<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 COMMISSION FILE NUMBER 1-11802
------------------------
QUEBECOR WORLD (USA) INC.
(FORMERLY KNOWN AS WORLD COLOR PRESS, INC.)
<TABLE>
<S> <C>
DELAWARE 37-1167902
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
THE MILL
340 PEMBERWICK ROAD
GREENWICH, CONNECTICUT 06831
(Address of principal executive offices) (Zip Code)
</TABLE>
203-532-4200
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
<TABLE>
<CAPTION>
<S> <C>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Title of each class
6% Convertible Senior Subordinated Notes due 2007
8 3/8% Senior Subordinated Notes due 2008
7 3/4% Senior Subordinated Notes due 2009
</TABLE>
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. /X/
THE ONLY CLASS OF VOTING SECURITIES OF QUEBECOR WORLD (USA) INC. IS ITS
COMMON STOCK, PAR VALUE $1.00 PER SHARE (THE "COMMON STOCK"). ON MARCH 15, 2000,
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES OF THE
REGISTRANT WAS $0.
------------------------
AS OF MARCH 15, 2000, TEN SHARES OF COMMON STOCK WERE OUTSTANDING.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
CERTAIN EXHIBITS AS LISTED ON THE EXHIBIT INDEX AND FILED WITH REGISTRANT'S
REGISTRATION STATEMENT ON FORM S-4 (NO. 333-74087) UNDER THE SECURITIES ACT OF
1933, AS AMENDED, ARE INCORPORATED BY REFERENCE INTO PART IV OF THIS FORM 10-K.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
----------------
<S> <C> <C>
PART I
ITEM 1. Business.................................................... 1
ITEM 2. Properties.................................................. 6
ITEM 3. Legal Proceedings........................................... 7
ITEM 4. Submission of Matters to a Vote of Security Holders......... 7
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 8
ITEM 6. Selected Financial Data..................................... 9
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 10
ITEM 7A. Quantitative and Qualitative Disclosures about Market
Risk...................................................... 16
ITEM 8. Financial Statements and Supplementary Data................. 16
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 16
PART III
ITEM 10. Directors and Executive Officers of the Registrant.......... 17
ITEM 11. Executive Compensation...................................... 19
ITEM 12. Security Ownership of Certain Beneficial Owners and
Management................................................ 24
ITEM 13. Certain Relationships and Related Transactions.............. 25
PART IV
ITEM 14. Exhibits, Financial Statement Schedule and Reports on Form
8-K....................................................... 26
SIGNATURES.......................................................................... 29
FINANCIAL STATEMENTS
Index to Financial Statements and Financial Statement
Schedule.................................................. 30
Independent Auditors' Report................................ F-1
Balance Sheets as of December 31, 1999 and December 27,
1998...................................................... F-2
Statements of Operations for the Years ended December 31,
1999, December 27, 1998 and December 28, 1997............. F-3
Statements of Stockholders' Equity for the Years ended
December 31, 1999, December 27, 1998 and December 28,
1997...................................................... F-4
Statements of Cash Flows for the Years ended December 31,
1999, December 27, 1998 and December 28, 1997............. F-5
Notes to Financial Statements............................... F-6-F-22
FINANCIAL STATEMENT SCHEDULE
Schedule II--Valuation and Qualifying Accounts.............. S-1
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
Quebecor World (USA) Inc. ("Quebecor World" or the "Company"), formerly
known as World Color Press, Inc. ("World Color"), is a wholly owned subsidiary
of Quebecor Printing (USA) Holdings Inc. and an indirect wholly owned subsidiary
of Quebecor Printing Inc. ("QPI"). On July 12, 1999, World Color entered into an
Agreement and Plan of Merger with QPI and its indirect wholly owned subsidiary,
Printing Acquisition Inc. ("Acquisition Inc."). On July 16, 1999, QPI, through
Acquisition Inc., commenced a tender offer (the "Offer") to acquire up to
23,500,000 shares of World Color common stock at a price of $35.69 per share. On
August 20, 1999, QPI acquired, through Acquisition Inc., 19,179,495, or
approximately 50.4%, of World Color's outstanding shares of common stock (the
"Change in Control"). On October 8, 1999, World Color and Acquisition Inc.
completed a merger (the "Merger") of World Color with and into Acquisition Inc.,
with World Color as the surviving corporation, following receipt of approval
from the Company's stockholders. The capital structure of the surviving
corporation is 3,000 authorized shares of common stock, par value $1.00 per
share. As of March 15, 2000 there were 10 shares outstanding. The surviving
corporation is known as Quebecor World (USA) Inc. As a result of the Merger, we
became an indirect wholly owned subsidiary of QPI. The remaining outstanding
shares of the common stock of World Color (other than shares purchased by
Acquisition Inc. in the Offer) were converted into the right to receive 1.2685
subordinate voting shares of QPI and $8.18 in cash per share. In addition, each
of World Color's 6% Convertible Senior Subordinated Notes due 2007, outstanding
at the Merger, became convertible into the number of QPI subordinate voting
shares and cash that would have been received had the convertible note been
converted immediately prior to October 8, 1999.
DUE TO CERTAIN COVENANTS IN ITS REGISTERED DEBT SECURITIES, QUEBECOR WORLD
IS REQUIRED TO CONTINUE TO MAKE REPORTS UNDER SECTION 13 AND 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"). THIS ANNUAL REPORT SPEAKS
TO THE OPERATIONS OF THE FORMER WORLD COLOR PRESS, INC. AND SUBSIDIARIES AND
EXCLUDES THE OTHER OPERATIONS OF QPI OF WHICH IT IS NOW AFFILIATED.
QUEBECOR PRINTING INC.
GENERAL
QPI, a diversified global commercial printing company, is the largest
commercial printer in Canada and Europe and one of the largest in the United
States and South America. Its 1999 revenues reached $5.0 billion, including
approximately $1.0 billion contributed by the Company since its acquisition by
QPI. QPI offers its customers state-of-the-art web offset, gravure and sheet fed
printing capabilities, plus related value-added printing services in product
categories including magazines, retail circulars, books, catalogs, directories,
specialty printing and direct mail, and digital and other value-added services.
QPI is a market leader in most of its product categories. QPI believes that the
diversity of its customer base, geographic coverage and product segments reduces
its reliance on any single product line or market. QPI's strategy for growth
focuses on increasing its geographic coverage and expanding its product segments
and services across its network of facilities. QPI services these markets and
offers its products through a network of 160 printing and related services
facilities capable of servicing virtually all major markets in the United
States, Canada, France, Germany, Austria, United Kingdom, Spain, Sweden,
Finland, Mexico, India, Chile, Argentina, Peru and Colombia. As of March 1,
2000, QPI employed over 40,000 people.
QUEBECOR WORLD (USA) INC.
GENERAL
We are an industry leader in the management and distribution of print and
digital information. Prior to the acquisition by QPI, we were the second largest
diversified commercial printer in the United States, providing digital
pre-media, press, binding, distribution and multi-media services to customers in
the commercial, magazine, catalog, direct mail, book and directory markets.
Founded in 1903, we currently
1
<PAGE>
operate 54 facilities with a network of sales offices nationwide. Through
selective acquisitions and internal expansion, we have strategically positioned
ourselves as a full-service provider of high technology solutions for our
customers' imaging, print and distribution needs. We operate in one business
segment--printing services, which is comprised of six separate sectors including
commercial, magazines, catalogs, direct mail, books and directories.
We completed five acquisitions in fiscal year 1999: Great Western Publishing
(December 1998), a commercial retail insert printer; Infiniti Graphics
(January), a commercial printer; Universal Press Graphics (March), a commercial
printer which also provided us with an entry into the packaging sector; Downey
Printing (April), a printer of specialty directories; and Metroweb (June), a
publication and commercial printer.
Substantially all sales are made to customers through our employees based
upon customer specification. A significant amount of our sales are made pursuant
to term contracts with our customers, with the remainder being made on an
order-by-order basis. As a result, we have a significant backlog of orders. No
customer accounted for more than 5% of our net sales in 1999. In our opinion,
the loss, at substantially the same time, of all of the business provided by any
one of our largest customers could have an adverse effect upon us.
MARKET SECTORS
COMMERCIAL
We are a premier printer of virtually all of the different kinds of printed
materials used by businesses to promote their goods and services to businesses,
investors and consumers. We print high quality specialty products such as annual
reports and automobile and travel brochures. We are also a leading printer of
product brochures, bill stuffers, informational marketing materials and other
advertising supplements. We also print freestanding inserts and retail inserts
for established national and regional retailers and are the second largest
offset printer of retail advertising inserts in the United States. We are an
industry leader in three highly specialized areas: (1) complex personalized
direct response materials; (2) unique and intricate consumer-involvement
promotional materials such as scratch-off game pieces; and (3) airline guides
and hotel directories. With a broad range of specialized equipment and focused
attention to customer service, we provide commercial customers with format
flexibility, high-speed production and the ability to print high quality
commercial products from start to finish at one full-service source.
MAGAZINES
We are a leading printer of consumer magazines in the United States. The
publication customer base includes some of the largest and most established
consumer magazine publishers in a diverse range of market categories. The
popularity of these magazines makes them less susceptible to cyclical downturns
in advertising spending, which we believe provides us with a significant
advantage over our competitors whose customers may be more susceptible to these
downturns. A majority of our magazine printing is performed under contracts with
remaining terms of between one and nine years, the largest of which are with
customers with whom the Company has had relationships for, on average, more than
20 years. We have extended a majority of these contracts beyond the initial
expiration dates and intend to continue this practice when economically
practicable.
CATALOGS
We are a leading printer for the U.S. catalog market. We currently print
many of the most well known catalog titles. In addition, our
business-to-business catalog printing work spans a broad range of industries
including the computer, home and office furniture, office products and
industrial safety products industries.
2
<PAGE>
DIRECT MAIL
We print direct mail materials such as booklets, inserts, bill stuffers and
other advertisements. In addition, we provide direct marketers with direct
imaging, personalization and other lettershop services. We believe that we are
the only direct mail printer capable of providing complex personalization for
both short and long-run projects.
BOOKS
We print mass-market rack size books as well as hardcover books for the
consumer, education and reference markets. We service many of the largest U.S.
publishers.
DIRECTORIES
We print four-color white-page and yellow-page directories for Pacific Bell
and certain other independent directory publishers.
CURRENT SERVICES
DIGITAL AND PRE-MEDIA SERVICES
We are a leader in the transition from conventional pre-media services to an
all-digital workflow, providing a complete spectrum of film and digital
preparation services, from traditional paste-up and color separations to
state-of-the-art, all-digital pre-media services, as well as digital imaging and
digital archiving. Our specialized digital and pre-media facilities, which are
strategically located close to and, in certain cases, onsite at customer's
facilities, provide our customers high quality, 24-hour preparatory services
linked directly to our various printing facilities. In addition, our computer
systems enable us to exchange images and textual material electronically,
directly between our facilities and our customers' business locations. The
integrated pre-media operations provide us with competitive advantages over
traditional pre-media shops that are not able to provide the same level of
integrated services. Our digital group also provides multi-media services such
as the transformation of customers' existing printed and digital material into
interactive media such as user-friendly information kiosk systems, Internet web
sites, corporate intranets, CD-ROMs and computer laptop sales presentations. Our
digital services group has provided a natural opportunity for cross-selling
efforts by offering integrated pre-media and multi-media services to print
customers who may have historically used third-party suppliers for their
pre-media and multi-media needs.
PRESS AND BINDING SERVICES
We believe that we provide our customers with access to state-of-the-art
technology in all phases of the printing and binding process, including, among
others, wide-web presses, computerized quality information systems,
computer-to-plate and digital processing systems, high speed binding and
personalization capabilities and robotic material handling. Wide-web press
technology, which only a small number of well-capitalized printers are able to
justify, generates a significant cost savings on longer press runs. Computerized
quality information systems provide us and our customers with instant analysis
of the quality of the printing, thereby enabling us to improve our performance
and plan preventive maintenance of our equipment more effectively.
Computer-to-plate and digital processing technologies eliminate the use of film,
which significantly reduces costs and production time and enables customers to
extend their production deadlines. Our personalization capabilities allow
customers to include different content, whether advertising or editorial or
both, within different copies of their product depending upon the geographic,
demographic and subscriber specifications of their readers. We operate web and
sheet fed offset, rotogravure and flexographic presses. We believe that the
variety and capabilities of our presses and other production equipment allows us
to meet the broad range of our customers' printing needs and be the full service
provider demanded by the market. This capacity provides us with a competitive
advantage over smaller printers who are unable to meet this demand.
3
<PAGE>
DISTRIBUTION AND LOGISTICS
We believe that our sophisticated mailing and distribution capabilities are
among the best in the industry. We maintain a network of strategic regional
locations as well as a central facility in the Chicago, Illinois area from which
we provide customers important access to our nationwide services. Nearly all of
our printing facilities dedicated to servicing our magazine, catalog and direct
mail customers are strategically located in the mid-region of the country. We
believe that the size of these printing plants and their central location and
close proximity to each other provide us with a significant advantage in
distribution capabilities, enabling us to distribute a greater volume of product
than our competitors to a wider target market at a lower cost. We also operate
facilities on the west and east coasts which serve more regionalized needs. We
use computerized cost studies to examine the benefits of pooled and palletized
mailing for our customers to develop an efficient and cost effective
distribution plan designed to enable the customer's product to reach consumers
at narrowly specified delivery times. Our mail capabilities extend from
state-of-the-art mail list processing technology through entry point
optimization, load planning, consolidation, carrier management, mail tracking
and customer reporting.
COMPETITION
Although we are one of the largest diversified commercial printers in the
United States, the industry is highly competitive in most product categories and
geographic regions. Competition is largely based on price, quality, range of
services offered, distribution capabilities, customer service, availability of
printing time on appropriate equipment and state-of-the-art technology. We
compete for commercial business not only with large national printers, but also
with smaller regional printers. In certain circumstances, due primarily to
factors such as freight rates and customer preference for local services,
printers with better access to certain regions of the country may have a
competitive advantage in such a region.
The printing industry is experiencing excess capacity. Further, the
industries that we serve have been subject to consolidation efforts, leading to
a smaller number of potential customers who exercise increased pricing leverage
over the industry. Primarily as a result of this excess capacity and customer
consolidation, there has been, and we believe will continue to be, downward
pricing pressure and increased competition in the printing industry.
We continue to evaluate solutions to address the challenges and
opportunities presented to us by the increased use of e-commerce and reliance on
communication through electronic media, including the Internet, in the conduct
of our business, both with our customers and suppliers. We are being called upon
to address our customers' use of electronic media throughout their business
spectrums, from the delegation of their print requirements through the
production and distribution of their product. We have continued to move to an
all digital environment in our pre-media service offerings to allow our
customers to produce, manage and redeploy their media assets by electronic
means. We are also developing electronic transaction technology that will enable
us to use electronic tools in aggregating and transacting our supply side
purchases.
Sales volume in general has been positively affected by increased
advertising pages, including those related to Internet/New Media companies. We
expect this trend to continue through 2000 and beyond.
SEASONALITY
The operations of our business are seasonal with approximately two-thirds of
historical operating income recognized in the second half of the fiscal year,
primarily due to the higher number of magazine pages, new product launches and
back-to-school and holiday catalog promotions.
RAW MATERIALS
The primary raw materials required in a printing operation are ink and
paper. We supply all of the ink and a substantial amount of the paper used in
the printing process. Our net sales include sales to certain customers of paper
that we purchase. We provide warehouse space for both ourselves and customer
4
<PAGE>
supplied paper. The price of paper is volatile over time and may cause
significant swings in net sales and cost of sales. We generally are able to pass
on increases in the cost of paper to our customers, while declines in paper
costs result in lower prices to our customers. In 1998, paper prices declined
from previous years and availability was plentiful for most grades of paper. In
the first three quarters of 1999, paper prices in general continued to decline
moderately. In the fourth quarter of 1999, paper prices started to recover and
were relatively flat compared to the same period in 1998. We expect the trend of
increasing paper prices to continue throughout 2000. We believe we have adequate
allocations with our paper suppliers to meet our customers' needs. Our contracts
with our customers generally provide for price adjustments to reflect price
changes for other materials, wages and outside services.
Our materials management program capitalizes on our purchasing power in
order to minimize materials costs while optimizing inventory management. We are
not dependent upon any one source for our paper or ink. We believe that an
adequate supply of ink is available. Given the volume of our purchases, we are
generally able to obtain quality paper, ink and other materials at competitive
prices. Our strong commercial relationships with a relatively small number of
suppliers allow us to negotiate favorable price discounts and achieve more
assured sourcing of high quality paper that meets our specifications.
ENVIRONMENTAL COMPLIANCE
We are subject to regulation under various and changing federal, state and
local laws relating to the environment and to employee safety and health. These
environmental regulations relate to the generation, storage, transportation,
disposal and emission into the environment of various substances. Permits are
required for operation of our business (particularly air emission permits), and
these permits are subject to renewal, modification and, in certain
circumstances, revocation. We believe that we are in substantial compliance with
such laws and permitting requirements. We are also subject to regulation under
various and changing federal, state and local laws which allow regulatory
authorities to compel (or to seek reimbursement for) clean-up of environmental
contamination at our own sites and at facilities where our waste is or has been
disposed.
We have procedural controls and personnel dedicated to compliance with all
applicable environmental laws. We estimate that capital expenditures in 2000
required to comply with federal, state and local provisions for environmental
controls, as well as expenditures for our share of costs for environmental
clean-up, if any, will not be material and will not have a material adverse
effect on us. We expect to incur ongoing capital and operating costs to maintain
compliance with applicable environmental laws, which costs we do not expect to
be, in the aggregate, material.
RESEARCH AND DEVELOPMENT
Suppliers of equipment and materials used by companies such as us perform
most of the research and development related to the printing industry.
Accordingly, our expenses and capital investments for research and development
are not material. We do, however, dedicate significant resources to improving
our operating efficiencies and the services we provide to our customers. In an
effort to realize increased efficiencies in our printing processes, we have made
significant investments in state-of-the-art equipment, including new press and
binding technology, digital photography, computer-to-plate and digital
processing technology and real-time product quality monitoring systems.
EMPLOYEES
As of March 1, 2000, we had over 16,000 employees, approximately 17% of who
were represented by unions under several different labor contracts, which expire
at various times from April 2000 through August 2005.
As of March 1, 2000, approximately 600 of such unionized employees, in one
facility, were covered under a contract, the term of which has been
automatically extended by its terms and currently is under negotiation. Under
the terms of the contract during the period of extension either party may give
the other party 21 calendar days written notice terminating the contract.
5
<PAGE>
ITEM 2. PROPERTIES.
Our corporate office is currently located in leased facilities in Greenwich,
Connecticut. Production facilities are located throughout the United States, as
set forth below. We believe our facilities provide adequate productive capacity
for our needs. Summary information regarding our facilities as of March 1, 2000
is set forth as follows:
<TABLE>
<CAPTION>
USE AND LOCATION OWNED/LEASED SQUARE FOOTAGE
- ---------------- ------------ --------------
<S> <C> <C>
CORPORATE HEADQUARTERS:
Greenwich, Connecticut...................................... Leased 55,000
PRINTING PLANTS:
Atlanta, Georgia............................................ Owned 129,000
Augusta, Georgia............................................ Owned 700,000
Brookfield, Wisconsin....................................... Owned 309,000
Caroll, Iowa................................................ Owned 58,000
Corinth, Mississippi........................................ Owned 630,000
Covington, Tennessee........................................ Owned 535,000
Dresden, Tennessee.......................................... Owned 678,000
Dyersburg, Tennessee........................................ Owned 869,000
Elk Grove Village, Illinois................................. Owned 175,000
Elk Grove Village, Illinois................................. Leased 93,000
Effingham, Illinois......................................... Owned 570,000
Enfield, Connecticut........................................ Owned 75,000
Erlanger, Kentucky.......................................... Leased 94,000
Jonesboro, Arkansas......................................... Owned 400,000
Lebanon, Ohio............................................... Owned 270,000
Los Angeles, California..................................... Leased 283,000
Merced, California.......................................... Owned 460,000
Metairie, Louisiana......................................... Owned 106,000
North Haven, Connecticut.................................... Owned 440,000
Oakwood, Georgia............................................ Owned 251,000
Oberlin, Ohio............................................... Owned 110,000
Oklahoma City, Oklahoma..................................... Owned 220,000
Omaha, Nebraska............................................. Owned 52,000
Ontario, California......................................... Leased 39,000
Orlando, Florida............................................ Leased 191,000
Pawtucket, Rhode Island..................................... Leased 300,000
Phoenix, Arizona............................................ Leased 83,000
Providence, Rhode Island.................................... Owned 88,000
Red Bank, Ohio.............................................. Owned 180,000
Salem, Illinois............................................. Owned 688,000
South Windsor, Connecticut.................................. Owned 42,000
Stillwater, Oklahoma........................................ Owned 335,000
Taunton, Massachusetts...................................... Owned 355,000
Versailles, Kentucky........................................ Owned 1,058,000
Waukee, Iowa................................................ Owned 119,000
Westwood, Massachusetts..................................... Leased 102,000
Wilmington, Massachusetts................................... Leased 195,000
Winchester, Virginia........................................ Owned 96,000
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
USE AND LOCATION OWNED/LEASED SQUARE FOOTAGE
- ---------------- ------------ --------------
<S> <C> <C>
DIGITAL SERVICES/PRE-MEDIA:
Arlington Heights, Illinois................................. Leased 18,000
Charlotte, North Carolina................................... Leased 21,000
Lake Mary, Florida.......................................... Leased 18,000
Lexington, Kentucky......................................... Leased 27,000
Los Angeles, California..................................... Leased 22,000
New York, New York.......................................... Leased 6,000
Orlando, Florida............................................ Leased 18,000
St. Charles, Missouri....................................... Leased 21,000
Warren, Michigan............................................ Leased 12,000
Washington, D.C............................................. Leased 67,000
DISTRIBUTION:
Altamont, Illinois.......................................... Leased 27,000
Bensenville, Illinois (DISTRIBUTION/BINDERY)................ Owned 307,000
Flora, Illinois............................................. Owned 120,000
Lexington, Kentucky......................................... Leased 241,000
Trenton, Tennessee.......................................... Leased 96,000
Versailles, Kentucky........................................ Leased 26,000
WAREHOUSE:
Jonesboro, Arkansas......................................... Leased 105,000
Memphis, Tennessee.......................................... Leased 100,000
Newburn, Tennessee.......................................... Leased 68,000
West Annex, Oklahoma........................................ Owned 54,000
</TABLE>
In addition, we maintain an extensive network of sales offices located
throughout the United States, as well as additional warehouse space. We believe
that none of our leases are material to our operations and that such leases were
entered into on market terms.
ITEM 3. LEGAL PROCEEDINGS.
We do not believe that there are any pending legal proceedings, which, if
adversely determined, could have a material adverse effect on our financial
condition or results of operations, taken as a whole.
There were no material pending legal proceedings that were terminated in the
fourth quarter of the fiscal year ended December 31, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On October 8, 1999, World Color held a Special Meeting of Stockholders. At
the meeting, the stockholders voted on the Merger of World Color and Acquisition
Inc. A total of 32,588,921 and 5,447,381 shares were voted and unvoted,
respectively. The following table sets forth certain information with respect to
such stockholder vote.
<TABLE>
<CAPTION>
SHARES SHARES VOTED SHARES
VOTED FOR AGAINST ABSTAINING
- --------------------- ------------ ----------
<S> <C> <C>
32,584,072 3,767 1,082
</TABLE>
No other matters were submitted for stockholder vote during the fourth
quarter of 1999.
7
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET PRICE RANGE OF COMMON STOCK
Until the effective time of the Merger on October 8, 1999, World Color's
common stock was listed on the New York Stock Exchange under the symbol: WRC. In
connection with the Merger, the remaining outstanding shares of the common stock
of World Color were converted into 1.2685 subordinate voting shares of QPI and
$8.18 in cash per share. The following table sets forth the range of the high
and low sales prices of the common stock of World Color as quoted on the New
York Stock Exchange for 1998 and 1999*. We did not pay dividends during 1998 or
1999.
<TABLE>
<CAPTION>
1998 HIGH LOW CLOSE
- ---- ------------ ------------ -----------
<S> <C> <C> <C>
First Quarter.......................................... 34 3/4 25 3/8 34 1/8
Second Quarter......................................... 35 11/16 29 7/8 33 1/16
Third Quarter.......................................... 36 1/4 26 29 1/2
Fourth Quarter......................................... 34 3/4 22 3/4 27 1/8
</TABLE>
<TABLE>
<CAPTION>
1999 HIGH LOW CLOSE
- ---- ------------ ------------ -----------
<S> <C> <C> <C>
First Quarter.......................................... 30 7/16 21 15/16 23 3/16
Second Quarter......................................... 27 5/8 20 26 7/8
Third Quarter.......................................... 37 3/16 27 1/16 35 1/2
Fourth Quarter (*)..................................... 38 3/8 35 1/2 38
</TABLE>
- ------------------------
* October 8, 1999, the day of the Merger, was the final day of public trading
for the common stock of World Color. Following the Merger, there is no
established public trading market for our Common Stock, par value $1.00 per
share. There was one holder of such Common Stock at March 15, 2000, which was
an affiliate of the Company.
DIVIDEND POLICY
We do not expect to declare or pay cash dividends on the Common Stock at any
time in the foreseeable future. The decision whether to apply legally available
funds to the payment of dividends on the Common Stock will be made by our Board
of Directors from time to time in the exercise of its prudent business judgment,
taking into account, among other things, our results of operations and financial
condition and any then existing or proposed commitments for our use of available
funds. We are restricted by the terms of certain of our outstanding debt and
financing agreements from paying cash dividends on our Common Stock.
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data for the five fiscal years ended
December 31, 1999 have been derived from the Company's audited consolidated
financial statements. The data presented below should be read in conjunction
with, and is qualified in its entirety by reference to, the Company's
consolidated financial statements and the notes thereto appearing elsewhere in
this report.
<TABLE>
<CAPTION>
FISCAL YEAR(1)
--------------------------------------------------------------
1999(2) 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Net sales.............................. $2,552,895 $2,356,885 $1,981,225 $1,641,412 $1,295,582
Cost of sales.......................... 2,223,424 1,927,790 1,613,938 1,349,130 1,074,785
---------- ---------- ---------- ---------- ----------
Gross profit........................... 329,471 429,095 367,287 292,282 220,797
Selling, general and administrative
expenses............................. 406,730 214,862 188,688 153,071 125,539
Restructuring and streamlining
charges(3)(4)........................ 74,807 -- -- -- 40,900
---------- ---------- ---------- ---------- ----------
Operating income (loss)................ (152,066) 214,233 178,599 139,211 54,358
Interest expense and securitization
fees................................. 103,866 88,589 80,039 58,417 37,897
Income tax provision (benefit)......... (56,406) 52,054 41,341 33,533 6,584
Extraordinary items, net of tax(5)..... (11,992) -- -- -- --
Cumulative effect of change in
accounting principle, net of
tax(6)............................... (10,513) -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss)...................... $ (222,031) $ 73,590 $ 57,219 $ 47,261 $ 9,877
========== ========== ========== ========== ==========
OTHER OPERATING DATA:
Depreciation and amortization.......... $ 155,766 $ 140,725 $ 131,710 $ 104,493 $ 74,668
Capital expenditures(7)................ 140,005 95,533 93,145 70,639 120,339
BALANCE SHEET DATA (AT PERIOD END):
Working capital........................ $ 291,068 $ 239,428 $ 168,752 $ 227,068 $ 160,835
Property, plant and equipment, net..... 877,998 885,999 857,195 818,157 480,421
Total assets........................... 2,376,121 2,433,886 1,933,571 1,822,432 1,150,728
Long-term debt (including current
maturities).......................... 1,291,196 1,255,920 819,113 897,867 487,106
Stockholders' equity................... 549,325 668,647 599,769 414,932 358,766
</TABLE>
- ------------------------
(1) In 1999, the Company changed its fiscal year end to December 31, 1999 from
the last Sunday in December. The change resulted in a 369-day period rather
than a 52-week period. This change was not material to the Company's results
of operations. The fiscal years prior to 1999 each represent the 52 or 53
week period ending on the last Sunday in December. Fiscal year 1995
consisted of 53 weeks. Fiscal years 1996, 1997 and 1998 each consisted of 52
weeks.
(2) In 1999, the Company recognized merger related charges of $313,845. See
Note 4 to the consolidated financial statements for further details.
(3) In 1999, the Company recognized restructuring and other special charges of
$74,807 to eliminate redundant and less efficient capacity resulting from
its ongoing acquisition strategy. See Note 8 to the consolidated financial
statements for further details.
(4) Operating income in 1995 was reduced by $40,900 of a nonrecurring
streamlining charge. This charge reflects the Company's strategy in 1995 to
realign certain business operations. The major components
9
<PAGE>
of this realignment plan were to close a facility and to consolidate certain
digital prepress operations and functions.
(5) In 1999, the Company recognized extraordinary charges of $11,992, net of
tax, for the early extinguishment of certain debt instruments. See Note 9 to
the consolidated financial statements for further details.
(6) The Company adopted Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities," in the first quarter of 1999 which resulted in a
charge of $10,513, net of tax. See Note 2 to the consolidated financial
statements for further details.
(7) 1998 capital expenditures are net of proceeds of approximately $88,500 from
the sale and leaseback of certain equipment.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(Dollars in thousands, except per share data)
GENERAL
We are a diversified commercial printer serving customers in the commercial,
magazine, catalog, direct mail, book and directory markets. We operate in one
business segment--the management and distribution of print and digital
information. Our revenues are derived primarily from the sale of services and
materials to our customers, including digital and pre-media services, press and
binding services and distribution and logistics services.
On July 12, 1999, we entered into an Agreement and Plan of Merger with
Quebecor Printing Inc. ("QPI") and its indirect wholly owned subsidiary,
Printing Acquisition Inc. ("Acquisition Inc."), which provided for the
acquisition of World Color (the "Merger"). On July 16, 1999, QPI, through
Acquisition Inc., commenced a tender offer to acquire up to 23,500,000 shares of
our common stock at a price of $35.69 per share. On August 20, 1999, QPI
acquired, through Acquisition Inc., 19,179,495, or approximately 50.4%, of our
outstanding shares.
On October 8, 1999, World Color and Acquisition Inc. completed the Merger
following receipt of approval from our stockholders. As a result, World Color
became an indirect wholly owned subsidiary of QPI and at that time was renamed
Quebecor World (USA) Inc. The remaining outstanding shares of our common stock
(other than shares purchased by QPI in the tender offer) were converted into the
right to receive 1.2685 subordinate voting shares of QPI and $8.18 in cash per
share. In addition, each 6% Convertible Senior Subordinated Note due 2007,
outstanding at the Merger, became convertible into the number of QPI subordinate
voting shares and cash that would have been received had the convertible note
been converted immediately prior to October 8, 1999. Our new capital structure
consists of 3,000 authorized shares of common stock, par value $1.00 per share.
At December 31, 1999, 10 common shares were outstanding.
In connection with the Merger, we incurred $169,301 of non-recurring costs
in the third quarter of 1999. These costs included: the cancellation and
settlement by Acquisition Inc. of all vested and unvested options, bonuses,
severance, legal and attorney fees, and other fees specifically related to the
Merger. In addition, our outstanding restricted stock became fully vested in
connection with the Merger. The costs related to the Merger are included in
selling, general and administrative expenses in our 1999 consolidated statement
of operations. The majority of these costs were paid during 1999.
In connection with the Merger, we have developed an integration strategy for
the combined entities that requires the redeployment and/or disposal of assets
and the shutdown or relocation of certain of our plant locations and sales
offices. This revised strategic initiative resulted in a charge to our 1999 cost
of sales and selling, general and administrative expenses of $134,668 and
$9,876, respectively. The charge was
10
<PAGE>
primarily composed of $40,011 for the writedown of fixed assets to reflect fair
market value, $32,303 for severance and related costs to shut down certain plant
locations and sales offices, $19,672 for the disposal and other related costs of
inventories and $34,100 to reflect other operational changes in the business as
a result of the Merger.
At December 31, 1999, all such assets have been adjusted to reflect the
appropriate value and we expect to proceed with the closure of the facilities
and related employee terminations in 2000. The expected cash expenditures for
the above charges are approximately $14,000, the majority of which is severance
related and will be paid in 2000. As a result of the Merger integration plan, we
anticipate incurring additional charges, primarily in 2000, of approximately
$26,000.
There continues to be significant pricing pressure on all printers,
including us. Our net sales include sales to certain customers of paper we
purchased. The price of paper, our primary raw material, is volatile over time
and may cause significant swings in net sales and cost of sales. We generally
are able to pass on increases in the cost of paper to our customers, while
declines in paper costs result in lower prices to our customers. In 1998, paper
prices declined from previous years and availability was plentiful for most
grades of paper. In the first three quarters of 1999, paper prices in general
continued to decline moderately. In the fourth quarter of 1999, paper prices
started to recover and were relatively flat compared to the same period in 1998.
We expect the trend of increasing paper prices to continue throughout 2000. Our
contracts with our customers generally provide for price adjustments to reflect
price changes for other materials, wages and outside services.
ACQUISITIONS
In fiscal year 1999, we acquired five businesses serving customers in the
commercial, retail, publication and directory markets for an aggregate purchase
price of approximately $203,000, including assumed indebtedness. In 1998, we
acquired four businesses serving customers in the commercial, direct mail and
book markets for an aggregate purchase price of approximately $200,000. In 1997,
we acquired two businesses serving the book and short-run publications markets
for an aggregate purchase price of approximately $194,000. These companies have
been included in results of operations since their respective acquisition dates
and the acquisitions were accounted for as purchases.
RESULTS OF OPERATIONS
Historically our fiscal years have represented the 52 or 53 week period
ending on the last Sunday in December. Fiscal 1997 and 1998 were 52-week years.
In 1999, we changed our fiscal year end to December 31, 1999 in order to conform
with the fiscal year end of QPI. The change in the fiscal year did not have a
material effect on our results of operations.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 27, 1998
Net sales increased $196,010 or 8.3% to $2,552,895 in 1999 from $2,356,885
in 1998. The increase was due to the inclusion of both a full year of results
from the acquisitions in 1998 and results from the acquisitions in 1999, higher
paper volume and improved sales in our base business.
Gross profit decreased $99,624 or 23.2% to $329,471 in 1999 from $429,095 in
1998, due primarily to the fourth quarter charges related to the Merger as
described above, partially offset by the inclusion of the 1998 and 1999
acquisitions and improved operating efficiencies in our base business. Excluding
the effect of the Merger related costs, gross profit margin remained flat at
18.2% in 1999 and 1998, respectively, due to the increased sales resulting from
higher paper volume, offset by synergies resulting from the integration of the
acquired businesses.
Selling, general and administrative expenses, including expenses related to
the Merger of $179,177 and restructuring and other special charges of $74,807,
increased $266,675 to $481,537 in 1999 from
11
<PAGE>
$214,862 in 1998. Excluding the non-recurring Merger and restructuring charges,
the 1999 increase of $12,691 or 5.9% to $227,553 was due primarily to the
acquisitions in 1999 and 1998, including the related additional amortization
expense for goodwill, partially offset by benefits derived from cost saving
initiatives.
In 1999, we recorded restructuring and other special charges of $74,807, or
$44,297 net of tax, to eliminate redundant and less efficient capacity resulting
from our ongoing acquisition strategy. The restructuring and other special
charges included the costs to exit and consolidate certain facilities and sales
offices, write down impaired assets and eliminate certain administrative
positions. These charges, consisting primarily of $26,615 for the writedown of
equipment and $44,566 to reserve for certain lease costs, resulted from changes
in our strategic growth objectives and were primarily determined based on
independent appraisals. As of year end 1999, we have closed the affected
facilities and sales offices and terminated the related employees. Fixed assets
have been adjusted to reflect their appropriate values. In 1999, we paid
approximately $5,000 related to these charges. The remaining costs, primarily
lease payments, will extend through 2008. The aggregate effect of all
restructuring and other special charges was originally estimated to be in the
range of $125,000 to $175,000 for the closure of facilities, write down of
assets and elimination of administrative positions. The Merger significantly
altered this estimate and as of the fourth quarter of 1999, we have completed
this restructuring initiative.
Interest expense and securitization fees increased $15,277 or 17.2% to
$103,866 in 1999 from $88,589 in 1998. The increase was due to higher average
borrowings incurred to fund acquisitions, capital expenditures and working
capital requirements, offset by a lower average cost of funds.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 22.0% for 1999 and 41.4% for 1998. Full year
1999's rate was impacted by costs related to the Merger, some of which were
nondeductible, as well as restructuring and other special charges.
YEAR ENDED DECEMBER 27, 1998 COMPARED TO YEAR ENDED DECEMBER 28, 1997
Net sales increased $375,660 or 19.0% to $2,356,885 in 1998 from $1,981,225
in 1997. The increase was due to the inclusion of both a full year of results
from the acquisitions in 1997 and results from the acquisitions in 1998, higher
paper prices and volume and improved sales in our base business.
Gross profit increased $61,808 or 16.8% to $429,095 in 1998 from $367,287 in
1997, due primarily to the inclusion of the 1997 and 1998 acquisitions and
improved operating efficiencies in our base business. Gross profit margin
decreased to 18.2% in 1998 from 18.5% in 1997 due to increased sales resulting
from higher paper prices and volume, slightly offset by the benefits of certain
cost reduction initiatives and other synergies resulting from the integration of
the acquired businesses.
Selling, general and administrative expenses increased $26,174 or 13.9% to
$214,862 in 1998 from $188,688 in 1997. The increase was due to the 1997 and
1998 acquisitions, including the related additional amortization expense for
goodwill, offset by benefits derived from cost saving initiatives and a decrease
in the 1998 provision for bad debts. The 1997 provision for bad debts was higher
than usual because of bad debts related to a customer that entered into
bankruptcy.
Interest expense and securitization fees increased $8,550 or 10.7% to
$88,589 in 1998 from $80,039 in 1997. The increase was due to higher average
borrowings incurred to fund acquisitions, capital expenditures and working
capital requirements, offset by a lower average cost of funds. The 1998 and 1997
amounts included $11,888 and $5,133, respectively, of fees resulting from the
asset securitization agreement entered into in June 1997.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 41.4% for 1998 and 42.0% for 1997.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In November 1998, we issued Senior Subordinated Notes in the aggregate
principal amount of $300,000 for net proceeds of approximately $291,700.
Interest on the notes is payable semi-annually at the annual rate of 8.375%.
Principal payments on the notes are not required prior to maturity on
November 15, 2008. We used a portion of the net proceeds to repay certain
indebtedness incurred under the Second Amended and Restated Credit Agreement
dated June 6, 1996, as amended ("1996 Credit Agreement"). The remaining net
proceeds were invested in money market securities through December 27, 1998. In
the beginning of fiscal year 1999, we used the remaining net proceeds to redeem
all of our then outstanding 9.125% Senior Subordinated Notes due 2003 (the
"Notes") in an aggregate principal amount of $150,000. The Notes were redeemed
for approximately $160,800, including the redemption premium of $6,840 and
accrued interest. This early extinguishment of debt generated an extraordinary
charge of $5,946, net of taxes of $4,132, for the redemption premium and
write-off of deferred financing costs. The Notes were included in current
maturities of long-term debt at December 27, 1998.
On February 22, 1999, we issued Senior Subordinated Notes in the aggregate
principal amount of $300,000, receiving net proceeds of approximately $294,000.
Interest on the notes is payable semi-annually at the annual rate of 7.75%. The
notes do not have required principal payments prior to maturity on February 15,
2009. The net proceeds from the notes issuance were used to repay certain
indebtedness under the 1996 Credit Agreement. In connection with the issuance of
these notes, we amended our 1996 Credit Agreement resulting in, among other
modifications, a $95,000 permanent reduction in borrowings and commitments under
the 1996 Credit Agreement. As a result, aggregate total commitments decreased
from $920,000 to $825,000. The amendment and related permanent reduction in
total borrowings and commitments resulted in a substantial modification of the
terms under the 1996 Credit Agreement. Accordingly, we recognized an
extraordinary charge for the early extinguishment of debt of $6,046, net of
taxes of $4,201, in the first quarter of 1999. As described below, all amounts
outstanding under the 1996 Credit Agreement were repaid in connection with the
Merger. At December 31, 1999, there were no available commitments under the 1996
Credit Agreement.
In August 1999, certain wholly owned subsidiaries of QPI provided us with
$511,500, which was borrowed on our behalf from subsidiaries' external long-term
credit facilities. We used these funds to pay certain Merger expenses and repay
$491,600 in outstanding debt incurred under the 1996 Credit Agreement. Our
resulting indebtedness has an interest rate of LIBOR plus 2% per annum, adjusted
quarterly. In 1999, the interest rate ranged from 7.23% to 8.07%. Payment is not
required prior to January 1, 2001.
On August 20, 1999, we entered into a credit agreement with a third party
lender with a maximum commitment of $100,000. Interest is payable at a variable
floating rate based on LIBOR or prime rate. We do not owe any amounts under this
credit agreement at December 31, 1999.
As part of the Merger expenses discussed above, we recognized a non-cash
charge of $67,474 for the cancellation and settlement by Acquisition Inc. of all
vested and unvested options. Of this amount, $40,868 was paid directly by
Acquisition Inc. to the option holders on our behalf and $26,606 was paid in
stock of QPI upon consummation of the Merger. In addition, we received $51,299
from Acquisition Inc. to pay certain other Merger expenses. These amounts will
not be repaid and are, therefore, included in stockholders' equity in the
December 31, 1999 consolidated balance sheet.
In July and October 1998, we entered into agreements for the sale and
leaseback of certain printing equipment for which we received approximately
$88,500 of proceeds. The equipment used for the sale and leaseback transaction
was primarily composed of 1998 capital expenditures. The lease expires in
July 2010 and has been classified as an operating lease. The proceeds were used
to repay certain indebtedness incurred under the 1996 Credit Agreement.
In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of our common stock. The repurchase of shares commenced in
August 1998 and continued through mid 1999.
13
<PAGE>
Shares were repurchased primarily to satisfy commitments under certain employee
benefit plans. From the inception of the plan through mid-1999, we repurchased
1,750,153 shares at a weighted average cost of $26.02 and reissued 466,255
shares. In connection with the Merger, the share repurchase plan was terminated
and the treasury stock was retired.
In October 1997, we issued 4,600,000 shares of our common stock, receiving
net proceeds of approximately $127,600. Concurrent with the stock offering, we
issued $151,800 aggregate principal amount of Convertible Senior Subordinated
Notes, receiving net proceeds of approximately $147,900. Interest on the
convertible notes is payable semi-annually at the annual rate of 6%. The
convertible notes have no required principal payments prior to maturity on
October 1, 2007. Prior to the Merger, the convertible notes in the aggregate
were convertible into 3,660,477 shares of our common stock at $41.47 per share,
subject to adjustment upon the occurrence of certain events. Subsequent to the
Merger, each note is convertible into the number of QPI subordinated shares and
cash that would have been received had the convertible note been converted
immediately prior to October 8, 1999. Certain convertible notes were redeemed by
the holders in 1999, reducing our liability to approximately $144,000 at
December 31, 1999. While we have the option to redeem the notes subsequent to
October 4, 2000, we do not intend to do so. Therefore, the notes are classified
as long-term in the consolidated balance sheets.
In June 1997, we entered into an agreement to sell, on a revolving basis for
a period of up to five years, certain of our accounts receivable to a
wholly-owned subsidiary, which entered into an agreement to transfer, on a
revolving basis, an undivided percentage ownership interest in a designated pool
of accounts receivable to a maximum of $204,000. Subsequent to the Merger, this
asset securitization program was cancelled. We entered into a new agreement
which was aligned with QPI's existing program and has substantially the same
terms and conditions as our previous agreement. In 1997, we received the
proceeds from the sale of $200,000 of accounts receivable. Accordingly, accounts
receivable has been reduced by $200,000 at December 31, 1999 and December 27,
1998. Fees associated with the asset securitization vary based on commercial
paper rates plus a margin, providing a lower effective rate than that available
from our traditional funding sources.
Working capital was $291,068 at December 31, 1999 and $239,428 at
December 27, 1998, increasing $51,640 or 21.6% primarily due to the 1999
acquisitions and the repayment of the 1996 Credit Agreement in 1999, a portion
of which was included in current maturities of long-term debt in 1998. Cash flow
from operations was primarily used to fund working capital requirements, capital
expenditures and acquisitions.
Capital expenditures totaled $140,005 and $95,533 in 1999 and 1998,
respectively. These capital expenditures reflect the purchase of additional
press and bindery equipment which increased our capacity and are part of our
ongoing program to maintain modern, efficient plants and continually increase
productivity.
At December 31, 1999, we had net operating loss carryforwards from business
acquisitions for federal income tax purposes of $1,762 available to reduce
future taxable income, expiring from 2007 to 2010. We also had federal tax
credits of $4,162 expiring primarily from 2000 to 2002 and state tax credits of
$3,894 expiring from 2001 to 2013. In addition, we had alternative minimum tax
carryover credits of $29,631 which do not expire and may be applied against
regular tax in the future, in the event that the regular tax expense exceeds the
alternative minimum tax.
Concentrations of credit risk with respect to accounts receivable are
limited due to our diverse operations and large customer base. As of
December 31, 1999, we had no significant concentrations of credit risk.
In the normal course of business, we are exposed to changes in interest
rates. However, we manage this exposure by having a balanced variety of debt
maturities as well as a combination of fixed and variable rate obligations. In
addition, in 1998, we entered into interest rate cap and swap agreements in
order to further reduce the exposure on our variable rate obligations. The
interest rate cap agreements expired in
14
<PAGE>
1999. As allowed under the interest rate swap agreements, these agreements were
cancelled in the third quarter of 1999 by the respective counterparties. These
agreements did not have a material impact on the consolidated financial
statements for the periods presented. As of December 31, 1999 we are not party
to any such agreements. We do not hold or issue any derivative financial
instruments for trading purposes.
We believe that our liquidity, capital resources and cash flows from
operations are sufficient to fund planned capital expenditures, working capital
requirements and interest and principal payments for the foreseeable future.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use." This SOP requires
certain costs related to computer software developed or obtained for internal
use to be expensed or capitalized depending on the stage of development and the
nature of the costs. We adopted this SOP in the first quarter of fiscal year
1999. The adoption of SOP 98-1 did not have a material effect on our
consolidated financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities," which requires costs of start-up activities and
organization costs to be expensed as incurred. We adopted this SOP in the first
quarter of fiscal year 1999, which resulted in a charge of $10,513, net of taxes
of $7,305, for the non-recurring write-off of deferred start-up costs. The
adoption of this SOP did not have a material effect on our operating income on a
continuing basis.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires companies to
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. We would account for gains or losses resulting from
changes in the values of those derivatives depending on the use of the
derivative and whether it qualifies for hedge accounting. In June 1999, the
Financial Accounting Standards Board issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
FASB Statement No. 133," to delay the effective date of SFAS No. 133 to fiscal
years beginning after June 15, 2000. Therefore, we plan to adopt this statement
in the first quarter of fiscal year 2001. We do not expect the adoption of SFAS
No. 133 to have a material impact on our consolidated financial statements.
SEASONALITY
The operations of our business are seasonal with approximately two-thirds of
historical operating income recognized in the second half of the fiscal year,
primarily due to the higher number of magazine pages, new product launches and
back-to-school and holiday catalog promotions.
YEAR 2000
We did not experience any material adverse impact with regard to software or
hardware failure or malfunction as a result of the year 2000 transition. The
costs incurred to date related to the year 2000 efforts have not been material,
nor are they expected to be material in 2000. We will continue to monitor our
systems throughout the first quarter of 2000.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the statements in this
document are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties, which may cause our actual
results in future periods to differ materially from forecasted results. Those
risks include, among
15
<PAGE>
others, changes in customers' demand for our products, changes in raw material
and equipment costs and availability, seasonal changes in customer orders,
pricing actions by our competitors and general changes in economic condition.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
For quantitative and qualitative disclosures about market risk, see the
notes to the consolidated financial statements (Note 9) referenced in Item 8 of
this report, and the information presented under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations:
Liquidity and Capital Resources" on pages 13-15 referenced in Item 7 of this
report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company on pages F-1 through
F-22 hereof and the related schedule thereto set forth on page S-1 hereof are
incorporated hereto by reference. The supplementary quarterly data set forth in
Note 18 on page F-22 hereof is incorporated hereto by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
16
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
EXECUTIVE OFFICERS
The table below sets forth certain information regarding the current
executive officers and Directors of the Company as of March 1, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ----------------------------------------------------------
<S> <C> <C>
Marc L. Reisch.................... 44 Chairman of the Board of Directors, President and Chief
Executive Officer
Kenneth Bacon..................... 49 Vice President, Taxes
Jerome V. Brofft.................. 55 Senior Vice President, Purchasing
Paul B. Carousso.................. 30 Vice President, Controller
David R. Coates................... 62 Director
Mark A. D'Souza................... 39 Vice President and Treasurer
Marcello A. De Giorgis............ 69 Director
Kevin P. Hayden................... 36 Vice President, Operations
Marie D. Hlavaty.................. 36 Vice President, General Counsel and Secretary
Heidi J. Nolte.................... 42 Senior Vice President, Chief Information Officer
Christian M. Paupe................ 41 Director and Executive Vice President
Michel P. Salbaing................ 54 Director and Senior Vice President, Chief Financial
Officer
</TABLE>
MARC L. REISCH has been the Chairman of the Board of Directors, President
and Chief Executive Officer of the Company since October 1999. Prior to that,
Mr. Reisch had served as President of World Color since 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 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. Mr. Reisch
has been a director of the Company since March 1996.
KENNETH BACON has been Vice President, Taxes since January 1998. Prior to
holding that position, Mr. Bacon held the position of Tax Director for the
Company, since joining the Company in June 1996. Prior to joining the Company,
Mr. Bacon was a Senior Tax Manager at Coopers & Lybrand LLP.
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 the Company,
Mr. Carousso was an auditor with Ernst & Young LLP.
DAVID R. COATES has served as director since October 1999. Mr. Coates is
retired as a partner of KPMG, where he was employed until June 1993. Currently,
Mr. Coates provides business advisory services and serves as director of Green
Mountain Power Corporation.
17
<PAGE>
MARK A. D'SOUZA has been an officer of the Company since August 1999.
Mr. D'Souza has also served as Vice President, Treasurer of Quebecor
Printing Inc. since November 1998. From September 1997 to November 1998,
Mr. D'Souza was Treasurer of Quebecor Printing Inc. From March 1995 to
September 1997 he was Director, Finance of Societe Generale de Financement du
Quebec and from July 1989 to March 1995, Mr. D'Souza held several positions in
Corporate Finance at the Royal Bank of Canada and Union Bank of Switzerland.
Mr. D'Souza is a Canadian citizen.
MARCELLO A. DE GIORGIS has been director of the Company since October 1999.
Mr. DeGiorgis is currently the sole proprietor of Berkshire International
Business Consulting. Mr. DeGiorgis also serves as director of Quebecor
Printing Inc.
KEVIN P. HAYDEN has been Vice President, Operations of the Company since
February 1998. Prior thereto, Mr. Hayden was Director, Operations of the
Company's Northeast Graphics Inc. subsidiary from November 1997. Prior to
holding that position, Mr. Hayden served as Director, Planning since joining the
Company in July 1994.
MARIE D. HLAVATY has been Vice President, General Counsel and Secretary of
the Company since November 1999. Prior to holding that position, Ms. Hlavaty was
Vice President, Deputy General Counsel and Assistant Secretary from March 1998.
Ms. Hlavaty held the position of Vice President, Assistant General Counsel from
October 1996 to March 1998 and the position of Assistant General Counsel from
August 1995 to October 1996. Prior thereto, Ms. Hlavaty was Associate Counsel
since joining the Company in February 1994.
HEIDI J. NOLTE has been Senior Vice President, Chief Information Officer of
the Company since July 1997. Prior to holding that position, Ms. Nolte was Vice
President, Chief Information Officer since joining the Company 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.
CHRISTIAN M. PAUPE has been an officer and director of the Company since
August 1999. Mr. Paupe has also served as Executive Vice President and Chief
Financial Officer of Quebecor Printing Inc., since January 1999. In April 1999,
Mr. Paupe was appointed as Executive Vice President, Chief Administrative
Officer and Chief Financial Officer of Quebecor Printing Inc. Prior thereto,
Mr. Paupe held the position of Senior Executive Vice President and Director of
Levesque Beaubien Geoffrion Inc. (investment dealer) from 1997 until
January 1999. Prior thereto, Mr. Paupe was a Senior Vice President of
Southam Inc. (newspaper publisher) from 1995 to 1997. From 1993 to 1995,
Mr. Paupe was Vice President, Corporate Finance of Bell Canada
International Inc. (cable and telecommunications). Mr. Paupe is a Swiss and
Canadian citizen.
MICHEL P. SALBAING has been Senior Vice President, Chief Financial Officer
since August 1999 and a director since October 1999. Prior to holding that
position, Mr. Salbaing held the position of Chief Executive Officer, Quebecor
Printing Europe since April 1998. From June 1996 to April 1998, Mr. Salbaing
held the position of Chief Financial Officer of Quebecor Printing Inc. Prior
thereto, Mr. Salbaing was Chief Financial Officer of Societe Generale de
Financement du Quebec. Mr. Salbaing is a United States, French and Canadian
citizen.
DIRECTOR'S FEES
Each director who is not an employee of the Company receives an annual board
retainer of $7,500 as well as $1,000 attendance fee per meeting. Directors who
are also employees of the Company receive no remuneration for serving as
directors.
18
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the cash compensation awarded in fiscal years
1997, 1998 and 1999, paid to or earned by (i) all individuals serving as a Chief
Executive Officer during the last completed fiscal year, (ii) our four most
highly paid executive officers other than Chief Executive Officer who were
serving as executive officers at the end of the last completed fiscal year, and
(iii) two additional individuals who would have been covered under (ii) but for
the fact that he/she was not serving as an executive officer at the end of the
last fiscal year.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION RESTRICTED NUMBER OF
-------------------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS (6) (7) GRANTED COMPENSATION (8)
- --------------------------- -------- -------- ---------- -------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Burton (1)............. 1999 $744,231 $2,250,000 $ 847,500 1,050,000 $24,202,252
1998 801,102 2,000,000 1,965,000 175,000 --
1997 675,583 1,600,000 -- 375,000 --
Marc L. Reisch................... 1999 $568,270 $ 962,500 $ 635,625 125,000 $ 3,655,749
Chairman of the Board of 1998 463,462 700,000 1,361,563 125,000 --
Directors, President and Chief 1997 393,250 500,000 -- 40,000 --
Executive Officer
Jennifer L. Adams (2)............ 1999 $297,958 $ 439,425 $ 423,750 65,000 $ 4,036,277
1998 324,308 440,000 751,563 65,000 --
1997 310,833 400,000 -- 40,000 --
Jerome V. Brofft................. 1999 $190,000 $ 114,000 -- 10,000 $ 120,000
Senior Vice President, 1998 184,039 114,000 -- 10,000 --
Purchasing 1997 164,338 60,000 -- 10,000 --
Heidi J. Nolte................... 1999 $220,079 $ 110,000 -- 10,000 $ 132,000
Vice President, Chief 1998 200,000 100,000 -- 10,000 --
Information Officer 1997 189,466 93,000 -- 7,500 --
Michel P. Salbaing (3)........... 1999 $111,137 -- -- -- --
Senior Vice President, Chief 1998 -- -- -- -- --
Financial Officer 1997 -- -- -- -- --
Robert B. Lewis (4).............. 1999 $155,288 $ 275,000 $ 317,812 20,000 $ 2,822,012
1998 185,673 150,000 -- 20,000 --
1997 119,567 65,000 -- 7,500 --
James E. Lillie (5).............. 1999 $175,961 $ 302,500 $ 158,906 20,000 $ 3,064,831
1998 241,186 250,000 -- 20,000 --
1997 162,186 93,000 -- 5,000 --
</TABLE>
- ------------------------
(1) Mr. Burton was employed by the Company until October 1999.
