625 13.7092 Buy
6/10/99 25.1633 14.4715 Buy
6/24/99 25.9721 14.0192 Buy
7/09/99 28.5625 12.7492 Buy
Paul B. Carousso............................................... 5/27/99 26.5625 9.4118 Buy
6/10/99 25.1633 9.9351 Buy
6/24/99 25.9751 9.6246 Buy
7/09/99 28.5625 8.7527 Buy
Heidi J. Nolte................................................. 5/27/99 25.5625 10.4252 Buy
6/10/99 25.1633 11.0049 Buy
6/24/99 25.9751 28.8738 Buy
7/09/99 28.5625 26.2582 Buy
Jerome V. Brofft............................................... 5/27/99 25.5625 5.2126 Buy
6/10/99 25.1633 5.5025 Buy
6/24/99 25.9751 5.3305 Buy
7/09/99 28.5625 4.8476 Buy
Thomas Quinlan................................................. 5/27/99 26.5625 17.3756 Buy
6/10/99 25.1633 29.8053 Buy
6/24/99 25.9751 29.8738 Buy
7/09/99 28.5625 26.2582 Buy
Mark J. Griffin................................................ 6/07/99 24.9377 40.0999 Buy
7/09/99 28.5625 35.0109 Buy
Patrice M. Daniels............................................. 6/07/99 24.9377 103.5913 Buy
7/09/99 28.5625 90.4448 Buy
</TABLE>
- ------------------------
* Each of the transactions listed in this Annex B were made under the
Company's Employee Stock Purchase Plan or 401(k) plan pursuant to which
Shares are purchased with periodic payroll deductions.
<PAGE>
Exhibit 99.5
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Jennifer L. Adams (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
1
<PAGE>
combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
2
<PAGE>
(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
3
<PAGE>
3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to three (3) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a thirty-six (36)
month period after the Date of Termination, the Company shall arrange
to provide the
4
<PAGE>
Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the thirty-six (36)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the third anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
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6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the eighteen (18) month period following his
initial receipt of Severance Benefits he shall not directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control, or be connected as a
director, officer, employee, partner, consultant or otherwise with any
Competing Business, other than as a shareholder or beneficial owner,
directly or indirectly of five (5) percent or less of the outstanding
securities of a publicly held Competing Business. For purposes of this
Agreement, "Competing Business" means any business, firm or enterprise
engaged in a business substantially similar to the Company's business
within the same geographical locations in which the Company operates on
the Date of Termination. The Executive acknowledges and agrees that at
least one half (1/2) of the Severance Benefits received hereunder is in
exchange for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a
Big 5 accounting firm engaged by either the Company or the Executive
for this purpose (at the Company's expense), or if so alleged by the
Internal Revenue Service, the aggregate of the benefit payments under
this Agreement would cause the payment of one or more of such benefits
to constitute an "excess parachute payment" as defined in Section
280G(b) of the Internal Revenue Code ("Code"), then the Company will
pay to the Executive an additional amount in cash (the "Gross-Up
Payment") equal to the amount necessary to cause the net amount
retained by the Executive, after deduction of any (i) excise tax on the
payments under Paragraph 4, (ii) federal, state or local income tax on
the Gross-Up payment, and (iii) excise tax on the Gross-Up payment, to
be equal to the aggregate remuneration the Executive would have
received under Section 4, excluding such Gross-Up Payment (net of all
federal, state and local excise and income taxes), as if Sections 280G
and 4999 of the Code (and any successor provisions thereto) had not
been enacted into law. The Gross-Up Payment provided for in this
Paragraph shall be made within ten (10) days after the termination of
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Executive's employment, provided however that if the amount of the
payment cannot be finally determined at the time, the Company shall pay
to Executive an estimate as determined in good faith by the Company of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the date of termination. Any dispute concerning the application of this
paragraph shall be resolved pursuant to paragraph 10, and if Paragraph
11 applies, any reference in this Paragraph to Paragraph 4 shall also
be deemed to include a reference to Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary)
and continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was participating
when the notice giving rise to
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the dispute was given until the dispute is finally resolved in
accordance with Paragraph 10 hereof. Amounts paid under this paragraph
11 are in addition to all other amounts due under this Agreement (other
than those due under paragraph 5 hereof) and shall not be offset
against or reduce any other amounts due under this Agreement. In
addition, any Gross-Up Payment due under Paragraph 7 shall be increased
to take into account any increased benefits under this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
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(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 14. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntary or involuntary, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
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18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least three years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Jennifer L. Adams
80 Delafield Island Road
Darien, CT 06820
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Jennifer L. Adams
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Exhibit 99.6
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Robert G. Burton (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to three (3) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a thirty-six (36)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the thirty-six (36)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the third anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
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6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the eighteen (18) month period following his
initial receipt of Severance Benefits he shall not directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control, or be connected as a
director, officer, employee, partner, consultant or otherwise with any
Competing Business, other than as a shareholder or beneficial owner,
directly or indirectly of five (5) percent or less of the outstanding
