AGREEMENT AND PLAN OF MERGER
AMONG
QUEBECOR PRINTING INC.
PRINTING ACQUISITION INC.
AND
WORLD COLOR PRESS, INC.
Dated as of
July 12, 1999
TABLE OF CONTENTS
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ARTICLE I THE OFFER........................................................................................ 1
1.1. THE OFFER..................................................................................... 1
1.2. COMPANY ACTION................................................................................ 3
1.3. DIRECTORS..................................................................................... 4
ARTICLE II THE MERGER...................................................................................... 5
2.1. THE MERGER.................................................................................... 5
2.2. EFFECT OF THE MERGER.......................................................................... 5
2.3. CONSUMMATION OF THE MERGER.................................................................... 5
2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND OFFICERS.............................. 5
2.5. CONVERSION OF SECURITIES...................................................................... 6
2.6. STOCK OPTIONS................................................................................. 7
2.7. CLOSING OF COMPANY TRANSFER BOOKS............................................................. 9
2.8. EXCHANGE OF CERTIFICATES...................................................................... 9
2.9. FUNDING OF PAYING AGENT....................................................................... 10
2.10. TAKING OF NECESSARY ACTION; FURTHER ACTION.................................................... 10
2.11. DISSENTING SHARES............................................................................. 10
2.12. FRACTIONAL SHARES............................................................................. 11
2.13. NO FURTHER OWNERSHIP RIGHTS IN COMMON......................................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER......................................... 11
3.1. ORGANIZATION AND QUALIFICATION................................................................ 11
3.2. AUTHORITY RELATIVE TO THIS AGREEMENT.......................................................... 12
3.3. FINANCING ARRANGEMENTS........................................................................ 13
3.4. OWNERSHIP OF SHARES........................................................................... 13
3.5. SUBSIDIARIES.................................................................................. 13
3.6. CAPITALIZATION................................................................................ 14
3.7. COMMISSION FILINGS............................................................................ 14
3.8. LITIGATION.................................................................................... 15
3.9. EMPLOYEES AND LABOR........................................................................... 15
3.10. TAXES AND TAX RETURNS......................................................................... 15
3.11 EMPLOYEE BENEFIT PLANS........................................................................ 15
3.12. COMPLIANCE WITH LAWS.......................................................................... 17
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3.13. ENVIRONMENTAL MATTERS......................................................................... 18
3.14. INTELLECTUAL PROPERTY......................................................................... 20
3.15. YEAR 2000..................................................................................... 20
3.16. NO STOCKHOLDER VOTE REQUIRED.................................................................. 20
3.17. PARENT CONSENTS............................................................................... 21
3.18. SUBSCRIPTION RIGHTS........................................................................... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................... 21
4.1. ORGANIZATION AND QUALIFICATION................................................................ 21
4.2. SUBSIDIARIES.................................................................................. 21
4.3. CAPITALIZATION................................................................................ 22
4.4. AUTHORITY RELATIVE TO THIS AGREEMENT.......................................................... 22
4.5. COMMISSION FILINGS............................................................................ 23
4.6. LITIGATION.................................................................................... 24
4.7. EMPLOYEES AND LABOR........................................................................... 25
4.8. TAXES AND TAX RETURNS......................................................................... 25
4.9 EMPLOYEE BENEFIT PLANS........................................................................ 25
4.10. STOCKHOLDER VOTE REQUIRED..................................................................... 27
4.11. COMPLIANCE WITH LAWS.......................................................................... 27
4.12. PROPERTIES.................................................................................... 28
4.13. ENVIRONMENTAL MATTERS......................................................................... 28
4.14. INTELLECTUAL PROPERTY......................................................................... 28
4.15. INSURANCE..................................................................................... 29
4.16. YEAR 2000..................................................................................... 29
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................................................... 29
5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER......................................... 29
5.2. CERTAIN ACTIONS BY PARENT PENDING THE MERGER.................................................. 31
ARTICLE VI ADDITIONAL AGREEMENTS........................................................................... 31
6.1. ACTION OF COMPANY STOCKHOLDERS................................................................ 31
6.2. COMPANY PROXY STATEMENT....................................................................... 32
6.3. PREPARATION OF THE FORM F-4 AND THE PARENT PROXY STATEMENT; PARENT STOCKHOLDERS MEETING....... 32
6.4. EXPENSES...................................................................................... 33
6.5. ADDITIONAL AGREEMENTS......................................................................... 33
6.6. LIMITATION ON NEGOTIATIONS.................................................................... 34
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6.7. NOTIFICATION OF CERTAIN MATTERS............................................................... 35
6.8. LISTING....................................................................................... 35
6.9. ACCESS TO INFORMATION......................................................................... 35
6.10. STOCKHOLDER CLAIMS............................................................................ 35
6.11. TREATMENT OF EMPLOYEE COMPENSATION AND BENEFITS............................................... 36
6.12. INDEMNIFICATION RIGHTS........................................................................ 37
6.13. PARENT GUARANTEE.............................................................................. 38
6.14. AFFILIATES.................................................................................... 39
ARTICLE VII CONDITIONS..................................................................................... 39
7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.................................. 39
7.2. ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT THE MERGER.............. 40
7.3. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER....................... 40
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER............................................................. 41
8.1. TERMINATION................................................................................... 41
8.2. AMENDMENT..................................................................................... 42
8.3. FEES UPON TERMINATION......................................................................... 42
8.4. EFFECT OF TERMINATION......................................................................... 43
8.5. WAIVER........................................................................................ 44
ARTICLE IX GENERAL PROVISIONS.............................................................................. 44
9.1. BROKERS....................................................................................... 44
9.2. PUBLIC STATEMENTS............................................................................. 44
9.3. NOTICES....................................................................................... 44
9.4. INTERPRETATION................................................................................ 45
9.5. REPRESENTATIONS AND WARRANTIES................................................................ 45
9.6. SEVERABILITY.................................................................................. 46
9.7. MISCELLANEOUS................................................................................. 46
9.8. COUNTERPARTS.................................................................................. 46
9.9. SURVIVAL...................................................................................... 47
9.10. THIRD PARTY BENEFICIARIES..................................................................... 47
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 12, 1999 (the "AGREEMENT") by
and among QUEBECOR PRINTING INC., a corporation amalgamated under the laws of
Canada ("PARENT"), PRINTING ACQUISITION INC., a Delaware corporation and a
subsidiary of Parent ("PURCHASER"), and WORLD COLOR PRESS, INC., a Delaware
corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has determined that it would
be fair to, advisable and in the best interests of the Company's stockholders to
enter into this Agreement and the Board of Directors of Parent and Purchaser
have approved this Agreement providing for the acquisition of the Company by
Purchaser pursuant to a tender offer (the "OFFER") by Purchaser to purchase for
cash up to 23,500,000 (the "MAXIMUM NUMBER") of the outstanding shares of Common
Stock, par value $0.01, of the Company (the "SHARES"), at a price of $35.69 in
cash per Share; followed by a merger (the "MERGER") of Purchaser with and into
the Company, all upon the terms and subject to the conditions set forth herein;
and
WHEREAS, in furtherance thereof, the respective Boards of Directors of
Parent, Purchaser and the Company have approved this Agreement, the Offer and
the Merger; and
WHEREAS, contemporaneously with the execution and delivery of this Agreement
and as a condition to Parent's willingness to enter this Agreement, (i) Parent
and certain stockholders of the Company are entering into the Tender, Voting and
Option Agreement in substantially the form of EXHIBIT C hereto (the "TENDER,
VOTING AND OPTION AGREEMENT"), and (ii) the Company, Parent and Purchaser are
entering in to the Stock Option Agreement in substantially the form of EXHIBIT D
hereto (the "STOCK OPTION AGREEMENT").
NOW THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
ARTICLE I
THE OFFER
1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1, Purchaser shall, as soon as reasonably practical
after the date hereof, commence within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder (the "EXCHANGE ACT"), the Offer but in any event within
five business days (as such term is defined in Rule 14e-1 under the Exchange
Act) from the date of public announcement of the execution hereof. The Offer
will be subject only to the satisfaction or waiver of the conditions set forth
in Annex I hereto (the "OFFER CONDITIONS"), any of which conditions may be
waived in the sole discretion of Purchaser (other than the Minimum Condition (as
such term is defined in Annex I), which may only be waived with the consent of
the Board of Directors of the Company). Assuming all of the conditions to
consummation of the Offer are satisfied, Purchaser shall consummate the Offer as
promptly as possible.
(b) Parent and Purchaser covenant and agree that upon the terms and subject
to the conditions of this Agreement (including the Offer Conditions), Purchaser
shall accept for payment all Shares, up to the Maximum Number of Shares, that
are validly tendered on or prior to the expiration of the Offer and not timely
withdrawn, as soon as it is permitted to do so under applicable law, and shall
pay for such Shares promptly thereafter. Purchaser may, at any time, assign to
one or more corporations, which are direct or indirect wholly owned subsidiaries
of Parent, the right to purchase all or any portion of
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the Shares tendered pursuant to the Offer, but any such transfer or assignment
shall not relieve Purchaser and Parent of their obligations under the Offer or
prejudice the rights of tendering stockholders to receive payment for Shares
properly tendered and accepted for payment in accordance with the terms of this
Agreement.
(c) The Offer shall initially be scheduled to expire 20 business days
following the commencement thereof; PROVIDED that, unless this Agreement shall
have been terminated pursuant to Section 8.1, Purchaser shall, subject to
Section 1.1(e), extend the Offer from time to time in the event that, at a
then-scheduled expiration date, the Offer Conditions have not been satisfied
(other than incurable breaches of representations, warranties and covenants,
PROVIDED that the determination of whether a breach is incurable is not in the
sole discretion of Purchaser) each such extension not to exceed (unless
otherwise consented to by the Company) the lesser of 10 additional business days
or such fewer number of days that the Company and Parent reasonably believe are
necessary to cause such Offer Condition to be satisfied; PROVIDED that, under no
circumstances shall any such extension be less than the minimum number of days
required by the Exchange Act or the rules and regulations promulgated thereunder
or by applicable law and PROVIDED further that Purchaser shall not be required
to extend the Offer more than 15 business days after making a public
announcement that all of the Offer Conditions other than the Minimum Condition
have been satisfied. Except as provided in Section 1.1(d) and Section 1.1(e),
Purchaser shall not terminate the Offer without purchasing Shares pursuant to
the Offer. As soon as reasonably practical on the date the Offer is commenced,
Purchaser shall file with the Securities and Exchange Commission (the
"COMMISSION") a Tender Offer Statement on SCHEDULE 14D-1 (together with all
amendments and supplements thereto, the "SCHEDULE 14D-1") with respect to the
Offer, that shall comply in all material respects with the provisions of such
Schedule and all applicable Federal securities laws, and shall contain an Offer
to Purchase and forms of the related letter of transmittal and summary
advertisement (which Schedule 14D-1, Offer to Purchase and other documents are
referred to herein collectively as the "TENDER OFFER DOCUMENTS"). Parent and
Purchaser agree that the Company and its counsel shall be given an opportunity
to review the Schedule 14D-1 before it is filed with the Commission. Parent,
Purchaser and the Company each agree promptly to correct any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the Commission and the other Offer Documents as so corrected to be
disseminated to holders of Shares in each case as and to the extent required by
applicable securities laws. Parent will provide the Company with a copy of any
comments Parent or Purchaser may receive from the Commission or its staff with
respect to the Tender Offer Documents promptly following receipt thereof.
Purchaser shall not, without the prior written consent of the Board of Directors
of the Company, (i) decrease or change the form of the consideration payable in
the Offer, (ii) reduce the number of Shares sought pursuant to the Offer, (iii)
amend the Offer Conditions or impose additional conditions to the Offer, (iv)
amend or change any term of the Offer or (v) waive the Minimum Condition.
(d) In the event that this Agreement has been terminated pursuant to Section
8.1, Purchaser shall, and Parent shall cause Purchaser to, promptly terminate
the Offer without accepting any Shares for payment.
(e) If on September 13, 1999, either or both of the Minimum Condition or
paragraph (b) of the Offer Conditions has not been satisfied, Purchaser shall,
unless Parent and the Company otherwise agree, terminate the Offer, and the
parties shall, subject to the terms and conditions hereof, seek to consummate
the Merger in accordance with Section 2.5(c).
1.2 COMPANY ACTION. The Company hereby consents to the Offer and
represents that its Board of Directors has determined by a unanimous vote that
the Offer and the Merger are fair to, advisable and in the best interests of,
the Company and its stockholders, has approved the Offer and the Merger, has
approved and adopted this Agreement, and has resolved to recommend acceptance of
the Offer to,
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and adoption of this Agreement by, the Company's stockholders (it being
understood that, notwithstanding anything in this Agreement to the contrary, if
the Company's Board of Directors shall conclude, acting in good faith, after
receiving advice from outside counsel or its financial advisor, that failure to
modify or withdraw its recommendation would constitute a breach of their
fiduciary duties under applicable law, the Board of Directors may so modify or
withdraw its recommendation and such modification or withdrawal shall not
constitute a breach of this Agreement). The Company further represents that
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated has delivered its written opinion to the Board
of Directors of the Company that, as of the date hereof, the consideration to be
received by holders of Shares pursuant to the Offer and the Merger is fair to
such holders from a financial point of view. Contemporaneously with the
commencement of the Offer, but in no event prior to such date as the Purchaser
has filed the Tender Offer Documents with the Commission, the Company shall file
with the Commission and mail to holders of record and beneficial owners of
Shares a Solicitation/ Recommendation Statement on SCHEDULE 14D-9 with respect
to the Offer (such SCHEDULE 14D-9, as amended from time to time, the "SCHEDULE
14D-9"), which shall contain the recommendation of the Company's Board of
Directors set forth in the preceding sentence. Parent, Purchaser and the Company
each agree promptly to correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the Commission and disseminated
to holders of Shares, in each case as and to the extent required by applicable
securities laws. The Company shall from time to time furnish Purchaser with such
additional information, if any, including updated or additional lists of
stockholders, mailing labels and lists of securities positions, and other
assistance as the Purchaser may reasonably request in order to be able to
communicate the Offer to the stockholders of the Company. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents, Parent, Purchaser and each of their respective affiliates
and associates shall hold in confidence the information contained in any of such
lists, labels or additional information and, if this Agreement is terminated,
shall promptly redeliver to the Company all copies (of whatever nature) of such
information then in their possession.
1.3. DIRECTORS.
(a) Promptly upon the purchase by Purchaser of Shares pursuant to the Offer,
Purchaser shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as will give
Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors of the Company equal to the product of
(a) the number of directors on the Board of Directors of the Company (after
giving effect to the appointment of such directors) and (b) the percentage that
such number of Shares so purchased bears to the number of Shares outstanding,
and the Company shall, upon request by Purchaser, promptly (i) increase the size
of the Board of Directors of the Company to the extent permitted by its Amended
and Restated Certificate of Incorporation and By-Laws (and amend the By-Laws, if
so required, to increase the size of the Board of Directors to allow for such
additional directors); and/or (ii) use reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable Purchaser's
designees to be elected to the Board of Directors of the Company (and shall hold
a Board meeting for such purpose); and (iii) shall cause Purchaser's designees
to be so elected. At any time after the execution hereof, at the request of
Purchaser, the Company shall promptly take, at its expense, all action necessary
to effect any such election, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in form and substance reasonably satisfactory to
Purchaser and its counsel. Purchaser shall supply the Company and be solely
responsible for any information included in the filings with the Commission with
respect to themselves and their nominees, officers, directors and affiliates
required by said Section 14(f) and Rule 14f-1.
