Exhibit 10.17

 

 

 

VERTIS, INC.,

 

as Issuer,

 

the Guarantors
named herein

 

and

 

THE BANK OF NEW YORK,

 

as Trustee

 

--------------------------------------------------------------------------------

 

INDENTURE

 

Dated as of February 28, 2003

 

--------------------------------------------------------------------------------

 

up to $293,500,000

 

131/2% Senior Subordinated Notes due 2009

 

 

 

--------------------------------------------------------------------------------

 

[CROSS-REFERENCE TABLE]

 

TIA Section

 

Indenture Section

 

 

 

§ 310

(a)(l)

 

7.10

 

(a)(2)

 

7.10

 

(a)(3)

 

N.A.

 

(a)(4)

 

N.A.

 

(a)(5)

 

7.10

 

(b)

 

7.8; 7.10; 13.2

 

(c)

 

N.A.

§ 311

(a)

 

7.11

 

(b)

 

7.11

 

(c)

 

N.A.

§ 312

(a)

 

2.5

 

(b)

 

13.3

 

(c)

 

13.3

§ 313

(a)

 

7.6

 

(b)(l)

 

7.6

 

(b)(2)

 

7.6

 

(c)

 

7.6; 13.2(b)

 

(d)

 

7.6

§ 314

(a)

 

4.6; 4.7; 13.2

 

(b)

 

N.A.

 

(c)(1)

 

13.4

 

(c)(2)

 

13.4

 

(c)(3)

 

13.4

 

(d)

 

N.A.

 

(e)

 

13.5

 

(f)

 

N.A.

§ 315

(a)

 

7.1(b)

 

(b)

 

7.5; 13.2

 

(c)

 

7.1(a)

 

(d)

 

7.1(c)

 

(e)

 

6.11

§ 316

(a) (last sentence)

2.9

 

(a)(l)(A)

 

6.5

 

(a)(l)(B)

 

6.4

 

(a)(2)

 

N.A.

 

(b)

 

6.7

 

(c)

 

9.4

§ 317

(a)(l)

 

6.8

 

(a)(2)

 

6.9

 

(b)

 

2.4

§ 318

(a)

 

13.1

 

(c)

 

13.1

 

--------------------------------------------------------------------------------

N.A. means Not Applicable.

 

i

--------------------------------------------------------------------------------

 

NOTE:                                    This Cross-Reference Table shall not,
for any purpose, be deemed to be a part of this Indenture.

 

ii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

Page

 

 

ARTICLE I

 

 

 

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

 

 

 

SECTION 1.1

Definitions

1

SECTION 1.2

Incorporation by Reference of Trust Indenture Act

35

SECTION 1.3

Rules of Construction

36

 

 

 

ARTICLE II

 

 

 

 

THE SECURITIES

 

 

 

 

SECTION 2.1

Form and Dating

36

SECTION 2.2

Execution and Authentication

36

SECTION 2.3

Registrar and Paying Agent

37

SECTION 2.4

Paying Agent To Hold Money in Trust

38

SECTION 2.5

Securityholder Lists

38

SECTION 2.6

Transfer and Exchange

39

SECTION 2.7

Replacement Notes

39

SECTION 2.8

Outstanding Notes

40

SECTION 2.9

Treasury Notes

40

SECTION 2.10

Temporary Notes

40

SECTION 2.1l

Cancellation

41

SECTION 2.12

Defaulted Interest

41

SECTION 2.13

CUSIP Number

41

SECTION 2,14

Book-Entry Provisions for Global Securities

42

SECTION 2.15

Special Transfer Provisions

43

 

 

 

ARTICLE III

 

 

 

 

REDEMPTION

 

 

 

 

SECTION 3.1

Notices to Trustee

45

SECTION 3.2

Selection of Notes To Be Redeemed

45

SECTION 3.3

Notice of Redemption

45

SECTION 3.4

Effect of Notice of Redemption

46

SECTION 3.5

Deposit of Redemption Price

46

SECTION 3.6

Notes Redeemed in Part

47

 

iii

--------------------------------------------------------------------------------

 

ARTICLE IV

 

 

 

 

COVENANTS

 

 

 

 

SECTION 4.1

Payment of Notes

47

SECTION 4.2

Maintenance of Office or Agency

47

SECTION 4.3

Corporate Existence

48

SECTION 4.4

Payment of Taxes and Other Claims

48

SECTION 4.5

Maintenance of Properties

49

SECTION 4.6

Compliance Certificates; Notice of Default

49

SECTION 4.7

Reports

50

SECTION 4.8

Limitation on Restricted Payments

50

SECTION 4.9

Limitation on Incurrence of Additional Indebtedness

54

SECTION 4.10

Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries

54

SECTION 4.11

Limitation on Liens

56

SECTION 4.12

Limitation on Asset Sales

56

SECTION 4.13

Limitations on Transactions with Affiliates

61

SECTION 4.14

Prohibition on Incurrence of Senior Subordinated Debt

63

SECTION 4.15

Change of Control

63

SECTION 4.16

Waiver of Stay; Extension of Usury Laws

65

SECTION 4.17

Limitation on Guarantees by Restricted Subsidiaries

65

SECTION 4.18

Limitation on Preferred Stock of Subsidiaries

67

SECTION 4.19

Conduct of Business

67

 

 

 

ARTICLE V

 

 

 

 

SUCCESSOR CORPORATION

 

 

 

 

SECTION 5.1

Limitation on Mergers, Consolidations or Sales of Assets

67

SECTION 5.2

Successor Entity Substituted

69

 

 

 

ARTICLE VI

 

 

 

 

DEFAULT AND REMEDIES

 

 

 

 

SECTION 6.1

Events of Default

70

SECTION 6.2

Acceleration

72

SECTION 6.3

Other Remedies

73

SECTION 6.4

Waiver of Past Default

73

SECTION 6.5

Control by Majority

73

SECTION 6.6

Limitation on Suits

74

SECTION 6.7

Rights of Holders To Receive Payment

74

SECTION 6.8

Collection Suit by Trustee

74

SECTION 6.9

Trustee May File Proofs of Claim

75

 

iv

--------------------------------------------------------------------------------

 

SECTION 6.10

Priorities

75

SECTION 6.1l

Undertaking for Costs

75

SECTION 6.12

Rights and Remedies Cumulative

76

SECTION 6.13

Delay or Omission Not Waiver

76

 

 

 

ARTICLE VII

 

 

 

 

TRUSTEE

 

 

 

 

SECTION 7.1

Duties of Trustee

76

SECTION 7.2

Rights of Trustee

77

SECTION 7.3

Individual Rights of Trustee

79

SECTION 7.4

Trustee’s Disclaimer

79

SECTION 7.5

Notice of Defaults

79

SECTION 7.6

Reports by Trustee to Holders

79

SECTION 7.7

Compensation and Indemnity

80

SECTION 7.8

Replacement of Trustee

81

SECTION 7.9

Successor Trustee by Merger, Etc

82

SECTION 7.10

Eligibility; Disqualification

82

SECTION 7.11

Preferential Collection of Claims Against Company

82

 

 

 

ARTICLE VIII

 

 

 

 

DISCHARGE OF INDENTURE; DEFEASANCE

 

 

 

 

SECTION 8.1

Termination of the Company’s Obligations

82

SECTION 8.2

Legal Defeasance and Covenant Defeasance

84

SECTION 8.3

Conditions to Legal Defeasance or Covenant Defeasance

85

SECTION 8.4

Application of Trust Money

87

SECTION 8.5

Repayment to the Company

87

SECTION 8.6

Reinstatement

88

 

 

 

ARTICLE IX

 

 

 

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

 

 

 

 

 

 

SECTION 9.1

Without Consent of Holders

88

SECTION 9.2

With Consent of Holders

89

SECTION 9.3

Compliance with Trust Indenture Act

90

SECTION 9.4

Revocation and Effect of Consents

91

SECTION 9.5

Notation on or Exchange of Notes

91

SECTION 9.6

Trustee To Sign Amendments, Etc

91

 

v

--------------------------------------------------------------------------------

 

 

ARTICLE X

 

 

 

 

SUBORDINATION

 

 

 

 

SECTION 10.1

Notes Subordinated to Senior Debt

92

SECTION 10.2

Suspension of Payment When Senior Debt Is in Default

92

SECTION 10.3

Obligations Subordinated to Prior Payment of All Senior Debt on Dissolution,
 Liquidation

 

 

  or Reorganization of Company

94

SECTION 10.4

Payments May Be Paid Prior to Dissolution

95

SECTION 10.5

Holders To Be Subrogated to Rights of Holders of Senior Debt

96

SECTION 10.6

Obligations of the Company Unconditional

96

SECTION 10.7

Reliance on Judicial Order or Certificate of Liquidating Agent

97

SECTION 10.8

Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders
of Senior

 

 

  Debt

97

SECTION 10.9

Holders Authorize Trustee To Effectuate Subordination of Obligations

98

SECTION 10.10

Amendments or Modifications to Article X

98

SECTION 10.11

Article X Not to Prevent Events of Default

98

SECTION 10.12

No Fiduciary Duty of Trustee to Holders of Senior Debt

99

 

 

 

ARTICLE XI

 

 

 

 

GUARANTEE

 

 

 

 

SECTION 11.1

Unconditional Guarantee

99

SECTION 11.2

Subordination of Guarantee

100

SECTION 11.3

Severability

100

SECTION 11.4

Release of a Guarantor

100

SECTION 11.5

Limitation of Guarantor’s Liability

101

SECTION 11.6

Consolidation, Merger and Sale of Assets

101

SECTION 11.7

Contribution

102

SECTION 11.8

Waiver of Subrogation

102

SECTION 11.9

Evidence of Guarantee

103

SECTION 11.10

Waiver of Stay, Extension or Usury Laws

103

 

 

 

ARTICLE XII

 

 

 

 

SUBORDINATION OF GUARANTEE OBLIGATIONS

 

 

 

 

SECTION 12.1

Guarantee Obligations Subordinated to Guarantor Senior Debt

103

 

vi

--------------------------------------------------------------------------------

 

SECTION 12.2

Suspension of Guarantee Obligations When Guarantor Senior Debt Is in Default

104

SECTION 12.3

Guarantee Obligations Subordinated to Prior Payment of All

 

 

  Guarantor Senior Debt on Dissolution, Liquidation or Reorganization of Such
Guarantor

105

SECTION 12.4

Payments May Be Paid Prior to Dissolution

106

SECTION 12.5

Holders To Be Subrogated to Rights of Lenders of Guarantor Senior Debt

107

SECTION 12.6

Guarantee Obligations of the Guarantors Unconditional

107

SECTION 12.7

Reliance on Judicial Order or Certificate of Liquidating Agent

107

SECTION 12.8

Subordination Rights Not Impaired by Acts or Omissions of

108

 

the Guarantors or Lenders of Guarantor Senior Debt

 

SECTION 12.9

Holders Authorize Trustee To Effectuate Subordination of Guarantee Obligations

108

SECTION 12.10

This Article XII Not To Prevent Events of Default

109

SECTION 12.11

Amendments or Modifications to Article XII

109

SECTION 12.12

No Fiduciary Duty of Trustee to Holders of Senior Debt

109

 

 

 

ARTICLE XIII

 

 

 

 

MISCELLANEOUS

 

 

 

 

SECTION 13.1

Trust Indenture Act Controls

110

SECTION 13.2

Notices

110

SECTION 13.3

Communications by Holders with Other Holders

111

SECTION 13.4

Certificate and Opinion of Counsel as to Conditions Precedent

111

SECTION 13.5

Statements Required in Certificate and Opinion of Counsel

112

SECTION 13.6

Rules by Trustee, Paying Agent, Registrar

112

SECTION 13.7

Legal Holidays

112

SECTION 13.8

Governing Law

112

SECTION 13.9

No Recourse Against Others

113

SECTION 13.10

Successors

113

SECTION 13.11

Counterparts

113

SECTION 13.12

Severability

113

SECTION 13.13

Table of Contents, Headings, Etc

113

SECTION 13.14

No Adverse Interpretation of Other Agreements

113

SECTION 13.15

Benefits of Indenture

114

SECTION 13.16

Independence of Covenants

114

 

 

vii

--------------------------------------------------------------------------------

 

Exhibit A-l

— Form of Series A Note

Exhibit A-2

— Form of Series B Note

Exhibit B

— Form of Legend for Global Securities

Exhibit C

— Transferee Certificate for Non-QIB Accredited Investors

Exhibit D

— Transferee Certificate for Transfers Pursuant to Regulation S

Exhibit E

— Form of Guarantee

 

Note:                         This Table of Contents shall not, for any purpose,
be deemed to be part of the Indenture.

 

viii

--------------------------------------------------------------------------------

 

INDENTURE dated as of February 28, 2003, among VERTIS, INC., a corporation duly
organized and existing under the laws of the State of Delaware, as issuer (the
“Company”), the Guarantors (as defined herein) and THE BANK OF
NEW YORK, a New York banking corporation, as Trustee (the “Trustee”).

 

The parties hereto agree as follows for the benefit of each other and for the
equal and ratable benefit of the Holders:

 

ARTICLE I

 

DEFINITlONS AND INCORPORATION BY REFERENCE

 

SECTION 1.1         Definitions.

 

“Acceleration Notice” shall have the meaning ascribed to such term in Section
6.2.

 

“Accrued Bankruptcy Interest” means all interest accruing subsequent to the
occurrence of any events specified in Section 6. l (f) or (g) or which would
have accrued but for any such event.

 

“Acquired Indebtedness” means Indebtedness (1) of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or (2) assumed in connection with the acquisition of assets from
such Person, in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
of the Company or such acquisition. Acquired Indebtedness shall be deemed to
have been incurred, with respect to clause (1) of the preceding sentence, on the
date such Person becomes a Restricted Subsidiary of the Company and, with
respect to clause (2) of the preceding sentence, on the date of consummation of
such acquisition of assets.

 

“Adjusted Net Assets” shall have the meaning provided in Section 11.7.

 

“Affiliate” means, with respect to any specified Person, any other Person who
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative of the foregoing.
Notwithstanding the foregoing, no Person (other than the Company or any

 

--------------------------------------------------------------------------------

 

Subsidiary of the Company) in whom a Receivables Entity makes an Investment in
connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.

 

“Affiliate Transaction” has the meaning ascribed to such term in Section 4.13.

 

“Agent” means any Registrar, Paying Agent or co-registrar.

 

“Agent Members” has the meaning provided in Section 2.14.

 

“A/R Facility” means the Receivables Purchase Agreement dated as of March 19,
1996, as amended, among the Company, certain subsidiaries of the Company and BFP
Receivables Corporation in each case as such agreement may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the term thereof, and any
successor or replacement agreement, including, without limitation, any agreement
or agreements governing a Qualified Receivables Transaction.

 

“Asset Acquisition” means (1) an Investment by the Company or any Restricted
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of the Company or of any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (2) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprise any division or line of business of
such Person or any other properties or assets of such Person other than in the
ordinary course of business.

 

“Asset Sale” means any direct or indirect sale, issuance, conveyance, transfer,
lease (other than operating leases entered into in the ordinary course of
business), assignment or other disposition for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of the Company of:
(1) any Capital Stock of any Restricted Subsidiary of the Company; or (2) any
other property or assets of the Company or any Restricted Subsidiary of the
Company other than in the ordinary course of business; provided, however, that
Asset Sales shall not include:

 

(a)           any transaction or series of related transactions for which the
Company or its Restricted Subsidiaries receive aggregate consideration of less
than $2.5 million;

 

(b)           the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Company as permitted under Article V;

 

2

--------------------------------------------------------------------------------

 

(c)           the sale or discount, in each case without recourse, of accounts
receivable arising in the ordinary course of business;

 

(d)           the factoring of accounts receivable arising in the ordinary
course of business pursuant to arrangements customary in the industry;

 

(e)           the licensing of intellectual property;

 

(f)            disposals or replacements of obsolete equipment in the ordinary
course of business;

 

(g)           the sale, lease, conveyance, disposition or other transfer by the
Company or any Restricted Subsidiary of assets or property in transactions
constituting Permitted Investments or Restricted Payments that are not
prohibited under Section 4.8;

 

(h)           sales of accounts receivable and related assets of the type
specified in the definition of “Qualified Receivables Transaction” to a
Receivables Entity (for the purposes of this clause (h), Purchase Money Notes
shall be deemed to be cash);

 

(i)            transfers of accounts receivable and related assets of the type
specified in the definition of “Qualified Receivables Transaction” (or a
fractional undivided interest therein) by a Receivables Entity in a Qualified
Receivables Transaction;

 

(j)            leases or subleases to third persons not interfering in any
material respect with the business of the Company or any of its Restricted
Subsidiaries; and

 

(k)           the surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind.

 

“Banc of America” means Banc of America Bridge LLC (f/k/a NationsBridge,
L.L.C.).

 

“Bankruptcy Law” means Title 11 of the United States Code entitled “Bankruptcy,”
as now and hereafter in effect, or any successor statute or any other United
States federal, state or local law or the law of any other jurisdiction relating
to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of
debtors, whether in effect on the date hereof or hereafter.

 

“Bankruptcy Order” means any court order made in a proceeding pursuant to or
within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorganization, or appointing a custodian of a debtor or of all or any
substantial part of a debtor’s property, or

 

3

--------------------------------------------------------------------------------

 

providing for the staying, arrangement, adjustment or composition of
indebtedness or other relief of a debtor.

 

“Board of Directors” means, as to any Person, the board of directors of such
Person or any duly authorized committee thereof.

 

“Board Resolution” means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have been
duly adopted by the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to the Trustee.

 

“Business Day” means any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of New York, New York or is a day on which banking
institutions therein located are authorized or required by law or other
governmental action to close.

 

“Capital Stock” means:

 

(1)                           with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person; and

 

(2)                           with respect to any Person that is not a
corporation, any and all partnership, membership or other equity interests of
such Person.

 

“Capitalized Lease Obligation” means, as to any Person, the obligations of such
Person under a lease that are required to be classified and accounted for as
capital lease obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.

 

“Cash Equivalents” means:

 

(1)                           marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or any member state
of the European Union or issued by any agency thereof and backed by the full
faith and credit of the United States or any member state of the European Union,
in each case maturing within one year from the date of acquisition thereof;

 

(2)                           marketable direct obligations issued by any state
of the United States of America or any member state of the European Union or any
political subdivision of

 

4

--------------------------------------------------------------------------------

 

any such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from either Standard & Poor’s Ratings
Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”);

 

(3)                           commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition, having a
rating of at least A-l from S&P or at least P-l from Moody’s;

 

(4)                           time deposits, certificates of deposit or bankers’
acceptances (or with respect to foreign banks, similar instruments) maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any member state of the European Union or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200.0 million;

 

(5)                           certificates of deposit or bankers’ acceptances or
similar instruments maturing within one year from the date of acquisition
thereof issued by any foreign bank that is a lender under the Senior Credit
Facility having at the date of acquisition thereof combined capital and surplus
of not less than $500.0 million;

 

(6)                           repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (1)
or (2) above entered into with any bank meeting the qualifications specified in
clause (4) above;

 

(7)                           demand deposit accounts maintained in the ordinary
course of business; and

 

(8)                           investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(1) through (7) above;

 

provided, that for purposes of Articles X and XII, the term “Cash Equivalents”
shall not include the Cash Equivalents referred to in clause (6) above.

 

“Change of Control” means the occurrence of one or more of the following events:

 

(1)                           any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially all
of the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a “Group”), together with any
Affiliates thereof (other than one or more Permitted Holders);

 

5

--------------------------------------------------------------------------------

 

(2)                           the approval by the holders of Capital Stock of
the Company of any plan or proposal for the liquidation or dissolution of the
Company;

 

(3)                           any Person or Group (other than one or more
Permitted Holders) shall become the beneficial owner (as defined in Rules 13d-3
and 13d-5 or any successor rule or regulation promulgated under the Exchange
Act), directly or indirectly, of shares representing more than 25% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of Vertis Holdings or the Company, unless at such time the Equity
Investors beneficially own, directly or indirectly, in the aggregate, shares
representing not less than a majority of the voting power represented by the
issued and outstanding Capital Stock of the Company; or

 

(4)                           the first day on which a majority of the Board of
Directors of the Company are not Continuing Directors.

 

“Change of Control Offer” has the meaning ascribed to such term in Section 4.15.

 

“Change of Control Payment Date” has the meaning ascribed to such term in
Section 4.15.

 

“Common Stock” of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person’s common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.

 

“Company” means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and, thereafter,
means the successor.

 

“Consolidated EBITDA” means, with respect to any Person, for any period, the sum
(without duplication) of:

 

(1)                           Consolidated Net Income; and

 

(2)                           to the extent Consolidated Net Income has been
reduced thereby:

 

(a)           all income taxes of such Person and its Restricted Subsidiaries
paid or accrued in accordance with GAAP for such period (other than income taxes
attributable to extraordinary, unusual or nonrecurring gains or losses or taxes
attributable to sales or dispositions outside the ordinary course of business);

 

6

--------------------------------------------------------------------------------

 

(b)           Consolidated Interest Expense;

 

(c)           Consolidated Non-cash Charges;

 

(d)           the amount of any restructuring reserve or charge recorded during
such period in accordance with GAAP;

 

(e)           any fees permitted pursuant to clause (b)(10) of Section 4.13;

 

(f)            amounts paid as a spread payment in connection with a cashless
exercise of options by a director or employee of Vertis Holdings or any of its
Restricted Subsidiaries (i.e., a payment equal to the spread of the then fair
market value of Vertis Holdings’ Common Stock which may be purchased with such
options over the aggregate exercise price of such options); and

 

(g)           less, without duplication, non-cash items increasing Consolidated
Net Income of such Person and its Restricted Subsidiaries for such period in
each case determined in accordance with GAAP.

 

“Consolidated Fixed Charge Coverage Ratio” means, with respect to any Person,
the ratio of Consolidated EBITDA of such Person during the four full fiscal
quarters (the “Four Quarter Period”) ending on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio for which financial statements are available (the “Transaction
Date”) to Consolidated Fixed Charges of such Person for the Four Quarter Period.
In addition to and without limitation of the foregoing, for purposes of this
definition, “Consolidated EBITDA” and “Consolidated Fixed Charges” shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to:

 

(1)                           the incurrence or repayment of any Indebtedness of
such Person or any of its Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period;

 

(2)                           any asset sales or other dispositions or Asset
Acquisitions (including, without limitation, any Asset Acquisition giving rise
to the need to make such calculation as a result of such Person or one of its
Restricted Subsidiaries (including

 

7

--------------------------------------------------------------------------------

 

any Person who becomes a Restricted Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Exchange Act) attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during
the Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such asset sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period; and

 

(3)                           any asset sales or asset acquisitions (including
any Consolidated EBITDA (including pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Exchange Act)
attributable to the assets which are the subject of the Asset Acquisition or
asset sale during the Four Quarter Period) that have been made by any Person
that has become a Restricted Subsidiary of the Company or has been merged with
or into the Company or any Restricted Subsidiary of the Company during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date that would have constituted asset
sales or Asset Acquisitions had such transactions occurred when such Person was
a Restricted Subsidiary of the Company or subsequent to such Person’s merger
into the Company, as if such asset sale or Asset Acquisition (including the
incurrence, assumption or liability for any Indebtedness or Acquired
Indebtedness in connection therewith) occurred on the first day of the Four
Quarter Period;

 

provided that to the extent that clause (2) or (3) of this sentence requires
that pro forma effect be given to an asset sale or Asset Acquisition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available. If such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness.