securities of a publicly held Competing Business. For purposes of this
Agreement, "Competing Business" means any business, firm or enterprise
engaged in a business substantially similar to the Company's business
within the same geographical locations in which the Company operates on
the Date of Termination. The Executive acknowledges and agrees that at
least one half (1/2) of the Severance Benefits received hereunder is in
exchange for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to be equal to
the aggregate remuneration the Executive would have received under
Section 4, excluding such Gross-Up Payment (net of all federal, state
and local excise and income taxes), as if Sections 280G and 4999 of the
Code (and any successor provisions thereto) had not been enacted into
law. The Gross-Up Payment provided for in this Paragraph shall be made
within ten (10) days after the termination of Executive's employment,
provided however that if the amount of the payment cannot be finally
determined at the time, the Company shall pay to Executive an estimate
as determined in good faith by the Company of such payments (together
with interest at
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the rate provided in section 1274(b)(2)(B) of the Code as soon as the
amount thereof can be determined but in no event later than the
thirtieth (30th) day after the date of termination. Any dispute
concerning the application of this paragraph shall be resolved pursuant
to paragraph 10, and if Paragraph 11 applies, any reference in this
Paragraph to Paragraph 4 shall also be deemed to include a reference to
Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary)
and continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was participating
when the notice giving rise to the dispute was given until the dispute
is finally resolved in accordance with Paragraph 10 hereof. Amounts
paid under this paragraph 11 are in addition to all other amounts due
under this Agreement (other than those due under paragraph 5 hereof)
and shall
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not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this
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Section 14. Without limiting the generality of the foregoing, the
Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a
security interest or otherwise, or otherwise subject to anticipation,
alienation, sale, encumbrance, charge, hypothecation, or set-off in
respect of any claim, debt, or obligation, or to execution, attachment,
levy or similar process, or assignment by operation of law, other than
by a transfer by his will or by the laws of descent and distribution.
Any attempt, voluntary or involuntary, to effect any action prohibited
by this Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of
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competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other
persons, places and circumstances shall remain in full force and
effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least three years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Robert G. Burton
170 Clapboard Ridge Road
Greenwich, CT 06831
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Robert G. Burton
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Exhibit 99.7
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Paul Carousso (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to two (2) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a twenty-four (24)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the twenty-four (24)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the second anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
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6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the twelve (12) month period following his initial
receipt of Severance Benefits he shall not directly or indirectly, own,
manage, operate, join, control or participate in the ownership,
management, operation or control, or be connected as a director,
officer, employee, partner, consultant or otherwise with any Competing
Business, other than as a shareholder or beneficial owner, directly or
indirectly of five (5) percent or less of the outstanding securities of
a publicly held Competing Business. For purposes of this Agreement,
"Competing Business" means any business, firm or enterprise engaged in
a business substantially similar to the Company's business within the
same geographical locations in which the Company operates on the Date
of Termination. The Executive acknowledges and agrees that at least one
half (1/2) of the Severance Benefits received hereunder is in exchange
for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to be equal to
the aggregate remuneration the Executive would have received under
Section 4, excluding such Gross-Up Payment (net of all federal, state
and local excise and income taxes), as if Sections 280G and 4999 of the
Code (and any successor provisions thereto) had not been enacted into
law. The Gross-Up Payment provided for in this Paragraph shall be made
within ten (10) days after the termination of Executive's employment,
provided however that if the amount of the payment cannot be finally
determined at the time, the Company shall pay to Executive an estimate
as determined in good faith by the Company of such payments (together
with interest at
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the rate provided in section 1274(b)(2)(B) of the Code as soon as the
amount thereof can be determined but in no event later than the
thirtieth (30th) day after the date of termination. Any dispute
concerning the application of this paragraph shall be resolved pursuant
to paragraph 10, and if Paragraph 11 applies, any reference in this
Paragraph to Paragraph 4 shall also be deemed to include a reference to
Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary)
and continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was participating
when the notice giving rise to the dispute was given until the dispute
is finally resolved in accordance with Paragraph 10 hereof. Amounts
paid under this paragraph 11 are in addition to all other amounts due
under this Agreement (other than those due under paragraph 5 hereof)
and shall
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not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this
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Section 14. Without limiting the generality of the foregoing, the
Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a
security interest or otherwise, or otherwise subject to anticipation,
alienation, sale, encumbrance, charge, hypothecation, or set-off in
respect of any claim, debt, or obligation, or to execution, attachment,
levy or similar process, or assignment by operation of law, other than
by a transfer by his will or by the laws of descent and distribution.