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(b) Following the election or appointment of Purchaser's designees pursuant
to this Section 1.3 and prior to the Effective Time, any amendment or waiver of
any term or condition of this Agreement, any amendment of the provisions of the
Amended and Restated Certificate of Incorporation or By-Laws of the Company
affecting indemnification, any termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Purchaser or Parent or waiver or assertion of any
of the Company's rights hereunder, and any other consent or action by the Board
of Directors with respect to this Agreement, will require the separate
concurrence of a majority of the continuing directors of the Company who hold
office as of the date of this Agreement or if there are no such continuing
directors, then a majority of the directors of the Company then in office who
were not designated by Purchaser (the "Disinterested Directors") and such
concurrence shall constitute the authorization of the Board of Directors of the
Company. The number of Disinterested Directors shall be not less than two. Any
person who is a director on the date of this Agreement, but who, in order to
carry out the provisions of this Section 1.3, is not a director at the Effective
Time, shall be entitled to receive all payments at the time such director
resigns as if he or she had been a director as of the Effective Time.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in Section 2.3), in
accordance with this Agreement and the General Corporation Law of the State of
Delaware, as amended (the "DELAWARE LAW"), Purchaser shall be merged with and
into the Company, the separate existence of Purchaser (except as may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation. The Company, in its capacity as the corporation
surviving the Merger, sometimes is referred to herein as the "Surviving
Corporation."
2.2 EFFECT OF THE MERGER. The Surviving Corporation shall possess all the
rights, privileges, powers and franchises, of a public as well as a private
nature, and be subject to all the restrictions, disabilities and duties, of each
of Purchaser and the Company (collectively, the "CONSTITUENT CORPORATIONS"); the
Surviving Corporation shall be vested with the rights, privileges, powers and
franchises, all properties and assets and all debts due on whatever account, and
all other things in action or belonging to, and all and every other interest of,
each of the Constituent Corporations; and all debts, liabilities and duties of
each of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as if such debts,
liabilities and duties had been incurred or contracted by it, all with the
effect set forth in Section 259 of the Delaware Law.
2.3 CONSUMMATION OF THE MERGER. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in Article VII, and in no
event later than five business days after such satisfaction or waiver, the
parties to this Agreement will cause a Certificate of Merger to be filed with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with, the relevant provisions of the Delaware Law.
The Merger shall be effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware or at such later time
as specified in the Certificate of Merger (the "EFFECTIVE TIME").
2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS; DIRECTORS AND OFFICERS. The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be amended and restated at the Effective Time so as to
read in its entirety in the form set forth as EXHIBIT A hereto and, as so
amended, shall be the Certificate of Incorporation of the Surviving Corporation
immediately after the Effective Time. The By-Laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation immediately after the Effective Time and the directors of the
Company shall submit their resignations at the Effective Time. The directors of
Purchaser holding office immediately prior to the Effective Time shall be the
directors of the Surviving
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Corporation immediately after the Effective Time. The officers of the Company
holding office immediately prior to the Effective Time shall be the officers
(holding the same offices as they held with the Company) of the Surviving
Corporation immediately after the Effective Time until such time as their
successors shall have been duly appointed.
2.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, the Company or the
holder of any of the following securities:
(a) If Purchaser shall have purchased, pursuant to the Offer, the Maximum
Number of Shares, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 2.5(d))
shall be canceled, extinguished and converted into the right to receive a number
(rounded to the nearest one-millionth of a share) of fully paid and
nonassessable, Subordinate Voting Shares of Parent ("PARENT STOCK"), equal to
the Exchange Ratio (as defined below).
(b) If Purchaser shall have purchased, pursuant to the Offer, less than the
Maximum Number of Shares (the number of Shares so paid for and purchased in the
Offer being referred to herein as the "PURCHASED SHARE NUMBER"), each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares to be canceled pursuant to Section 2.5(d) and other than Shares with
respect to which the provisions of Section 2.11 are applicable) shall be
cancelled, extinguished and converted into the right to receive, (i) cash, in an
amount equal to the product of the Cash Proration Factor (as defined below)
multiplied by $35.69 and (ii) a number (rounded to the nearest one-millionth of
a share) of fully paid and non-assessable shares of Parent Stock equal to the
product of (x) 1 minus the Cash Proration Factor multiplied by (y) the Exchange
Ratio.
(c) If the Offer is terminated pursuant to Section 1.1(e), each Share issued
and outstanding immediately prior to the Effective Time (other than any Shares
to be canceled pursuant to Section 2.5(d)) shall be canceled, extinguished and
converted into the right to receive, (i) cash, in an amount equal to $22.00 and
(ii) .6311 shares of Parent Stock.
(d) Each Share held in the treasury of the Company and each Share owned by
Purchaser, in each case immediately prior to the Effective Time, shall
automatically be canceled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto.
(e) Each share of capital stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted and changed into one
validly issued, fully paid and nonassessable share of such capital stock of the
Surviving Corporation.
(f) If prior to the Effective Time, Parent or the Company, as the case may
be, should (in the case of Parent, after obtaining the consent required by
Section 5.2 hereof; in the case of the Company, after obtaining the consent
required by Section 5.1 hereof) split, combine or otherwise reclassify the
Parent Stock or the Shares, or pay (or set a record date that is prior to the
Effective Time with respect to) a stock dividend or other stock distribution in
Parent Stock or the Shares, or otherwise change the Parent Stock or Shares into
any other securities, or make any other such stock dividend or distribution with
respect to the Parent Stock or the Shares in capital stock of Parent or the
Company or of their respective subsidiaries in respect of the Parent Stock or
the Shares, respectively, then the Merger Consideration and the Exchange Ratio
will be appropriately adjusted to reflect such split, combination, dividend or
other distribution or change to provide the holders of Shares the same economic
effect as contemplated by this Agreement prior to such event.
(g) Share certificates surrendered for exchange by any person constituting
an affiliate of the Company for purposes of Rule 145 under the Securities Act
shall not be exchanged for certificates representing Parent Stock until Parent
has received a written agreement from such person as provided in Section 6.14.
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(h) For purposes of this Agreement, "EXCHANGE RATIO" is equal to 1.6455
shares of Parent Stock per Share. The "CASH PRORATION FACTOR" shall be a
fraction, of which (A) the numerator is equal to (x) the Maximum Number minus
(y) the Purchased Share Number, if any, and (B) the denominator is equal to the
number of Shares issued and outstanding immediately prior to the Effective Time
(excluding Shares to be canceled pursuant to Section 2.5(d) and other than
Shares with respect to which the provisions of Section 2.11 are applicable) (the
"FINAL OUTSTANDING NUMBER"). The consideration provided for in Sections 2.5(a),
(b), or (c), as applicable, together with the consideration provided for in
Section 2.12, is referred to herein as the "MERGER CONSIDERATION".
(i) At the Effective Time, all Shares shall no longer be outstanding and
shall be cancelled and retired and shall cease to exist (in the case of the
Shares to be cancelled pursuant to Section 2.5(d), without the payment of any
consideration therefor), and each certificate (a "CERTIFICATE") formerly
representing any of such Shares, other than the Shares to be cancelled pursuant
to Section 2.5(d), shall thereafter represent only the right to receive the
Merger Consideration.
2.6 STOCK OPTIONS. As soon as practicable following the date of this
Agreement, the Board of Directors of the Company (or, if appropriate, any
committee administering the Stock Plans (as defined below)) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(a) adjust the terms of all outstanding employee or director stock options
to purchase Shares and any related stock appreciation rights ("COMPANY STOCK
OPTIONS") granted under any stock option or stock purchase plan, program or
arrangement of the Company (the "STOCK PLANS"), to provide that, at the
consummation of the Offer, each Company Stock Option outstanding immediately
prior to the consummation of the Offer shall (except to the extent that Parent
and the holder of a Company Stock Option otherwise agree prior to the
consummation of the Offer or unless the holder of such Company Stock Option
shall have elected otherwise by written notice to Parent prior to the date 10
business days prior to the consummation of the Offer) be cancelled in exchange
for (A) a cash payment from the Surviving Corporation to be made promptly
following the consummation of the Offer (subject to any applicable withholding
taxes) equal in value to (1) the product of (x) the total number of shares of
Company Common Stock subject to such Company Stock Option (the "OPTION SHARES"),
multiplied by (y) $22.00, multiplied by (z) the excess of $35.69 over the
exercise price per share of Common Stock subject to such Company Stock Option,
divided by (2) $35.69, and (B) a number of shares of Parent Stock to be issued
promptly following the Effective Time equal to (1) the product of (x) the number
of Option Shares, multiplied by (y) 0.6311, multiplied by (z) the excess of
$35.69 over the exercise price per share of Common Stock subject to such Company
Stock Option, divided by (2) $35.69; PROVIDED, HOWEVER, that if the Offer is
terminated pursuant to Section 1.1(e), references to "consummation of the Offer"
above shall be deemed replaced by the term "Effective Time." The calculation of
the amounts described in (A) and (B) of this Section 2.6(a) may also be
expressed with the following formulas:
($35.69 - Exercise Price)
(A) = (Option Shares) X ($22.00) X $35.69
($35.69 - Exercise Price)
(B) = (Option Shares) X (0.6311) X $35.69
(b) except as provided herein or as otherwise agreed to by the parties, the
Stock Plans and any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary shall terminate as of the Effective Time, and the
Company shall ensure that following the Effective Time no holder of a Company
Stock Option nor any participant in any Stock Plan shall have any right
thereunder to acquire equity securities of the Company or the Surviving
Corporation; and
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(c) prior to the expiration date of the Offer (or if the Offer is terminated
pursuant to Section 1.1(e), immediately prior to the Effective Time), any
restrictions imposed pursuant to any Stock Plan on any shares of Common Stock of
the Company (such shares, "COMPANY RESTRICTED STOCK") shall (subject, if the
Offer has not been terminated pursuant to Section 1.1(e), to the consummation of
the Offer) lapse and each share of Company Restricted Stock shall be subject to
the same terms and conditions of this Agreement as the Shares; PROVIDED,
HOWEVER, that in the event the Offer is terminated, such restrictions shall be
deemed to have not lapsed until immediately prior to the Effective Time.
(d) To the extent that Parent is not a "FOREIGN PRIVATE ISSUER" within the
meaning of Rule 3b-4(c) under the Exchange Act, Parent shall take all steps to
cause any acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (i) is a
director or officer of the Company or (ii) at the Effective Time will become a
director or officer of Parent to become exempt under Rule 16b-3 promulgated
under the Exchange Act.
2.7 CLOSING OF COMPANY TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed with respect to Shares issued and
outstanding immediately prior to the Effective Time and no further transfer of
such Shares shall thereafter be made on such stock transfer books. If, after the
Effective Time, valid certificates previously representing such Shares are
presented to the Surviving Corporation or the Paying Agent (as defined in
Section 2.8), they shall be exchanged as provided in Section 2.8.
2.8 EXCHANGE OF CERTIFICATES. Prior to the Effective Time, Purchaser shall
designate a bank or trust company, reasonably satisfactory to the Company, to
act as agent (the "PAYING AGENT") for the holders of Shares to receive the funds
and certificates necessary to effect the exchange for the Merger Consideration
of certificates which, immediately prior to the Effective Time, represented
Shares entitled to payment pursuant to Section 2.5(a), 2.5(b) or 2.5(c). As soon
as practicable after the Effective Time, the Surviving Corporation shall cause
the Paying Agent to mail a transmittal form (the "LETTER OF TRANSMITTAL") (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing such Shares shall pass, only upon proper
delivery to the Paying Agent) to each holder of record of certificates
theretofore representing such Shares advising such holder of the procedure for
surrendering to the Paying Agent such certificates for payment of the Merger
Consideration in respect thereof. If any certificate of Parent Stock is to be
issued in the name of, or if cash is to be remitted to, a person other than the
person in whose name the certificates for Shares surrendered for exchange are
registered on the books of the Company, it shall be a condition of the exchange
that the certificate so surrendered shall be properly endorsed and the person
requesting such exchange shall pay to the Paying Agent all transfer or other
taxes required by reason of the issuance of such check in the name of a person
other than the registered owner of the certificates surrendered, or shall
establish to the satisfaction of the Paying Agent that such taxes have been paid
or are not applicable. Notwithstanding the foregoing, neither the Paying Agent
nor any party hereto shall be liable to a holder of certificates theretofore
representing Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar laws. Upon the surrender and
exchange of a certificate theretofore representing Shares, together with such
Letter of Transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder shall be entitled to receive a certificate for the
number of full shares of Parent Stock and the amount of cash, if any, without
interest thereon, to which he or she is entitled hereunder, less only such
amount required to be withheld under applicable backup withholding federal
income tax regulations, and such certificate shall forthwith be cancelled. Until
so surrendered and exchanged, each such certificate shall represent solely the
right to receive the Merger Consideration into which the Shares it theretofore
represented shall have been converted pursuant to Sections 2.5(a), 2.5(b) or
2.5(c), without interest, and the Surviving Corporation shall not be required to
pay the holder thereof the Merger Consideration to which such holder otherwise
would be entitled; provided that customary and appropriate certifications and
indemnities
7
allowing for payment against lost or destroyed certificates shall be permitted.
If any certificates representing any Shares shall not have been surrendered
prior to five years after the Effective Time (or immediately prior to such
earlier date on which any payment in respect thereof would otherwise escheat to
or become the property of any governmental unit or agency), the payment in
respect of such certificates shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
2.9 FUNDING OF PAYING AGENT. Parent or Purchaser shall transmit by wire,
or other acceptable means, to the Paying Agent prior to the Effective Time funds
required for the cash portion of the exchange of Shares and cancellation of
Company Options in accordance with this Agreement. The Paying Agent shall agree
to hold such funds in trust and deliver such funds (in the form of checks of the
Paying Agent) in accordance with this Section and Section 2.8. Any portion of
such funds which has not been paid to holders of the Shares or Options pursuant
to Section 2.8 within six months after the Effective Time shall promptly be paid
to the party which provided such funds, and thereafter holders of certificates
representing the right to receive the cash into which Shares or Options formerly
represented by such certificates shall have been converted pursuant to Section
2.5(a), 2.5(b), 2.5(c) or 2.6 who have not theretofore complied with Section 2.8
shall look solely to the Surviving Corporation or the Paying Agent for payment
of the amount of cash to which they are entitled pursuant to this Agreement.
2.10 TAKING OF NECESSARY ACTION; FURTHER ACTION. Parent, Purchaser and the
Company shall use all reasonable efforts to take all such actions as may be
necessary or appropriate in order to effectuate the Offer and the Merger as
promptly as possible. If, at any time after the Effective Time, any further
actions are necessary or desirable to carry out the purposes of this Agreement
or to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, immunities, powers and franchises of
either or both of the Constituent Corporations, the officers and directors of
the Surviving Corporation are fully authorized in the name of either or both of
the Constituent Corporations or otherwise to take, and shall take, all such
actions.
2.11 DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, if stockholders of the Company are entitled to appraisal rights under
Section 262 of the Delaware Law, Shares that are issued and outstanding
immediately prior to the Effective Time and that are held by stockholders who
(i) have not voted such Shares in favor of the Merger and (ii) have delivered
timely a written demand for appraisal of such Shares in the manner provided in
Section 262 of the Delaware Law shall not be cancelled and converted into the
right to receive the Merger Consideration described in Section 2.5(a), 2.5(b) or
2.5(c), unless and until such holder shall have failed to perfect, or
effectively shall have withdrawn or lost, such holder's right to appraisal and
payment under the Delaware Law. If such holder shall have so failed to perfect,
or effectively shall have withdrawn or lost such right, such holder's Shares
shall thereupon be deemed to have been cancelled and converted as described in
Sections 2.5(a), 2.5(b) and 2.5(c), at the Effective Time, and each Share shall
represent solely the right to receive the appropriate Merger Consideration. From
and after the Effective Time, no stockholder who has demanded appraisal rights
as provided in Section 262(d) of the Delaware Law shall be entitled to vote his
or her Shares for any purpose or to receive payment of dividends or other
distributions with respect to his or her Shares (except dividends and other
distributions payable to stockholders of record at a date which is prior to the
Effective Time). The Company will give Purchaser prompt notice of all written
demands received by the Company for appraisal of Shares.