 

Furthermore, in calculating “Consolidated Fixed Charges” for purposes of this
“Consolidated Fixed Charge Coverage Ratio” interest on Indebtedness determined
on a fluctuating basis, to the extent such interest is covered by agreements
relating to Interest Swap Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such agreements.

 

8

--------------------------------------------------------------------------------

 

“Consolidated Fixed Charges” means, with respect to any Person for any period,
the sum, without duplication, of:

 

(1)                           Consolidated Interest Expense; plus

 

(2)                           the product of (x) the amount of all dividend
payments on any series of Preferred Stock of such Person and its Restricted
Subsidiaries (other than dividends paid in Qualified Capital Stock and dividends
paid on Preferred Stock of Unrestricted Subsidiaries) paid, accrued or scheduled
to be paid or accrued during such period times (y) a fraction, the numerator of
which is one and the denominator of which is one minus the then current
effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal; provided that to the extent that such dividend payments
are tax deductible, then this clause (2) shall equal the amount set forth in
clause (x) hereof without giving effect to clause (y) hereof.

 

“Consolidated Interest Expense” means, with respect to any Person for any
period, the sum of, without duplication:

 

(1)                           the aggregate of all cash and non-cash interest
expense with respect to all outstanding Indebtedness of such Person and its
Restricted Subsidiaries, including the net costs associated with Interest Swap
Obligations for such period determined on a consolidated basis in conformity
with GAAP but excluding amortization or original issued discount and
amortization of any deferred financing costs; and

 

(2)                           the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” of the Company means, for any period, the aggregate
net income (or loss) of the Company and its Restricted Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided
that there shall be excluded therefrom:

 

(1)                           gains and losses from Asset Sales (without regard
to the $2.5 million limitation set forth in the definition thereof) or
abandonments or reserves relating thereto and the related tax effects according
to GAAP;

 

(2)                           gains and losses due solely to fluctuations in
currency values and the related tax effects according to GAAP;

 

(3)                           extraordinary, unusual or nonrecurring gains,
losses, income or expense, and the related tax effects;

 

9

--------------------------------------------------------------------------------

 

(4)                           the net income (or loss) of any Person acquired in
a “pooling of interests” transaction accrued prior to the date it becomes a
Restricted Subsidiary of the Company or is merged or consolidated with the
Company or any Restricted Subsidiary of the Company;

 

(5)                           the net income of any Restricted Subsidiary of the
Company to the extent that the declaration of dividends or similar distributions
by that Restricted Subsidiary of that income is restricted by a contract,
operation of law or otherwise;

 

(6)                           the net loss of any Person other than a Restricted
Subsidiary of the Company;

 

(7)                           the net income of any Person, other than a
Restricted Subsidiary of the Company, except to the extent of cash dividends or
distributions paid to the Company or to a Restricted Subsidiary of the Company
by such Person unless, in the case of a Restricted Subsidiary of the Company
that receives such dividends or distributions, such Restricted Subsidiary is
subject to clause (5) above;

 

(8)                           (A) all non-cash charges (provided that any cash
payments actually made with respect to the liabilities for which such cash
charges were created shall be deducted from Consolidated Net Income in the
period when made) and (B) all deferred financing costs written off in connection
with the early extinguishment of any Indebtedness, in each case incurred by the
Company or any of its Restricted Subsidiaries in connection with the
recapitalization of Vertis Holdings in December 1999 and the related financing
transactions;

 

(9)                           non-cash compensation charges, including any
arising from existing stock options resulting from any merger or
recapitalization transition; and

 

(10)                         the cumulative effect of a change in accounting
principle.

 

“Consolidated Non-cash Charges” means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).

 

“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Company who:

 

(1)                           was a member of such Board of Directors on the
Issue Date;

 

10

--------------------------------------------------------------------------------

 

(2)                           was nominated for election or elected to such
Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election; or

 

(3)                           is any designee of a Permitted Holder or was
nominated by a Permitted Holder or any designees of a Permitted Holder on the
Board of Directors.

 

“Corporate Trust Office” means the principal office of the Trustee at which at
any time its corporate trust business shall be administered, which office at the
date hereof is located at 101 Barclay Street, New York, New York 10286,
Attention: Corporate Trust Administration, or such other address as the Trustee
may designate from time to time by notice to the Holders and the Company, or the
principal corporate trust office of any successor Trustee (or such other address
as such successor Trustee may designate from time to time by notice to the
Holders and the Company).

 

“Covenant Defeasance” has the meaning provided in Section 8.2.

 

“Currency Agreement” means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.

 

“Custodian” means any receiver, interim receiver, receiver and manager, trustee,
assignee, liquidator, sequestrator or similar official charged with maintaining
possession or control over property for one or more creditors, whether under any
Bankruptcy

Law or otherwise.

 

“Default” means an event or condition the occurrence of which is, or with the
lapse of time or the giving of notice or both would be, an Event of Default.

 

“Depository” means The Depository Trust Company, its nominees and successors.

 

“Designated Senior Debt” means (1) Indebtedness under or in respect of the
Senior Credit Facility and (2) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $25.0 million and is specifically
designated in the instrument evidencing such Senior Debt as “Designated Senior
Debt” by the Company.

 

“Deutsche Bank” means Deutsche Bank Trust Company Americas (f/k/a Bankers Trust
Company).

 

11

--------------------------------------------------------------------------------

 

“Disqualified Capital Stock” means that portion of any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event (other than an event which would constitute a Change of
Control), matures (excluding any maturity as the result of an optional
redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof (except, in each case, upon the occurrence of a Change of
Control) on or prior to the final maturity date of the Notes.

 

“Dollars” or the sign “$” means the lawful money of the United States of
America.

 

“Domestic Restricted Subsidiary” means a Restricted Subsidiary incorporated or
otherwise organized or existing under the laws of the United States, any state
thereof or any territory or possession of the United States.

 

“ECP” shall mean Evercore Capital Partners L.P., a Delaware limited partnership.

 

“ECP Affiliates” shall mean any Affiliate of ECP.

 

“ECP Investors” shall mean ECP, Evercore Capital Partners (NQ) L.P. and EBF
Group L.L.C., or any limited or general partner, stockholder, officer or
employee of such ECP Investor.

 

“Equity Investors” shall mean THL, THL Investors, ECP, ECP Investors and their
respective Affiliates, taken as a whole.

 

“Event of Default” means each of the events set forth in Section 6.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto.

 

“fair market value” means, with respect to any asset or property, the price
which could be negotiated in an
arm’s-length, free market transaction, for cash, between a willing seller and a
willing and able buyer, neither of whom is under undue pressure or compulsion to
complete the transaction. Fair market value shall be determined by the Board of
Directors of the Company acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of the Company
delivered to the Trustee.

 

“Funding Guarantor” has the meaning ascribed to it in Section 11.7.

 

12

--------------------------------------------------------------------------------

 

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession
of the United States, which are in effect as of the Issue Date.

 

“Global Security” has the meaning provided in Section 2.2.

 

“Guarantee Obligations” shall mean, as to any Guarantor, all obligations of
every nature of such Guarantor from time to time owing to the Holders and the
Trustee under this Indenture and the Notes (including its Guarantee), whether
for principal, reimbursements, interest, premium, fees, penalties, expenses,
indemnities, damages or otherwise.

 

“Guarantees” means, collectively, the guarantees of the Notes by the Guarantors
pursuant to Article XI which are evidenced by notations of guarantee
substantially in the form of Exhibit E.

 

“Guarantor” means (1) each of the Company’s Domestic Restricted Subsidiaries
that is a guarantor under the Senior Credit Facility on the Issue Date and (2)
each of the Company’s Domestic Restricted Subsidiaries that in the future
executes a supplemental indenture in which such Domestic Restricted Subsidiary
agrees to be bound by the terms of this Indenture as a Guarantor; provided that
any Person constituting a Guarantor as described above shall cease to constitute
a Guarantor when its respective Guarantee is released in accordance with the
terms of this Indenture.

 

“Guarantor Senior Debt” means, with respect to any Guarantor: the principal of,
premium, if any, and interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, whether or not such interest is an allowed claim under
applicable law) on any Indebtedness of a Guarantor, whether outstanding on the
Issue Date or thereafter created, incurred or assumed, unless, in the case of
any particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the Guarantee of such
Guarantor. Without limiting the generality of the foregoing, “Guarantor Senior
Debt” shall also include the principal of, premium, if any, interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on, and all other
amounts owing in respect of:

 

(x)            all. monetary obligations of every nature of such Guarantor
under, or with respect to, the Senior Credit Facility and the A/R Facility,
including, without

 

13

--------------------------------------------------------------------------------

 

limitation, obligations to pay principal and interest, reimbursement obligations
under letters of credit, fees, expenses and indemnities (and guarantees
thereof);

 

(y)           all Interest Swap Obligations of such Guarantor (and guarantees
thereof by such Guarantor); and

 

(z)            all obligations of such Guarantor (and guarantees thereof by such
Guarantor) under Currency Agreements;

 

in each case whether outstanding on the Issue Date or thereafter incurred.

 

Notwithstanding the foregoing, “Guarantor Senior Debt” shall not include:

 

(1)                           any Indebtedness of such Guarantor to a Subsidiary
of the Company;

 

(2)                           Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of such Guarantor or any Subsidiary
of such Guarantor (including, without limitation, amounts owed for compensation)
other than a shareholder who is also a lender (or an Affiliate of a lender)
under the Senior Credit Facility;

 

(3)                           Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services;

 

(4)                           Indebtedness represented by Disqualified Capital
Stock;

 

(5)                           any liability for federal, state, local or other
taxes owed or owing by such Guarantor;

 

(6)                           that portion of any Indebtedness incurred in
violation of Section 4.9 (but, as to any such obligation, no such violation
shall be deemed to exist for purposes of this clause (6) if the holder(s) of
such obligation or their representative shall have received an officers’
certificate of the Company to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate Section 4.9); provided
that the foregoing shall not apply to any incurrence under the Senior Credit
Facility pursuant to clause (2) of the definition of “Permitted Indebtedness”
which incurrence was in violation of such clause (2) solely as a result of the
increase in Attributed Receivables Facility Indebtedness (as defined in the
Senior Credit Facility as in effect on June 24, 2002) and the lenders under the
Senior Credit Facility extended such additional amounts in good faith without
knowledge of such increase;

 

14

--------------------------------------------------------------------------------

 

(7)                           Indebtedness which, when incurred and without
respect to any election under Section 111 l(b) of Title 11, United States Code,
is without recourse to such Guarantor; and

 

(8)                           any Indebtedness which is, by its express terms,
subordinated or junior in right of payment to any other Indebtedness of such
Guarantor.

 

“Guarantor Senior Debt Obligations” means all obligations of any Guarantor for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Guarantor Senior Debt, and all guarantees by such Guarantor of any of the
foregoing.

 

“Holder” or “Securityholder” means a Person in whose name a Note is registered.
The Holder of a Note will be treated as the owner of such Note for all purposes.

 

“Incur” means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
“Incurrence,” “Incurred,” “Incurrable” and “Incurring” shall have meanings
correlative to the foregoing); provided that any amendment, modification or
waiver of any document pursuant to which Indebtedness was previously Incurred
shall only be deemed to be an Incurrence of Indebtedness if and to the extent
such amendment, modification or waiver (i) increases the principal thereof or
interest rate or premium payable thereon or (ii) changes to an earlier date the
stated maturity thereof or the date of any scheduled or required principal
payment thereon or the time or circumstances under which such Indebtedness shall
be redeemed; provided, further, that any Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary of the Company (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of
the Company.

 

“Indebtedness” means with respect to any Person, without duplication:

 

(1)                           all Obligations of such Person for borrowed money;

 

(2)                           all Obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;

 

(3)                           all Capitalized Lease Obligations of such Person;

 

(4)                           all Obligations of such Person issued or assumed
as the deferred purchase price of properly, all conditional sale obligations and
all Obligations under

 

15

--------------------------------------------------------------------------------

 

any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business);

 

(5)                           all Obligations for the reimbursement of any
obligor on any letter of credit, banker’s acceptance or similar credit
transaction;

 

(6)                           guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (1) through (5) above and clause
(8) below;

 

(7)                           all Obligations of any other Person of the type
referred to in clauses (1) through (6) which are secured by any lien on any
property or asset of such Person, but which Obligations are not assumed by such
Person, the amount of such Obligation being deemed to be the lesser of the fair
market value of such property or asset or the amount of the Obligation so
secured;

 

(8)                           all Obligations under currency agreements and
interest swap agreements of such Person; and

 

(9)                           all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any.

 

For purposes hereof, (x) the “maximum fixed repurchase price” of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital Stock
and (y) any transfer of accounts receivable or other assets which constitutes a
sale for purposes of GAAP shall not constitute Indebtedness hereunder. Accrual
of interest, accretion or amortization of original issue discount and the
payment of any interest on any Indebtedness in the form of additional
Indebtedness with the same terms will not be deemed to be an incurrence of
Indebtedness for the purposes of Section 4.9.

 

“Indenture” means this Indenture as amended or supplemented from time to time
pursuant to the terms hereof.

 

“Institutional Accredited Investor” means an institution that is an “accredited
investor” as that term is defined in Rule 501(a)(l), (2), (3) or (7) under the
Securities Act.

 

16

--------------------------------------------------------------------------------

 

“Intercompany Indebtedness” means any Indebtedness of the Company or any
Guarantor or Wholly Owned Restricted Subsidiary of the Company that is not a
Guarantor which, in the case of the Company, is owing to any Guarantor or Wholly
Owned Restricted Subsidiary of the Company that is not a Guarantor and which, in
the case of any such Subsidiary, is owing to the Company or any Guarantor or
Wholly Owned Restricted Subsidiary of the Company that is not a Guarantor;
provided that if as of any date any Person other than the Company or a Guarantor
or a Wholly Owned Restricted Subsidiary of the Company that is not a Guarantor,
a lender under the Senior Credit Facility or a creditor under any interest rate
protection or other hedging agreement (or any collateral agent acting on behalf
of such lenders and/or creditors) owns or holds such Indebtedness, or holds any
Lien in respect thereof (other than a Lien in favor of the Holders, the lenders
under the Senior Credit Facility, the creditors under any interest rate
protection or other hedging agreement or any collateral agent for such lenders
and/or creditors), such Indebtedness shall no longer be Intercompany
Indebtedness.

 

“interest,” when used with respect to any Note, means the amount of all interest
accruing on such Note, including all interest accruing subsequent to the
occurrence of any events specified in Sections 6.1(f) and 6.1(g) or which would
have accrued but for any such event.

 

“Interest Payment Date,” when used with respect to any Note, means the stated
maturity of an installment of interest specified in such Note.

 

“Interest Swap Obligations” means the obligations of any Person, pursuant to any
arrangement with any other Person, whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount.

 

“Investment” by any Person in any other Person means, with respect to any
Person, any direct or indirect loan or other extension of credit (including,
without limitation, a guarantee) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Indebtedness issued by, such other Person. “Investment” shall
exclude extensions of trade credit by the Company and its Restricted
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of the Company or such Restricted Subsidiary, as the case may be. For
the purposes of Section 4.8:

 

(1)                           the Company shall be deemed to have made an
“Investment” equal to the fair market value of the net assets of any Restricted
Subsidiary at the time that such

 

17

--------------------------------------------------------------------------------

 

Restricted Subsidiary is designated an Unrestricted Subsidiary and the aggregate
amount of Investments made subsequent to the Issue Date shall exclude (to the
extent the designation as an Unrestricted Subsidiary was included as a
Restricted Payment) the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary, not to exceed the amount of the Investment deemed made at
the date of designation thereof as an Unrestricted Subsidiary; and

 

(2)                           the amount of any Investment shall be the original
cost of such Investment plus the cost of all additional Investments by the
Company or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
(including tax sharing payments) in connection with such Investment or any other
amounts received in respect of such Investment; provided that no such payment of
dividends or distributions or receipt of any such other amounts shall reduce the
amount of any Investment if such payment of dividends or distributions or
receipt of any such amounts would be included in Consolidated Net Income. If the
Company or any Restricted Subsidiary of the Company sells or otherwise disposes
of any Common Stock of any direct or indirect Restricted Subsidiary of the
Company such that, after giving effect to any such sale or disposition, the
Company no longer owns, directly or indirectly, more than 50% of the outstanding
Common Stock of such Restricted Subsidiary, the Company shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.

 

“Issue Date” means February 28, 2003.

 

“JP Morgan” means JP Morgan Chase Bank (f/k/a The Chase Manhattan Bank).

 

“Laws” means all applicable statutes, laws, ordinances, regulations, rules,
orders, judgments, writs, injunctions or decrees of any state, commonwealth,
nation, territory, possession or province, or Tribunal, and “Law” means each of
the foregoing.

 

“Legal Defeasance” has the meaning provided in Section 8.2.

 

“Legal Holiday” means any day other than a Business Day.

 

“Lien” means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).

 

18

--------------------------------------------------------------------------------

 

“Maturity Date” means, when used with respect to any Note, the date specified in
such Note as the fixed date on which the final installment of principal of such
Note is due and payable (in the absence of any acceleration thereof pursuant to
Section 6.2 or any Net Proceeds Offer or Change of Control Offer).

 

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds in the
form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Restricted Subsidiaries from such Asset Sale net of:

 

(1)                           out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions);

 

(2)                           taxes paid or payable after taking into account
any reduction in consolidated tax liability due to available tax credits or
deductions and any tax sharing arrangements;

 

(3)                           any repayment of debt under the Senior
Subordinated Credit Agreement to the extent such repayment is required
thereunder;

 

(4)                           any relocation expenses and severance, pension and
shutdown costs incurred as a result thereof;

 

(5)                           the repayment of Indebtedness that is secured by a
Lien on the Property or assets that are subject of such Asset Sale and such Lien
is permitted by this Indenture; and

 

(6)                           any portion of cash proceeds which the Company
determines in good faith should be reserved for post-closing adjustments, it
being understood and agreed that on the day that all such post-closing
adjustments have been determined, the amount (if any) by which the reserved
amount in respect of such Asset Sale exceeds the actual post-closing adjustments
payable by the Company or any of its Subsidiaries shall constitute Net Cash
Proceeds on such date; provided that, in the case of the sale by the Company of
an asset constituting an Investment made after the Issue Date (other than a
Permitted Investment), the “Net Cash Proceeds” in respect of such Asset Sale
shall not include the lesser of (x) the cash received with respect to such Asset
Sale and (y) the initial amount of such Investment, less, in the case of clause
(y), all amounts (up to an amount not to exceed the initial amount of such
Investment) received by the Company with respect to such Investment, whether by
dividend, sale, liquidation or repayment, in each case prior to the date of such
Asset Sale.

 

19

--------------------------------------------------------------------------------

 

“Net Proceeds Offer” shall have the meaning ascribed to such term in Section
4.12(a).

 

“Net Proceeds Offer Amount” shall have the meaning ascribed to such term in
Section 4.12(a).

 

“Net Proceeds Offer Payment Date” shall have the meaning ascribed to such term
in Section 4.12(a).

 

“Net Proceeds Offer Trigger Date” shall have the meaning ascribed to such term
in Section 4.12(a).

 

“Non-payment Default” shall have the meaning ascribed to such term in Section
10.2(b).

 

“Non-U.S. Person” means a Person who is not a U.S. Person, as defined in
Regulation S.

 

“Notes” means the Series A Notes and Series B Notes as amended or supplemented
from time to time in accordance with the terms hereof that are issued pursuant
to this Indenture.

 

“Obligations” means all obligations for (a) principal, premium, interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law),
penalties, fees, and (b) to the extent liquidated and quantifiable at the time
of determination, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.

 

“Officer” means the Chairman of the Board, the President, any Vice President,
the Chief Financial Officer, the Controller, the Treasurer, the Secretary or
Assistant Secretary.

 

“Officers’ Certificate” means, as applied to any corporation, a certificate
executed on behalf of such corporation by an Officer.

 

“Offshore Physical Securities” has the meaning provided in Section 2.2.

 

“Opinion of Counsel” means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, which may include outside or in-house
counsel to the Company.

 

“Paying Agent” has the meaning provided in Section 2.3.

 

20

--------------------------------------------------------------------------------

 

“Payment Blockage Notice” has the meaning ascribed to such term in Section
10.2(b).

 

“Payment Blockage Period” has the meaning provided in Section 10.2(b).

 

“Payment Default” shall have the meaning ascribed to such term in Section
10.2(a).

 

“Payment Restriction” has the meaning ascribed to such term in Section 4.10.

 

“Permitted Holders” shall mean and include (i) THL, THL Affiliates and THL
Investors and (ii) ECP, ECP Affiliates and ECP Investors.