Any attempt, voluntary or involuntary, to effect any action prohibited
by this Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of
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competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other
persons, places and circumstances shall remain in full force and
effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least two years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Paul Carousso
14 Meadow Lane
Chappaqua, NY 10514
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Paul Carousso
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Exhibit 99.8
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Robert Lewis (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to three (3) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a thirty-six (36)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the thirty-six (36)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the third anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
(g) LOAN FORGIVENESS. Upon the Date of Termination,
so long as the Executive is not in default thereunder, the then
outstanding balance under the Company's loan to the Executive evidenced
by the Secured Promissory Note dated March 12, 1998 shall be forgiven.
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5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the eighteen (18) month period following his
initial receipt of Severance Benefits he shall not directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control, or be connected as a
director, officer, employee, partner, consultant or otherwise with any
Competing Business, other than as a shareholder or beneficial owner,
directly or indirectly of five (5) percent or less of the outstanding
securities of a publicly held Competing Business. For purposes of this
Agreement, "Competing Business" means any business, firm or enterprise
engaged in a business substantially similar to the Company's business
within the same geographical locations in which the Company operates on
the Date of Termination. The Executive acknowledges and agrees that at
least one half (1/2) of the Severance Benefits received hereunder is in
exchange for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to
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be equal to the aggregate remuneration the Executive would have
received under Section 4, excluding such Gross-Up Payment (net of all
federal, state and local excise and income taxes), as if Sections 280G
and 4999 of the Code (and any successor provisions thereto) had not
been enacted into law. The Gross-Up Payment provided for in this
Paragraph shall be made within ten (10) days after the termination of
Executive's employment, provided however that if the amount of the
payment cannot be finally determined at the time, the Company shall pay
to Executive an estimate as determined in good faith by the Company of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the date of termination. Any dispute concerning the application of this
paragraph shall be resolved pursuant to paragraph 10, and if Paragraph
11 applies, any reference in this Paragraph to Paragraph 4 shall also
be deemed to include a reference to Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in
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Control and during the Term of this Agreement, and such termination is
disputed by any party, the Company shall continue to pay the Executive
the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue
the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the
notice giving rise to the dispute was given until the dispute is
finally resolved in accordance with Paragraph 10 hereof. Amounts paid
under this paragraph 11 are in addition to all other amounts due under
this Agreement (other than those due under paragraph 5 hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
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(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 14. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntary or involuntary, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or
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warranties, whether oral or written, by any officer, employee or
representative of any party hereto. The parties further intend that
this Agreement shall constitute the complete and exclusive statement of
its terms and that no extrinsic evidence whatsoever may be introduced
in any judicial, administrative, or other legal proceeding involving
this Agreement.
18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least three years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Robert Lewis
55 Tanners Drive
Wilton, CT 06897
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Robert Lewis
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Exhibit 99.9
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and James Lillie (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to three (3) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a thirty-six (36)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the thirty-six (36)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the third anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
(g) LOAN FORGIVENESS. Upon the Date of Termination,
so long as the Executive is not in default thereunder, the then
outstanding balance under the Company's loan to the Executive evidenced
by the Secured Promissory Note dated March 12, 1998 shall be forgiven.
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5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the eighteen (18) month period following his
initial receipt of Severance Benefits he shall not directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control, or be connected as a
director, officer, employee, partner, consultant or otherwise with any
Competing Business, other than as a shareholder or beneficial owner,
directly or indirectly of five (5) percent or less of the outstanding
securities of a publicly held Competing Business. For purposes of this
Agreement, "Competing Business" means any business, firm or enterprise
engaged in a business substantially similar to the Company's business
within the same geographical locations in which the Company operates on
the Date of Termination. The Executive acknowledges and agrees that at
least one half (1/2) of the Severance Benefits received hereunder is in
exchange for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to
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be equal to the aggregate remuneration the Executive would have
received under Section 4, excluding such Gross-Up Payment (net of all
federal, state and local excise and income taxes), as if Sections 280G
and 4999 of the Code (and any successor provisions thereto) had not
been enacted into law. The Gross-Up Payment provided for in this
Paragraph shall be made within ten (10) days after the termination of
Executive's employment, provided however that if the amount of the
payment cannot be finally determined at the time, the Company shall pay
to Executive an estimate as determined in good faith by the Company of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the date of termination. Any dispute concerning the application of this
paragraph shall be resolved pursuant to paragraph 10, and if Paragraph
11 applies, any reference in this Paragraph to Paragraph 4 shall also
be deemed to include a reference to Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in
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Control and during the Term of this Agreement, and such termination is
disputed by any party, the Company shall continue to pay the Executive
the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue
the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the
notice giving rise to the dispute was given until the dispute is
finally resolved in accordance with Paragraph 10 hereof. Amounts paid
under this paragraph 11 are in addition to all other amounts due under
this Agreement (other than those due under paragraph 5 hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
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(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 14. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntary or involuntary, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or
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warranties, whether oral or written, by any officer, employee or
representative of any party hereto. The parties further intend that
this Agreement shall constitute the complete and exclusive statement of
its terms and that no extrinsic evidence whatsoever may be introduced
in any judicial, administrative, or other legal proceeding involving
this Agreement.