2.12. FRACTIONAL SHARES.
(a) No certificates or scrip or shares of Parent Stock representing
fractional shares of Parent Stock shall be issued upon the surrender for
exchange of Certificates and such fractional interests will not entitle the
owner thereof to vote or to have any rights of a stockholder of Parent or a
holder of shares of Parent Stock.
8
(b) Notwithstanding any other provision of this Agreement, each holder of
Shares exchanged pursuant to the Merger and each holder of Company Stock Options
who would otherwise have been entitled pursuant to this Agreement to receive a
fraction of a share of Parent Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to the product of (i) such fractional part of a
share of Parent Stock multiplied by (ii) $21.6875.
2.13. NO FURTHER OWNERSHIP RIGHTS IN COMMON. From and after the Effective
Time, the holders of Shares which were outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided in this Agreement or by applicable law. All shares of
Parent Stock issued and cash paid upon the surrender of Certificates in
accordance with the terms hereof shall be deemed to have been issued or paid in
full satisfaction of all rights pertaining to the Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby represent and warrant to the Company as follows:
3.1. ORGANIZATION AND QUALIFICATION. Parent has been duly incorporated and
is validly existing as a corporation and in good standing under the laws of
Canada and has full corporate power and authority to own its properties and
conduct its business as presently owned and conducted, except where such failure
to be so incorporated, existing and in good standing or to have such power and
authority, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect (as defined below). Parent is duly qualified as a
foreign corporation and in good standing in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Purchaser has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of the State of
Delaware and has the full corporate power and authority to conduct its business
as presently conducted, except where such failure to be so incorporated,
existing and in good standing or to have such power and authority, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect (as defined below). Purchaser has been formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has no liabilities other than liabilities that, upon
merger of Purchaser and the Company, would not result in a breach or violation
by the Surviving Corporation of the covenants contained in (i) the Indenture
dated as of February 22, 1999, between the Company and The Bank of New York, as
Trustee, relating to the 7 3/4% Senior Subordinated Notes Due 2009; (ii) the
Indenture dated as of November 20, 1998, between the Company and The Bank of New
York, as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2008;
(iii) the Indenture dated as of October 8, 1997, between the Company and State
Street Bank, as Trustee, relating to the 6% Convertible Senior Subordinated
Notes Due 2007, (iv) Participation Agreement, dated as of December 21, 1993
among World Color Press, Inc., General Electric Capital Corporation, State
Street Bank and Trust Company of Connecticut, National Association and State
Street Bank and Trust Company of California, N.A. and ancillary documents
related thereto; (v) Participation Agreement, dated as of July 1, 1998 among
World Color Press, Inc., General Electric Capital Corporation, State Street Bank
and Trust Company of Connecticut, National Association and State Street Bank and
Trust Company of California, N.A. and ancillary documents related thereto; (vi)
Master Lease Agreement, dated as of May 11, 1998 by and between BancBoston
Leasing Inc. and World Color Press, Inc., and ancillary documents related
thereto; or (vii) Chattel Leasing Loan and Security Agreement, dated as of
December 20, 1994, by and among World Color
9
Press, Inc., the lenders named on the signature pages thereto and such other
lenders that may become parties thereto, and BancBoston Leasing Inc., and
ancillary documents related thereto. The copies of the Articles of Amalgamation
of the Parent, dated January 1, 1990, as amended, the Certificate of
Incorporation of the Purchaser, and the By-Laws of each of Parent and the
Purchaser previously delivered to the Company are true, correct and complete as
of the date hereof. When used in connection with Parent or any of its
subsidiaries, the term "Material Adverse Effect" means any change or effect that
is or would be materially adverse to the business, financial condition or
results of operations of Parent and its subsidiaries, taken as a whole, other
than any such effect attributable to or resulting from (i) the public
announcement or consummation of the transactions contemplated by this Agreement
including, without limitation, the loss of customers or employees resulting
therefrom (ii) any change in general economic conditions, financial market
conditions or in conditions affecting Parent's industry generally, (iii) any act
or omission of Parent or any of its subsidiaries taken with the prior consent of
the Company pursuant to Section 5.2 or (iv) actions taken by Parent or any of
its subsidiaries at the specific request of the Company.
3.2. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Purchaser
has the requisite corporate power and authority to enter into this Agreement and
to carry out its respective obligations hereunder. The execution and delivery of
this Agreement by Parent and Purchaser and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly authorized by
the Boards of Directors of Parent and Purchaser, and no other corporate
proceedings (other than such consents which have already been obtained) on the
part of Parent or Purchaser are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Purchaser and constitutes a valid and binding obligation
of each such company, enforceable in accordance with its terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors rights generally or by equitable
principles. None of Parent or Purchaser is subject to or obligated under any
provision of (a) its respective Certificate of Incorporation or By-Laws, (b) any
contract, (c) any license, franchise or permit or (d) any law, regulation,
order, judgment or decree, which would be breached or violated or in respect of
which a right of termination or acceleration or any encumbrance on any of its or
any of its subsidiaries assets could be created by its execution, delivery and
performance of this Agreement and the consummation by it of the transactions
contemplated hereby, other than consent requirements that have already been
satisfied and, in the cases of clauses (b), (c) and (d), any such breaches or
violations which will not, individually or in the aggregate, have a Material
Adverse Effect. Other than in connection with or in compliance with the
provisions of the Delaware Law, the Exchange Act, the securities or blue-sky
laws of the various states of the United States and the provinces of Canada and
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, (the
"H-S-R ACT"), no authorization, consent or approval of or filing with, any
public body, court or authority is necessary on the part of Parent or Purchaser
for the consummation by Parent and Purchaser of the transactions contemplated by
this Agreement, except for such authorizations, consents, approvals and filings
as to which the failure to obtain or make would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
Purchaser or on the ability of Parent or Purchaser to perform their respective
obligations hereunder.
3.3. FINANCING ARRANGEMENTS. Purchaser shall have funds available to it on
the Expiration Date sufficient to purchase the Shares and enable the Surviving
Corporation to pay all amounts payable in consideration of the cancellation of
the Company Stock Options in accordance with the terms of this Agreement and the
refinancing of all indebtedness of the Company and its subsidiaries required to
be refinanced in connection with the transactions contemplated by this
Agreement.
10
3.4. OWNERSHIP OF SHARES. As of the date hereof, none of Parent, Purchaser
or any of their subsidiaries owns (beneficially or otherwise) any Shares (except
for Shares that may be held in any of their pension or employee benefit plans).
3.5. SUBSIDIARIES. Each material subsidiary of Parent has been duly
incorporated or organized and is validly existing as a corporation or other
legal entity and is in good standing in its respective jurisdiction of
organization and has full corporate or organizational power and authority to own
its properties and conduct its businesses as presently owned and conducted,
except where such failure to be so incorporated or organized, existing and in
good standing or to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Each material subsidiary of Parent is duly qualified as a foreign corporation or
other legal entity and in good standing in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary except where the failure to be so qualified,
would not reasonably be expected to have a Material Adverse Effect.
3.6. CAPITALIZATION.
(a) As of July 8, 1999, the authorized equity capitalization of Parent
consists of an unlimited number of Multiple Voting Shares, no par value, of
which 62,984,552 are outstanding, an unlimited number of Subordinate Voting
Shares, no par value, of which 59,603,587 are outstanding and an unlimited
number of preferred shares, of which 12,000,000 are outstanding. All of the
outstanding shares of Parent's capital stock are validly issued, fully paid and
nonassessable. The aggregate number of outstanding awards of shares of Parent
Stock that have been issued pursuant to Parent's stock option plans as of July
8, 1999 is 2,568,613.
(b) Except as described in paragraph (a) above, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating Parent or any of its subsidiaries to issue or sell any
shares of capital stock of Parent or of any of its subsidiaries or securities or
obligations of any kind convertible into or exchangeable for any shares of
capital stock of Parent or any of its subsidiaries. The holders of the
outstanding Subordinate Voting Shares are not entitled to any preemptive or
other similar rights.
3.7. COMMISSION FILINGS. Parent has made available to the Company copies
of Parent's (i) Annual Reports on Form 40-F for the fiscal years ended December
31, 1997 and 1998, (ii) Parent's Current Reports on Form 6-K for 1999, (iii)
proxy statements relating to Parent's meetings of stockholders (whether annual
or special) during the years 1997 through 1999, inclusive, and (iv) filings
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), since
January 1, 1997, in each case as filed with the Commission. Since January 1,
1997, Parent has filed all reports, registration statements and other documents
required to be filed under the Exchange Act and the rules and regulations
thereunder, and all such reports, registration statements and other documents
complied (except to the extent revised or superseded by a subsequent public
filing with the Commission prior to the date hereof), in all material respects,
with the requirements of the Exchange Act, such compliance to be determined, to
the extent applicable, in accordance with the standards applied to Parent
Reports in the following two sentences. As of their respective dates, Parent's
Annual Report for 1998, Parent's Current Reports on Form 6-K with respect to
events which occurred in 1999 and Parent's 1999 Proxy Statement (together, the
"PARENT REPORTS") (except to the extent revised or superseded by a subsequent
public filing with the Commission prior to the date hereof) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of Parent (including any related notes and schedules) included in the
reports referred to in clauses (i) and (ii) of the first sentence of this
paragraph have been prepared in accordance with Canadian generally accepted
accounting principles ("CANADIAN GAAP") applied on a consistent basis during the
periods
11
involved (except as may be indicated in the notes thereto) and (except to the
extent revised or superseded by financial statements included in a subsequent
public filing with the Commission prior to the date hereof) fairly present the
consolidated financial position of Parent and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended, subject, in the case of the unaudited
consolidated interim financial statements, to normal year-end adjustments and
any other adjustments described therein, and the fact that the interim financial
statements were prepared in accordance with the rules and regulations of the
Commission and, therefore, certain information required by Canadian GAAP may
have been omitted. Except as set forth in Parent Reports, since March 31, 1999,
(i) there has not been a Material Adverse Effect, and (ii) except as permitted
by this Agreement, there has been (1) no declaration, setting aside or payment
of any dividend or other distribution by Parent in respect of Parent Stock, and
(2) no material change in the accounting principles as reflected in the first
footnote of the audited financial statements of Parent for the fiscal year
ending December 31, 1998.
3.8. LITIGATION. Except as disclosed in the Parent Reports, there are no
claims, actions, proceedings, or investigations pending or, to the knowledge of
Parent, threatened in writing against Parent or any of its subsidiaries or any
of their officers or directors (in their capacity as such) before any court or
governmental or regulatory authority or body which would reasonably be expected
to result in a Material Adverse Effect and neither Parent nor any of its
subsidiaries or any of their officers or directors (in their capacity as such)
are subject to any writs, injunctions or decrees which would reasonably be
expected to result in a Material Adverse Effect.
3.9. EMPLOYEES AND LABOR. Except as disclosed in Parent Reports, there is
no pending or, to the knowledge of Parent or any subsidiary, threatened, dispute
between Parent or any subsidiary and their present or past employees other than
such disputes as do not or would not reasonably be expected to result in a
Material Adverse Effect.
3.10. TAXES AND TAX RETURNS. Except for such failures to file or pay as
would not reasonably be expected to result in a Material Adverse Effect or as
disclosed in Parent Reports, Parent and each of its subsidiaries have timely
filed all tax returns, declarations and information statements that they are
required to file and have timely paid all taxes shown thereon except to the
extent that such taxes are being contested in good faith. Parent's consolidated
liability for taxes is adequately provided for by reserves except for any
failure to provide reserves that would not reasonably be expected to result in a
Material Adverse Effect. As used in this Agreement, the term "TAXES" includes
all taxes of any nature whatsoever and however denominated, including, without
limitation, income, capital, franchise, sales, gross receipts, occupation, use,
severance, real and personal property, employment, excise, goods and services,
stamp, impost, governmental fees, environmental, transfer, duties and all other
charges, as well as penalties and interest thereon, imposed by any government or
instrumentality, whether federal, state, provincial, local, foreign or other.
3.11. EMPLOYEE BENEFIT PLANS.
(a) No liability under Title IV of ERISA or under sections 82-86 of the
Ontario Pension Benefits Act (the "PBA") and related regulation under that Act
has been incurred by Parent or any Parent ERISA Affiliate that has not been
satisfied in full, other than liability that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect and no
condition exists that presents a material risk to Parent or any Parent ERISA
Affiliate of incurring a liability under such Title or such provisions of the
PBA, other than liability for premium payments to the Pension Benefit Guaranty
Corporation or Pension Benefits Guarantee Fund assessments and contributions in
the ordinary course of business, which premiums, assessments or contributions
have been or will be paid when due, and other than liability that, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
12
(b) Neither Parent nor any Parent ERISA Affiliate, nor any of the Parent
Plans, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in any prohibited transactions (within the meaning of
Section 406 of ERISA and Section 4975 of the Code) or engaged in any
transactions prohibited by any applicable Canadian federal or provincial pension
benefits standards legislation or by the Income Tax Act (Canada) (the "ITA")
with respect to any Parent Plan registered under such legislation in connection
with which Parent or any Parent ERISA Affiliate could, either directly or
indirectly, incur any liability (or liabilities) that either individually or the
aggregate would reasonably be expected to have a Material Adverse Effect. The
term "PARENT PLAN" means each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, medical, life or
other insurance, profit-sharing, or pension plan, program, agreement or
arrangement, and each other employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by Parent or by any trade or business, whether or not
incorporated, that together with Parent would be deemed a "single employer" with
Parent under Section 414 of the Code (a "PARENT ERISA AFFILIATE") for the
benefit of any employee or director or former employee or former director of
Parent or any Parent ERISA Affiliate.
(c) There has been no change in either the financial position or funded
status of the Parent Plans that are subject to Title IV of ERISA or applicable
Canadian federal or provincial pension benefits standards legislation since the
date of the information relating to the financial position and funded status of
such plans contained in the most recent Parent Form 40-F filed with the SEC or
actuarial reports filed with applicable regulatory authorities under Canadian
federal or provincial pension benefits standards legislation, other than such
changes that individually or in the aggregate would not reasonably be expected
to have a Material Adverse Effect.
(d) To the knowledge of the Parent, each of the Parent Plans that is
intended to satisfy the requirements of Section 125, 401(a) or 501(c)(9) of the
Code satisfies such requirements except where the failure to do so would not
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Parent Plans has been operated and
administered in compliance with its terms and applicable laws, including but not
limited to ERISA, the Code, the ITA and applicable Canadian federal or
provincial pension benefits standards legislation, except where the failure to
do so would not individually or in the aggregate reasonably be expected to have
a Material Adverse Effect.
(e) With respect to any Parent Plan that is a "multiemployer pension plan,"
as such term is defined in Section 3(37) of ERISA, the aggregate withdrawal
liability that Parent and the Parent ERISA Affiliates would incur if Parent and
the Parent ERISA Affiliates incurred a complete withdrawal under each such plan
on the date hereof would not reasonably be expected to have a Material Adverse
Effect.
(f) There are no actions, suits or claims pending, or, to the knowledge of
Parent, threatened or anticipated (other than routine claims for benefits)
against any Parent Plan, the assets of any Parent Plan or against Parent or any
Parent ERISA Affiliate with respect to any Parent Plan that would individually
or in the aggregate reasonably be expected to have a Material Adverse Effect.