 

“Permitted Indebtedness” means, without duplication, each of the following:

 

(1)                           Indebtedness under the Notes and this Indenture
and under the Senior Subordinated Credit Agreement (including the guarantees
made thereunder) in an aggregate principal amount not to exceed $293.5 million;

 

(2)                           Indebtedness incurred pursuant to the Senior
Credit Facility (including but not limited to Indebtedness in respect of letters
of credit or bankers’ acceptances issued or created thereunder) (including the
guarantees made thereunder) in a maximum principal amount not to exceed in the
aggregate the amount equal to $670 million less (x) the amount of any proceeds
from any incurrence by the Company or any of its Restricted Subsidiaries of
Attributed Receivables Facility Indebtedness (as defined in the Senior Credit
Facility as in effect on June 24, 2002) pursuant to the A/R Facility in excess
of $150.0 million and (y) the amount of all mandatory repayments of term loans
actually made under, and permanent commitment reductions actually made in the
revolving credit portion of, the Senior Credit Facility with Net Cash Proceeds
of Asset Sales applied thereto as required by Section 4.12;

 

(3)                           other Indebtedness of the Company and its
Restricted Subsidiaries outstanding on the Issue Date reduced by the amount of
any scheduled amortization payments or mandatory prepayments when actually paid
or permanent reductions thereon;

 

(4)                           Interest Swap Obligations of the Company or any
Restricted Subsidiary of the Company covering Indebtedness of the Company or any
of its Restricted Subsidiaries; provided that any Indebtedness to which any such
Interest Swap Obligations correspond is otherwise permitted to be incurred under
this Indenture;

 

21

--------------------------------------------------------------------------------

 

(5)                           Indebtedness of the Company or any of its
Restricted Subsidiaries under (i) Currency Agreements entered into, in the
judgment of the Company, to protect the Company or such Restricted Subsidiary
from foreign currency exchange rates and (ii) Raw Material Hedge Agreements;

 

(6)                           Intercompany Indebtedness of the Company or any of
its Restricted Subsidiaries;

 

(7)                           Acquired Indebtedness of any Restricted Subsidiary
of the Company that is not a Guarantor to the extent the Company could have
incurred such Indebtedness in accordance with the Consolidated Fixed Charge
Coverage Ratio of Section 4.9 on the date such Indebtedness became Acquired
Indebtedness; provided that such Acquired Indebtedness was not incurred in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary of the Company; provided, further, that the aggregate
amount of Indebtedness (including refinancings thereof) pursuant to this clause
(7) and clause (10) shall not exceed $40.0 million in the aggregate;

 

(8)                           Indebtedness arising from the honoring by a bank
or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business;

 

(9)                           any refinancing, modification, replacement,
renewal, restatement, refunding, deferral, extension, substitution, supplement,
reissuance or resale of existing or future Indebtedness (other than pursuant to
clauses (2), (4), (5), (6), (7), (8), (10), (11), (12), (13), (14) and (15) of
this definition), including any additional Indebtedness incurred to pay interest
or premiums required by the instruments governing such existing or future
Indebtedness as in effect at the time of issuance thereof or other premiums to
the extent the Company reasonably determines that such premiums are necessary to
effect the refinancing (“Required Premiums”) and fees in connection therewith;
provided that any such event shall not (1) result in an increase in the
aggregate principal amount of Permitted Indebtedness (except to the extent such
increase is a result of a simultaneous incurrence of additional Indebtedness (A)
to pay Required Premiums and related fees or (B) otherwise permitted to be
incurred under this Indenture) of the Company and its Restricted Subsidiaries
and (2) create Indebtedness with a Weighted Average Life to Maturity at the time
such Indebtedness is incurred that is less than the Weighted Average Life to
Maturity at such time of the Indebtedness being refinanced, modified, replaced,
renewed, restated, refunded, deferred, extended, substituted, supplemented,
reissued or resold; provided that no Restricted Subsidiary of the Company may
refinance any Indebtedness pursuant to this clause (9) other than its own
Indebtedness;

 

22

--------------------------------------------------------------------------------

 

(10)                         (x) Indebtedness incurred by the Company and its
Restricted Subsidiaries to finance the purchase, lease or improvement of
property (real or personal) or equipment (whether through the direct purchase of
assets or the Capital Stock of any Person owning such assets) and (y)
Capitalized Lease Obligations in an aggregate principal amount outstanding for
both clauses (x) and (y) (including refinancings thereof), together with any
Indebtedness pursuant to clause (7), not to exceed $40.0 million at the time of
any incurrence thereof;

 

(11)                         Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers’ compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement-type
obligations regarding workers’ compensation claims;

 

(12)                         Indebtedness arising from agreements of the Company
or a Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, earn out or other similar obligations, in each
case, incurred or assumed in connection with the disposition or acquisition of
any business, assets or a Restricted Subsidiary of the Company;

 

(13)                         obligations in respect of performance and surety
bonds and completion guarantees provided by the Company or any Restricted
Subsidiary of the Company in the ordinary course of business;

 

(14)                         Indebtedness consisting of guarantees (i) by the
Company of Indebtedness and any other obligation or liability permitted to be
incurred under this Indenture by Restricted Subsidiaries of the Company, and
(ii) subject to the provisions of Section 4.17, by Restricted Subsidiaries of
the Company of Indebtedness and any other obligation or liability permitted to
be incurred by the Company or other Restricted Subsidiaries of the Company; and

 

(15)                         additional Indebtedness of the Company or any
Restricted Subsidiary in an aggregate principal amount not to exceed $35.0
million at any one time outstanding (which amount may, but need not, be incurred
in whole or in part under the Senior Credit Facility; and

 

(16)                         Indebtedness of the Company represented by the
Senior Notes in an aggregate principal amount not to exceed $350.0 million and
the related guarantees by the Guarantors.

 

23

--------------------------------------------------------------------------------

 

Notwithstanding anything in this Indenture to the contrary, transactions
contemplated pursuant to the A/R Facility shall not be deemed to be the
incurrence of Indebtedness by the Company or by any Restricted Subsidiary.

 

“Permitted Investments” means:

 

(1)                           Investments by the Company or any Restricted
Subsidiary of the Company in any Restricted Subsidiary of the Company that is a
Guarantor or any Wholly Owned Subsidiary of the Company that is not a Guarantor
(whether existing on the Issue Date or created thereafter) and Investments in
the Company by any Restricted Subsidiary of the Company;

 

(2)                           cash and Cash Equivalents;

 

(3)                           Investments existing on the Issue Date;

 

(4)                           loans and advances to employees, officers and
directors of the Company and its Restricted Subsidiaries not in excess of $10.0
million at any one time outstanding;

 

(5)                           accounts receivable owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include concessionary trade terms as the
customary trade terms;

 

(6)                           Currency Agreements, Interest Swap Obligations and
Raw Material Hedge Agreements entered into by the Company or any of its
Restricted Subsidiaries for bona fide business reasons and not for speculative
purposes, and otherwise in compliance with this Indenture;

 

(7)                           Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers;

 

(8)                           guarantees by the Company or any of its Restricted
Subsidiaries of Indebtedness otherwise permitted to be incurred by the Company
or any of its Restricted Subsidiaries under this Indenture and the creation of
Liens on the assets of the Company or any of its Restricted Subsidiaries in
compliance with Section 4.11;

 

(9)                           Investments by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment (a)
such Person becomes a Restricted Subsidiary of the Company and a Guarantor or a
Wholly Owned Subsidiary

 

24

--------------------------------------------------------------------------------

 

of the Company that is not a Guarantor or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys all or
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company that is a Guarantor or any Wholly Owned
Subsidiary of the Company that is not a Guarantor;

 

(10)                         additional Investments having an aggregate fair
market value, taken together with all other Investments made pursuant to this
clause (10) that are at the time outstanding, not exceeding $20.0 million at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value);

 

(11)                         any Investment by the Company or a Restricted
Subsidiary of the Company in a Receivables Entity or any Investment by a
Receivables Entity in any other Person in connection with a Qualified
Receivables Transaction; provided that any Investment in a Receivables Entity is
in the form of a Purchase Money Note or an equity interest;

 

(12)                         Investments received by the Company or its
Restricted Subsidiaries as consideration for asset sales, including Asset Sales;
provided that such Asset Sale is otherwise effected in compliance with Section
4.12; and

 

(13)                         that portion of any Investment where the
consideration provided by the Company is Capital Stock of the Company (other
than Disqualified Capital Stock).

 

“Permitted Liens” means the following types of Liens:

 

(1)                           Liens securing the Notes and the Guarantees;

 

(2)                           Liens securing Acquired Indebtedness incurred in
reliance on clause (7) of the definition of “Permitted Indebtedness”; provided
that such Liens do not extend to or cover any property or assets of the Company
or of any of its Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or a Restricted Subsidiary of the Company;

 

(3)                           Liens existing on the Issue Date, together with
any Liens securing Indebtedness incurred in reliance on clause (9) of the
definition of “Permitted Indebtedness” in order to refinance the Indebtedness
secured by Liens existing on the Issue Date; provided that the Liens securing
the refinancing Indebtedness shall not extend to property other than that
pledged under the Liens securing the Indebtedness being refinanced; and

 

25

--------------------------------------------------------------------------------

 

(4)                           Liens in favor of the Company on the property or
assets, or any proceeds, income or profit therefrom, of any Restricted
Subsidiary.

 

“Person” means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof or any other entity.

 

“Physical Security” means, collectively, the Offshore Physical Securities and
the U.S. Physical Securities.

 

“Preferred Stock” of any Person means any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation.

 

“principal” of a debt security means the principal amount of the security plus,
when appropriate, the premium, if any, on the security.

 

“Private Placement Legend” means the legend initially set forth on the Series A
Notes in the form set forth on Exhibit A-1.

 

“Productive Assets” means assets (including Capital Stock) of a kind used or
usable in the businesses of the Company and its Restricted Subsidiaries as, or
related to such business, conducted on the Issue Date or in businesses
reasonably related thereto.

 

“pro forma” means, with respect to any calculation made or required to be made
pursuant to the terms of this Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company’s chief financial officer or Board of Directors in consultation with its
independent certified public accountants.

 

“Purchase Money Note” means a promissory note of a Receivables Entity evidencing
a line of credit, which may be irrevocable, from the Company or any Subsidiary
of the Company in connection with a Qualified Receivables Transaction to a
Receivables Entity, which note shall be repaid from cash available to the
Receivables Entity, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of newly generated receivables.

 

“Qualified Capital Stock” means any Capital Stock that is not Disqualified
Capital Stock.

 

“Qualified Institutional Buyer” or “QIB” shall have the meaning specified in
Rule 144A under the Securities Act.

 

26

--------------------------------------------------------------------------------

 

“Qualified Receivables Transaction” means any transaction or series of
transactions that may be entered into by the Company or any of its Subsidiaries
pursuant to which the Company or any or its Subsidiaries may sell, convey or
otherwise transfer to (a) a Receivables Entity (in the case of a transfer by the
Company or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Receivables Entity), or may grant a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.

 

“Raw Material Hedge Agreements” means agreements designed to hedge against
fluctuations in the cost of raw materials entered into in the ordinary course of
business in connection with the operation of the Company’s and its Restricted
Subsidiaries’ business.

 

“Receivable” means a right to receive payment arising from a sale or lease of
goods or services by a Person pursuant to an arrangement with another Person
pursuant to which such other Person is obligated to pay for goods or services
under terms that permit the purchase of such goods and services on credit, as
determined in accordance with GAAP.

 

“Receivables Entity” means a Wholly Owned Subsidiary of the Company (or another
Person in which the Company or any Subsidiary of the Company makes an Investment
and to which the Company or any Subsidiary of the Company transfers accounts
receivable and related assets) which engages in no activities other than in
connection with the financing of accounts receivable, all proceeds thereof and
all rights (contractual or other), collateral and other assets relating thereto,
and any business or activities incidental or related to such business, and which
is designated by the Board of Directors of the Company (as provided below) as a
Receivables Entity:

 

(1)                     no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which:

 

(i)            is guaranteed by the Company or any Subsidiary of the Company
(excluding guarantees of Obligations (other than the principal of, and interest
on, Indebtedness) pursuant to Standard Securitization Undertakings);

 

(ii)           is recourse to or obligates the Company or any Subsidiary of the
Company in any way other than pursuant to Standard Securitization Undertakings;
or

 

27

--------------------------------------------------------------------------------

 

(iii)     subjects any property or asset of the Company or any Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization Undertakings;

 

(2)      with which neither the Company nor any Subsidiary of the Company has
any material contract, agreement, arrangement or understanding other than on
terms no less favorable to the Company or such Subsidiary than those that might
be obtained at the time from Persons that are not Affiliates of the Company,
other than (i) pursuant to documents which evidence a Qualified Receivables
Transaction and (ii) fees payable in the ordinary course of business in
connection with servicing accounts receivable; and

 

(3)      to which neither the Company nor any Subsidiary of the Company has any
obligation to maintain or preserve such entity’s financial condition or cause
such entity to achieve certain levels of operating results other than through
the contribution of additional Receivables, related security and collections
thereto and proceeds of the foregoing.

 

Any such designation by the Board of Directors of the Company shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the resolution of
the Board of Directors of the Company giving effect to such designation and an
Officers’ Certificate certifying that such designation complied with the
foregoing conditions.

 

“Redemption Date” means, with respect to any Note, the Maturity Date of such
Note or the date on which such Note is to be redeemed by the Company pursuant to
the terms of the Notes.

 

“Reference Date” shall have the meaning ascribed to such term in Section 4.8(c).

 

“Registrar” has the meaning provided in Section 2.3.

 

“Registration Rights Agreement” means the Registration Rights Agreement by and
among the Company, Deutsche Bank, JP Morgan and Banc of America, as agents, and
the lenders named therein, relating to $293.5 million of the Notes and dated as
of the Issue Date, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.

 

“Regulation S” means Regulation S under the Securities Act.

 

28

--------------------------------------------------------------------------------

 

“Representative” means a trustee or other trustee, agent or representative in
respect of any Designated Senior Debt; provided that if, and for so long as, any
Designated Senior Debt lacks such a representative, then the Representative for
such Designated Senior Debt shall at all times constitute the holders of a
majority in outstanding principal amount of such Designated Senior Debt in
respect of any Designated Senior Debt.

 

“Responsible Officer” shall mean, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person’s knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.

 

“Restricted Security” has the meaning set forth in Rule 144(a)(3) under the
Securities Act; provided that the Trustee shall be entitled to request and
conclusively rely upon an Opinion of Counsel with respect to whether any Note is
a Restricted Security.

 

“Restricted Subsidiary” of any Person means any Subsidiary of such Person which
at the time of determination is not an Unrestricted Subsidiary.

 

“Rule 144A” means Rule 144A under the Securities Act.

 

“Sale and Leaseback Transaction” means any direct or indirect arrangement with
any Person or to which any such Person is a party, providing for the leasing to
the Company or a Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Issue Date or later acquired, which
has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such property.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securityholder” means Holder.

 

“Senior Credit Facility” means the Credit Agreement dated as of December 7,
1999, among the Company, certain of its subsidiaries, the lenders party thereto
in their capacities as lenders thereunder and J.P. Morgan Securities Inc. (f/k/a
Chase Securities Inc.) and Deutsche Bank Securities Inc., as Joint Lead
Arrangers and Joint Book Managers, JP Morgan Chase Bank, (f/k/a The Chase
Manhattan Bank), as Administrative Agent, Deutsche

 

29

--------------------------------------------------------------------------------

 

Bank Trust Company Americas (f/k/a Bankers Trust Company), as Syndication Agent,
Bank of America, N.A., as Documentation Agent, and various co-agents, together
with the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Restricted
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.

 

“Senior Debt” means the principal of, premium, if any, and interest (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is an allowed claim under applicable law) on any Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall not be senior in
right of payment to the Notes. Without limiting the generality of the foregoing,
“Senior Debt” shall also include the principal of, premium, if any, interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other amounts owing in respect of:

 

(1)                           all monetary obligations of every nature of the
Company under, or with respect to, the Senior Credit Facility and the A/R
Facility, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities (and guarantees thereof);

 

(2)                           all Interest Swap Obligations of the Company (and
guarantees thereof by the Company); and

 

(3)                           all obligations of the Company (and guarantees
thereof by the Company) under Currency Agreements;

 

in each case whether outstanding on the Issue Date or thereafter incurred.

 

Notwithstanding the foregoing, “Senior Debt” shall not include:

 

(1)                           any Indebtedness of the Company to a Subsidiary of
the Company;

 

30

--------------------------------------------------------------------------------

 

(2)                           Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Company or any Subsidiary of
the Company (including, without limitation, amounts owed for compensation) other
than a shareholder who is also a lender (or an Affiliate of a lender) under the
Senior Credit Facility;

 

(3)                           Indebtedness to trade creditors and other amounts
incurred in connection with obtaining goods, materials or services;

 

(4)                           Indebtedness represented by Disqualified Capital
Stock;

 

(5)                           any liability for federal, state, local or other
taxes owed or owing by the Company;

 

(6)                           that portion of any Indebtedness incurred in
violation of Section 4.9 (but, as to any such obligation, no such violation
shall be deemed to exist for purposes of this clause (6) if the holder(s) of
such obligation or their representative shall have received an officers’
certificate of the Company to the effect that the incurrence of such
Indebtedness does not (or, in the case of revolving credit indebtedness, that
the incurrence of the entire committed amount thereof at the date on which the
initial borrowing thereunder is made would not) violate such provisions of this
Indenture); provided that the foregoing shall not apply to any incurrence under
the Senior Credit Facility pursuant to clause (2) of the definition of
“Permitted Indebtedness” which incurrence was in violation of such clause (2)
solely as a result of the increase in Attributed Receivables Facility
Indebtedness (as defined in the Senior Credit Facility as in effect on June 24,
2002) and the lenders under the Senior Credit Facility extended such additional
amounts in good faith without knowledge of such increase;

 

(7)                           Indebtedness which, when incurred and without
respect to any election under Section 111l(b) of Title 11, United States Code,
is without recourse to the Company; and

 

(8)                           any Indebtedness which is, by its express terms,
subordinated or junior in right of payment to any other Indebtedness of the
Company.

 

“Senior Debt Obligations” means all obligations of the Company for principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any Senior Debt,
and all guarantees by the Company of any of the foregoing.

 

“Senior Notes” means the Company’s $350,000,000 aggregate principal amount of
10-7/8% Senior Notes due 2009.

 

31

--------------------------------------------------------------------------------

 

“Senior Subordinated Credit Agreement” shall mean the Senior Subordinated Credit
Agreement dated as of December 7, 1999, by and among Vertis Holdings, the
Company, the subsidiary guarantors named therein, the lenders party thereto, and
the agent banks named therein, as the same may be amended from time to time.

 

“Senior Subordinated Indebtedness” means (x) with respect to the Notes, any
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes and is not by its express terms subordinate in
right of payment to any Indebtedness of the Company which is not Senior Debt and
(y) with respect to a Guarantee, any Indebtedness of a Guarantor that
specifically provides that such Indebtedness is to rank pari passu with such
Guarantor’s Guarantee and is not by its express terms subordinate in right of
payment to any Indebtedness of such Guarantor which is not Guarantor Senior
Debt.

 

“Series A Notes” means the 13½% Senior Subordinated Notes due 2009, Series A,
issued, authenticated and delivered under this Indenture, as amended or
supplemented from time to time pursuant to the terms of this Indenture
substantially in the form set forth in Exhibit A-1.

 

“Series B Notes” means the 13½% Senior Subordinated Notes due 2009, Series B
(the terms of which are identical to the Series A Notes except that the Series B
Notes shall be registered under the Securities Act, and shall not contain the
restrictive legend on the face of the form of the Series A Notes) to the extent
issued in exchange for the Series A Notes pursuant to the terms of the
Registration Rights Agreement and this Indenture substantially in the form set
forth in Exhibit A-2.

 

“Significant Subsidiary” with respect to any Person, means any Restricted
Subsidiary of such Person that satisfies the criteria for a “significant
subsidiary” set forth in Rule 1.02(w) of Regulation S-X under the Exchange Act.

 

“Standard Securitization Undertakings” means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which, taken as a whole, are reasonably customary in an accounts
receivable transaction (including, without limitation, all such representations,
warrants, covenants and indemnities included in the documents evidencing the A/R
Facility as in effect on the Issue Date).

 

“Subordinated Obligation” means(x) with respect to the Company, any Indebtedness
of the Company (whether outstanding on the Issue Date or thereafter incurred)
which is expressly subordinate in right of payment to the Notes, pursuant to a
written agreement and (y) with respect to a Guarantor, any Indebtedness of such
Guarantor (whether outstanding on the Issue Date or thereafter incurred) which
is expressly subordinate in right of payment to the Guarantee of such Guarantor,
pursuant to a written agreement.

 

32

--------------------------------------------------------------------------------

 

“Subsidiary” with respect to any Person, means:

 

(1)                           any corporation of which the outstanding Capital
Stock having at least a majority of the votes entitled to be cast in the
election of directors under ordinary circumstances shall at the time be owned,
directly or indirectly, by such Person; or

 

(2)                           any other Person of which at least a majority of
the voting interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.

 

“THL” shall mean Thomas H. Lee Partners, L.P., a Delaware limited partnership.

 

“THL Affiliates” shall mean any Affiliate of THL, provided that for purposes of
the definition of “Change of Control,” the term THL Affiliate shall not include
any portfolio company of either THL or any Affiliate of THL.

 

“THL Investor” shall mean and include Thomas H. Lee Equity Fund, IV, L.P.,
Thomas H. Lee Foreign Fund, IV, L.P., Thomas H. Lee Equity Fund IV, L.P., 1997
Thomas H. Lee Nominee Trust and Thomas H. Lee Charitable Investment, L.P., or
any limited or general partner, stockholder, officer, employee or consultant of
such THL Investor, or any officer, employee or consultant of THL; provided that
for the purposes of making calculations under the definition of “Change of
Control,” the aggregate amount of equity of Vertis Holdings attributable to
consultants of THL and consultants of THL Investors may not exceed $3 million.

 

“TIA” means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in
effect on the date of this Indenture.

 

“Transaction Date” has the meaning ascribed to such term in the definition of
“Consolidated Fixed Charge Coverage Ratio.”

 

“Tribunal” means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency, authority or
instrumentality of the United States or any state, province, commonwealth,
nation, territory or possession, whether now or hereafter constituted and/or
existing.

 

“Trustee” means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.

 

“Unrestricted Subsidiary” of any Person means:

 

33

--------------------------------------------------------------------------------

 

(1)                           any Subsidiary of such Person that at the time of
determination shall be or continue to be designated an Unrestricted Subsidiary
by the Board of Directors of such Person in the manner provided below; and

 

(2)                           any Subsidiary of an Unrestricted Subsidiary.

 

The Board of Directors may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, the Company or any other Subsidiary of the Company that is not a
Subsidiary of the Subsidiary to be so designated; provided that:

 

(1)                           the Company certifies to the Trustee that such
designation complies with Section 4.8; and

 

(2)                           each Subsidiary to be so designated and each of
its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries.

 

The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if:

 

(1)                           immediately after giving effect to such
designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.9;
and

 

(2)                           immediately before and immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing. Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an officers’ certificate
certifying that such designation complied with the foregoing provisions.

 

“U.S. Government Obligations” means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which guarantee or obligation the full faith and credit of the United
States is pledged.

 

“U.S. Legal Tender” means such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts.

 

34

--------------------------------------------------------------------------------

 

“U.S. Physical Securities” means Notes, together with their related Guarantees,
issued in the form of certificated Notes, together with their related
Guarantees, in registered form in substantially the form set forth in Exhibit
A-l or Exhibit A-2.

 

“Vertis Holdings” means Vertis Holdings, Inc., a Delaware corporation and the
parent of the Company.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

 

“Wholly Owned Subsidiary” means any Restricted Subsidiary of the Company all the
outstanding voting interests or voting Capital Stock of which (other than
directors’ qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned, directly or
indirectly, by the Company.

 

SECTION 1.2             Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision of the TIA, the provision shall be
deemed incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

 

(a)  “Commission” means the SEC;

 

(b)  “indenture securities” means the Notes, together with their related
Guarantees;

 

(c)  “indenture security holder” means a Securityholder;

 

(d)  “indenture to be qualified” means this Indenture;

 

(e)  “indenture trustee” or “institutional trustee” means the Trustee; and

 

(f)  “obligor” on the indenture securities means the Company or any other
obligor on the Notes and the Guarantees.