(2) Ms. Adams was employed by the Company until December 1999.
(3) Mr. Salbaing commenced employment as of August 1999. Accordingly,
compensation shown reflects amounts paid after that date.
(4) Mr. Lewis was employed by the Company until August 1999.
(5) Mr. Lillie was employed by the Company until August 1999.
19
<PAGE>
(6) On April 6, 1999, the Company granted Mr. Burton 40,000 Restricted Shares.
In addition, Mr. Reisch, Ms. Adams, Mr. Lewis and Mr. Lillie were granted
30,000 Restricted Shares, 20,000 Restricted Shares, 15,000 Restricted Shares
and 7,500 Restricted Shares, respectively. The fair market value of World
Color's common stock on such date was $21.19 per share. Under the Company's
Restricted Stock Plan, shares vested over a five year period. Pursuant to
the Merger Agreement, the Board of Directors of World Color (or, if
appropriate, the committee administering the Restricted Stock Plan) adopted
resolutions and took such actions as required to provide that any
restrictions imposed pursuant to the Restricted Stock Plan on any shares of
common stock of World Color (such shares, "Restricted Stock") would (subject
to the consummation of the Offer) lapse and each share of Restricted Stock
would be entitled to receive $35.69 per share. All such shares were
subsequently tendered into the Offer.
(7) 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 $30.50 per share. Under the Company's 1998 Restricted Stock
Plan, shares vested over a five-year period. Any of such shares outstanding
at the time of the Offer were tendered into the Offer.
(8) Messrs. Burton, Reisch, Brofft, Lewis and Lillie and Ms. Adams and Nolte
received certain amounts provided for under their respective Change in
Control/Retention and Severance Agreements in connection with the Change in
Control. Mr. Burton's amount includes the amount due to him under the Third
Amended and Restated Supplemental Retirement Plan.
20
<PAGE>
OPTION GRANTS IN 1999
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
PERCENT OF TOTAL
OPTIONS GRANTED EXERCISE PRICE
OPTIONS TO EMPLOYEES IN PER SHARE EXPIRATION GRANT DATE
NAME GRANTED(1) 1999 ($/SH.) DATE VALUE(2)
- ---- ---------- ---------------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Robert G. Burton............... 875,000 50.1% $ 24.33 2/3/09 $11,404,497
Robert G. Burton............... 175,000 10.0% $23.3125 5/5/09 $ 2,185,276
Marc L. Reisch................. 125,000 7.2% $23.3125 5/5/09 $ 1,560,911
Jennifer L. Adams.............. 65,000 3.7% $23.3125 5/5/09 $ 811,674
Michel P. Salbaing............. -- -- -- -- --
Jerome V. Brofft............... 10,000 0.6% $23.3125 5/5/09 $ 124,873
Heidi J. Nolte................. 10,000 0.6% $23.3125 5/5/09 $ 124,873
Robert B. Lewis................ 20,000 1.1% $23.3125 5/5/09 $ 249,746
James E. Lillie................ 20,000 1.1% $23.3125 5/5/09 $ 249,746
</TABLE>
- ------------------------
(1) Had these options not been settled in connection with the consummation of
the Offer in August 1999, the options would have vested 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 World Color. The options were exercisable for ten years from the date of
the grant, with certain exceptions, including, without limitation, in the
case of the termination of the option holder's employment with World Color.
Under certain circumstances, the option holder had the right to resell
option shares and World Color had the right to repurchase a specified
percentage of options and option shares.
(2) The fair market value as of the dates of grant, February 3, 1999, in the
case of Mr. Burton's grant of 875,000 options and May 5, 1999 in the case of
all other grants to the named executive 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>
GRANT DATE VOLATILITY FACTOR RISK-FREE INTEREST RATE
- ---------- ----------------- -----------------------
<S> <C> <C>
February 3, 1999........................... .300 5.39%
May 5, 1999................................ .300 5.72%
</TABLE>
For each grant, the assumed expected life of the options was ten years, and
the assumed dividend yield of the option was zero. The fair market value as
of the grant dates set forth in the table are only theoretical values and
may not accurately determine fair market value. The actual value, if any,
that was realized by each individual depended on the market price of the
common stock on the date of exercise/settlement.
21
<PAGE>
AGGREGATE OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS AT OPTIONS AT DECEMBER 31,
UNDERLYING DECEMBER 31,1999 (3) 1999(3)
OPTIONS VALUE --------------------------- ---------------------------
NAME EXERCISED RESULTED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ---------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Burton........ 279,941 $ 3,824,321(1) -- -- -- --
Robert G. Burton........ 1,770,000 20,722,985(2) -- -- -- --
Marc L. Reisch.......... 453,539 6,223,606(2) -- -- -- --
Jennifer L. Adams....... 315,745 4,728,418(2) -- -- -- --
Jerome V. Brofft........ 65,880 1,031,776(2) -- -- -- --
Heidi J. Nolte.......... 59,285 915,812(2) -- -- -- --
Michel P. Salbaing...... -- -- -- -- -- --
Robert B. Lewis......... 47,500 440,950(2) -- -- -- --
James E. Lillie......... 54,255 605,798(2) -- -- -- --
</TABLE>
- ------------------------
(1) Mr. Burton exercised these options in April 1999.
(2) Pursuant to the Merger Agreement, the Board of Directors of World Color (or,
if appropriate, the committee administering the Stock Option Plans) adopted
such resolutions or took such other actions as required to effect the
following: adjust the terms of all outstanding employee or director stock
options to purchase common shares and any related stock appreciation rights
("Company Stock Options") granted under any stock option or stock purchase
plan, program or arrangement of World Color (the "Stock Plans"), to provide
that, subject to certain exceptions, at the consummation of the Offer, each
Company Stock Option outstanding immediately prior to the consummation of
the Offer be cancelled in exchange for (A) a cash payment from the surviving
corporation to be made promptly following the consummation of the Offer
(subject to any applicable withholding taxes) equal in value to (1) the
product of (x) the total number of shares of World Color 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 World Color common stock subject to such Company Stock Option,
divided by (2) $35.69, and (B) a number of shares of QPI common stock to be
issued promptly following the effective time of the Merger equal to (1) the
product of (x) the number of Option Shares, multiplied by (y) 0.6311,
multiplied by (z) the excess of $35.69 over the exercise price per share of
World Color common stock subject to such Company Stock Option, divided by
(2) $35.69. The calculation of the amounts described in (A) and (B) may also
be expressed with the following formulas:
(A) = (Options Shares) X ($22.00) X ($35.69-Exercise Price)/$35.69
(B) = (Options Shares) X (.6311) X ($35.69-Exercise Price)/$35.69
The Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of
World Color or any subsidiary terminated as of the effective time of the
Merger.
(3) As of December 31, 1999, all options had been settled in connection with the
Merger and none were outstanding.
COMPENSATION UNDER RETIREMENT PLANS
PENSION PLAN BENEFITS
The retirement plan of the Company in which the named 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
22
<PAGE>
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 Internal Revenue Code of 1986, as amended (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. The
following table sets forth the estimated combined annual retirement benefits
under the Cash Balance Plan and the Supplemental Executive Retirement Plan
(exclusive of Social Security payments) payable on a straight single life
annuity basis to each of Messrs. Reisch and Brofft and Ms. Nolte assuming
continued service until age 65 and current compensation levels remain unchanged.
PENSION TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL
BENEFITS PAYABLE
NAME UPON RETIREMENT
- ---- ----------------
<S> <C>
Marc L. Reisch.............................................. $568,336
Jerome V. Brofft............................................ 33,765
Heidi J. Nolte.............................................. 81,788
</TABLE>
In connection with their departure from the Company, none of Ms. Adams or
Messrs. Lillie or Lewis, participate in the Cash Balance Plan and the
Supplemental Executive Retirement Plan.
Mr. Salbaing does not participate in the Cash Balance Plan or the
Supplemental Executive Retirement Plan.
AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
The terms of employment for Mr. Reisch as the President and Chief Executive
Officer of Quebecor World North America, contemplate that he will be paid an
annual salary of $600,000 to be reviewed annually; he will participate in the
Quebecor Printing Inc. short-term incentive plan; he will be entitled to receive
stock option grants under the Quebecor Printing Inc. Executive Stock Option
Plan; and that he will receive all benefits to which other senior executives of
Quebecor Printing Inc. are entitled to receive. Mr. Reisch is also entitled to
receive severance benefits in case of termination of employment pursuant to his
employment arrangement with QPI and that certain Retention and Severance
Agreement entered into between Mr. Reisch and the Company in August 1999 (the
"Retention and Severance Agreement").
The Retention and Severance Agreement and condition of the special one-time
option grants by Quebecor Printing Inc. to Mr. Reisch include
non-competition/non-solicitation covenants restricting Mr. Reisch's ability to
own, manage, operate, join, control or participate in the ownership, management,
operation or control of any "competing business," with certain exceptions or
solicit customers or employees. Such restrictions are to be effective during
Mr. Reisch's employment and for a period of up to 18 months after termination of
his employment.
Each of Ms. Nolte and Ms. Hlavaty and Messrs. Bacon, Brofft, Carousso and
Hayden are party to Retention and Severance Agreements with the Company
providing for the payment of retention bonuses and in the case of a termination
of employment by the Company without cause or by the employee for good reason
(as such terms are defined in the respective agreements), the payment of
severance benefits
23
<PAGE>
including 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 respective employee becomes re-employed and
receives comparable benefits. Pursuant to their respective Retention and
Severance Agreements, each of Ms. Nolte and Ms. Hlavaty and each of
Messrs. Brofft, Carousso and Hayden are subject to
non-competition/non-solicitation covenants, which provide that for one year from
the earlier of August 20, 2000 or the date of termination of employment, the
respective employee shall not directly or indirectly, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of any "competing business," with certain exceptions, or solicit customers or
employees. Under these agreements, the employees receive a full gross-up for all
excise taxes and related costs in connection with any payments deemed "excess
parachute payments."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee for the Company during 1999 until the Change in
Control was comprised of Messrs. Gerald Armstrong and Scott Stuart, Dr. Mark
Griffin and Ms. Patrice Daniels. Until the acquisition by QPI, World Color paid
fees to Kohlberg Kravis Roberts & Co. L.P. ("KKR") of $750,000 per year for
management consulting and financial advisory services. Mr. Stuart, a former
director and 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. Alexander Navab, Jr., a former director of World Color, is
an Executive of KKR and a limited partner of KKR Associates.
CIBC, Inc., an affiliate of CIBC Oppenheimer Corp., was 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 former director and member of the Compensation Committee,
is a managing director of CIBC Oppenheimer Corp.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information regarding the beneficial
ownership of the Common Stock of Quebecor World as of March 1, 2000, including
beneficial ownership by (i) each stockholder of Quebecor World who owns more
than 5% of the outstanding shares of Quebecor World Common Stock, (ii) each
director of Quebecor World, (iii) the Chief Executive Officer of Quebecor World,
(iv) Quebecor World's four highest paid executive officers (exclusive of the
Chief Executive Officer) and (v) all directors and executive officers of
Quebecor World as a group. Except otherwise noted, the persons named in the
table below have sole voting and investment power with respect to all shares of
Quebecor World common stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON PERCENTAGE OF OUTSTANDING SHARES
NAME STOCK OWNED (1) OF THE COMMON STOCK
- ---- -------------------------- --------------------------------
<S> <C> <C>
Quebecor Printing (USA) Holdings Inc.
(2)...................................... 10 100%
Marc L. Reisch............................. 0 0%
Jerome V. Brofft........................... 0 0%
David R. Coates............................ 0 0%
Marcello A. De Giorgis..................... 0 0%
Heidi J. Nolte............................. 0 0%
Christian M. Paupe......................... 0 0%
Michel P. Salbaing......................... 0 0%
All directors and executive officers as a
group.................................... 0 0%
</TABLE>
- ------------------------
(1) For purposes of this table, "beneficial ownership" includes any shares that
a person has the right to acquire within 60 days of March 1, 2000. For
purposes of computing the percentage of outstanding
24
<PAGE>
shares of Quebecor World Common Stock held by each person or group of
persons named above on a given date, any security which this person(s) has
the right to acquire within 60 days after March 1, 2000 is deemed to be
outstanding for purposes of computing the percentage ownership of this
person, but is not deemed to be outstanding in computing the percentage
ownership of any other person.
(2) Quebecor Printing Inc. indirectly owns all of the issued and outstanding
shares of its subsidiary, Quebecor Printing (USA) Holdings Inc. The address
for Quebecor Printing (USA) Holdings Inc. is 300 Delaware Ave., Suite 900,
Wilmington, DE 19801.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Until the acquisition by QPI, World Color paid fees to KKR of $750,000 per
year for management consulting and financial advisory services. In August 1999,
World Color paid KKR fees of $17,997,000 for consulting services related to the
acquisition by QPI. We believe these fees were no less favorable than those
which could be obtained for comparable services from unaffiliated third parties.
Members of the limited liability company which is the general partner of KKR and
employees of KKR who also served as directors of World Color did not receive
additional compensation for service in such capacity, other than customary
directors' fees. Mr. Scott Stuart was a director of World Color until
August 1999 and is a member of the limited liability company which is the
general partner of KKR and a general partner of KKR Associates. Mr. Alexander
Navab, Jr. was a director of World Color until August 1999 and is an executive
of KKR and a limited partner of KKR Associates.
CIBC, Inc., an affiliate of CIBC Oppenheimer Corp., was a lender under World
Color's credit facility and CIBC Oppenheimer Corp. was a co-lead manager in
World Color's November 1998 issuance of $300.0 million of its 8 3/8% Senior
Subordinated Notes due 2008 and a co-manager in World Color's February 1999
issuance of $300.0 million of its 7 3/4% Senior Subordinated Notes due 2009.
Ms. Patrice Daniels was a director of World Color and is a managing director of
CIBC Oppenheimer Corp.
On November 5, 1997, World Color loaned $100,000 to each of Messrs. Lewis,
Lillie and Quinlan, each of whom were executive officers of World Color, to
enable each of such persons to purchase World Color's common stock in the open
market. Each such loan bore interest at the rate of 7.0% per annum in 1999. In
connection with the Change of Control of World Color, these loans were forgiven
in accordance with the applicable Change in Control agreements between World
Color and such individuals. On April 26, 1999, World Color loaned $100,000 to
each of Messrs. Lewis, Lillie, Quinlan, Carousso and Ms. Hlavaty. Each of
Messrs. Lewis, Lillie, Quinlan and Carousso were executive officers for purposes
of Section 16 of the Securities Exchange Act of 1934 at such time. These loans
were made to enable such persons to purchase World Color's common stock in the
open market. Each of such loans bore interest at the rate of 7.0% per annum in
1999. In connection with the Change in Control in August 1999 such loans were
repaid by these individuals and in accordance with the applicable requirements
of Section 16(b) of the Securities Exchange Act of 1934 the profit with respect
to such shares purchased was disgorged, as applicable.
In connection with World Color's common stock repurchase 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, World Color repurchased from
Messrs. Armstrong and Burton shares issued upon the exercise of certain stock
options. Specifically, World Color repurchased 31,603 shares and 180,782 shares
from Messrs. Armstrong and Burton, respectively, on April 6, 1999 at the fair
market value of $21.00 per share.
In 1999, certain wholly owned subsidiaries of QPI provided Company with
$511.5 million, which was borrowed on the Company's behalf from the
subsidiaries' external long-term credit facilities. The resulting indebtedness
has an interest rate of LIBOR plus 2% per annum, adjusted quarterly. The
interest rate was 8.07% at December 31, 1999. Payment is not required prior to
January 1, 2001. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
25
<PAGE>
As part of the Merger costs, the Company recognized a non-cash charge of
$67.5 million for the cancellation and settlement by Acquisition Inc. of all
vested and unvested options. Of this amount, $40.9 million was paid directly by
Acquisition Inc. to the option holders on behalf of the Company and
$26.6 million was paid in stock of QPI upon consummation of the Merger. In
addition, Acquisition Inc. contributed $51.3 million to the Company to pay
certain other Merger costs. These amounts will not be repaid and are, therefore,
included in stockholders' equity in the 1999 consolidated balance sheet.
At December 31, 1999, the Company had amounts payable to a wholly owned
subsidiary of QPI of approximately $5.1 million for the purchase of raw
materials. In addition, the Company sold land for $4.0 million to a wholly owned
subsidiary of QPI. The Company subsequently leased this property from the
subsidiary for a lease term through 2004.
The Company believes that any past or present 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.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
(i) Consolidated Financial Statements--See accompanying Index to
Consolidated Financial Statements and Financial Statement Schedule on
page 30
(ii) Financial Statement Schedule:
Schedule II, Valuation and Qualifying Accounts, as set forth on page S-1
of this report.
All other schedules have been omitted because they are inapplicable or
are not required or the information is included elsewhere in the
financial statements or notes thereto.
(iii) Exhibits:
26
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<C> <S>
3.1 Certificate of Merger of Printing Acquisition Inc. into
World Color Press, Inc.
3.2 By-Laws of Quebecor World (USA) Inc.
4.1 Indenture (the "Convert Indenture") between World Color
Press, Inc. and State Street Bank and Trust Company, as
trustee, relating to World Color's 6% Convertible Senior
Subordinated Notes due 2007 (the "Converts"), incorporated
by reference to Exhibit 4.1 to World Color's Quarterly
Report on Form 10-Q for the quarterly period ended September
28, 1997.
4.2 Specimen of Converts (included in the Convert Indenture,
incorporated by reference as Exhibit 4.1).
4.3 First Supplemental Indenture to the Convert Indenture, dated
as of August 10, 1999.
4.4 Second Supplemental Indenture to the Convert Indenture,
dated as of October 8, 1999.
4.5 Third Supplemental Indenture to the Convert Indenture, dated
as of November 23, 1999.
4.6 Indenture between World Color Press, Inc. and The Bank of
New York, as trustee, relating to World Color's 8 3/8%
Senior Subordinated Notes due 2008, incorporated by
reference to Exhibit 4.1 to World Color's Registration
Statement on Form S-4 (No. 333-74087) under the Securities
Act of 1933, as amended (the "World Color Debt S-4").
4.7 Specimen of World Color's 8 3/8% Senior Subordinated Notes
due 2008 (included in the Indenture incorporated by
reference as Exhibit 4.6 hereto).
4.8 Indenture between World Color Press, Inc. and The Bank of
New York, as trustee, relating to World Color's 7 3/4%
Senior Subordinated Notes due 2009, incorporated by
reference to Exhibit 4.3 to the World Color Debt S-4.
4.9 Specimen of World Color's 7 3/4% Senior Subordinated Notes
due 2009 (included in the Indenture incorporated by
reference as Exhibit 4.8 hereto).
10.1 Receivables Purchase Agreement dated as of September 24,
1999 among the Sellers Parties thereto and Quebecor World
Finance Inc.
10.2 Letter Amendment dated December 22, 1999 to Receivables
Purchase Agreement among Quebecor World (USA) Inc., Quebecor
World Finance Inc., and the Sellers party to the Receivables
Purchase Agreement dated as of September 24, 1999.
10.3 Amended and Restated Receivables Sale Agreement dated as of
December 22, 1999 among Quebecor World Finance Inc., as
Seller, Quebecor Printing (USA) Holdings Inc., as the
Initial Collection Agent, ABN AMRO Bank N.V., as the Agent
and a Purchaser Agent, Amsterdam Funding Corporation, as a
Conduit Purchaser, the other conduit purchasers from time to
time party thereto, the other purchase agents from time to
time party thereto and related bank purchasers from time to
time party thereto.
10.4 Acknowledgement of Termination of Purchased Interest and
Direction for Payment for Reduction in Purchased Interest
dated December 22, 1999 between World Color Finance Inc. and
ABN AMRO Bank N.V.
10.5 Retention and Severance Agreement, dated as of August 16,
1999, between World Color Press, Inc. and Jennifer L. Adams,
incorporated by reference to Exhibit 10.1 to the World Color
Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1999.
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------
<C> <S>
10.6 Retention and Severance Agreement, dated as of August 16,
1999, between World Color Press, Inc. and Marc L. Reisch,
incorporated by reference to Exhibit 10.2 to the World Color
Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1999.
10.7 Settlement Agreement, dated as of August 16, 1999, between
World Color Press, Inc. and Robert G. Burton, incorporated
by reference to Exhibit 10.3 to the World Color Quarterly
Report on Form 10-Q for the quarterly period ended September
26, 1999.
10.8 Form of Retention and Severance Agreement, dated as of
August 16, 1999, by and between World Color Press, Inc. and
each of Paul B. Carousso and Marie D. Hlavaty.
10.9 Form of Retention and Severance Agreement, dated as of
August 16, 1999, by and between World Color Press, Inc. and
each of Jerome V. Brofft, Heidi J. Nolte and Kevin P.
Hayden.
10.10 Form of Retention and Severance Agreement, dated as of
August 16, 1999, between World Color Press, Inc. and Kenneth
Bacon.
10.11 Third Amendment to the World Color Press, Inc. Supplemental
Executive Retirement Plan, incorporated by reference to
Exhibit 10.18 to World Color's Annual Report on Form 10-K
for the fiscal year ended December 25, 1994.
10.12 Agreement Plan of Merger dated as of July 12, 1999 by and
among Quebecor Printing Inc., Printing Acquisition Inc. and
World Color Press, Inc., incorporated by reference to
Exhibit 1 to the Form 14D-9.
10.13 Promissory Note dated December 1, 1999, made by and among
Quebecor World (USA) Inc., Quebecor Printing (USA) Holdings
Inc. and Bank of America, N.A.
10.14 Promissory Note dated August 20, 1999 made by and between
World Color Press, Inc. and Quebecor Printing (USA) Holdings
Inc.
10.15 Promissory Note dated August 20, 1999 made by and between
World Color Press, Inc. and Quebecor Printing Delaware LLC.
21.0 Subsidiaries of registrant.
23.1 Independent Auditors' Consent.
27.1 Financial Data Schedule for the year ended December 31, 1999
(filed in electronic format only).
</TABLE>
- ------------------------
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated October 8, 1999,
with respect to the merger with an indirect wholly owned subsidiary of Quebecor
Printing Inc. The items reported in such Current Report were Item 2 (Acquisition
or Disposition of Assets) and Item 7 (Financial Statements, Pro Forma Financial
Information and Exhibits).
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C> <C>
QUEBECOR WORLD (USA) INC.
(Registrant)
Date: March 30, 2000 By: /s/ MICHEL P. SALBAING
-----------------------------------------
Michel P. Salbaing
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated on March 30, 2000.
<TABLE>
<CAPTION>
SIGNATURES TITLES
---------- ------
<C> <S>
/s/ MARC L. REISCH Chairman of the Board of Directors, President
------------------------------------------- and Chief Executive Officer
Marc L. Reisch
/s/ MICHEL P. SALBAING Senior Vice President
------------------------------------------- (Principal Financial Officer) and Director
Michel P. Salbaing
/s/ PAUL B. CAROUSSO Vice President, Controller
------------------------------------------- (Principal Accounting Officer)
Paul B. Carousso
Director
-------------------------------------------
David R. Coates
Director
-------------------------------------------
Marcello A. De Giorgis
/s/ CHRISTIAN M. PAUPE Director
-------------------------------------------
Christian M. Paupe
</TABLE>
29
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
FINANCIAL STATEMENTS
Independent Auditors' Report.......................... F-1
Balance Sheets as of December 31, 1999 and December
27, 1998............................................ F-2
Statements of Operations for the Years ended December
31, 1999, December 27, 1998 and December 28, 1997... F-3
Statements of Stockholders' Equity for the Years ended
December 31, 1999, December 27, 1998 and December
28, 1997............................................ F-4
Statements of Cash Flows for the Years ended December
31, 1999, December 27, 1998 and December 28, 1997... F-5
Notes to Financial Statements......................... F-6 - F-22
FINANCIAL STATEMENT SCHEDULE
Schedule II--Valuation and Qualifying Accounts........ S-1
</TABLE>
All other schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission are omitted because they
are not required under the related instructions or are not applicable or the
required information is shown in the financial statements or notes thereto.
30
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Quebecor World (USA) Inc.:
We have audited the accompanying consolidated balance sheets of Quebecor
World (USA) Inc. and subsidiaries as of December 31, 1999 and December 27, 1998,
and related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years then ended. Our audits also included the
financial statement schedule listed in the Index at Item 14. These consolidated
financial statements and financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Quebecor World (USA) Inc. and
subsidiaries at December 31, 1999 and December 27, 1998, and the results of
their operations and their cash flows for each of the years then ended in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
As discussed in Note 2 to the consolidated financial statements, in 1999
Quebecor World (USA) Inc. changed its method of accounting for deferred start-up
costs to conform with Statement of Position 98-5.
DELOITTE & TOUCHE LLP
New York, New York
January 24, 2000
F-1
<PAGE>
QUEBECOR WORLD (USA) INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND DECEMBER 27, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 47,383 $ 199,932
Accounts receivable--net of allowances for doubtful
accounts of $13,844 and $10,638, respectively........... 270,399 229,209
Inventories............................................... 230,716 276,111
Deferred income taxes..................................... 47,990 16,986
Other..................................................... 40,226 63,729
---------- ----------
Total current assets.................................... 636,714 785,967
Property, plant and equipment--net........................ 877,998 885,999
Goodwill--net............................................. 793,011 647,085
Other..................................................... 68,398 114,835
---------- ----------
TOTAL ASSETS................................................ $2,376,121 $2,433,886
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 194,212 $ 171,683
Accrued expenses.......................................... 137,964 149,525
Payables to related parties............................... 7,380 --
Current maturities of long-term debt...................... 6,090 225,331
---------- ----------
Total current liabilities............................... 345,646 546,539
Long-term debt............................................ 1,285,106 1,030,589
Deferred income taxes..................................... 62,687 94,793
Other long-term liabilities............................... 133,357 93,318
---------- ----------
Total liabilities....................................... 1,826,796 1,765,239
---------- ----------
Stockholders' equity:
Common stock, $1.00 par value--authorized, 3,000 shares in
1999; shares outstanding, 10 in 1999.................... -- --
Common stock, $.01 par value--authorized, 100,000,000
shares in 1998; shares outstanding, 38,639,642 in
1998.................................................... -- 386
Additional paid-in capital................................ 701,893 721,913
Capital contribution from Printing Acquisition Inc........ 118,773 --
Accumulated deficit....................................... (271,341) (49,310)
Treasury stock, at cost: 20,246 shares.................... -- (613)
Unamortized restricted stock compensation................. -- (3,729)
---------- ----------
Total stockholders' equity.............................. 549,325 668,647
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $2,376,121 $2,433,886
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
QUEBECOR WORLD (USA) INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net sales................................................ $2,552,895 $2,356,885 $1,981,225
Cost of sales............................................ 2,223,424 1,927,790 1,613,938
---------- ---------- ----------
Gross profit............................................. 329,471 429,095 367,287
Selling, general and administrative expenses............. 406,730 214,862 188,688
Restructuring and other special charges.................. 74,807 -- --
---------- ---------- ----------
Operating income (loss).................................. (152,066) 214,233 178,599
Interest expense and securitization fees................. 103,866 88,589 80,039
---------- ---------- ----------
Income (loss) before income taxes, extraordinary items
and cumulative effect of change in accounting
principle.............................................. (255,932) 125,644 98,560
Income tax provision (benefit)........................... (56,406) 52,054 41,341
---------- ---------- ----------
Income (loss) before extraordinary items and cumulative
effect of change in accounting principle............... (199,526) 73,590 57,219
Extraordinary items, net of tax.......................... (11,992) -- --
Cumulative effect of change in accounting principle, net
of tax................................................. (10,513) -- --
---------- ---------- ----------
Net income (loss)........................................ $ (222,031) $ 73,590 $ 57,219
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
QUEBECOR WORLD (USA) INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
UNAMORTIZED
ADDITIONAL RESTRICTED
COMMON PAID-IN CAPITAL ACCUMULATED TREASURY STOCK
STOCK CAPITAL CONTRIBUTION DEFICIT STOCK COMPENSATION
-------- ---------- ------------ ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE
DECEMBER 29, 1996........................ $337 $583,721 $ -- $(169,126) $ -- $ --
Net income............................. -- -- -- 57,219 -- --
Common stock issued.................... 47 127,571 -- -- -- --
---- -------- -------- --------- ------- ------
BALANCE
DECEMBER 28, 1997........................ 384 711,292 -- (111,907) -- --
---- -------- -------- --------- ------- ------
Net income............................. -- -- -- 73,590 -- --
Common stock issued.................... 1 6,544 -- (10,993) 14,371 --
Common stock repurchased............... -- -- -- -- (14,984) --
Restricted stock issued................ 1 4,077 -- -- -- (4,078)
Amortization of restricted stock....... -- -- -- -- -- 349
---- -------- -------- --------- ------- ------
BALANCE
DECEMBER 27, 1998........................ 386 721,913 -- (49,310) (613) (3,729)
---- -------- -------- --------- ------- ------
Net income............................. -- -- -- (222,031) -- --
Common stock issued.................... 5 6,469 -- -- -- --
Common stock repurchased............... -- -- -- -- (30,558) --
Restricted stock issued................ 2 4,289 -- -- -- (4,291)
Amortization of restricted stock....... -- -- -- -- -- 8,020
Capital contribution from Printing
Acquisition Inc...................... -- -- 118,773 -- -- --
Merger with Printing Acquisition
Inc.................................. (393) (30,778) -- -- 31,171 --
---- -------- -------- --------- ------- ------
BALANCE
DECEMBER 31, 1999........................ $ -- $701,893 $118,773 $(271,341) $ -- $ --
==== ======== ======== ========= ======= ======
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
QUEBECOR WORLD (USA) INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
---------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)......................................... $ (222,031) $ 73,590 $ 57,219
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................. 155,766 140,725 131,710
Settlement of stock options............................... 67,474 -- --
Amortization of restricted stock.......................... 8,020 349 --
Restructuring and other special charges................... 74,807 -- --
Writedown of fixed assets................................. 40,011 -- --
Extraordinary items, net of tax........................... 11,992 -- --
Cumulative effect of change in accounting principle, net
of tax.................................................. 10,513 -- --
Deferred income tax (benefit) provision................... (48,036) 17,897 14,272
Changes in operating assets and liabilities:
Proceeds from sale of accounts receivable............... -- -- 200,000
Other changes in accounts receivable--net............... (14,096) (16,031) (13,812)
Inventories............................................. 54,920 (58,029) (53,936)
Accounts payable, accrued expenses and payables to
related parties....................................... (43,148) (26,700) (43,577)
Other assets and liabilities--net....................... 21,974 (119,916) (52,571)
---------- -------- --------
Net cash provided by operating activities............. 118,166 11,885 239,305
---------- -------- --------
INVESTING ACTIVITIES:
Additions to property, plant and equipment................ (140,005) (184,004) (93,145)
Proceeds from sale and leaseback of equipment............. -- 88,471 --
Proceeds from sale of property, plant and equipment....... 14,751 9,533 2,006
Acquisitions of businesses, net of cash acquired.......... (120,693) (190,095) (172,539)
---------- -------- --------
Net cash used in investing activities................. (245,947) (276,095) (263,678)
---------- -------- --------
FINANCING ACTIVITIES:
Proceeds from borrowings.................................. 992,900 451,553 285,775
Payments on long-term debt................................ (1,038,043) (20,026) (384,526)
Capital contribution from Printing Acquisition Inc........ 51,299 -- --
Premium paid on debt extinguishment....................... (6,840) -- --
Proceeds from issuance of common stock.................... 6,474 6,545 127,618
Repurchases of common stock--net.......................... (30,558) (11,606) --
---------- -------- --------
Net cash (used in) provided by financing activities... (24,768) 426,466 28,867
---------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (152,549) 162,256 4,494
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 199,932 37,676 33,182
---------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 47,383 $199,932 $ 37,676
========== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. ORGANIZATION
Quebecor World (USA) Inc., formerly known as World Color Press, Inc., (along
with its subsidiaries the "Company" or "World") specializes in the production
and distribution of data for customers in the commercial, magazine, catalog,
direct mail, book and directory markets.
On July 12, 1999, the Company entered into an Agreement and Plan of Merger
with Quebecor Printing Inc. ("QPI") and its indirect wholly owned subsidiary,
Printing Acquisition Inc. ("Acquisition Inc."), which provided for the
acquisition of the Company (the "Merger"). On July 16, 1999, QPI, through
Acquisition Inc., commenced a tender offer to acquire up to 23,500,000 shares of
the Company's common stock at a price of $35.69 per share. On August 20, 1999,
QPI acquired, through Acquisition Inc., 19,179,495, or approximately 50.4%, of
the Company's outstanding shares.
On October 8, 1999, the Company and Acquisition Inc. completed the Merger
following receipt of approval from the Company's stockholders. As a result, the
Company became an indirect wholly owned subsidiary of QPI and at that time was
renamed Quebecor World (USA) Inc. The remaining outstanding shares of World's
common stock (other than shares purchased by QPI in the tender offer) were
converted into the right to receive 1.2685 subordinate voting shares of QPI and
$8.18 in cash per share. In addition, each 6% Convertible Senior Subordinated
Note due 2007, outstanding at the Merger, became convertible into the number of
QPI subordinate voting shares and cash that would have been received had the
convertible note been converted immediately prior to October 8, 1999.
In connection with the Merger, all of the Company's then outstanding common
stock, treasury stock and additional paid-in capital was recapitalized into 10
common shares, par value $1.00 per share. All shares are held by a wholly owned
subsidiary of QPI. Under the Company's new capital structure, 3,000 common
shares, par value $1.00, were authorized. No preferred shares were authorized.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of Quebecor World (USA) Inc. and its subsidiaries. Intercompany
transactions have been eliminated.
CASH AND CASH EQUIVALENTS--Cash equivalents consist of highly liquid
instruments with original maturities of three months or less.
ACCOUNTING PERIOD--In 1999, the Company changed its fiscal year end from the
last Sunday in December to December 31, 1999 to conform to QPI's fiscal year
end. This change resulted in a 369-day period rather than a 52-week period under
the previous policy. The change in fiscal year did not have a material effect on
the Company's results of operations. The Company's fiscal year in 1998 and 1997
was the 52-week period ending on the last Sunday in December.
CONSOLIDATED STATEMENTS OF CASH FLOWS--During 1999, 1998 and 1997, the
Company borrowed and repaid $1,860,706, $599,100 and $563,200, respectively,
pursuant to the terms of credit agreements. See also Note 9. Such amounts have
been reflected as net in the consolidated statements of cash flows because of
the short-term nature of the borrowings.
F-6
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash paid for interest by the Company during the years 1999, 1998 and 1997
was $101,141, $82,392 and $75,738, respectively, net of capitalized interest of
$1,919, $2,374 and $941, respectively. Cash paid for taxes during the years
1999, 1998 and 1997 was $19,162, $35,145 and $28,266, respectively.
REVENUE RECOGNITION--In accordance with trade practice, sales are recognized
by the Company on the basis of production and service activity at the pro rata
billing value of work completed.
INVENTORIES--The Company's raw materials of paper and ink and the related
raw material component of work-in-process are valued at the lower of cost, as
determined using the first-in, first-out method, or market. The remainder of the
work-in-process is valued at the pro rata billing value of work completed.
DEPRECIATION AND AMORTIZATION--Property, plant and equipment is stated at
cost. Depreciation is recorded principally on the straight-line method over the
estimated useful lives of the assets. Leasehold improvements are amortized on
the straight-line method over the lesser of the useful life of the improvement
or the lease term. Estimated useful lives used in computing depreciation and
amortization expense are 3 to 15 years for machinery and equipment and 15 to
40 years for buildings and leasehold improvements.
GOODWILL--Goodwill is amortized using the straight-line method primarily
over 35 years. Amortization of goodwill for the years 1999, 1998 and 1997 was
$24,093, $20,008 and $16,424, respectively, and is included in selling, general
and administrative expenses. Accumulated amortization of goodwill was $95,329
and $71,236 as of year end 1999 and 1998, respectively.
RECLASSIFICATIONS--Certain reclassifications have been made to prior years'
amounts to conform with the current year presentation.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INTEREST RATE SWAP AGREEMENTS--The Company enters into interest rate swap
agreements from time to time to reduce exposures to market risks resulting from
fluctuations in interest rates. The Company does not hold or issue any
derivative financial instruments for trading purposes. Gains and losses on
interest rate agreements are recognized through income and offset the
transactions which they are intended to hedge.
RECENT ACCOUNTING PRONOUNCEMENTS--In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income," which establishes standards for
reporting and display of comprehensive income and its components in the
financial statements. The Company adopted this statement in the first quarter of
fiscal year 1998. The adoption of SFAS No. 130 did not have a material effect on
the Company's consolidated financial statements.
In June 1997, the Financial Accounting Standards Board also issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 establishes standards for
F-7
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
reporting information on operating segments in the financial statements. The
Company adopted this statement for the fiscal year ended 1998. In accordance
with this standard, the Company has determined that, while it offers services to
a diverse group of customers in different industries, the Company itself
operates in one business segment, the management and distribution of print and
digital information. In accordance with the management approach prescribed in
the statement, there are no discernable operating segments that management
evaluates separately on a regular basis. In addition, no customer accounted for
more than 5% of the Company's net sales in 1999.
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use." This SOP requires
certain costs related to computer software developed or obtained for internal
use to be expensed or capitalized depending on the stage of development and the
nature of the costs. The Company adopted this SOP in the first quarter of fiscal
year 1999. The adoption of SOP 98-1 did not have material effect on the
Company's consolidated financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities," which requires costs of start-up activities and
organization costs to be expensed as incurred. The Company adopted this SOP in
the first quarter of fiscal year 1999, which resulted in a charge of $10,513,
net of taxes of $7,305, as the cumulative effect of a change in accounting
principle for the non-recurring write-off of deferred start-up costs. The
adoption of this SOP did not have a material effect on operating income on a
continuing basis .
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
requires companies to recognize all derivatives as either assets or liabilities
and measure those instruments at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge accounting. In
June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133," to delay the effective date of SFAS
No. 133 to fiscal years beginning after June 15, 2000. Therefore, the Company
plans to adopt SFAS No. 133 in the first quarter of fiscal year 2001. The
Company does not expect the adoption of SFAS No. 133 to have a material impact
on its consolidated financial statements.
3. BUSINESS ACQUISITIONS
In fiscal year 1999, the Company acquired five businesses serving customers
in the commercial, retail and directory markets for an aggregate purchase price
of approximately $203,000, including assumed indebtedness. In 1998, the Company
acquired four businesses serving customers in the commercial, direct mail and
book markets for an aggregate purchase price of approximately $200,000. In 1997,
the Company acquired two businesses serving the book and short-run publication
markets for an aggregate purchase price of approximately $194,000.
These acquisitions were accounted for as purchases and the consolidated
financial statements include the results of their operations from the respective
acquisition dates. These acquisitions have not had a material effect on the
Company's results of operations.
F-8
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
4. MERGER RELATED COSTS
The Company incurred $169,301 of non-recurring Merger related costs in 1999.
These costs included: the cancellation and settlement by Acquisition Inc. of all
vested and unvested options, bonuses, severance, legal and attorney fees, and
other fees specifically related to the Merger. In addition, the Company's
outstanding restricted stock became fully vested in connection with the Merger.
The Merger related costs are included in selling, general and administrative
expenses in the Company's 1999 consolidated statement of operations. The
majority of these costs were paid in 1999.
In connection with the Merger, the Company has developed an integration
strategy for the combined entities that requires the redeployment and/or
disposal of assets and the shutdown or relocation of certain of the Company's
plant locations and sales offices. This revised strategic initiative resulted in
a charge to the Company's 1999 cost of sales and selling, general and
administrative expenses of $134,668 and $9,876, respectively. The charge was
primarily composed of $40,011 for the writedown of fixed assets to reflect the
fair market value, $32,303 for severance and related costs to shut down certain
plant locations and sales offices, $19,672 for the disposal and other related
costs of inventories and $34,100 to reflect other operational changes in the
business as a result of the Merger.
At December 31, 1999, all such assets have been adjusted to reflect the
appropriate value and the Company expects to proceed with the closure of the
facilities and related employee terminations in 2000. The expected cash
expenditures for the above charges are approximately $14,000, the majority of
which is severance related and will be paid in 2000.
As a result of the Merger integration plan, the Company anticipates
incurring additional charges, primarily in 2000, of approximately $26,000.
5. INVENTORIES
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Inventories are summarized as follows:
Work-in-process....................................... $135,543 $139,259
Raw materials......................................... 95,173 136,852
-------- --------
Total............................................... $230,716 $276,111
======== ========
</TABLE>
F-9
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
6. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Property, plant and equipment is as follows:
Land................................................. $ 17,922 $ 17,041
Buildings and leasehold improvements................. 310,227 303,051
Machinery and equipment.............................. 1,379,859 1,291,658
Leased property under capitalized leases............. -- 1,924
--------- ---------
1,708,008 1,613,674
Accumulated depreciation and amortization............ 830,010 727,675
--------- ---------
Total.............................................. $ 877,998 $ 885,999
========= =========
</TABLE>
Depreciation expense related to property, plant and equipment was $131,206,
$120,250 and $114,819 for the years 1999, 1998 and 1997, respectively.
7. ACCRUED EXPENSES
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Accrued expenses are as follows:
Compensation.......................................... $ 42,155 $ 55,727
Employee health and welfare benefits.................. 11,093 9,858
Deferred revenue...................................... 12,918 12,408
Interest.............................................. 16,080 14,794
Other................................................. 55,718 56,738
-------- --------
Total............................................... $137,964 $149,525
======== ========
</TABLE>
8. RESTRUCTURING AND OTHER SPECIAL CHARGES
In 1999, the Company recorded restructuring and other special charges of
$74,807, or $44,297 net of tax, to eliminate redundant and less efficient
capacity resulting from its ongoing acquisition strategy. The restructuring and
other special charges included the costs to exit and consolidate certain
facilities and sales offices, write down impaired assets and eliminate certain
administrative positions. These charges, consisting primarily of $26,615 for the
writedown of equipment and $44,566 to reserve for certain lease costs, resulted
from changes in the Company's strategic growth objectives and were primarily
determined based on independent appraisals.
The Company has closed the affected facilities and sales offices and
terminated related employees. Fixed assets have been adjusted to reflect their
appropriate values. In 1999, the Company paid approximately $5,000 related to
these charges. The remaining costs, primarily lease payments, will extend
through 2008. The Company does not expect to incur additional expenses related
to this restructuring initiative.
F-10
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
9. LONG-TERM DEBT
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Long-term debt is summarized as follows:
7.75% Senior Subordinated Notes.................... $ 300,000 $ --
8.375% Senior Subordinated Notes................... 300,000 300,000
Convertible Senior Subordinated Notes.............. 144,179 151,800
9.125% Senior Subordinated Notes................... -- 150,000
Borrowings under credit agreements................. -- 599,800
Notes borrowed on the Company's behalf............. 511,500 --
Notes payable, average of 9.12% due 2004--2005..... 26,160 33,008
Capitalized lease obligations...................... -- 527
Other debt, average of 7.21% due 2001--2008........ 9,357 20,785
---------- ----------
Total............................................ 1,291,196 1,255,920
Less current maturities.............................. 6,090 225,331
---------- ----------
Noncurrent portion................................... $1,285,106 $1,030,589
========== ==========
</TABLE>
7.75% SENIOR SUBORDINATED NOTES--On February 22, 1999, the Company issued
Senior Subordinated Notes in the aggregate principal amount of $300,000,
receiving net proceeds of approximately $294,000. Interest on the notes is
payable semi-annually at the annual rate of 7.75%. The notes do not have
required principal payments prior to maturity on February 15, 2009. The net
proceeds from the notes issuance were utilized to repay certain indebtedness
under the Credit Agreement, as defined below.
The fair value of the notes was approximately $287,000 at December 31, 1999
based on quoted market prices.
8.375% SENIOR SUBORDINATED NOTES--On November 20, 1998, the Company issued
Senior Subordinated Notes in the aggregate principal amount of $300,000,
receiving net proceeds of approximately $291,700. Interest on the Senior
Subordinated Notes is payable semi-annually at the annual rate of 8.375%. The
notes do not have required principal payments prior to maturity on November 15,
2008. The Company utilized the net proceeds from the issuance of these notes to
repay revolving loan commitments incurred under the Credit Agreement and to
redeem all of its outstanding 9.125% Senior Subordinated Notes.
The fair value of the notes was approximately $299,000 and $300,000 at
December 31, 1999 and December 27, 1998, respectively, based on quoted market
prices.
CONVERTIBLE SENIOR SUBORDINATED NOTES--On October 8, 1997, the Company
issued $151,800 aggregate principal amount of Convertible Senior Subordinated
Notes (the "Convertible Notes"), receiving net proceeds of approximately
$147,900. Interest on the Convertible Notes is payable semi-annually at the
annual rate of 6.00%. The Convertible Notes have no required principal payments
prior to maturity on October 1, 2007. The Convertible Notes are convertible at
the option of the holder at any time and at the option of the Company, at
specified prices, subsequent to October 4, 2000. As discussed in Note 1, on
October 8, 1999, each 6% Convertible Note due 2007 became convertible into the
number of QPI subordinate voting shares and cash that would have been received
had the Convertible Note been converted immediately prior to October 8, 1999.
F-11
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
9. LONG-TERM DEBT (CONTINUED)
The face value of the Convertible Notes was reduced to approximately
$144,000 during 1999, due to the redemption of the notes by the holders. The
Company does not intend to exercise its option to redeem the Convertible Notes
in 2000, therefore the Convertible Notes are classified as long-term in the
consolidated balance sheet.
The fair value of the notes was approximately $146,000 and $149,000 at
December 31, 1999 and December 27, 1998, respectively, based on quoted market
prices.
9.125% SENIOR SUBORDINATED NOTES--On May 10, 1993, the Company issued Senior
Subordinated Notes in the aggregate principal amount of $150,000. Interest on
the Senior Subordinated Notes was payable semi-annually at the annual rate of
9.125%. The notes did not have required principal payments prior to maturity on
March 15, 2003.
On December 28, 1998, the Company used proceeds from its November 1998 debt
issuance to redeem all of its outstanding 9.125% Senior Subordinated Notes due
2003 in an aggregate principal amount of $150,000. The notes were redeemed for
approximately $160,800, including the redemption premium of $6,840 and accrued
interest. This early extinguishment of debt generated an extraordinary charge of
$5,946, net of taxes of $4,132, for the redemption premium and write-off of
deferred financing costs. The 9.125% Senior Subordinated Notes were classified
as current maturities of long-term debt in the December 27, 1998 consolidated
balance sheet.
BORROWINGS UNDER CREDIT AGREEMENTS--On February 22, 1999 concurrent with the
7.75% Senior Subordinated Notes issuance, the Second Amended and Restated Credit
Agreement dated as of June 6, 1996, as amended (the "Credit Agreement"), was
amended resulting in, among other modifications, a $95,000 permanent reduction
in borrowings and commitments under the Credit Agreement. As a result, aggregate
total commitments decreased from $920,000 to $825,000. The amendment and related
permanent reduction in total borrowings and commitments resulted in a
substantial modification of the terms under the Credit Agreement. Accordingly,
the Company recognized an extraordinary charge for the early extinguishment of
debt of $6,046, net of taxes of $4,201, for the write-off of deferred financing
costs.
Subsequent to the Merger, the Company repaid all of its outstanding debt
incurred under the Credit Agreement. At December 31, 1999, there were no
available commitments under the Credit Agreement.
On August 20, 1999, the Company entered into a credit agreement with a third
party lender with a maximum total commitment of $100,000. Interest is payable at
a variable floating rate based on LIBOR or prime rate. At December 31, 1999, the
Company did not owe any amounts under this agreement.
NOTES BORROWED ON THE COMPANY'S BEHALF--In 1999, certain wholly owned
subsidiaries of QPI provided the Company with $511,500, which was borrowed on
the Company's behalf from subsidiaries' external long-term credit facilities.
The Company used these funds to pay certain Merger expenses and repay $491,600
in outstanding debt incurred under the Credit Agreement. The borrowings bear
interest at rates based on LIBOR plus 2% per annum, adjusted quarterly. Interest
on the borrowings ranged from 7.23% to 8.07% in 1999. Payment is not required
prior to January 1, 2001. In 1999, the Company incurred $14,374 of interest
expense, of which $2,305 was included in payables to related parties on the
consolidated balance sheet at December 31, 1999.
F-12
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
9. LONG-TERM DEBT (CONTINUED)
The fair value of these notes was approximately $511,600 at December 31,
1999, based upon the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
The fair value of the Company's remaining debt approximated its carrying
value, based upon the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
Aggregate annual maturities of long-term debt subsequent to December 31,
1999 are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ----------
<S> <C>
2000........................................................ $ 6,090
2001........................................................ 518,106
2002........................................................ 7,125
2003........................................................ 7,055
2004........................................................ 6,377
2005 and thereafter......................................... 746,443
----------
Total................................................... $1,291,196
==========
</TABLE>
10. ASSET SECURITIZATION
On June 30, 1997, the Company entered into an agreement to sell, on a
revolving basis for a period of up to five years, certain of its accounts
receivable to a wholly-owned subsidiary, which entered into an agreement to
transfer, on a revolving basis, an undivided percentage ownership interest in a
designated pool of accounts receivable to a maximum of $204,000. Subsequent to
the Merger, this asset securitization program was cancelled. The Company entered
into a new agreement which was aligned with QPI's existing program and has
substantially the same terms and conditions as World's previous agreement. At
December 31, 1999 and December 27, 1998, accounts receivable was reduced by
$200,000 for amounts sold. Fees arising from the securitization transaction of
$11,456, $11,888 and $5,133 are included in interest expense and securitization
fees in the consolidated statements of operations for the years ended
December 31, 1999, December 27, 1998 and December 28, 1997, respectively. These
fees vary based on commercial paper rates plus a margin. The Company maintains
an allowance for doubtful accounts based on the expected collectibility of all
accounts receivable, including receivables sold.
11. LEASES
OPERATING LEASES--The Company leases certain equipment, warehouse facilities
and office space under noncancellable operating leases which expire over the
next 11 years. Most of these operating leases provide the Company with the
option, after the initial lease term, either to purchase the equipment or renew
its lease based upon the fair value of the property at the option date.
In 2000, the Company entered into an agreement to lease real property from a
wholly owned subsidiary of QPI. The lease, which expires in December 2004, has
been classified as an operating lease. The lease payments of $360 per year have
been included in the minimum rental payments table.
F-13
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
11. LEASES (CONTINUED)
In 1998, the Company entered into interest rate swap agreements to exchange
floating rate for fixed interest payments. The agreements effectively converted
a notional principal amount of $75,000 variable rate, quarterly operating lease
payments into fixed. As allowable under the agreements, the respective
counterparties cancelled the agreements in September 1999. These agreements did
not have a material impact on the consolidated financial statements for the
periods presented.
SALE AND LEASEBACK OF EQUIPMENT--In 1998, the Company entered into
agreements for the sale and leaseback of certain printing equipment for which it
received approximately $88,500 of proceeds. The lease, which expires in
July 2010, has been classified as an operating lease. The proceeds were utilized
to repay revolving loan commitments incurred under the Credit Agreement.
Future minimum rental payments required under noncancellable leases at
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
YEAR
- ----
<S> <C>
2000........................................................ $ 51,989
2001........................................................ 46,687
2002........................................................ 41,031
2003........................................................ 33,732
2004........................................................ 25,249
2005 and thereafter......................................... 94,102
--------
Total minimum lease payments................................ $292,790
========
</TABLE>
Rental expense for operating leases was $57,154, $49,697 and $44,703 for the
years 1999, 1998 and 1997, respectively. Assets recorded under capital leases
amounted to $1,567, net of accumulated amortization of $357, at the end of 1998.
12. INCOME TAXES
The provision (benefit) for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal....................................... $ 6,318 $27,429 $21,178
State......................................... 950 6,728 5,891
-------- ------- -------
7,268 34,157 27,069
-------- ------- -------
Deferred:
Federal....................................... (60,776) 17,450 14,525
State......................................... (2,898) 447 (253)
-------- ------- -------
(63,674) 17,897 14,272
-------- ------- -------
Total........................................... $(56,406) $52,054 $41,341
======== ======= =======
</TABLE>
F-14
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
12. INCOME TAXES (CONTINUED)
The tax effects of significant items comprising the Company's net deferred
tax liability as of December 31, 1999 and December 27, 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Operating loss carryforwards........................ $ 4,125 $ 6,422
Tax credit carryforwards............................ 37,687 25,871
Employee health and welfare benefits................ 9,748 10,917
Postretirement benefits other than pensions......... 19,948 16,213
Pension benefits accrual............................ 6,853 4,533
Vacation accrual.................................... 6,654 9,232
Restructuring and Merger accrual.................... 24,076 --
Other differences................................... 21,029 12,603
--------- ---------
Gross deferred tax assets......................... 130,120 85,791
--------- ---------
Deferred tax liabilities:
Differences between book and tax bases of
property.......................................... (126,336) (125,184)
Other differences................................... (15,474) (33,319)
--------- ---------
Gross deferred tax liabilities.................... (141,810) (158,503)
--------- ---------
Deferred tax asset valuation allowance................ (3,007) (5,095)
--------- ---------
Net deferred tax liability............................ (14,697) (77,807)
Less current deferred tax asset....................... 47,990 16,986
--------- ---------
Noncurrent deferred tax liability..................... $ (62,687) $ (94,793)
========= =========
</TABLE>
The 1999 and 1998 amounts above include a valuation allowance of $3,007 and
$5,095, respectively, relating to a capital loss carryforward that potentially
may not be realized for tax purposes and for the limitations of certain state
net operating loss carryforwards.
The following table reconciles the difference between the U.S. federal
statutory tax rates and the rates used by the Company in the determination of
net income:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Income tax provision (benefit), at 35%.......... $(89,576) $43,975 $34,496
State and local income taxes, net of federal
income tax benefit............................ (1,266) 4,664 3,665
Release of deferred tax asset valuation
allowance..................................... -- (1,745) --
Costs related to acquisition.................... 29,077 -- --
Other, primarily goodwill amortization.......... 5,359 5,160 3,180
-------- ------- -------
Total........................................... $(56,406) $52,054 $41,341
======== ======= =======
</TABLE>
F-15
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
12. INCOME TAXES (CONTINUED)
At December 31, 1999, the Company had net operating loss carryforwards from
business acquisitions for federal income tax purposes of $1,762 available to
reduce future taxable income, expiring from 2007 to 2010. The Company also had
federal tax credits of $4,162 expiring primarily from 2000 to 2002 and state tax
credits of $3,894 expiring from 2001 to 2013. In addition, the Company had
alternative minimum tax carryover credits of $29,631 which do not expire and may
be applied against regular tax in the future, in the event that the regular tax
expense exceeds the alternative minimum tax.
13. EMPLOYEE BENEFIT PLANS
PENSION PLANS--The Company has defined benefit pension plans in effect which
cover certain employees who meet minimum eligibility requirements. The Company
contributes annually amounts sufficient to satisfy the government's minimum
standards.
Net periodic pension cost is determined based upon years of service and
compensation levels, using the projected unit credit method. Prior year service
costs and unrecognized gains and losses are amortized over the estimated future
service periods of active employees in the respective plan.
POSTRETIREMENT PLANS--The Company provides postretirement medical benefits
to eligible employees. The Company's postretirement health care plans are
unfunded.