(g) The consummation of the transactions contemplated by this Agreement will
not, by the terms of any Parent Plan, result in, and is not, under the terms of
any Parent Plan, a precondition to, (i) any current or former employee or
director of Parent or any Parent ERISA Affiliate becoming entitled to severance
pay, unemployment compensation or any similar payment, or (ii) any acceleration
in the time of payment or vesting, or increase the amount, of any compensation
due to any such current or former employee or director, or (iii) the renewal or
extension of the term of any agreement regarding compensation for any such
current or former employee or director.
(h) Any payment of surplus out of any Parent Plan and any contribution
holidays taken by the Parent or any of its subsidiaries under any Parent Plan
were authorized under the terms of the Parent
13
Plan and under applicable law, except any such payments or contribution holidays
which in the aggregate would not reasonably be expected to have a Material
Adverse Effect.
3.12. COMPLIANCE WITH LAWS. Except as disclosed in Parent Reports, Parent
and its subsidiaries are in compliance in all material respects with all laws,
regulations, rules, orders, policies, guidelines and other requirements of all
governmental authorities applicable to their businesses in effect as of the date
hereof except where the failure to do so would not individually or in the
aggregate be reasonably be expected to have a Material Adverse Effect. Parent
and its subsidiaries each hold or have filed in a timely manner applications or
renewals for all permits, licenses, certificates, grants or other authorizations
of foreign, federal, state and local governmental agencies (being collectively
referred to herein as "AUTHORIZATIONS") required for the conduct of its business
as now conducted, and are in compliance with all provisions and conditions
thereof, except for those Authorizations or any such noncompliance which
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Such Authorizations constitute all Authorizations
required to permit Parent and its subsidiaries to conduct their business in all
material respects in the manner so conducted from and after the Effective Time
except for such Authorizations the lack of which would not reasonably be
expected to result in a Material Adverse Effect. To the knowledge of Parent,
there is no reasonable ground to believe that any of the foregoing
Authorizations will not, in the ordinary course be renewable upon their
expiration except for those Authorizations for which the failure to renew would
not reasonably be expected to result in a Material Adverse Effect. Anything in
this Section 3.12 notwithstanding, it is understood and agreed that the
foregoing shall not be deemed inaccurate by reason of the ordinary expiration of
Authorizations, the renewal of which is expected to be obtained in the ordinary
course or for which the failure to renew would not reasonably be expected to
result in a Material Adverse Effect.
3.13. ENVIRONMENTAL MATTERS.
(a) Parent and its subsidiaries are in compliance with all applicable
Environmental Laws, except as otherwise disclosed in Parent Reports and except
for noncompliance, which individually or in the aggregate, would not reasonably
be expected to result in a Material Adverse Effect.
(b) Except as disclosed in Parent Reports, to the knowledge of Parent: (i)
there have been no Releases of Hazardous Material in, on, under or affecting the
properties or any surrounding site that Parent or its subsidiaries have operated
or owned and (ii) neither Parent nor any of its subsidiaries has disposed of any
Hazardous Material or any substance in a manner that has led, or would
reasonably be anticipated to lead, to a Release except in each case under clause
(i) or (ii) for those which individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect, and except in
each case for Releases made in compliance in all material respects with
Environmental Laws. Except as disclosed in Parent Reports, neither Parent nor
any of its subsidiaries or, to Parent's knowledge, any predecessors thereof, has
received any notice that it is a "POTENTIALLY RESPONSIBLE PARTY" under any
Environmental Law, except for any notice the basis of which has been determined
and Parent's liability, if any, has been paid or provided for in the financial
statements included as part of Parent Reports and except for any notice
concerning a liability whose amount, individually or in the aggregate, is not
reasonably expected to have a Material Adverse Effect.
(c) For purposes of this Agreement:
(1) "ENVIRONMENTAL LAW" means any applicable law in effect as of the
date hereof regulating or prohibiting Releases of Hazardous Material into
any part of the environment, or pertaining to the protection of natural
resources, the environment and public and employee health and safety
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") (42 U.S.C. (S) 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the
Clean Water Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C.
(S) 7401
14
et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 7401 et seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et
seq., the Oil Pollution Act (33 U.S.C. (S) 2701 et seq.), the Safe Drinking
Water Act (42 U.S.C. (S) 300 (et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. (S) 136 et seq.), the Canadian Environmental
Protection Act (R.S.C. ▇▇▇▇, ▇. ▇▇), ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ (▇▇▇▇▇▇) (S.C. 1992, c. 34), the Dangerous Goods Transportation Act
(Ontario) (R.S.O. 1990, c. D.1), the Environmental Protection Act (Ontario)
(R.S.O. 1990, c. E.19), the Occupational Health and Safety Act (Ontario)
(R.S.O. 1990, c. O.1), the Ontario Water Resources Act (R.S.O. 1990, c.
O.40), the Environment Quality Act (Quebec) (R.S.Q., c. Q-2) and the
Transportation of Dangerous Substances Regulation (Quebec) (R.R.Q. 1981, c.
C-24.2, Reg 4.2) and the regulations promulgated pursuant thereto, and any
such applicable federal, provincial, state or local statutes, and the
regulations promulgated pursuant thereto, as such laws have been amended or
supplemented through the Effective Time;
(2) "HAZARDOUS MATERIAL" means any substance, pollutant, material or
waste which is regulated by Environmental Law, including, without
limitation, coal tar, asbestos, polychlorinated biphenyls, petroleum, and
any material or substance which is defined as a "HAZARDOUS WASTE,"
"HAZARDOUS MATERIAL," "HAZARDOUS SUBSTANCE," "HAZARDOUS AIR POLLUTANT,"
"EXTREMELY HAZARDOUS SUBSTANCE" or "RESTRICTED HAZARDOUS WASTE,"
"CONTAMINANT," "POLLUTANT," "TOXIC WASTE" or "TOXIC SUBSTANCE" under any
provision of Environmental Law; and
(3) "RELEASE" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration in or into the indoor or outdoor environment (whether on site or
off site), or in, into or out of any property owned, operated or leased by
the applicable party or its subsidiaries or predecessors thereof.
3.14. INTELLECTUAL PROPERTY. Except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in Parent Reports filed and publicly available prior to the date of
this Agreement: (a) Parent and each of its subsidiaries owns, is licensed or
otherwise has the right to use, all Intellectual Property (as defined below)
used in or necessary for the conduct of its business as currently conducted; (b)
the use of any Intellectual Property by Parent and its subsidiaries does not
infringe on or otherwise violate the rights of any person and is in accordance
with any applicable license pursuant to which Parent or any subsidiary acquired
the right to use any Intellectual Property; (c) to the knowledge of Parent, no
person is challenging, infringing on or otherwise violating any right of Parent
or any of its subsidiaries with respect to any Intellectual Property owned by
and/or licensed to Parent or its subsidiaries; and (d) neither Parent nor any of
its subsidiaries has received any written notice of any pending claim with
respect to any Intellectual Property used by Parent and its subsidiaries and to
its knowledge no Intellectual Property owned and/or licensed by Parent or its
subsidiaries is being used or enforced in a manner that would result in the
abandonment, cancellation or unenforceability of such Intellectual Property. For
purposes of this Agreement, "Intellectual Property" shall mean trademarks,
service marks, brand names, certification marks, trade dress and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not, in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; nonpublic information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; proprietary writings and other works, whether
copyrightable or not, in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any claims
or causes of action arising out of or relating to any infringement or
misappropriation of any of the foregoing.
15
3.15. YEAR 2000. To the knowledge of Parent, the software, operations,
systems and processes (including, to the knowledge of Parent, software,
operations, systems and processes obtained from third parties) which, in whole
or in part, are used, operated, relied upon, or integral to, Parent's or any of
its subsidiaries, conduct of their business, are Year 2000 Compliant (as
hereinafter defined), to the extent that and except as disclosed in Parent
Reports filed and publicly available prior to the date of this Agreement or
where the failure to be Year 2000 Compliant would not, individually or in the
aggregate, have a Material Adverse Effect. For purposes of this Agreement, "YEAR
2000 COMPLIANT" means the ability to process (including calculate, compare,
sequence, display or store), transmit or receive data or data/time data from,
into and between the twentieth and twenty-first centuries, and the years 1999
and 2000, and leap year calculations without error or malfunction.
3.16. NO STOCKHOLDER VOTE REQUIRED. Except as may be required by the rules
of the New York Stock Exchange, Inc. (the "NYSE"), the Montreal Exchange ("ME")
or the Toronto Stock Exchange ("TSE"), no vote of the stockholders of Parent is
required to approve this Agreement and the transactions contemplated hereby. To
the extent that any such vote is required, the vote of Quebecor Inc. will be
sufficient to approve the transaction at a properly called meeting of the
stockholders of Parent.
3.17. PARENT CONSENTS. Parent has received all consents required under the
Shareholders Agreement between Quebecor Inc. and Caisse de Depot et placement du
Quebec and Parent's By-laws to Parent's entering into this Agreement and the
consummation of the transactions contemplated hereby.
3.18. SUBSCRIPTION RIGHTS. Parent has received confirmation that none of
the subscription rights attaching to its Multiple Voting Shares would be
exercised by the holders thereof in connection with the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser that:
4.1. ORGANIZATION AND QUALIFICATION. The Company has been duly
incorporated and is validly existing as a corporation and in good standing under
the laws of the State of Delaware and has full corporate power and authority to
own its properties and conduct its business as presently owned and conducted
except where such failure to be so incorporated, existing and in good standing
or to have such power and authority, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (as defined below). The
Company is duly qualified as a foreign corporation and in good standing in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary except where the
failure to be so qualified, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The copies of the
Amended and Restated Certificate of Incorporation and By-Laws of the Company
previously delivered to Purchaser are true, correct and complete as of the date
hereof. When used in connection with the Company or any of its subsidiaries, the
term "Material Adverse Effect" means any change or effect that is or would be
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, other than any such
effect attributable to or resulting from (i) the public announcement or
consummation of the transactions contemplated by this Agreement including,
without limitation, the loss of customers or employees resulting therefrom, (ii)
any change in general economic conditions, financial market conditions or in
conditions affecting the Company's industry generally, (iii) any act or omission
of the Company or any of its subsidiaries taken with the prior consent of
Purchaser pursuant to Section 5.1 or (iv) actions taken by the Company at the
specific request of Purchaser or Parent.
16
4.2. SUBSIDIARIES. The Company has listed all subsidiaries required to be
so listed on Exhibit 21 ("EXHIBIT 21") to the Company's Annual Report on Form
10-K for the year ended December 31, 1998. The Company has listed all of its
material subsidiaries (the "MATERIAL SUBSIDIARIES"), including the subsidiaries
required to be listed on Exhibit 21, on Section 4.2 of the Company Disclosure
Schedule, and each such subsidiary has been duly incorporated or organized and
is validly existing as a corporation or other legal entity and is in good
standing in its respective jurisdiction of organization and has full corporate
or organizational power and authority to own its properties and conduct its
businesses as presently owned and conducted, except where such failure to be so
incorporated or organized, existing and in good standing or to have such power
and authority, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Each Material Subsidiary is duly
qualified as a foreign corporation or other legal entity and in good standing in
each jurisdiction in which the character of its properties owned or leased or
the nature of its activities makes such qualification necessary except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect. The copies of the Certificate of Incorporation and By-Laws or
comparable organizational documents of each Material Subsidiary that is not
wholly owned by the Company has been previously delivered to Purchaser and are
true, correct and complete as of the date hereof.
4.3. CAPITALIZATION.
(a) As of July 8, 1999, the authorized equity capitalization of the Company
consists of 100,000,000 Shares, par value $.01 per share, of which 37,981,422
are outstanding (including 330,285 shares of Company Restricted Stock), and
50,000,000 shares of preferred stock, par value $.01 per share, of which none
are outstanding. All of the outstanding shares of the Company's capital stock
are validly issued, fully paid (except for the unvested portion of Company
Restricted Stock) and nonassessable. The aggregate number of Shares covered by
outstanding Company Stock Options that have been issued pursuant to the
Company's Stock Option Plans as of July 8, 1999 is 4,798,818. As of July 8,
1999, the Company has granted stock awards totaling 337,500 under the Company's
Restricted Stock Plan. The Company has reserved 3,660,477 Shares for issuance
upon conversion of the 6% Convertible Senior Subordinated Notes.
(b) Except as described in paragraph (a) above, there are no options,
warrants, conversion privileges or other rights, agreements, arrangements or
commitments obligating the Company or any of its subsidiaries to issue or sell
any shares of capital stock of the Company or of any of its subsidiaries or
securities or obligations of any kind convertible into or exchangeable for any
shares of capital stock of the Company or any of its subsidiaries. The holders
of the outstanding Shares are not entitled to any preemptive or other similar
rights. Upon consummation of the Merger in accordance with the terms of this
Agreement, Purchaser will own the entire equity interest in the Company, and
there will be no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating the Company or any of its
subsidiaries to issue or sell any shares of capital stock of the Company or any
of its subsidiaries other than such rights, options, warrants, conversion
privileges or other agreements, arrangements or commitments, that are the result
of actions taken or caused to be taken by or on behalf of Purchaser.
4.4. AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the requisite
corporate power and authority to enter into this Agreement and the Stock Option
Agreement and, subject to adoption of this Agreement by its stockholders as set
forth in Section 6.1, to perform its obligations hereunder and thereunder.
Assuming the accuracy of Purchaser's representation as to the ownership of
Shares and that no pension or employee benefit plan of any of Parent, Purchaser
or any of their subsidiaries owns (beneficially or otherwise) any Shares, the
execution and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement and the Stock Option Agreement have been duly authorized by the
Board of Directors of the Company prior to Parent or Purchaser becoming an
"INTERESTED STOCKHOLDER"
17
as defined in Section 203 of the Delaware Law; and, except for adoption of this
Agreement by its stockholders as set forth in Section 6.1, no other corporate
proceedings on the part of the Company are necessary to authorize or consummate
this Agreement and the transactions contemplated hereby. The Board of Directors
of the Company has approved Purchaser and or any other direct or indirect wholly
owned subsidiary of Parent which would be able to make the representations and
warranties in Article III applicable to Purchaser to which Parent may assign its
rights hereunder becoming "INTERESTED STOCKHOLDERS" as defined in Section 203 of
the Delaware Law pursuant to the terms of this Agreement. This Agreement and the
Stock Option Agreement have been duly executed and delivered by the Company and
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms except to the extent that enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement of
creditors rights' generally or by equitable principles. Except as set forth in
SECTION 4.4 of the Company Disclosure Schedule, neither the Company nor any of
its subsidiaries is subject to or obligated under any provision of (a) its
certificate or articles of incorporation or by-laws, (b) any contract, (c) any
license, franchise or permit, or (d) any law, regulation, order, judgment or
decree, which would be breached or violated or in respect of which a right of
termination or acceleration or any encumbrance on any of its or any of its
subsidiaries' assets could be created by its execution, delivery and performance
of this Agreement and the consummation by it of the transactions contemplated
hereby, other than, in the case of clauses (b), (c) and (d), any such breaches,
violations, rights or encumbrances which will not, and would not reasonably be
expected to individually or in the aggregate, have a Material Adverse Effect.
Other than in connection with or in compliance with the provisions of the
Delaware Law, the Exchange Act, the securities or blue-sky laws of the various
states of the United States and the H-S-R Act, and except as set forth in
SECTION 4.4 of the Company Disclosure Schedule, no authorization (other than
such Authorizations that are the subject of Section 4.11), consent or approval
of, or filing with, any public body, court or authority is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
other than any authorization, consent or approval the failure to obtain, or any
filing the failure to perform, would not reasonably be expected to have a
Material Adverse Effect.