 

All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule and not otherwise
defined herein have the meanings so assigned to them therein.

 

35

--------------------------------------------------------------------------------

 

SECTION 1.3             Rules of Construction.

 

Unless the context otherwise requires:

 

(a)  a term has the meaning assigned to it;

 

(b)  “or” is exclusive;

 

(c)  words in the singular include the plural, and words in the plural include
the singular;

 

(d)  provisions apply to successive events and transactions;

 

(e)  “herein,” “hereof” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision; and

 

(f)  unless otherwise specified herein, all accounting terms used herein shall
be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP as in effect from time to time, applied on a basis
consistent with the most recent audited consolidated financial statements of the
Company.

 

ARTICLE II

 

THE SECURITIES

 

SECTION 2.1             Form and Dating.

 

The Series A Notes and the Series B Notes and the Trustee’s certificate of
authentication with respect thereto shall be substantially in the form set forth
in Exhibits A-l and A-2 annexed hereto, which is hereby incorporated in and
expressly made a part of this Indenture. The Notes may have notations, legends
or endorsements required by law, rule, usage or agreement to which the Company
is subject. Each Note shall be dated the date of its issuance and shall show the
date of its authentication. The terms and provisions contained in the Notes and
the Guarantees shall constitute, and are expressly made, a part of this
Indenture.

 

SECTION 2.2             Execution and Authentication.

 

Two Officers shall execute the Notes on behalf of the Company by either manual
or facsimile signature. The Guarantors shall execute the Guarantees in the
manner set forth in Article XI.

 

36

--------------------------------------------------------------------------------

 

If a Person whose signature is on a Note as an Officer no longer holds that
office at the time the Trustee authenticates the Note, the Note shall be valid
nevertheless.

 

A Note shall not be valid until the Trustee manually signs the certificate of
authentication on the Note. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture. Each Note shall be dated the
date of its authentication.

 

The Trustee shall authenticate Series A Notes for original issue from time to
time in the aggregate principal amount not to exceed $293,500,000, upon receipt
of an Officers’ Certificate. In addition, the Trustee or an authenticating agent
shall authenticate Series B Notes to the extent issued pursuant to the terms of
the Registration Rights Agreement upon receipt of an Officers’ Certificate. The
aggregate principal amount of Notes outstanding at any time may not exceed
$293,500,000 except as provided in Section 2.7.

 

The Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Notes. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. Such authenticating agent shall have the same
authenticating rights and duties as the Trustee in any dealings hereunder with
the Company or with any Affiliate of the Company.

 

The Notes shall be issuable only in registered form without coupons and only in
denominations of $1,000 and any integral multiple thereof.

 

Notes offered and sold in reliance on Rule 144A shall be issued initially in the
form of one or more permanent global notes in registered form, substantially in
the form set forth in Exhibit A-l (“Global Securities”), deposited with the
Trustee, as custodian for the Depository, and shall bear the legend set forth on
Exhibit B. The aggregate principal amount of any Global Security may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository, as hereinafter provided.

 

Notes offered and sold in offshore transactions in reliance on Regulation S
shall be issued in the form of certificated notes in registered form set forth
in Exhibit A-l (“Offshore Physical Securities”).

 

SECTION 2.3             Registrar and Paying Agent.

 

The Company shall maintain an office or agency (which shall be located in the
Borough of Manhattan in the City of New York, State of New York) where Notes may
be presented for registration of transfer or for exchange (the “Registrar”), an
office or agency (which shall be located in the Borough of Manhattan, City of
New York, State of New York) where Notes may be presented for payment (the
“Paying Agent”) and an office or agency

 

37

--------------------------------------------------------------------------------

 

where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may have one or more
co-registrars and one or more additional paying agents. The term “Paying Agent”
includes any additional paying agent. The Company may act as its own Paying
Agent, except that for the purposes of payments on account of principal on the
Notes pursuant to Sections 4.12 and 4.15, neither the Company nor any Affiliate
of the Company may act as Paying Agent.

 

The Company shall enter into an appropriate agency agreement with any Agent not
a party to this Indenture, which shall incorporate the provisions of the TIA.
The agreement shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and address of any
such Agent. If the Company fails to maintain a Registrar or Paying Agent, or
fails to give the foregoing notice, the Trustee shall act as such and shall be
entitled to appropriate compensation in accordance with Section 7.7.

 

The Company initially appoints the Trustee as Registrar and Paying Agent and
agent for service of notices and demands in connection with the Notes.

 

SECTION 2.4             Paying Agent To Hold Money in Trust.

 

Each Paying Agent shall hold in trust for the benefit of the Securityholders or
the Trustee all money held by the Paying Agent for the payment of principal of
or interest on the Notes, and shall notify the Trustee of any default by the
Company in making any such payment. Money held in trust by the Paying Agent need
not be segregated except as required by law and in no event shall the Paying
Agent be liable for any interest on any money received by it hereunder. The
Company at any time may require the Paying Agent to pay all money held by it to
the Trustee and account for any funds disbursed and the Trustee may at any time
during the continuance of any Event of Default specified in Section 6.1(a) or
(b) upon written request to the Paying Agent, require such Paying Agent to pay
forthwith all money so held by it to the Trustee and to account for any funds
disbursed. Upon making such payment, the Paying Agent shall have no further
liability for the money delivered to the Trustee.

 

SECTION 2.5             Securityholder Lists.

 

The Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of the
Securityholders and otherwise comply with TIA §312(a). If the Trustee is not the
Registrar, the Company shall furnish or cause the Registrar to furnish to the
Trustee before each Interest Payment Date, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the
Securityholders.

 

38

--------------------------------------------------------------------------------

 

SECTION 2.6             Transfer and Exchange.

 

Subject to the provisions of Sections 2.14 and 2.15, when Notes are presented to
the Registrar or a co-Registrar with a request from the Holder of such Notes to
register the transfer or to exchange them for an equal principal amount of Notes
of other authorized denominations, the Registrar shall register the transfer or
make the exchange as requested; provided that every Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar, duly executed by the Holder thereof or his attorneys
duly authorized in writing. To permit registrations of transfers and exchanges,
the Company shall issue and execute and the Trustee shall authenticate new Notes
(together with related Guarantees executed by the Guarantors) evidencing such
transfer or exchange. No service charge shall be made to the Securityholder for
any registration of transfer or exchange. The Company may require from the
Securityholder payment of a sum sufficient to cover any transfer taxes or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 2.10,
4.12, 4.15 or 9.5 (in which events the Company will be responsible for the
payment of such taxes). The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of any Note (i) during a period beginning
at the opening of business 15 days before the mailing of a notice of redemption
of Notes and ending at the close of business on the day of such mailing and (ii)
selected for redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any Note being redeemed in part.

 

SECTION 2.7             Replacement Notes.

 

If a mutilated Note is surrendered to the Registrar or the Trustee or if the
Holder of a Note of any series claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note (together with related Guarantees executed by the Guarantors)
if the Holder of such Note furnishes to the Company and to the Trustee evidence
reasonably acceptable to them of the ownership and the destruction, loss or
theft of such Note. If required by the Trustee or the Company, an indemnity bond
shall be posted, sufficient in the judgment of the Company or the Trustee, as
the case may be, to protect the Company, the Trustee or any Agent from any loss
that any of them may suffer if such Note is replaced. The Company may charge
such Holder for the Company’s expenses in replacing such Note and the Trustee
may charge the Company for the Trustee’s expenses in replacing such Note. Every
replacement Note shall constitute an additional obligation of the Company and
shall be entitled to the benefits of this Indenture.

 

39

--------------------------------------------------------------------------------

 

SECTION 2.8             Outstanding Notes.

 

The Notes outstanding at any time are all Notes that have been authenticated by
the Trustee except for (a) those canceled by it, (b) those delivered to it for
cancellation or (c) those described in this Section 2.8 as not outstanding. A
Note does not cease to be outstanding because the Company or one of its
Affiliates holds the Note.

 

If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser in whose hands such Note is a legal, valid and
binding obligation of the Company.

 

If the Paying Agent holds, in its capacity as such, on any Maturity Date or on
any optional redemption date money sufficient to pay all accrued interest and
principal with respect to such Notes payable on that date and is not prohibited
from paying such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Notes cease to be outstanding and
interest on them ceases to accrue.

 

SECTION 2.9             Treasury Notes.

 

In determining whether the Holders of the required principal amount of Notes
have concurred in any declaration of acceleration or notice of default or
direction, waiver or consent or any amendment, modification or other change to
this Indenture, Notes owned by the Company or any Subsidiary or an Affiliate of
the Company shall be deemed not to be outstanding, except that for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent or any amendment, modification or other change to
this Indenture, only Notes that the Trustee knows are so owned shall be so
disregarded. The Company shall notify the Trustee, in writing, when it or any of
its Affiliates repurchases or otherwise acquires Notes, of the aggregate
principal amount of such Notes so repurchased or otherwise acquired.

 

SECTION 2.10           Temporary Notes.

 

Until definitive Notes are prepared and ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes (together with
related Guarantees executed by the Guarantors). Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company reasonably considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
definitive Notes (together with related Guarantees executed by the Guarantors)
in exchange for temporary Notes. Until such exchange, such temporary Notes shall
be entitled to the same rights, benefits and privileges as the definitive Notes.

 

40

--------------------------------------------------------------------------------

 

SECTION 2.11           Cancellation.

 

The Company at any time may deliver Notes to the Trustee for cancellation. The
Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall (subject to
the record-retention requirements of the Exchange Act) dispose of canceled Notes
unless the Company directs the Trustee to return such Notes to the Company. The
Company may not reissue or resell, or issue new Notes to replace, Notes that the
Company has redeemed or paid, or that have been delivered to the Trustee for
cancellation.

 

SECTION 2.12           Defaulted Interest.

 

If the Company defaults in a payment of interest on the Notes, it shall pay the
defaulted interest, plus, to the extent permitted by law, any interest payable
on the defaulted interest, to the Persons who are Securityholders on a
subsequent special record date. Such record date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of defaulted interest,
whether or not such day is a Business Day. At least 15 days before the
subsequent special record date, the Company shall mail (or cause to be mailed)
to each Securityholder a notice that states the record date, the payment date
and the amount of defaulted interest to be paid. Notwithstanding the foregoing,
any interest which is paid prior to the expiration of the 30-day period set
forth in Section 6.1 (a) or (b) shall be paid to Holders of Notes as of the
regular record date for the interest payment date for which interest has not
been paid. Notwithstanding the foregoing, the Company may make payment of any
defaulted interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange.

 

SECTION 2.13           CUSIP Number.

 

The Company in issuing the Notes may use a “CUSIP” number, and if so, such CUSIP
number shall be included in notices of redemption or exchange as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness or accuracy of the CUSIP number printed in the notice
or on the Notes, and that reliance may be placed only on the other
identification numbers printed on the Notes. The Company will promptly notify
the Trustee of any change in the CUSIP number.

 

41

--------------------------------------------------------------------------------

 

SECTION 2.14           Book-Entry Provisions for Global Securities.

 

(a)           The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.

 

Members of, or participants in, the Depository (“Agent Members”) shall have no
rights under this Indenture with respect to any Global Security held on their
behalf by the Depository, or the Trustee as its custodian, or under the Global
Security, and the Depository may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of the Global Security
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Note.

 

(b)           Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. U.S. Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities, in accordance
with the rules and procedures of the Depository, only if (i) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for any Global Security and a successor depositary is not appointed by the
Company within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a request from the Depository
to issue U.S. Physical Securities.

 

(c)           In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of U.S.
Physical Securities (together with related Guarantees executed by the
Guarantors) of authorized denominations.

 

(d)           Any U.S. Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.15, bear the legend regarding transfer restrictions applicable to the
U.S. Physical Securities set forth in Exhibit A-1.

 

(e)           The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through

 

42

--------------------------------------------------------------------------------

 

Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.

 

SECTION 2.15           Special Transfer Provisions.

 

(a)           Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:

 

(i)            the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the Private
Placement Legend, if (x) the requested transfer is after the second anniversary
of the Issue Date or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the
proposed transferee has delivered to the Registrar a certificate substantially
in the form of Exhibit C hereto or (2) in the case of a transfer to a Non-U.S.
Person, the proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto, together, in the case of clause
(i)(x) with such other certifications, legal opinions or other information as
the Company or the Trustee may reasonably require to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act; and

 

(ii)           if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Security, upon receipt by the Registrar of (x)
the certificate, if any, required by paragraph (i) above and (y) instructions
given in accordance with the Depository’s and the Registrar’s procedures,

 

whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of a Global Security in an amount equal to
the principal amount of the beneficial interest in a Global Security to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Securities (together with related
Guarantees executed by the Guarantors) of like tenor and amount.

 

(b)           Transfers to QIBs.  The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):

 

(i)            the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the Registrar in
writing, that the

 

43

--------------------------------------------------------------------------------

 

sale has been made in compliance with the provisions of Rule 144A to a
transferee who has signed the certification provided for on the form of Note
stating, or has otherwise advised the Company and the Registrar in writing, that
it is purchasing the Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such account
is a QIB within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and

 

(ii)           if the proposed transferee is an Agent Member, and the Notes to
be transferred consist of Physical Securities which after transfer are to be
evidenced by an interest in the Global Security, upon receipt by the Registrar
of instructions given in accordance with the Depository’s and the Registrar’s
procedures, the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security in an amount equal to
the principal amount of the Physical Securities to be transferred, and the
Trustee shall cancel the Physical Securities so transferred.

 

(c)           Private Placement Legend.  Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the circumstances contemplated by paragraph (a)(i)(x) of this Section
2.15 exist, (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act or (iii)
such Note has been sold pursuant to an effective registration statement under
the Securities Act.

 

(d)           General.  By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.

 

The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.14 or this Section 2.15. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.

 

44

--------------------------------------------------------------------------------

 

ARTICLE III

 

REDEMPTION

 

SECTION 3.1             Notices to Trustee.

 

If the Company elects to redeem Notes pursuant to Section 5 of the Notes, it
shall notify the Trustee and the Paying Agent in writing of the Redemption Date
and the principal amount of Notes to be redeemed.

 

The Company shall give each notice provided for in this Section 3.1 at least 30
but not more than 60 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee), together with an Officers’ Certificate
stating that such redemption will comply with the conditions contained herein
and in the Notes.

 

SECTION 3.2             Selection of Notes To Be Redeemed.

 

If less than all of the Notes are to be redeemed, the Trustee shall select Notes
to be so redeemed in compliance with applicable legal requirements and the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not listed on a national securities
exchange, by lot, pro rata or in such other fair and appropriate manner chosen
at the discretion of the Trustee.

 

The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. Notes in denominations of $1,000 or less may
only be redeemed in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Notes that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption. The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount of each certificate selected for redemption.

 

SECTION 3.3             Notice of Redemption.

 

At least 30 days but not more than 60 days before a Redemption Date, the Company
shall mail or cause the mailing of a notice of redemption by first-class mail,
postage prepaid, to each Holder of Notes to be redeemed at such Holder’s address
as it appears on the Notes register maintained by the Registrar with a copy to
the Trustee and any Paying Agent.

 

The notice shall identify the Notes to be redeemed and shall state:

 

(a)  the Redemption Date;

 

45

--------------------------------------------------------------------------------

 

(b)  the redemption price to be paid;

 

(c)  the name and address of the Paying Agent;

 

(d)  that Notes called for redemption must be surrendered to the Paying Agent to
collect the redemption price and accrued interest, if any;

 

(e)  that, unless the Company defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
Redemption Date and the only remaining right of the Holders of such Notes is to
receive payment of the redemption price upon surrender to the Paying Agent of
the Notes to be redeemed;

 

(f)  if any Note is to be redeemed in part, the portion of the principal amount
(equal to $1,000 or any integral multiple thereof) of such Note to be redeemed
and that, on or after the Redemption Date, upon surrender of such Note, a new
Note or Notes in aggregate principal amount equal to the unredeemed portion
thereof will be issued without charge to the Securityholder;

 

(g)  if less than all of the Notes are to be redeemed, the identification of the
particular Notes (or portion thereof) to be redeemed, as well as the aggregate
principal amount of Notes to be redeemed; and

 

(h)  the CUSIP number, if any.

 

At the Company’s request, made to the Trustee at least 35 days prior to the
Redemption Date, the Trustee shall give the notice of redemption in the
Company’s name and at the Company’s expense in accordance with this Section 3.3.

 

SECTION 3.4             Effect of Notice of Redemption.

 

Once notice of redemption is mailed, Notes called for redemption become due and
payable on the Redemption Date and at the redemption price. Upon surrender to
the Paying Agent, such Notes shall be paid at the redemption price plus accrued
interest to the Redemption Date, but interest installments whose Interest
Payment Date is on or prior to such Redemption Date will be payable on the
relevant Interest Payment Dates to the Holders of record at the close of
business on the relevant record dates referred to in the Notes.

 

SECTION 3.5             Deposit of Redemption Price.

 

Prior to 10:00 a.m. New York City time on the Redemption Date, the Company shall
deposit with the Paying Agent in immediately available funds U.S. Legal Tender

 

46

--------------------------------------------------------------------------------

 

sufficient to pay the redemption price of and accrued interest on all Notes or
portions thereof to be redeemed on that date.

 

If any Note surrendered for redemption in the manner provided in the Notes shall
not be so paid on the Redemption Date due to the failure of the Company to
deposit sufficient funds with the Paying Agent, interest will continue to accrue
from and including the Redemption Date until such payment is made on the unpaid
principal and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the date and in the manner provided in the Notes.

 

SECTION 3.6             Notes Redeemed in Part.

 

Upon surrender to the Paying Agent of a Note that is redeemed in part, the
Company shall execute and the Trustee shall authenticate for the Holder a new
Note (together with related Guarantees executed by the Guarantors) equal in
principal amount to the unredeemed portion of the Note surrendered.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.1             Payment of Notes.

 

The Company shall pay the principal of and interest on the Notes on the dates
and in the manner provided in the Notes and this Indenture.

 

An installment of principal or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Company or any Subsidiary of the
Company or any Affiliate of any thereof) holds on such date immediately
available funds designated for and sufficient to pay such installment.

 

The Company shall pay interest (including Accrued Bankruptcy Interest) on
overdue principal and on overdue installments of interest, in each case at the
rate per annum specified in the Notes, to the extent lawful.

 

SECTION 4.2             Maintenance of Office or Agency.

 

The Company shall maintain in the Borough of Manhattan, the City of New York, an
office or agency, where Notes may be surrendered for registration of transfer or
exchange or for presentation for payment and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company will give

 

47

--------------------------------------------------------------------------------

 

prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee set forth in Section 13.2.

 

The Company may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, the City
of New York, for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.

 

The Company hereby initially designates the Corporate Trust Office of the
Trustee set forth in Section 13.2 as an agency of the Company in accordance with
Section 2.3.

 

SECTION 4.3             Corporate Existence.

 

Subject to Article V hereof, the Company shall do or cause to be done, at its
own cost and expense, all things necessary to, and will cause each of its
Restricted Subsidiaries to, preserve and keep in full force and effect the
corporate existence and rights (charter and statutory), licenses and/or
franchises of the Company and each of its Restricted Subsidiaries; provided that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate existence of any of its Restricted Subsidiaries, if
in the judgment of the Board of Directors or management of the Company (i) such
preservation or existence is not desirable in the conduct of business of the
Company or such Restricted Subsidiary and (ii) the loss of such right, license
or franchise or the dissolution of such Restricted Subsidiary is not adverse in
any material respect to the Holders.

 

SECTION 4.4             Payment of Taxes and Other Claims.

 

The Company shall and shall cause each of its Subsidiaries to pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (a)
all material taxes, assessments and governmental charges levied or imposed upon
its or its Subsidiaries’ income, profits or property and (b) all material lawful
claims for labor, materials and supplies which, if unpaid, would be reasonably
likely to by law become a Lien upon its property or the property of any of its
Subsidiaries; provided that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate negotiations or proceedings and for which disputed amounts
adequate reserves (in the good faith judgment of

 

48

--------------------------------------------------------------------------------

 

the Board of Directors or management of the Company) have been made in
accordance with GAAP.

 

SECTION 4.5             Maintenance of Properties.

 

The Company shall and shall cause each of its Restricted Subsidiaries to at all
times cause all properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment, and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereto; provided that nothing in this Section 4.5 shall prevent
the Company or any Restricted Subsidiary from discontinuing the operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is either (i) in the ordinary course of business,
(ii) in the reasonable and good faith judgment of the Board of Directors or
management of the Company or the Restricted Subsidiary concerned, as the case
may be, desirable in the conduct of the business of the Company or such
Restricted Subsidiary, as the case may be, or (iii) otherwise permitted by this
Indenture.

 

SECTION 4.6             Compliance Certificates; Notice of Default.

 

(a)           The Company shall deliver to the Trustee, within 120 days after
the end of its fiscal year, an Officers’ Certificate signed by the principal
executive officer, the principal financial officer or the principal accounting
officer complying with TIA § 314(a)(4) stating (i) that a review of the
activities of the Company and the activities of its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company and the Guarantors have
kept, observed, performed and fulfilled each of their respective obligations
under this Indenture, the Notes and the Guarantees and (ii) that, to the best
knowledge of such Officer after due inquiry, each of the Company and the
Guarantors has kept, observed, performed and fulfilled, in each case in all
material respects, each and every covenant and other obligation contained in
this Indenture, the Notes and the Guarantees and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
and has not failed to comply with any other obligation hereunder (or, if a
Default, Event of Default or failure to comply with any other obligation
hereunder shall have occurred, describing with particularity all such Defaults,
Events of Default or failures to comply with any other obligation hereunder of
which such Officer may have knowledge, including, but not limited to, their
status and what action the Company is taking or proposes to take with respect
thereto).

 

(b)           The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon becoming aware of any Default or Event of
Default, an Officers’ Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.

 

49

--------------------------------------------------------------------------------

 

SECTION 4.7             Reports.

 

(a)           The Company shall deliver to the Trustee and mail to each Holder,
within 15 days after the filing of the same with the SEC, copies of its annual
report and of the information, documents and other reports, if any, which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the other provisions of TIA §
314(a).

 

(b)           If the Company is not subject to the requirements of such Section
13 or 15(d) of the Exchange Act, the Company shall file with the SEC, to the
extent permitted, and distribute to the Trustee and to each Holder copies of the
quarterly and annual financial information and current reports on Form 8-K that
would have been required to be filed with the SEC pursuant to the Exchange Act
had the Company been subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act. All such financial information shall include
consolidated financial statements (including footnotes) prepared in accordance
with GAAP. Such annual financial information shall also include an opinion
thereon expressed by an independent accounting firm of established national
reputation. All such consolidated financial statements shall be accompanied by a
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations.” The financial information and current reports to be distributed to
Holders pursuant to this Section 4.7 shall be filed with the Trustee and mailed
to the Holders at their respective addresses appearing in the register of the
Notes maintained by the Registrar, within the time periods specified in the
SEC’s rules and regulations.