18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least three years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
James Lillie
140 Catalpa Road
Wilton, CT 06897
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
James Lillie
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Exhibit 99.10
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Thomas Quinlan (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to two (2) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a twenty-four (24)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the twenty-four (24)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the second anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
(g) LOAN FORGIVENESS. Upon the Date of Termination,
so long as the Executive is not in default thereunder, the then
outstanding balance under the Company's loan to the Executive evidenced
by the Secured Promissory Note dated March 12, 1998 shall be forgiven.
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5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the twelve (12) month period following his initial
receipt of Severance Benefits he shall not directly or indirectly, own,
manage, operate, join, control or participate in the ownership,
management, operation or control, or be connected as a director,
officer, employee, partner, consultant or otherwise with any Competing
Business, other than as a shareholder or beneficial owner, directly or
indirectly of five (5) percent or less of the outstanding securities of
a publicly held Competing Business. For purposes of this Agreement,
"Competing Business" means any business, firm or enterprise engaged in
a business substantially similar to the Company's business within the
same geographical locations in which the Company operates on the Date
of Termination. The Executive acknowledges and agrees that at least one
half (1/2) of the Severance Benefits received hereunder is in exchange
for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to be equal to
the aggregate remuneration the Executive would have received under
Section 4, excluding such Gross-Up Payment (net of all federal, state
and local excise
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and income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law. The
Gross-Up Payment provided for in this Paragraph shall be made within
ten (10) days after the termination of Executive's employment, provided
however that if the amount of the payment cannot be finally determined
at the time, the Company shall pay to Executive an estimate as
determined in good faith by the Company of such payments (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code as
soon as the amount thereof can be determined but in no event later than
the thirtieth (30th) day after the date of termination. Any dispute
concerning the application of this paragraph shall be resolved pursuant
to paragraph 10, and if Paragraph 11 applies, any reference in this
Paragraph to Paragraph 4 shall also be deemed to include a reference to
Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in
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effect when the notice giving rise to the dispute was given (including,
but not limited to, salary) and continue the Executive as a participant
in all compensation, benefit and insurance plans in which the Executive
was participating when the notice giving rise to the dispute was given
until the dispute is finally resolved in accordance with Paragraph 10
hereof. Amounts paid under this paragraph 11 are in addition to all
other amounts due under this Agreement (other than those due under
paragraph 5 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement. In addition, any Gross-Up Payment due
under Paragraph 7 shall be increased to take into account any increased
benefits under this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
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(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 14. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntary or involuntary, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any
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party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least two years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Thomas Quinlan
564 Bement Avenue
Staten Island, NY 10310
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Thomas Quinlan
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Exhibit 99.11
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Marc L. Reisch (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to three (3) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a thirty-six (36)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the thirty-six (36)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the
Executive a lump sum in an amount equal to the benefits under all
defined benefit and cash balance plans (including but not limited to
the World Color Press, Inc. Cash Balance plan and Supplemental
Executive Retirement Plan (collectively, the "Pension Plans")) which
the Executive would have accrued had he continued his employment with
the Company until the third anniversary of the Date of Termination
assuming no change in base compensation and bonus potential and
assuming full bonus payout and without regard to any amendment to the
Pension Plan(s) made subsequent to a Change in Control or a Potential
Change in Control which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 4 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, the failure of the
Company to adopt such amendments or otherwise), then the Company itself
shall pay or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the
Executive all legal fees and expenses incurred by the Executive as a
result of a termination which entitles the Executive to the Severance
Benefits (including all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable
to the application of section 4999 of the Code to any payment of
benefit provided hereunder). Such payments shall be made within five
(5) business days after delivery of the Executive's written requests
for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
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6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the eighteen (18) month period following his
initial receipt of Severance Benefits he shall not directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control, or be connected as a
director, officer, employee, partner, consultant or otherwise with any
Competing Business, other than as a shareholder or beneficial owner,
directly or indirectly of five (5) percent or less of the outstanding
securities of a publicly held Competing Business. For purposes of this
Agreement, "Competing Business" means any business, firm or enterprise
engaged in a business substantially similar to the Company's business
within the same geographical locations in which the Company operates on
the Date of Termination. The Executive acknowledges and agrees that at
least one half (1/2) of the Severance Benefits received hereunder is in
exchange for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to be equal to
the aggregate remuneration the Executive would have received under
Section 4, excluding such Gross-Up Payment (net of all federal, state
and local excise and income taxes), as if Sections 280G and 4999 of the
Code (and any successor provisions thereto) had not been enacted into
law. The Gross-Up Payment provided for in this Paragraph shall be made
within ten (10) days after the termination of
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Executive's employment, provided however that if the amount of the
payment cannot be finally determined at the time, the Company shall pay
to Executive an estimate as determined in good faith by the Company of
such payments (together with interest at the rate provided in section
1274(b)(2)(B) of the Code as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after
the date of termination. Any dispute concerning the application of this
paragraph shall be resolved pursuant to paragraph 10, and if Paragraph
11 applies, any reference in this Paragraph to Paragraph 4 shall also
be deemed to include a reference to Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving
rise to
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the dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the
notice giving rise to the dispute was given until the dispute is
finally resolved in accordance with Paragraph 10 hereof. Amounts paid
under this paragraph 11 are in addition to all other amounts due under
this Agreement (other than those due under paragraph 5 hereof) and
shall not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
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(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 14. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntary or involuntary, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
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18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of competent jurisdiction to be invalid,
unenforceable or void, the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall
remain in full force and effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least three years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Marc L. Reisch
21 Trails End
Chappaqua, NY 10514
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Marc L. Reisch
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Exhibit 99.11
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of April 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06820, and Marie Hlavaty (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries.