4.5. COMMISSION FILINGS. The Company has made available to Purchaser
copies of the Company's (i) Annual Reports on Form 10-K for the fiscal years
ended December 27, 1997 and 1998, (ii) Quarterly Reports on Form 10-Q for the
quarter ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) proxy statements relating to the Company's
meetings of stockholders (whether annual or special) during the years 1997
through 1999, inclusive, and (iv) filings under the Securities Act, since
January 1, 1997, in each case as filed with the Commission. Except as set forth
in SECTION 4.5 of the Company Disclosure Schedule, since January 1, 1997, the
Company has filed all reports, registration statements and other documents
required to be filed under the Exchange Act and the rules and regulations
thereunder, and all such reports, registration statements and other documents
complied (except to the extent revised or superseded by a subsequent filing with
the Commission prior to the date hereof), in all material respects, with the
requirements of the Exchange Act, such compliance to be determined, to the
extent applicable, in accordance with the standards applied to the Company
Reports in the following two sentences. As of their respective dates, the
Company's Annual Report on Form 10-K for 1998, the Company's Quarterly Reports
on Form 10-Q in 1999, the Company's Current Reports on Form 8-K with respect to
events which occurred in 1999 and the Company's 1999 Proxy Statement (together,
the "COMPANY REPORTS") (except to the extent revised or superseded by a
subsequent filing with the Commission prior to the date hereof) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company (including any related notes and schedules)
included in the reports referred to in clauses (i) and (ii) of the first
sentence of this paragraph have been prepared in accordance with United States
generally accepted
18
accounting principles ("U.S. GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and (except
to the extent revised or superseded by financial statements included in a
subsequent filing with the Commission prior to the date hereof) fairly present
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended, subject, in the case of
the unaudited consolidated interim financial statements, to normal year-end
adjustments and any other adjustments described therein, and the fact that the
interim financial statements were prepared in accordance with the rules and
regulations of the Commission and, therefore, certain information required by
U.S. GAAP may have been omitted. Except as set forth in SECTION 4.5 of the
Company Disclosure Schedule, or in the Company Reports, since March 31, 1999,
(i) there has not been a Material Adverse Effect, and (ii) except as permitted
by this Agreement, there has been (1) no declaration, setting aside or payment
of any dividend or other distribution by the Company in respect of the Company's
Common Stock, and (2) no material change in the accounting principles as
reflected in the first footnote of the audited financial statements of the
Company for the fiscal year ending December 27, 1998.
4.6. LITIGATION. Except as disclosed in the Company Reports or in Section
4.6 of the Company Disclosure Schedule, there are no claims, actions,
proceedings, or investigations pending or, to the knowledge of the Company,
threatened in writing against the Company or any of its subsidiaries or any of
their officers or directors (in their capacity as such) before any court or
governmental or regulatory authority or body which would reasonably be expected
to result in a Material Adverse Effect and neither the Company nor any of its
subsidiaries or any of their officers or directors (in their capacity as such)
are subject to any writs, injunctions or decrees which would reasonably be
expected to result in a Material Adverse Effect.
4.7. EMPLOYEES AND LABOR.
(a) Except as disclosed in the Company Reports or in Section 4.7 of the
Company Disclosure Schedule, there is no pending or, to the knowledge of the
Company or any subsidiary, threatened, dispute between the Company or any
subsidiary and their present or past employees other than such disputes as do
not or would not reasonably be expected to result in a Material Adverse Effect.
(b) Except as disclosed in the Company Reports or set forth in Section 4.7
of the Company Disclosure Schedule, there are no written employment, consulting
or severance agreements between the Company or any of its subsidiaries on the
one hand, and any director or officer or, to the knowledge of any Group A
Executive (as defined in the Company Disclosure Schedule) after due inquiry,
other employee of the Company, on the other hand, which obligate the Company to
pay to any director, officer or employee more than $200,000 per annum or
$1,000,000 in the aggregate per agreement and which require more than six months
notice for termination.
4.8. TAXES AND TAX RETURNS. Except for such failures to file or pay as
would not reasonably be expected to result in a Material Adverse Effect or as
disclosed in the Company Reports, the Company and each of its subsidiaries have
timely filed all tax returns, declarations and information statements that they
are required to file and have timely paid all taxes shown thereon except to the
extent that such taxes are being contested in good faith. The Company's
consolidated liability for taxes is adequately provided for by reserves except
for any failure to provide reserves that would not reasonably be expected to
result in a Material Adverse Effect. As used in this Agreement, the term "TAXES"
includes all taxes of any nature whatsoever and however denominated, including,
without limitation, income, capital, franchise, sales, gross receipts,
occupation, use, severance, real and personal property, employment, excise,
goods and services, stamp, impost, governmental fees, environmental, transfer,
duties and all other charges, as well as penalties and interest thereon, imposed
by any government or instrumentality, whether federal, state, provincial, local,
foreign or other.
19
4.9. EMPLOYEE BENEFIT PLANS.
(a) With respect to each of the material Company Plans (as hereinafter
defined), the Company has made available within 10 business days of the date
hereof to Parent true and complete copies of each of the following documents:
(i) the Company Plan and related documents (including all amendments thereto);
(ii) the most recent annual report, financial statement, and actuarial report,
if any; (iii) the most recent summary plan description, together with each
summary of material modifications, if any, required under ERISA with respect to
such Company Plan; and (iv) the most recent determination letter, if any,
received from the IRS with respect to each Company Plan that is intended to be
tax-qualified under the Code. The term "Company Plan" means each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance
pay, medical, life or other insurance, profit-sharing, or pension plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or by any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single employer"
with the Company under Section 414 of the Code (a "COMPANY ERISA AFFILIATE") for
the benefit of any employee or director or former employee or former director of
the Company or any Company ERISA Affiliate.
(b) No liability under Title IV of ERISA has been incurred by the Company or
any Company ERISA Affiliate that has not been satisfied in full, other than a
liability that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, and no condition exists that
presents a material risk to the Company or any Company ERISA Affiliate of
incurring a liability under such Title, other than liability for premium
payments to the Pension Benefit Guaranty Corporation and contributions in the
ordinary course of business, which premiums have been or will be paid when due,
and other than a liability that, individually or in the aggregate, would not
reasonably be expected have a Material Adverse Effect.
(c) Neither the Company nor any Company ERISA Affiliate, nor any of the
Company Plans, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in any prohibited transactions (within the
meaning of Section 406 of ERISA and Section 4975 of the Code) in connection with
which the Company or any Company ERISA Affiliate could, either directly or
indirectly, incur any liability (or liabilities) that either individually or in
the aggregate would reasonably be expected to have a Material Adverse Effect.
(d) There has been no change in either the financial position or funded
status of the Company Plans that are subject to Title IV of ERISA since the date
of the information relating to the financial position and funded status of such
plans contained in the most recent Company Form 10-K filed with the SEC, other
than such changes that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(e) To the knowledge of the Company, each of the Company Plans that is
intended to satisfy the requirements of Section 125, 401(a) or 501(c)(9) of the
Code satisfies such requirements except where the failure to do so would not
either individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Company Plans has been operated and
administered in compliance with its terms and applicable laws, including but not
limited to ERISA and the Code, except where the failure to do so would not
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(f) With respect to any Company Plan that is a "multiemployer pension plan,"
as such term is defined in Section 3(37) of ERISA, the aggregate withdrawal
liability that the Company ERISA Affiliates would incur if the Company and the
Company ERISA Affiliates incurred a complete withdrawal under each such plan on
the date hereof would not reasonably be expected to have a Material Adverse
Effect.
20
(g) There are no actions, suits or claims pending, or, to the knowledge of
the Company, threatened or anticipated (other than routine claims for benefits)
against any Company Plan, the assets of any Company Plan or against the Company
or any Company ERISA Affiliate with respect to any Company Plan that would
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.
(h) Except as set forth in Section 4.9 of the Company Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not, by
the terms of any Company Plan, result in, and is not, by the terms of any
Company Plan, a precondition to (i) any current or former employee or director
of the Company or any Company ERISA Affiliate becoming entitled to severance
pay, unemployment compensation or any similar payment, or (ii) any acceleration
in the time of payment or vesting, or increase the amount, of any compensation
due to any such current or former employee or director, or (iii) the renewal or
extension of the term of any agreement regarding compensation for any such
current or former employee or director.
4.10. STOCKHOLDER VOTE REQUIRED. Under the Delaware Law and the Company's
Amended and Restated Certificate of Incorporation and By-Laws, the Company's
stockholders are required to adopt this Agreement in accordance with the terms
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares at a meeting called for such purpose.
4.11. COMPLIANCE WITH LAWS. The Company and its subsidiaries are in
compliance in all material respects with all laws, regulations, rules, orders,
policies, guidelines and other requirements of all governmental authorities
applicable to their businesses in effect as of the date hereof except where the
failure to do so would not individually or in the aggregate be reasonably
expected to have a Material Adverse Effect. The Company and its subsidiaries
each hold or have filed in a timely manner applications or renewals for all
Authorizations) required for the conduct of its business as now conducted, and
are in compliance with all provisions and conditions thereof, except for those
Authorizations or any such noncompliance which individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect). Such
Authorizations constitute all Authorizations required to permit the Company and
its subsidiaries to operate the businesses of the Principal Properties or
conduct their business in all material respects in the manner so conducted from
and after the Effective Time except for such Authorizations the lack of which
would not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Company, there is no reasonable ground to believe that any of
the foregoing Authorizations will not, in the ordinary course, be renewable upon
their expiration except for those Authorizations, for which the failure to renew
would not reasonably be expected to result in a Material Adverse Effect.
Anything in this Section 4.11 notwithstanding, it is understood and agreed that
the foregoing shall not be deemed inaccurate by reason of the ordinary
expiration of Authorizations, the renewal of which is expected to be obtained in
the ordinary course or for which the failure to renew would not reasonably be
expected to result in a Material Adverse Effect.
4.12. PROPERTIES.
(a) For purposes of this Agreement "PRINCIPAL PROPERTIES" means all of the
properties listed in SECTION 4.12 of the Company Disclosure Schedule and each
reference to real property includes the improvements thereon.
(b) SECTION 4.12 of the Company Disclosure Schedule sets forth the general
location and size of each of the Principal Properties. Except as set forth in
SECTION 4.12 of the Company Disclosure Schedule, the Company and its
subsidiaries, as applicable, hold rights to or interests in each of the
Principal Properties, either in fee simple or under valid, subsisting and
enforceable leases, as the case may be, together with any easements,
rights-of-way or other surface access rights, necessary for the current
operation of each of the Principal Properties, except for any rights or
interests the absence of which would not be reasonably expected to result in a
Material Adverse Effect. Except as set forth in
21
SECTION 4.12 of the Company Disclosure Schedule, each Principal Property is held
free and clear of all liens and encumbrances which would not reasonably be
expected to have a Material Adverse Effect.
4.13. ENVIRONMENTAL MATTERS.
(a) The Company and its subsidiaries are in compliance with all applicable
Environmental Laws, except as otherwise disclosed in the Company Reports and
except for noncompliance, which individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(b) Except as disclosed in the Company Reports or as set forth in SECTION
4.13 of the Company Disclosure Schedule, to the knowledge of the Company, (i)
there have been no Releases of Hazardous Material in, on, under or affecting the
properties or any surrounding site that the Company or its subsidiaries have
operated or owned and (ii) neither the Company nor any of its subsidiaries has
disposed of any Hazardous Material or any substance in a manner that has led, or
would reasonably be anticipated to lead, to a Release, except in each case under
clause (i) or (ii) for those which individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect, and except in
each case for Releases made in compliance in all material respects with
Environmental Laws. Except as disclosed in the Company Reports or in SECTION
4.13 of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries or, to the Company's knowledge, any predecessors thereof, has
received any notice that it is a "POTENTIALLY RESPONSIBLE PARTY" under any
Environmental Law, except for any notice the basis of which has been determined
and the Company's liability, if any, has been paid or provided for in the
financial statements included as part of the Company Reports and except for a
notice concerning a liability whose amount, individually or in the aggregate, is
not reasonably expected to have a Material Adverse Effect.
4.14. INTELLECTUAL PROPERTY. Except in each case as would not,
individually or in the aggregate, have a Material Adverse Effect and except as
disclosed in the Company Reports filed and publicly available prior to the date
of this Agreement or in Section 4.14 of the Company Disclosure Schedule: (a) the
Company and each of its subsidiaries owns, is licensed or otherwise has the
right to use, all Intellectual Property (as defined below) used in or necessary
for the conduct of its business as currently conducted; (b) the use of any
Intellectual Property by the Company and its subsidiaries does not infringe on
or otherwise violate the rights of any person and is in accordance with any
applicable license pursuant to which the Company or any subsidiary acquired the
right to use any Intellectual Property; (c) to the knowledge of the Company, no
person is challenging, infringing on or otherwise violating any right of the
Company or any of its subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or its subsidiaries; and (d) neither the
Company nor any of its subsidiaries has received any written notice of any
pending claim with respect to any Intellectual Property used by the Company and
its subsidiaries and to its knowledge no Intellectual Property owned and/or
licensed by the Company or its subsidiaries is being used or enforced in a
manner that would result in the abandonment, cancellation or unenforceability of
such Intellectual Property.
4.15. INSURANCE. Except as set forth in Section 4.15 of the Company
Disclosure Schedule, all material insurance policies maintained by the Company
or its subsidiaries are in full force and effect and, to the Company's
knowledge, are not currently terminable, and the consummation of the
transactions contemplated by this Agreement would not be expected to give rise
to a right of termination, on the part of the insurance carriers, other than
those policies the absence or termination of which would not reasonably be
expected to have a Material Adverse Effect. In the judgment of the Company, such
policies, with respect to their amounts and types of coverage, are adequate to
insure against risks to which the Company and its subsidiaries are normally
exposed, or to which they reasonably could be expected to be exposed, in the
operation of their business.