 

(c)           The Company shall deliver to the Trustee and mail to each Holder,
within the applicable time periods provided in the Senior Subordinated Credit
Agreement, all information and reports which the lenders under the Senior
Subordinated Credit Agreement are entitled to receive from Vertis Holdings, the
Company and the Company’s Subsidiaries, as the case may be, in each case to the
extent not already provided under clauses (a) and (b) of this Section 4.7.

 

(d)           Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee’s receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s
compliance with any of its covenants (as to which the Trustee is entitled to
conclusively rely exclusively on an Officers’ Certificates).

 

SECTION 4.8             Limitation on Restricted Payments.

 

(a)           The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly:

 

50

--------------------------------------------------------------------------------

 

(1)           declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock or options,
warrants and other rights to purchase the same) on or in respect of shares of
Capital Stock of the Company to holders of such Capital Stock;

 

(2)           purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock;

 

(3)           make any principal payment on, purchase, defease, redeem, prepay
or otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligation; or

 

(4)           make any Investment (other than Permitted Investments) in any
other Person (each of the foregoing actions set forth in clauses (1), (2), (3)
and (4) being referred to as a “Restricted Payment”);

 

if at the time of such Restricted Payment or immediately after giving effect
thereto:

 

(i)            a Default or an Event of Default shall have occurred and be
continuing; or

 

(ii)           the Company is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section 4.9;
or

 

(iii)          the aggregate amount of Restricted Payments made subsequent to
June 24, 2002 (the amount expended for such purposes, if other than cash, being
the fair market value of such property as determined in good faith by the Board
of Directors of the Company), shall exceed the sum of (the “Restricted Payment
Basket”):

 

(v)           50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the Company
earned subsequent to June 30, 2002 and on or prior to the date the Restricted
Payment occurs (the “Reference Date”) (treating such period as a single
accounting period); plus

 

(w)          100% of the aggregate Net Cash Proceeds received by the Company
from any Person (other than a Subsidiary of the Company) from the issuance and
sale subsequent to June 24, 2002 and on or prior to the Reference Date of
Qualified Capital Stock of the Company (including Capital Stock issued upon the
conversion of

 

51

--------------------------------------------------------------------------------

 

convertible Indebtedness or in exchange for outstanding Indebtedness but
excluding aggregate net cash proceeds from the sale of Capital Stock to the
extent used to repurchase or acquire shares of Capital Stock of the Company or a
Subordinated Obligation of the Company or a Guarantor pursuant to clause (2) of
paragraph (b) below); plus

 

(x)            without duplication of any amounts included in clause (iii) (w)
above, 100% of the aggregate net cash proceeds of any equity contribution
received by the Company from a holder of the Company’s Capital Stock subsequent
to June 24, 2002; plus

 

(y)           to the extent that any Investment (other than a Permitted
Investment) that was made after June 24, 2002 is sold for cash or otherwise
liquidated or repaid for cash, the Net Cash Proceeds received with respect to
such sale, liquidation or repayment of such Investment, but only to the extent
not included in the calculation of Consolidated Net Income.

 

(b)           Notwithstanding the foregoing, the provisions set forth in
paragraph (a) do not prohibit:

 

(1)           the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted on the
date of declaration;

 

(2)           the acquisition of any shares of Capital Stock of the Company or
the repurchase, redemption or other repayment of any Subordinated Obligation of
the Company or any Guarantor in exchange for or solely out of the proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company) of
shares of Qualified Capital Stock of the Company;

 

(3)           the repurchase, redemption or other repayment of any Subordinated
Obligation of the Company or any Guarantor in exchange for or solely out of the
proceeds of the substantially concurrent issuance (other than to a Subsidiary of
the Company) of a Subordinated Obligation of the Company or such Guarantor with
no payments of principal required until at least six months following the
maturity date of the Notes;

 

(4)           the making of distributions, loans or advances in an amount not to
exceed (x) $5.0 million to pay the ordinary operating costs of Vertis Holdings
(including, without limitation, directors fees, indemnification obligations,
professional fees and expenses) related to Vertis Holdings’ ownership of Capital
Stock of the Company (other than to the Equity Investors or their Affiliates) in
any fiscal year plus

 

52

--------------------------------------------------------------------------------

 

(y) any other amounts of corporate overhead expenses payable by Vertis Holdings
which were deducted in calculating the Consolidated Net Income of the Company in
accordance with GAAP;

 

(5)           the payment by the Company of cash dividends to Vertis Holdings in
the amounts and at the times of any payment by Vertis Holdings in respect of
taxes, provided that (x) the amount of cash dividends paid pursuant to this
clause (5) to enable Vertis Holdings to pay federal and state income taxes at
any time shall not exceed the lesser of (A) the amount of such federal and state
income taxes owing by Vertis Holdings at such time for the respective period and
(B) the amount of such federal and state income taxes that would be owing by the
Company and its Subsidiaries on a consolidated basis for such period if
determined without regard to Vertis Holdings’ ownership of the Company and (y)
any refunds shall promptly be returned by Vertis Holdings to the Company;

 

(6)           payments for the purpose of and in an amount equal to the amount
required to permit Vertis Holdings to redeem or repurchase Vertis Holdings’
common equity or options in respect thereof, in each case in connection with the
repurchase, put or call provisions under employee stock option, management
subscription, retained share or stock purchase agreements or other agreements to
compensate management employees; provided that such redemptions or repurchases
pursuant to this clause (6) shall not exceed $10.0 million per annum; provided
that amounts not used pursuant to this clause (6) in prior years shall not be
carried forward for use in future years;

 

(7)           so long as no Default or Event of Default shall have occurred and
be continuing, payments not to exceed $500,000 in the aggregate to enable Vertis
Holdings to make payments to holders of its Capital Stock in lieu of issuance of
fractional shares of its Capital Stock;

 

(8)           payments made to the Equity Investors allowed pursuant to Section
4.13; and

 

(9)           repurchases of Capital Stock deemed to occur upon the exercise of
stock options if such Capital Stock represents a portion of the exercise price
thereof; and

 

(10)           additional Restricted Payments in an aggregate amount not to
exceed $13.0 million.

 

In determining the aggregate amount of the Restricted Payments Basket in
accordance with clause (iii) of paragraph (a) above, amounts expended pursuant
to clauses (1), (6) and (10) of paragraph (b) shall be included in such
calculation.

 

53

--------------------------------------------------------------------------------

 

SECTION 4.9             Limitation on Incurrence of Additional Indebtedness.

 

(a)           The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable, contingently or otherwise, with respect to, or otherwise
become responsible for payment of (collectively, “incur”) any Indebtedness
(other than Permitted Indebtedness); provided, however, that if no Default or
Event of Default shall have occurred and be continuing at the time or as a
consequence of the Incurrence of any such Indebtedness, the Company or any
Guarantor may Incur Indebtedness if on the date of the Incurrence of such
Indebtedness, after giving effect to the Incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of the Company would have been greater than 2.25 to
1.0 if such Indebtedness is incurred before January 1, 2005, or greater than 2.5
to 1.0 if such Indebtedness is incurred on or after January 1, 2005.

 

No Indebtedness incurred pursuant to the Consolidated Fixed Charge Coverage
Ratio test of the preceding sentence (including, without limitation,
Indebtedness under the Senior Credit Facility) shall reduce the amount of
Indebtedness which may be incurred pursuant to any clause of the definition of
Permitted Indebtedness (including, without limitation, Indebtedness under the
Senior Credit Facility pursuant to clause (2) of the definition of Permitted
Indebtedness)

 

(b)           For purposes of determining compliance with this covenant, (1) in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in the definition of “Permitted
Indebtedness,” the Company, in its sole discretion, will classify such item of
Indebtedness at the time of incurrence and will be entitled to divide and
classify an item of Indebtedness in more than one of the types of Indebtedness
described in the definition of “Permitted Indebtedness” and (2) the Company will
be entitled from time to time to reclassify any Indebtedness incurred pursuant
to any clause in the definition of “Permitted Indebtedness.”

 

SECTION 4.10           Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries.

 

The Company shall not, and shall not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

 

(1)           pay dividends or make any other distributions on or in respect of
its Capital Stock;

 

(2)           make loans or advances or to pay any Indebtedness or other
obligation owed to the Company or any other Restricted Subsidiary of the
Company; or

 

54

--------------------------------------------------------------------------------

 

(3)           transfer any of its property or assets to the Company or any other
Restricted Subsidiary of the Company,

 

except for such encumbrances or restrictions existing under or by reason of:

 

(a)           applicable law;

 

(b)           the Loan Documents (as defined in the Senior Subordinated Credit
Agreement), this Indenture or encumbrances or restrictions substantially similar
to the encumbrances and restrictions contained in the Loan Documents (as defined
in the Senior Subordinated Credit Agreement) and this Indenture, as the case may
be, taken as a whole;

 

(c)           non-assignment provisions of any contract or any lease entered
into in the ordinary course of business;

 

(d)           any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to the Company or any Restricted Subsidiary of
the Company, or the properties or assets of any such Person, other than the
Person or the properties or assets of the Person so acquired; provided, however,
that such Acquired Indebtedness was not incurred in connection with, or in
anticipation or contemplation, of an acquisition by the Company or the
Restricted Subsidiary;

 

(e)           agreements existing on the Issue Date;

 

(f)            the Senior Credit Facility and the A/R Facility;

 

(g)           restrictions on the transfer of assets subject to any Lien
permitted under this Indenture imposed by the holder of such Lien;

 

(h)           restrictions imposed by any agreement to sell assets permitted
under this Indenture to any Person pending the closing of such sale;

 

(i)            Indebtedness or other contractual requirements of a Receivables
Entity in connection with a Qualified Receivables Transaction; provided that
such restrictions apply only to such Receivables Entity;

 

(j)            agreements governing Indebtedness permitted to be Incurred
pursuant to Section 4.9, provided that the provisions relating to such
encumbrances or restrictions contained in such Indebtedness are no less
favorable to the Company in any material respect as determined by the Board of
Directors of the Company in their reasonable and good faith judgment than the
provisions contained in the Senior Credit Facility as in effect on the Issue
Date; or

 

55

--------------------------------------------------------------------------------

 

(k)           an agreement effecting a refinancing, replacement or substitution
of Indebtedness issued, assumed or Incurred pursuant to an agreement referred to
in clause (b), (d), (e) or (f) above; provided, however, that the provisions
relating to such encumbrance or restriction contained in any such refinancing,
replacement or substitution agreement are no less favorable to the Company or
the Holders in any material respect as determined by the Board of Directors of
the Company than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (b), (d), (e) or (f).

 

SECTION 4.11           Limitation on Liens.

 

The Company shall not, and shall not permit any of its Restricted Subsidiaries
to, create, incur, assume or suffer to exist any Liens (other than Permitted
Liens) of any kind against or upon any of their respective property or assets,
or any proceeds, income or profit therefrom which secure Senior Subordinated
Indebtedness or Subordinated Obligations, unless:

 

(1)           in the case of Liens securing Subordinated Obligations of the
Company, the Notes are secured by a Lien on such property, assets, proceeds,
income or profit that is senior in priority to such Liens;

 

(2)           in the case of Liens securing Subordinated Obligations of a
Guarantor, such Guarantor’s Guarantee is secured by a Lien on such property,
assets, proceeds, income or profit that is senior in priority to such Liens;

 

(3)           in the case of Liens securing Senior Subordinated Indebtedness of
the Company, the Notes are equally and ratably secured by a Lien on such
property, assets, proceeds, income or profit; and

 

(4)           in the case of Liens securing Senior Subordinated Indebtedness of
a Guarantor, such Guarantor’s Guarantee is equally and ratably secured by a Lien
on such property, assets, proceeds, income or profit.

 

SECTION 4.12           Limitation on Asset Sales.

 

(a)           The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:

 

(1)           the Company or the applicable Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at least equal to
the fair market value of the assets sold or otherwise disposed of (as determined
in good faith by the Company’s Board of Directors);

 

56

--------------------------------------------------------------------------------

 

(2)           at least 75% of the consideration received by the Company or such
Restricted Subsidiary, as the case may be, from such Asset Sale shall be cash or
Cash Equivalents and is received at the time of such disposition; provided that
the amount of (x) any liabilities (as shown on the Company’s or such Restricted
Subsidiary’s most recent balance sheet or in the notes thereto) of the Company
or such Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes and other than liabilities consisting of Disqualified
Capital Stock) (i) that are assumed by the transferee of any such assets and
from which the Company and its Restricted Subsidiaries are unconditionally
released or (ii) in respect of which neither the Company nor any Restricted
Subsidiary following such sale has any obligation and (y) any notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are promptly, but in no event more than 60 days after receipt,
converted by the Company or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent of the cash or Cash Equivalents received), shall be
deemed to be cash for purposes of this provision; and

 

(3)           upon the consummation of an Asset Sale, the Company shall apply,
or cause such Restricted Subsidiary to apply, the Net Cash Proceeds relating to
such Asset Sale within 360 days of receipt thereof either:

 

(a)           to prepay any Senior Debt or Guarantor Senior Debt and, in the
case of any Senior Debt or Guarantor Senior Debt under any revolving credit
facility, effect a permanent reduction in the availability under such revolving
credit facility;

 

(b)           to reinvest in Productive Assets (and to the extent such
reinvestment constitutes an Investment, such reinvestment complies with Section
4.8); or

 

(c)           a combination of prepayment and investment permitted by the
foregoing clauses (3)(a) and (3)(b).

 

On the 361st day after an Asset Sale or such earlier date, if any, as the Board
of Directors of the Company or of such Restricted Subsidiary determines not to
apply the Net Cash Proceeds relating to such Asset Sale as set forth in clauses
(3)(a), (3)(b) and (3)(c) of the immediately preceding sentence (each, a “Net
Proceeds Offer Trigger Date”), such aggregate amount of Net Cash Proceeds which
have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (3)(a), (3)(b)
and (3)(c) of the immediately preceding sentence (each a “Net Proceeds Offer
Amount”) shall be applied by the Company or such Restricted Subsidiary to make
an offer to purchase for cash (the “Net Proceeds Offer”) on a date (the “Net
Proceeds Offer Payment Date”) not less than 30 nor more than 60 days following
the applicable Net Proceeds Offer Trigger Date, from all Holders on a pro rata

 

57

--------------------------------------------------------------------------------

 

basis, that amount of Notes equal to the Net Proceeds Offer Amount at a price in
cash equal to 100% of the principal amount of the Notes to be purchased, plus
accrued and unpaid interest thereon, if any, to the date of purchase; provided,
however, that if at any time any non-cash consideration received by the Company
or any Restricted Subsidiary of the Company, as the case may be, in connection
with any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest, dividends or other earnings received with respect to any
such non-cash consideration), then such conversion or disposition shall be
deemed to constitute an Asset Sale hereunder as of the date of such conversion
or disposition and the Net Cash Proceeds thereof shall be applied in accordance
with this covenant.

 

(b)           Notwithstanding the foregoing, if a Net Proceeds Offer Amount is
less than $20 million, the application of the Net Cash Proceeds constituting
such Net Proceeds Offer Amount to a Net Proceeds Offer may be deferred until
such time as such Net Proceeds Offer Amount plus the aggregate amount of all Net
Proceeds Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date
relating to such initial Net Proceeds Offer Amount from all Asset Sales by the
Company and its Restricted Subsidiaries aggregates at least $10 million, at
which time the Company or such Restricted Subsidiary shall apply all Net Cash
Proceeds constituting all Net Proceeds Offer Amounts that have been so deferred
to make a Net Proceeds Offer (the first date the aggregate of all such deferred
Net Proceeds Offer Amounts is equal to $20 million or more shall be deemed to be
a Net Proceeds Offer Trigger Date).

 

(c)           Notwithstanding paragraphs (a) and (b) of this Section 4.12, the
Company and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraphs to the extent that:

 

(1)           at least 75% of the consideration for such Asset Sale constitutes
Productive Assets (and to the extent any of such Productive Assets constitutes
an Investment, such Investment complies with Section 4.8); and

 

(2)           such Asset Sale is for at least fair market value (as determined
in good faith by the Company’s Board of Directors); provided that any
consideration not constituting Productive Assets received by the Company or any
of its Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds and shall be
subject to the provisions of this covenant with respect to the application of
Net Cash Proceeds; provided that at the time of entering into such transaction
or immediately after giving effect thereto, no Default or Event of Default shall
have occurred or be continuing or would occur as a consequence thereof.

 

(d)           Within 25 days following the Net Proceeds Offer Trigger Date, the
Company shall mail or cause the Trustee to mail (in the Company’s name and at
its expense)

 

58

--------------------------------------------------------------------------------

 

notice of a Net Proceeds Offer to the Holders of the Notes at their last
registered addresses with a copy to the Trustee and the Paying Agent. The Net
Proceeds Offer shall remain open from the time of mailing for at least 20
Business Days and until the close of business on the third Business Day prior to
the Net Proceeds Offer Payment Date. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Net Proceeds Offer. The notice, which shall govern the terms of the Net Proceeds
Offer, shall state:

 

(i)            that the Net Proceeds Offer is being made pursuant to this
Section 4.12;

 

(ii)           the purchase price (including the amount of accrued and unpaid
interest, if any) for each Note and the Net Proceeds Offer Payment Date;

 

(iii)          that any Note not tendered or accepted for payment will continue
to accrue interest in accordance with the terms thereof;

 

(iv)          that any Note accepted for payment pursuant to the Net Proceeds
Offer shall cease to accrue interest after the Net Proceeds Offer Payment Date
unless the Company shall fail to make payment therefor;

 

(v)           that Holders electing to have Notes purchased pursuant to a Net
Proceeds Offer will be required to surrender their Notes to the Paying Agent at
the address specified in the notice prior to 5:00 p.m., New York City time, on
the third Business Day immediately preceding the Net Proceeds Offer Payment Date
and must complete any form letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;

 

(vi)          that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than 5:00 p.m., New York City time, on the
third Business Day immediately preceding the Net Proceeds Offer Payment Date, a
telex or facsimile transmission (confirmed by overnight delivery of the original
thereof) or letter setting forth the name of the Holder, the principal amount of
Notes the Holder delivered for purchase, the Note certificate number (if any)
and a statement that such Holder is withdrawing his election to have such Notes
purchased;

 

(vii)         that if Notes in a principal amount in excess of the Holders’ pro
rata share of the Net Proceeds are tendered pursuant to a Net Proceeds Offer,
the Company shall purchase Notes on a pro rata basis among the Notes tendered
(with such adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000 or integral multiples of $1,000 shall be
acquired);

 

59

--------------------------------------------------------------------------------

 

(viii)        that Holders whose Notes are purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; and

 

(ix)           the instructions that Holders must follow in order to tender
their Notes.

 

On or before the Net Proceeds Offer Payment Date, the Company shall (i) accept
for payment, on a pro rata basis among the Notes, Notes or portions thereof
tendered pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent
money, in immediately available funds, in an amount sufficient to pay the
purchase price of all Notes or portions thereof so tendered and accepted and
(iii) deliver to the Paying Agent the Notes so accepted together with an
Officers’ Certificate setting forth the Notes or portions thereof tendered to
and accepted for payment by the Company. The Paying Agent shall promptly mail or
deliver to Holders of Notes so accepted payment in an amount equal to the
purchase price, and the Trustee shall promptly authenticate and mail or deliver
to such Holders a new Note equal in principal amount to any unpurchased portion
of the Note surrendered. Any Notes not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Net Proceeds Offer on the first Business Day
following the Net Proceeds Offer Payment Date. The Paying Agent shall promptly
deliver to the Company the balance of any moneys held by the Paying Agent after
payment to the Holders of Notes as aforesaid.

 

(e)           To the extent that the aggregate amount of Notes tendered pursuant
to a Net Proceeds Offer is less than the Net Proceeds Offer Amount, the Company
may use any remaining Net Proceeds Offer Amount for general corporate purposes.
Upon completion of any such Net Proceeds Offer, the Net Proceeds Offer Amount
shall be reset at zero.

 

(f)            In the event of the transfer of substantially all of the property
and assets of the Company and its Restricted Subsidiaries as an entirety to a
Person in a transaction permitted under Article V, which transaction does not
constitute a Change of Control, the successor Person shall be deemed to have
sold the properties and assets of the Company and its Subsidiaries not so
transferred for purposes of this Section 4.12, and shall comply with the
provisions of clause (a)(3) of this Section 4.12 respect to such deemed sale as
if it were an Asset Sale.

 

(g)           The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations (including Rule 14e-l under the Exchange Act) in connection with
the repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.12, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.12 by virtue thereof.

 

60

--------------------------------------------------------------------------------

 

SECTION 4.13           Limitations on Transactions with Affiliates.

 

(a)           The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of its Affiliates (an “Affiliate
Transaction”), other than (x) Affiliate Transactions permitted under paragraph
(b) below and (y) Affiliate Transactions entered into on terms that are fair and
reasonable to, and in the best interests of, the Company or such Restricted
Subsidiary, as the case may be, as determined in good faith by the Company’s
Board of Directors; provided, however, that for a transaction or series of
related transactions with an aggregate value of $5.0 million or more, at the
Company’s option (i) such determination shall be made in good faith by a
majority of the disinterested members of the Board of the Directors of the
Company or (ii) the Board of Directors of the Company or any such Restricted
Subsidiary party to such Affiliate Transaction shall have received a favorable
opinion from a nationally recognized investment banking firm that such Affiliate
Transaction is fair from a financial point of view to the Company or such
Restricted Subsidiary; provided, further, that for a transaction or series of
related transactions with an aggregate value of $20.0 million or more, the Board
of Directors of the Company shall have received a favorable opinion from a
nationally recognized investment banking firm that such Affiliate Transaction is
fair from a financial point of view to the Company or such Restricted
Subsidiary.