F-16
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
13. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table provides a reconciliation of the changes in the plans'
benefit obligations and fair value of plan assets for the fiscal years ended
December 31, 1999 and December 27, 1998 and a statement of the funded status as
of December 31, 1999 and December 27, 1998:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
------------------- -----------------------
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year............ $205,845 $191,849 $ 43,075 $ 44,665
Service cost....................................... 4,865 5,603 382 945
Interest cost...................................... 14,677 14,568 2,582 2,946
Plan participants' contributions................... -- -- 583 329
Plan amendments.................................... -- -- -- (2,345)
Acquisitions....................................... -- -- -- 741
Curtailment gain................................... -- -- (7,387) (740)
Settlement loss.................................... 2,301 -- -- --
Actuarial (gain) or loss........................... (18,699) 8,932 (1,013) (815)
Benefits paid...................................... (20,306) (15,107) (2,959) (2,651)
Settlements paid................................... (2,533) -- -- --
-------- -------- -------- --------
Benefit obligation at end of year.................. $186,150 $205,845 $ 35,263 $ 43,075
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
------------------- -----------------------
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year..... $180,665 $168,625 $ -- $ --
Actual return on plan assets....................... 27,204 22,089 -- --
Employer contributions............................. 5,428 5,058 2,376 2,322
Plan participants' contributions................... -- -- 583 329
Settlements paid................................... (2,533) -- -- --
Benefits paid...................................... (20,306) (15,107) (2,959) (2,651)
-------- -------- -------- --------
Fair value of plan assets at end of year........... $190,458 $180,665 $ -- $ --
======== ======== ======== ========
RECONCILIATION OF FUNDED STATUS
Funded status...................................... $ 4,308 $(25,180) $(35,263) $(43,075)
Unrecognized actuarial (gain) loss................. (8,553) 20,417 (3,194) 2,539
Unrecognized net transition obligation (asset)..... 45 (182) -- --
Unrecognized prior service cost.................... (10,929) (11,962) (1,731) (3,327)
-------- -------- -------- --------
Net amount recognized.............................. $(15,129) $(16,907) $(40,188) $(43,863)
======== ======== ======== ========
</TABLE>
The unrecognized net transition asset is being amortized over the average
expected future service periods of employees. Plan assets consist principally of
common stocks and U.S. government and corporate
F-17
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
13. EMPLOYEE BENEFIT PLANS (CONTINUED)
obligations. The plans' assets included common stock of the Company totaling
$8,934 at December 27, 1998.
The following table provides the amounts recognized in the consolidated
balance sheets as of December 31, 1999 and December 27, 1998:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
------------------- -----------------------
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Accrued benefit liability............................ $(18,362) $(22,621) $(40,188) $(43,863)
Prepaid benefit cost................................. 2,925 -- -- --
Intangible asset..................................... 308 5,714 -- --
-------- -------- -------- --------
Net amount recognized................................ $(15,129) $(16,907) $(40,188) $(43,863)
======== ======== ======== ========
</TABLE>
The following table provides the components of net periodic benefit cost for
the fiscal years ended December 31, 1999 and December 27, 1998:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
------------------- -----------------------
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Service cost......................................... $ 4,865 $ 5,603 $ 382 $ 945
Interest cost........................................ 14,677 14,568 2,582 2,946
Expected return on plan assets....................... (17,428) (16,584) -- --
Amortization of prior service cost................... (1,013) (1,015) (1,595) (1,596)
Amortization of transitional asset................... (226) (226) -- --
Curtailment gain..................................... -- -- (2,667) (740)
Recognized actuarial loss............................ 474 336 -- 136
-------- -------- -------- --------
Net periodic cost.................................... $ 1,349 $ 2,682 $ (1,298) $ 1,691
======== ======== ======== ========
</TABLE>
The weighted average assumptions used in the measurement of the Company's
benefit obligation are as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
------------------- -----------------------
1999 1998 1999 1998
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Discount rate........................................ 8.00% 7.25% 8.00% 7.25%
Expected return on plan assets....................... 10.25% 10.25% -- --
Rate of compensation increase........................ 3.50% 3.50% -- --
</TABLE>
At December 31, 1999, the Company had only one pension plan with an
accumulated benefit obligation in excess of plan assets of $1,731. At
December 27, 1998, accumulated benefit obligations exceeded plan assets for all
pension plans. The market value of plan assets was used to calculate the
expected return on plan assets.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 5% at the end of 1998 and 1999, and is
expected to remain constant at that rate for future
F-18
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
13. EMPLOYEE BENEFIT PLANS (CONTINUED)
periods. A one percentage point increase in the assumed health care cost trend
rate would increase the accumulated postretirement benefit obligation as of
December 31, 1999 by $3,395 and the annual postretirement benefit expense by
approximately $290. A one percentage point decrease in the assumed health care
cost trend rate would decrease the accumulated postretirement benefit obligation
as of December 31, 1999 by $3,093 and the annual postretirement benefit expense
by approximately $255.
Certain union employees of the Company participate in multiemployer plans.
Amounts charged to benefit expense relating to the multiemployer plans for 1999,
1998 and 1997 totaled $3,850, $3,685 and $3,352, respectively. In addition, the
Company has various deferred savings and profit sharing plans for certain
employees who meet eligibility requirements. Amounts charged to benefit expense
related to these plans for 1999,1998 and 1997 totaled $3,891, $2,993 and $1,977,
respectively.
14. STOCK-BASED COMPENSATION PLANS
STOCK OPTION PLANS--Prior to the Merger, the Company had stock option plans
that permitted the Stock Option Committee to grant up to an aggregate of
7,750,000 options to purchase shares of the Company's common stock to certain
key employees of the Company. Options granted under the plans generally vested
ratably over a five-year period. Vested options were exercised up to ten years
from the date of grant. Subsequent to the Merger, the Company's stock option
plan was terminated and no options were granted. Information related to the
Company's stock option plans is presented below.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS OPTION PRICE
----------------- ----------------
<S> <C> <C>
Outstanding at December 29, 1996........................... 2,562,305 $ 5.49 to $22.00
Granted.................................................. 804,000 $23.75 to $26.75
Exercised................................................ (12,000) $6.89
Rescinded/Canceled....................................... (45,365) $11.20 to $22.00
----------
Outstanding at December 28, 1997........................... 3,308,940 $ 5.49 to $26.75
----------
Granted.................................................. 937,500 $29.13 to $32.56
Exercised................................................ (617,044) $ 5.49 to $26.75
Rescinded/Canceled....................................... (166,500) $15.00 to $32.56
----------
Outstanding at December 27, 1998........................... 3,462,896 $ 5.49 to $30.75
----------
Granted.................................................. 1,771,500 $23.31 to $24.33
Exercised................................................ (478,058) $ 5.49 to $26.75
Rescinded/Canceled....................................... (16,400) $26.75 to $29.13
Settled at Merger........................................ (4,739,938) $ 5.49 to $30.75
----------
Outstanding at December 31, 1999........................... --
==========
<CAPTION>
RESERVED FOR
EXERCISABLE FUTURE GRANTS
----------- ----------------
<S> <C> <C>
December 27, 1998.......................................... 1,600,600 2,009,800
December 28, 1997.......................................... 1,861,934 396,770
</TABLE>
F-19
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
14. STOCK-BASED COMPENSATION PLANS (CONTINUED)
As discussed in Note 4, the Company canceled and settled all vested and
unvested options at the time of the Merger. The Company recognized $67,474
compensation expense related to the cancellation and settlement of the
outstanding stock options.
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation,"
prior to 1999, the Company had not recorded compensation expense for stock
options granted to employees. Therefore, the Company has determined the pro
forma net income for fiscal years 1998 and 1997, had compensation expense been
recorded for options granted during those years under the applicable fair value
method described in the statement.
For options granted during 1998 and 1997, the fair value at the date of
grant was estimated using the Black-Scholes option pricing model. Under the
Black-Scholes model, a volatility factor of .281 and .310 was used for 1998 and
1997, respectively.
The following weighted average assumptions were used in calculating the fair
value of the options granted in 1998 and 1997, respectively: risk-free interest
rates of 5.13% and 6.33%; an assumed dividend yield of zero; and an expected
life of the options of ten years.
For purposes of the pro forma disclosures, the estimated fair value of the
options granted is amortized to compensation expense over the options' vesting
period. The Company's pro forma information is as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Net income:
As reported............................................. $73,590 $57,219
Pro forma............................................... $71,319 $55,893
Weighted average fair value of options granted during the
year.................................................... $ 15.00 $ 14.39
</TABLE>
RESTRICTED STOCK--Restricted shares of the Company's stock were issued in
1999 and 1998 to certain key employees under a restricted stock plan. The stock
vested ratably over five years and was contingent upon employment. The market
value of the stock at the time of grant was recorded as unamortized restricted
stock compensation in stockholders' equity and was amortized to expense over the
five year vesting period. In 1999 and 1998, the Company issued 202,500 and
135,000 restricted shares of common stock at a weighted average price of $21.19
and $30.21 per share, respectively. As discussed in Note 4, all of the Company's
restricted stock became fully vested at the time of the Merger. Unamortized
restricted stock compensation at the time of the Merger of $7,306 was recognized
in selling, general and administrative expenses as part of the Merger related
expenses in 1999.
15. TREASURY STOCK
In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of the Company's common stock. The repurchase of shares
commenced in August 1998 in the open market at prevailing market prices or in
negotiated transactions, depending on market conditions. The shares were
repurchased to satisfy commitments under certain employee benefit plans. When
treasury shares were reissued, the Company used the weighted average cost method
and the excess of repurchase cost over
F-20
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
15. TREASURY STOCK (CONTINUED)
reissuance price was treated as a reduction of retained earnings. In 1999, the
Company repurchased 1,263,652 shares of common stock at a weighted average cost
of $24.18 per share. Since the inception of the plan in 1998, the Company had
repurchased 1,750,153 shares at a weighted average cost of $26.02 and reissued
466,255 shares. The Company terminated the share purchase plan in 1999 and the
treasury stock was retired as a result of the Merger.
16. RELATED PARTY TRANSACTIONS
As part of the Merger expenses discussed in Note 4, the Company recognized a
non-cash charge of $67,474 for the cancellation and settlement by
Acquisition Inc. of all vested and unvested options. Of this amount, $40,868 was
paid directly by Acquisition Inc. to the option holders on behalf of the Company
and $26,606 was paid in stock of QPI upon consummation of the Merger. In
addition, Acquisition Inc. contributed $51,299 to the Company to pay certain
other Merger expenses. These amounts will not be repaid and are, therefore,
included in stockholders' equity in the 1999 consolidated balance sheet.
At December 31, 1999, the Company had amounts payable to a wholly owned
subsidiary of QPI of approximately $5,075 for the purchase of raw materials.
This payable, along with the interest payable discussed in Note 9, is included
in short-term payables to related parties in the consolidated balance sheet at
December 31, 1999.
In 1999, the Company sold land for $4,000 to a wholly owned subsidiary of
QPI. The Company subsequently entered into a lease agreement for the land with
this subsidiary for a lease term through 2004.
The Company paid $17,997 for consulting services related to the Merger
provided by Kohlberg Kravis Roberts & Co. L.P. These fees are included in the
Merger related costs discussed in Note 4.
The Company has incurred expenses of $750 in each of the fiscal years ending
1999, 1998 and 1997 for management services provided by affiliated companies
prior to the Merger.
17. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is subject to legal proceedings and other claims arising in the
ordinary course of operations. In the opinion of management, ultimate resolution
of proceedings currently pending will not have a material effect on the results
of operations or financial position of the Company.
F-21
<PAGE>
QUEBECOR WORLD (USA) INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, DECEMBER 27, 1998 AND DECEMBER 28, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
18. UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS AND
CUMULATIVE EFFECT OF
QUARTER ENDED NET SALES GROSS PROFIT CHANGE IN ACCOUNTING NET INCOME (LOSS)
- ------------- ---------- ------------ ----------------------- -----------------
<S> <C> <C> <C> <C>
March 28, 1999..................... $ 605,843 $ 98,036 $ 10,379 $ (12,126)
June 27, 1999...................... 566,545 99,772 (26,218) (26,218)
September 26, 1999................. 686,840 139,677 (109,399) (109,399)
December 31, 1999.................. 693,667 (8,014) (74,288) (74,288)
---------- -------- --------- ---------
$2,552,895 $329,471 $(199,526) $(222,031)
========== ======== ========= =========
March 29, 1998..................... $ 550,407 $ 87,573 $ 9,358 $ 9,358
June 28, 1998...................... 546,503 94,211 9,772 9,772
September 27, 1998................. 635,980 127,037 28,987 28,987
December 27, 1998.................. 623,995 120,274 25,473 25,473
---------- -------- --------- ---------
$2,356,885 $429,095 $ 73,590 $ 73,590
========== ======== ========= =========
</TABLE>
F-22
<PAGE>
SCHEDULE II
QUEBECOR WORLD (USA) INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS OTHER
BALANCE CHARGED TO CHARGES- BALANCE AT
BEGINNING COSTS AND DEDUCTIONS- ADD (DEDUCT) END
CLASSIFICATION OF YEAR EXPENSES DESCRIBE DESCRIBE OF YEAR
- -------------- --------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Allowance for uncollectible accounts
receivable............................. $10,638 $5,269 $3,367(1) $1,304(2) $13,844
YEAR ENDED DECEMBER 27, 1998
Allowance for uncollectible accounts
receivable............................. $ 9,287 $2,428 $2,545(1) $1,468(2) $10,638
YEAR ENDED DECEMBER 28, 1997
Allowance for uncollectible accounts
receivable............................. $ 8,476 $7,193 $8,345(1) $1,963(2) $ 9,287
</TABLE>
- ------------------------
(1) Write-offs of receivables, net of recoveries.
(2) Balance of acquired companies at acquisition date.
S-1
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF MERGER
OF
PRINTING ACQUISITION INC.
INTO
WORLD COLOR PRESS, INC.
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware (the "DGCL"), World Color Press, Inc. ("World Color"), a Delaware
corporation,
DOES HEREBY CERTIFY THAT:
FIRST: The name and state of incorporation of each of the constituent
corporations (the "Constituent Corporations") in the merger is as follows:
NAME STATE OF INCORPORATION
---- ----------------------
Printing Acquisition Inc. Delaware
World Color Press, Inc. Delaware
SECOND: An Agreement and Plan of Merger dated as of July 12, 1999 (the
"Merger Agreement") by and among Quebecor Printing Inc., a corporation
amalgamated under the laws of Canada and the owner of all of the outstanding
capital stock of Printing Acquisition Inc., Printing Acquisition Inc. and World
Color has been approved, adopted, certified, executed and acknowledged by each
of the Constituent Corporations in accordance with Section 251 of the DGCL.
THIRD: The surviving corporation in the merger is World Color. The
certificate of incorporation of the surviving corporation will be amended in the
merger to change the name of the surviving corporation to Quebecor World (USA)
Inc.
FOURTH: The certificate of incorporation of World Color Press, Inc. as
in effect immediately prior to the time the merger becomes effective shall be
amended to read in its entirety as follows:
FIRST
The name of the corporation is Quebecor World (USA) Inc. (the
"Corporation").
<PAGE>
SECOND
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware (the "DGCL").
FOURTH
The total number of shares of common stock which the Corporation shall
have the authority to issue is three thousand (3,000), par value $1.00 per
share, amounting in the aggregate to $3,000.
FIFTH
The Corporation is to have perpetual existence.
SIXTH
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the by-laws of the Corporation.
SEVENTH
Elections of directors need not be by written ballot unless the by-laws
of the Corporation shall so provide. Meetings of stockholders may be held within
or without the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the by-laws of the Corporation.
EIGHTH
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
NINTH
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as director, except for liability (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit.
<PAGE>
FIFTH: An executed Merger Agreement is on file at an office of the
surviving corporation located at The Mill, 340 Pemberwick Road, Greenwich, CT
06831.
SIXTH: A copy of the Merger Agreement will be furnished by the
surviving corporation, on request and without cost to any stockholder of any
Constituent Corporation.
SEVENTH: This Certificate of Merger and the merger provided for herein
shall become effective at 12 p.m. on October 8, 1999.
<PAGE>
IN WITNESS WHEREOF, this certificate of Merger has been executed as of
the 8th day of October, 1999
World Color Press, Inc.
By: /s/ Michel P. Salbaing
------------------------
Name: Michel P. Salbaing
Title: Senior Vice President, Finance
ATTEST:
/s/ Jennifer Adams
- ---------------------
Name: Jennifer Adams
Its Secretary
<PAGE>
EXHIBIT 3.2
QUEBECOR WORLD (USA) INC.
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held at such place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
<PAGE>
Section 2. Annual meetings of stockholders shall be held at such date
and time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, at which they shall elect by a plurality
vote a board of directors and transact such other business as may properly be
brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman or the president and shall be
called by the president or secretary at the request in writing of (a) a majority
of the board of directors or (b) stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 5. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called shall be given not less than ten nor more than sixty days before the date
of the meeting, to each stockholder entitled to vote at such meeting.
Section 6. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 7. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical
<PAGE>
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy
<PAGE>
shall decide any question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the certificate of
incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
<PAGE>
Section 1. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
Section 2. The number of directors which shall constitute the whole
board shall be not less than one nor more than seven. Within the limits above
specified, the number of directors shall be fixed from time to time by
resolution of the board of directors or by the stockholders at the annual
meeting. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 3 of this Article, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 3. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors,
<PAGE>
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 7. Special meetings of the board may be called by the chairman
or the president on two days' notice to each director, either personally or by
mail or by telegram; special meetings shall be called in like manner and on like
notice on the written request of two directors, unless the board consists of
only one director in which case
<PAGE>
special meetings shall be called in like manner and on like notice on the
written request of the sole director.
Section 8. At all meetings of the board, a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
<PAGE>
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) of the General Corporation Law of Delaware, fix
any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation, or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of the same or any other class or classes of
stock of the corporation), adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets,
<PAGE>
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provides,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
<PAGE>
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall consist of a president and a secretary. The board of
directors may also choose one or more vice-presidents, a treasurer, one or more
assistant treasurers and one
<PAGE>
or more assistant secretaries. Any number of offices may be held by the same
person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 3. The board of directors at its first meeting after each
annual meeting of stockholders shall choose the officers of the corporation who
shall hold their offices until their successors are chosen and qualified, or
until their resignation or removal. If any officers are not chosen at an annual
meeting, any such officers may be chosen at any subsequent regular or special
meeting.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualified. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
<PAGE>
THE CHAIRMAN
Section 6. The chairman shall preside at all stockholders' meetings and
all meetings of the board of directors at which he is present and shall have
such other duties as may be assigned to him by the board of directors.
THE PRESIDENT
Section 7. The president shall have general and active management of
the business of the corporation and shall see that all orders and resolutions of
the board of directors are carried into effect. In the absence of the chairman
or in the event of his inability or refusal to act, the president shall also
perform the duties of the chairman and, when so acting, shall have all the
powers of and be subject to all the restrictions upon the chairman.
Section 8. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation. The
president shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
<PAGE>
THE VICE-PRESIDENTS
Section 9. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he shall be. The secretary shall have
custody of the corporate seal of the corporation and the secretary, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and, when so affixed, it may be attested by the secretary's
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by that officer's signature.
<PAGE>
Section 11. The assistant secretary or, if there be more than one, the
assistant secretaries in the order determined by the board of directors (or, if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 13. The treasurer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chairman, the president and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as treasurer and of the financial condition
of the corporation.
Section 14. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of the treasurer's office
and for the restoration to the corporation, in case of the treasurer's death,
resignation, retirement or removal from
<PAGE>
office, of all books, papers, vouchers, money and other property of whatever
kind in the treasurer's possession or under the treasurer's control belonging to
the corporation.
Section 15. The assistant treasurer or, if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or, if there be no such determination, then in the order of their election)
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, (a) the chairman or the president or a
vice-president of the corporation and (b) the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the corporation.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of
<PAGE>
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
TRANSFER OF STOCK
<PAGE>
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares, such uncertificated shares shall be cancelled and
issuance of new equivalent uncertificated shares or certificated shares shall be
made to the person entitled thereto and the transaction shall be recorded upon
the books of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
<PAGE>
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
<PAGE>
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of directors by the certificate of
incorporation at any regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by the
certificate of incorporation, it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
<PAGE>
EXHIBIT 4.3
================================================================================
WORLD COLOR PRESS, INC.,
as Issuer
$151,800,000
6% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2007
-------------------------------------------------------
-----------------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 10, 1999
-----------------------------
-----------------------------
STATE STREET BANK AND TRUST COMPANY,
as Trustee
-----------------------------
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of August 10, 1999 (the "FIRST
SUPPLEMENTAL INDENTURE"), by and between World Color Press, Inc., a Delaware
corporation (the "COMPANY"), as issuer, and State Street Bank and Trust Company
(the "TRUSTEE"), as trustee, to the indenture, dated as of October 8, 1997, by
and between the Company and the Trustee (the "INDENTURE").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company and the Trustee have heretofore executed and
delivered the Indenture providing for the issuance of 6% Convertible Senior
Subordinated Notes due 2007 (the "NOTES") of the Company;
WHEREAS, there is currently outstanding under the Indenture
$151,800,000 in aggregate principal amount of the Notes;
WHEREAS, Section 9.1 of the Indenture provides that the Company and the
Trustee may, without the written consent of any Holder, enter into a
supplemental indenture for the purpose of amending the Indenture to cure any
ambiguity, defect or inconsistency in the Indenture;
WHEREAS, the Company has authorized by a resolution of its Board of
Directors this First Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by the
Indenture and by the certificate of incorporation and bylaws of the Company, to
make this First Supplemental Indenture a valid and binding agreement for the
purposes expressed herein, in accordance with its terms, have been duly done and
performed;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration the
receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the Holders of the Notes, the Company and the Trustee hereby agree as
follows:
Section 1. AMENDMENT TO EXHIBIT A TO THE INDENTURE
The reference to "$41.47" in Section 9 of Exhibit A to the Indenture is
hereby deleted and replaced with "24.113817."
Section 2. OPERATIVENESS
This First Supplemental Indenture will become operative and binding
upon the Company and the Trustee and the Holders as of the day and year first
above written.
Section 3. REFERENCE TO AND EFFECT ON THE INDENTURE
(a) On and after the operative date of this First Supplemental
Indenture, each reference in the Indenture to "this Indenture," "hereunder,"
"hereof," or "herein" shall mean and be a reference to the Indenture as
supplemented by this First Supplemental Indenture unless the context otherwise
requires.
(b) Except as specifically amended above, the Indenture shall remain in
full force and effect and is hereby ratified and confirmed.
1
<PAGE>
Section 4. GOVERNING LAW
THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 5. DEFINED TERMS
Unless otherwise indicated, capitalized terms used herein and not
defined shall have the respective meanings given such terms in the Indenture.
Section 6. TRUST INDENTURE ACT CONTROLS
If any provision of this First Supplemental Indenture limits, qualifies
or conflicts with another provision of this First Supplemental Indenture or the
Indenture that is required to be included by the Trust Indenture Act of 1939, as
amended (the "ACT"), as in force at the date this First Supplemental Indenture
is executed, the provision required by said Act shall control.
Section 7. TRUSTEE DISCLAIMER
The recitals contained in this First Supplemental Indenture shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this First Supplemental Indenture.
Section 8. COUNTERPARTS AND METHOD OF EXECUTION
This First Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
Section 9. TITLES
Section titles are for descriptive purposes only and shall not control
or alter the meaning of this First Supplemental Indenture as set forth in the
text.
[SIGNATURE PAGE FOLLOW]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be executed as of the day and year first above
written.
WORLD COLOR PRESS, INC.
By:
--------------------------------------
Name: Jennifer L. Adams
Title: Vice Chairman, Chief Legal and
Administrative Officer and Secretary
STATE STREET BANK AND TRUST COMPANY
By:
--------------------------------------
Name:
Title:
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 4.4
WORLD COLOR PRESS, INC.,
As Issuer
$151,800,000
6% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2007
------------------------------------
------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of October 8, 1999
------------
------------
STATE STREET BANK AND TRUST COMPANY,
As Trustee
------------
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of October 8, 1999 (the "SECOND
SUPPLEMENTAL INDENTURE"), among Quebecor Printing Inc., a corporation
amalgamated under the laws of Canada, ("QPI"), World Color Press, Inc. (to be
known as Quebecor World (USA) Inc. following the Merger referred to herein), a
Delaware corporation (the "COMPANY"), as issuer, and State Street Bank and Trust
Company (the "TRUSTEE"), as trustee, to the indenture, dated as of October 8,
1997, by and between the Company and the Trustee, as amended or supplemented
(the "INDENTURE").
W I T N E S S E T H :
WHEREAS, the Company and the Trustee have heretofore executed and
delivered the Indenture providing for the issuance of 6% Convertible Senior
Subordinated Notes due 2007 (the "NOTES") of the Company;
WHEREAS, there is currently outstanding under the Indenture $151,800,000
in aggregate principal amount of the Notes;
WHEREAS, the Company is the surviving party of a merger (the "Merger")
effective as of the date hereof with Printing Acquisition Inc. ("PAI"), a
Delaware corporation, pursuant to an Agreement and Plan of Merger dated as of
July 12, 1999 by and among the Company, PAI and PAI's parent corporation,
Quebecor Printing Inc. ("QPI"), a corporation amalgamated under the laws of
Canada; and
WHEREAS, the Indenture permits the merger of the Company with another
corporation, subject to the satisfaction of certain conditions set forth in the
Indenture, including without limitation, Section 11.6, which requires the
execution of a supplemental indenture to provide that each Note issued
thereunder shall no longer be convertible into shares of common stock of the
Company, but rather into the consideration that would have been received by the
holder of such Note in the Merger if such holder had converted the Note into
common stock of the Company immediately prior to the Merger; and
WHEREAS, the Company has authorized by a resolution of its Board of
Directors this Second Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by the
Indenture and by the certificate of incorporation and bylaws of the Company, to
make this Second Supplemental Indenture a valid and binding agreement for the
purposes expressed herein, in accordance with its terms, have been duly done and
performed;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration the
receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the Holders of the Notes, the Company and the Trustee hereby agree as
follows: SECTION 1. AMENDMENTS TO THE INDENTURE
- 1 -
<PAGE>
SECTION 1. AMENDMENTS TO THE INDENTURE
The Indenture shall be amended as follows:
(a) Unless otherwise provided in this Second Supplemental Indenture,
throughout the entirety of the Indenture:
(i) The capitalized words "Common Stock" and the words "shares
of Common Stock" shall each be replaced with the words "QPI Shares".
(ii) The words "share of Common Stock" shall be replaced with the
words "QPI Share".
(b) SECTION 1.1:
(i) The definition of "Common Stock" shall be deleted in its
entirety.
(ii) The definition of "Company" shall be amended to read in its
entirety as follows:
"COMPANY" means (i) Quebecor World (USA) Inc., a Delaware
corporation, and (ii) any successor of Quebecor World (USA) Inc.
pursuant to Article Five hereof.
(iii)The following definitions shall be added in proper
alphabetical order:
"QPI" means Quebecor Printing Inc., a corporation amalgamated
under the laws of Canada.
"QPI SHARES" means subordinate voting shares, no par value, of
QPI.
(c) SECTION 3.7: The figure "$58.06" shall be deleted and replaced
with the figure "$36.74".
(d) SECTION 3.10:
(i) In Section 3.10(c)(2)(i), the words "by the Company, any
Subsidiary of the Company or any employee benefit plan of the Company;
or" at the end of the Section shall be deleted and replaced by the words
"by the Company, QPI, any Subsidiary of either the Company or QPI or any
employee benefit plan of either the Company or QPI; or".
(ii) In Section 3.10(c)(2)(ii), each usage of the words "Common
Stock" shall be replaced with the words "common stock of the Company".
- 2 -
<PAGE>
(iii) In Section 3.10(c)(4), the words "convertible into Common
Stock" shall be replaced with the words "convertible into QPI Shares and
cash pursuant to Article Eleven hereof".
(e) SECTION 11.1: The parenthetical phrase "(as such shares shall
then be constituted)" shall be deleted.
(f) SECTION 11.2: In the first sentence of the sixth paragraph, the
words "fixed number of shares of Common Stock" shall be replaced with the words
"fixed number of QPI shares and cash".
(g) SECTION 11.3:
(i) The penultimate sentence of Section 11.3 shall be amended in
its entirety to read as follows:
If any fractional QPI Share of stock would be issuable upon the
conversion of any Security or Securities, the Company shall make
an adjustment and payment therefor in cash in an amount equal to
the product of (a) the fractional part of a QPI Share to which
the holder would otherwise be entitled and (b) $21.6875.
(ii) The last sentence of Section 11.3 shall be deleted.
(h) SECTION 11.5:
(i) Section 11.5(a) shall be amended in its entirety to read as
follows:
(a) In case QPI shall pay a dividend or make a
distribution, in QPI Shares, on QPI Shares, the Conversion Rate
in effect at the opening of business on the date following the
date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased by
multiplying such Conversion Rate by a fraction of which the
denominator shall be the number of QPI Shares outstanding at the
close of business on the date fixed for such determination and
the numerator shall be the sum of such number of QPI Shares and
the total number of QPI Shares constituting such dividend or
other distribution, such adjustment to become effective
immediately after the opening of business on the day following
the date fixed for such determination. QPI will not pay any
dividend or make any distribution on QPI Shares held in the
treasury of QPI. If any dividend or distribution of the type
described in this Section 11.5(a) is declared but is not so paid
or made and not required to be so paid or made, the Conversion
Rate shall again be adjusted to the Conversion Rate which would
then be in effect if such dividend or distribution had not been
declared.
(ii) The first sentence of Section 11.5(b) shall be amended in
its entirety to read as follows:
- 3 -
<PAGE>
(b) In case QPI shall issue rights or warrants to all
holders of QPI Shares entitling them (for a period expiring
within 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to
subscribe for or purchase QPI Shares at a price per share less
than the Current Market Price per QPI Share (as defined in
Section 11.5(g) below) at the record date for the determination
of stockholders entitled to receive such rights or warrants, the
Conversion Rate in effect immediately prior thereto shall be
adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to
the date fixed for determination of stockholders entitled to
receive such rights or warrants by a fraction the denominator of
which shall be the number of QPI shares of Common Stock
outstanding at the close of business on the date fixed for
determination of stockholders entitled to receive such rights or
warrants plus the number of shares which the aggregate offering
price of the total number of QPI Shares so offered would purchase
at such Current Market Price and the numerator of which shall be
the number of QPI Shares outstanding on the date fixed for
determination of stockholders entitled to receive such rights or
warrants plus the number of additional QPI Shares offered for
subscription or purchase.
(iii) In the third sentence of Section 11.5(b), the words
"consideration to be received by the Company" shall be deleted and
replaced by the words "consideration to be received by QPI".
(iv) In the first sentence of Section 11.5(d), each usage of the
defined term "the Company" shall be replaced with the defined term
"QPI".
(v) In the first sentence of Section 11.5(e), each usage of the
defined term "the Company" shall be replaced with the defined term
"QPI"; and the words "in addition to the shares of Common Stock to which
such holder is entitled, the amount of cash which such holder would have
received if such holder had, immediately prior to the record date for
such distribution of cash, converted its Securities into Common Stock"
shall be replaced by the words "in addition to the QPI Shares and cash
to which such holder is entitled, the amount of cash which such holder
would have received if such holder had, immediately prior to the record
date for such distribution of cash, converted its Securities pursuant to
Article Eleven hereof".
(vi) In Section 11.5(e), each usage of the defined term "the
Company" shall be replaced with the defined term "QPI".
(vii) In Section 11.5(f), the defined term "the Company" shall be
replaced with the defined term "QPI".
- 4 -
<PAGE>
(viii)In the third sentence of Section 11.5(f), the words "by
the Company to its stockholders" shall be replaced with the words "by
QPI to holders of QPI Shares".
(i) SECTION 11.8: each usage of the defined term "the company" shall
be replaced with the defined term "qpi".
(j) SECTION 11.9: The third sentence shall be amended in its entirety
to read as follows: to read as follows:
Subject to the provisions of Section 7.1, neither the Trustee nor any
conversion agent shall be responsible for any failure of QP to issue,
transfer or deliver any QPI Shares or share certificates or other
securities or property or cash upon the surrender of any Security for
the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of QPU or the Company contained in this
Article.
(k) SECTION 11.10: each usage of the defined term "the company" shall
be replaced with the defined term "qpi".
(l) SECTION 9 TO EXHIBIT A: In the first sentence of Section 9, the
words "into that number of fully paid and nonassessable shares of Company's
Common Stock, as said shares shall be constituted at the date of conversion,
obtained by dividing the principal amount at maturity of this Note or portion
thereof to be converted by $1,000 and multiplying the result so obtained by
24.113817 (the "Conversion Rate") or such Conversion Rate as adjusted from time
to time as provided in the Indenture" shall be replaced by the words "into (a)
that number of fully paid and nonassessable QPI Shares obtained by dividing the
principal amount at maturity of this Note or portion thereof to be converted by
$41.47 (the result of such division being the "Conversion Rate") or such
Conversion Rate as adjusted from time to time as provided in the Indenture and
multiplying the result so obtained by 1.2685 AND (b) an amount in cash equal to
the product of (x) the principal amount at --- maturity of this Note or portion
thereof to be converted divided by the Conversion Rate, as it may be adjusted
from time to time, MULTIPLIED BY (y) $8.18".
SECTION 2. OPERATIVENESS
From the date hereof, QPI shall be a party to the Indenture. This Second
Supplemental Indenture will become operative and binding upon each of QPI, the
Company and the Trustee and the Holders of the day and year first above written.
SECTION 3. REFERENCE TO AND EFFECT ON THE INDENTURE
(m) On and after the operative date of this Second Supplemental
Indenture, each reference in the Indenture to "this Indenture," "hereunder,"
"hereof," or "herein" shall mean and be a reference to the Indenture as
supplemented by this Second Supplemental Indenture unless the context otherwise
requires.
- 5 -
<PAGE>
(n) Except as specifically amended above, the Indenture shall remain
in full force and effect and is hereby ratified and confirmed.
SECTION 4. GOVERNING LAW
This Second Supplemental Indenture shall be construed and enforced in
accordance with the laws of the State of New York.
SECTION 5. DEFINED TERMS
Unless otherwise indicated, capitalized terms used herein and not
defined shall have the respective meanings given such terms in the Indenture.
SECTION 6. CONFLICTS.
In the event of a conflict between the terms and conditions of the
Indenture and the terms and conditions of this Second Supplemental Indenture,
then the terms and conditions of this Second Supplemental Indenture shall
prevail.
SECTION 7. TRUST INDENTURE ACT CONTROLS
If any provision of this Second Supplemental Indenture limits, qualifies
or conflicts with another provision of this Second Supplemental Indenture or the
Indenture that is required to be included by the Trust Indenture Act of 1939, as
amended (the "ACT"), as in force at the date this Second Supplemental Indenture
is executed, the provision required by said Act shall control.
SECTION 8. TRUSTEE DISCLAIMER
The recitals contained in this Second Supplemental Indenture shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Second Supplemental Indenture.
SECTION 9. COUNTERPARTS AND METHOD OF EXECUTION
This Second Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
- 6 -
<PAGE>
SECTION 10. TITLES
Section titles are for descriptive purposes only and shall not control
or alter the meaning of this Second Supplemental Indenture as set forth in the
text.
[SIGNATURE PAGE FOLLOWS]
- 7 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be executed as of the day and year first above
written.
QUEBECOR PRINTING INC.
By: /s/ Christian M. Paupe
-----------------------
Name: Christian M. Paupe
Title: Executive Vice President
WORLD COLOR PRESS, INC.
By: /s/ Mark Reisch
-----------------------
Name: Marc Reisch
Title: President and Chief Executive Officer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Gerald R. Wheeler
-----------------------
Name: Gerald R. Wheeler
Title: Vice President
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 4.5
QUEBECOR WORLD (USA) INC.,
As Issuer
6% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2007
------------------------
------------------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of November 23 , 1999
------------------------
------------------------
STATE STREET BANK AND TRUST COMPANY,
As Trustee
------------------------
- --------------------------------------------------------------------------------
<PAGE>
THIRD SUPPLEMENTAL INDENTURE, dated as of November 23, 1999 (the "THIRD
SUPPLEMENTAL INDENTURE"), among Quebecor Printing Inc., a corporation
amalgamated under the laws of Canada, ("QPI") Quebecor World (USA) Inc.
(formerly World Color Press, Inc.), a Delaware corporation (the "COMPANY"), as
issuer, and State Street Bank and Trust Company (the "TRUSTEE"), as trustee, to
the indenture, dated as of October 8, 1997, by and between the Company and the
Trustee, as amended or supplemented (the "INDENTURE").
W I T N E S S E T H :
WHEREAS, the Company and the Trustee have heretofore executed and
delivered the Indenture providing for the issuance of 6% Convertible Senior
Subordinated Notes due 2007 (the "NOTES") of the Company;
WHEREAS, there is currently outstanding under the Indenture $150,330,000
in aggregate principal amount of the Notes;
WHEREAS, Section of 9.2 of the Indenture provides that the Company and the
Trustee may amend the Indenture with the written consent of the Holders of at
least a majority in aggregate principal amount of the Notes then outstanding;
WHEREAS, the Company desires to amend a provision of the Indenture, as
set forth in Section 1 hereof;
WHEREAS, the holders of at least a majority in aggregate principal amount
of the Notes outstanding have consented to the amendment effected by this Third
Supplemental Indenture;
WHEREAS, the Company has authorized by a resolution of its Board of
Directors this Third Supplemental Indenture; and
WHEREAS, all other acts and proceedings required by law, by the Indenture
and by the certificate of incorporation and bylaws of the Company, to make this
Third Supplemental Indenture a valid and binding agreement for the purposes
expressed herein, in accordance with its terms, have been duly done and
performed;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration the
receipt of which is hereby acknowledged, and for the equal and proportionate
benefit of the Holders of the Notes, the Company and the Trustee hereby agree as
follows:
SECTION 1. AMENDMENT TO THE INDENTURE
Section 4.6 shall be shall be amended in its entirety to read as follows:
SECTION 4.6 SEC REPORTS; FINANCIAL STATEMENTS. QPI shall deliver to the
Trustee and mail to each Holder, within 15 days after the filing of the
same with
- 1 -
<PAGE>
the SEC, copies of its annual report and of the information, documents and
other reports, if any, which QPI is required to file with the SEC pursuant
to Section 13 or 15(d) of the Exchange Act. QPI shall also comply with the
other provisions of TIA Section 314(a).
SECTION 2. OPERATIVENESS
This Third Supplemental Indenture will become operative and binding upon
each of QPI, the Company and the Trustee and the Holders of the day and year
first above written.
SECTION 3. REFERENCE TO AND EFFECT ON THE INDENTURE
(a) On and after the operative date of this Third Supplemental
Indenture, each reference in the Indenture to "this Indenture," "hereunder,"
"hereof," or "herein" shall mean and be a reference to the Indenture as
supplemented by this Third Supplemental Indenture unless the context otherwise
requires.
(b) Except as specifically amended above, the Indenture shall remain in
full force and effect and is hereby ratified and confirmed.
SECTION 4. GOVERNING LAW
This Third Supplemental Indenture shall be construed and enforced in
accordance with the laws of the State of New York.
SECTION 5. DEFINED TERMS
Unless otherwise indicated, capitalized terms used herein and not defined
shall have the respective meanings given such terms in the Indenture.
SECTION 6. CONFLICTS.
In the event of a conflict between the terms and conditions of the
Indenture and the terms and conditions of this Third Supplemental Indenture,
then the terms and conditions of this Third Supplemental Indenture shall
prevail.
SECTION 7. TRUST INDENTURE ACT CONTROLS
If any provision of this Third Supplemental Indenture limits, qualifies or
conflicts with another provision of this Third Supplemental Indenture or the
Indenture that is required to be included by the Trust Indenture Act of 1939, as
amended (the "ACT"), as in force at the date this Third Supplemental Indenture
is executed, the provision required by said Act shall control.
- 2 -
<PAGE>
SECTION 8. TRUSTEE DISCLAIMER
The recitals contained in this Third Supplemental Indenture shall be taken
as the statements of the Company, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Third Supplemental Indenture.
SECTION 9. COUNTERPARTS AND METHOD OF EXECUTION
This Third Supplemental Indenture may be executed in several counterparts,
all of which together shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the same
counterpart.
SECTION 10. TITLES
Section titles are for descriptive purposes only and shall not control or
alter the meaning of this Third Supplemental Indenture as set forth in the text.
- 3 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be executed as of the day and year first above written.
QUEBECOR PRINTING INC.
By: /s/ Christian M. Paupe
----------------------
Name: Christian M. Paupe
Title: Executive Vice President
QUEBECOR WORLD (USA) INC.
By: /s/ Michel P. Salbaing
----------------------
Name: Michel P. Salbaing
Title: Senior Vice President and Chief
Financial Officer
STATE STREET BANK AND TRUST COMPANY
By: /S/ GERALD R. WHEELER
----------------------
Name: Gerald R. Wheeler
Title: Vice President
<PAGE>
Exhibit 10.1
RECEIVABLES PURCHASE AGREEMENT
dated as of September 24, 1999
among
THE SELLERS PARTIES HERETO
and
QUEBECOR WORLD FINANCE INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS....................................................................1
SECTION 1.1 Defined Terms................................................1
ARTICLE II
PURCHASES AND SALES............................................................5
SECTION 2.1. Sales and Purchases of Receivables..........................5
SECTION 2.2. Purchase Price..............................................5
SECTION 2.3. Payments and Computations...................................6
SECTION 2.4. Rights of the Purchaser.....................................7
SECTION 2.5. Consent to Assignment of this Agreement.....................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES.................................................8
SECTION 3.1. Representations and Warranties of Sellers...................8
SECTION 3.2. Representations and Warranties of the Purchaser.............9
ARTICLE IV
CONDITIONS PRECEDENT..........................................................10
SECTION 4.1. Conditions to Closing......................................10
ARTICLE V
COVENANTS.....................................................................10
SECTION 5.1. Affirmative Covenants of Sellers...........................10
ARTICLE VI
TERMINATION...................................................................14
SECTION 6.1. Termination................................................14
ARTICLE VII
INDEMNIFICATION...............................................................14
SECTION 7.1. Indemnities by Sellers.....................................14
SECTION 7.2. Indemnities by the Purchaser...............................14
SECTION 7.3. Indemnification Procedures.................................15
SECTION 7.4. Special Indemnities by the Seller..........................15
ARTICLE VIII
REPURCHASE AMOUNTS AND DEEMED COLLECTIONS.....................................17
SECTION 8.1. Repurchase Amounts.........................................17
SECTION 8.2. Deemed Collections.........................................17
<PAGE>
ARTICLE IX
MISCELLANEOUS.................................................................18
SECTION 9.1. Waivers and Amendments.....................................18
SECTION 9.2. Notices....................................................18
SECTION 9.3. Governing Law; Submission to Jurisdiction; Integration;
Service of Process....................................19
SECTION 9.4. Severability and Counterparts..............................19
SECTION 9.5. Successors and Assigns.....................................20
SECTION 9.6. Waiver of Confidentiality..................................20
SECTION 9.7. Characterization of the Transactions Contemplated by the
Agreement.............................................20
SECTION 9.8. Notification...............................................21
SECTION 9.9. Termination of Agreement...................................21
2
<PAGE>
EXHIBITS
Exhibit A Sellers
Exhibit B Form of Revolving Subordinated Promissory Note
3
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT, dated as of September 24, 1999
(this "Agreement"), is by and among the selling entities set forth on Exhibit A
attached hereto (collectively the "Sellers" and individually a "Seller") and
Quebecor World Finance Inc., a Delaware corporation (the "Purchaser").
R E C I T A L S
WHEREAS, the Sellers desire to sell, and the Purchaser desires to
purchase, from time to time, all of the Sellers' right, title and interest in,
to and under each of the Sellers respective present and future Receivables from
time to tome owing to it, and related rights.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual benefits to be derived
under this Agreement and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Sellers and the Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"Adverse Claim" means, for any asset or property of any Person, a lien,
security interest, charge, mortgage, pledge, hypothecation, assignment or
encumbrance, or any other right or claim, in, of or on any such asset or
property in favor of any other Person.
"Agent" shall have the meaning given to it in the RSA.
"Business Day" means any day excluding Saturday, Sunday, and any day on
which banks in New York, New York are authorized or required by law to be
closed.
"Closing Date" means the first Business Day on which all of the
conditions set forth in Section 4.1 of this Agreement have been satisfied.
"Collection Agent" means, with respect to any date, the Servicer or
such other Person appointed to administer and collect the Receivables pursuant
to Section 3.1(b) of the RSA.
"Collections" means, with respect to any Receivable, all amounts paid
on or with respect to such Receivable (including, without limitation, any
proceeds from collateral
<PAGE>
securing such Receivable, or any guaranty of such Receivable, or any Deemed
Collections or Repurchase Amounts paid on account of such Receivable).
"Contract" means any agreement or invoice generated in the ordinary
course of business of any Seller pursuant to which an Obligor shall be obligated
to pay for services rendered to, or merchandise sold to, such Obligor by the
Seller.
"Credit and Collection Policies" means the credit and collection
policies and practices relating to the Receivables and the related Contracts of
the Sellers.
"Charge Off" means any Receivable, that has or should have been (in
accordance with its respective Credit and Collection Policy) charged off or
written off by a Seller.
"Deemed Collections" shall have the meaning set forth in Section 8.2.
"Eligible Receivable" means, at any time, any Receivable:
(i) which is stated to be due and payable within 90 days after the
invoice therefor;
(ii) which is not a Defaulted Receivable or a Charge-Off;
(iii) which is an "ACCOUNT" or "CHATTEL PAPER" within the meaning of
Section 9-105 and Section 9-106, respectively of the UCC of all applicable
jurisdictions;
(iv) which is denominated and payable only in Dollars in the USA;
(v) which constitutes the legal, valid and binding obligation of the
related Obligor enforceable against such Obligor in accordance with its terms
subject to no offset, counterclaim, defense or other Adverse Claim, and is not
an executory contract or unexpired lease within the meaning of Section 365 of
the Bankruptcy Code;
(vi) which (a) contains an obligation to pay a determinable sum of
money and is subject to no contingencies other than performance, (b) does not
require the Obligor under a related Contract to consent to the transfer, sale or
assignment of the rights and duties of the respective Seller under such
Contract, (c) does not contain a confidentiality provision that purports to
restrict the Purchaser's exercise of rights under this Agreement, and (d)
directs that payment be made to a Lock-Box Account or other collection account;
(vii) which does not, in whole or in part, contravene any law, rule or
regulation applicable thereto (including, without limitation, those relating to
usury, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy);
(viii) which satisfies all applicable requirements of the Credit and
Collection Policy of the respective Seller and was generated in the ordinary
course of such Seller's
2
<PAGE>
business from the sale of goods or provision of services to a related Obligor
solely by such Seller;
(ix) the purchase of which with proceeds of notes would constitute a
"current transaction" within the meaning of Section 3(a)(3) of the Securities
Act of 1933, as amended;
(x) which, in the case of a Seller with its chief executive office
located in a state that imposes a recording, intangibles or other similar tax
when added to the aggregate principal amount of all other Receivables of Sellers
with their chief executive office located in such state, does not exceed the
amount specified on the UCC financing statement filed by the respective Seller
to perfect the ownership interests of such Receivables sold by all such Sellers
and for which such tax has been paid; and
"Government Authority" means any (i) federal, state, municipal or other
governmental entity, board, bureau, agency or instrumentality, (ii)
administrative or regulatory authority (including any central bank or similar
authority), or (iii) court, judicial authority or arbitrator, in each case,
whether foreign or domestic.
"Indemnified Amounts" means damages, losses, claims, liabilities, costs
and expenses (including, without limitation, reasonable attorneys' fees and
disbursements);
"Indemnified Party" means each Person that is entitled to be
indemnified against Indemnified Amounts pursuant to Article VII of this
Agreement.
"Indemnifying Party" means any Person that is obligated to indemnify
any other Person against Indemnified Amounts pursuant to Article VII of this
Agreement.
"Law" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree, or award
of any Official Body.
"Lock-Box Account" means each account maintained by the Collection
Agent on behalf of the Purchaser at a Lock-Box Bank for the purpose of receiving
or concentrating Collections.
"Lock-Box Agreement" means each agreement entered into by a Purchaser
and a Lock-Box Bank with respect to a Lock-Box Account.
"Lock-Box Bank" means each bank at which a Lock-Box Account is
maintained.
"Lock-Box Letter" means a letter from the Purchaser and the Collection
Agent to each Lock-Box Bank, acknowledged and accepted by such Lock-Box Bank.
"Obligor" means, with respect to any Receivable, each Person obligated
to pay such Receivable and each guarantor of such obligation.
3
<PAGE>
"Official Body" means any federal, state or local government or
political subdivision or any agency, authority, bureau, central bank commission,
department or instrumentality of any such government or political subdivision,
or any court, tribunal, grand jury, or arbitrator, in each case whether foreign
or domestic.
"Outstanding Balance" means, with respect to any Receivable at any
time, the then outstanding principal amount thereof (excluding any accrued and
unpaid finance charges and interest related thereto).
"Person" means an individual, corporation, association, joint venture,
trust, unincorporated organization, Governmental Authority or other entity of
any kind.
"Purchaser Indemnified Parties" shall have the meaning given to it in
Section 7.1 of this Agreement.
"Purchase Price" means, with respect to each sale and assignment of
Receivables to the Purchaser by any Seller pursuant to Section 2.1 of this
Agreement, the amount payable by the Purchaser to such Seller in consideration
of such sale and assignment, which amount shall be equal to (i) 98.5% of the
aggregate then outstanding Outstanding Balance of the Receivables included in
such sale and assignment, or (ii) such other amount as may be agreed to by the
Seller and the Purchaser.
"Purchaser" means Quebecor World Finance Inc., a Delaware corporation.
"Receivable" means each obligation of any Person to pay for merchandise
sold or services rendered by any Seller to such Person, and includes all of such
Seller's rights in and to (i) the payment of any interest or finance charges
with respect to such obligation, (ii) the merchandise (including returned goods)
and Contracts relating to such obligation, (iii) all security interests,
guarantees and property securing or supporting payment of such obligation, (iv)
all Records relating to or evidencing such obligation, and (v) all proceeds of
the foregoing (including, without limitation, all Collections on such
obligation).
"Records" means, with respect to each Receivable, all Contracts, books,
records and other documents or information (including computer programs, tapes,
disks, software, and related property and rights) related to or evidencing such
Receivable.
"Repurchase Amount" shall have the meaning set forth in Section 8.1.
"RSA" means the Receivables Sale Agreement, dated as of September 24,
1999 by and among the Purchaser, Amsterdam Funding Corporation, the Servicer and
others, as may be amended, supplemented and modified from time to time.
"Revolving Subordinated Note" means the revolving promissory note
issued by the Purchaser to each Seller to finance any part of the Purchase Price
for Sold Receivables sold by such Seller to the Purchaser that is not paid to
such Seller in cash, as
4
<PAGE>
such promissory note may be amended, supplemented or modified by such Seller and
the Purchaser from time to time.
"Sellers" means each of the entities named in Exhibit A hereto and such
other entities affiliated with any Seller, if any, that are agreed by the
Sellers and the Purchaser from time to time after the date of this Agreement.
"Seller Indemnified Parties" shall have the meaning given to it in
Section 7.2 of this Agreement.
"Sold Receivables" means all of Receivables sold to the Purchaser by
the Sellers or any Seller pursuant to Section 2.1 of this Agreement.
"Servicer" means Quebecor Printing (USA) Holdings, Inc., as the initial
Collection Agent.
"Termination Date" means the earlier of (a) the Business Day designated
by the Sellers or the Purchaser with no less than thirty (30) days prior notice
to the other, or (c) such other date as is agreed to by the Sellers and the
Purchaser.
"Termination Event" shall have the meaning given to it in the RSA.
ARTICLE II
PURCHASES AND SALES
SECTION 2.1. SALES AND PURCHASES OF RECEIVABLES. Upon the terms and
subject to the conditions set forth in this Agreement, on the Closing Date and
each subsequent Business Day prior to the Termination Date, each of the Sellers
shall sell and assign to the Purchaser, and the Purchaser shall purchase, all of
such Seller's right, title and interest in, to and under all of the then
outstanding Receivables of such Seller that are Eligible Receivables and that
have not been sold and assigned to the Purchaser on or prior to such day
pursuant to this Agreement; provided, however, that notwithstanding any such
sale and assignment, the Purchaser shall not assume, and shall not have, any
obligation or liability under or with respect to any Contract related to any
such then Sold Receivable. Each of the Sellers with respect to its Sold
Receivables shall (i) remain responsible for all of its obligations under the
Contracts related to such Sold Receivables, and (ii) observe and perform all of
the conditions and obligations to be observed and performed by it under such
Contracts in accordance with the terms of such Contracts.
SECTION 2.2. PURCHASE PRICE. (a) The Purchase Price for each sale and
assignment of Receivables by each Seller to the Purchaser pursuant to Section
2.1 of this Agreement shall be payable to such Seller within five Business Days
of the date of such sale and assignment. At the election of the Purchaser, all
or any part of the Purchase Price payable to such Seller with respect to any
sale and assignment of such Receivables to the Purchaser may be paid by
borrowings under the Revolving Subordinated Note
5
<PAGE>
issued by the Purchaser to such Seller rather than cash; provided, however, that
(i) unless otherwise agreed to by such Seller, on the Closing Date, the
Purchaser shall pay such Seller in cash an amount not less than seventy-five
percent (75%) of the Purchase Price payable for such Receivables then being sold
and assigned to the Purchaser on the relevant Closing Date, and (ii) after such
Closing Date, the Purchaser shall not be permitted to increase its borrowings
under the Revolving Subordinated Note issued to such Seller without the prior
written consent of such Seller if immediately prior to, or immediately after
giving effect to, such increase the stockholders' equity of the Purchaser (as
determined in accordance with generally accepted accounting practices) would be
less than five percent (5%) of the aggregate amount then payable under the
Revolving Subordinated Note issued to such Seller.
(b) The Purchaser may prepay all or any part of the amounts
outstanding under any Revolving Subordinated Note at any time without premium or
penalty.
(c) Unless otherwise agreed to by the applicable Seller and
the Purchaser, all Collections on the Sold Receivables sold by such Seller to
the Purchaser shall be applied to reduce the amounts then payable to such Seller
pursuant to the terms of this Agreement (including, without limitation, all
amounts then payable under the related Revolving Subordinated Note) until all
such amounts have been paid in full. If the aggregate amount of cash received by
a Seller from the Purchaser pursuant to this Agreement, and the Collection Agent
on account of Collections pursuant to the RSA relative to such Seller's Sold
Receivables, on any day exceeds the aggregate amount then payable to such Seller
pursuant to this Agreement (including, without limitation, all amounts payable
under such Seller's Revolving Subordinated Note), such Seller shall promptly
transfer such excess amount to the Purchaser.
(d) Consistent with the Purchaser's ownership of Sold
Receivables, the Purchaser shall be solely responsible for servicing,
administering and collecting such Receivables, and the Sellers shall have no
rights or obligations whatsoever in this regard. The Purchaser has appointed the
Servicer as the initial Collection Agent of the Sold Receivables pursuant to the
RSA to administer the collection, administration and servicing of Sold
Receivables on behalf of the Purchaser in accordance with the terms and
conditions of the RSA. In furtherance thereof, the Purchaser shall cause the
Collection Agent to make and maintain all appropriate record-keeping entries to
reflect (i) all amounts payable by the Purchaser to each Seller pursuant to this
Agreement on each day (including, without limitation, all amounts then payable
under such Seller's Revolving Subordinated Note), and (ii) all payments received
by such Seller on each day from (1) the Purchaser pursuant to this Agreement,
and (2) the Collection Agent on account of Collections pursuant to the RSA
relative to such Seller's Sold Receivables.