22
4.16. YEAR 2000. To the knowledge of the Company, the software,
operations, systems and processes (including, to the knowledge of the Company,
software, operations, systems and processes obtained from third parties) which,
in whole or in part, are used, operated, relied upon, or integral to, the
Company's or any of its subsidiaries, conduct of their business, are Year 2000
Compliant (as hereinafter defined), to the extent that and except as disclosed
in the Company Reports filed and publicly available prior to the date of this
Agreement or where the failure to be Year 2000 Compliant would not, individually
or in the aggregate, have a Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The Company
covenants and agrees that, prior to the Effective Time, unless Purchaser shall
otherwise agree in writing (which consent shall not be unreasonably withheld) or
as otherwise expressly contemplated or permitted by this Agreement (including
Section 5.1 of the Company Disclosure Schedule and Section 6.11 of the Company
Disclosure Schedule):
(a) The Company shall use reasonable efforts to conduct the businesses and
affairs of the Company and its subsidiaries only in the ordinary course of
business and consistent with past practice;
(b) except as set forth in Section 5.1 of the Company Disclosure Schedule
and except in connection with the adoption by the Company of a shareholder
rights plan that would not be applicable to, or adversely affect the
transactions contemplated hereby among the parties to this Agreement, neither
the Company nor any of its subsidiaries shall: (i) issue (except pursuant to
employee and non-employee director stock options outstanding on the date hereof)
sell, pledge, dispose of or encumber (or permit any of its subsidiaries to
issue, sell, pledge, dispose of or encumber): (A) any additional shares of, or
any options, warrants, conversion privileges or rights of any kind to acquire
any shares of, any capital stock of the Company or any of its subsidiaries, or
(B) any material assets of the Company or any of its subsidiaries except in the
ordinary course of business; (ii) amend or propose to amend the certificate or
articles of incorporation or bylaws or similar governing instruments of the
Company or any of its subsidiaries; (iii) split, combine or reclassify any
outstanding Shares, or declare, set aside or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to the
Shares; (iv) redeem, purchase or acquire, or offer to acquire (or permit any of
its subsidiaries to redeem, purchase or acquire or offer to acquire) any Shares
or other securities of the Company; or (v) enter into or modify any contract,
agreement, commitment or arrangement with respect to any of the matters set
forth in this Section 5.1(b);
(c) neither the Company nor any of its subsidiaries shall (i) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division or material
assets thereof for aggregate consideration for all such acquisitions in excess
of $25,000,000; (ii) incur any indebtedness for borrowed money or issue any debt
securities except the borrowing of working capital in the ordinary course of
business and consistent with past practice; or (iii) enter into or materially
modify any contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(d) except as set forth in Section 5.1 of the Company Disclosure Schedule,
or in the ordinary course of business in accordance with past practice, neither
the Company nor any of its subsidiaries shall enter into or modify any
employment, severance or similar agreements or arrangements with, or grant any
bonuses, salary increases, severance or termination pay to, any officers,
directors or employees;
(e) except as set forth in Section 5.1 of the Company Disclosure Schedule,
or contemplated by this Agreement (including Section 2.6(a)), neither the
Company nor any of its subsidiaries shall adopt or
23
amend any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any officer,
director or employee, other than (i) in the ordinary course of business
consistent with past practice for the benefit or welfare of any employee, (ii)
for the purpose of accelerating the vesting of restricted stock and stock
options, (iii) to the extent required by law or (iv) with respect to new hires
or promotions in the ordinary course of business;
(f) the Company shall use reasonable efforts (i) to cause its current
insurance (or reinsurance) policies not to be cancelled or terminated; and (ii)
to not permit any of the coverage thereunder to lapse, in any such case unless
prior to or promptly after such termination, cancellation or lapse, replacement
policies underwritten by insurance and reinsurance companies of nationally
recognized standing;
(g) the Company shall use reasonable efforts, and cause each of its
subsidiaries to use reasonable efforts, to keep substantially intact their
respective business organizations and good will, keep available the services of
their officers and employees as a group and maintain their present relationships
with suppliers and customers and others having business relationships with them;
and
(h) the Company shall make no awards of restricted stock or grants of
options.
5.2. CERTAIN ACTIONS BY PARENT PENDING THE MERGER. Parent covenants and
agrees that prior to the Effective Time, unless the Company shall otherwise
agree in writing (which consent shall not be unreasonably withheld prior to the
consummation of the Offer), Parent shall not (i) (A) declare, set aside or pay
any dividends on, or make any other distributions in respect of, any of its
capital stock, except that Parent may continue the declaration and payment of
regular quarterly cash dividends (with usual record and payment dates and in
accordance with its past dividend policy), (B) split, combine or reclassify or
otherwise alter the Parent Stock or any other class of Parent's capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (C) purchase, redeem
or otherwise acquire any shares of Parent Stock or any other class of Parent's
capital stock or other securities convertible into or exchangeable for such
shares, and (ii) authorize for issuance, issue, deliver or sell for below market
value any shares of Parent Stock or any other class of Parent's capital stock,
other than non-voting preferred stock, or other securities convertible into or
exchangeable for such shares (except upon (x) the conversion of Multiple Voting
Shares, (y) the grant of options issued in the ordinary course of business
pursuant to the existing stock option plans of Parent, or (z) the exercise of
stock options).
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1. ACTION OF COMPANY STOCKHOLDERS. The Company shall take all action
necessary in accordance with and subject to applicable law and its Amended and
Restated Certificate of Incorporation and By-Laws to convene a meeting of its
stockholders promptly after the consummation of the Offer (or if the Offer has
been terminated pursuant to Section 1.1(e), as promptly as practicable) to
consider and vote upon this Agreement. The Company shall use all reasonable
efforts to obtain the necessary adoption of this Agreement by the stockholders
of the Company, subject to the exercise of fiduciary duties by the Board of
Directors under applicable law. At any such meeting, Purchaser and Parent shall
vote or cause to be voted all of the Shares then owned by them and their
subsidiaries in favor of adoption of this Agreement and the Company shall vote
or cause to be voted all Shares with respect to which proxies in the form
distributed by the Company have been given, and not voted against the adoption
of this Agreement, in favor of adoption of this Agreement. Between the date of
consummation, if any, of the Offer and the date of the Company stockholders
meeting referred to above, Parent and Purchaser shall not sell, transfer,
dispose of or encumber in any manner or otherwise
24
subject to any voting or other agreement with any party any of the Shares
purchased in the Offer or any voting rights with respect thereto. Between the
date hereof and the Effective Time, neither Parent nor any of its subsidiaries
shall acquire, or agree to acquire, whether in the open market or otherwise, any
rights in any securities of the Company other than pursuant to the Offer or the
Merger.
6.2. COMPANY PROXY STATEMENT. The Company shall file with the Commission
under the Exchange Act within 20 business days from the date hereof, and shall
use all reasonable efforts to have cleared by the Commission, in each case at
the earliest practicable date, a proxy statement (the "COMPANY PROXY
STATEMENT"), with respect to the adoption by the Company's stockholders of this
Agreement in form and substance reasonably satisfactory to Purchaser and its
counsel. The Company shall use its reasonable best efforts to include the
Company Proxy Statement in the Form F-4 (as defined in Section 6.3). Parent,
Purchaser and the Company will cooperate with each other in the preparation of
the Company Proxy Statement; without limiting the generality of the foregoing,
each of Parent and Purchaser will furnish to the Company the information
relating to it required by the Exchange Act and the rules and regulations
promulgated thereunder to be set forth in the Company Proxy Statement. The
Company Proxy Statement shall, subject to the exercise of fiduciary duties by
the Board of Directors under applicable law, contain the determination and
recommendation of the Board of Directors of the Company referred to in SECTION
1.2.
6.3. PREPARATION OF THE FORM F-4 AND THE PARENT PROXY STATEMENT; PARENT
STOCKHOLDERS MEETING.
(a) The Parent Stock to be issued in the Merger shall be registered under
the Securities Act on a Form F-4 registration statement (the "Form F-4"). As
soon as practicable following the date of this Agreement, but in no event later
than 20 business days from the date hereof, Parent shall prepare and file with
the Commission the Form F-4. Parent shall use its reasonable best efforts to
respond promptly to any comments of the commission and to have the Form F-4
declared effective under the Securities Act as promptly as practicable after
such filing. Parent shall use its reasonable best efforts to include the Company
Proxy Statement in the Submission of the Form F-4 to the Commission. Parent will
advise the Company, promptly after it receives notice thereof, of the time when
the Form F-4 has become effective or any supplement or amendment has been filed,
the issuance of any stop order, the suspension of the qualification of the
Parent Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of Form F-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
Parent shall obtain, and shall provide evidence reasonably satisfactory to the
Company of, all necessary rulings or orders of Canadian securities regulatory
authorities exempting the distribution by Parent of the shares of Parent Stock
issuable in connection with the Merger and the resale of such shares from the
registration and prospectus delivery requirements and resale restrictions of
applicable Canadian securities laws on terms reasonably satisfactory to the
Company.
(b) Parent shall use its reasonable best efforts to have any approval by the
shareholders of Parent that may be required by the rules and regulations of the
NYSE, ME and TSE waived by such exchanges. If any such waiver is not obtained,
Parent shall, as soon as practicable following the date of this Agreement, take
all action necessary in accordance with Canadian law or the rules of the NYSE,
ME and TSE to convene and hold a meeting of its stockholders (together with any
adjournment or postponement thereof, the "PARENT STOCKHOLDER MEETING") for the
purpose of obtaining the approval (the "PARENT STOCKHOLDER APPROVAL") of a
majority of votes cast by the stockholders of Parent of the issuance of the
Parent Stock in connection with the Merger (the "ISSUANCE"), and shall, through
its Board of Directors, recommend to its stockholders the approval of the
Issuance, and shall use reasonable best efforts to cause a proxy statement to be
mailed to Parent shareholders and to solicit from its stockholders proxies in
favor the issuance.
25
6.4. EXPENSES. All costs and expenses incurred in connection with the
Offer, this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, except as set forth in Section 8.3.
6.5. ADDITIONAL AGREEMENTS. (a) Subject to the conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by the Offer and this Agreement,
including, without limitation, cooperating with each other, using reasonable
efforts to obtain all necessary waivers, consents and approvals and effecting
all necessary registrations and filings, including, without limitation,
submissions of information requested by governmental authorities.
(b) Notwithstanding the foregoing, Parent and Purchaser (i) shall on or
prior to November 9, 1999 (unless extended in the sole discretion of the
Company) secure the expiration or termination of any applicable waiting period
under the H-S-R Act or the statutes, rules, regulations, administrative and
judicial doctrines and any other antitrust or competition laws of the United
States, any State thereof, any foreign country or the European Union (the
"ANTITRUST LAWS"), (ii) shall take all action necessary or required, including
any litigation or appeals, to permit the consummation no later than November 9,
1999 (unless extended in the sole discretion of the Company) of the Offer, the
Merger and the other transactions contemplated by this Agreement under the
Antitrust Laws, and (iii) shall avoid the imposition of any injunction or other
order under the Antitrust Laws (and to the extent an injunction or other order
has been issued, shall secure its immediate dissolution) that would prevent the
consummation of the Offer, the Merger or the transactions contemplated by this
Agreement on or prior to November 9, 1999 (unless extended in the sole
discretion of the Company). The Company shall cooperate with Parent and
Purchaser in connection with the satisfaction of the covenant of Parent and
Purchaser in this Section 6.5; PROVIDED, HOWEVER, that the steps or actions
referred to in this Section 6.5 that may be required to be taken by the Company
shall be subject to the consummation of the Offer (or if the Offer has been
terminated pursuant to Section. 1.1(e), to the closing of the Merger).
6.6. LIMITATION ON NEGOTIATIONS.
(a) From the date hereof until the termination hereof, except as set forth
in Section 6.6(c) below, the Company and its subsidiaries will not, directly or
indirectly, make, solicit, initiate or encourage submission of proposals or
offers from any persons (including any of its officers or employees) relating to
an Acquisition Proposal. As used herein, the term "ACQUISITION PROPOSAL" means
any proposal or offer involving a liquidation, dissolution, recapitalization,
merger, consolidation or acquisition or purchase of all or substantially all of
the assets of, or equity interest in, the Company or other similar transaction
or business combination involving the Company or its material subsidiaries.
(b) The Company shall:
(i) immediately cease and cause to be terminated all discussions or
negotiations with third parties with respect to any Acquisition
Proposal, if any, existing on the date hereof; and
(ii) promptly notify Purchaser after receipt of any bona fide
Acquisition Proposal or any inquiry from any person relating to an
Acquisition Proposal and promptly provide Purchaser with a
reasonable summary of the financial and other material terms of
such Acquisition Proposal.
(c) To the extent that the Board of Directors of the Company shall conclude,
acting in good faith, after receiving advice from outside counsel or its
financial advisor, that the following action is necessary
26
or appropriate in order for the Board of Directors to act in a manner which is
consistent with its fiduciary duties under applicable law, the Company may:
(i) furnish or cause to be furnished information concerning the Company
and its businesses, properties or assets to a third party;
(ii) engage in discussions or negotiations with a third party concerning
an Acquisition Proposal initiated by such third party;
(iii) following receipt of an Acquisition Proposal, take and disclose to
its stockholders a position contemplated by Rule 14e-2(a) under the
Exchange Act or otherwise make disclosure to the Company's
stockholders; and
(iv) following receipt of an Acquisition Proposal, (1) through its Board
of Directors, withdraw, modify or amend its recommendation referred
to in Section 1.2, and/or (2) enter into an agreement providing for
the consummation of such Acquisition Proposal; PROVIDED, that no
action shall be taken by the Company pursuant to this subsection
(iv) with respect to any Acquisition Proposal until a time that is
after the third business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company
has received such an Acquisition Proposal, and specifying the
material terms and conditions of, and identifying the person
making, such Acquisition Proposal.
(d) The Company will direct its financial and other advisors and
representatives to comply with each of the covenants contained in this Section
6.8.
6.7. NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the others of (to the extent it has knowledge thereof) (i) the occurrence or
failure to occur of any event, which occurrence or failure would cause or may
cause any representation or warranty on its part contained in this Agreement to
be untrue or inaccurate in any respect which would have a Material Adverse
Effect; and (ii) any failure of such party, or any officer, director, employee
or agent thereof, to comply with or satisfy in all material respects any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.8. LISTING. Parent shall use its reasonable best efforts to have the
shares of Parent Stock issued pursuant to this Agreement admitted for listing on
the NYSE, the TSE and the ME (together, the "LISTING"). Any fees in connection
with the Listing payable prior to the Effective Time shall be paid by Parent.
Parent will take no action, for at least three years from the Effective Time, to
cause the Listing to be terminated, except with respect to the NYSE listing, in
accordance with the applicable requirements of the NYSE, including compliance
with Rule 500 of the NYSE, as interpreted in Section 806 of the NYSE Listed
Company Manual as in effect on the date hereof.
6.9. ACCESS TO INFORMATION. Subject to and in accordance with the
Antitrust Laws, from the date hereof to the Effective Time, each party hereto
shall, and shall cause its subsidiaries, officers, directors, employees and
agents to, afford the officers, employees and agents of the other parties hereto
reasonable access at all reasonable times to its officers, employees, agents,
premises, books and records, and properties and shall furnish the other parties
hereto all financial, operating, personal, compensation, tax and other data and
information, that the other party, through its officers, employees or agents,
may reasonably request.
6.10. STOCKHOLDER CLAIMS. The Company shall not settle or compromise any
claim brought by any present, former or purported holder of any securities of
the Company in connection with the Offer or the Merger prior to the Effective
Time, without the prior written consent of Purchaser, which consent may not be
unreasonably withheld, and shall notify Purchaser promptly upon receipt of all
written demands for appraisal rights.
6.11. TREATMENT OF EMPLOYEE COMPENSATION AND BENEFITS.
27
(a) Effective no later than the Effective Time, the Company (or Parent, as
applicable) shall enter into agreements and adopt plans or programs, the terms
and conditions of which shall be consistent in all material respects with those
set forth in Section 6.11 of the Company Disclosure (a) Schedule.
(b) For the two-year period immediately following the consummation of the
Offer, Parent shall provide each Group A and Group B executive (as described in
Section 6.11 of the Company Disclosure Schedule) with an annual base salary and
target bonus no less than such executive was eligible to receive immediately
prior to the consummation of the Offer and with employee benefits including
pension, welfare, fringe and other employee benefits that are comparable, on a
benefit by benefit basis, to these benefits as provided by the Company
immediately prior to the consummation of the Offer. Notwithstanding the
foregoing, during the two-year period immediately following the consummation of
the Offer, all employees of Parent who were employees of the Company immediately
prior to the consummation of the Offer shall be entitled to severance benefits
upon termination without Cause (as defined below) that are no less than those
under the severance policies of the Company in effect immediately prior to the
consummation of the Offer.
(c) Bonuses for the fiscal year ended December 31, 1999 ("1999 Fiscal Year")
shall be paid to each participant ("Participant") under the Company's Management
by Objective bonus plan ("MBO Plan") as follows: (i) at the consummation of the
Offer, a pro rata bonus, if any, shall be paid based on achievement of the
Participant's performance targets under the MBO Plan, as determined by ▇▇▇▇ ▇.
▇▇▇▇▇▇, and the portion of the 1999 Fiscal Year completed as of the consummation
of the Offer and (ii) the balance of such 1999 bonus, if any, shall be paid on
January 31, 2000, based on achievement of the Participant's performance targets
under the MBO Plan, as determined by ▇▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and the
portion of the 1999 Fiscal Year after the consummation of the Offer; provided,
however, that if such Participant's employment is terminated after the
consummation of the Offer by Parent or the Company for other than Cause (as
defined in Section 6.11(d)) or by the Participant with Good Reason (as defined
in Section 6.11(d)), the balance of such 1999 bonus, if any, shall be paid
promptly following termination based on the achievement of Participant's
performance targets as determined by ▇▇. ▇▇▇▇▇▇ at the consummation of the Offer
(pursuant to (i) above) and the portion of the 1999 Fiscal Year completed after
the consummation of the Offer.