 

(b)           The foregoing restrictions shall not apply to:

 

(1)           transactions exclusively between or among the Company and any of
its Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by this
Indenture;

 

(2)           transactions effected as part of a Qualified Receivables
Transaction;

 

(3)           any agreement as in effect as of the Issue Date or any amendment
thereto or any transaction contemplated thereby (including pursuant to any
amendment thereto) or in any replacement agreement thereto so long as any such
amendment or replacement agreement is not more disadvantageous to the Holders in
any material respect than the original agreement as in effect on the Issue Date;

 

(4)           Restricted Payments permitted by this Indenture;

 

(5)           loans or advances to officers, directors or employees of the
Company or its Restricted Subsidiaries not in excess of $10.0 million at any one
time outstanding;

 

(6)           Permitted Investments or Permitted Liens;

 

61

--------------------------------------------------------------------------------

 

(7)           transactions with Persons solely in their capacity as holders of
Indebtedness or Capital Stock of the Company or any of its Restricted
Subsidiaries, where such Persons are treated no more favorably than holders of
Indebtedness or Capital Stock of the Company or such Restricted Subsidiary
generally;

 

(8)           reasonable and customary fees and compensation paid to, and
indemnity provided on behalf of, officers, directors, consultants or employees
of Vertis Holdings or any of its Restricted Subsidiaries (other than the THL
Affiliates and the ECP Affiliates, which are set forth in clauses 9, 10 and 11
below), as determined by the Board of Directors of the Company or any such
Restricted Subsidiary or the senior management thereof in good faith, including,
without limitation, issuances of stock, payment of bonuses and other
transactions pursuant to employment or compensation agreements, stock option
agreements, indemnification agreements and other arrangements in effect on the
Issue Date or substantially similar thereto;

 

(9)           the payment, on a quarterly basis, of management fees to (A) THL
and/or the THL Affiliates not to exceed $250,000 in any fiscal quarter and (B)
ECP and/or the ECP Affiliates not to exceed $62,500 in any fiscal quarter, in
each case in accordance with the management agreement between THL, the THL
Affiliates, ECP and/or the ECP Affiliates and Vertis Holdings;

 

(10)         the reimbursement of THL, the THL Affiliates, ECP and/or the ECP
Affiliates for the reasonable out-of-pocket expenses incurred by them in
connection with performing management services to Vertis Holdings and its
Restricted Subsidiaries;

 

(11)         the payment of one-time fees to THL, the THL Affiliates, ECP and/or
the ECP Affiliates in connection with acquisition transactions not prohibited by
this Indenture, such fees to be payable at the time of each such acquisition and
not to exceed (for all fees paid pursuant to this clause (11)) 2.5% of the
aggregate consideration paid by Vertis Holdings and its Restricted Subsidiaries
for any such acquisition or such lesser amount as is then permitted pursuant to
the Senior Credit Facility; and

 

(12)         reasonable and customary fees paid to members of the Board of
Directors of the Company, other than THL, the THL Affiliates, ECP and the ECP
Affiliates.

 

Notwithstanding the foregoing, the Company shall only pay one-half of any
management or other fees or expenses permitted under clauses (9), (10) and (11)
to the Equity Investors or their Affiliates at a time when a Default or an Event
of Default exists; provided

 

62

--------------------------------------------------------------------------------

 

that such unpaid fees and/or expenses shall be paid at such time as such Default
or Event of Default shall have been cured or waived.

 

SECTION 4.14           Prohibition on Incurrence of Senior Subordinated Debt.

 

Neither the Company nor any Guarantor shall incur Indebtedness that is senior in
right of payment to the Notes or such Guarantor’s Guarantee and subordinate in
right of payment to any other Indebtedness of the Company or such Guarantor, as
the case may be.

 

SECTION 4.15           Change of Control.

 

(a)           Upon the occurrence of a Change of Control (the date of such
occurrence, the “Change of Control Date”), each Holder shall have the right to
require that the Company purchase all or a portion of such Holder’s Notes
pursuant to an offer to purchase (the “Change of Control Offer”) at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued
interest thereon to the date of repurchase.

 

Prior to the mailing of the notice to the Holders provided for in paragraph (b)
below but in any event within 30 days following the date upon which the Company
obtains actual knowledge of any Change of Control, the Company hereby covenants
to (i) repay in full and terminate all commitments under Indebtedness under the
Senior Credit Facility and all other Senior Debt the terms of which require
repayment upon a Change of Control or offer to repay in full and terminate all
commitments under all Indebtedness under the Senior Credit Facility and all
other such Senior Debt and to repay the Indebtedness of each lender which has
accepted such offer or (ii) obtain the requisite consents under the Senior
Credit Facility and all other Senior Debt to permit the repurchase of the Notes
as provided for in paragraph (c) below.

 

The Company shall first comply with the covenant in the immediately preceding
sentence before it shall be required to repurchase the Notes pursuant to this
Section 4.15. The Company’s failure to comply with the covenant described in the
immediately preceding paragraph (and any failure to send the notice referred to
in clause (b) below as a result of the prohibition in the second preceding
sentence) may (with notice and lapse of time) constitute an Event of Default
described in Section 6.1 (c) but shall not constitute an Event of Default
described in Section 6.1 (a) or (b).

 

(b)           Notice of a Change of Control Offer shall be sent, by first class
mail, by the Company within 30 days following the date upon which the Company
obtains actual knowledge that a Change of Control occurred to the Holders of
Notes at their last registered addresses with a copy to the Trustee and the
Paying Agent. The date on which Notes are purchased pursuant to the Change of
Control Offer shall be a business day that is no earlier than 30 days nor later
than 60 days from the date such notice is mailed (the “Change of

 

63

--------------------------------------------------------------------------------

 

Control Payment Date”). The Change of Control Offer shall remain open from the
time of mailing for at least 20 Business Days and until 3:00 p.m., New York City
time, on the third Business Day prior to the Change of Control Payment Date. The
notice, which shall govern the terms of the Change of Control Offer, shall
include such disclosures as are required by law and shall state:

 

(i)            that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes will be accepted for payment;

 

(ii)           the purchase price (including the amount of accrued and unpaid
interest, if any) for each Note and the Change of Control Payment Date;

 

(iii)          that any Note not tendered for payment will continue to accrue
interest in accordance with the terms thereof;

 

(iv)          that any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date unless the Company shall fail to make payment therefor;

 

(v)           that Holders electing to have Notes purchased pursuant to a Change
of Control Offer will be required to surrender their Notes to the Paying Agent
at the address specified in the notice prior to 3:00 p.m., New York City time,
on the Change of Control Payment Date and must complete any form of transmittal
proposed by the Company and acceptable to the Trustee and the Paying Agent;

 

(vi)          that Holders of Notes will be entitled to withdraw their election
if the Paying Agent receives, not later than 3:00 p.m., New York City time, on
the third Business Day prior to the Change of Control Payment Date, a telex or
facsimile transmission (confirmed by overnight delivery of the original thereof)
or letter setting forth the name of the Holder, the principal amount of Notes
the Holder delivered for purchase, the Note certificate number (if any) and a
statement that such Holder is withdrawing his election to have such Notes
purchased;

 

(vii)         that Holders whose Notes are purchased only in part will be issued
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; and

 

(viii)        the instructions that Holders must follow in order to tender their
Notes.

 

64

--------------------------------------------------------------------------------

 

(c)           On the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof so tendered and accepted and
(iii) deliver to the Trustee the Notes so accepted together with an Officers’
Certificate setting forth the Notes or portions thereof tendered to and accepted
for payment by the Company. The Paying Agent shall promptly mail or deliver to
the Holders of Notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail or deliver to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered. Any Notes not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Change of Control Offer not later than the first
Business Day following the Change of Control Payment Date.

 

(d)           The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other securities laws
or regulations (including Rule 14e-l under the Exchange Act) in connection with
the purchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with provisions of
this Section 4.15, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Section 4.15 by virtue thereof.

 

SECTION 4.16           Waiver of Stay; Extension of Usury Laws.

 

The Company covenants (to the extent that it may lawfully do so) that it shall
not, nor shall it cause or permit any of the Guarantors to, at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law that would prohibit
or forgive the Company or any Guarantor from paying all or any portion of the
principal of or interest on the Notes or the Guarantees, as applicable, as
contemplated herein or in the Notes and the Guarantees, wherever enacted, now or
at any time hereafter in force, or that may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
each of the Company and the Guarantors hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.

 

SECTION 4.17           Limitation on Guarantees by Restricted Subsidiaries.

 

The Company shall not permit any of its Domestic Restricted Subsidiaries that is
not a Guarantor (whether formed or acquired before or after the Issue Date),
directly or indirectly, by way of the pledge of any intercompany note or
otherwise, to assume, guarantee or in any other manner become liable with
respect to any Indebtedness of the Company (other

 

65

--------------------------------------------------------------------------------

 

than: (1) Indebtedness under Currency Agreements in reliance on clause (5) of
the definition of Permitted Indebtedness; or (2) Interest Swap Obligations
incurred in reliance on clause (4) of the definition of Permitted Indebtedness),
unless, in any such case:

 

(1)                           such Restricted Subsidiary executes and delivers a
supplemental indenture to this Indenture providing a guarantee of payment of the
Notes by such Restricted Subsidiary, and

 

(2)                           (a) if any such assumption, guarantee or other
liability of such Restricted Subsidiary is provided in respect of Senior Debt,
the guarantee or other instrument provided by such Restricted Subsidiary in
respect of such Senior Debt may be superior to such guarantee of the Notes
pursuant to subordination provisions no less favorable to the Holders of the
Notes than those contained in this Indenture and (b) if such assumption,
guarantee or other liability of such Restricted Subsidiary is provided in
respect of Indebtedness that is expressly subordinated to the Notes, the
guarantee or other instrument provided by such Restricted Subsidiary in respect
of such Subordinated Obligation shall be subordinated to such guarantee at least
to the same extent that the Notes are subordinated to Senior Debt.

 

Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of
the Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged, without any further action required on
the part of the Trustee or any Holder, upon:

 

(1)                           the unconditional release of such Restricted
Subsidiary from its liability in respect of the Indebtedness in connection with
which such Guarantee was executed and delivered pursuant to the preceding
paragraph and all other Indebtedness which would require that a Guarantee be
executed and delivered pursuant to the preceding paragraph;

 

(2)                           any sale or other disposition (by merger or
otherwise) to any Person which is not a Restricted Subsidiary of the Company of
all of the Company’s Capital Stock in, or all or substantially all of the assets
of, such Restricted Subsidiary; provided that (a) such sale or disposition of
such Capital Stock or assets is otherwise in compliance with the terms of this
Indenture and (b) such assumption, guarantee or other liability of such
Restricted Subsidiary has been released by the holders of the other Indebtedness
of the Company so guaranteed;

 

(3)                           the Legal Defeasance of the Notes as described
under Section 8.2; or

 

(4)                           such Restricted Subsidiary being designated as an
Unrestricted Subsidiary in compliance with this Indenture.

 

66

--------------------------------------------------------------------------------

 

SECTION 4.18           Limitation on Preferred Stock of Subsidiaries.

 

The Company shall not permit any of its Restricted Subsidiaries that is not a
Guarantor to issue any Preferred Stock (other than to the Company or to a
Restricted Subsidiary of the Company) or permit any Person (other than the
Company or a Restricted Subsidiary of the Company) to own any Preferred Stock of
any Restricted Subsidiary of the Company that is not a Guarantor.

 

SECTION 4.19           Conduct of Business.

 

The Company and its Restricted Subsidiaries shall not engage in any businesses
which are not the same, similar, related or ancillary to the businesses in which
the Company and its Restricted Subsidiaries are engaged on the Issue Date.

 

ARTICLE V

 

SUCCESSOR CORPORATION

 

SECTION 5.1             Limitation on Mergers, Consolidations or Sales of
Assets.

 

The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of (or cause or permit any Restricted
Subsidiary of the Company to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company’s assets to, another Person
or Persons unless:

 

(1)           either:

 

(a)           the Company shall be the surviving or continuing corporation of
such merger or consolidation; or

 

(b)           the surviving Person is a corporation existing under the laws of
the United States, any state thereof or the District of Columbia and such
surviving Person shall expressly assume all the obligations of the Company under
the Notes and this Indenture;

 

(2)           immediately after giving effect to such transaction (on a pro
forma basis, including any Indebtedness incurred or anticipated to be incurred
in connection with such transaction and the other adjustments that are referred
to in the definition of “Consolidated Fixed Charge Coverage Ratio”), the Company
or the surviving Person

 

67

--------------------------------------------------------------------------------

 

is able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.9;

 

(3)           immediately before and immediately after giving effect to such
transaction (including any Indebtedness incurred or anticipated to be incurred
in connection with the transaction), no Default or Event of Default shall have
occurred and be continuing; and

 

(4)           the Company or the surviving entity, as the case may be, has
delivered to the Trustee an officers’ certificate and opinion of counsel, each
stating that such consolidation, merger or transfer complies with this
Indenture, that the surviving Person agrees to be bound thereby and by the Notes
and the Registration Rights Agreement, and that all conditions precedent in this
Indenture relating to such transaction have been satisfied.

 

For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Company, the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.

 

Notwithstanding the foregoing clauses (1), (2) and (3):

 

(a)           any Restricted Subsidiary of the Company may consolidate with,
merge into or transfer all or part of its properties and assets to the Company;
and

 

(b)           the Company may merge with an Affiliate that is (x) a corporation
that has no material assets or liabilities and which was incorporated solely for
the purpose of reincorporating the Company in another jurisdiction or (y) a
Restricted Subsidiary of the Company that is a Guarantor so long as all assets
of the Company and the Restricted Subsidiaries immediately prior to such
transaction are owned by such Restricted Subsidiary and its Restricted
Subsidiaries immediately after the consummation thereof.

 

Each Guarantor (other than any Guarantor whose Guarantee is to be released in
accordance with the terms of this Indenture) shall not, and the Company shall
not cause or permit any Guarantor to, consolidate with or merge with or into any
Person other than the Company or any other Guarantor unless:

 

(1)                           the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) or to which such sale,
lease, conveyance or other disposition

 

68

--------------------------------------------------------------------------------

 

shall have been made is a corporation organized and existing under the laws of
the United States or any State thereof or the District of Columbia;

 

(2)                           such entity assumes by supplemental indenture all
of the obligations of the Guarantor on the Guarantee;

 

(3)                           immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and

 

(4)                           immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (2) of the first paragraph of
this Section 5.1.

 

Any merger or consolidation of a Restricted Subsidiary with and into the Company
(with the Company being the surviving entity) or another Guarantor that is a
Wholly Owned Subsidiary of the Company need only comply with clause (4) of the
first paragraph of this Section 5.1.

 

SECTION 5.2             Successor Entity Substituted.

 

Upon any consolidation or merger, or any sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company or any
assignment of its obligations under this Indenture in accordance with Section
5.1 hereof, upon assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the due and punctual payment of the principal of, premium, if any,
and interest on all of the Notes and the due and punctual performance and
observance of all the covenants and conditions of this Indenture to be performed
or observed by the Company, the surviving entity formed by such consolidation or
into or with which the Company is merged or to which such sale, lease,
conveyance or other disposition or assignment is made will succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such surviving entity has been named
as the Company herein and such surviving entity may cause to be signed and may
issue in its own name or in the name of the Company, any or all Notes issuable
hereunder and the predecessor Company in the case of a sale, lease, conveyance
or other disposition or assignment, will be released from all obligations under
the Notes.

 

69

--------------------------------------------------------------------------------

 

ARTICLE VI

 

DEFAULT AND REMEDIES

 

SECTION 6.1             Events of Default.

 

“Event of Default”, whenever used herein, means any one of the following events
(whatever the reason for such Event of Default and whether or not it shall be
occasioned or prohibited by the provisions of Article X or Article XII and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

 

(a)           the failure to pay interest on any Notes when the same becomes due
and payable and the default continues for a period of 30 days (whether or not
such payments shall be prohibited by the subordination provisions of this
Indenture);

 

(b)           the failure to pay the principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise (including
the failure to make a payment to purchase Notes tendered pursuant to a Change of
Control Offer or a Net Proceeds Offer) (whether or not such payments shall be
prohibited by the subordination provisions of this Indenture);

 

(c)           a default in the observance or performance of any other covenant
or agreement contained in this Indenture which default continues for a period of
30 days after the Company receives written notice specifying the default (and
demanding that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Notes;

 

(d)           the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount of any
Indebtedness of the Company or any Restricted Subsidiary (other than a
Receivables Entity) of the Company, or the acceleration of the final stated
maturity of any such Indebtedness (which acceleration is not rescinded, annulled
or otherwise cured within 30 days of receipt by the Company or such Restricted
Subsidiary of notice of any such acceleration) if the aggregate principal amount
of such Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at final stated maturity or
which has been accelerated (in each case with respect to which the 30-day period
described above has elapsed), aggregates $20.0 million or more at any time;

 

70

--------------------------------------------------------------------------------

 

(e)           one or more judgments in an aggregate amount in excess of $20.0
million shall have been rendered against the Company or any of its Significant
Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a
period of 60 days after such judgment or judgments become final and
non-appealable;

 

(f)            A court of competent jurisdiction enters a Bankruptcy Order under
any Bankruptcy Law that:

 

(1)          is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding, or

 

(2)          appoints a Custodian of the Company or any of its Significant
Subsidiaries for all or substantially all of its respective properties, or

 

(3)          orders the liquidation of the Company or any of its Significant
Subsidiaries,

 

and in each case the order or decree remains unstayed and in effect for 60
consecutive days;

 

(g)           The Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:

 

(1)          commences a voluntary case or proceeding, or

 

(2)          consents to the entry of a Bankruptcy Order for relief against it
in an involuntary case or proceeding, or

 

(3)          consents to the appointment of a Custodian of it or for all or
substantially all of its property, or

 

(4)          makes a general assignment for the benefit of its creditors or
files a proposal or scheme of arrangement involving the rescheduling or
composition of its indebtedness, or

 

(5)          consents to the filing of a petition in bankruptcy against it; or

 

(h)           any Guarantee of a Significant Subsidiary ceases to be in full
force and effect or any Guarantee of a Significant Subsidiary is declared to be
null and void and unenforceable or any Guarantee of a Significant Subsidiary is
found to be invalid or any Guarantor that is a Significant Subsidiary denies its
liability under its Guarantee (other than by reason of release of a Guarantor in
accordance with the terms of this Indenture).

 

71

--------------------------------------------------------------------------------

 

SECTION 6.2             Acceleration.

 

(a)           If an Event of Default (other than an Event of Default specified
in Section 6.1(f) or 6.1(g) above with respect to the Company) shall occur and
be continuing, then, and in every such case, unless the principal of all the
Notes shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of the then
outstanding Notes, by notice in writing to the Company and the Representative
under the Senior Credit Facility (and to the Trustee if given by Holders) (the
“Acceleration Notice”), may declare all of the unpaid principal of and accrued
interest thereon to be, and the same (x) shall become immediately due and
payable, or (y) if there are any amounts outstanding under the Senior Credit
Facility, shall become immediately due and payable upon the first to occur of an
acceleration under the Senior Credit Facility or five business days after
receipt by the Company and the Representative under the Senior Credit Facility
of such Acceleration Notice but only if such Event of Default is then
continuing. If an Event of Default specified in Section 6.1(f) or 6.1(g) with
respect to the Company occurs and is continuing, all unpaid principal of and
accrued interest due and payable on all the outstanding Notes shall ipso facto
become and be immediately due and payable without any declaration, notice or
other act on the part of the Trustee or any Holder.

 

(b)           At any time after a declaration of acceleration with respect to
the Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Notes, by written notice to the Company and
the Trustee, may rescind and cancel, on behalf of all Holders, such declaration
and its consequences:

 

(1)          if the rescission would not conflict with any judgment or decree;

 

(2)          if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration;

 

(3)          to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid;

 

(4)          if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances; and

 

(5)          in the event of the cure or waiver of an Event of Default of the
type described in Section 6.1(f) or (g), the Trustee shall have received an
Officers’ Certificate to the effect that such Event of Default has been cured or
waived.

 

72

--------------------------------------------------------------------------------

 

No such rescission shall affect any subsequent Default or impair any right
consequent thereto.

 

In the event that the maturity of the Notes is accelerated pursuant to this
Section 6.2, 100% of the principal amount thereof plus accrued interest to the
date of payment shall become due and payable.

 

SECTION 6.3             Other Remedies.

 

If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
principal of or interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the
Notes or does not produce any of them in the proceeding, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.

 

SECTION 6.4             Waiver of Past Default.

 

Subject to Sections 6.7 and 9.2, prior to the declaration of acceleration of the
maturity of the Notes, the Holder or Holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding by written
notice to the Company and the Trustee may waive on behalf of all the Holders any
past default under this Indenture and its consequence, except a default in the
payment of principal of or interest on any Note or a default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Note affected pursuant to Section 9.2.

 

SECTION 6.5             Control by Majority.

 

The Holders of a majority in aggregate principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
it, including, without limitation, any remedies provided for in Section 6.3.
However, the Trustee may refuse to follow any direction that conflicts with law,
the Notes or this Indenture, or that the Trustee determines may be unduly
prejudicial to the rights of another Securityholder or that may involve the
Trustee in personal liability.

 

73

--------------------------------------------------------------------------------

 

SECTION 6.6            Limitation on Suits.

 

A Securityholder may not pursue any remedy with respect to this Indenture or the
Notes unless:

 

(a) the Holder gives to the Trustee written notice of a continuing Event of
Default;

 

(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue a remedy;

 

(c) such Holder or Holders offer and, if requested, provide to the Trustee
indemnity satisfactory to the Trustee against any loss, liability or expense;

 

(d) the Trustee does not comply with the request within 30 days after receipt of
the request and the offer of indemnity; and

 

(e) during such 30-day period the Holders of at least a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction which
is inconsistent with the request.

 

A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over such other
Securityholder.

 

SECTION 6.7            Rights of Holders To Receive Payment.

 

Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on a Note, on or after the
respective due dates expressed in the Note, or to bring suit for the enforcement
of any such payment on or after such respective dates, is absolute and
unconditional and shall not be impaired or affected without the consent of such
Holder.

 

SECTION 6.8            Collection Suit by Trustee.

 

If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Notes for the
whole amount of principal and accrued interest remaining unpaid, together with
interest overdue on principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
interest rate and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

 

74

--------------------------------------------------------------------------------

 

SECTION 6.9            Trustee May File Proofs of Claim.

 

The Trustee shall be entitled and empowered to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Securityholders allowed in any judicial proceedings relative to the Company
or any of its Subsidiaries (or any other obligor upon the Notes), its creditors
or its property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Securityholder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel, and any other amounts due the Trustee under
Section 7.7. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Securityholder in any such proceeding.

 

SECTION 6.10          Priorities.

 

If the Trustee collects any money pursuant to this Article VI, it shall pay out
such money in the following order:

 

First: to the Trustee for amounts due under Section 7.7;

 

Second: to Holders for amounts due and unpaid on the Notes for principal and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal and interest, respectively;
and

 

Third: to the Company.

 

The Trustee, upon prior written notice to the Company, may fix a record date and
payment date for any payment to Securityholders pursuant to this Article VI.

 

SECTION 6.11          Undertaking for Costs.

 

In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the

 

75

--------------------------------------------------------------------------------

 

costs of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.7, or a suit by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
outstanding Notes.

 

SECTION 6.12          Rights and Remedies Cumulative.

 

No right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

SECTION 6.13          Delay or Omission Not Waiver.

 

No delay or omission of the Trustee or of any Holder of any Note to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

ARTICLE VII

 

TRUSTEE

 

SECTION 7.1            Duties of Trustee.

 

(a)       If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of his own affairs.

 

(b)       Except during the continuance of an Event of Default:

 

(i)        The Trustee need perform only those duties as are specifically set
forth in this Indenture or the TIA and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee.

 

76

--------------------------------------------------------------------------------

 

(ii)       In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, in the case of any
such certificate or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall examine such
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.