SECTION 2.3. PAYMENTS AND COMPUTATIONS. All amounts to be paid or
deposited by any of the Sellers, on the one hand, or the Purchaser, on the other
hand, pursuant to the terms of this Agreement shall be paid or deposited to or
in an account designated by, or on behalf of, the party entitled to receive such
amounts no later than 1:00 p.m. (New York City time) on the day when due in
immediately available funds. Each of the Sellers
6
<PAGE>
and the Purchaser shall pay interest on all amounts not paid or deposited when
due under this Agreement at a rate equal to 2% per annum plus the rate then
payable on the Revolving Subordinated Note. All computations of discount,
interest and all per annum fees under this Agreement shall be made on the basis
of a year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed.
SECTION 2.4. RIGHTS OF THE PURCHASER.
(a) The Purchaser, or the Collection Agent on behalf of the Purchaser,
shall be entitled to: (i) receive all Collections on the Sold Receivables; (ii)
endorse all drafts, checks and other forms of payment on account of the Sold
Receivables and to settle, adjust and forgive any amounts payable with respect
to the Sold Receivables; and (iii) exercise all other rights and incidences of
ownership of the Sold Receivables.
(b) Each of the Sellers shall promptly deliver to the Purchaser or as
the Purchaser may direct, including to the Collection Agent on behalf of the
Purchaser pursuant to the RSA, evidence of the creation of its respective Sold
Receivables, including invoices, charge slips, credit memoranda and notes
evidencing such creation, necessary for the Purchaser to realize upon such Sold
Receivables.
(c) Each of the Sellers agrees that from time to time, it will promptly
execute and deliver at its own expense, all further reasonable instruments and
documents, and take all further action that the Purchaser may reasonably request
in writing in order to perfect, protect or more fully evidence the Purchaser's
ownership interest in the Receivables sold to the Purchaser by such Seller, and
upon the Purchaser's request, each of the Sellers will execute such further
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as the Purchaser may reasonably request.
(d) Anything herein to the contrary notwithstanding:
(i) Each of the Sellers shall perform its obligations under
the Contracts related to the Receivables sold to the Purchaser by such Seller to
the same extent as if such Receivables had not been sold hereunder, and the
exercise by the Purchaser of its rights hereunder shall not release any such
Seller from any of its duties or obligations with respect to any Receivables
sold to the Purchaser by such Seller or under the related Contracts; and
(ii) The Purchaser shall not have any obligation or liability
with respect to any related Contracts, nor shall the Purchaser be obligated to
perform any of the obligations of the Sellers thereunder.
SECTION 2.5. CONSENT TO ASSIGNMENT OF THIS AGREEMENT. The Agent, on
behalf of the Purchasers (as defined in the RSA), is intended to be a third
party beneficiary of this Agreement. The Sellers hereby consent to the
assignment by the Purchaser to Agent, for the benefit of the Purchasers (as
defined in RSA), of all of the Purchaser's right and title to and interest in
this Agreement with respect to the Sold Receivables that are Eligible
Receivables (as defined in the RSA) as security for the Purchaser's obligations
7
<PAGE>
under the RSA. The Sellers consent to the Purchaser's agreement that, following
a Termination Event, the Agent shall have the sole right to enforce the
Purchaser's rights and remedies under this Agreement with respect to all of the
Sold Receivables that are Eligible Receivables (as defined in RSA) (including,
without limitation, all of the Purchaser's rights to enforce the Sellers' rights
and remedies under the Contracts); provided, however, that under no
circumstances shall the Agent have any obligation to perform any of the
Purchaser's obligations under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each Seller
represents and warrants to the Purchaser that:
(a) Corporate Existence and Power. Each Seller is duly
organized, validly existing, and in good standing under the laws of its state of
organization and has all corporate or other organizational power and authority
and all governmental licenses, authorizations, consents, and approvals required
to carry on its business in each jurisdiction in which its business is now
conducted, except where failure to obtain such license, authorization, consent
or approval is not reasonably likely to have a material adverse effect on (i)
its ability to perform its obligations under, or the enforceability of, this
Agreement, (ii) its business or financial condition, (iii) the interests of the
Purchaser under this Agreement, or (iv) the enforceability or collectibility of
a material portion of the Sold Receivables.
(b) Authorization and No Contravention. The execution,
delivery, and performance by each Seller of this Agreement (i) is within its
corporate or other organizational powers, (ii) has been duly authorized by all
necessary corporate or other organizational action, (iii) does not contravene or
constitute a default under (A) any applicable law, rule or regulation, (B) its
charter or by-laws, or (C) any material agreement, order or other instrument to
which it is a party or its property is subject, and (iv) will not result in any
Adverse Claim on any Sold Receivable.
(c) No Consent Required. Except as contemplated hereby, no
approval, authorization or other action by, filings with, or notices to, any
Governmental Authority or other Person is required to be obtained or made by any
Seller in connection with the execution, delivery and performance by such Seller
of this Agreement or any transaction contemplated by this Agreement.
(d) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of each Seller enforceable against each Seller in
accordance with its terms, except as limited by (i) bankruptcy, insolvency, or
other similar laws relating to or affecting the enforcement of creditors'
rights, and (ii) general principles of equity.
(e) Good Title, No Disputes. Immediately prior to each sale
and assignment of its Sold Receivables to the Purchaser pursuant to Section 2.1
of this
8
<PAGE>
Agreement, each Seller will have undivided good title to, and be the sole legal
and beneficial owner of, all of such Sold Receivables, free and clear of all
Adverse Claims. All of its respective Sold Receivables will be transferred by
each Seller to the Purchaser, free and clear of all Adverse Claims, and such
Sold Receivables shall not be subject to any dispute with or set off or defense
by its related Obligor. From and after the filing of the UCC financing
statements referred to in Section 5.1(e) the Purchaser's ownership interest in
the Sold Receivables shall at all times be duly perfected by all required
filings, notices and registrations under all applicable laws.
(f) No Actions, Suits. There are no actions, suits or other
proceedings (including matters relating to environmental liability) pending or
threatened against or affecting any Seller, or any of its properties, that (i)
if adversely determined (individually or in the aggregate), may have a material
adverse effect on the financial condition of such Seller, or on the
collectibility of a material portion of its Sold Receivables, or (ii) involve
this Agreement or any transaction contemplated by this Agreement. No Seller is
in default of any contractual obligation or in violation of any order, rule or
regulation of any Governmental Authority, which default or violation may have a
material adverse effect upon (a) the financial condition of such Seller, or (b)
the collectibility of a material portion of such Seller's Sold Receivables that
are Eligible Receivables.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Sellers that:
(a) Corporate Existence and Power. The Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of incorporation and has all corporate power and authority and
all governmental licenses, authorizations, consents, and approvals required to
carry on its business in each jurisdiction in which its business is now
conducted, except where failure to obtain such license, authorization, consent
or approval is not reasonably likely to have a material adverse effect on its
ability to perform its obligations under, or the enforceability of, this
Agreement or the Revolving Subordinated Note.
(b) Corporate Authorization and No Contravention. The
execution, delivery, and performance by the Purchaser of this Agreement (i) is
within its corporate powers, (ii) has been duly authorized by all necessary
corporate action, and (iii) does not contravene or constitute a default under
(A) any applicable law, rule or regulation, (B) its charter or by-laws, or (C)
any agreement, order or other instrument to which it is a party or its property
is subject.
(c) No Consent Required. Except as contemplated hereby, no
approval, authorization or other action by, filings with, or notices to, any
Governmental Authority or other Person is required to be obtained or made by the
Purchaser in connection with the execution, delivery and performance by the
Purchaser of this Agreement or any transaction contemplated by this Agreement.
9
<PAGE>
(d) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms, except as limited by (i) bankruptcy, insolvency,
or other similar laws relating to or affecting the enforcement of creditors'
rights, and (ii) general principles of equity.
(e) No Actions, Suits. There are no actions, suits or other
proceedings pending or threatened against or affecting the Purchaser or any of
its properties.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. CONDITIONS TO CLOSING. This Agreement shall become
effective on the first date on which all conditions in this Section 4.1 are
satisfied:
(a) all of the conditions precedent to the effectiveness of
the RSA shall have been satisfied or waived; and
(b) an executed copy of the Revolving Subordinated Note shall
have been delivered by the Purchaser to the Sellers.
ARTICLE V
COVENANTS
SECTION 5.1. AFFIRMATIVE COVENANTS OF SELLERS. At all times from the
date of this Agreement until the first date after the Termination Date on which
all amounts due and owing with respect to the Sold Receivables have been paid in
full or written-off in accordance with the Credit and Collection Policies,
unless the Purchaser shall give its prior consent (which consent shall not be
unreasonably withheld or delayed), each Seller hereby agrees as follows:
(a) Conduct of Business. Each Seller will perform all actions
necessary to remain duly organized, validly existing and in good standing in its
jurisdiction of incorporation or organization and to maintain all requisite
authority to conduct its business in each jurisdiction in which it conducts
business except where the failure to do so would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
financial condition of such Seller, or on the collectibility of a material
portion of its Sold Receivables.
(b) Compliance with Laws. Each Seller will comply with all
laws, regulations, judgments and other directions or orders imposed by any
Governmental Authority to which it may be subject except where the failure to do
so would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the financial condition of such Seller, or on the
collectibility of a material portion of its Sold Receivables.
10
<PAGE>
(c) Furnishing Information and Inspection of Records. Each
Seller will from time to time furnish to the Purchaser such information
concerning the Sold Receivables, as the Purchaser may reasonably request. Each
Seller will permit, at any time during regular business hours upon reasonable
advance written notice, the Purchaser (or any representatives thereof) to: (i)
examine and make copies of any or all of the Records relating to or evidencing
its Sold Receivables, (ii) visit the offices and properties of such Seller for
the purpose of examining any or all of the Records relating to or evidencing its
Sold Receivables, and (iii) discuss matters relating to this Agreement and/or
its Sold Receivables with any of the officers, directors, employees or
independent public accountants of any Sellers who have knowledge of such
matters.
(d) Keeping Records. Each Seller will have and maintain (i)
administrative and operating procedures (including an ability to recreate
Records relating to or evidencing its Sold Receivables if originals are
destroyed), (ii) adequate facilities, personnel and equipment, and (iii) all
Records and other information necessary for collecting such Sold Receivables
(including Records adequate to permit the identification of each Sold Receivable
and all Collections on, and all adjustments to, each Sold Receivable). Each
Seller will use its best efforts to identify the Purchaser's interest in its
Sold Receivables on its computer and master data processing books and records.
(e) Perfection. (i) Each Seller will promptly execute and
deliver all instruments and documents and take all action necessary or
reasonably requested by the Purchaser (including the execution and filing of
financing or continuation statements, amendments thereto or assignments thereof)
to enable the Purchaser to (1) exercise and enforce all of its rights under this
Agreement, and (2) vest and maintain vested in the Purchaser a valid, first
priority perfected ownership interest in the applicable Sold Receivables free
and clear of all Adverse Claims. Each Seller hereby agrees that the Purchaser
will be permitted to sign and file any continuation statements, amendments
thereto and assignments thereof with respect to such Sold Receivables without
the signature of such Seller.
(ii) Each Seller will not change its name, identity or
corporate structure or relocate its chief executive office or the Records
relating to or evidencing its respective Sold Receivables unless it has (1)
given at least ten (10) days advance notice to the Purchaser, and (2) delivered
to the Purchaser all financing statements, instruments and other documents
(including direction letters) required to maintain the Purchaser's ownership
interest in such Sold Receivables or otherwise reasonably requested by the
Purchaser.
(iii) Each Seller will maintain its chief executive office
within a jurisdiction in the United States of America at all times after the
date of this Agreement. If any Seller moves its chief executive office to a
location that imposes taxes, fees or other charges to perfect the Purchaser's
ownership interests in its respective Sold Receivables, such Seller will pay all
such amounts and any other costs and expenses incurred in order to maintain the
enforceability of (1) this Agreement, and (2) its
11
<PAGE>
respective Sold Receivables or the Purchaser's ownership interests in such Sold
Receivables.
(f) Performance of Duties. Each Seller will perform all of its
duties and obligations under this Agreement. Each Seller will (i) fully and
timely perform in all material respects all of the obligations required to be
performed by it in connection with its respective Sold Receivables, and (ii)
comply in all material respects with its respective Credit and Collection
Policy. In the event that any Person other than the Servicer is appointed as the
Collection Agent at any time, the Servicer shall, upon the request of the
Purchaser, promptly deliver all Records relating to or evidencing the Sold
Receivables to such Collection Agent (or its designee) at the location
designated by the Purchaser or such Collection Agent; provided, however, that
any such Collection Agent shall provide the Servicer with reasonable access to
such Records.
(g) Payments on Receivables. Each Seller will at all times
instruct all Obligors to deliver all Collections on its respective Sold
Receivables to a Lock-Box Account. If any Collections on a Seller's respective
Sold Receivables are received by such Seller, such Seller shall hold such
Collections in trust for the benefit of the Purchaser and promptly (but in any
event within two Business Days after receipt) deposit such Collections into a
Lock-Box Account. Each Seller shall use its reasonable best efforts to prevent
any funds other than Collections on its respective Sold Receivables from being
deposited into any Lock-Box Account; provided, however, that if any funds other
than such Collections are nevertheless deposited into any Lock-Box Account, such
applicable Seller will identify and remit such funds to the owner of such funds
as soon as practicable. Any payment by an Obligor to any Seller shall, except as
otherwise instructed by the Purchaser, be remitted to the Collection Agent as a
Collection on the Receivables of such Obligor (starting with the oldest such
Sold Receivable) to the extent of any amounts then due and payable thereunder
before being applied to any other Receivable or other indebtedness of such
Obligor.
(h) Extension or Amendment of Receivables. Except as permitted
by the Credit and Collection Policies, the Sellers shall not amend or otherwise
modify the terms of any Sold Receivable, or otherwise amend, modify or waive any
term or condition of any Contract related to or evidencing such Sold Receivable.
(i) Change in Business or Credit and Collection Policy. Each
of the Sellers agrees not to make any material change in the character of its
business or its Credit and Collection Policy without the prior consent of the
Purchaser.
(j) Adverse Claims. Each of the Sellers agrees not to sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim on or against any of its respective Sold
Receivables.
(k) Separateness Covenants. Each Seller shall do all things
necessary and appropriate to maintain its existence separate and apart from the
Purchaser, including, without limitation:
12
<PAGE>
(i) practicing and adhering to corporate formalities, such as
maintaining appropriate books and records;
(ii) refraining from (1) guaranteeing or otherwise becoming
liable for any obligations of the Purchaser, (2) having obligations
guaranteed by the Purchaser, and (3) holding itself out as responsible
for debts of the Purchaser or for decisions or actions with respect to
the affairs of the Purchaser;
(iii) maintaining all of its deposit and other bank accounts
and all of its assets separate from those of the Purchaser;
(iv) maintaining all of its financial records separate and
apart from those of the Purchaser and ensuring that any consolidated
financial statements or other public information contain appropriate
disclosures concerning the Purchaser's separate existence;
(v) reimbursing the Purchaser out of the Seller's own funds
for any services provided to the Seller by employees, officers,
consultants, and agents of the Purchaser;
(vi) maintaining office space separate and apart from that of
the Purchaser or allocating fairly and reasonably any overhead for
shared office space;
(vii) accounting for and managing all of its liabilities
separately from the Purchaser (including, without limitation, payment
directly by the Seller of all payroll, accounting and other
administrative expenses and taxes);
(viii) allocating, on an arm's-length basis, all corporate
operating services, leases and expenses shared between the Seller and
the Purchaser (including, without limitation, those associated with the
services of shared consultants and agents and shared computer equipment
and software);
(ix) refraining from filing or otherwise initiating or
supporting the filing of a motion in any bankruptcy or other insolvency
proceeding involving the Purchaser to substantively consolidate the
assets and liabilities of the Seller with the assets and liabilities of
the Purchaser;
(x) maintaining adequate capitalization in light of its
business and purpose;
(xi) refraining from commingling assets with those of the
Purchaser;
13
<PAGE>
(xii) refraining from acquiring obligations or securities of
the Purchaser (other than the Revolving Subordinated Note) and
refraining from loaning any funds to the Purchaser;
(xiii) using separate stationery, invoices, and checks from
the Purchaser; and
(xiv) correcting any known misunderstanding regarding the
separate identity of the Purchaser.
ARTICLE VI
TERMINATION
SECTION 6.1. TERMINATION. This Agreement shall terminate upon the
Termination Date; provided, however, that the following rights and obligations
shall survive the termination of this Agreement: (i) the indemnification and
payment provisions of Article VII of this Agreement, and (ii) the Purchaser's
obligations under the Revolving Subordinated Note.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. INDEMNITIES BY THE SELLERS. Without limiting any other
rights that the Purchaser may have under this Agreement or under applicable law,
each Seller hereby agrees to indemnify the Purchaser, and any permitted assigns
and its officers, directors, agents and employees (collectively, the "Purchaser
Indemnified Parties") from and against any and all Indemnified Amounts awarded
against or incurred by the Purchaser Indemnified Parties in any action or
proceeding between such Seller and any of the Purchaser Indemnified Parties or
between any of the Purchaser Indemnified Parties and any other Person or
otherwise, arising out of or as a result of any breach by such Seller of any of
its representations, warranties and covenants in this Agreement.
SECTION 7.2. INDEMNITIES BY THE PURCHASER. Without limiting any other
rights that the Sellers may have under this Agreement or under applicable law,
the Purchaser hereby agrees to indemnify each Seller and its officers,
directors, agents and employees and any permitted assigns (collectively, the
"Seller Indemnified Parties") from and against any and all Indemnified Amounts
awarded against or incurred by such Seller Indemnified Parties in any action or
proceeding between the Purchaser and any of such Seller Indemnified Parties or
between any of such Seller Indemnified Parties and any other Person or
otherwise, arising out of or as a result of any breach by the Purchaser of any
of its representations, warranties and covenants in this Agreement; provided,
however, that notwithstanding any other provision to the contrary in this
Agreement, until the first day after the Termination Date on which all amounts
due and owing with respect to the Sold Receivables have been paid in full or
written-off in accordance with the
14
<PAGE>
Credit and Collection Policies, all of the Purchaser's obligations under this
Section 7.2 shall be satisfied by increasing the amount outstanding under the
Revolving Subordinated Note by the aggregate amount of the Indemnified Amounts,
if any, that become payable to the Seller Indemnified Parties.
SECTION 7.3. INDEMNIFICATION PROCEDURES. In the event that any claim,
action or proceeding for Indemnified Amounts is made or brought against any
Indemnified Party, such Indemnified Party shall promptly notify the Indemnifying
Party in writing; provided, however, that no delay on the part of such
Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation under this Agreement unless (and then
solely to the extent) the Indemnifying Party is prejudiced by such delay. The
Indemnifying Party will have the right to defend such claim or proceeding with
counsel of its choice reasonably satisfactory to the Indemnified Party so long
as the Indemnifying Party notifies the Indemnified Party that it will assume the
defense thereof within twenty (20) days after notice from the Indemnified Party
of such claim, action or proceeding and the Indemnifying Party reimburses the
Indemnified Party for any fees and expenses incurred by it during such twenty
(20) day period; provided, however, that the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense
of such claim, action or proceeding; and provided further that the Indemnified
Party may retain its own counsel at the sole cost and expense of the
Indemnifying Party if: (i) the employment of such counsel has been specifically
authorized in writing by the Indemnifying Party; (ii) the Indemnifying Party has
failed to assume the defense and employ counsel within thirty (30) days of
receiving notice of such claim or proceeding; and (iii) the named parties to any
such action (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by its counsel that there may be one or more legal defenses available to
it that are different from or additional to those available to the Indemnifying
Party (in which case the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of such Indemnified Party). The
Indemnifying Party shall not be liable for any settlement of any such action
effected without the written consent of the Indemnifying Party; provided,
however, if any action is settled with the written consent of the Indemnifying
Party, the Indemnifying Party agrees to indemnify and hold harmless any
Indemnified Party from and against any loss or liability by reason of such
settlement.
SECTION 7.4. SPECIAL INDEMNITIES BY THE SELLERS. Without limiting any
other rights any Purchaser Indemnified Party may have hereunder or under
applicable law, each Seller hereby indemnifies and holds harmless, the Purchaser
or any successor to or assignee of the Purchaser, whether on its own behalf or
derivatively on behalf of the Purchaser, and their respective affiliates,
successors and assigns, from and against any and all Indemnified Amounts at any
time imposed on or incurred by any such party arising out of or otherwise
relating to any one or more of the following, excluding only Indemnified Amounts
to the extent (a) a final judgment of a court of competent jurisdiction holds
such Indemnified Amounts resulted solely from gross negligence or willful
misconduct of such party seeking indemnification, or (b) due to the credit risk
of
15
<PAGE>
the Obligor and for which reimbursement would constitute recourse to such Seller
or the Collection Agent for uncollectible Sold Receivables:
(i) any representation or warranty made by such
Seller, under or in connection with this Agreement or any other
information or report delivered by such Seller pursuant thereto,
which shall have been false or incorrect in any material respect
when made or deemed made;
(ii) the failure by such Seller to comply with any
applicable law, rule or regulation related to any Sold
Receivable of such Seller sold to the Purchaser hereunder, or
the nonconformity of any such Sold Receivable with any such
applicable law, rule or regulation;
(iii) the failure of such Seller to vest and maintain
vested in the Purchaser a perfected ownership interest in any
Sold Receivable of such Seller sold to the Purchaser hereunder,
free and clear of any Adverse Claim;
(iv) any commingling of Collections or other funds
received by such Seller to which the Purchaser is entitled
hereunder with any other funds;
(v) any failure of a Lock-Box Bank to comply with the
terms of the applicable Lock-Box Letter;
(vi) any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the Obligor to
the payment of any Sold Receivable of such Seller sold to the
Purchaser hereunder, or any other claim resulting from the sale
or lease of goods or the rendering of services related to such
Sold Receivable or the furnishing or failure to furnish any such
goods or services or other similar claim or defense not arising
from the financial inability of any Obligor to pay undisputed
indebtedness or otherwise relating to the collectibility of any
Sold Receivables of such Seller;
(vii) any failure of such Seller to perform its
duties or obligations in accordance with the provisions of this
Agreement;
(viii) any environmental liability claim, products
liability claim or personal injury or property damage suit or
other similar or related claim or action of whatever sort,
arising out of or in connection with any Sold Receivable of such
Seller sold to the Purchaser hereunder;
16
<PAGE>
ARTICLE VIII
REPURCHASE AMOUNTS AND DEEMED COLLECTIONS
SECTION 8.1. (a) REPURCHASE AMOUNTS. Each Seller hereby covenants and
agrees with the Purchaser that if any of such Seller's representations and
warranties contained in Section 3.1 with respect to any Sold Receivable sold to
the Purchaser by such Seller was incorrect when made (a) such Seller shall upon
notice from the Purchaser repurchase such Sold Receivable from the Purchaser at
a price equal to the Outstanding Balance of such Sold Receivable (after giving
effect to the receipt of any moneys collected from whatever source on account of
such Sold Receivable) (such amount being the "REPURCHASE AMOUNT"). The amount
due in respect of the foregoing repurchase obligation shall be paid to the
Purchaser by deposit to the Lock-Box Account within two Business Days following
notice to such Seller of such breach.
(b) With respect to all Sold Receivables, the Repurchase
Amount of which has been received by the Purchaser as set forth in Section 8.1
above, the Purchaser shall, at the expense of the applicable Seller, convey,
transfer and assign to such Seller all right, title and interest of such Seller
in and to such Sold Receivables free and clear of all Adverse Claims. The
Purchaser shall execute such necessary documents and instruments of transfer and
assignment prepared by such Seller and take such other actions as shall be
reasonably requested by such Seller to effect the repurchase of any such Sold
Receivables.
SECTION 8.2. (a) DEEMED COLLECTIONS. If on any day the Outstanding
Balance of a Sold Receivable of any Seller is either (i) reduced as a result of
any defective, rejected or returned goods or services, any discount, or any
adjustment by such Seller, or (ii) reduced or cancelled as a result of a setoff
in respect of any claim by the Obligor thereof against such Seller (whether such
claim arises out of the same or a related transaction or an unrelated
transaction), which events shall not arise from the financial inability of the
Obligor thereof relative to such Sold Receivable, such Seller shall be deemed to
have received on such day a Collection of such Sold Receivable (a "DEEMED
COLLECTION") in the amount of such reduction or cancellation and shall make the
payment required to be made by it to the Lock-Box Account in connection with
such Collection on the day required.
(b) Without limiting the effect of Article VII, no Seller
shall otherwise be liable for any deficiency in Collections of any of
the Sold Receivables sold by such Seller to the Purchaser.
17
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. WAIVERS AND AMENDMENTS. No failure or delay on the part of
any party to this Agreement in exercising any power, right or remedy of such
party under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any other
further exercise thereof or the exercise of any other power, right or remedy.
The rights and remedies provided in this Agreement shall be cumulative and
nonexclusive of any rights or remedies provided by law. Any provision of this
Agreement may be amended if, but only if, such amendment is in writing and is
signed by the parties hereto.
SECTION 9.2. NOTICES. Except as provided below, all communications and
notices provided for under this Agreement shall be in writing (including bank
wire, telex, telecopy or electronic facsimile transmission or similar writing)
and shall be given to the other party at its address or telecopy number set
forth below or at such other address or telecopy number as such party may
hereafter specify for the purposes of notice to such party. Each such notice or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 9.2 and
confirmation is received, (ii) two (2) Business Days after the date on which
such notice or communication is delivered to a nationally or internationally
recognized overnight courier service, or (iii) if given by any other means, when
received at the address specified in this Section 9.2.
If to any of the Sellers:
c/o Quebecor Printing (USA) Corp.
980 Washington Street
Suite 222
Dedham, MA 02026
Attention: General Counsel and Secretary
Telephone: (781) 410-2000
With a copy to:
Imprimeries Quebecor S.A.
Succursale de Granges-Paccot
Route des Arseneaux 15,
Chayette 8 CH 1700, Fribourg
Switzerland
Tel: 41-26-347-4777
Fax: 41-26-347-4778
and
18
<PAGE>
If to the Purchaser:
Quebecor World Finance Inc.
300 Delaware Avenue
Suite 900
Wilmington, DE 19801
Attention: Vice President, Legal Affairs and Secretary
Telephone: (302) 421-7361
With a copy to:
Imprimeries Quebecor S.A.
Succursale de Granges-Paccot
Route des Arseneaux 15,
Chayette 8 CH 1700, Fribourg
Switzerland
Tel: 41-26-347-4777
Fax: 41-26-347-4778
SECTION 9.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; INTEGRATION;
SERVICE OF PROCESS. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE SELLERS AND THE
PURCHASER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. Each of the Sellers and the Purchaser hereby irrevocably waives,
to the fullest extent it may effectively do so, any objection that it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court, any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum and any claim based on its immunity from suit.
Nothing in this Section 9.3 shall affect the right of the Purchaser or any
Seller to bring any action or proceeding against the other or its property in
the courts of other jurisdictions.
(b) This Agreement contains the final and complete integration
of all prior expressions by the Sellers and the Purchaser with respect to the
subject matter of this Agreement and shall constitute the entire Agreement among
the Sellers and the Purchaser with respect to the subject matter of this
Agreement superseding all prior oral or written understandings.
SECTION 9.4. SEVERABILITY AND COUNTERPARTS. Any provisions of this
Agreement that are prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in
19
<PAGE>
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. This Agreement may be executed in any number of separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
SECTION 9.5. SUCCESSORS AND ASSIGNS. (a) This Agreement shall be
binding on each Seller and the Purchaser and their successors and assigns;
provided, however, that no Seller may assign any of its rights or delegate any
of its duties under this Agreement without the prior written consent of the
Purchaser. No provision of this Agreement shall in any manner restrict the
ability of the Purchaser to assign, participate, grant security interests in, or
otherwise transfer, any Sold Receivable.
(b) Each Seller hereby agrees and consents to the complete
assignment by the Purchaser from time to time of all or any part of its rights,
title and interest in and to this Agreement and the respective Sold Receivables
to the Agent for the benefit of the Purchasers (as defined in the RSA).
SECTION 9.6. WAIVER OF CONFIDENTIALITY. Each of the Sellers hereby
consents to the disclosure of any nonpublic information with respect to it
received by the Purchaser to any nationally recognized rating agency rating
Amsterdam Funding Corporation's commercial paper, the Agent, and the Liquidity
Providers or the Enhancer (each as defined in the RSA) in connection with the
RSA.
SECTION 9.7. CHARACTERIZATION OF THE TRANSACTIONS CONTEMPLATED BY THE
AGREEMENT. It is the intention of the Sellers and the Purchaser that (i) the
transactions contemplated by this Agreement constitute an absolute and
irrevocable sale, assignment, transfer and conveyance to the Purchaser of all of
the Sellers' right, title and interest in, to and under all of the Sold
Receivables, free and clear of all Adverse Claims, without any recourse except
as herein specifically provided, and (ii) the Sellers have no interest or right
whatsoever in any of the Sold Receivables. The Sellers and the Purchaser do not
intend the transactions contemplated by this Agreement to be, or for any purpose
to be characterized as, a lending transaction secured by the Sold Receivables
from the Sellers to the Purchaser or otherwise. If, however, the transactions
contemplated by this Agreement should nevertheless be deemed a financing rather
than a true sale, the Sellers and the Purchaser intend that (i) the Sellers
shall be deemed to have granted to the Purchaser, and the Sellers hereby grant
to the Purchaser, a first priority perfected security interest in all of the
Sellers' right, title and interest in, to and under the Sold Receivables, and
(ii) this Agreement shall constitute a security agreement under applicable law.
Each party to this Agreement agrees that it will account for all transactions
under this Agreement as purchases and sales of Receivables for all purposes, and
that it will not take any action inconsistent with that characterization.
Notwithstanding any other provision of this Agreement, regardless of whether the
transactions contemplated by this Agreement are deemed to be a sale or
financing, the Sellers and the Purchaser agree that the Purchaser shall not have
any recourse against any Seller or any of its affiliates as a result of any
uncollectible Sold Receivable.
20
<PAGE>
SECTION 9.8. NOTIFICATION. Notwithstanding anything in this Agreement
or elsewhere, the Purchaser shall be entitled, acting directly or through the
Collection Agent, and at any time, to give notice to any Obligor of the
Purchaser's purchase of any Sold Receivable, PROVIDED that the giving of notice
shall in no way release the applicable Seller of its obligations under this
Agreement.
SECTION 9.9. TERMINATION OF AGREEMENT. Upon the occurrence of the
Termination Date, the Purchaser shall have no further obligation to purchase
Receivables under this Agreement, but the provisions of this Agreement shall
continue in full force and effect in relation to any Sold Receivables which the
Purchaser then owns.
21
<PAGE>
IN WITNESS WHEREOF, each of the Sellers and the Purchaser have executed
and delivered this Receivables Purchase Agreement as of the date first written
above.
SELLERS NAMED IN EXHIBIT A
By:
--------------------------------
Name:
Title:
QUEBECOR WORLD FINANCE INC.
By:
--------------------------------
Name:
Title:
22
<PAGE>
EXHIBIT A--SELLERS
Quebecor Printing Atglen Inc., a Delaware corporation
Quebecor Printing Buffalo Inc., a New York corporation
Quebecor Printing Dallas II Inc., a Delaware corporation
Quebecor Printing Dallas, L.P., a Delaware limited partnership
Quebecor Printing Dickson Inc., a Tennessee corporation
Quebecor Printing Dubuque Inc., a Delaware corporation
Quebecor Printing Eagle Inc., a Missouri corporation
Quebecor Printing Eusey Press Inc., a Massachusetts corporation
Quebecor Printing Fairfield Inc., a Delaware corporation
Quebecor Printing Hazelton Inc., a Pennsylvania corporation
Quebecor Printing Kingsport Inc., a California corporation
Quebecor List Services Chicago Inc., a Delaware corporation
Quebecor Printing Lincoln Inc., a Delaware corporation
Quebecor Printing Loveland Inc., a Delaware corporation
Quebecor Printing Memphis II Inc., a Delaware corporation
QP Memphis Corp., a Delaware corporation
Quebecor Printing Mt. Morris II Inc., a Delaware corporation
Quebecor Printing Olive Branch Inc., a Delaware corporation
Quebecor Printing Pendell Inc., a Michigan corporation
Quebecor Petty Printing Inc., an Illinois corporation
Quebecor Printing St. Cloud Inc., a Minnesota corporation
Quebecor Printing St. Paul Inc., a Minnesota corporation
Quebecor Printing San Jose Inc., a California corporation
Quebecor Printing Sayers Inc., a Delaware corporation
Quebecor Printing Vermont Inc., a Delaware corporation
<PAGE>
EXHIBIT B
FORM OF REVOLVING SUBORDINATED PROMISSORY NOTE
For value received, Quebecor World Finance Inc., a Delaware corporation
(the "Borrower"), hereby promises to pay to ________________________, a
_________ corporation (the "Lender"), on the Payment Date (as defined below), in
lawful money of the United States of America and in immediately payable funds,
the outstanding principal amount of, and all accrued and unpaid interest due on,
all borrowings made as of the Payment Date by the Borrower from the Lender
pursuant to Article II of that certain Receivables Purchase Agreement, dated as
of September 24, 1999 (the "Receivables Purchase Agreement"), by and among the
Borrower and the Lender. Unless otherwise defined in this Revolving Subordinated
Note (this "Note"), capitalized terms shall have tile meanings given to them in
the Receivables Purchase Agreement.
In the event that the Borrower incurs any liability to the Lender under
the Receivables Purchase Agreement that is not paid as incurred, the Lender
shall automatically be deemed to have advanced under this Note the amount of
such liability. From time to time prior to the Payment Date, the Borrower may,
at its option, repay all or any part of the amounts payable under this Note;
provided, however, that the Borrower shall have no obligation to pay the Lender
any amount payable under this Note prior to the Payment Date. For purposes of
this Note, the term "Payment Date" shall mean one year and one day after (or, if
such day is not a Business Day, the first Business Day thereafter) the first
date on which all of the Amsterdam Obligations (as defined below) have been
paid.
The Borrower covenants and agrees, and the Lender by its acceptance of
this Note also covenants and agrees, that the payment of principal and interest
on this Note shall be subordinated in right of payment to the prior payment of
all amounts payable to Amsterdam, or its successors and assigns ("Amsterdam
Obligations"). As a result, upon the occurrence of any Bankruptcy Event (as
defined in the RSA), no payment shall be made by the Borrower with respect to
any amount due under this Note until after all of the Amsterdam Obligations have
been paid in the event that the Lender receives any payment or other
distribution of any kind or character from or on behalf of the Borrower in
payment of any amount owing under this Note after the occurrence of a Bankruptcy
Event and prior to the date that all of the Amsterdam Obligations have been
paid, such payment or other distribution shall promptly be returned by the
Lender to the Borrower.
Borrower further agrees to pay, in lawful money of the United States of
America and in immediately available funds, interest at the rate of eight
percent (8%) on all amounts outstanding under this Note until such amounts have
been paid. The interest payable for any month shall be due on the last Business
Day of that month; provided, however, that at the option of the Borrower, all or
any part of the interest due under this Note may be deferred until the Payment
Date.
All amounts owed by the Borrower shall be recorded in the books and
records of the Lender. On the Payment Date, all amounts then remaining unpaid on
this Note shall be immediately due and payable without notice of default,
presentment or demand for payment, protest or notice of nonpayment or dishonor,
or notices or demands of any kind, all of which are
<PAGE>
expressly waived by the Borrower. The Borrower agrees to pay all costs and
expenses, including without limitation attorneys' fees, incurred in connection
with the interpretation or enforcement of this Note.
This Note has been executed and delivered in and shall be construed and
interpreted in accordance with and governed by the laws of the State of New
York.
QUEBECOR WORLD FINANCE, INC.
By:
-------------------------------------
Name: Robert G. Ventura
Title: Vice President, Legal Affairs
and Secretary
-3-
<PAGE>
December 22, 1999
Quebecor World Finance Inc.
300 Delaware Avenue
Suite 900
Wilmington, DE 19801
Attention: Vice President, Legal Affairs and Secretary
Dear Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement dated as
of September 24, 1999 (the "Agreement") among the Sellers party thereto and
Quebecor World Finance Inc. (the "Purchaser"). Capitalized terms used herein
without definition shall have the meanings assigned to them in the Agreement.
The Sellers and the Purchaser wish to include Quebecor World (USA) Inc.
("Quebecor World") as a party to the Agreement in the capacity of a Seller, and
Quebecor World wishes to be party to the Agreement in the capacity of a Seller.
Accordingly, the Sellers, Quebecor World and the Purchaser hereby agree that
Quebecor World shall be made party to the Agreement as a Seller, Quebecor World
to be subject to the same terms and conditions of the Agreement as the Sellers.
Exhibit A to the Agreement is hereby amended to include the name of Quebecor
World.
Except as specifically amended hereby, the Agreement shall, in all
respects, remain in full force and effect.
<PAGE>
Please sign where noted below to confirm the foregoing agreement.
Very truly yours,
SELLERS NAMED IN EXHIBIT A TO
THE AGREEMENT
By:
-------------------------------
Name: Jeremy Roberts
Title: Assistant Treasurer
QUEBECOR WORLD (USA) INC.
By:
-------------------------------
Name: Jeremy Roberts
Title: Assistant Treasurer
ACCEPTED AND AGREED:
QUEBECOR WORLD FINANCE INC.
By:
----------------------------
Name: Jeremy Roberts
Title: Assistant Treasurer
-2-
<PAGE>
Exhibit 10.2
December 22, 1999
Quebecor World Finance Inc.
300 Delaware Avenue
Suite 900
Wilmington, DE 19801
Attention: Vice President, Legal Affairs and Secretary
Dear Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement dated as of
September 24, 1999 (the "Agreement") among the Sellers party thereto and
Quebecor World Finance Inc. (the "Purchaser"). Capitalized terms used herein
without definition shall have the meanings assigned to them in the Agreement.
The Sellers and the Purchaser wish to include Quebecor World (USA) Inc.
("Quebecor World") as a party to the Agreement in the capacity of a Seller, and
Quebecor World wishes to be party to the Agreement in the capacity of a Seller.
Accordingly, the Sellers, Quebecor World and the Purchaser hereby agree that
Quebecor World shall be made party to the Agreement as a Seller, Quebecor World
to be subject to the same terms and conditions of the Agreement as the Sellers.
Exhibit A to the Agreement is hereby amended to include the name of Quebecor
World.
Except as specifically amended hereby, the Agreement shall, in all
respects, remain in full force and effect.
<PAGE>
Please sign where noted below to confirm the foregoing agreement.
Very truly yours,
SELLERS NAMED IN EXHIBIT A TO
THE AGREEMENT
By:
------------------------------------
Name: Jeremy Roberts
Title: Assistant Treasurer
QUEBECOR WORLD (USA) INC.
By:
------------------------------------
Name: Jeremy Roberts
Title: Assistant Treasurer
ACCEPTED AND AGREED:
QUEBECOR WORLD FINANCE INC.
By:
----------------------------
Name: Jeremy Roberts
Title: Assistant Treasurer
-2-
<PAGE>
Exhibit 10.3
Amended and Restated
Receivables Sale Agreement
Dated as of September 24, 1999, as amended
and Restated as of December 22, 1999
among
Quebecor World Finance Inc.,
as the Seller,
Quebecor Printing (USA) Holdings Inc.,
as the Initial Collection Agent,
ABN AMRO Bank N.V.,
as the Agent and a Purchaser Agent,
The other Purchaser Agents
from time to time party hereto,
The Related Bank Purchasers
from time to time party hereto,
and
Amsterdam Funding Corporation, as a
Conduit Purchaser
and
The other Conduit Purchasers
from time to time party hereto
<PAGE>
Table of Contents
PAGE
Article I Purchases from Seller and Settlements 1
Section 1.1. Sales 1
Section 1.2. Interim Liquidations. 2
Section 1.3. Selection of Discount Rates and Tranche Periods. 2
Section 1.4. Fees and Other Costs and Expenses 2
Section 1.5. Maintenance of Sold Interest; Deemed Collection 3
Section 1.6. Reduction in Commitments 3
Section 1.7. Optional Repurchases. 3
Section 1.8. Assignment of Purchase Agreement and RPA Limited Guaranty. 3
Section 1.9. Extension of Scheduled Termination Date. 4
Article II Sales to and from Conduit Purchasers; Allocations 4
Section 2.1. Required Purchases from an Uncommitted Conduit Purchaser. 4
Section 2.2. Purchases by an Uncommitted Conduit Purchaser. 4
Section 2.3. Allocations and Distributions 4
Article III Administration and Collections 5
Section 3.1. Appointment of Collection Agent 5
Section 3.2. Duties of Collection Agent 6
Section 3.3. Reports 6
Section 3.4. Lock-Box Arrangements 6
Section 3.5. Enforcement Rights 7
Section 3.6. Collection Agent Fee 7
Section 3.7. Responsibilities of the Seller 7
Section 3.8. Actions by Seller 7
Section 3.9. Indemnities by the Collection Agent. 8
Article IV Representations and Warranties 8
Section 4.1. Representations and Warranties 8
Article V Covenants 9
Section 5.1. Covenants of the Seller 9
Article VI Indemnification 12
Section 6.1. Indemnities by the Seller 12
Section 6.2. Increased Cost and Reduced Return 13
Section 6.3. Other Costs and Expenses 13
Section 6.4. Withholding Taxes 14
Section 6.5. Payments and Allocations 14
Article VII Conditions Precedent 14
Section 7.1. Conditions to Closing 14
Section 7.2. Conditions to Each Purchase 15
Article VIII The Agent 15
Section 8.1. Appointment and Authorization 15
Section 8.2. Delegation of Duties 15
Section 8.3. Exculpatory Provisions 16
Section 8.4. Reliance by Agent and Purchaser Agent 16
Section 8.5. Assumed Payments 16
Section 8.6. Notice of Termination Events 16
-i-
<PAGE>
Section 8.7. Non-Reliance on Agent and Other Purchasers 17
Section 8.8. Agent and Affiliates. 17
Section 8.9. Indemnification 17
Section 8.10. Successor Agent. 17
Article IX Miscellaneous 17
Section 9.1. Termination 17
Section 9.2. Notices 17
Section 9.3. Payments and Computations 18
Section 9.4. Sharing of Recoveries 18
Section 9.5. Right of Setoff 18
Section 9.6. Amendments 18
Section 9.7. Waivers 19
Section 9.8. Successors and Assigns; Participations; Assignments 19
Section 9.9. Intended Tax Characterization 20
Section 9.10. Confidentiality 20
Section 9.11. Agreement Not to Petition. 20
Section 9.12. Excess Funds 21
Section 9.13. No Recourse 21
Section 9.14. Headings; Counterparts. 21
Section 9.15. Cumulative Rights and Severability. 21
Section 9.16. Governing Law; Submission to Jurisdiction 21
Section 9.17. WAIVER OF TRIAL BY JURY 21
Section 9.18. Entire Agreement. 21
-ii-
<PAGE>
SCHEDULES DESCRIPTION
Schedule I Definitions
Schedule II Related Bank Purchasers and Commitments of Committed Purchasers
Schedule III Obligors
EXHIBITS DESCRIPTION
Exhibit A Form of Incremental Purchase Request
Exhibit B [RESERVED]
Exhibit C Form of Periodic Report
Exhibit D Addresses and Names of Seller and Originator
Exhibit E Subsidiaries
Exhibit F Lock-Boxes and Lock-Box Banks
Exhibit G Form of Lock-Box Letter
Exhibit H Compliance Certificate
Exhibit I Credit and Collection Policy
-iii-
<PAGE>
Amended and Restated
Receivables Sale Agreement
THIS AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of December 22,
1999, is among Quebecor World Finance Inc., a Delaware corporation, as Seller
(the "SELLER"), Quebecor Printing (USA) Holdings Inc., a Delaware corporation,
as initial Collection Agent (the "INITIAL COLLECTION AGENT," and, together with
any successor thereto, the "COLLECTION AGENT"), ABN AMRO Bank N.V., as agent for
the Purchasers (the "AGENT"), the Purchaser Agents party hereto, the Conduit
Purchasers party hereto, and the Related Bank Purchasers party hereto.
Preliminary Statement
The Seller, Initial Collection Agent, Agent, Amsterdam and certain liquidity
providers are parties to a Receivables Sale Agreement, dated as of September 24,
1999 (the "ORIGINAL CREDIT AGREEMENT"); Subject to and upon the terms and
conditions set forth herein, the parties desire to amend and restated the
Original Credit Agreement in the form of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
the other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
Article I
Purchases from Seller and Settlements
SECTION 1.1. SALES.
(a) THE SOLD INTEREST. Subject to the terms and conditions hereof, the
Seller may, from time to time before the Termination Date, sell to the Conduit
Purchasers or, only if an Uncommitted Conduit Purchaser declines to make the
applicable purchase, ratably to the Related Bank Purchasers for such Uncommitted
Conduit Purchaser an undivided percentage ownership interest in the Eligible
Receivables identified by the Seller as provided in Section 7.2 (the "SOLD
RECEIVABLES"), the Related Security and all related Collections; PROVIDED THAT
the aggregate principal amount of Sold Receivables shall equal the Sold
Receivable Balance. Any such purchase (a "PURCHASE") shall be made by each
relevant Purchaser remitting funds to the Seller, through the Agent, pursuant to
Section 1.1(c) or by the Collection Agent remitting Collections to the Seller
pursuant to Section 1.1(d). The aggregate percentage ownership interest so
acquired by a Purchaser in the Sold Receivables, the Related Security and
related Collections (its "PURCHASE INTEREST") shall equal at any time such
Purchaser's Investment divided by the Aggregate Investment. The sum of all
Purchasers' Purchase Interests at any time is referred to herein as the "SOLD
INTEREST", which at any time is the aggregate percentage ownership interest then
held by the Purchasers in the Sold Receivables, the Related Security and
Collections.
(b) UNCOMMITTED CONDUIT PURCHASERS' PURCHASE OPTION AND COMMITTED
PURCHASERS' COMMITMENTS. Subject to Section 1.1(d) concerning Reinvestment
Purchases, at no time will an Uncommitted Conduit Purchaser have any obligation
to make a Purchase. Each Committed Purchaser severally hereby agrees, subject to
Section 7.2 and the other terms and conditions hereof (including, in the case of
an Incremental Purchase (as defined below), the condition that the related
Uncommitted Conduit Purchaser has refused to make a requested Purchase), to make
Purchases before the Termination Date, based on the applicable Purchaser Group's
Ratable Share of each Purchase (and, in the case of each Related Bank Purchaser,
its Commitment Percentage of its Purchaser Group's Ratable Share of such
Purchase), to the extent its Investment would not thereby exceed its Commitment,
the Aggregate Investment would not thereby exceed the Purchase Limit, and the
Matured Aggregate Investment would not thereby exceed the Aggregate Commitments.
Each Purchaser's first Purchase and each additional Purchase by such Purchaser
not made from Collections pursuant to Section 1.1(d) is referred to herein as an
"INCREMENTAL PURCHASE." Each Purchase made by a Purchaser with the proceeds of
Collections in which it has a Purchase Interest, which does not increase the
outstanding Investment of such Purchaser, is referred to herein as a
"REINVESTMENT PURCHASE." All Purchases hereunder shall be made ratably by each
Purchaser Group in accordance with the Commitment of such Purchaser Group.
(c) INCREMENTAL PURCHASES. In order to request an Incremental Purchase
from a Purchaser, the Seller must provide to the Agent and each Purchaser Agent
an irrevocable written request (including by telecopier or other facsimile
communication) substantially in the form of Exhibit A, by (i) 10:00 a.m.
(Chicago time) three Business Days before the requested date (the "PURCHASE
DATE") of such Purchase, in the case of each Purchase by an Uncommitted Conduit
Purchaser and in the case of each Purchase by the Committed Purchasers that is
to accrue Discount at the LIBOR Rate and (ii) 10:00 a.m. (Chicago time) one
Business Day before the requested Purchase Date in the case of each Purchase by
the Committed Purchasers that is to accrue Discount at the Prime Rate, or, in
each of the foregoing cases, such later time or day as a Conduit Purchaser shall
agree. Each such notice shall specify the requested Purchase Date (which must be
a Business Day) and the requested amount (the "PURCHASE Amount") of such
Purchase, which must be in a minimum amount of $1,000,000 and multiples thereof
(or, if less, an amount equal to the Maximum Incremental Purchase Amount). All
Incremental Purchases must be requested
<PAGE>
ratably from all Conduit Purchasers unless upon such request, in the case of an
Uncommitted Conduit Purchaser, such Uncommitted Conduit Purchaser, in its sole
discretion, determines not to make its Ratable Share of the requested Purchase
(which determination shall be made within one Business Day after the Seller's
request for an Incremental Purchase), in which case the Seller may request
(which such request may only be made on and after January 3, 2000) such Ratable
Share of the Incremental Purchase be made by the Related Bank Purchasers of such
Uncommitted Conduit Purchaser on the originally requested Purchase Date. Each
Purchaser Agent shall promptly notify the related Purchasers from which a
Purchase is requested of the contents of such request. If a Ratable Share of an
Incremental Purchase is requested from an Uncommitted Conduit Purchaser and such
Uncommitted Conduit Purchaser determines, in its sole discretion, to make the
requested Purchase, such Uncommitted Conduit Purchaser shall transfer to the
Agent's Account its Ratable Share of such Incremental Purchase by no later than
12:00 noon (Chicago time) on the Purchase Date. If a Ratable Share of an
Incremental Purchase is requested from a Committed Conduit Purchaser or the
Related Bank Purchasers for a Purchaser Group (which such request of the Related
Bank Purchasers may only be made on and after January 3, 2000), subject to
Section 7.2 and the other terms and conditions hereof, each Committed Conduit
Purchaser or the Related Bank Purchasers for a Purchaser Group shall transfer
the applicable Purchaser Group's Ratable Share of the requested Purchase Amount
(and, in the case of each Related Bank Purchaser, its Commitment Percentage of
its Purchaser Group's Ratable Share of such Purchase) into the Agent's Account
by no later than 12:00 noon (Chicago time) on the Purchase Date. The Agent shall
transfer to the Seller Account the proceeds of any Incremental Purchase
delivered into the Agent's Account. Notwithstanding anything in this Agreement
to the contrary, the Committed Purchasers shall have no Commitment to make an
Incremental Purchase prior to January 3, 2000.
(d) REINVESTMENT PURCHASES. Unless an Uncommitted Conduit Purchaser has
provided to the Agent, its Purchaser Agent, the Seller, and the Collection Agent
a notice (which notice has not been revoked) that it no longer wishes to make
Reinvestment Purchases (in which case such Uncommitted Conduit Purchaser's
Reinvestment Purchases, but not those of its Related Bank Purchasers or any
Committed Conduit Purchaser, shall cease), on each day before the Termination
Date that any Collections are received by the Collection Agent and no Interim
Liquidation is in effect a Purchaser's Purchase Interest in such Collections
shall automatically be used to make a Reinvestment Purchase by such Purchaser.
An Uncommitted Conduit Purchaser may revoke any notice provided under the first
sentence of this Section 1.1(d) by notifying the Agent, its Purchaser Agent, the
Seller, and the Collection Agent that it will make Reinvestment Purchases.
(e) SECURITY INTEREST. To secure all of the Seller's obligations under
the Transaction Documents, the Seller hereby grants to the Agent (for the
benefit of the Purchasers and any other Person to whom any amount is owed
hereunder) a security interest in all of the Seller's rights in the Sold
Receivables, the Related Security, the Collections, the Lock- Box Accounts and
all proceeds of the foregoing.
SECTION 1.2. INTERIM LIQUIDATIONS. (a) OPTIONAL. The Seller may at any
time direct that Reinvestment Purchases cease and that an Interim Liquidation
commence for all Purchasers by giving the Agent, each Purchaser Agent and the
Collection Agent at least three Business Days' prior written (including telecopy
or other facsimile communication) notice specifying the date on which the
Interim Liquidation shall commence and, if desired, when such Interim
Liquidation shall cease (identified as a specific date prior to the Termination
Date or as when the Aggregate Investment is reduced to a specified amount). If
the Seller does not so specify the date on which an Interim Liquidation shall
cease, it may cause such Interim Liquidation to cease at any time before the
Termination Date, subject to Section 1.2(b) below, by notifying the Agent, each
Purchaser Agent and the Collection Agent in writing (including by telecopy or
other facsimile communication) at least three Business Days before the date on
which it desires such Interim Liquidation to cease.
(b) MANDATORY. If at any time before the Termination Date any condition
in Section 7.2 is not fulfilled, the Seller shall immediately notify the Agent,
each Purchaser Agent and the Collection Agent, whereupon Reinvestment Purchases
shall cease and an Interim Liquidation shall commence, which shall cease only
upon the Seller confirming to the Agent that the conditions in Section 7.2 are
fulfilled.
SECTION 1.3. SELECTION OF DISCOUNT RATES AND TRANCHE PERIODS. The
Discount Rates, Tranche Periods and related matters for all Investment of each
Purchaser Group shall be set forth in and governed by the terms of, the Rate
Supplement for such Purchaser Group.
SECTION 1.4. FEES AND OTHER COSTS AND EXPENSES. (a) The Seller shall
pay to each Purchaser Agent for the benefit of its Purchaser Group, such amounts
as agreed to with the Seller in the Pricing Letter and Fee Letter, if any, for
such Purchaser Group.
(b) Investment shall be payable solely from Collections and from
amounts payable under Sections 1.5, 1.7 and 6.1 (to the extent amounts paid
under Section 6.1 indemnify against reductions in or non-payment of
Receivables). The Seller shall pay, as a full recourse obligation, all amounts
payable pursuant to Sections 1.5, 1.7
-2-
<PAGE>
and 6.1 and all other amounts payable hereunder (other than Investment) and
under the Rate Supplements, including, without limitation, all Discount, fees
described in the Pricing Letters and Fee Letters and amounts payable under
Article VI.
SECTION 1.5. MAINTENANCE OF SOLD INTEREST; DEEMED COLLECTION. (a)
GENERAL. If at any time before the Termination Date the Eligible Receivable
Balance is less than the sum of the Aggregate Investment (or, if a Termination
Event exists, the Matured Aggregate Investment) plus the Aggregate Reserve, the
Seller shall pay to the Agent an amount equal to such deficiency for application
to reduce the Investments of the Purchasers ratably in accordance with the
principal amount of their respective Investments, applied FIRST to Prime
Tranches and SECOND to the other Tranches with the shortest remaining maturities
unless otherwise specified by the Seller.
(b) DEEMED COLLECTIONS. If on any day the outstanding balance of a Sold
Receivable is reduced or cancelled as a result of any defective or rejected
goods or services, any cash discount or adjustment (including any adjustment
resulting from the application of any special refund or other discounts or any
reconciliation), any setoff or credit (whether such claim or credit arises out
of the same, a related, or an unrelated transaction) or other similar reason not
arising from the financial inability of the Obligor to pay undisputed
indebtedness, the Seller shall be deemed to have received on such day a
Collection on such Sold Receivable in the amount of such reduction or
cancellation. If on any day any representation, warranty, covenant or other
agreement of the Seller related to a Receivable is not true or is not satisfied,
the Seller shall be deemed to have received on such day a Collection in the
amount of the outstanding balance of such Sold Receivable. All such Collections
deemed received by the Seller under this Section 1.5(b) ("DEEMED COLLECTIONS")
shall be remitted by the Seller to the Collection Agent in accordance with
Section 5.1(i).