(d) For purposes of this Section 6.11, (1) "Cause" shall mean the Company
Employee's (i) conviction or guilty plea or plea of nolo contendere of a felony
involving fraud or dishonesty, (ii) theft or embezzlement of property from
Parent or (iii) willful and continued refusal by the Company Employee
substantially to perform the duties of his position (other than any such failure
resulting from the Company Employee's incapacity due to physical or mental
illness or any such actual or anticipated failure after the Company Employee's
issuance of a notice of termination for Good Reason) within a reasonable period
of time after receipt of written notice from Parent specifying the manner in
which Parent believes the Company Employee is not substantially performing the
duties of his position. For this definition, no act or failure to act shall be
deemed willful unless done, or omitted to be done, by the Company Employee not
in good faith and without reasonable belief that the Company Employee's act, or
failure to act was in the best interests of Parent and (2) Good Reason shall
mean (i) the Company Employee is not elected, reelected, or otherwise continued
in the office of Parent or any of its subsidiaries which he held immediately
prior to the consummation of the Offer, or he is removed as a member of the
Board of Directors of Parent or any of its subsidiaries if the Company Employee
was a Director immediately prior to the consummation of the Offer; (ii) the
Company Employee's duties, responsibilities, status or authority are materially
reduced, diminished or adversely altered from those in effect on the
consummation of the Offer or the Company Employee is assigned duties
inconsistent with the Company Employee's status as a senior officer of Parent;
(iii) the Company Employee's future or current compensation or benefits are
reduced; (iv) Parent reduces the potential earnings of the Company Employee
under any performance-based bonus, equity or other incentive plan of Parent in
effect immediately prior to consummation of the Offer; (v) Parent requires
28
that the Company Employee's employment be based at a location more than ten
miles away from the location at which it is based at consummation of the Offer;
(vi) any purchaser, assign, surviving corporation, or successor of Parent or its
business or assets (whether by acquisition, merger, liquidation, consolidation,
reorganization, sale or transfer of assets of business or otherwise) fails or
refuses to expressly assume in writing this Agreement and all of the duties and
obligations of Parent thereunder (vii) Parent fails to pay any amounts due to
the Company Employee; (viii) Parent requires the Company Employee to travel
substantially more than he traveled prior to consummation of the Offer; or (ix)
Parent breaches any of the provisions of this Agreement.
(e) If the Offer is terminated pursuant to Section 1.1(e), references to
"consummation of the Offer" in this Section 6.11 shall be deemed replaced by the
term "Effective Time".
6.12. INDEMNIFICATION RIGHTS.
(a) From and after the Effective Time, to the extent not covered by the
insurance set forth in the next succeeding sentence, Parent shall indemnify,
defend and hold harmless the officers, directors and employees of the Company or
any of its subsidiaries against all losses, expenses, claims, damages or
liabilities arising out of claims brought or made by third parties, including,
without limitation, derivative claims, in connection with the transactions
contemplated by this Agreement to the fullest extent permitted or required under
applicable law and shall advance expenses prior to the final disposition of such
claims and liabilities to which this sentence applies. Parent agrees that all
rights to indemnification now existing in favor of the directors, officers or
employees of the Company or any of its subsidiaries (including, without
limitation, any person who was or becomes a director, officer or employee prior
to the Effective Time (the "INDEMNIFIED PARTIES")) under the Delaware Law or as
provided in the Company's Amended and Restated Certificate of Incorporation or
by By-Laws with respect to matters occurring on or prior to the Effective Time
shall survive the Merger and shall continue in full force and effect for a
period of not less than six years after the Effective Time (or, in the case of
claims or other matters occurring on or prior to the expiration of such six year
period which have not been resolved prior to the expiration of such six year
period, until such matters are finally resolved) and Parent shall honor, and
shall cause the Company to honor, all such rights. Parent shall cause to be
maintained in effect for not less than six years from the Effective Time the
current policies of the directors' and officers' liability insurance maintained
by the Company (provided that Parent may substitute therefor policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the Company's directors, officers or employees) with respect to
matters occurring on or prior to the Effective Time; provided that in no event
shall Parent or the Company be required to expend annually more than 200% of the
amount that the Company spent for these purposes in the last fiscal year to
maintain or procure insurance coverage pursuant hereto; and provided further
that if Parent or the Company are unable to obtain the insurance called for by
this section, Parent or the Company will obtain as much comparable insurance as
is available for such amount per year.
(b) Without limiting the foregoing, in the event any claim, action, suit,
proceeding or investigation to which the provisions of this Section 6.12 are
applicable is brought against any Indemnified Party (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be subject to the approval of the
Surviving Corporation (such approval to not be unreasonably withheld; it being
hereby agreed that the retention of any of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Bartlett, Richards,
▇▇▇▇▇▇ & Finger or Osler, ▇▇▇▇▇▇ & Harcourt by the Indemnified Parties shall not
require the approval of the Surviving Corporation)); (ii) after the Effective
Time, the Surviving Corporation shall pay all reasonable fees and expenses of
such counsel for the Indemnified Parties promptly as statements therefor are
received; and (iii) after the Effective Time, the Surviving Corporation will use
reasonable efforts to assist in the vigorous defense of any such matter,
provided that the Surviving Corporation shall not be liable for any settlement
of any claim effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any Indemnified Party wishing to claim
indemnification under this Section 6.12, upon learning of any such
29
claim, action, suit, proceeding or investigation, shall notify the Surviving
Corporation (but the failure so to notify the Surviving Corporation shall not
relieve it from any liability which it may have under this Section 6.12 except
to the extent such failure materially prejudices the Surviving Corporation). The
Surviving Corporation shall be liable for the fees and expenses hereunder with
respect to only one law firm, in addition to local counsel in each applicable
jurisdiction, to represent the Indemnified Parties as a group with respect to
each such matter unless there is, under applicable standards of professional
conduct, a conflict between the positions of any two or more Indemnified Parties
that would preclude or render inadvisable joint or multiple representation of
such parties.
6.13. PARENT GUARANTEE. Parent unconditionally and irrevocably guarantees
to the Company the due, prompt and faithful performance of, and compliance with,
all agreements and obligations of Purchaser in this Agreement. Parent hereby
agrees that the Company shall have the right to enforce the guarantee set forth
in this Section 6.13 to ensure Purchaser's performance of, and compliance with,
all agreements and obligations of Purchaser in this Agreement without being
required to first proceed against Purchaser.
6.14. AFFILIATES. Prior to the Effective Time of the Merger, the Company
shall deliver to Parent a letter identifying all persons who are, at the time
this Agreement is submitted for adoption by the shareholders of the Company,
"AFFILIATES" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its reasonable efforts to cause each such person to
deliver to Parent as of the Closing Date, a written agreement substantially in
the form attached as EXHIBIT B hereto.
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) Unless the Offer has been terminated pursuant to Section 1.1(e), the
Offer shall have been consummated in accordance with its terms; PROVIDED,
HOWEVER, that this condition shall be deemed to be satisfied if Purchaser fails
to accept for payment and pay for Shares pursuant to the Offer other than as a
result of a failure of a condition thereof;
(b) If the Offer has been terminated pursuant to Section 1.1(e), the waiting
period applicable to the consummation of the Merger under the H-S-R Act shall
have expired or been terminated;
(c) the requisite approval of the respective shareholders of Parent (if
required), and of the Company shall have been obtained;
(d) the Form F-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order
and no stop order or similar restraining order shall be threatened or entered by
the SEC or any state securities administration preventing the Merger, and all
necessary rulings or orders of Canadian securities authorities exempting the
distribution by Parent of the shares of Parent Stock issuable in connection with
the Merger and the resale of such shares from the registration and prospectus
delivery requirements and resale restrictions of applicable Canadian securities
laws shall have been received;
30
(e) the shares of Parent Stock issuable to the Company's stockholders and
holders of Company Stock Options as contemplated by this Agreement shall have
been approved for listing on the NYSE, TSE and ME subject to official notice of
issuance;
(f) there shall have been no law, statute, rule or regulation in the United
States, Canada, the European Union or member state of the European Union enacted
or promulgated which is in effect and, in the judgment of a majority of the
Continuing Directors (or if the Offer has been terminated pursuant to Section
1.1(e), in the reasonable judgement of the Company), has the effect of making
the acquisition of Shares illegal or otherwise prohibits consummation of the
Merger; and
(g) there shall not be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any federal,
provincial or state court or administrative agency or authority in the United
States, Canada, the European Union or any member state of the European Union
enjoining, restraining or otherwise prohibiting the Offer, the Merger or the
acquisition by Purchaser of Shares.
7.2. ADDITIONAL CONDITIONS TO OBLIGATION OF PARENT AND PURCHASER TO EFFECT
THE MERGER. If the Offer is terminated pursuant to Section 1.1(e), then the
obligations of Parent and Purchaser to consummate the Merger shall also be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct immediately prior to the Effective Time,
except for failures to be true and correct that would not be reasonably likely
to have a Material Adverse Effect, PROVIDED, HOWEVER, that representations or
warranties which by their terms are given as of a specified date shall be true
and correct as of such date (except for failures to be true and correct that
would not be reasonably likely to have a Material Adverse Effect).
(b) The Company shall have performed and complied in all material respects
with all agreements and covenants required to be performed or complied with by
it on or before the Effective Time.
7.3. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. If the Offer is terminated pursuant to Section 1.1(e), then the
obligations of the Company to consummate the Merger shall also be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of Parent and Purchaser set forth in
this Agreement shall be true and correct immediately prior to the Effective
Time, except for failures to be true and correct that would not be reasonably
likely to have a Material Adverse Effect, PROVIDED, HOWEVER, that
representations or warranties which by their terms are given as of a specified
date shall be true and correct as of such date (except for failures to be true
and correct that would not be reasonably likely to have a Material Adverse
Effect).
(b) Parent and Purchaser shall have performed and complied in all material
respects with all agreements and covenants required to be performed or complied
with by them on or before the Effective Time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after approval by the stockholders of
the Company:
(a) by written mutual consent of Purchaser and the Company prior to the
consummation of the Offer (or, if the Offer has been terminated pursuant to
Section 1.1(e), prior to the Effective Time);
31
(b) by either Purchaser or the Company:
(i) Unless the Offer has been terminated pursuant to Section 1.1(e), if
the Offer shall not have been consummated by November 10, 1999, or,
if all of the Offer Conditions other than the Minimum Condition
shall have been satisfied by November 10, 1999, such later date as
provides at least 15 business days from the date the Purchaser shall
have publicly announced that all of the Offer Conditions other than
the Minimum Condition have been satisfied; or
(ii) a permanent injunction or other final, non-appealable order by any
federal or state court in the United States or federal or
provincial court in Canada which prohibits the consummation of the
Merger shall have been issued and remain in effect; PROVIDED,
HOWEVER, that prior to invoking this right of termination each
party agrees to comply with Section 6.5 hereof; and, PROVIDED
FURTHER, that the occurrence of an event described in this Section
8.1(b)(ii) related to the Antitrust Laws shall constitute a breach
of the covenant of Parent and Purchaser in Section 6.5(b); or
(iii) if the Offer has been terminated pursuant to Section 1.1(e) and if
the Merger has not been consummated on or prior to November 19,
1999;
(c) by Purchaser prior to the consummation of the Offer (or, if the Offer
has been terminated pursuant to Section 1.1(e), prior to the Effective Time):
(i) if (1) the Board of Directors of the Company shall have failed to
recommend, or shall have withdrawn, its approval or recommendation
of the Offer (unless the Offer has been terminated pursuant to
Section 1.1.(e)) or the Merger or shall have resolved to do any of
the foregoing; or (2) if the Company shall have entered into a
definitive agreement to accept an Acquisition Proposal;
(ii) if the Board of Directors of the Company shall have modified its
approval of the Offer (unless the Offer has been terminated
pursuant to Section 1.1.(e)) or the Merger in a manner adverse to
Purchaser and the Minimum Condition shall not have been met on the
then scheduled expiration date of the Offer immediately following
such modification;
(iii) if the Offer shall have terminated or expired in accordance with
the terms of this Agreement (unless the Offer has been terminated
pursuant to Section 1.1.(e)) without Purchaser or a subsidiary of
Parent having purchased any Shares thereunder, PROVIDED, HOWEVER,
that prior to invoking this right of termination Purchaser agrees
to comply with Section 1.1(c) hereof; or
(d) by the Company prior to the consummation of the Offer (or if the Offer
has been terminated pursuant to Section 1.1(e), prior to the Effective
Time):
(i) if the Company withdraws its recommendation of the Offer (unless the
Offer has been terminated pursuant to Section 1.1(e)) or the Merger
pursuant to Section 6.6(c)(iv)(1), or takes the actions described in
Section 6.6(c)(iv)(2), and such action is taken pursuant to, and in
compliance with, such provision; or
(ii) Unless the Offer has been terminated pursuant to Section 1.1(e), if
the Offer shall not have been consummated by October 11, 1999 (and
if the Offer has been terminated pursuant to Section 1.1(e), if the
Merger shall not have been consummated by October 11, 1999) by
reason of not having obtained all required approvals under
Antitrust Laws, PROVIDED, HOWEVER, that such date shall be extended
by each day that the Company is not in substantial compliance with
any second request issued on the transactions contemplated by this
Agreement but only if and to the extent that Parent and Purchaser
are in substantial compliance when the Company is not.
32
Notwithstanding the above, neither the Company nor Purchaser shall be
permitted to terminate this Agreement if the event which gave rise to such
termination right is a result of or arose in connection with any action or
inaction of the party seeking to terminate taken or not taken in breach of the
terms hereof.
8.2. AMENDMENT. Subject to applicable law, this Agreement may be amended
by an instrument signed by each of the parties hereto before or after approval
of the Merger by the stockholders of the Company, if required; PROVIDED,
HOWEVER, that after consummation of the Offer (or, if the Offer has been
terminated pursuant to Section 1.1(e), after the approval of the Merger by the
stockholders of the Company), no amendment may be made which decreases the
amount of the Merger Consideration or effects any change which would adversely
affect the stockholders of the Company (other than Purchaser and its affiliates)
without the approval of the stockholders of the Company (other than Purchaser
and its affiliates).