WHEREAS, the Company wishes to encourage the Executive to remain with
and devote full time and attention to the business affairs of the Company and
wishes to provide income protection to the Executive for a period of time in the
event of a Change in Control;
NOW, THEREFORE, in consideration of the mutual agreement and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agree as follows:
1. DEFINITIONS.
(a) "BASE SALARY" shall mean the Executive's regular annual
rate of base pay as of the date in question.
(b) "CAUSE" shall mean the Executive'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 the Company or
(iii) willful and continued refusal by the Executive substantially to
perform the duties of his position (other than any such failure
resulting from Executive's incapacity due to physical or mental illness
or any such actual or anticipated failure after the Executive's
issuance of a notice of termination for "Good Reason", (as defined
herein)), within a reasonable period of time after receipt of written
notice from the Company specifying the manner in which the Company
believes the Executive 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 Executive not
in good faith and without reasonable belief that the Executive's act,
or failure to act was in the best interests of the Company.
(c) A "CHANGE OF CONTROL" shall be deemed to have taken place
if: (i) any person, corporation, or other entity or group, including
any "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, other than any employee benefit plan then maintained by
the Company, becomes the beneficial owner of shares of the Company
having 30 percent or more of the total number of votes that may be cast
for the election of Directors of the Company; (ii) as the result of, or
in connection with, any contested election for the Board of Directors
of the Company, or any tender or exchange offer, merger or other
business combination or sale of assets, or any
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combination of the foregoing (a "Transaction"), the persons who were
directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or any
successor to the Company or its assets, or (iii) at any time (a) the
Company shall consolidate or merge with any other Person and the
Company shall not be the continuing or surviving corporation, (b) any
Person shall consolidate or merge with the Company and the Company
shall be the continuing or surviving corporation and in connection
therewith, all or part of the outstanding Company stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) to any Person or
Persons.
(d) The "CHANGE IN CONTROL DATE" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(e) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination.
(f) The Executive shall have "GOOD REASON" to terminate
employment if (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities, status or authority are materially reduced,
diminished or adversely altered from those in effect on the Change in
Control Date or the Executive is assigned duties inconsistent with the
Executive's status as a senior officer of the Company; (iii) the
Executive's future or current compensation or benefits are reduced;
(iv) the Company reduces the potential earnings of the Executive under
any performance-based bonus, equity or other incentive plan of the
Company in effect immediately prior to the Change in Control Date; (v)
the Company requires that the Executive's employment be based at a
location more than ten miles away from the location at which it is
based at the Change in Control Date; (vi) any purchaser, assign,
surviving corporation, or successor of the Company 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 the Company hereunder pursuant to
Section 14 hereof; (vii) the Company fails to pay any amounts due to
the Executive; (viii) the Company requires the Executive to travel
substantially more than he traveled prior to the Change in Control
Date; or (ix) the Company breaches any of the provisions of this
Agreement. The Executive shall also have Good Reason in the event upon
or following a Potential Change in Control any of the foregoing shall
occur.
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(g) NOTICE OF TERMINATION. After a Change in Control and
during the term of this Agreement, any purported termination of the
Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to
the other party hereto in accordance with Paragraph 15 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
(h) "PERSON" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934 and used in
Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(i) A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in
Control;
(II) The Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control; or
(III) The Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.
(j) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
(k) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company other than such a
termination in connection with an offer of immediate reemployment by a
successor or assign of the company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
2. TERM. The initial term of this Agreement shall be for the
period commencing on the date hereof and ending on the fifth
anniversary thereafter. The Term shall be automatically extended by one
additional day for each day beyond the fifth anniversary of the date of
this Agreement that the Executive remains employed by the Company until
such time as the Company elects to cease such extension by giving
written notice of such to the Executive. (In such event, the Agreement
shall thus terminate on the second anniversary of the effective date of
such notice).