(c) PAYMENT ASSUMPTION. Unless an Obligor otherwise specifies or
another application is required by contract or law, any payment received by the
Seller from any Obligor shall be applied as a Collection of Sold Receivables of
such Obligor (starting with the oldest such Sold Receivable) and remitted to the
Collection Agent as such.
SECTION 1.6. REDUCTION IN COMMITMENTS. (a) The Seller may, upon thirty
days' notice to the Agent and each Purchaser Agent, reduce the Aggregate
Commitment in increments of $1,000,000, so long as the Aggregate Commitment as
so reduced equals at least the outstanding Matured Aggregate Investment. Each
such reduction in the Aggregate Commitment shall reduce the Commitment of each
Purchaser Group in accordance with its Ratable Share (and, in the case of each
Related Bank Purchaser, its Commitment Percentage of its Purchaser Group's
Ratable Share of such reduction) and shall ratably reduce the Purchase Limit so
that the Aggregate Commitment remains at least 102% of the Purchase Limit and
the Purchase Limit is not less than the outstanding Aggregate Investment.
(b) Unless all parties hereto agree in writing, the Seller shall reduce
on April 3, 2000 by $81,600,000 the Aggregate Commitment and the Matured
Aggregate Investment. Each such redution in the Aggregate Commitment shall
reduce the Commitment of each Purchaser Group in accordance with its Ratable
Share (and, in the case of each Related Bank Purchaser, its Commitment
Percentage of its Purchaser Group's Ratable Share of such reduction) and shall
ratably reduce the Purchase Limit so that the Aggregate Commitment remains at
least 102% of the Purchase Limit and the Purchase Limit is not less than the
outstanding Aggregate Investment.
SECTION 1.7. OPTIONAL REPURCHASES. At any time that the Aggregate
Investment is less than 10% of the Aggregate Commitment in effect on the date
hereof, the Seller may, upon thirty days' notice to the Agent and each Purchaser
Agent, repurchase the entire Sold Interest from the Purchasers at a price equal
to the outstanding Matured Aggregate Investment and all other amounts then owed
hereunder.
SECTION 1.8. ASSIGNMENT OF PURCHASE AGREEMENT AND RPA LIMITED GUARANTY.
The Seller hereby assigns and otherwise transfers to the Agent (for the benefit
of the Agent, each Purchaser Agent, each Purchaser and any other Person to whom
any amount is owed hereunder), all of the Seller's right, title and interest in,
to and under the Purchase Agreement and RPA Limited Guaranty to the extent of
the Sold Receivables. The Seller shall execute, file and record all financing
statements, continuation statements and other documents required to perfect or
protect such assignment. This assignment includes to the extent related to the
Sold Receivables (a) all monies due and to become due to the Seller from the
Originator or the Parent under or in connection with the Purchase Agreement and
the RPA Limited Guaranty (including fees, expenses, costs, indemnities and
damages for the breach of any obligation or representation related to such
agreement) and (b) all rights, remedies, powers, privileges and claims of the
Seller against the Originator, the Parent or Quebecor Printing Inc. under or in
connection with the Purchase Agreement and the RPA Limited Guaranty. All
provisions of the Purchase Agreement and the RPA Limited Guaranty shall inure to
the benefit of, and may be relied upon by, the Agent, each Purchaser Agent, each
Purchaser and each such other Person. At any time that a Termination Event has
occurred and is continuing, the Agent shall have the sole right to enforce the
Seller's rights and remedies under the Purchase Agreement and the RPA Limited
-3-
<PAGE>
Guaranty to the same extent as the Seller could absent this assignment, but
without any obligation on the part of the Agent, any Purchaser Agent, any
Purchaser or any other such Person to perform any of the obligations of the
Seller under the Purchase Agreement (or the promissory note executed
thereunder). All amounts distributed to the Seller under the Purchase Agreement
or the RPA Limited Guaranty from Sold Receivables sold to the Seller thereunder
shall constitute Collections hereunder and shall be applied in accordance
herewith.
SECTION 1.9. EXTENSION OF SCHEDULED TERMINATION DATE. No later than 60
days prior to the Scheduled Termination Date the Seller may request in a written
notice to the Agent that the Scheduled Termination Date then in effect be
extended by three hundred sixty (360) days. The Agent will promptly inform each
Purchaser Agent of any such request and each Purchaser Agent shall notify the
Agent in writing no later than 30 days after its receipt of such notice whether
its Purchaser Group agrees to such extension (each such Purchaser Group agreeing
to such extension being a "CONSENTING PURCHASER GROUP"). In the event that a
Purchaser Agent shall fail timely to so notify the Agent whether its Purchaser
Group agrees to such extension, such Purchaser Group shall be deemed to have
refused to grant the requested extension. Upon receipt by the Agent of the
consent to such extension of all the Purchaser Groups no later than 30 days
after its receipt of such notice, the Scheduled Termination Date shall be
automatically extended an additional three hundred sixty (360) days. If the
Instructing Group consents to such extension but fewer than all the Purchaser
Groups so consent, and if the Seller still desires to extend the Scheduled
Termination Date, the Seller may seek to replace any Purchaser Group that is a
non-Consenting Purchaser Group pursuant to Section 9.8.
If the Seller and all the Purchaser Groups do not agree to the extension and
each non-Consenting Conduit Purchaser is not replaced, the Scheduled Termination
Date shall take place as scheduled. If the Scheduled Termination Date is
extended, any non-Consenting Purchaser Group shall be replaced on the effective
date of the assignment as set forth above and all amounts owing to such
Purchaser Group hereunder shall, on such effective date, be paid in full
pursuant to the terms of Section 9.8 hereof.
Article II
Sales to and from Conduit Purchasers; Allocations
SECTION 2.1. REQUIRED PURCHASES FROM AN UNCOMMITTED CONDUIT PURCHASER.
(a) Each Uncommitted Conduit Purchaser may, at any time, sell to the relevant
Related Bank Purchasers pursuant to the relevant Transfer Agreement any
percentage designated by such Uncommitted Conduit Purchaser of such Uncommitted
Conduit Purchaser Investment and its related Uncommitted Conduit Purchaser
Settlement (each, a "PUT").
(b) Any portion of any Investment of an Uncommitted Conduit Purchaser
and related Uncommitted Conduit Purchaser Settlement purchased by a Related Bank
Purchaser shall be considered part of such Related Bank Purchaser's Investment
and related Uncommitted Conduit Purchaser Settlement from the date of the
relevant Put. Immediately upon any purchase by a Related Bank Purchaser of any
portion of the relevant Uncommitted Conduit Purchaser Investment, the Seller
shall pay to the relevant Purchaser Agent (for the ratable benefit of each such
Purchaser) an amount equal to the sum of (i) the Assigned Uncommitted Conduit
Purchaser Settlement and (ii) all unpaid Discount owed to such Uncommitted
Conduit Purchaser (whether or not then due) to the end of each applicable
Tranche Period to which any Investment being Put has been allocated, (iii) all
accrued but unpaid fees (whether or not then due) payable to such Uncommitted
Conduit Purchaser in connection herewith at the time of such purchase and (iv)
all accrued and unpaid costs, expenses and indemnities due to such Uncommitted
Conduit Purchaser from the Seller in connection herewith.
SECTION 2.2. PURCHASES BY AN UNCOMMITTED CONDUIT PURCHASER. Each
Uncommitted Conduit Purchaser may at any time deliver to its Purchaser Agent and
each relevant Related Bank Purchaser a notification of assignment in
substantially the form provided by the relevant Transfer Agreement. If an
Uncommitted Conduit Purchaser delivers such notice, each relevant Related Bank
Purchaser shall sell to such Uncommitted Conduit Purchaser and such Uncommitted
Conduit Purchaser shall purchase in full from each such Related Bank Purchaser,
the Investment of the Related Bank Purchasers on the last day of the relevant
Tranche Periods, at a purchase price equal to such Investment plus accrued and
unpaid Discount thereon. Any sale from any Related Bank Purchaser to the
relevant Uncommitted Conduit Purchaser pursuant to this Section 2.2 shall be
without recourse, representation or warranty except for the representation and
warranty that the Investment sold by such Related Bank Purchaser is free and
clear of any Adverse Claim created or granted by such Related Bank Purchaser and
that such Related Bank Purchaser has not suffered a Bankruptcy Event.
SECTION 2.3. ALLOCATIONS AND DISTRIBUTIONS.
(a) NON-REINVESTMENT PERIODS. Before the Termination Date unless an
Interim Liquidation is in effect, on each day during a period that an
Uncommitted Conduit Purchaser is not making Reinvestment Purchases (as
established under Section 1.1(d)), the Collection Agent (i) shall set aside and
hold solely for the benefit of the applicable Uncommitted Conduit Purchaser (or
deliver to the applicable Purchaser Agent, if so instructed pursuant
-4-
<PAGE>
to Section 3.2(a)) such Uncommitted Conduit Purchaser's Purchase Interest in all
Collections received on such day and (ii) shall distribute on the last day of
each CP Tranche Period to the applicable Purchaser Agent (for the benefit of
such Uncommitted Conduit Purchaser) the amounts so set aside up to the amount of
such Uncommitted Conduit Purchaser's Purchase Amount and, to the extent not
already paid in full, all Discount thereon and all other amounts then due from
the Seller in connection with such Purchase Amount and Tranche Period. As
provided in Section 1.4(c) all Discount and other amounts payable hereunder
other than the Purchase Amount are payable by the Seller. If any part of the
Sold Interest in any Collections is applied to pay any such amounts pursuant to
this Section 2.3(a) and after giving effect to such application the Aggregate
Investment PLUS the Aggregate Reserve is greater than the Eligible Receivable
Balance, the Seller shall pay to the Collection Agent the amount so applied to
the extent necessary so that after giving effect to such payment the Aggregate
Investment PLUS the Aggregate Reserve is no greater than the Eligible Receivable
Balance, for distribution as part of the Purchase Interest in Collections.
(b) TERMINATION DATE AND INTERIM LIQUIDATIONS. On each day during any
Interim Liquidation and on each day on and after the Termination Date the
Collection Agent shall set aside and hold solely for the account of each
Purchaser Agent, for the benefit of each Purchaser Group to the extent provided
below, (or deliver to each Purchaser Agent, if so instructed pursuant to Section
3.2(a)) and for the account of the Agent, the Sold Interest in all Collections
received on such day and such Collections shall be allocated as follows:
(i) FIRST, ratably to each Purchase Group until all Investment of, and
Discount and interest due but not already paid to, each Purchaser Group has been
paid in full; and
(ii) SECOND, ratably to such Purchaser Group until all amounts owed to
such Purchaser Group have been paid in full.
(iii) THIRD, to the Agent until all amounts owed to the Agent (other
than amounts owing the Agent in its role as a Purchaser Agent) have been paid in
full;
(iv) FOURTH, to each Purchaser Agent until all amounts owed to such
Persons have been paid in full;
(v) FIFTH, to any other Person to whom any amounts are owed under the
Transaction Documents until all such amounts have been paid in full; and
(vi) SIXTH, to the Seller (or as otherwise required by applicable law).
Unless an Interim Liquidation has ended by such date (in which case Reinvestment
Purchases shall resume to the extent provided in Section 1.1(d)), on the last
day of each Tranche Period (unless otherwise instructed by a Purchaser Agent
pursuant to Section 3.2(a)), the Collection Agent shall pay to the appropriate
parties, from such set aside Collections, all amounts allocated to such Tranche
Period and all Tranche Periods that ended before such date that are due in
accordance with the priorities in clauses (i) and (ii) above. No distributions
shall be made to pay amounts under clauses (iii), (iv), (v), and (vi) above
until sufficient Collections have been set aside to pay all amounts described in
clause (i) that may become payable for all outstanding Tranche Periods. All
distributions by the Agent shall be made ratably within each priority level in
accordance with the respective amounts then due each Person included in such
level unless otherwise agreed by all Purchaser Agents. As provided in Section
1.4(b) all Discount, interest and other amounts payable hereunder other than
Investment are payable by the Seller. If any part of the Sold Interest in any
Collections is applied to pay any such amounts pursuant to this Section 2.3(b)
and after giving effect to such application the Matured Aggregate Investment
PLUS the Aggregate Reserve is greater than the Eligible Receivable Balance, the
Seller shall pay to the Collection Agent the amount so applied to the extent
necessary so that after giving effect to such payment the Aggregate Investment
PLUS the Aggregate Reserve is no greater than the Eligible Receivable Balance,
for distribution as part of the Sold Interest in Collections.
Article III
Administration and Collections
SECTION 3.1. APPOINTMENT OF COLLECTION AGENT. (a) The servicing,
administering and collecting of the Receivables shall be conducted by a Person
(the "COLLECTION AGENT") designated to so act on behalf of the Purchasers under
this Article III. As the Initial Collection Agent, the Parent is hereby
designated as, and agrees to perform the duties and obligations of, the
Collection Agent. The Parent acknowledges that the Agent, each Purchaser Agent
and each Purchaser have relied on the Parent's agreement to act as Collection
Agent (and the agreement of any of the sub-collection agents to so act) in
making the decision to execute and deliver this Agreement and agrees that it
will not voluntarily resign as Collection Agent nor permit any sub-collection
agent to voluntarily resign as a sub-collection agent. At any time after the
occurrence of a Collection Agent Replacement Event, the Seller, with the written
consent of the Agent, may designate a new Collection Agent to succeed the Parent
(or any successor Collection Agent); PROVIDED THAT if the Seller and Agent can
not agree on a new Collection Agent within three days of the occurrence of a
Collection Agent Replacement Event, the Agent may designate a new Collection
Agent.
-5-
<PAGE>
(b) The Parent may, and if requested by the Agent shall, delegate its
duties and obligations as Collection Agent to an Affiliate (acting as a
sub-collection agent). Notwithstanding such delegation, the Parent shall remain
primarily liable for the performance of the duties and obligations so delegated,
and the Agent, each Purchaser Agent and each Purchaser shall have the right to
look solely to the Parent for such performance. The Agent may at any time after
the occurrence of a Collection Agent Replacement Event remove or replace any
sub-collection agent.
(c) If replaced, the Collection Agent agrees it will terminate, and
will cause each existing sub-collection agent to terminate, its collection
activities in a manner requested by the Agent to facilitate the transition to a
new Collection Agent. The Collection Agent shall cooperate with and assist any
new Collection Agent (including providing access to, and transferring, all
Records and allowing (to the extent permitted by applicable law and contract)
the new Collection Agent to use all licenses, hardware or software necessary or
desirable to collect the Receivables). The Parent irrevocably agrees to act (if
requested to do so) as the data-processing agent for any new Collection Agent in
substantially the same manner as the Parent conducted such data-processing
functions while it acted as the Collection Agent.
SECTION 3.2. DUTIES OF COLLECTION AGENT. (a) The Collection Agent shall
take, or cause to be taken, all action necessary or advisable to collect each
Receivable in accordance with this Agreement, the Credit and Collection Policy
and all applicable laws, rules and regulations using the skill and attention the
Collection Agent exercises in collecting other receivables or obligations owed
solely to it. The Collection Agent shall, in accordance herewith, set aside all
Collections to which a Purchaser is entitled. If so instructed by the
appropriate Purchaser Agent, after the occurrence of a Collection Agent
Replacement Event, the Collection Agent shall transfer to the appropriate
Purchaser Agent the amount of Collections to which the related Purchaser Group
are entitled by the Business Day following receipt. Each party hereto hereby
appoints the Collection Agent to enforce such Person's rights and interests in
the Sold Receivables, but (notwithstanding any other provision in any
Transaction Document) the Agent shall at all times after the occurrence of a
Collection Agent Replacement Event have the sole right to direct the Collection
Agent to commence or settle any legal action to enforce collection of any Sold
Receivable.
(b) If no Termination Event exists and the Collection Agent determines
that such action is appropriate in order to maximize the Collections, the
Collection Agent may, in accordance with the Credit and Collection Policy,
extend the maturity of any Receivable (but no such extension shall be for a
period more than thirty (30) days) or adjust the outstanding balance of any
Receivable. Any such extension or adjustment shall not alter the status of a
Receivable as a Defaulted Receivable or Delinquent Receivable or limit any
rights of the Agent, any Purchaser Agent or the Purchasers hereunder. If a
Termination Event exists, the Collection Agent may make such extensions or
adjustments only with the prior consent of the Instructing Group.
(c) The Collection Agent shall turn over to the Seller (i) any
Collections in excess of the Aggregate Investment plus the Aggregate Reserve,
less all reasonable costs and expenses of the Collection Agent for servicing,
collecting and administering the Receivables and (ii) subject to Section 1.5(c),
the collections and records for any indebtedness owed to the Seller that is not
a Sold Receivable. The Collection Agent shall keep a copy in its files of all
such records which it turns over to the Seller. The Collection Agent has no
obligations concerning indebtedness that is not a Receivable other than to
deliver the collections and records for such indebtedness to the Seller when
required by this Section 3.2(c).
(d) Each Purchase hereunder shall constitute a representation and
warranty by the Collection Agent that the Eligible Receivable Balance as of the
date such Purchase is made is greater than or equal to the Sold Receivable
Balance.
SECTION 3.3. REPORTS. On or before the twentieth day of each month,
and, after the occurrence of a Termination Event, at such other times covering
such other periods as is requested by the Agent or the Instructing Group, the
Collection Agent shall deliver to the Agent and each Purchaser Agent a report
reflecting information as of the close of business of the Collection Agent for
the immediately preceding fiscal month or such other preceding period as is
requested (each a "PERIODIC REPORT"), containing the information described on
Exhibit C (with such modifications or additional information as reasonably
requested by the Agent or the Instructing Group and, prior to the occurrence of
a Termination Event, agreed to by the Seller).
SECTION 3.4. LOCK-BOX ARRANGEMENTS. The Agent is hereby authorized to
give notice at any time after the occurrence of a Collection Agent Replacement
Event to any or all Lock-Box Banks that the Agent is exercising its rights under
the Lock-Box Letters and to take all actions permitted under the Lock-Box
Letters. The Seller agrees to take any action requested by the Agent to
facilitate the foregoing. After the Agent takes any such action under the
Lock-Box Letters, the Seller shall immediately deliver to the Agent any
Collections received by the Seller. If the Agent takes control of any Lock-Box
Account, the Agent shall distribute Collections it receives in accordance
-6-
<PAGE>
herewith and shall deliver to the Collection Agent, for distribution under
Section 3.2, all other amounts it receives from such Lock-Box Account.
SECTION 3.5. ENFORCEMENT RIGHTS. (a) The Agent may at any time after
the occurrence of a Collection Agent Replacement Event direct the Obligors and
the Lock-Box Banks to make all payments on the Sold Receivables directly to the
Agent or its designee. The Agent may, and the Seller shall at the Agent's
request, withhold the identity of the Purchasers from the Obligors and Lock-Box
Banks. Upon the Agent's request after the occurrence of a Collection Agent
Replacement Event, the Seller (at the Seller's expense) shall (i) give notice to
each Obligor of the Agent's ownership of the Sold Interest and direct that
payments on Sold Receivables be made directly to the Agent or its designee, (ii)
assemble for the Agent all Records and collateral security for the Sold
Receivables and the Related Security and transfer to the Agent (or its
designee), or (to the extent permitted by applicable law and contract) license
to the Agent (or its designee) the use of, all software useful to collect the
Sold Receivables and (iii) segregate in a manner acceptable to the Agent all
Collections the Seller receives and, promptly upon receipt, remit such
Collections in the form received, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(b) After the occurrence of a Collection Agent Replacement Event, the
Seller hereby irrevocably appoints the Agent as its attorney-in-fact coupled
with an interest exclusively for the purposes described in clauses (i) and (ii)
below, with full power of substitution and with full authority in the place of
the Seller, to take any and all steps deemed desirable by the Agent, in the name
and on behalf of the Seller to (i) collect any amounts due under any Sold
Receivable, including endorsing the name of the Seller on checks and other
instruments representing Collections and enforcing such Sold Receivables and the
Related Security, and (ii) exercise any and all of the Seller's rights and
remedies under the Purchase Agreement and the RPA Limited Guaranty. The Agent's
powers under this Section 3.5(b) shall not subject the Agent to any liability if
any action taken by it proves to be inadequate or invalid, nor shall such powers
confer any obligation whatsoever upon the Agent.
(c) Except as otherwise expressly provided herein or in any other
Transaction Document to which it is a party, none of the Agent, any Purchaser
Agent or any Purchaser shall have any obligation to take or consent to any
action to realize upon any Sold Receivable or Related Security or to enforce any
rights or remedies related thereto.
SECTION 3.6. COLLECTION AGENT FEE. On or before the twentieth day of
each calendar month, the Seller shall pay to the Collection Agent a fee for the
immediately preceding calendar month as compensation for its services (the
"COLLECTION AGENT FEE") equal to (a) at all times the Parent or an Affiliate of
any Quebecor Entity is the Collection Agent, such consideration as is acceptable
to it, the receipt and sufficiency of which is hereby acknowledged, and (b) at
all times any other Person is the Collection Agent, a reasonable amount agreed
upon by the Agent and the new Collection Agent on an arm's-length basis
reflecting rates and terms prevailing in the market at such time. The Collection
Agent may apply to payment of the Collection Agent Fee only the portion of the
Collections in excess of the Sold Interest plus Collections that fund
Reinvestment Purchases. The Agent may, with the consent of the Instructing
Group, pay the Collection Agent Fee to the Collection Agent from the Sold
Interest in Collections. The Seller shall be obligated to reimburse any such
payment.
SECTION 3.7. RESPONSIBILITIES OF THE SELLER. The Seller shall, or shall
cause the Originator to, pay when due all Taxes payable in connection with the
Receivables and the Related Security or their creation or satisfaction. The
Seller shall, and shall cause the Originator to, perform all of its obligations
under agreements related to the Receivables and the Related Security to the same
extent as if interests in the Receivables and the Related Security had not been
transferred hereunder or, in the case of the Originator, under the Purchase
Agreement. The Agent's, any Purchaser Agent's or any Purchaser's exercise of any
rights hereunder shall not relieve the Seller or the Originator from such
obligations. None of the Agent, any Purchaser Agent or any Purchaser shall have
any obligation to perform any obligation of the Seller or of the Originator or
any other obligation or liability in connection with the Receivables or the
Related Security.
SECTION 3.8. ACTIONS BY SELLER. The Seller shall defend and indemnify
the Agent, each Purchaser Agent and each Purchaser against all costs, expenses,
claims and liabilities for any action taken by the Seller, the Originator or any
other Affiliate of the Seller or of the Originator (whether acting as Collection
Agent or otherwise) related to any Receivable and the Related Security, or
arising out of any alleged failure of compliance of any Sold Receivable or the
Related Security with the provisions of any law or regulation. If any goods
related to a Sold Receivable are repossessed, the Seller agrees to resell, or to
have the Originator or another Affiliate resell, such goods in a commercially
reasonable manner for the account of the Agent and remit, or have remitted, to
the Agent the Purchasers' share in the gross sale proceeds thereof net of any
out-of-pocket expenses and any equity of redemption of the Obligor thereon. Any
such moneys collected by the Seller or the Originator or other Affiliate of the
Seller pursuant to this Section 3.8 shall be segregated and held in trust for
the Agent and remitted to the Agent's
-7-
<PAGE>
Account within one Business Day of receipt as part of the Sold Interest in
Collections for application as provided herein.
SECTION 3.9. INDEMNITIES BY THE COLLECTION AGENT. Without limiting any
other rights any Person may have hereunder or under applicable law, the
Collection Agent hereby indemnifies and holds harmless the Agent, each Purchaser
Agent and each Purchaser and their respective officers, directors, agents and
employees (each an "INDEMNIFIED PARTY") from and against any and all damages,
losses, claims, liabilities, penalties, Taxes, costs and expenses (including
attorneys' fees and court costs) (all of the foregoing collectively, the
"INDEMNIFIED LOSSES") at any time imposed on or incurred by any Indemnified
Party arising out of or otherwise relating to:
(i) any representation or warranty made by or on behalf of the
Collection Agent in this Agreement, any other Transaction Document, any Periodic
Report or any other information or report delivered by the Collection Agent
pursuant hereto, which shall have been false or incorrect in any material
respect when made;
(ii) the failure by the Collection Agent to comply with any applicable
law, rule or regulation related to any Receivable or the Related Security;
(iii) any loss of a perfected security interest (or in the priority of
such security interest) as a result of any commingling by the Collection Agent
of funds to which the Agent, any Purchaser Agent or any Purchaser is entitled
hereunder with any other funds; or
(iv) any failure of the Collection Agent to perform its duties or
obligations in accordance with the provisions of this Agreement or any other
Transaction Document to which the Collection Agent is a party; whether arising
by reason of the acts to be performed by the Collection Agent hereunder or
otherwise, excluding only Indemnified Losses to the extent (a) a final judgment
of a court of competent jurisdiction determined that such Indemnified Losses
resulted solely from gross negligence or willful misconduct of the Indemnified
Party seeking indemnification, (b) solely due to the credit risk of the Obligor
and for which reimbursement would constitute recourse to the Collection Agent
for uncollectible Receivables, or (c) such Indemnified Losses include Taxes on,
or measured by, the overall net income of the Agent, any Purchaser Agent or any
Purchaser computed in accordance with the Intended Tax Characterization;
PROVIDED, HOWEVER, that nothing contained in this sentence shall limit the
liability of the Collection Agent or limit the recourse of the Agent, any
Purchaser Agent and each Purchaser to the Collection Agent for any amounts
otherwise specifically provided to be paid by the Collection Agent hereunder.
Article IV
Representations and Warranties
SECTION 4.1. REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants to the Agent and each Purchaser that:
(a) EXISTENCE AND POWER. Each of the Seller and each Quebecor Entity is
duly organized, validly existing and in good standing under the laws of its
state of organization and has all corporate or other organizational power and
authority and all governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is
now conducted, except where failure to obtain such license, authorization,
consent or approval would not have a material adverse effect on (i) its ability
to perform its obligations under, or the enforceability of, any Transaction
Document, (ii) its business or financial condition, (iii) the interests of the
Agent, any Purchaser Agent or any Purchaser under any Transaction Document or
(iv) the enforceability or collectibility of a material portion of the Sold
Receivables.
(b) AUTHORIZATION AND NO CONTRAVENTION. The execution, delivery and
performance by each of the Seller and each Quebecor Entity of each Transaction
Document to which it is a party (i) are within its corporate or other
organizational powers, (ii) have been duly authorized by all necessary corporate
or other organizational action, (iii) do not contravene or constitute a default
under (A) any applicable law, rule or regulation, which contravention or default
may have a material adverse effect upon (I) the financial condition of the
Seller, the Quebecor Entities and the Subsidiaries, taken as a whole or (II) the
collectibility of a material portion of the Sold Receivables, (B) its or any
Subsidiary's charter, by-laws or other constituent documents or (C) any material
agreement, order or other instrument to which it or any Subsidiary is a party or
its property is subject, which contravention or default may have a material
adverse effect upon (I) the financial condition of the Seller, the Quebecor
Entities and the Subsidiaries, taken as a whole or (II) the collectibility of a
material portion of the Sold Receivables and (iv) will not result in any Adverse
Claim on any Sold Receivable, the Related Security or Collection or result in
the acceleration of any indebtedness of the Seller, any Quebecor Entity or any
Subsidiary.
(c) NO CONSENT REQUIRED. Other than the filing of financing statements
no approval, authorization or other action by, or filings with, any Governmental
Authority or other Person is required in connection with the execution, delivery
and performance by the Seller or any Quebecor Entity of any Transaction Document
to which it is a party or any transaction contemplated thereby.
-8-
<PAGE>
(d) BINDING EFFECT. Each Transaction Document to which the Seller or
any Quebecor Entity is a party constitutes the legal, valid and binding
obligation of such Person enforceable against that Person in accordance with its
terms, except as limited by bankruptcy, insolvency, or other similar laws of
general application relating to or affecting the enforcement of creditors'
rights generally and subject to general principles of equity.
(e) PERFECTION OF OWNERSHIP INTEREST. Immediately preceding its sale of
Sold Receivables to the Seller, the Originator was the owner of, and effectively
sold, such Sold Receivables to the Seller and, from and after the date occurring
30 days after the first Incremental Purchase, free and clear of any Adverse
Claim. The Seller owns the Sold Receivables, and, from and after the date
occurring 30 days after the first Incremental Purchase, free of any Adverse
Claim other than the interests of the Purchasers (through the Agent) therein
that are created hereby, and each Purchaser shall at all times have a valid
undivided percentage ownership interest, which shall, upon filing the UCC
financing statements referred to in Section 7.1(b), be a perfected security
interest for purposes of Article 9 of the applicable Uniform Commercial Code, in
the Sold Receivables and Collections to the extent of its Purchase Interest then
in effect.
(f) ACCURACY OF INFORMATION. All information furnished by the Seller,
any Quebecor Entity or any Affiliate of any such Person to the Agent, any
Purchaser Agent or any Purchaser in connection with any Transaction Document, or
any transaction contemplated thereby, is true and accurate in all material
respects (and is not incomplete by omitting any information necessary to prevent
such information from being materially misleading).
(g) NO ACTIONS, SUITS. There are no actions, suits or other proceedings
(including matters relating to environmental liability) pending or threatened
against or affecting the Seller, any Quebecor Entity or any Subsidiary, or any
of their respective properties, that (i) if adversely determined (individually
or in the aggregate), may have a material adverse effect on the financial
condition of the Seller, the Quebecor Entities and the Subsidiaries, taken as a
whole or on the collectibility of a material portion of the Sold Receivables or
(ii) involve any Transaction Document or any transaction contemplated thereby.
None of the Seller, any Quebecor Entity or any Subsidiary is in default of any
contractual obligation or in violation of any order, rule or regulation of any
Governmental Authority, which default or violation may have a material adverse
effect upon (i) the financial condition of the Seller, the Quebecor Entities and
the Subsidiaries, taken as a whole or (ii) the collectibility of a material
portion of the Sold Receivables.
(h) NO MATERIAL ADVERSE CHANGE. Since September 28, 1999, there has
been no material adverse change in the collectibility of a material portion of
the Sold Receivables or the Seller's, the Quebecor Entity's or the
Subsidiaries', taken as a whole (i) financial condition, business, operations or
prospects or (ii) ability to perform its obligations under any Transaction
Document.
(i) ACCURACY OF EXHIBITS; LOCK-BOX ARRANGEMENTS. All information on
Exhibits D-F (listing offices and names of the Seller and the Originator and
where they maintain Records; the Subsidiaries; and Lock Boxes) is true and
complete in all material respects, subject to any changes permitted by, and
notified to the Agent in accordance with, Article V. The Seller has delivered a
copy of all Lock-Box Agreements to the Agent. The Seller has not granted any
interest in any Lock-Box or Lock-Box Account to any Person other than the Agent
and, upon delivery to a Lock-Box Bank of the related Lock-Box Letter, the Agent
will have exclusive ownership and control of the Lock-Box Account at such
Lock-Box Bank.
(j) SALES BY THE ORIGINATOR. Each sale by the Originator to the Seller
of an interest in Receivables and their Collections has been made in accordance
with the terms of the Purchase Agreement, including the payment by the Seller to
the Originator of the purchase price described in the Purchase Agreement. Each
such sale has been made for "REASONABLY EQUIVALENT VALUE" (as such term is used
in Section 548 of the Bankruptcy Code) and not for or on account of "ANTECEDENT
DEBT" (as such term is used in Section 547 of the Bankruptcy Code) owed by the
Originator to the Seller.
(k) YEAR 2000 PROBLEM. Each of the Seller and each Quebecor Entity has
reviewed the areas within its business and operations which could be adversely
affected by, and have developed or are developing a program to address on a
timely basis, the "YEAR 2000 PROBLEM" (that is, the risk that computer
applications used by such Person and its Subsidiaries may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date on or after December 31, 1999). Based on such program, such Person
believes that the "YEAR 2000 PROBLEM" will not have a material adverse effect on
such Person.
Article V
Covenants
SECTION 5.1. COVENANTS OF THE SELLER. The Seller hereby covenants and
agrees to comply with the following covenants and agreements, unless the Agent
(with the consent of the Instructing Group) shall otherwise consent:
-9-
<PAGE>
(a) FINANCIAL REPORTING. The Seller will, and each Quebecor Entity and
each Subsidiary will, maintain a system of accounting established and
administered in accordance with GAAP and will furnish to the Agent, each
Purchaser Agent and each Purchaser:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within 90 days after the end of each fiscal year of Quebecor Printing Inc.,
commencing with the fiscal year ending December 31, 1999:
(a) the consolidated balance sheet of Quebecor Printing Inc. as the end
of such fiscal year and the related consolidated statement of income, retained
earnings and cash flows for such fiscal year, setting forth in comparative form
the figures as at the end of and for the previous fiscal year, and
(b) an audit report of KPMG, or any one of the five (5) largest firms
of accountants nationally recognized in the United States of America or in
Canada, as the case may be, which report shall include an opinion of such
auditors which opinion shall not be qualified and shall state that such
financial statements were prepared in accordance with GAAP and that the audit by
such auditors in connection with such financial statements has been made in
accordance with generally accepted auditing standards,
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within 60 days after the close of each of the first three quarterly
accounting periods in each fiscal year of Quebecor Printing Inc., commencing
with the quarterly period ending September 25, 1999, the consolidated balance
sheet of Quebecor Printing Inc. and the related consolidated statements of
income, retained earnings and cash flows for such quarterly period and for the
elapsed portion of the fiscal year ended with the last day of such quarterly
period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year, subject to normal year-end
auditing adjustments; and
(iii) OFFICER'S CERTIFICATE. Each time financial statements are
furnished pursuant to clause (i) or (ii) of this Section 5.1(a), a compliance
certificate (in substantially the form of Exhibit H) signed by a Designated
Financial Officer, dated the date of such financial statements;
(iv) PUBLIC REPORTS. Promptly upon becoming available, a copy of each
report or proxy statement filed by Quebecor Printing Inc. with the Securities
Exchange Commission; and
(v) OTHER INFORMATION. With reasonable promptness, such other
information (including non-financial information) as may reasonably be requested
by the Agent, any Purchaser Agent or any Purchaser (with a copy of such request
to the Agent).
(b) NOTICES. Promptly upon becoming aware of any of the following the
Seller will notify the Agent and each Purchaser Agent and provide a description
of:
(i) POTENTIAL TERMINATION EVENTS. The occurrence of any Potential
Termination Event;
(ii) REPRESENTATIONS AND WARRANTIES. The failure of any representation
or warranty herein to be true (when made) in any material respect;
(iii) DOWNGRADING. The downgrading, withdrawal or suspension of any
rating by any rating agency of any indebtedness of Quebecor Printing Inc.;
(iv) LITIGATION. The institution of any litigation, arbitration
proceeding or governmental proceeding reasonably likely to have a material
adverse effect on the financial condition of the Seller, the Quebecor Entities
and the Subsidiaries, taken as a whole or on the collectibility of a material
portion of the Sold Receivables; or
(v) CHANGES IN BUSINESS. Any change in, or proposed change in, the
character of any Quebecor Entity's business that could impair the collectibility
or quality of a material portion of the Sold Receivables. If the Agent or any
Purchaser Agent receives such a notice, the Agent or such Purchaser Agent shall
promptly give notice thereof to each Purchaser and, until each Conduit Purchaser
has no Investment after the Termination Date, to each CP Dealer and each Rating
Agency.
(c) CONDUCT OF BUSINESS. The Seller will perform, and will cause each
Quebecor Entity and Subsidiary to perform, all actions necessary to remain duly
organized, validly existing and in good standing in its jurisdiction of
incorporation or organization and to maintain all requisite authority to conduct
its business in each jurisdiction in which it conducts business except where the
failure to do so would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the financial condition of the
Seller, the Quebecor Entities and any Subsidiary, taken as a whole or on the
collectibility of a material portion of the Sold Receivables.
(d) COMPLIANCE WITH LAWS. The Seller will comply, and will cause each
Quebecor Entity and Subsidiary to comply, with all laws, regulations, judgments
and other directions or orders imposed by any Governmental Authority to which
such Person or any Receivable, any Related Security or Collection may be subject
except where the failure to do so would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the financial
condition of the Seller, the Quebecor Entities and any Subsidiary, taken as a
whole or on the collectibility of a material portion of the Sold Receivables.
-10-
<PAGE>
(e) FURNISHING INFORMATION AND INSPECTION OF RECORDS. The Seller will
furnish to the Agent, each Purchaser Agent and the Purchasers such information
concerning the Receivables and the Related Security as the Agent, any Purchaser
Agent or a Purchaser may reasonably request. The Seller will, and will cause the
Originator to, permit, at any time during regular business hours upon reasonable
advance written notice, the Agent, any Purchaser Agent or any Purchaser (or any
representatives thereof) (i) to examine and make copies of all Records, (ii) to
visit the offices and properties of the Seller for the purpose of examining the
Records and (iii) to discuss matters relating hereto with any of the Seller's or
the Originator's officers, directors, employees or independent public
accountants having knowledge of such matters. Once a year, the Agent may (at the
expense of the Seller which, prior to the occurrence of a Termination Event,
shall not exceed $15,000 per year) have an independent public accounting firm
conduct an audit of the Records or make test verifications of the Receivables
and Collections. Once a year, each Purchaser Agent may (at the expense of the
Seller which, prior to occurrence of a Termination Event, shall not exceed
$5,000 per year) have an independent public accounting firm conduct an audit of
the Records or make test verifications of the Receivables and Collections.
(f) KEEPING RECORDS. (i) The Seller will, and will cause the Originator
to, have and maintain (A) administrative and operating procedures (including an
ability to recreate Records if originals are destroyed), (B) adequate
facilities, personnel and equipment and (C) all Records and other information
necessary or advisable for collecting the Sold Receivables (including Records
adequate to permit the timely identification of each new Sold Receivable and all
Collections of, and adjustments to, each existing Receivable). The Seller will
give the Agent prior notice of any material change in such administrative and
operating procedures.
(ii) The Seller will, (A) at all times from and after the date hereof,
use its best efforts to identify the Agent's and the Purchasers' interest in the
Sold Receivables and the Collections on its computer and master data processing
books and records and (B) upon the request of the Agent in the case of Sold
Receivables constituting chattel paper, so mark each contract relating to a Sold
Receivable and deliver to the Agent all such contracts (including all multiple
originals of such contracts), with any appropriate endorsement or assignment, or
segregate (from all other receivables then owned or being serviced by the
Seller) the Sold Receivables and all contracts relating to each Sold Receivable
and hold in trust and safely keep such contracts so legended in separate filing
cabinets or other suitable containers at such locations as the Agent may
specify.
(g) PERFECTION. (i) The Seller will, and will cause the Originator to,
at its expense, promptly execute and deliver all instruments and documents and
take all action necessary or requested by the Agent (including the execution and
filing of financing or continuation statements, amendments thereto or
assignments thereof) to enable the Agent, for the benefit of the Purchasers, to
exercise and enforce all its rights hereunder and to vest and maintain vested in
the Agent, for the benefit of the Purchasers, a valid, and from and after the
date occurring 30 days after the first Incremental Purchase hereunder, a first
priority perfected security interest in the Sold Receivables, the Collections,
the Purchase Agreement, the Lock-Box Accounts and proceeds thereof free, and
clear of any Adverse Claim (and a perfected ownership interest in the Sold
Receivables and Collections to the extent of the Sold Interest). The Agent will
be permitted to sign and file any continuation statements, amendments thereto
and assignments thereof without the Seller's signature.
(ii) The Seller will, and will cause the Originator to, only change its
name, identity or corporate structure or relocate its chief executive office or
the Records following the delivery to the Agent of all financing statements,
instruments and other documents (including direction letters) requested by the
Agent.
(iii) Each of the Seller and the Originator will at all times maintain
its chief executive offices within a jurisdiction in the USA in which Article 9
of the UCC is in effect. If the Seller or the Originator moves its chief
executive office to a location that imposes Taxes, fees or other charges to
perfect the Agent's and the Purchasers' interests hereunder or the Seller's
interests under the Purchase Agreement, the Seller will pay all such amounts and
any other costs and expenses incurred in order to maintain the enforceability of
the Transaction Documents, the Sold Interest and the interests of the Agent, the
Purchaser Agents and the Purchasers in the Sold Receivables, the Related
Security, Collections, Purchase Agreement and Lock-Box Accounts.
(h) PERFORMANCE OF DUTIES. The Seller will perform, and will cause each
Quebecor Entity and Subsidiary and the Collection Agent (if an Affiliate) to
perform, its respective duties or obligations in accordance with the provisions
of each of the Transaction Documents. The Seller (at its expense) will, and will
cause each Quebecor Entity to, (i) fully and timely perform in all material
respects all agreements required to be observed by it in connection with each
Sold Receivable, (ii) comply in all material respects with the Credit and
Collection Policy, and (iii) refrain from any action that may impair the rights
of the Agent, the Purchaser Agents or the Purchasers in the Sold Receivables,
the Related Security, Collections, Purchase Agreement or Lock-Box Accounts.
(i) PAYMENTS ON RECEIVABLES, ACCOUNTS. The Seller will, and will cause
the Originator to, at all times instruct all Obligors to deliver payments on the
Sold Receivables to a Lock-Box Account. If any such payments or
-11-
<PAGE>
other Collections are received by the Seller or the Originator, it shall hold
such payments in trust for the benefit of the Agent, the Purchaser Agents and
the Purchasers and promptly (but in any event within two Business Days after the
Seller or any Originator becomes aware of such receipt) remit such funds into a
Lock-Box Account. The Seller will cause each Lock-Box Bank to comply with the
terms of each applicable Lock-Box Letter. The Seller will not permit the funds
of any Affiliate (other than payments on Receivables) to be deposited into any
Lock-Box Account. If such funds are nevertheless deposited into any Lock-Box
Account, the Seller will promptly identify such funds for segregation. The
Seller will not, and will not permit any Collection Agent or other Person to,
commingle Collections or other funds to which the Agent or any Purchaser is
entitled with any other funds other than collections on Receivables. The Seller
shall only add, and shall only permit the Originator to add, a Lock-Box Bank,
Lock-Box, or Lock-Box Account to those listed on Exhibit F if the Agent has
received notice of such addition, a copy of any new Lock-Box Agreement and an
executed and acknowledged copy of a Lock-Box Letter substantially in the form of
Exhibit G (with such changes as are acceptable to the Agent) from any new
Lock-Box Bank. The Seller shall only terminate a Lock-Box Bank or Lock-Box, or
close a Lock-Box Account, upon 30 days (or such fewer days as consented to by
the Agent) advance notice to the Agent.
(j) SALES AND ADVERSE CLAIMS RELATING TO RECEIVABLES. Except as
otherwise provided herein, the Seller will not, and will not permit the
Originator to, (by operation of law or otherwise) dispose of or otherwise
transfer, or create or suffer to exist any Adverse Claim upon, any Sold
Receivable or any proceeds thereof.
(k) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise
permitted in Section 3.2(b) and then subject to Section 1.5, the Seller will
not, and will not permit the Originator to, extend, amend, rescind or cancel any
Sold Receivable.
(l) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. The Seller will
not make any material change in the character of its business and will not, and
will not permit the Originator to, make any material change to the Credit and
Collection Policy without the prior written approval of the Agent and the
Instructing Group.
Article VI
Indemnification
SECTION 6.1. INDEMNITIES BY THE SELLER. Without limiting any other
rights any Person may have hereunder or under applicable law, the Seller hereby
indemnifies and holds harmless, on an after-Tax basis, the Agent, each Purchaser
Agent and each Purchaser and their respective officers, directors, agents and
employees (each an "INDEMNIFIED PARTY") from and against any and all damages,
losses, claims, liabilities, penalties, Taxes, costs and expenses (including
attorneys' fees and court costs) (all of the foregoing collectively, the
"INDEMNIFIED LOSSES") at any time imposed on or incurred by any Indemnified
Party arising out of or otherwise relating to any Transaction Document, the
transactions contemplated thereby or any action taken or omitted by any of the
Indemnified Parties (including any action taken by the Agent as attorney-in-fact
for the Seller pursuant to Section 3.5(b)), whether arising by reason of the
acts to be performed by the Seller hereunder or otherwise, excluding only
Indemnified Losses to the extent (a) a final judgment of a court of competent
jurisdiction holds such Indemnified Losses resulted solely from gross negligence
or willful misconduct of the Indemnified Party seeking indemnification, (b)
solely due to the credit risk of the Obligor and for which reimbursement would
constitute recourse to the Seller or the Collection Agent for uncollectible
Receivables or (c) such Indemnified Losses include Taxes on, or measured by, the
overall net income of the Agent, any Purchaser Agent or any Purchaser computed
in accordance with the Intended Tax Characterization. Without limiting the
foregoing indemnification, but subject to the limitations set forth in clauses
(a), (b) and (c) of the previous sentence, the Seller shall indemnify each
Indemnified Party for Indemnified Losses relating to or resulting from:
(i) any representation or warranty made by the Seller, any Quebecor
Entity or the Collection Agent (or any employee or agent of the Seller, any
Quebecor Entity or the Collection Agent) under or in connection with this
Agreement, any Periodic Report or any other information or report delivered by
the Seller, any Quebecor Entity or the Collection Agent pursuant hereto, which
shall have been false or incorrect in any material respect when made or deemed
made;
(ii) the failure by the Seller, any Quebecor Entity, or the Collection
Agent to comply with any applicable law, rule or regulation related to any Sold
Receivable, or the nonconformity of any Sold Receivable with any such applicable
law, rule or regulation;
(iii) the failure of the Seller to vest and maintain vested in the
Agent, for the benefit of the Purchasers, a perfected ownership or security
interest in the Sold Interest and the property conveyed pursuant to Section
1.1(e) and Section 1.8, free and clear of any Adverse Claim;
(iv) any commingling of funds to which the Agent, any Purchaser Agent
or any Purchaser is entitled hereunder with any other funds;
-12-
<PAGE>
(v) any failure of a Lock-Box Bank to comply with the terms of the
applicable Lock-Box Letter;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Sold Receivable,
or any other claim resulting from the sale or lease of goods or the rendering of
services related to such Sold Receivable or the furnishing or failure to furnish
any such goods or services or other similar claim or defense not arising from
the financial inability of any Obligor to pay undisputed indebtedness;
(vii) any failure of the Seller or any Quebecor Entity, or any
Affiliate of any thereof, to perform its duties or obligations in accordance
with the provisions of this Agreement or any other Transaction Document to which
such Person is a party (as a Collection Agent or otherwise);
(viii) any action taken by the Agent as attorney-in-fact for the Seller
pursuant to Section 3.5(b);
(ix) any environmental liability claim, products liability claim or
personal injury or property damage suit or other similar or related claim or
action of whatever sort, arising out of or in connection with any Sold
Receivable or any other suit, claim or action of whatever sort relating to any
of the Transaction Documents; or
(x) litigation and related costs of collection relating to any
inability to enforce any judgment rendered in the United States against any
Obligor of any Sold Receivable in such Obligor's country of domicile in respect
of any Receivable without reexamination or relitigation of the matters
adjudicated upon, or any inability to obtain any judgment in or utilize the
court or other adjudication system of, any foreign jurisdiction in which such an
Obligor may be located, except, in each case, to the extent the applicable Sold
Receivable is uncollectible on account of the insolvency or bankruptcy of such
Obligor or its financial inability to pay.
SECTION 6.2. INCREASED COST AND REDUCED RETURN. If the adoption after
the date hereof of any applicable law, rule or regulation, or any change therein
after the date hereof, or any change in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by any Funding Source, the Agent, any
Purchaser Agent or any Purchaser (collectively, the "FUNDING PARTIES") with any
request or directive (whether or not having the force of law) after the date
hereof of any such Governmental Authority (a "REGULATORY CHANGE") (a) subjects
any Funding Party to any charge or withholding on or in connection with a
Funding Agreement or this Agreement (collectively, the "FUNDING DOCUMENTS") or
any Receivable, (b) changes the basis of taxation of payments to any of the
Funding Parties of any amounts payable under any of the Funding Documents
(except for changes in the rate of Tax on the overall net income of such Funding
Party), (c) imposes, modifies or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or any credit extended by, any of the
Funding Parties, (d) has the effect of reducing the rate of return on such
Funding Party's capital to a level below that which such Funding Party could
have achieved but for such adoption, change or compliance (taking into
consideration such Funding Party's policies concerning capital adequacy) or (e)
imposes any other condition, and the result of any of the foregoing is (x) to
impose a cost on, or increase the cost to, any Funding Party of its commitment
under any Funding Document or of purchasing, maintaining or funding any interest
acquired under any Funding Document, (y) to reduce the amount of any sum
received or receivable by, or to reduce the rate of return of, any Funding Party
under any Funding Document or (z) to require any payment calculated by reference
to the amount of interests held or amounts received by it hereunder, then, upon
demand by the Agent, the Seller shall pay to the Agent for the account of the
Person such additional amounts as will compensate the Agent or such Purchaser
(or, in the case of a Conduit Purchaser, will enable such Conduit Purchaser to
compensate any Funding Source) for such increased cost or reduction. Without
limiting the foregoing, the Seller acknowledges and agrees that the fees and
other amounts payable by the Seller to the Purchasers, the Purchaser Agents, and
the Agent have been negotiated on the basis that the unused portion of each
Committed Purchaser's Commitment is treated as a "SHORT TERM COMMITMENT" for
which there is no regulatory capital requirement and the Commitment of each
Enhancement Bank carries the same capital requirement as a funded loan in the
same amount. If any Committed Purchaser determines it is required to maintain
capital against its Unused Commitment, or if any Enhancement Bank is required to
maintain capital on its Unused Commitment (or any Purchaser is required to
maintain capital against its Investment) in excess of the amount of capital it
would be required to maintain against a funded loan in the same amount, such
Purchaser shall be entitled to compensation under this Section 6.2.
SECTION 6.3. OTHER COSTS AND EXPENSES. The Seller shall pay to the
Agent (with respect to amounts owed to it) or the applicable Purchaser Agent
(with respect to amounts owed to it or any Purchaser in its Purchaser Group) on
demand all reasonable costs and expenses in connection with (a) the preparation,
execution, delivery and administration (including amendments of any provision)
of the Transaction Documents, (b) the sale of the Sold Interest, (c) the
perfection of the Agent's rights in the Sold Receivables and Collections, (d)
the enforcement by the Agent, any Purchaser Agent or the Purchasers of the
obligations of the Seller under the Transaction Documents or of any Obligor
under a Sold Receivable and (e) the maintenance by the Agent of the Lock-Boxes
and Lock-Box
-13-
<PAGE>
Accounts, including fees, costs and expenses of legal counsel for the Agent and
each Purchaser Agent relating to any of the foregoing or to advising the Agent,
any Purchaser Agent, and any Funding Source about its rights and remedies under
any Transaction Document or any related Funding Agreement and all reasonable
costs and expenses (including counsel fees and expenses) of the Agent, each
Purchaser Agent, each Purchaser and each Funding Source in connection with the
enforcement of the Transaction Documents or any Funding Agreement and in
connection with the administration of the Transaction Documents following a
Termination Event. The Seller shall reimburse the Agent and each Conduit
Purchaser for the cost of the Agent's or such Conduit Purchaser auditors (which
may be employees of such Person) auditing the books, records and procedures of
the Seller. The Seller shall reimburse each Conduit Purchaser for any amounts
such Conduit Purchaser must pay to any Funding Source pursuant to any Funding
Agreement on account of any Tax. The Seller shall reimburse such Conduit
Purchaser on demand for all other costs and expenses incurred by such Conduit
Purchaser or any shareholder of such Conduit Purchaser in connection with the
Transaction Documents or the transactions contemplated thereby, including a PRO
RATA share of the cost of auditing such Conduit Purchaser's books by certified
public accountants, the cost of the Ratings and the fees and reasonable
out-of-pocket expenses of counsel of the Agent, each Conduit Purchaser or any
shareholder, or administrator, of each Conduit Purchaser for advice relating to
such Conduit Purchaser operation.
SECTION 6.4. WITHHOLDING TAXES. (a) All payments made by the Seller
hereunder shall be made without withholding for or on account of any present or
future taxes (other than overall net income taxes on the recipient). If any such
withholding is so required, the Seller shall make the withholding, pay the
amount withheld to the appropriate authority before penalties attach thereto or
interest accrues thereon and pay such additional amount as may be necessary to
ensure that the net amount actually received by each Purchaser, each Purchaser
Agent and the Agent free and clear of such taxes (including such taxes on such
additional amount) is equal to the amount that Purchaser or the Agent (as the
case may be) would have received had such withholding not been made. If the
Agent, any Purchaser Agent or any Purchaser pays any such taxes, penalties or
interest the Seller shall reimburse the Agent, such Purchaser Agent or such
Purchaser for that payment on demand. If the Seller pays any such taxes,
penalties or interest, it shall deliver official tax receipts evidencing that
payment or certified copies thereof to the Purchaser, such Purchaser Agent or
Agent on whose account such withholding was made (with a copy to the Agent if
not the recipient of the original) on or before the thirtieth day after payment.
(b) Before the first date on which any amount is payable hereunder for
the account of any Purchaser not incorporated under the laws of the USA such
Purchaser shall deliver to the Seller and the Agent each two (2) duly completed
copies of United States Internal Revenue Service Form W-8BEN or W-8ECI (or
successor applicable form) certifying that such Purchaser is entitled to receive
payments hereunder without deduction or withholding of any United States federal
income taxes. Each such Purchaser shall replace or update such forms when
necessary to maintain any applicable exemption and as requested by the Agent or
the Seller.
SECTION 6.5. PAYMENTS AND ALLOCATIONS. If any Person seeks compensation
pursuant to this Article VI, such Person shall deliver to the Seller and its
Purchaser Agent a certificate setting forth the amount due to such Person, a
description of the circumstance giving rise thereto and the basis of the
calculations of such amount, which certificate shall be conclusive as to amount
absent manifest error. The Seller shall pay to the Agent amounts owed to it or
to the applicable Purchaser Agent amounts owed to such Purchaser Agent or owed
to any Purchaser in its Purchase Group, for the account of such Person the
amount shown as due on any such certificate within 10 Business Days after
receipt of the notice.
Article VII
Conditions Precedent
SECTION 7.1. CONDITIONS TO CLOSING. This Agreement shall become
effective on the first date all conditions in this Section 7.1 are satisfied. On
or before such date, the Seller shall deliver to the Agent the following
documents in form, substance and quantity acceptable to the Agent:
(a) A certificate of the Secretary of each of the Seller and each
Quebecor Entity certifying (i) the resolutions of the Seller's and each Quebecor
Entity's board of directors approving each Transaction Document to which it is a
party, (ii) the name, signature, and authority of each officer who executes on
the Seller's or any Quebecor Entity's behalf a Transaction Document (on which
certificate the Agent and each Purchaser may conclusively rely until a revised
certificate is received), (iii) the Seller's and each Quebecor Entity's
certificate or articles of incorporation certified by the Secretary of State of
its state of incorporation, (iv) a copy of the Seller's and each Quebecor
Entity's by-laws and (v) good standing certificates issued by the Secretaries of
State of each jurisdiction where the Seller or any Quebecor Entity is organized.
(b) All instruments and other documents required, or deemed desirable
by the Agent, to perfect the Agent's first priority interest in the Sold
Receivables, Collections, the Purchase Agreement and the Lock-Box Accounts in
all appropriate jurisdictions.
-14-
<PAGE>
(c) UCC search reports from all jurisdictions the Agent requests.
(d) Executed copies of (i) all consents and authorizations necessary in
connection with the Transaction Documents (ii) all Lock-Box Letters, (iii) a
Periodic Report covering the month ended November __, 1999 and (iv) each
Transaction Document.
(e) Favorable opinions of counsel to the Seller and each Quebecor
Entity covering such matters as any Purchaser Agent or the Agent may request.