 

(c)       Notwithstanding anything to the contrary herein contained, the Trustee
may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:

 

(i)        This paragraph does not limit the effect of paragraph (b) of this
Section 7.1.

 

(ii)       The Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.

 

(iii)      The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Sections 6.4 and 6.5.

 

(d)       No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably assured
to it.

 

(e)       Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.

 

(f)        The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

 

SECTION 7.2            Rights of Trustee.

 

Subject to Section 7.1:

 

(a)   The Trustee may rely and shall be protected in acting or refraining from
acting upon any document reasonably believed by it to be genuine and to have
been

 

77

--------------------------------------------------------------------------------

 

signed or presented by the proper Person. The Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.

 

(b)   Before the Trustee acts or refrains from acting with respect to any matter
contemplated by this Indenture, it may require an Officers’ Certificate or an
Opinion of Counsel, which shall conform to the provisions of Section 13.5. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate or opinion.

 

(c)   The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent (other than the
negligence or willful misconduct of an agent who is an employee of the Trustee)
appointed with due care.

 

(d)   The Trustee shall not be liable for any action it takes or omits to take
in good faith and without negligence which it reasonably believes to be
authorized or within its rights or powers conferred upon it by this Indenture or
the TIA.

 

(e)   The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request, order or direction of any
of the Holders, pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.

 

(f)   The Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

 

(g)   The rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder;
and

 

(h)   The Trustee may request that the Company deliver an Officers’ Certificate
setting forth the names of individuals and or titles of officers authorized at
such time to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any person authorized to sign an Officers’
Certificate,

 

78

--------------------------------------------------------------------------------

 

including any person specified as so authorized in any such certificate
previously delivered and not superseded.

 

SECTION 7.3            Individual Rights of Trustee.

 

The Trustee in its individual capacity or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, or its
Subsidiaries and Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.

 

SECTION 7.4            Trustee’s Disclaimer.

 

The Trustee makes no representation as to the validity or adequacy of this
Indenture, the Notes or the Guarantees, and it shall not be accountable for the
Company’s use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Company in this Indenture, or any statement in the
Notes other than the Trustee’s certificate of authentication.

 

SECTION 7.5            Notice of Defaults.

 

If a Default or an Event of Default with respect to the Notes occurs and is
continuing and is actually known to a Responsible Officer, the Trustee shall
mail to each Holder a notice of the Default or Event of Default within 60 days
after it occurs or, if later, within 10 days after such Default or Event of
Default becomes known to the Trustee, unless such Default or Event of Default
has been cured. Except in the case of a Default or Event of Default in the
payment of principal of or interest on any Note, including an acceleration, and
the failure to make payment when required by Sections 4.12 and 4.15, the Trustee
may withhold the notice to the Holders if and so long as a committee of its
Responsible Officers determines in good faith that withholding the notice is in
the interest of the Holders.

 

SECTION 7.6            Reports by Trustee to Holders.

 

Within 60 days after each November 15 beginning with November 15, 2003, the
Trustee shall transmit to each Securityholder a report dated as of May 15 of the
relevant year that complies with the requirements of TIA § 313(a). The Trustee
also shall comply with TIA § 313(b) and TIA § 313(c) and (d). A copy of such
report at the time of its transmission to Securityholders shall be filed with
the SEC, if required, with each stock exchange, if any, on which the Notes are
listed and with the Company.

 

The Company shall promptly notify the Trustee if the Notes become listed on any
stock exchange and the Trustee shall comply with TIA § 313(d).

 

79

--------------------------------------------------------------------------------

 

SECTION 7.7            Compensation and Indemnity.

 

The Company shall pay to the Trustee, the Paying Agent and the Registrar from
time to time such compensation for their respective services rendered hereunder
as agreed in writing. The Trustee’s compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Company shall reimburse
the Trustee upon request for all reasonable out-of-pocket disbursements,
expenses and advances (including reasonable fees and expenses of counsel)
incurred or made by each of them in connection with the performance of its
duties under this Indenture. Such expenses shall include the reasonable
compensation, reasonable out-of-pocket disbursements and reasonable expenses of
the Trustee’s agents and counsel.

 

The Company shall indemnify and hold harmless the Trustee and their agents,
employees, officers, directors and shareholders against any and all claims,
expenses, loss or liability incurred by it arising out of or in connection with
the administration of its duties under this Indenture. The Trustee shall notify
the Company promptly of any claim asserted against it for which it may seek
indemnity. The Company shall defend the claim with counsel designated by the
Company, who may be outside counsel to the Company, but shall in all events be
reasonably satisfactory to the Trustee, and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company will not
be required to pay such fees and expenses if it assumes the Trustee’s defense
and there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent, which consent may not be unreasonably withheld. The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through the Trustee’s own willful misconduct,
negligence or bad faith.

 

To secure the Company’s payment obligations in this Section 7.7, the Trustee
shall have a lien prior to the Notes and the Guarantees on all money or property
held or collected by it in its capacity as Trustee, except money or property
held in trust to pay principal of or interest on particular Notes.

 

When the Trustee incurs expenses or renders services after an Event of Default
specified in Section 6.l(f) or 6.1(g) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under any
Bankruptcy Law.

 

This section shall survive the resignation or removal of the Trustee.

 

80

--------------------------------------------------------------------------------

 

SECTION 7.8            Replacement of Trustee.

 

The Trustee may resign at any time by so notifying the Company in writing, such
resignation to be effective upon the appointment of a successor Trustee. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the Company’s consent which consent shall not be unreasonably
withheld. The Company may remove the Trustee if:

 

(a)  the Trustee fails to comply with Section 7.10;

 

(b)  the Trustee is adjudged a bankrupt or an insolvent;

 

(c)  a receiver or other public officer takes charge of the Trustee or its
property; or

 

(d)  the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Company shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the Notes may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.

 

A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the lien provided in Section 7.7), the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.

 

If a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of at least 25% in principal amount of then outstanding Notes may petition any
court of competent jurisdiction at the expense of the Company for the
appointment of a successor Trustee.

 

If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

 

Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the
Company’s obligations under Section 7.7 shall continue for the benefit of the
retiring Trustee.

 

81

--------------------------------------------------------------------------------

 

SECTION 7.9            Successor Trustee by Merger, Etc.

 

If the Trustee consolidates with, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee corporation
or national banking association without any further act shall be the successor
Trustee; provided such corporation shall be otherwise qualified and eligible
under this Article VII.

 

SECTION 7.10          Eligibility; Disqualification.

 

This Indenture shall always have a Trustee who satisfies the requirements of TIA
§ 310(a)(l) and (2). The Trustee shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA § 310(b); provided that there shall
be excluded from the operation of TIA § 310(b)(l) any indenture or indentures
under which other securities, or certificates of interest or participation in
other securities, of the Company are outstanding if the requirements for such
exclusion set forth in TIA § 310(b)(l) are met. The provisions of TIA § 310
shall apply to the Company, as obligor of the Notes.

 

SECTION 7.11          Preferential Collection of Claims Against Company.

 

The Trustee shall comply with TIA § 31l(a), excluding any creditor relationship
listed in TIA § 31l(b). A Trustee who has resigned or been removed shall be
subject to TIA § 311 (a) to the extent indicated therein.

 

ARTICLE VIII

 

DISCHARGE OF INDENTURE; DEFEASANCE

 

SECTION 8.1            Termination of the Company’s Obligations.

 

The Company may terminate its obligations under the Notes and the obligations of
the Guarantors under the Guarantees, as the case may be, and this Indenture,
except those obligations referred to in the penultimate paragraph of this
Section 8.1, if all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes which have been replaced or paid or Notes for
whose payment U.S. Legal Tender has theretofore been deposited with the Trustee
or the Paying Agent in trust or segregated and held in trust by the Company and
thereafter repaid to the Company, as provided in Section 8.5) have been
delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if:

 

82

--------------------------------------------------------------------------------

 

(a) either (i) pursuant to Article III, the Company shall have given notice to
the Trustee and mailed a notice of redemption to each Holder of the redemption
of all of the Notes under arrangements satisfactory to the Trustee for the
giving of such notice or (ii) all Notes have otherwise become due and payable
hereunder;

 

(b) the Company shall have irrevocably deposited or caused to be deposited with
the Trustee, as trust funds in trust solely for the benefit of the Holders for
that purpose, U.S. Legal Tender in such amount as is sufficient without
consideration of reinvestment of interest, to pay principal of, premium, if any,
and interest on the outstanding Notes to maturity or redemption; provided that
the Trustee shall have been irrevocably instructed to apply such U.S. Legal
Tender to the payment of said principal, premium, if any, and interest with
respect to the Notes; and provided, further, that from and after the time of
deposit, the money deposited shall not be subject to the rights of holders of
Senior Debt pursuant to the provisions of Article X and Article XII;

 

(c) no Default or Event of Default with respect to this Indenture, the Notes or
the Guarantees shall have occurred and be continuing on the date of such deposit
or shall occur immediately after giving effect to such deposit and such deposit
will not result in a breach or violation of, or constitute a default under, any
other instrument to which the Company is a party or by which it is bound;

 

(d) the Company shall have paid all other sums payable by it hereunder; and

 

(e) the Company shall have delivered to the Trustee an Officers’ Certificate and
an Opinion of Counsel, each stating that all conditions precedent providing for
or relating to the termination of the Company’s and the Guarantors’ obligations
under the Notes and the Guarantees, as the case may be, and this Indenture have
been complied with. Such Opinion of Counsel shall also state that such
satisfaction and discharge does not result in a default under the Senior Credit
Facility (if then in effect) or any other material agreement or material
instrument then known to such counsel that binds or affects the Company.

 

Notwithstanding the foregoing paragraph, the Company’s obligations in Sections
2.5, 2.6, 2.7, 2.10, 4.1, 4.2, 7.7, 8.5 and 8.6 shall survive until the Notes
are no longer outstanding pursuant to the last paragraph of Section 2.8. After
the Notes are no longer outstanding, the Company’s obligations in Sections 7.7,
8.5 and 8.6 shall survive.

 

After such delivery or irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company’s and the Guarantors’
obligations under the Notes and the Guarantees, as the case may be, and this
Indenture except for those surviving obligations specified above.

 

83

--------------------------------------------------------------------------------

 

SECTION 8.2            Legal Defeasance and Covenant Defeasance.

 

(a)       The Company may, at its option by Board Resolution of the Board of
Directors, at any time, elect to have either paragraph (b) or (c) below be
applied to all outstanding Notes upon compliance with the conditions set forth
in Section 8.3.

 

(b)       Upon the Company’s exercise under paragraph (a) hereof of the option
applicable to this paragraph (b), each of the Company and the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.3, be
deemed to have been discharged from its obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
“outstanding” only for the purposes of Section 8.4 hereof and the other Sections
of this Indenture referred to in (i) and (ii) below, and to have satisfied all
its other obligations under such Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 8.3 hereof shall cease to be subject to any obligations to, or the
rights of, any holder of Senior Debt under Article X or otherwise, except for
the following provisions, which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.4 hereof, and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Notes when and to the extent such payments are due, (ii) the Company’s
obligations with respect to such Notes under Article II and Section 4.2 hereof,
(iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company’s obligations in connection therewith, including Section 7.7
hereof and (iv) this Article VIII. Subject to compliance with this Article VIII,
the Company may exercise its option under this paragraph (b) notwithstanding the
prior exercise of its option under paragraph (c) hereof.

 

(c)       Upon the Company’s exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), each of Vertis Holdings, the Company and the
Guarantors shall, subject to the satisfaction of the conditions set forth in
Section 8.3 hereof, be released from its obligations under the covenants
contained in Sections 4.8 through 4.15, Sections 4.18 and 4.19 and Article V
hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, “Covenant Defeasance”),
and the Notes shall thereafter be deemed not “outstanding” for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes) and Holders of the Notes and any amounts deposited under Section 8.3
hereof shall cease to be subject to any obligations to, or the rights of, any
holder of Senior Debt under Article X,

 

84

--------------------------------------------------------------------------------

 

Article XII or otherwise. For this purpose, such Covenant Defeasance means that,
with respect to the outstanding Notes, the Company and its Subsidiaries may omit
to comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
or Default under Section 6.1 (c) hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company’s exercise under paragraph (a) hereof of the option
applicable to this paragraph (c), subject to the satisfaction of the conditions
set forth in Section 8.3 hereof, Sections 6. l(c) and 6.1(e) shall not
constitute Events of Default.

 

SECTION 8.3            Conditions to Legal Defeasance or Covenant Defeasance.

 

The following shall be the conditions to the application of either Section
8.2(b) or 8.2(c) hereof to the outstanding Notes:

 

In order to exercise either Legal Defeasance or Covenant Defeasance:

 

(a)   the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, U.S. Legal Tender or U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms, will provide, not later than one day before the due
date of any payment on the Notes, U.S. Legal Tender, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest on the Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or installment
of principal of or interest on the Notes; provided that the Trustee shall have
received an irrevocable written order from the Company instructing the Trustee
to apply such U.S. Legal Tender or the proceeds of such U.S. Government
Obligations to said payments with respect to the Notes;

 

(b)   in the case of an election under Section 8.2(b) hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal

 

85

--------------------------------------------------------------------------------

 

income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;

 

(c)   in the case of an election under Section 8.2(c) hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;

 

(d)   no Default or Event of Default or event which with notice or lapse of time
or both would become a Default or an Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the incurrence of Indebtedness all or
a portion of the proceeds of which will be used to defease the Notes pursuant to
this Article VIII concurrently with such incurrence) or insofar as Sections
6.1(f) and 6. l(g) hereof are concerned, at any time in the period ending on the
91st day after the date of such deposit;

 

(e)   such Legal Defeasance or Covenant Defeasance shall not result in a breach
or violation of or constitute a default under this Indenture or any other
material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound;

 

(f)   the Company shall have delivered to the Trustee an Officers’ Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others;

 

(g)   the Company shall have delivered to the Trustee an Officers’ Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with; and

 

(h)   the Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that (i) the trust funds will not be subject to any rights of any
holders of Senior Debt, including, without limitation, those arising under this
Indenture, and (ii) assuming no intervening bankruptcy or insolvency of the
Company between the date of deposit and the 91st day following the deposit and
that no Holder is an insider of the Company, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any applicable
Bankruptcy Law.

 

86

--------------------------------------------------------------------------------

 

Notwithstanding the foregoing, the Opinion of Counsel required by clause (b)
above of this Section 8.3 need not be delivered if all Notes not theretofore
delivered to the Trustee for cancellation (i) have become due and payable, (ii)
will become due and payable on the Maturity Date within one year or (iii) are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company.

 

SECTION 8.4            Application of Trust Money.

 

The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or U.S.
Government Obligations deposited with it pursuant to this Article VIII, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of principal of and
interest on the Notes. The Trustee shall be under no obligation to invest said
U.S. Legal Tender or U.S. Government Obligations except as it may agree with the
Company.

 

The Company shall pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the U.S. Legal Tender or U.S. Government
Obligations deposited pursuant to Section 8.3 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

 

Anything in this Article VIII to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon the Company’s request any
U.S. Legal Tender or U.S. Government Obligations held by it as provided in
Section 8.3 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.

 

SECTION 8.5            Repayment to the Company.

 

Subject to this Article VIII, the Trustee and the Paying Agent shall promptly
pay to the Company upon request any excess U.S. Legal Tender or U.S. Government
Obligations held by them at any time and thereupon shall be relieved from all
liability with respect to such money. The Trustee and the Paying Agent shall pay
to the Company upon request any money held by them for the payment of principal
or interest that remains unclaimed for two years; provided that the Trustee or
such Paying Agent, before being required to make any payment, may at the expense
of the Company cause to be published once in a newspaper of general circulation
in the City of New York or mail to each Holder entitled to such money notice
that such money remains unclaimed and that after a date specified therein which
shall be at least 30 days from the date of such publication or mailing any

 

87

--------------------------------------------------------------------------------

 

unclaimed balance of such money then remaining will be repaid to the Company.
After payment to the Company, Holders entitled to such money must look to the
Company for payment as general creditors unless an applicable law designates
another Person.

 

SECTION 8.6            Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender or U.S.
Government Obligations in accordance with this Article VIII by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company’s obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article VIII until such time as the Trustee or Paying Agent is permitted to
apply all such U.S. Legal Tender or U.S. Government Obligations in accordance
with this Article VIII; provided that if the Company has made any payment of
interest on or principal of any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.

 

ARTICLE IX

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

SECTION 9.1            Without Consent of Holders.

 

Without the consent of any Holders, the Company and the Guarantors, when
authorized by resolutions of their respective Boards of Directors (copies of
which shall be delivered to the Trustee), and the Trustee may amend or
supplement this Indenture, the Notes or the Guarantees without notice to any
Holder for any of the following purposes:

 

(a) to cure any ambiguity, defect or inconsistency herein;

 

(b) to add to the covenants of the Company for the benefit of the Holders, or
surrender any right or power herein conferred upon the Company;

 

(c) to provide for collateral for the Notes;

 

(d) to provide for uncertificated Notes in addition to or in place of
certificated Notes;

 

(e) to effect or maintain the qualification of this Indenture under the TLA;

 

88

--------------------------------------------------------------------------------

 

(f) to evidence the succession in accordance with Article V hereof of another
Person to the Company and the assumption by any such successor of the covenants
of the Company herein and in the Notes; or

 

(g) to make any other change that does not adversely affect the rights of any
Holder in any material respect; provided that in making such change, the Trustee
may rely upon an Opinion of Counsel stating that such change does not adversely
affect the rights of any Holder in any material respect.

 

SECTION 9.2            With Consent of Holders.

 

Subject to Section 6.7 and the provisions of this Section 9.2, the Company and
the Guarantors, when authorized by resolutions of their respective Boards of
Directors (copies of which shall be delivered to the Trustee), and the Trustee
may amend or supplement this Indenture with the written consent of the Holders
of at least a majority in aggregate principal amount of the Notes then
outstanding. Subject to Section 6.7 and the provisions of this Section 9.2, the
Holders of, in the aggregate, at least a majority in principal amount of the
then outstanding Notes affected may waive compliance by the Company with any
provision of this Indenture without notice to any other Securityholder. However,
without the consent of each Securityholder affected, an amendment, supplement or
waiver, including a waiver pursuant to Section 6.4 may not:

 

(a) reduce the percentage of principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver of any provision of this Indenture
or the Notes;

 

(b) reduce the rate of or change or have the effect of changing the time for
payment of interest, including defaulted interest, on any Note;

 

(c)       reduce the principal of or change or have the effect of changing the
fixed maturity of any Notes, or change the date on which any Notes may be
subject to redemption or reduce the redemption price therefor;

 

(d)       make the principal of, or any interest on, any Note payable in money
other than that stated in the Note;

 

(e)       make any change in provisions of this Indenture protecting the right
of each Holder to receive payment of principal of and interest on such Note on
or after the due date thereof or to bring suit to enforce such payment, or
permitting Holders of a majority in principal amount of Notes to waive Defaults
or Events of Default;

 

89

--------------------------------------------------------------------------------

 

(f)        amend, change or modify any provisions of this Indenture or the
related definitions affecting the Company’s obligation to make a Change of
Control Offer in a manner which adversely affects the Holders;

 

(g)       after the Company’s obligation to purchase Notes arises thereunder,
amend, change or modify in any material respect the obligation of the Company to
make and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or, after such Asset Sale has been consummated, modify any of
the provisions or definitions with respect thereto;

 

(h)       modify or change any provision of this Indenture or the related
definitions affecting the subordination or ranking of the Notes or any Guarantee
in a manner which adversely affects the Holders; or

 

(i)        release any Guarantor that is a Significant Subsidiary from any of
its obligations under its Guarantee or this Indenture otherwise than in
accordance with the terms of this Indenture.

 

It shall not be necessary for the consent of the Holders under this Section 9.2
to approve the particular form of any proposed amendment, supplement or waiver,
but it shall be sufficient if such consent approves the substance thereof.

 

Notwithstanding the foregoing, no amendment shall modify any provision of
Article X or Article XII of this Indenture without the consent of each holder of
any then outstanding Designated Senior Debt.

 

After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.

 

In connection with any amendment, supplement or waiver under this Article IX,
the Company may, but shall not be obligated to, offer to any Holder who consents
to such amendment, supplement or waiver, or to all Holders, consideration for
such Holder’s consent to such amendment, supplement or waiver.

 

SECTION 9.3            Compliance with Trust Indenture Act.

 

Every amendment to or supplement of this Indenture, the Notes or the Guarantees
shall be set forth in a supplemental indenture that complies with the TIA as
then in effect.

 

90

--------------------------------------------------------------------------------

 

SECTION 9.4            Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of that
Note or portion of that Note that evidences the same debt as the consenting
Holder’s Note, even if notation of the consent is not made on any Note. However,
any such Holder or subsequent Holder may revoke the consent as to his Note or
portion of a Note. Such revocation shall be effective only if the Trustee
receives the notice of revocation before the date the amendment, supplement or
waiver becomes effective. Notwithstanding the above, nothing in this paragraph
shall impair the right of any Securityholder under § 316(b) of the TIA.

 

The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver which record date shall be at least 10 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the second and third sentences of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to consent to
such amendment, supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such record date. Such
consent shall be effective only for actions taken within 90 days after such
record date.

 

After an amendment, supplement or waiver becomes effective, it shall bind every
Securityholder unless it makes a change described in any of clauses (a) through
(1) of Section 9.2. In that case the amendment, supplement or waiver shall bind
each Holder of a Note who has consented to it.

 

SECTION 9.5            Notation on or Exchange of Notes.

 

If an amendment, supplement or waiver changes the terms of a Note, the Trustee
may (in accordance with the specific direction of the Company) request the
Holder of the Note to deliver it to the Trustee. The Trustee may (in accordance
with the specific direction of the Company) place an appropriate notation on the
Note about the changed terms and return it to the Holder. Alternatively, if the
Company or the Trustee so determines, the Company in exchange for the Note shall
issue and the Trustee shall authenticate a new Note (together with related
Guarantees of the Guarantors) that reflects the changed terms. Failure to make
the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver.

 

SECTION 9.6            Trustee To Sign Amendments, Etc.

 

The Trustee shall sign any amendment, supplement or waiver authorized pursuant
to this Article IX if the amendment, supplement or waiver does not adversely
affect

 

91

--------------------------------------------------------------------------------

 

the rights, duties or immunities of the Trustee. If it does, the Trustee may,
but need not, sign it. In signing any amendment, supplement or waiver, the
Trustee shall be entitled to receive, if requested, an indemnity reasonably
satisfactory to it and to receive, and shall be fully protected in relying upon,
an Officers’ Certificate and an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture. Neither the Company nor any Guarantor
may sign an amendment until its Board of Directors approves it.

 

ARTICLE X

 

SUBORDINATION

 

SECTION 10.1          Notes Subordinated to Senior Debt.