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3. ELIGIBILITY FOR SEVERANCE BENEFITS. The Executive shall be
eligible for the benefits described in Paragraph 4 (the "Severance
Benefits") if, during the Term there has been a Change in Control and
during the two year period commencing on the Change of Control Date,
the Executive has a Termination of Employment initiated (i) by the
Company without Cause or (ii) by the Executive for Good Reason. The
Executive's employment shall also be deemed to have a Termination of
Employment following a Change in Control if the Executive's employment
is terminated in connection with or following a Potential Change in
Control and prior to the actual Change in Control.
4. SEVERANCE BENEFITS. Upon satisfaction of the requirements
set forth in Paragraph 3, and subject to Paragraphs 7 and 11, the
Executive shall be entitled to the following Severance Benefits:
(a) CASH PAYMENT. The Executive shall be entitled to
receive an amount of cash equal to two (2) times the greater of
(i) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect upon the Termination of
Employment, or
(ii) the sum of the Executive's Base Salary
and Target Bonus, in each case as in effect on the Change in Control
Date.
Notwithstanding the foregoing, in each case, the Base Salary and Target
Bonus shall be those in effect prior to any reductions giving rise to a
termination for Good Reason. The payment shall be made in a single lump
sum upon the Executive's Termination of Employment unless the Executive
shall have elected another method on the signature page hereof.
(b) EQUITY-BASED COMPENSATION. To the extent not
already vested pursuant to the terms of any option plans then in
effect, any and all (i) options, phantom units, and other awards
granted to Executive pursuant to any such plan to purchase Company
stock or which is measured by the current market value of Company stock
and (ii) restricted stock of the Company, granted to the Executive,
shall be fully vested. If the Executive shall so elect, the Company
shall, in lieu of issuing Company shares upon the exercise of
outstanding options, pay the Executive a lump sum amount, less required
withholding, equal to the difference between the aggregate exercise
price of such options and the product of the aggregate numbers of
options held by the Executive times the greater of (A) the per share
value of the consideration received by shareholders of the Company upon
the consummation of the Change in Control and (B) the fair market value
per share of the Company stock upon a Change of Control.
(c) CONTINUATION OF BENEFITS. For a twenty-four (24)
month period after the Date of Termination, the Company shall arrange
to provide the
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Executive with life, disability, accident, health and dental insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control which reduction constitutes Good Reason.) Benefits otherwise
receivable by the Executive pursuant to this Section shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost during the twenty-four (24)
month period following the Executive's termination of employment (and
any such benefits actually received by the Executive shall be reported
to the Company by the Executive.)
(d) RETIREMENT BENEFITS. The Company shall pay the Executive a
lump sum in an amount equal to the benefits under all defined benefit
and cash balance plans (including but not limited to the World Color
Press, Inc. Cash Balance plan and Supplemental Executive Retirement
Plan (collectively, the "Pension Plans")) which the Executive would
have accrued had he continued his employment with the Company until the
second anniversary of the Date of Termination assuming no change in
base compensation and bonus potential and assuming full bonus payout
and without regard to any amendment to the Pension Plan(s) made
subsequent to a Change in Control or a Potential Change in Control
which becomes a Change in Control.
(e) PLAN AMENDMENTS. The Company may adopt such amendments to
its employee benefit plans and insurance policies as are necessary to
effectuate the provisions of this Agreement. If and to the extent any
benefits under this Paragraph 4 are not paid or payable or otherwise
provided to the Executive or his dependents or beneficiaries under any
such plan or policy (whether due to the terms of the plan or policy,
the termination thereof, applicable law, the failure of the Company to
adopt such amendments or otherwise), then the Company itself shall pay
or provide for such benefits.
(f) LEGAL FEES. The Company also shall pay to the Executive
all legal fees and expenses incurred by the Executive as a result of a
termination which entitles the Executive to the Severance Benefits
(including all such fees and expenses, if any, incurred in disputing
any such termination or in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the
application of section 4999 of the Code to any payment of benefit
provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for
payment accompanied with such evidence of fees and expenses incurred as
the Company reasonably may require.
5. PAYMENTS OTHER THAN SEVERANCE. In the event the Severance
Benefits outlined in paragraph 4 above are payable, the Executive shall
also be entitled to all compensation and other amounts accrued, due and
owing to Executive from the Company as of the date of Termination of
Employment.
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6. EXECUTIVE'S AGREEMENTS.
(a) CONTINUATION OF EMPLOYMENT. In exchange for, and in
consideration of the Severance Benefits, Executive agrees that subject
to the terms and condition of this Agreement to remain in the employ of
the Company until the earliest of (i) a date which is six months from
the date of such Potential Change of Control, (ii) the date of a Change
in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the
Potential change in Control as a Change in Control in applying the
definition of Good Reason), by reason of death, Disability or
Retirement, or (iv) the termination by the Company of the Executive's
employment for any reason.