(f) Such other approvals, opinions or documents as the Agent or any
Purchaser Agent may request.
(g) All legal matters related to the Purchase are satisfactory to the
Purchasers.
SECTION 7.2. CONDITIONS TO EACH PURCHASE. The obligation of each
Committed Purchaser to make any Purchase, and the right of the Seller to request
or accept any Purchase, are subject to the conditions (and each Purchase shall
evidence the Seller's representation and warranty that clauses (a)-(e) of this
Section 7.2 have been satisfied) that on the date of such Purchase before and
after giving effect to the Purchase:
(a) no Potential Termination Event (or in the case of a Reinvestment
Purchase, a Termination Event) shall then exist or shall occur as a result of
the Purchase;
(b) the Termination Date has not occurred;
(c) after giving effect to the application of the proceeds of such
Purchase, (x) the outstanding Matured Aggregate Investment would not exceed the
Aggregate Commitment and (y) the outstanding Aggregate Investment would not
exceed the Purchase Limit;
(d) the representations and warranties in Section 4.1 are true and
correct in all material respects on and as of such date (except to the extent
such representations and warranties relate solely to an earlier date and then
are true and correct as of such earlier date);
(e) the Seller has identified on its books and records the Sold
Receivables and after giving effect to the application of the proceeds of such
Purchase, the Aggregate Investment plus the Aggregate Reserve does not exceed
the Eligible Receivable Balance; and
(f) each of the Seller and each Quebecor Entity is in full compliance
with the Transaction Documents (including all covenants and agreements in
Article V). Nothing in this Section 7.2 limits the obligations of each Related
Bank Purchaser to its related Conduit Purchaser (including any applicable
Transfer Agreement).
Article VIII
The Agent
SECTION 8.1. APPOINTMENT AND AUTHORIZATION. (a) Each Purchaser and each
Purchaser Agent hereby irrevocably designates and appoints ABN AMRO Bank N.V. as
the "AGENT" under the Transaction Documents and authorizes the Agent to take
such actions and to exercise such powers as are delegated to the Agent thereby
and to exercise such other powers as are reasonably incidental thereto. The
Agent shall hold, in its name, for the benefit of each Purchaser, the Purchase
Interest of the Purchaser. The Agent shall not have any duties other than those
expressly set forth in the Transaction Documents or any fiduciary relationship
with any Purchaser, and no implied obligations or liabilities shall be read into
any Transaction Document, or otherwise exist, against the Agent. The Agent does
not assume, nor shall it be deemed to have assumed, any obligation to, or
relationship of trust or agency with, the Seller. Notwithstanding any provision
of this Agreement or any other Transaction Document, in no event shall the Agent
ever be required to take any action which exposes the Agent to personal
liability or which is contrary to the provision of any Transaction Document or
applicable law.
(b) Each Purchaser hereby irrevocably designates and appoints the
respective institution identified on the applicable signature page hereto or in
the related Transfer Supplement (as applicable) as its Purchaser Agent
hereunder, and each authorizes such Purchaser Agent to take such action on its
behalf under the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to such Purchaser Agent by the
terms of this Agreement, if any, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Purchaser Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser or other Purchaser Agent or the Agent, and no
implied obligations or liabilities on the part of such Purchaser Agent shall be
read into this Agreement or otherwise exist against such Purchaser Agent. No
Purchaser Agent assumes, nor shall it be deemed to have assumed, any obligation
to, or relationship of trust or agency with, the Seller.
SECTION 8.2. DELEGATION OF DUTIES. The Agent and each Purchaser Agent
may execute any of their respective duties through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Neither the Agent nor any Purchaser Agent shall be responsible for
the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.
-15-
<PAGE>
SECTION 8.3. EXCULPATORY PROVISIONS. Neither the Agent, any Purchaser
Agent nor any of their respective directors, officers, agents or employees shall
be liable for any action taken or omitted (i) with the consent or at the
direction of the Instructing Group or (ii) in the absence of such Person's gross
negligence or willful misconduct. Neither the Agent nor any Purchaser Agent
shall be responsible to any Purchaser or other Person for (i) any recitals,
representations, warranties or other statements made by the Seller, any Quebecor
Entity or any of their Affiliates, (ii) the value, validity, effectiveness,
genuineness, enforceability or sufficiency of any Transaction Document, (iii)
any failure of the Seller, any Quebecor Entity or any of their Affiliates to
perform any obligation or (iv) the satisfaction of any condition specified in
Article VII. Neither the Agent nor any Purchaser Agent shall not have any
obligation to any Purchaser or any Purchaser Agent to ascertain or inquire about
the observance or performance of any agreement contained in any Transaction
Document or to inspect the properties, books or records of the Seller, any
Quebecor Entity or any of their Affiliates.
SECTION 8.4. RELIANCE BY AGENT AND PURCHASER AGENTS. (a) Each Purchaser
Agent and the Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document, other writing or conversation believed
by it to be genuine and correct and to have been signed, sent or made by the
proper Person and upon advice and statements of legal counsel (including counsel
to the Seller), independent accountants and other experts selected by the Agent
or such Purchaser Agent. Each Purchaser Agent and the Agent shall in all cases
be fully justified in failing or refusing to take any action under any
Transaction Document unless it shall first receive such advice or concurrence of
the Purchasers, and assurance of its indemnification, as it deems appropriate.
(b) The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a request of the
Instructing Group, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Purchasers, the Agent and Purchaser
Agents.
(c) Each Purchaser Agent shall determine with its Purchaser Group the
number of such Purchasers (each, a "VOTING BLOCK"), which shall be required to
request or direct such Purchaser Agent to take action, or refrain from taking
action, under this Agreement on behalf of such Purchasers. Such Purchaser Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement in accordance with a request of its appropriate Voting
Block, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of such Purchaser Agent's Purchasers.
(d) Unless otherwise advised in writing by a Purchaser Agent or by any
Purchaser on whose behalf such Purchaser Agent is purportedly acting, each party
to this Agreement may assume that (i) such Purchaser Agent is acting for the
benefit and on behalf of each of the Purchasers in respect of which such
Purchaser Agent is identified as being the "PURCHASER AGENT" in the definition
of "PURCHASER AGENT" hereto, as well as for the benefit of each assignee or
other transferee from any such Person, and (ii) each action taken by such
Purchaser Agent has been duly authorized and approved by all necessary action on
the part of the Purchasers on whose behalf it is purportedly acting. Each
Purchaser Agent and the Purchasers in its Purchaser Group shall agree amongst
themselves as to the circumstances and procedures for removal and resignation of
such Purchaser Agent.
SECTION 8.5. ASSUMED PAYMENTS. Unless the Agent shall have received
notice from the applicable Purchaser Agent before the date of any Incremental
Purchase that the applicable Purchaser Group will not make available to the
Agent the amount it is scheduled to remit as part of such Incremental Purchase,
the Agent may assume such Purchaser Group has made such amount available to the
Agent when due (an "ASSUMED PAYMENT") and, in reliance upon such assumption, the
Agent may (but shall have no obligation to) make available such amount to the
appropriate Person. If and to the extent that any Purchaser Group shall not have
made its Assumed Payment available to the Agent, such Purchaser Group and the
Seller hereby agrees to pay the Agent forthwith on demand such unpaid portion of
such Assumed Payment up to the amount of funds actually paid by the Agent,
together with interest thereon for each day from the date of such payment by the
Agent until the date the requisite amount is repaid to the Agent, at a rate per
annum equal to the Federal Funds Rate for the first three days such amounts are
past due and thereafter at a rate per annum equal to the Federal Funds Rate plus
2%.
SECTION 8.6. NOTICE OF TERMINATION EVENTS. Neither any Purchaser Agent
nor the Agent shall be deemed to have knowledge or notice of the occurrence of
any Potential Termination Event unless the Agent or such Purchaser Agent has
received notice from any Purchaser or the Seller stating that a Potential
Termination Event has occurred hereunder and describing such Potential
Termination Event. If the Agent receives such a notice, it shall promptly give
notice thereof to each Purchaser Agent whereupon each Purchaser Agent shall
promptly give notice thereof to the members of its Purchaser Group. If a
Purchaser Agent receives such a notice from any Person other than the Agent, it
shall promptly give notice thereof to the Agent and each Purchaser Agent
whereupon each Purchaser Agent shall promptly give notice thereof to the members
of its Purchaser Group. The Agent shall take such action concerning a Potential
Termination Event as may be directed by the Instructing Group (or, if required
for such action, all of the Purchasers), but until the Agent receives such
directions, the Agent may (but shall not be
-16-
<PAGE>
obligated to) take such action, or refrain from taking such action, as the Agent
deems advisable and in the best interests of the Purchasers.
SECTION 8.7. NON-RELIANCE ON AGENT AND OTHER PURCHASERS. Each Purchaser
expressly acknowledges that neither the Agent, the Purchaser Agents nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
the Agent hereafter taken, including any review of the affairs of the Seller or
any Quebecor Entity, shall be deemed to constitute any representation or
warranty by the Agent. Each Purchaser represents and warrants to the Agent and
the Purchaser Agents that, independently and without reliance upon the Agent,
any Purchaser Agent or any other Purchaser and based on such documents and
information as it has deemed appropriate, it has made and will continue to make
its own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller,
the Quebecor Entities, and the Receivables and its own decision to enter into
this Agreement and to take, or omit, action under any Transaction Document. The
Agent shall deliver each month to any Purchaser Agent that so requests a copy of
the Periodic Report(s) received covering the preceding calendar month. Except
for items delivered hereunder, the Agent shall not have any duty or
responsibility to provide any Purchaser or Purchaser Agent with any information
concerning the Seller, any Quebecor Entity or any of their Affiliates that comes
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
SECTION 8.8. AGENT AND AFFILIATES. Each of the Purchaser Agents, the
Agent and their respective Affiliates may extend credit to, accept deposits from
and generally engage in any kind of business with the Seller, any Quebecor
Entity or any of their Affiliates and ABN AMRO may exercise or refrain from
exercising its rights and powers as if it were not the Agent. The parties
acknowledge that ABN AMRO acts as agent for Amsterdam and subagent for
Amsterdam's management company in various capacities, as well as providing
credit facilities and other support for Amsterdam not contained in the
Transaction Documents.
SECTION 8.9. INDEMNIFICATION. Each Purchaser Group shall indemnify and
hold harmless the Agent and its officers, directors, employees, representatives
and agents (to the extent not reimbursed by the Seller or any Quebecor Entity
and without limiting the obligation of the Seller or any Quebecor Entity to do
so), ratably in accordance with its Ratable Share from and against any and all
liabilities, obligations, losses, damages, penalties, judgments, settlements,
costs, expenses and disbursements of any kind whatsoever (including in
connection with any investigative or threatened proceeding, whether or not the
Agent or such Person shall be designated a party thereto) that may at any time
be imposed on, incurred by or asserted against the Agent or such Person as a
result of, or related to, any of the transactions contemplated by the
Transaction Documents or the execution, delivery or performance of the
Transaction Documents or any other document furnished in connection therewith
(but excluding any such liabilities, obligations, losses, damages, penalties,
judgments, settlements, costs, expenses or disbursements resulting solely from
the gross negligence or willful misconduct of the Agent or such Person as
finally determined by a court of competent jurisdiction).
SECTION 8.10. SUCCESSOR AGENT. The Agent may, upon at least thirty (30)
days notice to the Seller and each Purchaser Agent, resign as Agent. Such
resignation shall not become effective until a successor agent is appointed by
an Instructing Group (with the approval of the Seller) and has accepted such
appointment. Upon such acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Transaction Documents.
After any retiring Agent's resignation hereunder, the provisions of Article VI
and this Article VIII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Agent.
Article IX
Miscellaneous
SECTION 9.1. TERMINATION. Each Uncommitted Purchaser shall cease to be
a party hereto when the Termination Date has occurred, such Uncommitted
Purchaser holds no Investment and all amounts payable to it hereunder have been
indefeasibly paid in full. This Agreement shall terminate following the
Termination Date when no Investment is held by a Purchaser and all other amounts
payable hereunder have been indefeasibly paid in full, but the rights and
remedies of the Agent, each Purchaser Agent and each Purchaser under Article VI
and Section 8.9 shall survive such termination.
SECTION 9.2. NOTICES. Unless otherwise specified, all notices and other
communications hereunder shall be in writing (including by telecopier or other
facsimile communication or, if agreed by all parties, e-mail), given to the
appropriate Person at its address or telecopy number set forth on the signature
pages hereof or at such other address or telecopy number as such Person may
specify, and effective when received at the address specified by such Person.
Each party hereto, however, authorizes the Agent and each Purchaser Agent to act
on telephone
-17-
<PAGE>
notices of Purchases and Discount Rate and Tranche Period selections from any
person the Agent or such Purchaser Agent in good faith believes to be acting on
behalf of the relevant party and, at the Agent's or such Purchaser Agent's
option, to tape record any such telephone conversation. Each party hereto agrees
to deliver promptly a confirmation of each telephone notice given or received by
such party (signed by an authorized officer of such party), but the absence of
such confirmation shall not affect the validity of the telephone notice. The
Agent's or such Purchaser Agent's records of all such conversations shall be
deemed correct and, if the confirmation of a conversation differs in any
material respect from the action taken by the Agent or such Purchaser Agent, the
records of the Agent or such Purchaser Agent shall govern absent manifest error.
The number of days for any advance notice required hereunder may be waived
(orally or in writing) by the Person receiving such notice and, in the case of
notices to the Agent or any Purchaser Agent, the consent of each Person to which
the Agent or such Purchaser Agent is required to forward such notice.
SECTION 9.3. PAYMENTS AND COMPUTATIONS. Notwithstanding anything herein
to the contrary, any amounts to be paid or transferred by the Seller or the
Collection Agent to, or for the benefit of, any Purchaser or any other Person
shall be paid or transferred to the Agent or the appropriate Purchaser Agent
(for the benefit of such Purchaser or other Person). The Agent or the
appropriate Purchaser Agent shall promptly (and, if reasonably practicable, on
the day it receives such amounts) forward each such amount to the Person
entitled thereto and such Person shall apply the amount in accordance herewith.
All amounts to be paid or deposited hereunder shall be paid or transferred on
the day when due in immediately available Dollars (and, if due from the Seller
or Collection Agent, by 1:00 p.m. (Chicago time), with amounts received after
such time being deemed paid on the Business Day following such receipt). The
Seller hereby authorizes the Agent to debit the Seller Account for application
to any amounts owed by the Seller hereunder. The Seller shall, to the extent
permitted by law, pay to the Agent or the appropriate Purchaser Agent upon
demand, for the account of the applicable Person, interest on all amounts not
paid or transferred by the Seller or the Collection Agent when due hereunder at
a rate equal to the Prime Rate plus 2%, calculated from the date any such amount
became due until the date paid in full. Any payment or other transfer of funds
scheduled to be made on a day that is not a Business Day shall be made on the
next Business Day, and any Discount Rate or interest rate accruing on such
amount to be paid or transferred shall continue to accrue to such next Business
Day. All computations of interest, fees, and Discount shall be calculated for
the actual days elapsed based on a 360 day year.
SECTION 9.4. SHARING OF RECOVERIES. Each Purchaser agrees that if it
receives any recovery, through set-off, judicial action or otherwise, on any
amount payable or recoverable hereunder in a greater proportion than should have
been received hereunder or otherwise inconsistent with the provisions hereof,
then the recipient of such recovery shall purchase for cash an interest in
amounts owing to the other Purchasers (as return of Investment or otherwise),
without representation or warranty except for the representation and warranty
that such interest is being sold by each such other Purchaser free and clear of
any Adverse Claim created or granted by such other Purchaser, in the amount
necessary to create proportional participation by the Purchasers in such
recovery (as if such recovery were distributed pursuant to Section 2.3). If all
or any portion of such amount is thereafter recovered from the recipient, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
SECTION 9.5. RIGHT OF SETOFF. During a Termination Event, each
Purchaser is hereby authorized (in addition to any other rights it may have) to
setoff, appropriate and apply (without presentment, demand, protest or other
notice which are hereby expressly waived) any deposits and any other
indebtedness held or owing by such Purchaser (including by any branches or
agencies of such Purchaser) to, or for the account of, the Seller against
amounts due and owing by the Seller hereunder.
SECTION 9.6. AMENDMENTS. Except as otherwise expressly provided herein,
no amendment or waiver hereof shall be effective unless signed by the Seller and
the Instructing Group. In addition, no amendment of any Transaction Document
shall, without the consent of (a) all the Purchasers, (i) extend the Termination
Date or the date of any payment or transfer of Collections by the Seller to the
Collection Agent or by the Collection Agent to the Agent or any Purchaser Agent,
(ii) reduce the rate or extend the time of payment of Discount for any LIBOR
Tranche or Prime Tranche, (iii) reduce or extend the time of payment of any fee
payable to the Purchasers, (iv) except as provided herein, release, transfer or
modify any Committed Purchaser's Purchase Interest or change any Commitment, (v)
amend the definition of Instructing Group, Termination Event or Section 1.1,
1.2, 1.5, 1.7(a), 2.1, 2.2, 2.3, 7.2 or 9.6, Article VI, Section 7.4 of the
Purchase Agreement, the RPA Limited Guaranty, the RSA Limited Guaranty or any
obligation of any Quebecor Entity thereunder, (vi) consent to the assignment or
transfer by the Seller or the Originator of any interest in the Receivables
other than transfers under the Transaction Documents or permit any Quebecor
Entity to transfer any of its obligations under any Transaction Document except
as expressly contemplated by the terms of the Transaction Documents, or (vii)
amend any defined term relevant to the
-18-
<PAGE>
restrictions in clauses (i) through (vi) in a manner which would circumvent the
intention of such restrictions or (b) the Agent and each affected Purchaser
Agent, amend any provision hereof if the effect thereof is to affect the
indemnities to, or the rights or duties of, the Agent or any Purchaser Agent or
to reduce any fee payable for the Agent's or such Purchaser Agent's own account.
Notwithstanding the foregoing, the amount of any fee or other payment due and
payable from the Seller to any Person may be changed or otherwise adjusted
solely with the consent of the Seller and the party to which such payment is
payable. Any amendment hereof shall apply to each Purchaser equally and shall be
binding upon the Seller, the Purchasers, and the Agent and each Purchaser Agent.
If required by the Rating Agencies for any Conduit Purchaser, no material
amendment hereof or assignment, termination, resignation or removal hereunder
shall be effective unless a statement is obtained from the applicable Rating
Agencies that its Rating will not be downgraded, withdrawn or suspended as a
result of such amendment, assignment, termination, resignation or removal.
SECTION 9.7. WAIVERS. No failure or delay of the Agent, any Purchaser
Agent or any Purchaser in exercising any power, right, privilege or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right, privilege or remedy preclude any other or
further exercise thereof or the exercise of any other power, right, privilege or
remedy. Any waiver hereof shall be effective only in the specific instance and
for the specific purpose for which such waiver was given. After any waiver, the
Seller, the Purchasers, the Purchaser Agents and the Agent shall be restored to
their former position and rights and any Potential Termination Event waived
shall be deemed to be cured and not continuing, but no such waiver shall extend
to (or impair any right consequent upon) any subsequent or other Potential
Termination Event. Any additional Discount that has accrued after a Termination
Event before the execution of a waiver thereof, solely as a result of the
occurrence of such Termination Event, may be waived by the Agent or related
Purchaser Agent at the direction of the Purchaser entitled thereto.
SECTION 9.8. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Except as otherwise provided herein, the Seller may not assign or
transfer any of its rights or delegate any of its duties without the prior
consent of the Agent and the Purchasers.
(b) PARTICIPATIONS. Any Purchaser may sell to one or more Persons (each
a "PARTICIPANT") participating interests in the interests of such Purchaser
hereunder and under the Transfer Agreement. Such Purchaser shall remain solely
responsible for performing its obligations hereunder, and the Seller, the Agent
and the applicable Purchaser Agent shall continue to deal solely and directly
with such Purchaser in connection with such Purchaser's rights and obligations
hereunder and under the Transfer Agreement. Each Participant shall be entitled
to the benefits of Article VI and shall have the right of setoff through its
participation in amounts owing hereunder to the same extent as if it were a
Purchaser hereunder and under the applicable Transfer Agreement, which right of
setoff is subject to such Participant's obligation to share with the Purchasers
as provided in Section 9.4. A Purchaser shall not agree with a Participant to
restrict such Purchaser's right to agree to any amendment hereto or to the
applicable Transfer Agreement, except amendments described in clause (a) of
Section 9.6.
(c) ASSIGNMENTS BY RELATED BANK PURCHASERS. Any Related Bank Purchaser
may assign to one or more Persons ("PURCHASING COMMITTED PURCHASERS"),
acceptable to the applicable Purchaser Agent in its sole discretion and, prior
to the occurrence of a Termination Event, subject to the prior written consent
of the Seller (which consent will not be unreasonably withheld) any portion of
its Commitment as a Related Bank Purchaser hereunder and under the applicable
Transfer Agreement and Purchase Interest pursuant to a supplement hereto and to
the Transfer Agreement (a "TRANSFER SUPPLEMENT") in form satisfactory to the
applicable Purchaser Agent executed by each such Purchasing Committed Purchaser,
such selling Committed Purchaser and the applicable Purchaser Agent. Any such
assignment by a Related Bank Purchaser must be for an amount of at least Ten
Million Dollars. Each Purchasing Committed Purchasers shall pay a fee of Three
Thousand Dollars to the applicable Purchaser Agent. Any partial assignment shall
be an assignment of an identical percentage of such selling Related Bank
Purchaser Investment and its Commitment as a Related Bank Purchaser hereunder
and under any applicable Transfer Agreement. Upon the execution and delivery to
the applicable Purchaser Agent of the Transfer Supplement and payment by the
Purchasing Committed Purchaser to the selling Related Bank Purchaser of the
agreed purchase price, such selling Related Bank Purchaser shall be released
from its obligations hereunder and under the applicable Transfer Agreement to
the extent of such assignment and such Purchasing Committed Purchaser shall for
all purposes be a Related Bank Purchaser party hereto and shall have all the
rights and obligations of a Related Bank Purchaser hereunder to the same extent
as if it were an original party hereto and to the applicable Transfer Agreement
with a Commitment as a Related Bank Purchaser, any Investment and any related
Assigned Settlement described in the Transfer Supplement.
-19-
<PAGE>
(d) REPLACEABLE RELATED BANK PURCHASER. If any Related Bank Purchaser
(a "REPLACEABLE PURCHASER") shall (i) petition the Seller for any amounts under
Section 6.2 or (ii) have a short-term debt rating lower than the "A-1" by S&P
and "P-1" by Moody's (unless such Related Bank Purchaser is also an Enhancement
Bank), the Seller or applicable Conduit Purchaser may designate a replacement
financial institution (a "REPLACEMENT RELATED BANK PURCHASER") acceptable to the
Agent and the applicable Conduit Purchaser, in its sole discretion and, prior to
the occurrence of a Termination Event, subject to the prior written consent of
the Seller (which consent will not be unreasonably withheld) to which such
Replaceable Related Bank Purchaser shall, subject to its receipt of an amount
equal to its Investment, any related Assigned Settlement, and accrued Discount
and fees thereon (plus, from the Seller, any Early Payment Fee that would have
been payable if such transferred Investment had been paid on such date) and all
amounts payable under Section 6.2, promptly assign all of its rights,
obligations and Commitment hereunder and under the applicable Transfer
Agreement, together with all of its Purchase Interest, and any related Assigned
Settlement, to the Replacement Related Bank Purchaser in accordance with Section
9.8(c).
(e) ASSIGNMENT BY CONDUIT PURCHASERS. Each party hereto agrees and
consents (i) to each Conduit Purchaser's assignment, participation, grant of
security interests in or other transfers of any portion of not less than
$25,000,000 of, or any of its beneficial interest in, the Purchase Interest and
the related Assigned Settlement and (ii) to the complete assignment by such
Conduit Purchaser of all of its rights and obligations hereunder to any Person
reasonably acceptable to the Seller and the Agent, and upon such assignment such
Conduit Purchaser shall be released from all obligations and duties hereunder.
Each new Conduit Purchaser shall pay a fee of Three Thousand Dollars to the
Agent. Each Conduit Purchaser shall promptly notify each party hereto of any
such assignment. Upon such an assignment of any portion of a Conduit Purchaser's
Purchase Interest and the related Assigned Settlement and the payment to the
Agent of the fee specified above, the assignee shall have all of the rights of
such Conduit Purchaser hereunder relate to such Purchase Interest and related
Assigned Settlement.
(f) OPINIONS OF COUNSEL. If required by the Agent or any Purchaser
Agent or to maintain the Ratings, each Transfer Supplement must be accompanied
by an opinion of counsel of the assignee as to such matters as the Agent or such
Purchaser Agent may reasonably request.
SECTION 9.9. INTENDED TAX CHARACTERIZATION. It is the intention of the
parties hereto that, for the purposes of all Taxes, the transactions
contemplated hereby shall be treated as a loan by the Purchasers (through the
Agent) to the Seller that is secured by the Sold Receivables (the "INTENDED TAX
CHARACTERIZATION"). The parties hereto agree to report and otherwise to act for
the purposes of all Taxes in a manner consistent with the Intended Tax
Characterization. As provided in Section 5.1(g), the Seller hereby grants to the
Agent, for the ratable benefit of the Purchasers, a security interest in all
Sold Receivables, Related Security and Collections to secure the payment of all
amounts other than Investment owing hereunder and (to the extent of the Sold
Interest) to secure the repayment of all Investment.
SECTION 9.10. CONFIDENTIALITY. The parties hereto agree to hold the
Transaction Documents or any other confidential or proprietary information
received in connection therewith in confidence and agree not to provide any
Person with copies of any Transaction Document or such other confidential or
proprietary information other than to (i) any officers, directors, members,
managers, employees or outside accountants, auditors or attorneys thereof, (ii)
any prospective or actual assignee or participant which (in each case) has
signed a confidentiality agreement in form and substance acceptable to the
Seller, (iii) any rating agency, (iv) any surety, guarantor or credit or
liquidity enhancer to the Agent, any Purchaser Agent or any Purchaser which (in
each case) has signed a confidentiality agreement substantially in the form of
the confidentiality agreement signed by the Agent prior to the date hereof, (v)
any Conduit Purchaser's administrator, management company, referral agents,
issuing agents or depositaries or CP Dealers, and (vi) Governmental Authorities
with appropriate jurisdiction. Notwithstanding the above stated obligations,
PROVIDED that the other parties hereto are given notice of the intended
disclosure or use, the parties hereto will not be liable for disclosure or use
of such information which such Person can establish by tangible evidence: (i)
was required by law, including pursuant to a valid subpoena or other legal
process, (ii) was in such Person's possession or known to such Person prior to
receipt or (iii) is or becomes known to the public through disclosure in a
printed publication (without breach of any of such Person's obligations
hereunder).
SECTION 9.11. AGREEMENT NOT TO PETITION. Each party hereto agrees, for
the benefit of the holders of the privately or publicly placed indebtedness for
borrowed money for each Conduit Purchaser, not, prior to the date which is one
(1) year and one (1) day after the payment in full of all such indebtedness, to
acquiesce, petition or otherwise, directly or indirectly, invoke, or cause such
Conduit Purchaser to invoke, the process of any Governmental Authority for the
purpose of (a) commencing or sustaining a case against such Conduit Purchaser
under any federal or state bankruptcy, insolvency or similar law (including the
Federal Bankruptcy Code), (b) appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official for such Conduit
-20-
<PAGE>
Purchaser, or any substantial part of its property, or (c) ordering the winding
up or liquidation of the affairs of such Conduit Purchaser.
SECTION 9.12. EXCESS FUNDS. Other than amounts payable under Section
9.4, each Conduit Purchaser shall be required to make payment of the amounts
required to be paid pursuant hereto only if such Conduit Purchaser has Excess
Funds (as defined below). If such Conduit Purchaser does not have Excess Funds,
the excess of the amount due hereunder (other than pursuant to Section 9.4) over
the amount paid shall not constitute a "CLAIM" (as defined in Section 101(5) of
the Federal Bankruptcy Code) against such Conduit Purchaser until such time as
such Conduit Purchaser has Excess Funds. If such Conduit Purchaser does not have
sufficient Excess Funds to make any payment due hereunder (other than pursuant
to Section 9.4), then such Conduit Purchaser may pay a lesser amount and make
additional payments that in the aggregate equal the amount of deficiency as soon
as possible thereafter. The term "EXCESS FUNDS" means the excess of (a) the
aggregate projected value of such Conduit Purchaser's assets and other property
(including cash and cash equivalents), over (b) the sum of (i) the sum of all
scheduled payments of principal, interest and other amounts payable on publicly
or privately placed indebtedness of such Conduit Purchaser for borrowed money,
plus (ii) the sum of all other liabilities, indebtedness and other obligations
of such Conduit Purchaser for borrowed money or owed to any credit or liquidity
provider, together with all unpaid interest then accrued thereon, plus (iii) all
taxes payable by such Conduit Purchaser to the Internal Revenue Service, plus
(iv) all other indebtedness, liabilities and obligations of such Conduit
Purchaser then due and payable, but the amount of any liability, indebtedness or
obligation of such Conduit Purchaser shall not exceed the projected value of the
assets to which recourse for such liability, indebtedness or obligation is
limited. Excess Funds shall be calculated once each Business Day.
SECTION 9.13. NO RECOURSE. The obligations of each Conduit Purchaser,
their respective management companies, their respective administrators and
referral agents (each a "PROGRAM ADMINISTRATOR") under any Transaction Document
or other document (each, a "PROGRAM DOCUMENT") to which a Program Administrator
is a party are solely the corporate obligations of such Program Administrator
and no recourse shall be had for such obligations against any Affiliate,
director, officer, member, manager, employee, attorney or agent of any Program
Administrator.
SECTION 9.14. HEADINGS; COUNTERPARTS. Article and Section Headings in
this Agreement are for reference only and shall not affect the construction of
this Agreement. This Agreement may be executed by different parties on any
number of counterparts, each of which shall constitute an original and all of
which, taken together, shall constitute one and the same agreement.
SECTION 9.15. CUMULATIVE RIGHTS AND SEVERABILITY. All rights and
remedies of the Purchasers, the Purchaser Agents and Agent hereunder shall be
cumulative and non-exclusive of any rights or remedies such Persons have under
law or otherwise. Any provision hereof that is prohibited or unenforceable in
any jurisdiction shall, in such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof and without affecting such provision in any other
jurisdiction.
SECTION 9.16. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND
NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK. THE SELLER HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE
BOUROUGH OF MANHATTAN FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF, OR
RELATING TO, THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
The Seller hereby irrevocably waives, to the fullest extent permitted by law,
any objection it may now or hereafter have to the venue of any such proceeding
and any claim that any such proceeding has been brought in an inconvenient
forum. Nothing in this Section 9.16 shall affect the right of the Agent, any
Purchaser Agent or any Purchaser to bring any action or proceeding against the
Seller or its property in the courts of other jurisdictions.
SECTION 9.17. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH,
ANY TRANSACTION DOCUMENT OR ANY MATTER ARISING THEREUNDER.
SECTION 9.18. ENTIRE AGREEMENT. The Transaction Documents constitute
the entire understanding of the parties thereto concerning the subject matter
thereof. Any previous or contemporaneous agreements, whether written or oral,
concerning such matters are superseded thereby.
-21-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date hereof.
ABN AMRO BANK N.V., as the Agent ABN AMRO BANK N.V., as the Related Bank
Purchaser for Amsterdam and as the
Amsterdam Purchaser Agent
By: By:
------------------------------ ------------------------------
Title: Title:
By: By:
------------------------------ ------------------------------
Title: Title:
Address: Structured Finance, Address: Structured Finance,
Asset Securitization Asset Securitization
135 South LaSalle Street 135 South LaSalle Street
Chicago, Illinois 60674-9135 Chicago, Illinois 60674-9135
Attention: Purchaser Agent- Attention: Enhancer-Amsterdam
Amsterdam Telephone: (312) 904-6263
Telephone: (312) 904-6263 Telecopy: (312) 904-6376
Telecopy: (312) 904-6376
AMSTERDAM FUNDING CORPORATION, as
an Uncommitted Conduit Purchaser
By:
------------------------------
Title:
Address: c/o Global Securitization Services, LLC
25 West 43rd Street, Suite 704
New York, New York 10036
Attention: Andrew Stidd
Telephone: (212) 302-8330
Telecopy: (212) 302-8767
QUEBECOR WORLD FINANCE INC., as Seller
By:
------------------------------
Title:
Address: 300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attention: Vice President, Legal Affairs
and Secretary
Telephone: (302) 421-7361
Telecopy: (302) _________
with a copy to : Imprimeries Quebecor S.A.
Succursale de Granges-Paccot
-22-
<PAGE>
Route des Arseneaux 15
Chayette 8 CH 1700, Fribourg
Switzerland
Telephone: 41-26-347-4777
Telecopy: 41-26-347-4778
QUEBECOR PRINTING (USA) HOLDINGS INC.,
as Initial Collection Agent
By:
------------------------------
Title:
Address: 300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
Attention: Vice President
Telephone: (302) 421-7361
Telecopy: (302) _________
with a copy to : Imprimeries Quebecor S.A.
Succursale de Granges-Paccot
Route des Arseneaux 15
Chayette 8 CH 1700, Fribourg
Switzerland
Telephone: 41-26-347-4777
Telecopy: 41-26-347-4778
-23-
<PAGE>
Schedule I
Definitions
The following terms have the meanings set forth, or referred to, below:
"ABN AMRO" means ABN AMRO Bank N.V. in its individual capacity and not in its
capacity as the Agent.
"ADVERSE CLAIM" means, for any asset or property of a Person, a lien, security
interest, charge, mortgage, pledge, hypothecation, assignment or encumbrance, or
any other right or similar claim, in, of or on such asset or property in favor
of any other Person, except those created by the Transaction Documents.
"AFFILIATE" means, for any Person, any other Person which, directly or
indirectly, is in control of, or is controlled by, such Person. For purposes of
this definition, "CONTROL" means the power, directly or indirectly, to either
(i) vote ten percent (10%) or more of the securities having ordinary voting
power for the election of directors of a Person or (ii) cause the direction of
the management and policies of a Person.
"AGENT" is defined in the first paragraph hereof.
"AGENT'S ACCOUNT" means the account designated to the Seller, the Purchaser
Agents and the Purchasers by the Agent.
"AGGREGATE COLLECTIONS" means the sum of all amounts paid on a Receivable plus
all amounts deemed paid on any Sold Receivable under Section 1.5(b) or that
would be deemed paid under Section 1.5(b) if such Receivable were a Sold
Receivable.
"AGGREGATE COMMITMENT" means the aggregate of all Commitments of each Purchaser
Group, as such amount may be reduced pursuant to Section 1.6.
"AGGREGATE INVESTMENT" means the sum of the Investments of all Purchasers.
"AGGREGATE RESERVE" means, at any time at which such amount is calculated, the
sum of the Loss Reserve, the Discount Reserve and the Dilution Reserve.
"AMSTERDAM" is defined in the first paragraph hereof.
"ASSIGNED SETTLEMENT" means, for each Related Bank Purchaser for an Uncommitted
Conduit Purchaser for any Put, the product of such Related Bank Purchaser's
Purchased Percentage and the amount of the an Uncommitted Conduit Purchaser
Settlement being transferred pursuant to such Put.
"BANKRUPTCY EVENT" means, for any Person, that (a) such Person makes a general
assignment for the benefit of creditors or any proceeding is instituted by or
against such Person seeking to adjudicate it bankrupt or insolvent, or seeking
the liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property or such Person
generally does not pay its debt as such debts become due or admits in writing
its inability to pay its debts generally or (b) such Person takes any corporate
action to authorize any such action.
"BUSINESS DAY" means any day other than (a) a Saturday, Sunday or other day on
which banks in New York City, New York or Chicago, Illinois are authorized or
required to close, (b) a holiday on the Federal Reserve calendar and, (c) solely
for matters relating to a LIBOR Tranche, a day on which dealings in Dollars are
not carried on in the London interbank market.
"CHARGE-OFF" means any Receivable that has or should have been (in accordance
with the Credit and Collection Policy) charged off or written off by the Seller.
"COLLECTION" means any amount paid, or deemed paid, on a Sold Receivable or by
the Seller as a Deemed Collection under Section 1.5(b).
"COLLECTION AGENT" is defined in Section 3.1(a).
"COLLECTION AGENT FEE" is defined in Section 3.6.
"COLLECTION AGENT REPLACEMENT EVENT" means the occurrence of any one or more of
the following:
(a) the Collection Agent (or any sub-collection agent) fails to observe
or perform any material term, covenant or agreement under any Transaction
Document;
(b) any written representation, warranty, certification or statement
made by the Collection Agent in, or pursuant to, any Transaction Document proves
to have been incorrect in any material adverse respect when made; or
(c) the Collection Agent suffers a Bankruptcy Event.
"COMMITMENT" means, for each Committed Purchaser, the amount set forth on
Schedule II for such Committed Purchaser or in a Transfer Supplement, and, for
each, Purchaser Group, the amount set forth on Schedule II for such Purchaser
Group, in each case, as adjusted in accordance with Sections 1.6 and 9.8.
"COMMITMENT PERCENTAGE" means, for each Related Bank Purchaser in a Purchaser
Group, such Related Bank Purchaser's Commitment divided by the total of all
Commitments of all Related Bank Purchasers in such Purchaser Group.
<PAGE>
"COMMITTED CONDUIT PURCHASER" means each Person party to this Agreement and
listed as such on Schedule II hereto and each other Person that becomes a
Committed Conduit Purchaser pursuant to a Transfer Supplement.
"COMMITTED PURCHASERS" means each Related Bank Purchaser for an Uncommitted
Conduit Purchaser and each Committed Conduit Purchaser.
"CONDUIT PURCHASER" means each Committed Conduit Purchaser and Uncommitted
Conduit Purchaser.
"CONDUIT PURCHASER INVESTMENT PERCENTAGE" means a fraction, expressed as a
decimal, obtained by dividing the Investment of a Conduit Purchaser by the
Investment of all Purchasers.
"CONCENTRATION LIMIT" means (i) with respect to the Obligors with senior
unsecured long-term indebtedness rated A- (or higher) by S&P and A3 (or higher)
by Moody's, an amount not to exceed 5% of the Aggregate Investment plus
Aggregate Reserves, (ii) with respect to Obligors that do not satisfy the
requirements of clause (i) above but have senior unsecured long-term
indebtedness rated BBB (or higher) by S&P and Baa2 (or higher) by Moody's, an
amount not to exceed 4% of the Aggregate Investment plus Aggregate Reserves, and
(iii) with respect to all other Obligors, an amount not to exceed 3.33% of the
Aggregate Investment plus Aggregate Reserves.
"CP DEALER" means, at any time, each Person a Conduit Purchaser then engages as
a placement agent or commercial paper dealer.
"CP RATE" means, for any CP Tranche Period, a rate per annum as established
pursuant to the applicable Rate Supplement.
"CREDIT AND COLLECTION POLICY" means the Seller's credit and collection policy
and practices relating to Receivables attached hereto as Exhibit I.
"DEEMED COLLECTIONS" is defined in Section 1.5(b).
"DEFAULT RATIO" means at the end of any fiscal month, the ratio (expressed as a
percentage), of (a) the then aggregate outstanding balance of all Defaulted
Receivables (minus Charge-Offs) at the end of such fiscal month to (b) the then
aggregate outstanding balance of all Receivables (minus Charge-Offs) at the end
of such fiscal month.
"DEFAULTED RECEIVABLE" means any Receivable (a) which is unpaid more than 90
days past its original due date or (b) the Obligor on which has suffered a
Bankruptcy Event.
"DELINQUENCY RATIO" means at the end of any fiscal month, the ratio (expressed
as a percentage), of (a) the sum of the aggregate outstanding balance of all
Delinquent Receivables as of the end of such fiscal month to (b) the sum of the
aggregate outstanding balance of all Receivables (minus Charge-Offs) as of the
end of each fiscal month.
"DELINQUENT RECEIVABLE" means any Receivable (other than a Charge-Off or
Defaulted Receivable) on which any amount is unpaid more than 60 days past its
original due date.
"DESIGNATED FINANCIAL OFFICER" means the president, chief financial officer,
treasurer, assistant treasurer or controller of the Seller or the relevant
Quebecor Entity , as applicable.
"DILUTION RATIO" means at the end of any fiscal month, the ratio (expressed as a
percentage), of (a) the aggregate amount of payments that would be owed by the
Seller pursuant to the first sentence of Section 1.5(b) for such period if all
Receivables were Sold Receivables to (b) the Aggregate Collections received
during such period.
"DILUTION RESERVE" means, at any time, an amount equal to the product of (i) the
Sold Receivable Balance as of the last day of the immediately preceding monthly
period times (ii) the Dilution Reserve Percentage.
"DILUTION RESERVE PERCENTAGE" means, at any time, an amount, expressed as a
percentage, equal to the excess of (i) 1.5 times the highest three-month average
Dilution Ratio (expressed as a decimal) as of the last day of each of the last
12 (twelve) fiscal months over (ii) 5%.
"DISCOUNT" means, for any Tranche Period, (a) the product of (i) the Discount
Rate for such Tranche Period, (ii) the total amount of Investment allocated to
the Tranche Period, and (iii) the number of days elapsed during the Tranche
Period divided by (b) 360 days.
"DISCOUNT RATE" means, (i) for any Tranche Period relating to a CP Tranche, the
CP Rate applicable thereto, (ii) for any Tranche Period relating to a LIBOR
Tranche, the LIBOR Rate applicable thereto and (iii) for any Tranche Period
relating to a Prime Tranche, the Prime Rate applicable thereto.
"DISCOUNT RESERVE" means, at any time, the product of (a) 1.5 multiplied by (b)
the rate calculated under clause (a) of the definition of Prime Rate plus 2%
multiplied by (c) Aggregate Investment multiplied by (d) a fraction, the
numerator of which is the Turnover Ratio, expressed in days, most recently
calculated and the denominator of which is 360.
"DOLLAR" and "$" means lawful currency of the United States of America.
"EARLY PAYMENT FEE" is defined in the applicable Rate Supplement.
"ELIGIBLE RECEIVABLE" means, at any time, any Receivable:
(i) the Obligor of which (a) is a resident of, or organized under the
laws of, or with its chief executive office in, the USA or, with respect to not
more than 3% of the aggregate principal amount of Receivables, Canada; (b) is
not an Affiliate of any of the parties hereto or the Originator; (c) is not a
government or a governmental
I-2
<PAGE>
subdivision or agency; (d) has not suffered a Bankruptcy Event; (e) is a
customer of the Originator in good standing; and (f) does not have more than 25%
in aggregate principal amount of its Receivables that are Defaulted Receivables
or are Receivables that became Charge-Offs;
(ii) which is stated to be due and payable within 90 days after the
invoice date therefor;
(iii) which is not a Delinquent Receivable, Defaulted Receivable or a
Charge-Off;
(iv) which is an "ACCOUNT" or "CHATTEL PAPER" within the meaning of
Section 9-105 and Section 9-106, respectively of the UCC of all applicable
jurisdictions;
(v) which is denominated and payable only in Dollars in the USA;
(vi) which constitutes the legal, valid and binding obligation of the
related Obligor enforceable against such Obligor in accordance with its terms
subject to no offset, counterclaim, defense or other Adverse Claim, and is not
an executory contract or unexpired lease within the meaning of Section 365 of
the Bankruptcy Code;
(vii) which (a) contains an obligation to pay a determinable sum of
money and is subject to no contingencies other than performance, (b) does not
require the Obligor under such contract to consent to the transfer, sale or
assignment of the rights and duties of the Originator under such contract, (c)
does not contain a confidentiality provision that purports to restrict any
Purchaser's exercise of rights under this Agreement, including, without
limitation, the right to review such contract and (d) directs that payment be
made to a Lock-Box or other collection account;
(viii) which does not, in whole or in part, contravene any law, rule or
regulation applicable thereto (including, without limitation, those relating to
usury, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy);
(ix) which satisfies all applicable requirements of the Credit and
Collection Policy and was generated in the ordinary course of the Originator's
business from the sale of goods or provision of services to a related Obligor
solely by the Originator;
(x) the purchase of which with proceeds of notes would constitute a
"current transaction" within the meaning of Section 3(a)(3) of the Securities
Act of 1933, as amended;
(xi) which, in the case of an Originator with its chief executive
office located in a state that imposes a recording, intangibles or other similar
tax when added to the aggregate principal amount of all other Receivables of
Originators with their chief executive office located in such state, does not
exceed the amount specified on the UCC financing statement filed by the Agent to
perfect a lien on the Receivables sold by all such Originators and for which
such tax has been paid;
(xii) the Originator of which has 100% (or, in the case of Quebecor
Printing Sayers Inc., not less than 90%) of its outstanding voting stock or
other equity interest owned and controlled, either directly or indirectly, by
Quebecor Printing Inc.; and
(xiii) which does not exceed the Concentration Limit or Special Limit.
"ELIGIBLE RECEIVABLE BALANCE" means, at any time, the aggregate outstanding
principal balance of all Sold Receivables that are Eligible Receivables.
"ENHANCEMENT BANK" means any Person providing credit support to a Purchaser for
such Purchaser's account under an Enhancement Agreement, including pursuant to
an unfunded commitment.
"FACE AMOUNT" means the face amount of any commercial paper issued by a Conduit
Purchaser on a discount basis or, if not issued on a discount basis, the
principal amount of such note and interest scheduled to accrue thereon to its
stated maturity.
"FEDERAL FUNDS RATE" means for any day the greater of (i) the highest rate per
annum as determined by ABN AMRO at which overnight Federal funds are offered to
ABN AMRO for such day by major banks in the interbank market, and (ii) if ABN
AMRO is borrowing overnight funds from a Federal Reserve Bank that day, the
highest rate per annum at which such overnight borrowings are made on that day.
Each determination of the Federal Funds Rate by ABN AMRO shall be conclusive and
binding on the Seller except in the case of manifest error.
"FEE LETTER" means, for each Purchaser Group, the letter agreement, if any,
among the Seller, the Purchaser Agent for the applicable Purchaser Group and the
Enhancement Bank.
"FUNDING AGREEMENT" means any agreement or instrument executed by a Conduit
Purchaser and executed by or in favor of any Funding Source or executed by any
Funding Source at the request of a Conduit Purchaser.
"FUNDING SOURCE" means, for a Conduit Purchaser, any insurance company, bank or
other financial institution providing liquidity, back-up purchase or credit
support for such Conduit Purchaser.
"GAAP" means generally accepted accounting principles in the USA or Canada, as
applicable, applied on a consistent basis.
I-3
<PAGE>
"GOVERNMENTAL AUTHORITY" means any (a) Federal, state, municipal or other
governmental entity, board, bureau, agency or instrumentality, (b)
administrative or regulatory authority (including any central bank or similar
authority) or (c) court, judicial authority or arbitrator, in each case, whether
foreign or domestic.
"INCREMENTAL PURCHASE" is defined in Section 1.1(b).
"INITIAL COLLECTION AGENT" is defined in the first paragraph hereof.
"INSTRUCTING GROUP" means (i) at any time there are three or more Purchaser
Groups, the Purchaser Agents representing Purchaser Groups with at least 662/3%
of the Commitments and (ii) at any time there are fewer than three Purchaser
Groups, the Purchaser Agents representing Purchaser Groups with 100% of the
Commitments.
"INTENDED TAX CHARACTERIZATION" is defined in Section 9.9.
"INTERIM LIQUIDATION" means any time before the Termination Date during which no
Reinvestment Purchases are made by any Purchaser, as established pursuant to
Section 1.2.
"INVESTMENT" means, for each Purchaser (or Purchaser Group), (a) the sum of (i)
all Incremental Purchases by such Purchaser (or Purchaser Group) and (ii) the
aggregate amount of any payments or exchanges made by, or on behalf of, such
Purchaser (or Purchaser Group) to any other Purchaser (or Purchaser Group) to
acquire Investment from such other Purchaser minus (b) all Collections, amounts
received from other Purchasers and other amounts received or exchanged and, in
each case, applied by the Agent or such Purchaser (or Purchaser Group) to reduce
such Purchaser's (or Purchaser Group's) Investment. A Purchaser's (or Purchaser
Group's) Investment shall be restored to the extent any amounts so received or
exchanged and applied are rescinded or must be returned for any reason.
"LIBOR" means, for any Tranche Period for a LIBOR Tranche or other time period,
the rate per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in Dollars for a period
equal to such Tranche Period or other period, which appears on Page 3750 of the
Telerate Service (or any successor page or successor service that displays the
British Bankers' Association Interest Settlement Rates for Dollar deposits) as
of 11:00 a.m. (London, England time) two Business Days before the commencement
of such Tranche Period or other period. If for any Tranche Period for a LIBOR
Tranche no such displayed rate is available (or, for any other period, if such
displayed rate is not available or the need to calculate LIBOR is not notified
to the Agent at least 3 Business Days before the commencement of the period for
which it is to be determined), the Agent shall determine such rate based on the
rates ABN AMRO is offered deposits of such duration in the London interbank
market.
"LIBOR RATE" means, for any LIBOR Tranche Period, a rate established pursuant to
the applicable Rate Supplement.
"LIQUIDATION PERIOD" means, for an Uncommitted Conduit Purchaser only, all times
when such Uncommitted Purchaser is not making Reinvestment Purchases pursuant to
Section 1.1(d) and, for all Purchasers, all times (x) during an Interim
Liquidation and (y) on and after the Termination Date.
"LOCK-BOX" means each post office box or bank box listed on Exhibit F, as
revised pursuant to Section 5.1(i).
"LOCK-BOX ACCOUNT" means each account maintained by the Collection Agent at a
Lock-Box Bank for the purpose of receiving or concentrating Collections.
"LOCK-BOX AGREEMENT" means each agreement between the Collection Agent and a
Lock-Box Bank concerning a Lock-Box Account.
"LOCK-BOX BANK" means each bank listed on Exhibit F, as revised pursuant to
Section 5.1(i).
"LOCK-BOX LETTER" means a letter in substantially the form of Exhibit G (or
otherwise acceptable to the Agent) from the Seller and the Collection Agent to
each Lock-Box Bank, acknowledged and accepted by such Lock-Box Bank and the
Agent.
"LOSS RESERVE" means, at any time, the product of (i) 10% multiplied by (ii) the
Sold Receivable Balance.
"LOSS-TO-LIQUIDATION RATIO" means at the end of any fiscal month, the ratio
(expressed as a percentage) of the principal amount of Charge-Offs made during
such fiscal month to the Aggregate Collections during such fiscal month.
"MATURED AGGREGATE INVESTMENT" means, at any time, the aggregate Matured Value
of all Conduit Purchasers' Investments plus the total Investments of all other
Purchasers then outstanding.
"MATURED VALUE" means, of any Investment, the sum of such Investment and all
unpaid Discount scheduled to become due (whether or not then due) on such
Investment during all Tranche Periods to which any portion of such Investment
has been allocated.
"MAXIMUM INCREMENTAL PURCHASE AMOUNT" means, at any time, the lesser of (a) the
difference between the Purchase Limit and the Aggregate Investment then
outstanding and (b) the difference between the Aggregate Commitment and the
Matured Aggregate Investment then outstanding.
"MOODY'S" means Moody's Investors Service, Inc.
I-4
<PAGE>
"OBLIGOR" means, for any Receivable, each Person obligated to pay such
Receivable and each guarantor of such obligation.
"ORIGINATOR" means, collectively each Subsidiary listed on Schedule III hereto
and such other Subsidiaries approved in writing by the Agent from time to time
that become a party to the Purchase Agreement, and also individually, as the
context shall require.
"PARENT" means Quebecor Printing (USA) Holdings Inc., a Delaware corporation.
"PERIODIC REPORT" is defined in Section 3.3.
"PERMITTED INVESTMENTS" shall mean (a) evidences of indebtedness, maturing not
more than thirty (30) days after the date of purchase thereof, issued by, or the
full and timely payment of which is guaranteed by, the full faith and credit of,
the federal government of the United States of America, (b) repurchase
agreements with banking institutions or broker-dealers that are registered under
the Securities Exchange Act of 1934 fully secured by obligations of the kind
specified in clause (a) above, (c) money market funds denominated in Dollars
rated not lower than A-1 (and without the "r" symbol attached to any such
rating) by S&P and P-1 by Moody's or otherwise acceptable to the Rating Agencies
or (d) commercial paper denominated in Dollars issued by any corporation
incorporated under the laws of the United States or any political subdivision
thereof, provided that such commercial paper is rated at least A-1 (and without
any "r" symbol attached to any such rating) thereof by S&P and at least Prime-1
thereof by Moody's.
"PERSON" means an individual, partnership, corporation, association, joint
venture, Governmental Authority or other entity of any kind.
"POTENTIAL TERMINATION EVENT" means any Termination Event or any event or
condition that with the lapse of time or giving of notice, or both, would
constitute a Termination Event.
"PRICING LETTER" means for each Purchaser Group the letter agreement, if any,
among the Related Bank Purchasers, the Purchaser Agent for the applicable
Purchaser Group and the Seller.
"PRIME RATE" means, (A) for any period, the daily average during such period of
(a) the greater of (i) the floating commercial loan rate per annum of ABN AMRO
(which rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer by ABN AMRO) announced from time to
time as its prime rate or equivalent for Dollar loans in the USA, changing as
and when said rate changes and (ii) the Federal Funds Rate plus 0.75%; or (B) in
reference to a Prime Tranche, the "PRIME RATE" specified in the applicable Rate
Supplement.
"PURCHASE" is defined in Section 1.1(a).
"PURCHASE AGREEMENT" means the Receivables Purchase Agreement dated as of
September 24, 1999 among the Seller and the Originators.
"PURCHASE AMOUNT" is defined in Section 1.1(c).
"PURCHASE DATE" is defined in Section 1.1(c).
"PURCHASE INTEREST" means, for a Purchaser, the percentage ownership interest in
the Sold Receivables and Collections held by such Purchaser, calculated when and
as described in Section 1.1(a).
"PURCHASE LIMIT" means $400,000,000.
"PURCHASED PERCENTAGE" means, for any Put, for each Committed Purchaser, its
Commitment Percentage or such lesser percentage as is necessary to prevent the
Purchase Price of such Purchaser from exceeding its Unused Commitment (unless,
in the case of an Enhancement Bank, it elects not to reduce its Purchased
Percentage in whole or in part).
"PURCHASER" means each Conduit Purchaser, Enhancement Bank and the Related Bank
Purchasers.
"PURCHASER AGENT" means each Person party to this Agreement and listed as such
on Schedule II hereto and each other Person who becomes a party to this
Agreement as a Purchaser Agent pursuant to a Transfer Supplement.
"PURCHASER GROUP" means, for each Conduit Purchaser, such Conduit Purchaser, its
Related Bank Purchasers (if any), and the Purchasers party to its Transfer
Agreement.
"PUT" is defined in Section 2.1(a).
"QUEBECOR ENTITY" means Quebecor Printing Inc., the Parent and each Originator.
"RATABLE SHARE" means, for each Purchaser Group, such Purchaser Group's
aggregate Commitments divided by the aggregate Commitments of all Purchaser
Groups.
"RATE SUPPLEMENT" means each Rate Supplement among the Seller, the Collection
Agent, a Purchaser Agent and the applicable Related Bank Lenders.
"RATING AGENCY" means, for any Conduit Purchaser, each rating agency such
Conduit Purchaser chooses to rate its commercial paper notes.
"RATINGS" means, for any Conduit Purchaser, the ratings by the Rating Agencies
of the indebtedness for borrowed money of such Conduit Purchaser.
I-5
<PAGE>
"RECEIVABLE" means each obligation of an Obligor to pay for merchandise sold or
services rendered by the Originator and includes the Originator's rights to
payment of any interest or finance charges and all proceeds of the foregoing.