8.3. FEES UPON TERMINATION. The Company agrees that if this Agreement is
terminated pursuant to:
(a) Section 8.1(b)(i) and at the time of such termination any person, entity
or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Parent
or any of its affiliates) shall have become the beneficial owner of more than
30% of the outstanding Shares (with appropriate adjustments for
reclassifications of capital stock, stock dividends, stock splits, reverse stock
splits and similar events) and such person, entity or group (or any subsidiary
of such person, entity or group) thereafter shall enter into a definitive
written agreement with the Company to accept an Acquisition Proposal at any time
on or prior to the date which is six months after the termination of this
Agreement and such transaction is thereafter consummated;
(b) Sections 8.1(c)(i)(2) or Section 8.1(d)(i); or
(c) Sections 8.1(c)(i)(1), 8.1(c)(ii) or 8.1(c)(iii), and in each case,
prior to the time of termination of this Agreement, there shall exist a bona
fide Acquisition Proposal that has been made known to the Company or publicly
announced by a third party that is more favorable from a financial point of view
than the Offer and the Merger, the Company shall enter into a definitive written
agreement to accept an Acquisition Proposal from such party at any time on or
prior to the date which is six months after the termination of this Agreement
and such transaction shall thereafter be consummated;
(d) then the Company shall pay to Purchaser the Termination Amount (as
defined below). Such payment shall be made as promptly as practicable but in no
event later than (i) in the case of paragraph (b) of this Section, two business
days following termination of this Agreement, (ii) in the case of paragraph (a)
of this Section, upon consummation of such Acquisition Proposal, and (iii) in
the case of paragraph (c) of this Section, upon entering into a definitive
agreement to accept such Acquisition Proposal. Each such payment shall be made
by wire transfer of immediately available funds to an account designated by
Purchaser without set-off or deduction. The term "Termination Amount" as used
herein shall mean (i) if (A) any third party has on or prior to July 26, 1999,
and, at such time, the Company was not in violation of Section 6.6 hereof, (x)
made a bona fide Acquisition Proposal or (y) requested that the Company enter
into negotiations or discussions concerning an Acquisition Proposal or possible
Acquisition Proposal and has indicated a potential price or range of prices in
connection therewith, and (B) a payment is required to be made pursuant to this
Section 8.3 by the Company to Purchaser as a result of the Company entering into
a written agreement to accept an Acquisition Proposal with any such third party
or such third party acquiring 50% or more of the outstanding Shares, $10,662,000
and (ii), in each other circumstance, $42,648,000.
33
8.4. EFFECT OF TERMINATION.
(a) The provisions of Sections 6.4 (expenses), 6.12 (indemnification) and
8.3 (termination fees) shall survive the termination of this Agreement. The
provisions of the Confidentiality Agreement shall also survive the termination
of this Agreement.
(b) The rights of termination provided for in Section 8.1 shall not be an
exclusive remedy hereunder but shall be in addition to any other legal or
equitable remedies that may be available to any non-defaulting party hereto
arising out of any default hereunder by any other party hereto, and any party
hereto shall continue to have the right following termination hereof to all
legal and equitable remedies against any other party hereto for any breach of
any representation, warranty, covenant or agreement contained herein by such
other party prior to the termination hereof; PROVIDED, HOWEVER, that in the
event that the amount set forth in Section 8.3 shall have been paid to
Purchaser, there shall be no liability on the part of either the Company or its
respective officers or directors, except for a willful and intentional breach of
any representation, warranty, covenant or agreement contained herein.
8.5. WAIVER. At any time prior to the Effective Time and subject to the
provisions of this Agreement, any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto or
(ii) waive compliance with any of the agreements of any other party or with any
conditions to its own obligations, in each case only to the extent such
obligations, agreements and conditions are intended for its benefit.
ARTICLE IX
GENERAL PROVISIONS
9.1. BROKERS. (a) The Company represents and warrants that no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission, or to the reimbursement of any of its expenses, in connection
with the Offer or the Merger or any similar transaction based upon arrangements
made by or on behalf of the Company, except for the arrangements between the
Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and the arrangements between the
Company and Kohlberg Kravis ▇▇▇▇▇▇▇ & Co., L.P.
(b) Parent and Purchaser represent and warrant to the Company that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission, or to the reimbursement of any of its expenses, in
connection with the Offer or the Merger or any similar transaction based upon
arrangements made by or on behalf of Parent or Purchaser, except for the
arrangements between Parent and RBC Dominion Securities and Credit Suisse First
Boston Corporation.
9.2. PUBLIC STATEMENTS. Except as required by applicable law or stock
exchange regulation, none of Parent or Purchaser, on the one hand, or the
Company, on the other hand, shall make any public announcement or statement with
respect to the Offer, the Merger or this Agreement without the approval of the
Company or Purchaser, respectively, which approval shall not be unreasonably
withheld. Moreover, the parties hereto agree to consult with each other prior to
issuing each public announcement or statement with respect to the Offer, the
Merger or this Agreement.
9.3. NOTICES. All notices and other communications hereunder shall be
given by telephone and immediately confirmed in writing and shall be deemed
given if delivered personally or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Purchaser:
34
QUEBECOR PRINTING INC.
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Vice President, Legal Affairs & Secretary
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) if to the Company:
WORLD COLOR PRESS, INC.
The Mill
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
9.4. INTERPRETATION. When a reference is made in this Agreement to a
subsidiary of Parent or the Company, the word "SUBSIDIARY" means any
"MAJORITY-OWNED SUBSIDIARY" (as defined in Rule 12b-2 promulgated under the
Exchange Act) of Parent or the Company, as the case may be; PROVIDED, HOWEVER,
that the Company shall in no event and at no time be considered a subsidiary of
Purchaser for purposes of this Agreement. "Affiliate" of a person means a person
that, directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned person. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
References to Sections and Articles refer to sections and articles of this
Agreement unless otherwise stated. Any reference to dollars or "$" shall refer
to U.S. dollars.
9.5. REPRESENTATIONS AND WARRANTIES. Any matters disclosed in any of a
party's representations and warranties or the section of such party's disclosure
schedule with respect to such representations and warranties shall be deemed
disclosed for purposes of the other representations and warranties of such party
as long as the applicability of such matters to such representations and
warranties is reasonably apparent.
9.6. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify the Agreement to preserve, to the extent legally
permitted, each party's anticipated benefits and obligations under this
Agreement.
9.7. MISCELLANEOUS. This Agreement (including the agreements that are
exhibits hereto) and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter hereof.
35
This Agreement (a) is not intended to confer upon any other person any rights or
remedies hereunder, except as set forth in Section 9.10; and (b) shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any portion of their rights under this Agreement to any of their
subsidiaries (PROVIDED, HOWEVER, that in the event of any such assignment,
Parent shall cause such assignee to execute and become a party to this agreement
and such assignee shall be vested with all the rights and obligations assigned
to it by the assignor as if it were named in this Agreement), but no such
assignment shall relieve Parent or Purchaser, as applicable, of their
obligations hereunder, and except that this Agreement may be assigned by
operation of law to any corporation with or into which Purchaser may be merged
as long as the surviving corporation in such merger complies with the
representations and warranties and covenants of Purchaser set forth herein and
(c) shall be governed in all respects, including validity, interpretation and
effect, by the internal laws of the State of Delaware, without giving effect to
the principles of conflict of laws thereof. The parties hereto expressly consent
to the personal jurisdiction of the courts of the United States of America and
of the courts of the State of Delaware, in each case sitting in the State of
Delaware. Each of the parties hereto irrevocably waives and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any action
or proceeding with respect to this Agreement, (a) the defense of sovereign
immunity, (b) any claim that it is not personally subject to the jurisdiction in
any federal court located in the State of Delaware or Chancery or other Courts
of the State of Delaware for any reason other than the failure to serve process
in accordance with this Section 9.7, (c) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment prior to
judgement, attachment in aid of execution of judgement, execution of judgement
or otherwise), and (d) to the fullest extent permitted by applicable law, that
(i) the suit, action or proceeding in any such court is brought in an
inconvenient forum (ii) the venue of such suit, action or proceeding is improper
or (iii) this Agreement, or the subject matter hereof, may not be enforced in or
by such courts. Parent further designates Purchaser as its duly appointed agent
for the service of summonses and other legal processes in the State of Delaware
(a "Service Agent").
9.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but together shall be
construed as one document.
9.9. SURVIVAL. The representations, warranties, covenants and agreements
of the parties set forth herein shall terminate as of the Effective Time, except
as provided in Sections 6.11 and 6.12.
9.10. THIRD PARTY BENEFICIARIES. The parties entitled to the employee
benefits pursuant to the terms of Section 6.11 and indemnification pursuant to
the terms of Section 6.12 are expressly made third party beneficiaries solely of
Section 6.11 and Section 6.12, respectively, of this Agreement. In addition,
holders of Company Stock Options and Company Restricted Stock are expressly made
third party beneficiaries solely of Section 2.6 of this Agreement.
36
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed on the date first written above by their respective
officers thereunder duly authorized.
QUEBECOR PRINTING INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & Chief Executive Officer
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
PRINTING ACQUISITION INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
WORLD COLOR PRESS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed on the date first written above by their respective
officers thereunder duly authorized.
QUEBECOR PRINTING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & Chief Executive Officer
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
PRINTING ACQUISITION INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
WORLD COLOR PRESS, INC.
By:
-----------------------------------------
Name:
Title:
ANNEX I
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex I have the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered shares of Common Stock promptly after termination or withdrawal of the
Offer), pay for any Shares tendered pursuant to the Offer, and may postpone the
acceptance for payment, or, subject to the restriction referred to above,
payment for, Shares tendered pursuant to the Offer, and may terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for) to the
extent permitted by the Merger Agreement, if (i) at the expiration of the Offer,
a number of Shares which, together with any Shares owned by Parent or Purchaser,
would constitute more than 50% of the voting power (determined on a
fully-diluted basis), of all the securities of the Company entitled to vote
generally in a merger shall not have been validly tendered and not withdrawn
prior to the expiration of the Offer (the "MINIMUM CONDITION"), or (ii) if, at
any time on or after July 12, 1999 and prior to the acceptance for payment for
any such Shares, any of the following conditions occurs or has occurred and
continues to exist (each of paragraphs (a) through (f) providing a separate and
independent condition to Purchaser's obligations pursuant to the Offer):
(a) there shall be in effect any preliminary or final injunction or
temporary restraining order or other order or decree issued by any Canadian or
United States federal, provincial or state court or United States federal or
administrative agency or authority, enjoining, restraining or otherwise
prohibiting the Offer, the Merger or the acquisition by Purchaser of Shares;
(b) any waiting periods under the H-S-R Act applicable to the purchase of
Shares pursuant to the Offer shall not have expired or been terminated;
(c) there shall have been any law, statute, rule or regulation in the United
States, Canada, the European Union or any member state of the European Union,
enacted, promulgated or proposed that has the effect of making the acquisition
of Shares illegal or otherwise prohibits consummation of the Merger;
(d) any representation or warranty of the Company in the Merger Agreement
shall not be true and correct in any respect that is reasonably likely to have a
Material Adverse Effect, in each case as if such representation or warranty were
made at the time of such determination (except for any representations or
warranties which by their terms are given as of a specified date, PROVIDED that
such representations or warranties shall have been true and correct on such
date, except for failures to be true and correct that would not be reasonably
likely to have a Material Adverse Effect);
(e) the Company shall fail to perform or comply in any material respect with
any covenant or agreement to be performed or complied with by the Company under
the Merger Agreement required to be performed or complied with by it prior to
the consummation of the Offer;
(f) The Merger Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition (except for any action or inaction by Purchaser, Parent or any of
their respective affiliates constituting a breach of the Merger Agreement),
makes it inadvisable to proceed with the Offer or with such acceptance for
payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and (i) may
be asserted by Purchaser regardless of the circumstances giving rise to such
condition (except for any action or inaction by Purchaser, Parent or any of
their respective affiliates constituting a breach of the Merger Agreement) or
(ii) (other than the Minimum Condition) may be waived by Purchaser in whole at
any time or in part from time to time in its reasonable discretion. The failure
by Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right and may be asserted at any time and from time to time.
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
QUEBECOR WORLD (USA) INC.
FIRST
The name of the corporation is Quebecor World (USA) Inc. (the
"Corporation"). The Corporation was originally incorporated under the name of
World Color Press, Inc. The original certificate of incorporation of the
Corporation was filed with the Delaware Secretary of State on September 24,
1984.
SECOND
The address of its registered office in the State of Delaware is Corporation
Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 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 General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
The undersigned hereby declare that this Amended and Restated Certificate of
Incorporation has been duly adopted in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, under penalties of perjury, the undersigned have
examined this Amended and Restated Certificate of Incorporation, and to the best
of their knowledge it is true, correct and complete, and the undersigned further
declare that the undersigned have authority to sign this Amended and Restated
Certificate of Incorporation on behalf of Quebecor World (USA) Inc., all as of
this (th) day of .
QUEBECOR WORLD (USA) INC.
By: /s/
-----------------------------------------
Name:
Title:
ATTEST:
----------------------------
Name:
Its Secretary
EXHIBIT B
FORM OF COMPANY AFFILIATE LETTER
QUEBECOR PRINTING INC.
[Address]
Ladies and Gentlemen:
The undersigned, a holder of shares of common stock, par value $0.01 per
share ("Company Common Stock"), of World Color Press, Inc., a Delaware
corporation (the "Company"), is entitled to receive in connection with the
merger (the "Merger") between the Company and a direct wholly owned subsidiary
of Quebecor Printing Inc. ("Parent") subordinate voting shares, no par value
("Parent Stock"), of Parent. The undersigned acknowledges that the undersigned
may be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933, as amended (the
"Act"), although nothing contained herein should be construed as an admission of
such fact.
If in fact the undersigned is an affiliate under the Act, the undersigned's
ability to sell, assign or transfer the shares received by the undersigned
pursuant to the Merger may be restricted unless such transaction is registered
under the Act or an exemption from such registration is available. The
undersigned understands that such exemptions are limited and the undersigned has
obtained advice of counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to the sale of such
securities of Rules 144 and 145(d) promulgated under the Act.
The undersigned hereby represents to and covenants with Parent that the
undersigned will not sell, assign or transfer any of the Parent Stock received
by the undersigned pursuant to the Merger except (i) pursuant to an effective
registration statement under the Act; (ii) in conformity with the limitations
specified by Rules 144 and Rule 145(d); or (iii) in a transaction that, in the
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or other counsel reasonably satisfactory
to Parent or as described in a "no-action" or interpretive letter from the Staff
of the Securities and Exchange Commission (the "SEC"), is not required to be
registered under the Act.
In the event of a sale or other disposition by the undersigned of Parent
Stock pursuant to Rule 145(d)(1), the undersigned will supply Parent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto. The undersigned understands that Parent may instruct its
transfer agent to withhold the transfer of any Parent Stock disposed of by the
undersigned, but that upon receipt of such evidence of compliance including,
without limitation, an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ or another counsel
reasonably satisfactory to them, the transfer agent shall effectuate the
transfer of the shares sold as indicated in the letter.
The undersigned acknowledges and agrees that the following legend will be
placed on certificates representing the Parent Stock received by the undersigned
pursuant to the Merger or held by a transferee thereof, which legend will be
removed by delivery of substitute certificates upon receipt of an opinion in
form and substance reasonably satisfactory to Parent from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ or another independent counsel reasonably satisfactory to Parent to the
effect that such legends are no longer required for the purposes of the Act or
the fourth paragraph of this letter:
"The Securities represented by this certificate were issued in a
transaction to which Rule 145 under the United States Securities Act of 1933
(the "Act") applies. The securities represented by this certificate may be
transferred in the United States only in accordance with Rule 145(d) or
pursuant to an effective registration statement or exemption from
registration under the Act."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of the Parent Stock
and (ii) the receipt by Parent of this letter is an inducement and a condition
to Parent's obligations to consummate the Merger.
Very truly yours,
ANNEX I TO EXHIBIT B
[Date]
Quebecor Printing Inc.
On the undersigned sold subordinate voting shares,
no par value, of Quebecor Printing Inc. ("Parent"). The shares were received by
the undersigned in connection with the merger of a direct wholly owned
subsidiary of Parent with and into World Color Press, Inc.
Based upon the most recent report or statement filed by Parent with the
Securities and Exchange Commission, the shares sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
The undersigned hereby represents that the shares were sold in "brokers'
transactions" within the meaning of Section 4(4) of the Act or in transactions
directly with a "market maker" as that term is defined in Section 3(a)(38) of
the Securities Exchange Act of 1934, as amended. The undersigned further
represents that the undersigned has not solicited or arranged for the
solicitation of orders to buy the shares in anticipation or in connection with
such transactions, and that the undersigned has not made any payment in
connection with the offer or sale of the shares to any person other than to the
broker who executed the order in respect of such sale.
Very truly yours,