(b) NON-COMPETE. In consideration of and in connection with
the Severance Benefits provided under the Agreement, and in order to
protect the good will of the Company, the Executive hereby covenants
and agrees that for the twelve (12) month period following his initial
receipt of Severance Benefits he shall not directly or indirectly, own,
manage, operate, join, control or participate in the ownership,
management, operation or control, or be connected as a director,
officer, employee, partner, consultant or otherwise with any Competing
Business, other than as a shareholder or beneficial owner, directly or
indirectly of five (5) percent or less of the outstanding securities of
a publicly held Competing Business. For purposes of this Agreement,
"Competing Business" means any business, firm or enterprise engaged in
a business substantially similar to the Company's business within the
same geographical locations in which the Company operates on the Date
of Termination. The Executive acknowledges and agrees that at least one
half (1/2) of the Severance Benefits received hereunder is in exchange
for this non-competition covenant.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a Big 5
accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal
Revenue Service, the aggregate of the benefit payments under this
Agreement would cause the payment of one or more of such benefits to
constitute an "excess parachute payment" as defined in Section 280G(b)
of the Internal Revenue Code ("Code"), then the Company will pay to the
Executive an additional amount in cash (the "Gross-Up Payment") equal
to the amount necessary to cause the net amount retained by the
Executive, after deduction of any (i) excise tax on the payments under
Paragraph 4, (ii) federal, state or local income tax on the Gross-Up
payment, and (iii) excise tax on the Gross-Up payment, to be equal to
the aggregate remuneration the Executive would have received under
Section 4, excluding such Gross-Up Payment (net of all federal, state
and local excise and income taxes), as if Sections 280G and 4999 of the
Code (and any successor provisions thereto) had not been enacted into
law. The Gross-Up Payment provided for in this Paragraph shall be made
within ten (10) days after the termination of Executive's employment,
provided however that if the amount of the payment cannot be finally
determined at the time, the Company shall pay to Executive an estimate
as determined in good faith by the Company of such payments (together
with interest at
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the rate provided in section 1274(b)(2)(B) of the Code as soon as the
amount thereof can be determined but in no event later than the
thirtieth (30th) day after the date of termination. Any dispute
concerning the application of this paragraph shall be resolved pursuant
to paragraph 10, and if Paragraph 11 applies, any reference in this
Paragraph to Paragraph 4 shall also be deemed to include a reference to
Paragraph 11 as well.
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Executive's employment with the Company is not
for any specified term and may be terminated by the Executive or by the
Company at any time, for any reason, with or without cause, without
liability except with respect to the Severance Benefits provided
hereunder or as required by law or any other contract or employee
benefit plan.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits
which may otherwise by payable to the Executive upon termination
following a Change in Control pursuant to Agreement, policy or
practice, except those benefits which are to be made available to the
Executive as required by applicable law.
10. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be
in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement
shall, at the election and upon written demand of either party, be
finally determined and settled by binding arbitration in the city of
Greenwich, CT, using a single arbitrator, in accordance with the Labor
Arbitration rules and procedures of the American Arbitration
Association, and judgment upon the award may be entered in any court
having jurisdiction thereof. The arbitrator shall have the power to
order specific performance, mandamus, or other appropriate legal or
equitable relief to enforce the provisions of this Agreement. The
company shall pay all costs of the arbitration and all reasonable
attorney's and accountant's fees of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control or a Potential Change in Control leading
to a Change in Control and during the Term of this Agreement, and such
termination is disputed by any party, the Company shall continue to pay
the Executive the full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, salary)
and continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was participating
when the notice giving rise to the dispute was given until the dispute
is finally resolved in accordance with Paragraph 10 hereof. Amounts
paid under this paragraph 11 are in addition to all other amounts due
under this Agreement (other than those due under paragraph 5 hereof)
and shall
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not be offset against or reduce any other amounts due under this
Agreement. In addition, any Gross-Up Payment due under Paragraph 7
shall be increased to take into account any increased benefits under
this Paragraph.
12. NO SET-OFF. There shall be no right of set-off or counterclaim
in respect of any claim, debt, or obligation against any payment to or
benefit for the Executive provided for in this Agreement.
13. NO MITIGATION OBLIGATION. The parties hereto expressly agree
that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages,
and that the Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment
or otherwise, not shall any profits, income, earnings or other benefits
from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or
otherwise.
14. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall not be terminated by the voluntary or
involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation, or successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in the form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation of successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and assets of the Company whether by
purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or
otherwise (and such purchaser, assign, surviving corporation or
successor shall thereafter be deemed the "Company" for the purposes of
this Agreement), but this Agreement shall not otherwise be assignable,
transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this
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Section 14. Without limiting the generality of the foregoing, the
Executive's right to receive payments hereunder shall not be
assignable, transferable or delegable, whether by pledge, creation of a
security interest or otherwise, or otherwise subject to anticipation,
alienation, sale, encumbrance, charge, hypothecation, or set-off in
respect of any claim, debt, or obligation, or to execution, attachment,
levy or similar process, or assignment by operation of law, other than
by a transfer by his will or by the laws of descent and distribution.