During any Interim Liquidation and on and after the Termination Date, the term
"RECEIVABLE" shall only include receivables existing on the date such Interim
Liquidation commenced or Termination Date occurred, as applicable. Deemed
Collections shall reduce the outstanding balance of Receivables hereunder, so
that any Receivable that has its outstanding balance deemed collected shall
cease to be a Receivable hereunder after (x) the Collection Agent receives
payment of such Deemed Collections under Section 1.5(b) or (y) if such Deemed
Collection is received before the Termination Date, an adjustment to the Sold
Interest permitted by Section 1.5(c) is made.
"RECORDS" means, for any Sold Receivable, all contracts, books, records and
other documents or information (including computer programs, tapes, disks,
software and related property and rights) relating to such Sold Receivable or
the related Obligor.
"REINVESTMENT PURCHASE" is defined in Section 1.1(b).
"RELATED BANK PURCHASERS" means each Person party to this Agreement and listed
as such on Schedule II hereto and each other Person that becomes a Related Bank
Purchaser pursuant to a Transfer Supplement.
"RELATED SECURITY" means all of the Originator's rights in the merchandise
(including returned goods) and contracts relating to the Sold Receivables, all
security interests, guaranties and property securing or supporting payment of
the Sold Receivables, all Records and all proceeds of the foregoing.
"RPA LIMITED GUARANTY" means the Receivables Purchase Agreement Limited Guaranty
dated the date hereof executed by Quebecor Printing Inc. in favor of the Seller.
"RSA LIMITED GUARANTY" means the Receivables Sale Agreement Limited Guaranty
dated the date hereof executed by Quebecor Printing Inc. in favor of the Agent.
"SCHEDULED TERMINATION DATE" means September 18, 2000, as such date may be
extended pursuant to the terms of Section 1.9.
"SELLER" is defined in the first paragraph hereof.
"SELLER ACCOUNT" means the Seller's account designated by the Seller to the
Agent in writing.
"SOLD INTEREST" is defined in Section 1.1(a).
"SOLD RECEIVABLE" is defined in Section 1.1(a).
"SOLD RECEIVABLE BALANCE" means, at any time, an amount equal to the quotient
obtained by dividing (I) the sum of (i) Aggregate Investment plus (ii) the
Discount Reserve by (II) the difference between (i) 90% and (ii) the Dilution
Reserve Percentage.
"SPECIAL LIMIT" means, with respect to any Obligor, the amount agreed to from
time to time by the Agent and the Seller.
"S&P" means Standard & Poor's Ratings Group.
"SUBORDINATED NOTES" means each revolving promissory note issued by the Seller
to an Originator under the Purchase Agreement.
"SUBSIDIARY" means any Person of which at least a majority of the voting stock
(or equivalent equity interests) is owned or controlled by the Seller or any
Quebecor Entity or by one or more other Subsidiaries of the Seller or such
Quebecor Entity. The Subsidiaries of the Parent on the date hereof are listed on
Exhibit E.
"TAXES" means all taxes, charges, fees, levies or other assessments (including
income, gross receipts, profits, withholding, excise, property, sales, use,
license, occupation and franchise taxes and including any related interest,
penalties or other additions) imposed by any jurisdiction or taxing authority
(whether foreign or domestic).
"TERMINATION DATE" means the earliest of (a) the Business Day designated by the
Seller with no less than thirty (30) Business Days prior notice to the Agent,
(b) the occurrence of a Termination Event and (c) the Scheduled Termination
Date.
"TERMINATION EVENT" means the occurrence of any one or more of the following:
(a) any representation, warranty, certification or statement made by
the Seller or any Quebecor Entity in, or pursuant to, any Transaction Document
proves to have been incorrect in any material respect when made (including
pursuant to Section 7.2); or
(b) the Collection Agent, any Quebecor Entity or the Seller fails to
make any payment or other transfer of funds hereunder when due (including any
payments under Section 1.5(a)) and such failure remains unremedied for three (3)
Business Days after notice of such failure shall have been given by the Agent or
any Purchaser; or
(c) the Seller fails to observe or perform any covenant or agreement
contained in Sections 1.6(b), 5.1(g), 5.1(i) or 5.1(j) of this Agreement or the
Originator fails to perform any covenant or agreement in
I-6
<PAGE>
Sections 5.1(e) or (j) of the Purchase Agreement and such failure remains
unremedied for three (3) Business Days or notice of such failure shall have been
given by the Agent or any Purchaser; or
(d) the Seller or the Collection Agent (or any sub-collection agent)
fails to observe or perform any other term, covenant or agreement under any
Transaction Document, and such failure remains unremedied for ten Business Days
after notice of such failure shall have been given by the Agent or any
Purchaser; or
(e) any Quebecor Entity or any Subsidiary suffers a Bankruptcy Event;
or
(f) the three-month rolling average Delinquency Ratio exceeds 4.50%,
the three-month rolling average Default Ratio exceeds 6.50%, the three-month
rolling average Dilution Ratio exceeds 15%, the three-month rolling average
Loss-to Liquidation Ratio exceeds 1% or the three-month rolling average Turnover
Ratio exceeds 90 days; or
(g) (i) the Seller, any Quebecor Entity or any Affiliate, directly or
indirectly, disaffirms or contests the validity or enforceability of any
Transaction Document or (ii) any Transaction Document fails to be the
enforceable obligation of Quebecor Printing Inc., the Seller or any Affiliate
party thereto; or
(h) with respect to any indebtedness of any Quebecor Entity or any
Subsidiary in the aggregate outstanding principal amount of $25,000,000:
(i) failure to pay, in accordance with its terms and when due and
payable (subject to any applicable grace period), any of the principal or
interest of such indebtedness, or any such indebtedness shall, in whole or in
part, have been required to be repaid prior to the stated maturity thereof, in
accordance with the provision of any agreement evidencing, providing for the
creation of or concerning such indebtedness, or
(ii) (y) any event shall have occurred and be continuing that
accelerates such maturity or requires such repayment or permits (or, with the
passage of time or the giving of notice or both, would permit) any holder or
holders of such indebtedness, any trustee or agent acting on behalf of such
holder or holders or any other Person so to accelerate such maturity or require
any such repayment, and said holder or holders, trustee or agent, acting on
behalf of such holder or holders have accelerated said maturity or required such
repayment and (z) if the agreement evidencing, providing for the creation of or
concerning such indebtedness provides for a cure period for such event, such
event shall not be cured prior to the end of such cure period, ;PROVIDED THAT no
Termination Event shall be deemed to have occurred if the failure to pay or
perform under the relevant agreement is waived, rescinded or annulled in writing
by the relevant creditor(s);
(i) the long-term unsecured, unsubordinated indebtedness of Quebecor
Printing Inc. is rated less than BBB- by S&P or Baa3 by Moody's (or S&P or
Moody's has withdrawn or suspended such rating);
(j) Quebecor Printing Inc. shall fail to own and control, directly or
indirectly, 100% of the outstanding voting stock of the Seller and the Parent;
or
(k) a Collection Agent Replacement Event has occurred and is
continuing.
Notwithstanding the foregoing, a failure of a representation or warranty or
breach of any covenant described in clause (a), (c) or (d) above related to a
Sold Receivable shall not constitute a Termination Event if the Seller has been
deemed to have collected such Sold Receivable pursuant to Section 1.5(b).
"TRANCHE" means a portion of the Investment of a Conduit Purchaser or of the
Related Bank Purchasers allocated to
a Tranche Period pursuant to Section 1.3. A Tranche is a (i) CP Tranche, (ii)
LIBOR Tranche or (iii) Prime Tranche depending whether Discount accrues during
its Tranche Period based on a (i) CP Rate, (ii) LIBOR Rate, or (iii) Prime Rate.
"TRANCHE PERIOD" means a period of days ending on a Business Day selected
pursuant to Section 1.3, which (i) for a CP Tranche shall not exceed 270 days,
(ii) for a LIBOR Tranche shall not exceed 180 days, and (iii) for a Prime
Tranche shall not exceed 30 days.
"TRANSACTION DOCUMENTS" means this Agreement, each Fee Letter, each Pricing
Letter, the Purchase Agreement, the Subordinated Notes, the RPA Limited
Guaranty, the RSA Limited Guaranty and all other documents, instruments and
agreements executed or furnished in connection herewith and therewith.
"TRANSFER AGREEMENT" means each transfer or asset purchase agreement entered
into among an Uncommitted Conduit Purchaser, its Purchaser Agent and its Related
Bank Purchasers in connection with this Agreement.
"TRANSFER SUPPLEMENT" is defined in Section 9.8.
"TURNOVER RATIO" means an amount, expressed in days, obtained by multiplying (a)
a fraction, (i) the numerator of which is equal to the sum of the aggregate
principal amount of all Receivables as of the last day of the immediately
preceding fiscal month and (ii) the denominator of which is equal to the sum of
the Aggregate Collections during such fiscal month; times (b) 30.
"UCC" means, for any state, the Uniform Commercial Code as in effect in such
state.
"UNCOMMITTED CONDUIT PURCHASER" means each Person party to this Agreement and
listed as such on Schedule II hereto and each other Person that becomes an
Uncommitted Conduit Purchaser pursuant to a Transfer Supplement.
I-7
<PAGE>
"UNCOMMITTED CONDUIT PURCHASER SETTLEMENT" means the sum of all claims and
rights to payment pursuant to Section 1.5 or 1.7 or any other provision owed to
an Uncommitted Conduit Purchaser (or owed to the Agent or Purchaser Agent or the
Collection Agent for the benefit of an Uncommitted Conduit Purchaser) by the
Seller that, if paid, would be applied to reduce Investment.
"USA" means the United States of America (including all states and political
subdivisions thereof).
"UNUSED AGGREGATE COMMITMENT" means, at any time, the difference between the
Aggregate Commitment then in effect and the outstanding Matured Aggregate
Investment.
"UNUSED COMMITMENT" means, for any Committed Purchaser at any time, the
difference between its Commitment and its Investment then outstanding.
The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms. Unless otherwise inconsistent with the terms
of this Agreement, all accounting terms used herein shall be interpreted, and
all accounting determinations hereunder shall be made, in accordance with GAAP.
Amounts to be calculated hereunder shall be continuously recalculated at the
time any information relevant to such calculation changes.
I-8
<PAGE>
Schedule II
Purchasers
<TABLE>
<CAPTION>
Uncommitted Conduit Purchasers Name of Related Bank Purchasers Commitments of Related Bank
Purchasers
<S> <C> <C>
AMSTERDAM FUNDING CORPORATION ABN AMRO BANK, N.V. $408,000,000
</TABLE>
Committed Conduit Purchasers Commitments of Committed Conduit Purchasers
<PAGE>
Exhibit A
to
Receivables Sale Agreement
Form of Incremental Purchase Request
____________, ____
ABN AMRO Bank N.V., as Agent
Asset Securitization, Structured Finance
Suite 725
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attn: Purchaser Agent-Amsterdam
Re: Amended and Restated Receivables Sale Agreement dated as of December 22,
1999 (the "SALE AGREEMENT") among Quebecor
World Finance Inc., as Seller, Quebecor Printing (USA)
Holdings Inc., as Initial Collection Agent,
ABN AMRO Bank N.V., as Agent,
and the Purchasers thereunder
Ladies and Gentlemen:
The undersigned Seller under the above-referenced Sale Agreement hereby confirms
its has requested an Incremental Purchase of $___________ to be made ratably by
the Conduit Purchasers under the Sale Agreement. [IN THE EVENT AN UNCOMMITTED
PURCHASER IS UNABLE OR UNWILLING TO MAKE THE REQUESTED INCREMENTAL PURCHASE, THE
SELLER HEREBY REQUESTS AN INCREMENTAL PURCHASE OF $____________ BY THE RELATED
BANK LENDERS FOR SUCH UNCOMMITTED PURCHASER UNDER THE SALE AGREEMENT AT THE
[LIBOR RATE WITH A TRANCHE PERIOD OF _______ MONTHS.] [PRIME RATE]].
Attached hereto as Schedule I is information relating to the proposed
Incremental Purchase required by the Sale Agreement. If on the date of this
Incremental Purchase Request ("NOTICE"), an Interim Liquidation is in effect,
this Notice revokes our request for such Interim Liquidation so that
Reinvestment Purchases shall immediately commence in accordance with Section
1.1(d) of the Sale Agreement.
The Seller hereby certifies that both before and after giving effect to [EACH
OF] the proposed Incremental Purchase[S] contemplated hereby and the use of the
proceeds therefrom, all of the requirements of Section 7.2 of the Sale Agreement
have been satisfied.
Very truly yours,
QUEBECOR WORLD FINANCE INC.
By
-------------------------------
Title
<PAGE>
Schedule I
to
Incremental Purchase Requests
Summary of Information Relating to Proposed Sale(s)
1. DATES, AMOUNTS, PURCHASER(S), PROPOSED TRANCHE PERIODS
A1 Date of Notice _________
A2 Measurement Date (the last
Business Day of the month
immediately preceding the
month in which the Date of
Notice occurs) _________
<TABLE>
<S> <C> <C> <C> <C>
A3 Proposed Purchase Dates _________ _________ _________ _________
(each of which is a Business Day)
A4 Respective Proposed
Incremental Purchase on
each such Purchase Date $_________ $_________ $_________ $________
(each Incremental (A4A) (A4B) (A4C) (A4D)
Purchase must be in a
minimum amount of
$1,000,000 and multiples
thereof, or, if less, an
amount equal to the
Maximum Incremental
Purchase Amount)
A5 Proposed Allocation
among Purchasers
Conduit
Purchaser $_________ $_________ $_________ $_________
Conduit
Purchaser $_________ $_________ $_________ $_________
Related Bank
Lenders $_________ $_________ $_________ $_________
Related Bank
Lenders $_________ $_________ $_________ $_________
Enhancement Bank $_________ $_________ $_________ $_________
Enhancement Bank $_________ $_________ $_________ $_________
A6 Tranche Period
and Tranche Rate(s) for Committed
Purchasers
Starting Date _________ _________ _________ _________
Ending Date _________ _________ _________ _________
Number of Days _________ _________ _________ _________
Prime or LIBOR
(for Committed
Purchasers only) _________ _________ _________ _________
</TABLE>
Each proposed Purchase Date must be a Business Day and, other than the initial
Incremental Purchase, must occur no later than two weeks after the Measurement
Date set forth above. The choice of Measurement Date is a risk undertaken by the
Seller. If a selected Measurement Date is not the applicable Purchase Date, the
Seller's choice
<PAGE>
and disclosure of such date shall not in any manner diminish or
waive the obligation of the Seller to assure the Purchasers that, after giving
effect to the proposed Purchase, the actual Sold Interest as of the date of such
proposed Purchase does not exceed 100%.
A-2
<PAGE>
Exhibit B
to
Receivables Sale Agreement
[Reserved]
<PAGE>
Exhibit C
Form of Periodic Report
<PAGE>
Exhibit D
Addresses and Names of Seller and Originator
1. LOCATIONS. (a) The chief executive office of the Seller and the
Originator are located at the following address:
SELLER:
Quebecor World Finance Inc.
300 Delaware Avenue, Suite 900
Wilmington, Delaware 19801
ORIGINATORS:
Quebecor Printing Atglen
Lower Valley Road, Route 372
P.O. Box 465
Atglen, PA 19310-0465
Quebecor Printing Buffalo Inc.
2475 George Urban Boulevard
Depew, NY 14043
Quebcor Printing Dallas II Inc.
4800 Spring Valley Road
Dallas, TX 75244
Quebecor Printing Dallas, L.P.
4800 Spring Valley Road
Dallas, TX 75244
Quebecor Printing Dickson Inc.
1655 Old Columbia Road
Box 686
Dickson, TN 37055
Quebecor Printing Dubuque Inc.
2460 Kerper Blvd.
Dubuque, IA 52001
Quebecor Printing Eagle Inc.
4515 East 75th Terrace
Kansas City, MO 64132
Quebecor Printing Eusey Press Inc.
27 Nashua Street
Leominster, MA 04153
Quebecor Printing Fairfield Inc.
100 North Miller Street
Fairfield, PA 17320
Quebecor Printing Hazelton Inc.
Humboldt Industrial Park, Route 924 South
Hazelton, PA 18201
Quebecor Printing Kingsport Inc.
Press and Roller Streets
Kingsport, TN 37662
Quebecor List Services Chicago Inc.
27907 W. Industrial Drive North
Plainfield, IL 60544-8570
Quebecor Printing Lincoln Inc.
3700 NW 12th Street
Lincoln, NE 68521
Quebecor Printing Loveland Inc.
380 West 37th Street
Loveland, CO 80538
Quebecor Printing Memphis II Inc.
828 East Holmes Road
<PAGE>
Memphis, TN 38116
QP Memphis Corp.
828 East Holmes Road
Memphis, TN 38116
Quebecor Printing Mt Morris II Inc.
404 North Wesley Avenue
Mt. Morris, IL 61054
Quebecor Printing Olive Branch Inc.
8649 Hacks Cross Road
Olive Branch, MS 38654
Quebecor Printing Pendell Inc.
1700 James Savage Road
Midland, MI 48642
Quebecor Petty Printing Inc.
420 West Industrial Avenue
Effingham, IL 62401-0250
Quebecor Printing St. Cloud Inc.
660 Mayhew Lake Road N.E.
St. Cloud, MN 56304
Quebecor Printing St. Paul Inc.
1999 Shepard Road
St. Paul, MN 55116
Quebecor Printing San Jose Inc.
696 East Trimble Road
San Jose, CA 95131-1222
Quebecor Printing Sayers Inc.
9600 Manchester Road
St. Louis, MO 63119-1390
Quebecor Printing Vermont Inc.
Putney Road
Brattleboro, VT 05504
Quebecor World (USA) Inc.
340 Pemberwick Road
Greenwich, Connecticut 06831
No such address was different at any time since June 25, 1999
(b) The following are all the locations where the Seller and the
Originator directly or through its agents maintain any Records:
[SAME AS (A) ABOVE]
2. NAMES. The following is a list of all names (including trade names
or similar appellations) used by the Seller and the Originator or any of its
divisions or other business units that generate Receivables:
[SAME AS (A) ABOVE]
-2-
<PAGE>
Exhibit E
Subsidiaries
Arcata Corporation
Holyoke Lithograph Co., Inc.
Karl M. Harrop Company II Inc.
National Magazine Mailers, Inc.
Nova Marketing Services
Print Northwest Company L.P.
Printing Acquisition Inc.
Q.P. New York Corp.
QP Memphis Corp.
Quebecor Direct Brookfield Inc.
Quebecor List Services Chicago Inc.
Quebecor Petty Printing Inc.
Quebecor Printing (USA) Corp.
Quebecor Printing Atglen Inc.
Quebecor Printing Atlanta Inc.
Quebecor Printing Aviation Inc.
Quebecor Printing Buffalo Inc.
Quebecor Printing Capital Corporation
Quebecor Printing Capital GP
Quebecor Printing Dallas II Inc.
Quebecor Printing Dallas, L.P.
Quebecor Printing Delaware L.L.C.
Quebecor Printing Dickson Inc.
Quebecor Printing Directory Sales Corp.
Quebecor Printing Dubuque Inc.
Quebecor Printing Eagle Inc.
Quebecor Printing Eusey Press Inc.
Quebecor Printing Fairfield Inc.
Quebecor Printing Federated Inc.
Quebecor Printing Franklin Inc.
Quebecor Printing Halliday Inc.
Quebecor Printing Hazelton Inc.
Quebecor Printing Holding Company
Quebecor Printing Kingsport Inc.
Quebecor Printing Lincoln Inc.
Quebecor Printing Loveland Inc.
Quebecor Printing Memphis II Inc.
Quebecor Printing Memphis Inc.
Quebecor Printing Mt. Morris Inc.
Quebecor Printing Nevada Inc.
<PAGE>
Quebecor Printing Olive Branch Inc.
Quebecor Printing Pendell Inc.
Quebecor Printing Providence Inc.
Quebecor Printing San Jose Inc.
Quebecor Printing Sayers Inc.
Quebecor Printing Seattle Inc.
Quebecor Printing Semline Inc.
Quebecor Printing St. Cloud Inc.
Quebecor Printing St. Paul Inc.
Quebecor Printing Vermont Inc.
Quebecor Printing Warehousing Inc.
The Webb Company
QUEBECOR WORLD (USA) INC. AND ITS SUBSIDIARIES:
Acme Printing Company, Inc.
BCK 140 Partnership
Central Florida Press, L.C.
Century Graphics Corporation
DB Acquistion Corp.
Dittler Brothers, Incorporated
Downey Printing/Waukee, Inc.
Edwin Road Properties, Inc.
Great Western Publishing, Inc.
Great Western Trucking
Image Technologies
Infiniti Graphics, Inc.
Johnson & Hardin Enterprises Inc.
KRI Dresden, Inc.
KRI TN, L.P.
KRI, Inc.
Krueger Acquisition Corporation
Lagnaippe Advertising, Inc.
Lagnaippe Inserts, Inc.
Lagnaippe Marketing Group
Lanman Dominion, Inc.
Lanman Lithotech, Inc.
Lightspeed Digital Express L.L.C.
Magna Graphic, Inc.
Magna Graphic/Midwest Inc.
Magna/Ruttles L.L.C.
-2-
<PAGE>
Metroweb Acquisition L.P.
Nimrod Press
Northeast Graphics Inc.
Packaging Graphics
RAI, Inc.
Shea Communications Company
Taconic Holdings, Inc.
The Johnson & Hardin Co.
The Lanman Companies, Inc.
The Wessel Company, Inc.
UP/Graphics Inc.
WCP TN L.P.
WCP-D, Inc.
WCX, L.L.C.
WCY, L.L.C.
WCZ, L.L.C.
World Color Book Services, Inc.
World Color Finance, Inc.
World Color Foreign Sales Corporation
World Color Systems, Inc.
World Color Tennesee, Inc.
-3-
<PAGE>
Exhibit F
Lock Boxes and Lock-Box Banks
BANK LOCK-BOX NUMBER COLLECTION ACCOUNT
Bank of America, N.A. 81880-03219 81885-11363
Wachovia Bank, N.A. 101073 12440-135
Wachovia Bank, N.A. 101629 12440-135
Wachovia Bank, N.A. 101771 12440-135
Wachovia Bank, N.A. 101268 12440-135
Wachovia Bank, N.A. 101312 12440-135
Wachovia Bank, N.A. 945559 12440-135
Wachovia Bank, N.A. 751214 12440-135
Wachovia Bank, N.A. 751359 12440-135
Wachovia Bank, N.A. 751429 12440-135
Wachovia Bank, N.A. 751442 12440-135
Wachovia Bank, N.A. 751444 12440-135
Wachovia Bank, N.A. 751447 12440-135
Wachovia Bank, N.A. 751448 12440-135
Wachovia Bank, N.A. 751449 12440-135
Wachovia Bank, N.A. 751450 12440-135
Wachovia Bank, N.A. 751451 12440-135
Wachovia Bank, N.A. 751452 12440-135
Wachovia Bank, N.A. 751453 12440-135
Wachovia Bank, N.A. 751454 12440-135
Wachovia Bank, N.A. 751566 12440-135
Wachovia Bank, N.A. 751916 12440-135
Wachovia Bank, N.A. 751919 12440-135
Wachovia Bank, N.A. 751950 12440-135
Wachovia Bank, N.A. 751567 12440-135
Wachovia Bank, N.A. 951018 12440-135
Wachovia Bank, N.A. 951006 12440-135
Wachovia Bank, N.A. 951045 12440-135
Wachovia Bank, N.A. 951105 12440-135
Wachovia Bank, N.A. 951167 12440-135
Wachovia Bank, N.A. 945592 12440-135
Wachovia Bank, N.A. 951198 12440-135
Wachovia Bank, N.A. 951467 12440-135
Wachovia Bank, N.A. 951470 12440-135
Wachovia Bank, N.A. 951473 12440-135
Wachovia Bank, N.A. 951476 12440-135
Wachovia Bank, N.A. 951406 12440-135
<PAGE>
Exhibit G
to Receivables Sale Agreement
Form of Lock Box Letter
[Name of Lock Box Bank]
Ladies and Gentlemen:
Reference is made to the lock-box numbers _______________ in __________ and the
associated lock-box demand deposit account number ____________ maintained with
you (such lock-boxes and associated lock-box demand deposit account,
collectively, the "ACCOUNTS"), each in the name of [NAME OF ORIGINATOR]
("[___]"). [___] hereby confirms it has sold all Receivables (as defined below)
to Quebecor World Finance Inc. (the "SELLER"). In connection with the Amended
and Restated Receivables Sale Agreement, dated as of December 22, 1999 (as
amended, supplemented or otherwise modified from time to time, the "RECEIVABLES
SALE AGREEMENT"), among the Seller, the Initial Collection Agent, the Conduit
Purchasers from time to time party thereto, the Enhancement Banks from time to
time party thereto, the Related Bank Purchasers from time to time party thereto
and ABN AMRO Bank N.V., as agent (the "AGENT") for the Conduit Purchasers, the
Related Bank Purchasers and the Enhancer (collectively, the "PURCHASERS"), the
Seller has assigned to the Agent for the benefit of the Purchasers an undivided
percentage interest in the accounts, chattel paper, instruments or general
intangibles (collectively, the "RECEIVABLES") under which payments are or may
hereafter be made to the Accounts, and has granted to the Agent for the benefit
of the Purchasers a security interest in its retained interest in such
Receivables. As is the customary practice in this type of transaction, we hereby
request that you execute this letter agreement. All references herein to "WE"
and "US" refer to [_____] and the Seller, jointly and severally. Your execution
hereof is a condition precedent to our continued maintenance of the Accounts
with you.
We hereby transfer exclusive dominion and control of the Accounts to the Agent,
subject only to the condition subsequent that the Agent shall have given you
notice that a "TERMINATION EVENT" and/or "COLLECTION AGENT REPLACEMENT EVENT"
has occurred and is continuing under the Receivables Sale Agreement and of its
election to assume such dominion and control, which notice shall be in
substantially the form attached hereto as Annex A (the "AGENT'S NOTICE").
At all times prior to the receipt of the Agent's Notice described above, all
payments to be made by you out of, or in connection with the Accounts, are to be
made in accordance with the instructions of the Seller or its agent. We hereby
irrevocably instruct you, at all times from and after the date of your receipt
of the Agent's Notice as described above, to make all payments to be made by you
out of, or in connection with, the Accounts directly to the Agent, at its
address set forth below its signature hereto or as the Agent otherwise notifies
you, or otherwise in accordance with the instructions of the Agent.
We also hereby notify you that, at all times from and after the date of your
receipt of the Agent's Notice as described above, the Agent shall be irrevocably
entitled to exercise in our place and stead any and all rights in connection
with the Accounts, including, without limitation, (a) the right to specify when
payments are to be made out of, or in connection with, the Accounts and (b) the
right to require preparation of duplicate monthly bank statements on the
Accounts for the Agent's audit purposes and mailing of such statements directly
to an address specified by the Agent. At all times from and after the date of
your receipt of the Agent's Notice, neither we nor any of our affiliates shall
be given any access to the Accounts.
The Agent's Notice may be personally served or sent by telex, facsimile or U.S.
mail, certified return receipt requested, to the address, telex or facsimile
number set forth under your signature to this letter agreement (or to such other
address, telex or facsimile number as to which you shall notify the Agent in
writing). If the Agent's Notice is given by telex or facsimile, it will be
deemed to have been received when the Agent's Notice is sent and the answerback
is received (in the case of telex) or receipt is confirmed by telephone or other
electronic means (in the case of facsimile). All other notices will be deemed to
have been received when actually received or, in the case of personal delivery,
delivered.
By executing this letter agreement, you acknowledge the existence of the Agent's
right to dominion and control of the Accounts and its ownership of and security
interest in the amounts from time to time on deposit therein and agree that from
the date hereof the Accounts shall be maintained by you for the benefit of, and
amounts from time to time therein held by you as agent for, the Agent on the
terms provided herein. The Accounts are to be entitled "Quebecor World Finance
Inc. and ABN AMRO Bank N.V., as Agent for the Purchasers" with the subline
"[NAME OF ORIGINATOR]". Except as otherwise provided in this letter agreement,
payments to the Accounts are to be
<PAGE>
processed in accordance with the standard procedures currently in effect. All
service charges and fees in connection with the Accounts shall continue to be
payable by us under the arrangements currently in effect. By executing this
letter agreement, you (a) irrevocably waive and agree not to assert, claim or
endeavor to exercise, (b) irrevocably bar and estop yourself from asserting,
claiming or exercising and (c) acknowledge that you have not heretofore received
a notice, writ, order or other form of legal process from any other party
asserting, claiming or exercising, any right of set-off, banker's lien or other
purported form of claim with respect to the accounts or any funds from time to
time therein. Except for your right to payment of your service charge and fees
and to make deductions for returned items, you shall have no rights in the
Accounts or funds therein, except deductions for service charges, fees and
returned or misplaced items. To the extent you may ever have any additional
rights, you hereby expressly subordinate all such rights to all rights of the
Agent.
You may terminate this letter agreement by canceling the Accounts maintained
with you, which cancellation and termination shall become effective only upon
thirty (30) days prior written notice thereof from you to the Agent in the
absence of fraud or abuse. Incoming mail addressed to the Accounts (including,
without limitation, any direct funds transfer to the Accounts) received after
such cancellation shall be forwarded in accordance with the Agent's
instructions. This letter agreement may also be terminated upon written notice
to you by the Agent stating that the Receivables Sale Agreement is no longer in
effect. Except as otherwise provided in this paragraph, this letter agreement
may not be terminated without the prior written consent of the Agent.
This letter agreement contains the entire agreement between the parties with
respect to the subject matter hereof, and may not be altered, modified or
amended in any respect, nor may any right, power or privilege of any party
hereunder be waived or released or discharged, except upon execution by you, us
and the Agent of a written instrument so providing. The terms and conditions of
any agreement between us and you (a "LOCK-BOX SERVICE AGREEMENT") (whether now
existing or executed hereafter) with respect to the lock-box arrangements, to
the extent not inconsistent with this letter agreement, will remain in effect
between you and us. In the event that any provision in this letter agreement is
in conflict with, or inconsistent with, any provision of any such Lock-Box
Service Agreement, this letter agreement will exclusively govern and control.
Each party agrees to take all actions reasonably requested by any other party to
carry out the purposes of this letter agreement or to preserve and protect the
rights of each party hereunder.
[___] agrees to indemnify, defend and hold harmless you and your affiliates,
directors, officers, employees, agents, successors and assigns (each, an
"INDEMNITEE") from and against any and all liabilities, losses, claims, damages,
demands, costs and expenses of every kind (including but not limited to costs
incurred as a result of items being deposited in the Account and being unpaid
for any reason, reasonable attorney's fees and the reasonable charges of your
in-house counsel) incurred or sustained by any Indemnitee arising out of your
performance of the services contemplated by this Lock-Box Letter, except to the
extent such liabilities, losses, claims, damages, demands, costs and expenses
are the direct result of your gross negligence or willful misconduct. The
provisions of this paragraph shall survive the termination of this Lock-Box
Letter.
In the event [___] becomes subject to a voluntary or involuntary proceeding
under the United States Bankruptcy Code, or if you are otherwise served with
legal process which you in good faith believe affects funds in the Account you
may suspend disbursements from the Account otherwise required by the terms
hereof until such time as you receive an appropriate court order or other
assurances satisfactory to you establishing that the funds may continue to be
disbursed according to the instructions contained in this Lock-Box Letter.
THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF __________. This letter agreement may be executed in any number of
counterparts and all of such counterparts taken together will be deemed to
constitute one and the same instrument.
Please indicate your agreement to the terms of this letter agreement by signing
in the space provided below. This letter agreement will become effective
immediately upon execution of a counterpart of this letter agreement by all
parties hereto.
Very truly yours,
[NAME OF ORIGINATOR]
By:
---------------------------------
Title:
QUEBECOR WORLD FINANCE INC.
By:
---------------------------------
Title:
Accepted and confirmed as of
G-2
<PAGE>
the date first written above:
By: ABN AMRO BANK N.V., as Agent
By:
---------------------------------
Title:
By:
---------------------------------
Title:
Address of notice:
ABN AMRO Bank N.V.
Structured Finance, Asset Securitization
135 South LaSalle Street
Chicago, Illinois 60674
Attention: Purchaser Agent
Telephone Number: (312) 904-6263
Telecopy Number: (312) 904-6376
Acknowledged and agreed to as of the date first written above:
[NAME OF BANK]
By:
---------------------------------
Title:
Address for notice:
-------------------------------
-------------------------------
-------------------------------
G-3
<PAGE>
ANNEX A TO
LOCK-BOX LETTER
[Name of Bank]
Re: Quebecor World Finance Inc.
Lock Box Numbers ______________
Lock-Box Account Number ____________
Ladies and Gentlemen:
Reference is made to the letter agreement dated __________, ____ (the "LETTER
AGREEMENT") among [NAME OF ORIGINATOR], Quebecor World Finance Inc., the
undersigned, as Agent, and you concerning the above-described lock-boxes and
lock-box account (collectively, the "ACCOUNTS"). We hereby give you notice that
a "TERMINATION EVENT" and/or "COLLECTION AGENT REPLACEMENT EVENT" has occurred
and is continuing under the Receivables Sale Agreement (as defined in the Letter
Agreement) and of our assumption of dominion and control of the Accounts as
provided in the Letter Agreement.
We hereby instruct you not to permit any other party to have access to the
Accounts and to make all payments to be made by you out of or in connection with
the Accounts directly to the undersigned upon our instructions, at our address
set forth above.
Very truly yours,
ABN AMRO BANK N.V.
By:
---------------------------------
Title:
By:
---------------------------------
Title:
cc: Quebecor World Finance Inc.
G-4
<PAGE>
Exhibit H
To Receivables Sale Agreement
Compliance Certificate
To: ABN AMRO Bank N.V., as Agent, and
each Purchaser
This Compliance Certificate is furnished pursuant to Section 5.1(a)(iii) of the
Amended and Restated Receivables Sale Agreement, dated as of December 22, 1999
(as amended, supplemented or otherwise modified through the date hereof, the
"SALE AGREEMENT"), among Quebecor World Finance Inc. (the "SELLER"), Quebecor
Printing (USA) Holdings Inc. (the "INITIAL COLLECTION AGENT"), the Conduit
Purchasers from time to time party thereto, the Enhancement Banks from time to
time party thereto, the Related Bank Purchasers from time to time party thereto,
and ABN AMRO Bank N.V. as agent for the Purchasers (in such capacity, the
"AGENT"). Terms used in this Compliance Certificate and not otherwise defined
herein shall have the respective meanings ascribed thereto in the Sale
Agreement.
THE UNDERSIGNED HEREBY REPRESENTS, WARRANTS, CERTIFIES AND CONFIRMS THAT:
1. The undersigned is a duly elected Designated Financial Officer of
the undersigned.
2. Attached hereto is a copy of the financial statements described in
Section 5.1(a)(i) or 5.1(a)(ii) of the Sale Agreement.
3. The undersigned has reviewed the terms of the Transaction Documents
and has made, or caused to be made under his/her supervision, a detailed review
of the transactions and the conditions of the Seller and the Originator during
and at the end of the accounting period covered by the attached financial
statements.
4. The examinations described in paragraph 3 hereof did not disclose,
and the undersigned has no knowledge of, the existence of any condition or event
which constitutes a Potential Termination Event, during or at the end of the
accounting period covered by the attached financial statements or as of the date
of this Compliance Certificate, except as set forth below.
5. Based on the examinations described in paragraph 3 hereof, the
undersigned confirms that the representations and warranties contained in
Article IV of the Sale Agreement are true and correct as though made on the date
hereof, except as set forth below.
6. The undersigned confirms that Year 2000 remediation efforts are
proceeding as scheduled. Described below are the exceptions, if any, to
paragraphs 4 and 5 listing, in detail, the nature of the condition or event, the
period during which it has existed and the action the undersigned has taken, is
taking or proposes to take with respect to each such condition or event:
The foregoing certifications are made and delivered this ____ day of
___________, _____.
QUEBECOR PRINTING INC.
By:
----------------------------------------
Designated Financial Officer
<PAGE>
Exhibit I
Credit and Collection Policy
<PAGE>
EXHIBIT 10.4
ACKNOWLEDGMENT OF TERMINATION OF PURCHASED INTEREST
AND
DIRECTION FOR PAYMENT FOR REDUCTION IN PURCHASED INTEREST
The undersigned do hereby agree and acknowledge in connection with that
certain Receivables Sale Agreement dated as of June 30, 1997 among World Color
Finance, Inc. (the "SELLER"), ABN AMRO Bank N.V., as the Enhancer, the Liquidity
Providers from time to time party thereto, Amsterdam Funding Corporation, and
ABN AMRO Bank N.V., as Agent (as amended through the date hereof, the
"AGREEMENT"), the following:
1. Subject to Paragraph 4 hereof, the Agreement is hereby terminated as
of December 22 1999, with all Purchased Interest as defined therein, reduced to
zero and terminated; PROVIDED, however, the provisions of Article VI and other
indemnities contained in the Agreement shall survive the effectiveness of this
termination.
2. Following the receipt of $200,399,591.83 (which consists of
$200,000,000 in principal, $357,806.08 of accrued interest and dealer fees and
$41,785.75 of accrued fees and interest on shortfall) ($200,000,000 of which
will be funded with the proceeds of a drawing request made by Quebecor World
Finance Inc., which request will be in the form of Exhibit A attached hereto)
the Purchasers and the Agent shall have received all amounts due and owing from
Seller as provided under the Agreement and upon receipt thereof, except to the
extent set forth in Paragraph 1 & 4 hereof, releases the Seller from any and all
further obligations or liabilities arising out of the Agreement or agreements
related thereto. The Agent shall provide to the Seller such evidence as is
reasonable acceptable to the Seller within two Business days hereof setting
forth a calculation of the amounts specified herein. If the Agent and the Seller
agree that the amounts set forth herein are inaccurate each such party agrees to
pay the other party such amounts as shall be agreed upon.
3. The Agent, on behalf of the Purchasers, hereby sells and assigns back
to Seller without representation, warranty or recourse of any kind, and the
Seller hereby acquires from the Agent, on behalf of the Purchasers, any
Purchased Interest in all Receivables of the Seller and the Collections thereon,
all such terms as defined in the Agreement.
4. Notwithstanding any other provision contained herein to the extent
that any amount paid to any Purchaser or the Agent pursuant to this agreement is
subsequently invalidated, declared fraudulent, preferential, set aside or
otherwise required to be returned to the Seller or any trustee, receiver, or any
other party under any bankruptcy law, state or federal law, common law or
equitable cause, then the Agreement shall be reinstated in its entirety and the
liens created thereby shall be revived and, in each case, continue in full force
and effect as if such payment had not been made and this agreement had not been
executed and delivered.
Dated As of December 22, 1999.
WORLD COLOR FINANCE, INC.
By:_____________________________________
Title:__________________________________
ABN AMRO BANK N.V., as Agent
By:_____________________________________
Title:__________________________________
By: ____________________________________
Title:__________________________________
<PAGE>
EXHIBIT A
December 22, 1999
ABN AMRO Bank N.V., as Agent
Asset Securitization, Structured Finance
Suite 725
135 South LaSalle Street
Chicago, Illinois 60674-9135
Attn: Purchaser Agent-Amsterdam
Re: Amended and Restated Receivables Sale Agreement dated as of
December 22, 1999 (the "SALE AGREEMENT") among Quebecor
World Finance Inc., as Seller, Quebecor Printing (USA)
Holdings Inc., as Initial Collection Agent,
ABN AMRO Bank N.V., as Agent,
and the Purchasers thereunder
Ladies and Gentlemen:
The undersigned Seller under the above-referenced Sale Agreement hereby
confirms it has requested an Incremental Purchase of $200,000,000 to be made
ratably by the Conduit Purchasers under the Sale Agreement.
Attached hereto as Schedule I is information relating to the proposed
Incremental Purchase required by the Sale Agreement.
<PAGE>
The Seller hereby certifies that both before and after giving effect to
the proposed Incremental Purchase contemplated hereby and the use of the
proceeds therefrom, all of the requirements of Section 7.2 of the Sale Agreement
have been satisfied.
Very truly yours,
QUEBECOR WORLD FINANCE INC.
By
Title___________________________________
<PAGE>
SCHEDULE I
TO
INCREMENTAL PURCHASE REQUESTS
SUMMARY OF INFORMATION RELATING TO PROPOSED SALE(S)
1. DATES, AMOUNTS, PURCHASER(S), PROPOSED TRANCHE PERIODS
A1 Date of Notice December 22, 1999
A2 Measurement Date (the last
Business Day of the month
immediately preceding the
month in which the Date of
Notice occurs) November 30, 1999
A3 Proposed Purchase Dates December 22, 1999
(each of which is a
Business Day)
A4 Respective Proposed
Incremental Purchase on
each such Purchase Date
(each Incremental $200,000,000
Purchase must be in a
minimum amount of
$1,000,000 and multiples
thereof, or, if less, an
amount equal to the
Maximum Incremental
Purchase Amount)
A5 Proposed Allocation
among Purchasers
Conduit
Purchaser Amsterdam Funding Corporation $200,000,000
Conduit
Purchaser
Related Bank
Lenders
Related Bank
Lenders
Enhancement
Bank
Enhancement
Bank
A6 Tranche Period N/A
and Tranche Rate(s) for Committed
Purchasers
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Starting Date _________ _________ _________ _________
Ending Date _________ _________ _________ _________
Number of Days _________ _________ _________ _________
Prime or LIBOR
(for Committed
Purchasers only) _________ _________ _________ _________
</TABLE>
Each proposed Purchase Date must be a Business Day and, other than the
initial Incremental Purchase, must occur no later than two weeks after
the Measurement Date set forth above. The choice of Measurement Date is
a risk undertaken by the Seller. If a selected Measurement Date is not
the applicable Purchase Date, the Seller's choice and disclosure of such
date shall not in any manner diminish or waive the obligation of the
Seller to assure the Purchasers that, after giving effect to the
proposed Purchase, the actual Sold Interest as of the date of such
proposed Purchase does not exceed 100%.
<PAGE>
EXHIBIT 10.8
RETENTION AND SEVERANCE AGREEMENT
[CAROUSSO]
[HLAVATY]
AGREEMENT made as of August 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06831, and __________________ (the "Executive").
WHEREAS, the Executive is employed by the Company or by one of its
wholly-owned consolidated subsidiaries;
WHEREAS, Executive and the Company entered into a Change in Control
Severance Agreement as of April 16, 1999 (the "CIC Agreement"), which provides
for severance benefits upon certain terminations within two years following a
"Change in Control" (as defined therein);
WHEREAS, through a wholly-owned subsidiary, Quebecor Printing Inc. (the
"Parent") intends to acquire the Company in a two-step transaction, and the
consummation of the first step tender offer (the "Effective Date") will
constitute a Change in Control under the CIC Agreement; PROVIDED, HOWEVER, that
in the event the transaction is converted to a one-step merger, the Change in
Control and therefore the Effective Date hereunder will occur upon the effective
date of such merger;
WHEREAS, the Company wishes to encourage and provide incentive to 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
following the 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 Parent or the Company;
or (iii) willful and continued refusal by the Executive substantially to perform
the duties of his or her 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
or her 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. amended.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
<PAGE>
2
(d) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination, or upon the death of the
Executive.
(e) 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 which he or she held immediately prior to
the Effective Date, or he or she is removed as a member of the Board of
Directors of the Company if the Executive was a director immediately prior to
the Effective Date; (ii) the Executive's duties, responsibilities, status or
authority are materially reduced, diminished or adversely altered from those in
effect immediately prior to the Effective Date or the Executive is assigned
duties inconsistent with the Executive's status as a senior officer of the
Company; (iii) the Executive's level of compensation or benefits in effect
immediately prior to or after the Effective Date is reduced; (iv) the potential
benefit of the Executive under any performance-based bonus, equity or other
incentive plan of the Company in effect immediately prior to the Effective Date
is reduced; (v) the Executive's employment is based at a location more than ten
miles away from the location at which it is based immediately prior to the
Effective Date; (vi) any purchaser, assign, surviving corporation, or successor
of Parent or the Company or their respective businesses 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 Paragraph 14 hereof; (vii) Parent or the Company
fails to pay any amounts due to the Executive; (viii) the Executive is required
to travel substantially more than he or she traveled prior to the Effective
Date; or (ix) the Company breaches any of the provisions of this Agreement.
(f) "NOTICE OF TERMINATION" 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 circumstance claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
(g) "PERMANENT DISABILITY shall mean the Executive is unable
to engage in the activities required by the Executive's job by reason of any
medically determined physical or mental impairment for a period of six
consecutive months or for an aggregate of nine months in any twenty-four
consecutive month period.
(h) "SEVERANCE PERIOD" shall be the two-year period commencing
on the date of the Executive's Termination of Employment.
(i) "TARGET BONUS" shall mean the Executive's maximum bonus
eligibility under the Company's management bonus plan.
<PAGE>
3
(j) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Executive's employment with the Company and its affiliates for any reason.
2. TERM. The initial term of this Agreement shall be for the period
commencing on the Effective Date, if and only if such Effective Date occurs, 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 Parent or the
Company until such time as Parent or the Company (as applicable) elects to cease
such extension by giving written notice of such to the Executive. The Agreement
shall thus terminate on the second anniversary of the effective date of such
notice.
3. RETENTION Bonuses. The Executive shall be entitled to a bonus (the
"Retention Bonus") equal to a cash payment of (i) one times the sum of the
Executive's Base Salary and Target Bonus, as in effect on the Effective Date and
(ii) 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 accrue during the period from the Effective Date until
the second anniversary of the Effective Date if he or she were to continue
employment with the Company, assuming no change in Base Salary and Target Bonus,
each as in effect immediately prior to the Effective Date, assuming full bonus
payout and without regard to any amendment to the Pension Plans made subsequent
to the Effective Date. Forty percent of such cash amount shall be paid on the
Effective Date and sixty percent of such cash amount shall be paid on the first
anniversary of the Effective Date if the Executive remains employed by the
Company or its affiliates.
4. SEVERANCE BENEFITS,
(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The
Executive shall be entitled to severance benefits if, during the two year period
commencing on the Effective Date, the Executive has a Termination of Employment
initiated (i) by the Company or any of its affiliates without Cause or (ii) by
the Executive for Good Reason. Such severance benefits shall include (i) a cash
payment, which shall be payable in one lump sum as soon as reasonably
practicable after the Date of Termination, but in no event later than fourteen
days thereafter, equal to (x) one times the sum of the Executive's Base Salary
and Target Bonus, each as in effect upon the Termination of Employment (without
giving effect to any reduction which constitutes Good Reason) (or, if higher,
immediately prior to the Effective Date), and (y) the amount under all of the
Pension Plans which the Executive would have accrued during the period from the
Date of Termination until the second anniversary of the Date of Termination had
the Executive continued employment with the Company, assuming no change in Base
Salary and Target Bonus, each as in effect immediately prior to the Termination
of Employment (without giving effect to any reduction that constitutes Good
Reason) (or, if higher, immediately prior to the Effective Date), assuming full
bonus payout and without regard to any amendment to the Pension Plans made upon
or subsequent to the Effective Date, PROVIDED, HOWEVER, that such amount shall
be reduced by the amount, if any, of the Retention Bonus (defined below) already
paid to the Executive; PROVIDED, FURTHER, that after such reduction the
Executive shall be entitled to no less than one times the sum of the Executive's
then current Base Salary and the Target
<PAGE>
4
Bonus; (ii) continuation during the Severance Period of coverage under and
participation in employee welfare and fringe benefit plans or programs that the
Executive (and any beneficiary) is covered under or participating in immediately
prior to the Notice of Termination (without giving effect to any reduction in
such benefits which constitutes Good Reason) (or, if more favorable to the
Executive, immediately prior to the Effective Date) (or substantially equivalent
plans or programs on a benefit by benefit basis), subject to reduction of such
employee welfare and fringe benefit plans upon re-employment and receipt by the
Executive of comparable benefits under welfare and fringe benefit plans of a
successor employer during the Severance Period; and (iii) receipt of
outplacement services during the Severance Period, which services are no less
favorable than the executive outplacement provided by the Company, consistent
with past practices.
(b) TERMINATION UPON DEATH OR DISABILITY. The Executive (or
his or her representative, if applicable) shall be entitled to the following
severance benefits if, during the two year period commencing on the Effective
Date, the Executive has a Termination of Employment due to death or permanent
disability: (i) a cash payment, which shall be payable in one lump sum as soon
as reasonably practicable after the Date of Termination, but in no event later
than fourteen days thereafter, equal to (x) one times the sum of the Executive's
Base Salary and Target Bonus, each as in effect upon the Termination of
Employment (or, if higher, immediately prior to the Effective Date), and (y) the
amount under all of the Pension Plans which the Executive would have accrued
during the period from the Date of Termination until the second anniversary of
the Date of Termination had the Executive continued employment with the Company,
assuming no change in Base Salary and Target Bonus, each as in effect
immediately prior to the Termination of Employment (or, if higher, immediately
prior to the Effective Date), assuming full bonus payout and without regard to
any amendment to the Pension Plans made subsequent to the Effective Date;
PROVIDED, HOWEVER, that such amount shall be reduced by the amount, if any, of
the Retention Bonus already paid to the Executive; and (ii) continuation during
the Severance Period of coverage under and participation in employee welfare and
fringe benefit plans or programs that the Executive (and any beneficiary) is
covered under or participating in immediately prior to the Date of Termination
(or, if more favorable to the Executive, immediately prior to the Effective
Date) (or substantially equivalent plans or programs on a benefit by benefit
basis).
(c) LEGAL AND ACCOUNTING FEES AND EXPENSES. The Company also
shall pay to the Executive all legal and accounting fees and expenses incurred
by the Executive as a result of a termination which entitles the Executive to
the severance benefits hereunder (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 by the Company).
Such payments shall be made within five 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.
<PAGE>
5
5. PAYMENTS OTHER THAN SEVERANCE. Subject to Paragraph 9 herein, upon
any Termination of Employment, whether or not 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 Parent
or the Company or under any employee benefit plan of Parent or the Company, as
of the Date of Termination including, without limitation, under the Pension
Plans.
6. EXECUTIVE'S AGREEMENTS.
(a) NON-COMPETE. In consideration of the Noncompete Payment,
the Executive hereby covenants and agrees that for the twelve-month period
following the earlier of any Termination of Employment and the first anniversary
of the Effective Date, he or she 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. For purposes of
this Agreement, "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 Effective Date within the same geographical
locations in the United States in which the Company operates on the Effective
Date. The "Noncompete Payment" shall be equal to $225,000, forty percent of
which shall be paid on the Effective Date and sixty percent of which shall be
paid on the earlier of the first anniversary of the Effective Date and
termination of the Executive's employment without Cause, for Good Reason or by
reason of death or Permanent Disability.
(b) NON-SOLICITATION. In consideration of the Noncompete
Payment, the Executive hereby covenants and agrees that for the twelve-month
period following the earlier of any Termination of Employment and the first
anniversary of the Effective Date, he or she shall not directly or indirectly,
(i) solicit any employee of the Company or its affiliates to leave the
employment of the Company or its affiliates, or (ii) solicit any customer of the
Company or its affiliates to end its business relations with the Company or its
affiliates.
(c) ENFORCEMENT. It is expressly understood and agreed that
although the Executive and the Company consider the restrictions contained in
this Paragraph 6 to be reasonable, if a final judicial determination is made by
a court of competent jurisdiction that the time or territory or any other
restriction contained in this Agreement is an unenforceable restriction against
the Executive, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such MAXIMUM time and territory and to
such maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a
nationally recognized accounting firm, selected by the Company and reasonably
acceptable to the
<PAGE>
6
Executive for this purpose (at the Company's expense), or if so alleged by the
Internal Revenue Service ("IRS"), the aggregate of the benefit payments and
provisions under this Agreement and any other arrangement between the Executive
and Parent or the Company (the "Payments") would cause the payment or provision
of one or more of such benefits to constitute an "excess parachute payment" as
defined in Section 28OG(b) of the 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, (ii) federal, state or local
income tax on the Gross-Up Payment, (iii) excise tax on the Gross-Up Payment and
(iv) any penalty related to the Payments, to be equal to the aggregate
remuneration the Executive would have received, excluding such Gross-Up Payment
(net of all federal, state and local excise and income taxes), as if Sections
28OG 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 days after the termination of Executive's employment or the date
on which any Payment is made that is reasonably Rely to constitute an "excess
parachute payment"; PROVIDED, HOWEVER, that if the amount of the Gross- Up
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
after the earlier of (i) the date any related withholding taxes are due or (ii)
the thirtieth day after the date of termination or the date on which any Payment
is made that is reasonably likely to constitute an "excess parachute payment."
The Company agrees to reimburse the Executive for reasonable fees and
expenses (including reasonable attorneys and accountants fees and expenses) in
connection with any audit or assessment by the IRS if a claim ("Claim") arises
out of, or results from the treatment or characterization by the IRS of any
Payments made by Parent or the Company and for the cost of preparing the
Executive's income tax returns for the year in which any Payment by Parent or
the Company may be characterized as an excess parachute payment. The Executive
shall notify the Company in writing of any such Claim as soon as practicable,
but in no event later than ten business days after the Executive is informed of
such Claim and shall cooperate with the Company in good faith to effectively
contest the Claim. The Company shall, at its expense, control all proceedings in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such Claim and the Executive agrees to cooperate
in the prosecution of such contest in such manner as the Company shall
reasonably determine, subject to the Company's obligations hereunder; PROVIDED,
HOWEVER, that no formal resolution of such claim may be made by the Company
without the Executive's consent if such resolution could adversely affect the
Executive. Notwithstanding the foregoing, if the Company forgoes further
prosecution of such contest, the Executive may elect to continue such
prosecution and the Company shall cooperate with the Executive and shall be
liable for the fees and expenses in connection with such further prosecution.
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
<PAGE>
7
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 or practice.
9. WAIVER OF OTHER SEVERANCE BENEFITS. The benefits payable pursuant to
this Agreement are in lieu of any other severance benefits which may otherwise
be payable to the Executive upon termination within two years 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 of Directors of the
Company and shall be in writing. Any denial by the Board of Directors of the
Company 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 town of Greenwich,
CT, using a mutually agreeable 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 and expenses of the Executive in connection
therewith.
11. COMPENSATION DURING DISPUTE. If a purported termination occurs
during the two years following the Effective Date, 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 10 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, except with respect
to reduction of employee welfare and fringe benefits but only to the extent
specifically provided for in Paragraph 4(a), that the Executive shall not be
required to mitigate the amount of any payment provided for in this
<PAGE>
8
Agreement by seeking other employment or otherwise, nor 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 or
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 Paragraph 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 or her 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
of 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:
<PAGE>
9
(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 in the signature page hereto after Executive's name, 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 of is obligated to
comply with or perform; provided, however, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other of 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
exercises 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 agreements, including the CIC Agreement and Schedule 6.11
to the Agreement and Plan of Merger among Parent, Printing Acquisition Inc. and
the Company dated as of July 12, 1999 (the "Merger Agreement"), promises,
covenants, arrangements, communications, 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. Notwithstanding the foregoing, nothing in this
Agreement shall affect the treatment of the Executive's stock options or
restricted stock or the Executive's third party beneficiary rights under the
Merger Agreement (except with respect to Schedule 6.11 of the Merger 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, damages, costs, or expenses
(including legal and accounting fees and expenses) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him or her
by reason of his or her 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 directors and officer liability insurance
for the benefit of the Executive for at least six years after the Effective
Date; PROVIDED that the Company shall be
<PAGE>
10
deemed to maintain such insurance if Parent so maintains directors and officer
liability insurance for the benefit of the Executive.