Any attempt, voluntary or involuntary, to effect any action prohibited
by this Paragraph shall be null, void, and of no effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt
(or refusal or receipt) and shall be in writing and delivered
personally or sent by telex, telecopy, or certified or registered mail,
postage prepaid, or other similar means of communication, as follows:
(a) If to the Company, addressed to its principal executive
offices to the attention of its Secretary;
(b) If to the Executive, to him or her at the address set
forth below under the Executive's signature; or at any such other
address as either party shall have specified by notice in writing to
the other.
16. AMENDMENTS; WAIVERS. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
the Executive and by a duly authorized representative of the Company.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that
such other party was or is obligated to comply with or perform;
provided, however, that such waiver shall not operate as a waiver of,
estoppel with respect to, any other or subsequent failure. No failure
to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, or power hereunder preclude any
other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity.
17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreement, promises,
covenants, arrangement, communication, representations or warranties,
whether oral or written, by any officer, employee or representative of
any party hereto. The parties further intend that this Agreement shall
constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
18. SEVERABILITY; ENFORCEMENT. If any provision of this Agreement,
or the application thereof to any person, place or circumstance shall
be held by a court of
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competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other
persons, places and circumstances shall remain in full force and
effect.
19. INDEMNIFICATION. The Company shall indemnify, defend, and hold
the Executive harmless from and against any liability, damaged, costs,
or expenses (including attorney's fees) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him
by reason of his having been an officer, director, employee, or agent
of the Company, unless it is judicially determined, in a final,
nonappealable order, that the Executive was guilty of gross negligence
or willful misconduct. The Company also agrees to maintain adequate
directors and officer liability insurance for the benefit of Executive
for the term of this Agreement and for at least two years thereafter.
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20. GOVERNING LAW. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of
Connecticut, except to the extent pre-empted by Federal law.
The parties have duly executed this Agreement as of the date first
written above.
EXECUTIVE
By:
-------------------------- -----------------------
Marie Hlavaty
40 East 94th Apt. 4K
New York, NY 10128
Form of Cash Benefit Payment paragraph 4(a)
_____ One lump sum payment
_____ Equal monthly installment payments each in the
amount of Executive's monthly Base Salary as of the
date of termination of employment.
---------------------------
Marie Hlavaty
11
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[LOGO]
July 16, 1999
Dear Stockholder:
I am pleased to inform you that on July 12, 1999, World Color Press, Inc.
(the "Company") entered into an Agreement and Plan of Merger ("Merger
Agreement") with Quebecor Printing Inc., a corporation amalgamated under the
laws of Canada ("Quebecor Printing"), and its indirect wholly owned subsidiary,
Printing Acquisition Inc., a Delaware corporation ("Purchaser"), which provides
for the acquisition of the Company. Under the terms of the Merger Agreement,
Purchaser today commenced a tender offer (the "Offer") to purchase up to
23,500,000 of the Company's outstanding shares of common stock the ("Shares")
for $35.69 per share in cash (the "Offer Price"). The Merger Agreement further
provides that, following consummation of the Offer, Purchaser will be merged
with the Company (the "Merger") and Shares that are not acquired through the
Offer will be converted in the Merger into the right to receive 1.6455
subordinate voting shares of Quebecor Printing (or a combination of subordinate
voting shares and cash if fewer than 23,500,000 shares are purchased in the
Offer, as set forth in the Merger Agreement).
Furthermore, pursuant to the Merger Agreement, if the Offer is not completed
by September 13, 1999 as a result of certain conditions to the Offer not being
satisfied, Purchaser has agreed to terminate the Offer and the parties have
agreed to seek to consummate a one-step merger, subject to the approval of each
company's stockholders and other customary conditions. In such one-step merger,
each Share would be converted into the right to receive (i) $22.00 in cash and
(ii) .6311 shares of Quebecor Printing subordinate voting shares.
The receipt of cash and Quebecor Printing subordinate voting shares in the
Offer and the Merger will be a taxable transaction for federal income tax
purposes.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
ARE FAIR TO, ADVISABLE, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT
YOU ACCEPT THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9. Morgan Stanley & Co. Incorporated ("Morgan Stanley"), financial
advisor to the Company, has delivered to the Board of Directors a written
opinion dated as of July 12, 1999 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 transactions contemplated by the Merger Agreement was fair from a financial
point of view to such holders. A copy of the Morgan Stanley opinion is attached
to the enclosed Schedule 14D-9 and should be read in its entirety. In addition,
certain affiliates of the Company have agreed to tender into the Offer
approximately 24% of the Shares outstanding.
Additional information with respect to the Offer and the Merger is contained
in the enclosed Schedule 14D-9, and we urge you to consider this information
carefully. On behalf of the Board of Directors and management of the Company, I
thank you for the support you have given to the Company.
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<S> <C> <C>
Sincerely,
[LOGO]
Robert G. Burton
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