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 preempted by Federal law.
21. SURVIVAL. Any paragraph hereunder that requires performance beyond
the termination of this Agreement, and the Company's or the Executive's (as
applicable) obligations thereunder, shall survive any termination of this
Agreement.
22. COUNTERPARTS. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
<PAGE>
The parties have duly executed this Agreement as of the date first
written above.
WORLD COLOR PRESS, INC. EXECUTIVE
- -------------------------- ----------------------------
By:
Title:
<PAGE>
EXHIBIT 10.9
EXECUTION COPY
KEY EMPLOYEES A
[ BROFFT ]
[ HAYDEN ] RETENTION AND SEVERANCE AGREEMENT
[ NOLTE ]
AGREEMENT made as of August 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06831, and the employee whose name is set forth on the signature
page hereof (the "Employee").
WHEREAS, the Employee is employed by the Company or by one of its
wholly-owned consolidated subsidiaries;
WHEREAS, through a wholly-owned subsidiary, Quebecor Printing Inc. (the
"Parent") intends to acquire the Company by two-step transaction, and the
consummation of the first step tender offer shall be referred to as the
"Effective Date" of this Agreement; PROVIDED, HOWEVER, that in the event the
transaction is converted to a one-step merger, the Change in Control and
therefore the Effective Date hereof will occur upon the effective date of such
merger;
WHEREAS, the Company wishes to encourage and provide incentive to the
Employee to remain with and devote full time and attention to the business
affairs of the Company and wishes to provide income protection to the Employee
following the Effective Date;
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
Employee hereby agree as follows:
1. DEFINITIONS.
(a) "CAUSE" shall mean the Employee's (i) conviction or guilty
plea or plea of nolo contendere of a felony involving fraud or dishonesty; (ii)
theft or embezzlement of property from Parent or the Company; or (iii) willful
and continued refusal by the Employee substantially to perform the duties of his
or her position (other than any such failure resulting from Employee's
incapacity due to physical or mental illness or any such actual or anticipated
failure after the Employee'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 Employee is not substantially performing the duties of his or her
position. For this definition, no act or failure to act shall be deemed willful
unless done, or omitted to be done, by the Employee not in good faith and
without reasonable belief that the Employee's act, or failure to act was in the
best 'interests of the Company.
(b) "Code"shall mean the Internal Revenue Code of 1986, as
amended.
(c) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination or the date of death.
<PAGE>
2
(d) The Employee shall have "GOOD REASON" to terminate
employment if (i) the Employee's level of compensation immediately prior to or
after the Effective Date is reduced, or level of benefits in effect immediately
prior to or after the Effective Date is reduced in any material respect; (ii)
any purchaser, assign, surviving corporation, or successor of Parent or the
Company or their respective businesses 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 Paragraph 13 hereof; (iii) Parent or the Company fails to pay any
amounts due to the Employee; or (iv) the Company breaches any of the provisions
of this Agreement.
(e) "NOTICE OF TERMINATION" During the term of this Agreement,
any purported termination of the Employee'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 14 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 circumstance claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(f) "PERMANENT DISABILITY" shall mean the Employee is unable
to engage in the activities required by the Employee's job by reason of any
medically determined physical or mental impairment for a period of six
consecutive months or for an aggregate of nine months in any twenty-four
consecutive month period.
(g) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Employee's employment with Parent and the Company for any reason.
2. TERM. The initial term of this Agreement shall be for the period
commencing on the Effective Date, if and only if such Effective Date occurs, 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 Employee remains employed by Parent or the
Company until such time as Parent or the Company (as applicable) elects to cease
such extension by giving written notice of such to the Employee. The Agreement
shall thus terminate on the second anniversary of the effective date of such
notice.
3. RETENTION BONUSES. The Employee shall be entitled to a bonus (the
"Retention Bonus") equal to a cash payment equal to the amount set forth on the
signature page hereof, forty percent of which shall be paid on the Effective
Date and sixty percent of which shall be paid on the first anniversary of the
Effective Date if the Employee remains employed by the Company or its
affiliates.
<PAGE>
3
4. SEVERANCE BENEFITS,
(a) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. The Employee
shall be entitled to severance benefits if, during the one-year period
commencing on the Effective Date, the Employee has a Termination of Employment
initiated (i) by Parent or the Company without Cause or (ii) by the Employee for
Good Reason. Such severance benefits shall include (i) a cash payment, which
shall be payable in one lump sum as soon as reasonably practicable after the
Date of Termination, but in no event more than fourteen days thereafter, equal
to the unpaid balance, if any, of the Retention Bonus; and (ii) continuation of
coverage under and participation in employee welfare and fringe benefit plans or
programs that the Employee (or any beneficiary) is covered under or
participating in immediately prior to Notice of Termination (without giving
effect to any reduction in such benefits which constitutes Good Reason) (or, if
higher, immediately prior to the Effective Date) (or substantially equivalent
plans or programs on a benefit by benefit basis) until the earlier of (x) the
one-year anniversary of the Date of Termination and (y) the date on which the
Employee becomes re-employed and receives comparable benefits under welfare and
fringe benefit plans of a successor employer; PROVIDED, HOWEVER, that in the
event that the Employee is party to an employment and/or noncompete agreement
with the Company or any of its affiliates and such agreement provides severance
benefits upon termination without Cause (and such provision is applicable), then
the Employee shall be entitled to severance benefits under whichever agreement
provides greater severance benefits, and no severance shall be paid under the
other agreement.
(b) TERMINATION UPON DEATH OR DISABILITY. The Employee (or his
or her representative, if applicable) shall be entitled to the following
severance benefits if, during the one year period commencing on the Effective
Date, the Employee has a Termination of Employment due to death or Permanent
Disability: (i) a cash payment, which shall be payable in one lump sum as soon
as reasonably practicable after the Date of Termination, but in no event more
than fourteen days thereafter, equal to the unpaid balance, if any, of the
Retention Bonus; and (ii) continuation of coverage under and participation in
employee welfare and fringe benefit plans or programs that the Employee (or any
beneficiary) is covered under or participating in immediately prior to Notice of
Termination (or, if higher, immediately prior to the Effective Date) (or
substantially equivalent plans or programs on a benefit by benefit basis) until
the earlier of (x) the one-year anniversary of the Date of Termination and (y)
the date on which the Employee becomes re-employed and receives comparable
benefits under welfare and fringe benefit plans of a successor employer.
(c) LEGAL AND ACCOUNTING FEES AND EXPENSES. The Company also
shall pay to the Employee all legal and accounting fees and expenses incurred by
the Employee as a result of a termination which entities the Employee to the
severance benefits hereunder (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 by the Company).
Such payments shall be made within five business days after delivery of the
Employee's written requests for
<PAGE>
4
payment accompanied with such evidence of fees and expenses incurred as the
Company reasonably may require.
5. PAYMENTS OTHER THAN SEVERANCE . Subject to Paragraph 9 herein, upon
any Termination of Employment, whether or not the severance benefits outlined in
Paragraph 4 above are payable, the Employee shall also be entitled to all
compensation and other amounts accrued, due and owing to Employee from Parent or
the Company or under any employee benefit plan of Parent or the Company, as of
the Date of Termination.
6. EMPLOYEE'S AGREEMENTS,
(a) NON-COMPETE. In consideration of the Noncompete Payment,
the Employee hereby covenants and agrees that for the twelve-month period
following the earlier of any Termination of Employment and the first anniversary
of the Effective Date, he or she shall not directly or indirectly, own, manage,
operate, 'oin, 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. For purposes of
this Agreement, "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 Effective Date within the same geographical
locations in the United States in which the Company operates on the Effective
Date. The "Noncompete Payment" shall be equal to amount set forth on the
signature page hereto, forty percent of which shall be paid on the Effective
Date and sixty percent of which shall be paid on the earlier of the first
anniversary of the Effective Date or termination of the Executive's employment
without Cause, for Good Reason or by reason of death or Permanent Disability.
(b) NON-SOLICITATION. In consideration of the Noncompete
Payment, the Employee hereby covenants and agrees that for the twelve-month
period following the earlier of any Termination of Employment and the first
anniversary of the Effective Date, he or she shall not directly or indirectly,
(i) solicit any employee of the Company or its affiliates to leave the
employment of the Company or its affiliates, or (ii) solicit any customer of the
Company or its affiliates to end its business relations with the Company or its
affiliates.
(c) ENFORCEMENT. It is expressly understood and agreed that
although the Employee and the Company consider the restrictions contained in
this Paragraph 6 to be reasonable, if a final judicial determination is made by
a court of competent jurisdiction that the time or territory or any other
restriction contained in this Agreement is an unenforceable restriction against
the Employee, the provisions of this Agreement shall not be rendered void but
shall be deemed amended to apply as to such maximum time and territory and to
such maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in this Agreement is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.
<PAGE>
5
7. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a
nationally recognized accounting firm, selected by the Company and reasonably
acceptable to the Employee for this purpose (at the Company's expense), or if so
alleged by the Internal Revenue Service ("IRS"), the aggregate of the benefit
payments and provisions under this Agreement and any other arrangement between
the Employee and Parent or the Company (the "Payments") would cause the payment
or provision of one or more of such benefits to constitute an "excess parachute
payment" as defined in Section 28OG(b) of the Code, then the Company will pay to
the Employee an additional amount in cash (the "Gross-Up Payment") equal to the
amount necessary to cause the net amount retained by the Employee, after
deduction of any (i) excise tax on the Payments, (ii) federal, state or local
income tax on the Gross-Up Payment, (iii) excise tax on the Gross-Up Payment and
(iv) any penalty and interest related to the Payments, to be equal to the
aggregate remuneration the Employee would have received, excluding such Gross-Up
Payment (net of all federal, state and local excise and income taxes), as if
Sections 28OG 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 days after the termination of Employee's employment or
the date on which any Payment is made that is reasonably likely to constitute an
"excess parachute payment"; PROVIDED, HOWEVER, that if the amount of the
Gross-Up Payment cannot be finally determined at the time, the Company shall pay
to Employee 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
after the earlier of (i) the date any related withholding taxes are due or (ii)
the thirtieth day after the date of termination or the date on which any Payment
is made that is reasonably likely to constitute an "excess parachute payment."
The Company agrees to reimburse the Employee for reasonable fees and
expenses (including reasonable attorneys and accountants fees and expenses) in
connection with any audit or assessment by the IRS if a claim ("Claim") arises
out of, or results from the treatment or characterization by the IRS of any
Payments made by Parent or the Company and for the cost of preparing the
Employee's income tax returns for the year in which any Payment by Parent or the
Company may be characterized as an excess parachute payment. The Employee shall
notify the Company in writing of any such Claim as soon as practicable, but in
no event later than ten business days after the Employee is informed of such
Claim and shall cooperate with the Company in good faith to effectively contest
the Claim. The Company shall, at its expense, control all proceedings in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such Claim and the Employee agrees to cooperate
in the prosecution of such contest in such manner as the Company shall
reasonably determine, subject to the Company's obligations hereunder; PROVIDED,
HOWEVER, that no final resolution of such claim may be made by the Company
without the Employee's consent if such resolution could adversely affect the
Employee. Notwithstanding the foregoing, if the Company forgoes further
prosecution of such contest, the Employee may elect to continue such prosecution
and the Company shall cooperate with the Employee and shall be liable for the
fees and expenses in connection with such further prosecution.
<PAGE>
6
8. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Employee's employment with the Company is not for any
specified term and may be terminated by the Employee 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 or practice.
9. WAIVER OF OTHER SEVERANCE BENEFITS. Subject to the proviso in
Paragraph 4(a) herein, the benefits payable pursuant to this Agreement are in
lieu of any other severance benefits which may otherwise be payable to the
Employee upon termination within one year following a change in control pursuant
to agreement, policy or practice, except those benefits which are to be made
available to the Employee as required by applicable law.
10. DISPUTE. All claims by the Employee for benefits under this
Agreement shall be directed to and determined by the Board of Directors of the
Company and shall be in writing. Any denial by the Board of Directors of the
Company of a claim for benefits under this Agreement shall be delivered to the
Employee 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 town of Greenwich,
CT, using a mutually agreeable 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 and expenses of the Employee in connection
therewith.
11. 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 Employee provided for in this Agreement.
12. NO MITIGATION OBLIGATION. The parties hereto expressly agree that
the payment of the benefits by the Company to the Employee in accordance with
the terms of this Agreement will be liquidated damages, and, except with respect
to reduction of employee welfare and fringe benefits but only to the extent
specifically provided for in Paragraph 4(a), that the Employee shall not be
required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, nor 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 Employee hereunder or
otherwise.
13. 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
<PAGE>
7
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 Employee, 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 or 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 Employee'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 Paragraph 13. Without limiting the generality of the
foregoing, the Employee'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.
14. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of 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) the attention of its Secretary; If to the Company,
addressed to its principal Employee offices to
(b) If to the Employee, to him or her at the address set forth
below under the Employee's signature; or at any such other address as either
party shall have specified by notice in writing to the other.
15. AMENDMENTS: WAIVERS. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, signed by the Employee and by
a duly authorized representative of the Company. By an instrument in writing
similarly executed, either
<PAGE>
8
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, or
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.
16. 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 agreements (including Schedule 6. 1 1 to the Agreement and
Plan of Merger among Parent, Printing Acquisition Inc. and the Company dated as
of July 12, 1999 (the "Merger Agreement")), promises, covenants, arrangements,
communications, 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.
Notwithstanding the foregoing, nothing in this Agreement shall affect the
treatment of the Employee's stock options or restricted stock, if any, or the
Employee's third party beneficiary rights under the Merger Agreement (except
with respect to Schedule 6.11 of the Merger Agreement). Notwithstanding the
foregoing, this Agreement shall not affect or supersede any existing employment
and/or noncompete agreement between the Employee and the Company or any of its
affiliates, except to the extent provided in the proviso in Paragraph 4((a)
herein.
17. 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.
18. INDEMNIFICATION. The Company shall indemnify, defend, and hold the
Employee harmless from and against any liability, damages, costs, or expenses
(including legal and accounting fees and expenses) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him or her
by reason of his or her having been an officer, director, employee, or agent of
the Company, unless it is judicially determined, in a final, nonappealable
order, that the Employee was guilty of gross negligence or willful misconduct.
19. GOVERNING LAW. This Agreement shall be interpreted, administered
and enforced in accordance with the law of the State of Connecticut, except to
the extent preempted by Federal law.
20. COUNTERPARTS. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
<PAGE>
The parties have duly executed this Agreement as of the date first written
above.
Employee Name:
Retention Bonus:
Noncompete Payment:
WORLD COLOR PRESS, INC EMPLOYEE
- -------------------------- ----------------------------
By:
Title:
<PAGE>
EXHIBIT 10.10
EXECUTION COPY
KEY EMPLOYEES I
RETENTION AND SEVERANCE AGREEMENT
[BACON]
AGREEMENT made as of August 16, 1999 between World Color Press, Inc., a
Delaware corporation (the "Company"), with offices at 340 Pemberwick Road,
Greenwich, CT 06831, and the employee whose name is set forth on the signature
page hereof (the "Employee").
WHEREAS, the Employee is employed by the Company or by one of its
wholly-owned consolidated subsidiaries;
WHEREAS, through a wholly-owned subsidiary, Quebecor Printing Inc. (the
"Parent") intends to acquire the Company by two-step transaction, and the
consummation of the first step tender offer shall be referred to as the
"Effective Date" of this Agreement; PROVIDED, HOWEVEr that in the event the
transaction is converted to a one-step merger, the Change in Control and
therefore the Effective Date hereof will occur upon the effective date of such
merger;
WHEREAS, the Company wishes to encourage and provide incentive to the
Employee to remain with and devote full time and attention to the business
affairs of the Company and wishes to provide income protection to the Employee
following the Effective Date;
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
Employee hereby agree as follows:
1. DEFINITIONS.
(a) "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 Parent or the Company;
or (iii) willful and continued refusal by the Executive substantially to perform
the duties of his or her 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
or her 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.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "DATE OF TERMINATION" shall mean fifteen days following a
party's receipt of the Notice of Termination or the date of death.
<PAGE>
2
(d) The Employee shall have "GOOD REASON" to terminate
employment if (i) the Employee's level of compensation in effect immediately
prior to or after the Effective Date is reduced, or level of benefits in effect
immediately prior to or after the Effective Date is reduced in any material
respect; (ii) any purchaser, assign, surviving corporation, or successor of
Parent or the Company or their respective businesses 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 Paragraph 12 hereof; (iii) Parent or the Company
fails to pay any amounts due to the Employee; or (iv) the Company breaches any
of the provisions of this Agreement.
(e) "NOTICE OF TERMINATION" During the term of this Agreement,
any purported termination of the Employee'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 13 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 circumstance claimed to
provide a basis for termination of the Employee's employment under the provision
so indicated.
(f) "PERMANENT DISABILITY" shall mean the Employee is unable
to engage in the activities required by the Employee's job by reason of any
medically determined physical or mental impairment for a period of six
consecutive months or for an aggregate of nine months in any twenty-four
consecutive month period.
(g) "TERMINATION OF EMPLOYMENT" shall mean the termination of
the Employee's employment with Parent and the Company for any reason.
2. TERM. The initial term of this Agreement shall be for the period
commencing on the Effective Date, if and only if such Effective Date occurs, 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 Parent or the
Company until such time as Parent or the Company (as applicable) elects to cease
such extension by giving written notice of such to the Executive. The Agreement
shall thus terminate on the second anniversary of the effective date of such
notice.
3. RETENTION BONUSES. The Employee shall be entitled to a bonus (the
"Retention Bonus") equal to a cash payment equal to the amount set forth on the
signature page hereof, which shall be paid on the first anniversary of the
Effective Date if the Employee remains employed by the Company or its
affiliates.
4. SEVERANCE BENEFITS. (a) The Employee shall be entitled to severance
benefits if, during the one-year period commencing on the Effective Date, the
Employee has a Termination of Employment initiated (i) by Parent or the Company
without Cause or (ii) by the Employee for Good Reason. Such severance benefits
shall include (i) a cash payment, which
<PAGE>
3
shall be payable in one lump sum as soon as reasonably practicable after the
Date of Termination, but in no event more than fourteen days thereafter, equal
to the unpaid balance, if any, of the Retention Bonus; and (ii) continuation of
coverage under and participation in employee welfare and fringe benefit plans or
programs that the Employee (or any beneficiary) is covered under or
participating in immediately prior to Notice of Termination (without giving
effect to any reduction in such benefits which constitutes Good Reason) (or, if
higher, immediately prior to the Effective Date) (or substantially equivalent
plans or programs on a benefit by benefit basis) until the earlier of (x) the
one-year anniversary of the Date of Termination and (y) the date on which the
Employee becomes re-employed and receives comparable benefits under welfare and
fringe benefit plans of a successor employer; PROVIDED, HOWEVER, that in the
event that the Employee is party to an employment and/or noncompete agreement
with the Company or any of its affiliates and such agreement provides severance
benefits upon termination without Cause (and such provision is applicable), then
the Employee shall be entitled to severance benefits under whichever agreement
provides greater severance benefits, and no severance shall be paid under the
other agreement.
(b) TERMINATION UPON DEATH OR DISABILITY. The Employee (or his
or her representative, if applicable) shall be entitled to the following
severance benefits if, during the one year period commencing on the Effective
Date, the Employee has a Termination of Employment due to death or Permanent
Disability: (i) a cash payment, which shall be payable in one lump sum as soon
as reasonably practicable after the Date of Termination, but in no event more
than fourteen days thereafter, equal to the unpaid balance, if any, of the
Retention Bonus; and (ii) continuation of coverage under and participation in
employee welfare and fringe benefit plans or programs that the Employee (or any
beneficiary) is covered under or participating in immediately prior to Notice of
Termination (or, if higher, immediately prior to the Effective Date) (or
substantially equivalent plans or programs on a benefit by benefit basis) until
the earlier of (x) the one-year anniversary of the Date of Termination and (y)
the date on which the Employee becomes re-employed and receives comparable
benefits under this Agreement.
(c) LEGAL AND ACCOUNTING FEES AND EXPENSES. The Company also
shall pay to the Executive all legal and accounting fees and expenses incurred
by the Executive as a result of a termination which entitles the Executive to
the severance benefits hereunder (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 by the Company).
Such payments shall be made within five 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. Subject to Paragraph 8 herein, upon
any Termination of Employment, whether or not the severance benefits outlined in
Paragraph 4 above are payable, the Employee shall also be entitled to all
compensation and other amounts accrued, due and owing to Employee from Parent or
the Company or under any employee benefit plan of Parent or the Company, as of
the Date of Termination.
<PAGE>
4
6. GOLDEN PARACHUTE GROSS-UP. If, in the written opinion of a
nationally recognized accounting firm, selected by the Company and reasonably
acceptable to the Executive for this purpose (at the Company's expense), or if
so alleged by the Internal Revenue Service ("IRS"), the aggregate of the benefit
payments and provisions under this Agreement and any other arrangement between
the Executive and Parent or the Company (the "Payments") would cause the payment
or provision of one or more of such benefits to constitute an "excess parachute
payment" as defined in Section 28OG(b) of the 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, (ii) federal, state or local
income tax on the Gross-Up Payment, (iii) excise tax on the Gross-Up Payment and
(iv) any penalty and interest related to the Payments, to be equal to the
aggregate remuneration the Executive would have received, excluding such
Gross-Up Payment (net of all federal, state and local excise and income taxes),
as if Sections 28OG 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 days after the termination of Executive's
employment or the date on which any Payment is made that is reasonably likely to
constitute an "excess parachute payment"; PROVIDED, HOWEVER, that if the amount
of the Gross-Up 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 after the earlier of (i) the date any related withholding taxes are
due or (ii) the thirtieth day after the date of termination or the date on which
any Payment is made that is reasonably likely to constitute an "excess parachute
payment."
The Company agrees to reimburse the Executive for reasonable fees and
expenses (including reasonable attorneys and accountants fees and expenses) in
connection with any audit or assessment by the IRS if a claim ("Claim") arises
out of, or results from the treatment or characterization by the IRS of any
Payments made by Parent or the Company and for the cost of preparing the
Executive's income tax returns for the year in which any Payment by Parent or
the Company may be characterized as an excess parachute payment. The Executive
shall notify the Company in writing of any such Claim as soon as practicable,
but in no event later than ten business days after the Executive is informed of
such Claim and shall cooperate with the Company in good faith to effectively
contest the Claim. The Company shall, at its expense, control all proceedings in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such Claim and the Executive agrees to cooperate
in the prosecution of such contest in such manner as the Company shall
reasonably determine, subject to the Company's obligations hereunder; PROVIDED,
HOWEVER, that no final resolution of such claim may be made by the Company
without the Executive's consent if such resolution could adversely affect the
Executive. Notwithstanding the foregoing, if the Company forgoes further
prosecution of such contest, the Executive may elect to continue such
prosecution and the Company shall cooperate with the Executive and shall be
liable for the fees and expenses in connection with such further prosecution.
<PAGE>
5
7. EMPLOYMENT AT-WILL. Notwithstanding anything to the contrary
contained herein, the Employee's employment with the Company is not for any
specified term and may be terminated by the Employee 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 or practice.
8. WAIVER OF OTHER SEVERANCE BENEFITS. Subject to the proviso in
Paragraph 4(a) herein, the benefits payable pursuant to this Agreement are in
lieu of any other severance benefits which may otherwise be payable to the
Employee upon termination within one year following a change in control pursuant
to agreement, policy or practice, except those benefits which are to be made
available to the Employee as required by applicable law.
9. DISPUTE. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board of Directors of the
Company and shall be in writing. Any denial by the Board of Directors of the
Company 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 town of Greenwich,
CT, using a mutually agreeable 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 and expenses of the Executive in connection
therewith.
10. 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 Employee provided for in this Agreement.
11. 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, except with respect
to reduction of employee welfare and fringe benefits but only to the extent
specifically provided for in Paragraph 4(a), 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, nor 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.
12. 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
<PAGE>
6
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 Employee, 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 or 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 Employee'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 Paragraph 12. Without limiting the generality of the
foregoing, the Employee'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.
13. NOTICES. Any notice, request, claim, demand, document and
other communication hereunder to any party shall be effective upon receipt (or
refusal of 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) the attention of its Secretary; If to the Company,
addressed to its principal executive offices to
(b) If to the Employee, to him or her at the address set forth
below under the Employee's signature; or at any such other address as either
party shall have specified by notice in writing to the other.
14. AMENDMENTS: WAIVERS. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, signed by the Employee and by
a duty authorized representative of the Company. By an instrument in writing
similarly executed, either
<PAGE>
7
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, or
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.
15. 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 agreements (including Schedule 6.1 1 to the Agreement and
Plan of Merger among Parent, Printing Acquisition Inc. and the Company dated as
of July 12, 1999 (the "Merger Agreement")), promises, covenants, arrangements,
communications, 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.
Notwithstanding the foregoing, nothing in this Agreement shall affect the
treatment of the Employee's stock options or restricted stock, if any, or the
Employee's third party beneficiary rights under the Merger Agreement (except
with respect to Schedule 6.11 of the Merger Agreement). Notwithstanding the
foregoing, this Agreement shall not affect or supersede any existing employment
and/or noncompete agreement between the Employee and the Company or any of its
affiliates, except to the extent provided in the proviso in Paragraph 4(a)
herein.
16. 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.
17. INDEMNIFICATION. The Company shall indemnify, defend, and hold the
Executive harmless from and against any liability, damages, costs, or expenses
(including legal and accounting fees and expenses) in connection with any claim,
cause of action, investigation, litigation, or proceeding involving him or her
by reason of his or her 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.
18. GOVERNING LAW. This Agreement shall be interpreted, administered
and enforced in accordance with the law of the State of Connecticut, except to
the extent preempted by Federal law.
19. COUNTERPARTS. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
<PAGE>
The parties have duly executed this Agreement as of the date first written
above.
Employee Name:
Retention Bonus:
Address
WORLD COLOR PRESS, INC. EMPLOYEE
- -------------------------- -------------------------
By:
Title:
<PAGE>
EXHIBIT 10.13
PROMISSORY NOTE
USD 100,000,000 DECEMBER 1, 1999
FOR VALUE RECEIVED, each of the undersigned, Quebecor World (USA) Inc. (formerly
known as World Color Press Inc.) a Delaware corporation and Quebecor Printing
(USA) Holdings Inc., a Delaware corporation, jointly and severally, (each a
"BORROWER," collectively, the "BORROWERS"), hereby promises to pay to the order
of BANK OF AMERICA, N.A. ("LENDER") the principal sum of One Hundred Million
U.S. dollars (USD 100,000,000) or, if less, the aggregate unpaid principal
amount of all Loans made by Lender to Borrowers pursuant to the advising
letters, dated as of July 23, 1999, August 11, 1999 and November 18, 1999 (such
advising letters, as they may be amended, restated, extended, supplemented or
otherwise modified from time to time, being hereinafter called the "LETTERS"),
between Borrowers and Lender, on the Maturity Date. Borrowers further promise,
jointly and severally, to pay interest on the unpaid principal amount of the
Loans evidenced hereby from time to time at the rates, on the dates, and
otherwise as provided in the Letters.
The loan account records maintained by Lender shall at all times be conclusive
evidence, absent manifest error, as to the amount of the Loans and payments
thereon; PROVIDED, HOWEVER, that any failure to record any Loan or payment
thereon or any error in doing so shall not limit or otherwise affect the
obligation of the Borrowers to pay any amount owing with respect to the Loans.
Each advance, and accrued and unpaid interest thereon, shall be due and payable
on demand, or if no demand is sooner made, on March 31, 2000.
QUEBECOR WORLD (USA) INC. QUEBECOR PRINTING (USA) HOLDINGS INC.
(formerly known as World
Color Press, Inc.)
By: By:
-------------------------------- --------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
-------------------------------- --------------------------------
By: By:
-------------------------------- --------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
-------------------------------- --------------------------------
<PAGE>
GUARANTY
FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged,
and, in consideration of any credit and/or financial accommodation heretofore or
hereafter from time to time made or granted to QUEBECOR WORLD (USA) INC.
(formerly knows as WORLD COLOR PRESS, INC.) and QUEBECOR PRINTING (USA) HOLDINGS
INC. (each a "BORROWER," collectively, the "BORROWERS") by BANK OF AMERICA, N.A.
and any other subsidiaries or affiliates of BankAmerica Corporation and its
successors and assigns (collectively "LENDER") the undersigned Guarantor
(whether one or more "GUARANTOR", and if more than one jointly and severally)
hereby furnishes its guaranty of the Guaranteed Obligations (as hereinafter
defined) as follows:
1. GUARANTY. Guarantor hereby absolutely and unconditionally guarantees,
as a guarantee of payment and not merely as a guarantee of collection, prompt
payment when due, whether at stated maturity, upon acceleration or otherwise,
and at all times thereafter, of any and all existing and future indebtedness and
liabilities of every kind, nature and character, direct or indirect, absolute or
contingent, liquidated or unliquidated, voluntary or involuntary, of Borrowers
to Lender arising under that certain US$100,000,000 Working Capital and
Overdraft Facility dated as of July 23, 1999 between Borrowers and Lender, as
amended from time to time (the "CREDIT AGREEMENT") and all instruments,
agreements and other documents of every kind and nature now or hereafter
executed in connection with the Credit Agreement (including all renewals,
extensions and modifications thereof and all costs, attorneys' fees and expenses
incurred by Lender in connection with the collection or enforcement thereof)
(collectively, the "GUARANTEED OBLIGATIONS"). Lender's books and records showing
the amount of the Guaranteed Obligations shall be admissible in evidence in any
action or proceeding, and shall be binding upon Guarantor and conclusive for the
purpose of establishing the amount of the Guaranteed Obligations. This Guaranty
shall not be affected by the genuineness, validity, regularity or enforceability
of the Guaranteed Obligations or any instrument or agreement evidencing any
Guaranteed Obligations, or by the existence, validity, enforceability,
perfection, or extent of any collateral therefor, or by any fact or circumstance
relating to the Guaranteed Obligations which might otherwise constitute a
defense to the obligations of Guarantor under this Guaranty.
The joint and several liability of Guarantor under this Guaranty
(exclusive of liability under any other guaranties executed by Guarantor) shall
not exceed at any one time the total of (a) One Hundred Million U.S. Dollars
($100,000,000 USD), for the principal amount of the Guaranteed Obligations (the
"MAXIMUM PRINCIPAL AMOUNT") and (b) all interest, fees, and other costs and
expenses of Guarantor relating to or arising out of the Guaranteed Obligations
or such part of the Guaranteed Obligations as shall not exceed the foregoing
limitation. Lender may permit the Guaranteed Obligations of Borrowers to exceed
the Maximum Principal Amount, and may apply any amounts received from any
source, other than from Guarantor, to the unguaranteed portion of Borrowers'
indebtedness.
2. NO DEDUCTIONS. All payments by Guarantor hereunder shall be paid in
full, without setoff or counterclaim or any deduction or withholding whatsoever,
including, without limitation, for any and all present and future taxes. In the
event that Guarantor or Lender is required by law to make any such deduction or
withholding, Guarantor agrees to pay on behalf of Lender such
<PAGE>
amount directly to the appropriate person or entity, or if the Guarantor cannot
legally comply with the foregoing, Guarantor shall pay to Lender such additional
amounts as will result in the receipt by Lender of the full amount payable
hereunder. Guarantor shall promptly provide Lender with evidence of payment of
any such amount made on Lender's behalf.
3. NO TERMINATION. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable under this Guaranty are indefeasibly paid and performed in full
and any commitments of Lender or facilities provided by Lender with respect to
the Guaranteed Obligations are terminated.
4. WAIVER OF NOTICES. Guarantor waives notice of the acceptance of this
Guaranty and of the extension or continuation of the Guaranteed Obligations or
any part thereof. Guarantor further waives presentment, protest, notice,
dishonor or default, demand for payment and any other notices to which Guarantor
might otherwise be entitled.
5. SUBROGATION. Guarantor shall exercise no right of subrogation,
contribution or similar rights with respect to any payments it makes under this
Guaranty until all of the Guaranteed Obligations and any amounts payable under
this Guaranty are indefeasibly paid and performed in full and any commitments of
Lender or facilities provided by Lender with respect to the Guaranteed
Obligations are terminated. If any amounts are paid to Guarantor in violation of
the foregoing limitation, then such amounts shall be held in trust for the
benefit of Lender and shall forthwith be paid to Lender to reduce the amount of
the Guaranteed Obligations, whether matured or unmatured.
6. WAIVER OF SURETYSHIP DEFENSES. Guarantor agrees that Lender may, at
any time and from time to time, and without notice to Guarantor, make any
agreement with Borrowers or with any other person or entity liable on any of the
Guaranteed Obligations or providing collateral as security for the Guaranteed
Obligations, for the extension, renewal, payment, compromise, discharge or
release of the Guaranteed Obligations or any collateral (in whole or in part),
or for any modification or amendment of the terms thereof or of any instrument
or agreement evidencing the Guaranteed Obligations or the provision of
collateral, all without in any way impairing, releasing, discharging or
otherwise affecting the obligations of Guarantor under this Guaranty. Guarantor
waives any defense arising by reason of any disability or other defense of
Borrowers or any other guarantor, or the cessation from any cause whatsoever of
the liability of Borrowers, or any claim that Guarantor's obligations exceed or
are more burdensome than those of Borrowers and waives the benefit of any
statute of limitations affecting the liability of Guarantor hereunder. Guarantor
waives any right to enforce any remedy which Lender now has or may hereafter
have against Borrowers and waives any benefit of and any right to participate in
any security now or hereafter held by Lender. Further, Guarantor consents to the
taking of, or failure to take, any action which might in any manner or to any
extent vary the risks of Guarantor under this Guaranty or which, but for this
provision, might operate as a discharge of Guarantor.
7. EXHAUSTION OF OTHER REMEDIES NOT REQUIRED. The obligations of
Guarantor hereunder are those of primary obligor, and not merely as surety, and
are independent of the Guaranteed Obligations. Guarantor waives diligence by
Lender and action on delinquency in respect of the
<PAGE>
Guaranteed Obligations or any part thereof, including, without limitation any
provisions of law requiring Lender to exhaust any right or remedy or to take any
action against Borrowers, any other guarantor or any other person, entity or
property before enforcing this Guaranty against Guarantor.
8. REINSTATEMENT. Notwithstanding anything in this Guaranty to the
contrary, this Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any portion of the Guaranteed
Obligations is revoked, terminated, rescinded or reduced or must otherwise be
restored or returned upon the insolvency, bankruptcy or reorganization of either
Borrower or any other person or entity or otherwise, as if such payment had not
been made and whether or not Lender is in possession of or has released this
Guaranty and regardless of any prior revocation, rescission, termination or
reduction.
9. SUBORDINATION. Guarantor hereby subordinates the payment of all
obligations and indebtedness of Borrowers owing to Guarantor, whether now
existing or hereafter arising, including but not limited to any obligation of
Borrowers to Guarantor as subrogee of Lender or resulting from Guarantor's
performance under this Guaranty, to the indefeasible payment in full of all
Guaranteed Obligations. If Lender so requests, any such obligation or
indebtedness of Borrowers to Guarantor shall be enforced and performance
received by Guarantor as trustee for Lender and the proceeds thereof shall be
paid over to Lender on account of the Guaranteed Obligations, but without
reducing or affecting in any manner the liability of Guarantor under this
Guaranty.
10. INFORMATION. Guarantor agrees to furnish promptly to Lender any and
all financial or other information regarding Guarantor or its property as Lender
may reasonably request in writing.
11. STAY OF ACCELERATION. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed, upon the insolvency,
Bankruptcy or reorganization of either Borrower or any other person or entity,
or otherwise, all such amounts shall nonetheless be payable by Guarantor
immediately upon demand by Lender.
12. EXPENSES. Guarantor shall pay on demand all out-of-pocket expenses
(including reasonable attorneys' fees and expenses and the allocated cost and
disbursements of internal legal counsel) in any way relating to the enforcement
or protection of Lender's rights under this Guaranty, including any incurred in
the preservation, protection or enforcement of any rights of Lender in any case
commenced by or against Guarantor under the Bankruptcy Code (Title 11, United
States Code) or any similar or successor statute. The obligations of Guarantor
under the preceding sentence shall survive termination of this Guaranty.
13. AMENDMENTS. No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by Lender and
Guarantor.
14. NO WAIVER. No failure by Lender 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
<PAGE>
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law or in equity. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein.
15. ASSIGNMENT; GOVERNING LAWS; JURISDICTION. This Guaranty shall (a)
bind Guarantor and its successors and assigns, PROVIDED that Guarantor may not
assign its rights or obligations under this Guaranty without the prior written
consent of Lender (and any attempted assignment without such consent shall be
void), (b) inure to the benefit of Lender and its successors and assigns and
Lender may, without notice to Guarantor and without affecting Guarantor's
obligations hereunder, assign or sell participations in the Guaranteed
Obligations and this Guaranty, in whole or in part, and (c) be governed by the
internal laws of the State of New York. Guarantor hereby irrevocably (i) submits
to the non-exclusive jurisdiction of any United States Federal or State court
sitting in New York, New York in any action or proceeding arising out of or
relating to this Guaranty, and (ii) waives to the fullest extent permitted by
law any defense asserting an inconvenient forum in connection therewith. Service
of process by Lender in connection with such action or proceeding shall be
binding on Guarantor if sent to Guarantor by registered or certified mail at its
address specified below. Guarantor agrees that Lender may disclose to any
prospective purchaser and any purchaser of all or part of the Guaranteed
Obligations any and all information in Lender's possession concerning Guarantor,
this Guaranty and any security for this Guaranty.
16. CONDITION OF BORROWERS. Guarantor acknowledges and agrees that it
has the sole responsibility for, and has adequate means of, obtaining from
Borrowers such information concerning the financial condition, business and
operations of Borrowers as Guarantor requires, and that Lender has no duty, and
Guarantor is not relying on Lender at any time to disclose to Guarantor any
information relating to the business, operations or financial condition of
Borrowers.
17. SETOFF. If and to the extent any payment is not made when due
hereunder, Lender may setoff and charge from time to time any amount so due
against any or all of Guarantor's accounts or deposits with Lender.
18. OTHER GUARANTEES. Unless otherwise agreed by Lender and Guarantor in
writing, this Guaranty is not intended to supersede or otherwise affect any
other guaranty now or hereafter given by Guarantor for the benefit of Lender or
any term or provision thereof.
19. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
that (i) it is duly organized and in good standing under the laws of the
jurisdiction of its organization and has full capacity and right to make and
perform this Guaranty, and all necessary authority has been obtained; (ii) this
Guaranty constitutes its legal, valid and binding obligation enforceable in
accordance with its terms; (iii) the making and performance of this Guaranty
does not and will not violate the provisions of any applicable law, regulation
or order, and does not and will not result in the breach of, or constitute a
default or require any consent under, any material agreement, instrument, or
document to which it is a party or by which it or any of its property may be
bound or affected; (iv) all consents, approvals, licenses and authorizations of,
and
<PAGE>
filings and registrations with, any governmental authority required under
applicable law and regulations for the making and performance of this Guaranty
have been obtained or made and are in full force and effect; (v) by virtue of
its relationship with Borrowers, the execution, delivery and performance of this
Guaranty is for the direct benefit of Guarantor and it has received adequate
consideration for this Guaranty; and (vi) the financial information, that has
been delivered to Lender by or on behalf of Guarantor, is complete and correct
in all respects and accurately presents the financial condition and the
operational results of Guarantor and since the date of the most recent financial
statements delivered to Lender, there has been no material adverse change in the
financial or operational condition of Guarantor.
20. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY
APPLICABLE LAW, GUARANTOR AND LENDER EACH WAIVE TRIAL BY JURY WITH RESPECT TO
ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING OUT OF THIS GUARANTY. THIS
GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
21. FOREIGN CURRENCY. If any claim arising under or related to this
Guaranty is reduced to judgment denominated in a currency (the "JUDGMENT
CURRENCY") other than the currencies in which the Guaranteed Obligations are
denominated (collectively the "OBLIGATIONS CURRENCY"), the judgment shall be for
the equivalent in the Judgment Currency of the amount of the claim denominated
in the Obligations Currency included in the judgment, determined as of the date
of judgment. The equivalent of any Obligations Currency amount in any Judgment
Currency shall be calculated at the spot rate for the purchase of the
Obligations Currency with the Judgment Currency quoted by Lender in the place of
Lender's choice at or about 8:00 a.m. on the date for determination specified
above. Guarantor shall indemnify Lender and hold Lender harmless from and
against all loss or damage resulting from any change in exchange rates between
the date any claim is reduced to judgment and the date of payment thereof by
Guarantor.
22. TAXES. If Guarantor makes a payment under this Guaranty to which
withholding tax applies, then any taxes (other than taxes on net income (a)
imposed by the country or any subdivision of the country in which Lender's
principal office or actual lending office is located and (b) measured by the
United States taxable income Lender would have received if all payments under or
in respect of this Guaranty were exempt from taxes levied by Guarantor's
country), are at any time imposed on any payments under or in respect of this
Guaranty including, but not limited to, payments made pursuant to this Paragraph
22, Guarantor shall pay all such taxes and shall also pay to Lender, on demand,
all additional amounts which Lender specifies as necessary to preserve the
after-tax yield Lender would have received if such taxes had not been imposed.
23. MAXIMUM PRINCIPAL AMOUNT. The Maximum Principal Amount is the amount
set forth in Paragraph 1 in U. S. Dollar or its equivalent in the applicable
Obligations Currency. In the event of an increase in market value of any of the
Obligations Currency as compared to the United States Dollar before payment in
full by Guarantor of its obligations under this Guaranty,
<PAGE>
the Maximum Principal Amount shall be increased by an amount of U. S. Dollars
sufficient to purchase on the day of such payment, whether before or after
settlement or judgment, the amount of such Obligations Currency to Lender in
each of the Obligations Currencies. The exchange rate quotes determined as
provided in Paragraph 21 will be applicable in determining the Maximum Principal
Amount.
Executed under seal this ___ day of ________________, _____.
QUEBECOR PRINTING INC.
612, St. Jacques Street
Montreal, Quebec
Canada
H3C 4M8
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
<PAGE>
Exhibit 10.14
$271,500,000 Wilmington, Delaware
August 20, 1999
FOR VALUE RECEIVED, the undersigned WORLD COLOR PRESS, INC., a Delaware
corporation (the "Borrower") promises to pay to the order of QUEBECOR PRINTING
(USA) HOLDINGS INC., a Delaware limited liability company (the "Lender"), the
principal amount of Two Hundred and Seventy One Million and Five Hundred
Thousand Dollars ($271,500,000), on November 11, 1999 (the "Maturity Date"), and
to pay interest monthly in arrears from the date hereof on the unpaid principal
amount hereof (and, to the extent permitted by applicable law, any overdue
payment of interest) (i) for the period commencing on the date hereof through
and including the Maturity Date, at a rate of 7.23% per annum, and (ii) for the
period of any extension granted by the Lender pursuant hereto, at the rate per
annum determined as provided below.
All payments of principal and interest hereunder shall be payable in
lawful money of the United States of America, and shall be payable to the Lender
at its address in Wilmington, Delaware, or to such other address as may be
designated by notice from the Lender to the Borrower.
The proceeds of this Promissory Note are being used to refinance the
existing indebtedness of the Borrower under the Second Amended and Restated
Credit Agreement, dated as of June 6, 1996 among the Borrower, the Lenders party
thereto, Bankers Trust Company, as administrative agent thereunder, BA
Securities Inc., as syndication agent thereunder and Citibank N.A., as
documentation agent thereunder, as amended. This Promissory Note shall
constitute senior indebtedness of the Borrower.
The following shall constitute "Events of Default" as the term is used
herein:
(a) The Borrower shall default in the payment when due of any
amount payable by it hereunder prior to the seventh (7th) day after the
date when due or the Maturity Date;
(b) Any event or condition shall occur that results in the
acceleration of the maturity of any Debt, as defined below, (but only
in an aggregate amount of at least $20,000,000) or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
or holders of such Debt or any person or entity acting on behalf of
such holder or holders to accelerate the maturity of such Debt in an
aggregate amount of at least $20,000,000. "Debt" means (i) all
indebtedness of the Borrower for borrowed money or for the deferred
purchase price of property, (ii) all obligations under leases which
shall have been or should be,
<PAGE>
in accordance with generally accepted accounting principles, recorded
as capital leases in respect of which the Borrower is liable as lessee,
holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien, security interest or other
charge or encumbrance upon or in property (including, without
limitation, accounts and contract rights) owned by the Borrower, (iv)
all indebtedness referred to in clause (i) or (ii) above guaranteed
directly or indirectly in any manner by the Borrower, through an
agreement to pay or purchase such indebtedness or to advance or supply
funds for the payment or purchase of such indebtedness, or to otherwise
assure a creditor against loss, and (v) liabilities in respect of
unfunded vested benefits under Plans (as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and
withdrawal liability incurred under ERISA by the Borrower or by a
Commonly Controlled Entity (as defined in ERISA) to any Multiemployer
Plan (as defined in ERISA), PROVIDED, that Debt shall not include trade
and other accounts payable in the ordinary course of business in
accordance with customary trade terms;
(c) The Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property; (ii) make a general assignment for the benefit of its
creditors; (iii) commence a voluntary case under the Bankruptcy Code
(as now or hereafter in effect); (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts;
(v) fail to controvert within 60 days or such lesser period as may be
provided in the Bankruptcy Code, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy
Code; or (vi) take any action for the purpose of effecting any of the
foregoing;
(d) A proceeding or case shall be commenced, without the
application or consent of the Borrower in any court of competent
jurisdiction, seeking (i) liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of debts of the
Borrower; (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Borrower of all or any substantial part
of any of their assets; or (iii) similar relief in respect of the
Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 days,
or an order for relief against the Borrower shall be entered in an
involuntary case under the Bankruptcy Code;
(e) A final judgment or judgments for the payment of money
shall be rendered by a court of record against the Borrower, and the
Borrower shall not discharge the same or provide for its discharge in
accordance with its terms, or procure a stay of execution thereof
within 60 days from the date of entry thereof, and within said period
of 60 days or such longer period during which execution of
<PAGE>
such judgment shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(f) The Borrower shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due.
When an Event of Default has occurred and is continuing, the holder of
this Promissory Note may, by notice to the Borrower, declare the entire
principal hereof and all interest accrued hereon to be immediately due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived. In the event of any default hereunder,
the Borrower shall pay and reimburse the Lender for all expenses of collection
and enforcement, including legal fees and disbursements.
This Promissory Note may be prepaid in whole or in part at the option
of the Borrower, without but with interest accrued to and including the date of
prepayment.
All notices, consents and demands hereunder shall be given in writing
and shall be deemed effective when personally delivered, or five days after
deposit in the United States mail, postage prepaid, addressed to the respective
party at the address specified above or such other address as may be specified
by written notice.
The Borrower waives presentment for payment, protest, notice of protest
and notice of nonpayment of this Promissory Note.
This Promissory Note may be extended from time to time by the Lender
for a period of not less than 90 days, but only in writing duly executed by the
Lender; PROVIDED that if this Promissory Note shall be so extended, the interest
rate for the period of such extension shall be a rate per annum equal to Libor
plus 2%.
"Libor" shall mean the rate per annum (expressed on the basis of a
360-day year) shown on Telerate page 3750 (as defined in the International Swaps
and Derivatives Association, Inc. definitions, as modified and amended from time
to time) as of 11:00 a.m. (London, England time) for US Dollar deposits for a
period of 90 days.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of Delaware. If any provision of this Promissory Note is held to
be invalid or unenforceable, the remaining provisions of this Promissory Note
shall remain in full force and effect.
WORLD COLOR PRESS, INC.
By: __________________________
Marc L. Reisch
President and Chief Executive Officer
<PAGE>
Exhibit 10.15
$240,000,000 Wilmington, Delaware
August 20, 1999
FOR VALUE RECEIVED, the undersigned WORLD COLOR PRESS, INC., a Delaware
corporation (the "Borrower") promises to pay to the order of QUEBECOR PRINTING
DELAWARE LLC, a Delaware limited liability company (the "Lender"), the principal
amount of Two Hundred and Forty Million Dollars ($240,000,000), on November 11,
1999 (the "Maturity Date"), and to pay interest monthly in arrears from the date
hereof on the unpaid principal amount hereof (and, to the extent permitted by
applicable law, any overdue payment of interest) (i) for the period commencing
on the date hereof through and including the Maturity Date, at a rate of 7.23%
per annum, and (ii) for the period of any extension granted by the Lender
pursuant hereto, at the rate per annum determined as provided below.
All payments of principal and interest hereunder shall be payable in
lawful money of the United States of America, and shall be payable to the Lender
at its address in Wilmington, Delaware, or to such other address as may be
designated by notice from the Lender to the Borrower.
The proceeds of this Promissory Note are being used to refinance the
existing indebtedness of the Borrower under the Second Amended and Restated
Credit Agreement, dated as of June 6, 1996 among the Borrower, the Lenders party
thereto, Bankers Trust Company, as administrative agent thereunder, BA
Securities Inc., as syndication agent thereunder and Citibank N.A., as
documentation agent thereunder, as amended. This Promissory Note shall
constitute senior indebtedness of the Borrower.
The following shall constitute "Events of Default" as the term is used
herein:
(a) The Borrower shall default in the payment when due of any
amount payable by it hereunder prior to the seventh (7th) day after the
date when due or the Maturity Date;
(b) Any event or condition shall occur that results in the
acceleration of the maturity of any Debt, as defined below, (but only
in an aggregate amount of at least $20,000,000) or enables (or, with
the giving of notice or lapse of time or both, would enable) the holder
or holders of such Debt or any person or entity acting on behalf of
such holder or holders to accelerate the maturity of such Debt
<PAGE>
in an aggregate amount of at least $20,000,000. "Debt" means (i) all
indebtedness of the Borrower for borrowed money or for the deferred
purchase price of property, (ii) all obligations under leases which
shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which
the Borrower is liable as lessee, holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any lien,
security interest or other charge or encumbrance upon or in property
(including, without limitation, accounts and contract rights) owned by
the Borrower, (iv) all indebtedness referred to in clause (i) or (ii)
above guaranteed directly or indirectly in any manner by the Borrower,
through an agreement to pay or purchase such indebtedness or to advance
or supply funds for the payment or purchase of such indebtedness, or to
otherwise assure a creditor against loss, and (v) liabilities in
respect of unfunded vested benefits under Plans (as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
and withdrawal liability incurred under ERISA by the Borrower or by a
Commonly Controlled Entity (as defined in ERISA) to any Multiemployer
Plan (as defined in ERISA), PROVIDED, that Debt shall not include trade
and other accounts payable in the ordinary course of business in
accordance with customary trade terms;
(c) The Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property; (ii) make a general assignment for the benefit of its
creditors; (iii) commence a voluntary case under the Bankruptcy Code
(as now or hereafter in effect); (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts;
(v) fail to controvert within 60 days or such lesser period as may be
provided in the Bankruptcy Code, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy
Code; or (vi) take any action for the purpose of effecting any of the
foregoing;
(d) A proceeding or case shall be commenced, without the
application or consent of the Borrower in any court of competent
jurisdiction, seeking (i) liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of debts of the
Borrower; (ii) the appointment of a trustee, receiver, custodian,
liquidator or the like of the Borrower of all or any substantial part
of any of their assets; or (iii) similar relief in respect of the
Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 days,
or an order for relief against the Borrower shall be entered in an
involuntary case under the Bankruptcy Code;
(e) A final judgment or judgments for the payment of money
shall be rendered by a court of record against the Borrower, and the
Borrower shall not
<PAGE>
discharge the same or provide for its discharge in accordance with its
terms, or procure a stay of execution thereof within 60 days from the
date of entry thereof, and within said period of 60 days or such longer
period during which execution of such judgment shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal; or
(f) The Borrower shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due.
When an Event of Default has occurred and is continuing, the holder of
this Promissory Note may, by notice to the Borrower, declare the entire
principal hereof and all interest accrued hereon to be immediately due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived. In the event of any default hereunder,
the Borrower shall pay and reimburse the Lender for all expenses of collection
and enforcement, including legal fees and disbursements.
This Promissory Note may be prepaid in whole or in part at the option
of the Borrower, without but with interest accrued to and including the date of
prepayment.
All notices, consents and demands hereunder shall be given in writing
and shall be deemed effective when personally delivered, or five days after
deposit in the United States mail, postage prepaid, addressed to the respective
party at the address specified above or such other address as may be specified
by written notice.
The Borrower waives presentment for payment, protest, notice of protest
and notice of nonpayment of this Promissory Note.
This Promissory Note may be extended from time to time by the Lender
for a period of not less than 90 days, but only in writing duly executed by the
Lender; PROVIDED that if this Promissory Note shall be so extended, the interest
rate for the period of such extension shall be a rate per annum equal to Libor
plus 2%.
"Libor" shall mean the rate per annum (expressed on the basis of a
360-day year) shown on Telerate page 3750 (as defined in the International Swaps
and Derivatives Association, Inc. definitions, as modified and amended from time
to time) as of 11:00 a.m. (London, England time) for US Dollar deposits for a
period of 90 days.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of Delaware. If any provision of this Promissory Note is held to
be invalid or unenforceable, the remaining provisions of this Promissory Note
shall remain in full force and effect.
WORLD COLOR PRESS, INC.
By: _____________________________
Marc L. Reisch
President and Chief Executive Officer
<PAGE>
EXHIBIT 21.0
SUBSIDIARIES
(AS OF 3/1/00)
Northeast Graphics Inc.
The Wessel Company, Inc.
The Lanman Companies, Inc.
Lanman Lithotech, Inc.
Central Florida Press, L.L.C.
RAI, Inc.
KRI, Inc.
World Color Book Services, Inc.
Shea Communications Company
The Johnson & Hardin Co.
Magna Graphic, Inc.
Century Graphics Corporation
Dittler Brothers, Incorporated
Acme Printing Company, Inc.
Great Western Publishing, Inc.
Infiniti Graphics, Inc.
World Color Systems, Inc.
World Color Tennessee, Inc.
WCX, L.L.C.
WCY, L.L.C.
WCZ, L.L.C.
KRI TN, L.P.
KRI Dresden, Inc.
UP/Graphics, Inc.
Packaging Graphics Corporation
Nimrod Press, Inc.
Metroweb Acquisition L.P.
Quebecor World Detroit, Inc.
World Color Logistics, Inc.
Downey Printing / Waukee, Inc.
WCP-D, Inc.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-74087 of World Color Press, Inc. on Form S-4 of
our report dated January 24, 2000, appearing in the Annual Report on Form 10-K
of Quebecor World (USA) Inc. for the year ended December 31, 1999.
DELOITTE & TOUCHE LLP
New York, New York
March 27, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 OF QUEBECOR WORLD
(USA) INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 47,383
<SECURITIES> 0
<RECEIVABLES> 284,243
<ALLOWANCES> 13,844
<INVENTORY> 230,716
<CURRENT-ASSETS> 636,714
<PP&E> 1,708,008
<DEPRECIATION> 830,010
<TOTAL-ASSETS> 2,376,121
<CURRENT-LIABILITIES> 345,646
<BONDS> 1,285,106
0
0
<COMMON> 0
<OTHER-SE> 549,325
<TOTAL-LIABILITY-AND-EQUITY> 2,376,121
<SALES> 2,552,895
<TOTAL-REVENUES> 2,552,895
<CGS> 2,223,424
<TOTAL-COSTS> 2,223,424
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,866
<INCOME-PRETAX> (255,932)
<INCOME-TAX> (56,406)
<INCOME-CONTINUING> (199,526)
<DISCONTINUED> 0
<EXTRAORDINARY> (11,992)
<CHANGES> (10,513)
<NET-INCOME> (222,031)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