 

Anything herein to the contrary notwithstanding, the Company, for itself and its
successors, and each Holder, by his acceptance of Notes, agrees that the payment
of the principal of and interest on the Notes is subordinated, to the extent and
in the manner provided in this Article X, to the prior payment in full in cash
or Cash Equivalents, or such payment duly provided for to the satisfaction of
the holders of Senior Debt, of all Senior Debt Obligations (including the Senior
Debt Obligations with respect to the Senior Credit Facility, whether outstanding
on the Issue Date or thereafter incurred).

 

This Article X shall constitute a continuing offer to all Persons who become
holders of, or continue to hold, Senior Debt, and such provisions are made for
the benefit of the holders of Senior Debt and such holders are made obligees
hereunder and any one or more of them may enforce such provisions.

 

SECTION 10.2          Suspension of Payment When Senior Debt Is in Default.

 

(a)       If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt
(including, without limitation, guarantees of the foregoing items which
constitute Senior Debt) (a “Payment Default”), then no payment or distribution
of any kind or character shall be made by or on behalf of the Company or any
other Person on its or their behalf with respect to any Obligations or to
acquire any of the Notes for cash or property or otherwise until such Payment
Default (and all other Payment Defaults) shall have been cured or waived in
accordance with the terms of the documentation governing the respective Senior
Debt or ceased to exist or all Senior Debt with respect to which any

 

92

--------------------------------------------------------------------------------

 

Payment Default has occurred and is continuing shall have been discharged or
paid in full in cash or Cash Equivalents.

 

(b)       If any event of default (other than a Payment Default) occurs and is
continuing with respect to any Designated Senior Debt (as such event of default
is defined in the instrument creating or evidencing such Designated Senior Debt)
permitting the holders of such Designated Senior Debt then outstanding to
accelerate the maturity thereof (a “Non payment Default”), and if the
Representative for the respective issue of Designated Senior Debt gives notice
of the event of default to the Trustee stating that such notice is a payment
blockage notice (a “Payment Blockage Notice”), then during the period (the
“Payment Blockage Period”) beginning upon the delivery of such Payment Blockage
Notice and ending on the earlier of the 180th day after such delivery and the
date on which (x) all events of default with respect to all Designated Senior
Debt have been cured or waived or cease to exist, (y) all Designated Senior Debt
with respect to which any such event of default has occurred and is continuing
is discharged or paid in full in cash or Cash Equivalents, or (z) the Trustee
receives notice thereof from the Representative for the respective issue of
Designated Senior Debt terminating the Payment Blockage Period, neither the
Company nor any other Person on its behalf shall (i) make any payment of any
kind or character with respect to any Obligations or (ii) acquire any of the
Notes for cash or property or otherwise. Notwithstanding anything herein to the
contrary, (x) in no event will a Payment Blockage Period extend beyond 180 days
from the date the applicable Payment Blockage Notice is received by the Trustee
and (y) only one such Payment Blockage Period may be commenced within any 360
consecutive days. For all purposes of this Section 10.2(b), no event of default
which existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Debt shall be, or be made,
the basis for the commencement of a second Payment Blockage Period by the
Representative of such Designated Senior Debt whether or not within a period of
360 consecutive days, unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days (it being acknowledged
that any subsequent action, or any breach of any financial covenants for a
period ending after the date of commencement of such Payment Blockage Period
that, in either case, would give rise to an event of default pursuant to any
provisions under which an event of default previously existed or was continuing
shall constitute a new event of default for this purpose).

 

(c)       In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee, any Holder or any Paying Agent when such payment is
prohibited by the foregoing provisions of this Section 10.2, such payment shall
be held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Debt (pro rata to such holders on the basis of the respective
amount of Senior Debt held by such holders) or their respective Representatives,
as their respective interests may appear. The Trustee and any Paying Agent shall
be entitled to rely on information regarding amounts then due and owing on the
Senior Debt, if any, received from the holders of Senior Debt (or their
Representatives)

 

93

--------------------------------------------------------------------------------

 

or, if such information is not received from such holders or their
Representatives, from the Company and only amounts included in the information
provided to the Trustee and any Paying Agent shall be paid to the holders of
Senior Debt.

 

Nothing contained in this Article X shall limit the right of the Trustee or the
Holders to take any action to accelerate the maturity of the Notes and all other
Obligations pursuant to Article VI or to pursue any rights or remedies
hereunder; provided that all Senior Debt thereafter due or declared to be due
shall first be paid in full in cash or Cash Equivalents before the Holders are
entitled to receive any payment of any kind or character with respect to
Obligations.

 

SECTION 10.3         Obligations Subordinated to Prior Payment of All Senior
Debt on Dissolution, Liquidation or Reorganization of Company.

 

(a)       Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets and liabilities
of the Company or in a bankruptcy, reorganization, insolvency, receivership or
other similar proceeding relating to the Company or its assets, whether
voluntary or involuntary, all Senior Debt Obligations due or to become due shall
first be paid in full in cash or Cash Equivalents, or such payment duly provided
for to the satisfaction of the holders of Senior Debt, before any payment or
distribution of any kind or character is made on account of any Obligations or
for the acquisition of any of the Notes for cash or property or otherwise. Upon
any such dissolution, winding-up, liquidation, reorganization, receivership or
similar proceeding, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the Holders
or the Trustee would be entitled, except for the provisions hereof, shall be
paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Holders, the Trustee or any Paying Agent if received by them, directly to the
holders of Senior Debt (pro rata to such holders on the basis of the respective
amounts of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of Senior Debt.

 

(b)       To the extent any payment of Senior Debt (whether by or on behalf of
the Company, as proceeds of security or enforcement of any right of setoff or
otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to any receiver,

 

94

--------------------------------------------------------------------------------

 

trustee in bankruptcy, liquidating trustee, agent or other similar Person under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Debt or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred.

 

It is further agreed that any diminution (whether pursuant to court decree or
otherwise, including without limitation for any of the reasons described in the
preceding sentence) of the Company’s obligation to make any distribution or
payment pursuant to any Senior Debt, except to the extent such diminution occurs
by reason of the repayment (which has not been disgorged or returned) of such
Senior Debt in cash or Cash Equivalents, shall have no force or effect for
purposes of the subordination provisions contained in this Article X, with any
turnover of payments as otherwise calculated pursuant to this Article X to be
made as if no such diminution had occurred.

 

(c)       In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by any Holder when such payment or
distribution is prohibited by this Section 10.3, such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Senior Debt (pro rata to such holders on the basis of the
respective amount of Senior Debt held by such holders) or their respective
Representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of Senior Debt remaining
unpaid until all such Senior Debt has been paid in full in cash or Cash
Equivalents, after giving effect to any concurrent payment, distribution or
provision therefor to or for the holders of such Senior Debt.

 

(d)       The consolidation of the Company with, or the merger of the Company
with or into, another corporation, partnership, trust or limited liability
company or the liquidation or dissolution of the Company following the
conveyance or transfer of all or substantially all of its assets, to another
corporation, partnership, trust or limited liability company upon the terms and
conditions provided in Article V hereof and as long as permitted under the terms
of the Senior Debt shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section if such other corporation shall,
as a part of such consolidation, merger, conveyance or transfer, assume the
Company’s obligations hereunder in accordance with Article V hereof.

 

SECTION 10.4          Payments May Be Paid Prior to Dissolution,

 

Nothing contained in this Article X or elsewhere in this Indenture shall prevent
(i) the Company, except under the conditions described in Sections 10.2 and
10.3, from making payments at any time for the purpose of making payments of
principal of and interest

 

95

--------------------------------------------------------------------------------

 

on the Obligations, or from depositing with the Trustee or any Paying Agent, any
monies for such payments, or (ii) in the absence of actual knowledge by the
Trustee or any Paying Agent that a given payment would be prohibited by Section
10.2 or 10.3, the application by the Trustee and any Paying Agent of any monies
deposited with them for the purpose of making such payments of principal of, and
interest on, the Obligations to the Holders entitled thereto unless at least one
Business Day prior to the date upon which such payment would otherwise become
due and payable Trustee and any Paying Agent shall have actually received the
written notice provided for in the first sentence of Section 10.2(b) (provided
that, notwithstanding the foregoing, the Holders receiving any payments made in
contravention of Section 10.2 and/or 10.3 (and the respective such payments)
shall otherwise be subject to the provisions of Section 10.2 and Section 10.3).
The Company shall give prompt written notice to the Trustee and any Paying Agent
of any dissolution, winding-up, liquidation or reorganization of the Company,
although any delay or failure to give any such notice shall have no effect on
the subordination provisions contained herein.

 

SECTION 10.5          Holders To Be Subrogated to Rights of Holders of Senior
Debt.

 

Subject to the payment in full in cash or Cash Equivalents of all Senior Debt,
the Holders shall be subrogated to the rights of the holders of Senior Debt to
receive payments or distributions of cash, property or securities of the Company
applicable to the Senior Debt until the Obligations shall be paid in full; and,
for the purposes of such subrogation, no such payments or distributions to the
holders of the Senior Debt by or on behalf of the Company, or by or on behalf of
the Holders by virtue of this Article X, which otherwise would have been made to
the Holders shall, as between the Company and the Holders, be deemed to be a
payment by the Company to or on account of the Senior Debt, it being understood
that the provisions of this Article X are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of Senior Debt, on the other hand.

 

SECTION 10.6          Obligations of the Company Unconditional.

 

Nothing contained in this Article X or elsewhere in this Indenture is intended
to or shall impair, as among the Company, its creditors other than the holders
of Senior Debt, and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal of and any
interest on the Obligations as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Debt, nor shall anything herein or therein prevent any Holder or the
Trustee on its behalf from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article X, of the holders of Senior Debt

 

96

--------------------------------------------------------------------------------

 

in respect of cash, property or securities of the Company received upon the
exercise of any such remedy.

 

SECTION 10.7          Reliance on Judicial Order or Certificate of Liquidating
Agent.

 

Upon any payment or distribution of assets of the Company referred to in this
Article X, the Trustee, subject to the provisions of Article VII hereof, and the
Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any insolvency, bankruptcy, receivership,
dissolution, winding-up, liquidation, reorganization or similar case or
proceeding is pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, assignee for the benefit of creditors, agent or
other person making such payment or distribution, delivered to the Trustee or
the Holders, for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior Debt and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X.

 

SECTION 10.8         Subordination Rights Not Impaired by Acts or Omissions of
the Company or
Holders of Senior Debt.

 

No right of any present or future holders of any Senior Debt to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.

 

Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders and without impairing or releasing the subordination
provided in this Article X or the obligations hereunder of the Holders to the
holders of the Senior Debt, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt,
or any instrument evidencing the same or any agreement under which Senior Debt
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the payment or collection of Senior Debt; and (iv)
exercise or refrain from exercising any rights against the Company and any other
Person.

 

97

--------------------------------------------------------------------------------

 

SECTION 10.9          Holders Authorize Trustee To Effectuate Subordination of
Obligations.

 

Each Holder authorizes and expressly directs the Trustee on its behalf to take
such action as may be necessary or appropriate to effectuate, as between the
holders of Senior Debt and the Holders, the subordination provided in this
Article X, and appoints the Trustee its attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
credits or otherwise) tending towards liquidation of the business and assets of
the Company, the filing of a claim for the unpaid balance of its Obligations and
accrued interest in the form required in those proceedings.

 

If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Debt or their
Representative are or is hereby authorized to have the right to file and are or
is hereby authorized to file an appropriate claim for and on behalf of the
Holders. Nothing herein contained shall be deemed to authorize the Trustee or
the holders of Senior Debt or their Representative to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior Debt or their
Representative to vote in respect of the claim of any Holder in any such
proceeding.

 

SECTION 10.10        Amendments or Modifications to Article X.

 

Notwithstanding anything to the contrary contained in this Indenture, no
amendment or modification to any provision of this Article X or the related
definitions used herein (other than to cure any ambiguity, defect, mistake or
inconsistency herein, so long as such amendment or modification does not
adversely affect the rights of the holders of any Senior Debt then outstanding)
shall be permitted without the consent of the “Required Lenders,” as such term
is used in the Senior Credit Facility.

 

SECTION 10.11        Article X Not to Prevent Events of Default.

 

The failure to make a payment on account of principal of or interest on the
securities by reason of any provision of this Article X shall not be construed
as preventing the occurrence of a Default or an Event of Default under Section
6.1.

 

98

--------------------------------------------------------------------------------

 

SECTION 10.12        No Fiduciary Duty of Trustee to Holders of Senior Debt.

 

The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt, and shall not be liable to any such holders if it shall in good
faith mistakenly pay over or distribute to the Holders of Notes or the Company
or any other Person, cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article X or otherwise. Nothing in this
Section 10.12 shall affect the obligation of any other such Person to hold such
payment for the benefit of, and to pay such payment over to, the holders of
Senior Debt or their Representative.

 

ARTICLE XI

 

GUARANTEE

 

SECTION 11.1          Unconditional Guarantee.

 

Each Guarantor hereby unconditionally, jointly and severally, guarantees (each
such guarantee to be referred to herein as a “Guarantee”), subject to Article
XII, to each of the Holders and to the Trustee and their respective successors
and assigns that (i) the principal of and interest on the Notes will be promptly
paid in full when due, subject to any applicable grace period, whether at
maturity, by acceleration or otherwise, and interest on the overdue principal,
if any, and interest on any interest, if any, to the extent lawful, of the Notes
and all other obligations of the Company to the Holders or the Trustee hereunder
or thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (ii) in case of any extension of time of
payment or renewal of any of the Notes or of any such other obligations, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
11.5. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any of the Holders with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that this Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and in
this Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any

 

99

--------------------------------------------------------------------------------

 

Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between each Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article VI for
the purposes of this Guarantee, and (y) in the event of any acceleration of such
obligations as provided in Article VI, such obligations (whether or not due and
payable) shall forthwith become due and payable by each Guarantor for the
purpose of this Guarantee.

 

SECTION 11.2          Subordination of Guarantee.

 

The obligations of each Guarantor to the Holders and to the Trustee pursuant to
the Guarantee of such Guarantor and this Indenture are expressly subordinate and
subject in right of payment to the prior payment in full of all Guarantor Senior
Debt of such Guarantor, to the extent and in the manner provided in Article XII.

 

SECTION 11.3          Severability.

 

In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

SECTION 11.4          Release of a Guarantor.

 

Upon (i) the release by the lenders under the Senior Credit Facility and related
documents of all guarantees of a Guarantor and all Liens on the property and
assets of such Guarantor relating to such Indebtedness, (ii) the unconditional
release of a Guarantor from its liability in respect of the Indebtedness in
connection with which such Guarantee was executed and delivered in accordance
with the first paragraph of Section 4.17, (iii) any sale or other disposition
(by merger or otherwise) to any Person which is not a Restricted Subsidiary of
the Company of all of the Company’s Capital Stock in, or all or substantially
all of the assets of, a Guarantor; provided that (a) such sale or disposition of
such Capital Stock or assets is otherwise in compliance with the terms of this
Indenture and (b) such assumption, guarantee or other liability of such
Guarantor has been released by the holders of the other Indebtedness of the
Company so guaranteed, (iv) the Legal Defeasance of the Notes as described under
Section 8.2, or (v) a Guarantor being designated as an Unrestricted Subsidiary
as described under the definition of “Unrestricted Subsidiary,” such Guarantor
shall be deemed released from all obligations under this Article XI without any
further action required on the part of the Trustee or any Holder; provided that
any such termination shall occur only to the extent that all obligations of such
Guarantor under all of its guarantees of, and under all of its pledges of

 

100

--------------------------------------------------------------------------------

 

assets or other security interests which secure, such Indebtedness of the
Company shall also terminate upon such release, sale or transfer.

 

The Trustee shall promptly deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers’
Certificate certifying as to the compliance with this Section 11.4. Any
Guarantor not so released remains liable for the full amount of principal of and
interest on the Notes as provided in this Article XI.

 

SECTION 11.5          Limitation of Guarantor’s Liability.

 

Each Guarantor and by its acceptance hereof each of the Holders hereby confirm
that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Holders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including, but not limited
to, the Guarantor Senior Debt of such Guarantor) and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 11.7, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.

 

SECTION 11.6          Consolidation, Merger and Sale of Assets.

 

Upon any consolidation, merger, sale or conveyance of a Guarantor as permitted
by Article V, the Guarantee of such Guarantor set forth in this Article XI, and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by such Guarantor, shall be
expressly assumed (in the event that the Company, the Guarantor or another
Guarantor is not the surviving corporation in the merger), by an agreement or
supplemental indenture reasonably satisfactory in form to the Trustee, executed
and delivered to the Trustee, by the corporation formed by such consolidation,
or into which the Guarantor shall have merged, or by the corporation that shall
have acquired such property. In the case of any such consolidation, merger, sale
or conveyance and upon the assumption by the successor corporation, by an
agreement or supplemental indenture executed and delivered to the Trustee and
satisfactory in form and substance to the Trustee of the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor.

 

101

--------------------------------------------------------------------------------

 

SECTION 11.7          Contribution.

 

In order to provide for just and equitable contribution among the Guarantors,
the Guarantors agree, inter se, that in the event any payment or distribution is
made by any Guarantor (a “Funding Guarantor”) under its Guarantee, such Funding
Guarantor shall be entitled to a contribution from all other Guarantors in a pro
rata amount based on the Adjusted Net Assets of each Guarantor (including the
Funding Guarantor) for all payments, damages and expenses incurred by that
Funding Guarantor in discharging the Company’s obligations with respect to the
Obligations. “Adjusted Net Assets” of such Guarantor at any date shall mean the
lesser of (x) the amount by which the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date (other than liabilities
of such Guarantor under Subordinated Obligation)), but excluding liabilities
under the Guarantee, of such Guarantor at such date and (y) the amount by which
the present fair salable value of the assets of such Guarantor at such date
exceeds the amount that will be required to pay the probable liabilities of such
Guarantor on its debts including, without limitation, Guarantor Senior Debt
(after giving effect to all other fixed and contingent liabilities incurred or
assumed on such date and after giving effect to any collection from any
Subsidiary of such Guarantor in respect of the obligations of such Subsidiary
under the Guarantee), excluding debt in respect of the Guarantee of such
Guarantor, as they become absolute and matured.

 

SECTION 11.8          Waiver of Subrogation.

 

Each Guarantor hereby irrevocably waives any claim or other rights which it may
now or hereafter acquire against the Company that arise from the existence,
payment, performance or enforcement of such Guarantor’s obligations under its
Guarantee and this Indenture, including, without limitation, any right of
subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Holder against the Company, whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall be
deemed to have been paid to such Guarantor for the benefit of, and held in trust
for the benefit of, the Holders, and shall, subject to the provisions of Article
X, Section 11.2 and Article XII, forthwith be paid to the Trustee for the
benefit of such Holders to be credited and applied upon the Notes, whether
matured or unmatured, in accordance with the terms of this Indenture. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by

 

102

--------------------------------------------------------------------------------

 

this Indenture and that the waiver set forth in this Section 11.8 is knowingly
made in contemplation of such benefits.

 

SECTION 11.9          Evidence of Guarantee.

 

To evidence their guarantees to the Holders set forth in this Article XI, each
of the Guarantors hereby agrees to execute the notation of Guarantee in
substantially the form included in Exhibit E. Each such notation of Guarantee
shall be signed on behalf of each Guarantor by an Officer or an assistant
Secretary.

 

SECTION 11.10        Waiver of Stay, Extension or Usury Laws.

 

Each Guarantor covenants that it will not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive such
Guarantor from performing its Guarantee as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and each Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.

 

ARTICLE XII

 

SUBORDINATION OF GUARANTEE OBLIGATIONS

 

SECTION 12.1         Guarantee Obligations Subordinated to Guarantor Senior
Debt.

 

Anything herein to the contrary notwithstanding, each of the Guarantors, for
itself and its successors, and each Holder by his acceptance of Notes agrees
that the payment of all Guarantee Obligations of such Guarantor are
subordinated, to the extent and in the manner provided in this Article XII, to
the prior payment in full in cash or Cash Equivalents, or such payment duly
provided for to the satisfaction of the holders of Guarantor Senior Debt, of all
Guarantor Senior Debt Obligations of such Guarantor (including Guarantor Senior
Debt Obligations with respect to the Senior Credit Facility, whether outstanding
on the Issue Date or thereafter incurred).

 

This Article XII shall constitute a continuing offer to all Persons who become
holders of, or continue to hold, Guarantor Senior Debt, and such provisions are
made for the

 

103

--------------------------------------------------------------------------------

 

benefit of the holders of Guarantor Senior Debt and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.

 

SECTION 12.2          Suspension of Guarantee Obligations When Guarantor Senior
Debt Is in Default.

 

(a)       If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by declaration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Guarantor Senior
Debt (including, without limitation, guarantees of the foregoing items which
constitute Guarantor Senior Debt), then no payment or distribution of any kind
or character shall be made by or on behalf of such Guarantor or any other Person
on its or their behalf with respect to any Guarantee Obligations or to acquire
any of the Notes for cash or property or otherwise until such Payment Default
(and all other Payment Defaults) shall have been cured or waived in accordance
with the terms of the documentation governing the respective Guarantor Senior
Debt or ceased to exist or all Guarantor Senior Debt with respect to which any
Payment Default has occurred and is continuing shall have been discharged or
paid in full in cash or Cash Equivalents.

 

(b)       During any Payment Blockage Period (as determined in accordance with
Section 10.2(b), including the limitations set forth therein), neither any
Guarantor nor any other Person on any Guarantor’s behalf shall (i) make any
payment of any kind or character with respect to any Guarantee Obligations or
(ii) acquire any of the Notes for cash or property or otherwise.

 

(c)       In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee, any Paying Agent or any Holder when such payment is
prohibited by the foregoing provisions of this Section 12.2, such payment shall
be held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Guarantor Senior Debt (pro rata to such holders on the basis of the
respective amount of Guarantor Senior Debt held by such holders) or their
respective Representatives, as their respective interests may appear. The
Trustee and any Paying Agent shall be entitled to rely on information regarding
amounts then due and owing on the Guarantor Senior Debt, if any, received from
the holders of Guarantor Senior Debt (or their Representatives) or, if such
information is not received from such holders or their Representatives, from a
Guarantor and only amounts included in the information provided to the Trustee
and any Paying Agent shall be paid to the holders of Guarantor Senior Debt.

 

104

--------------------------------------------------------------------------------

 

SECTION 12.3

 

Guarantee Obligations Subordinated to Prior Payment of All Guarantor Senior Debt
on Dissolution, Liquidation or Reorganization of Such Guarantor.

 

(a)       Upon any payment or distribution of assets of any Guarantor of any
kind or character, whether in cash, property or securities, to creditors upon
any total or partial liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors or marshaling of assets of such
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or other
similar proceeding relating to such Guarantor or its property, whether voluntary
or involuntary, all Guarantor Senior Debt Obligations due or to become due shall
first be paid in full in cash or Cash Equivalents, or such payment duly provided
for to the satisfaction of the holders of Guarantor Senior Debt, before the
Holders shall be entitled to receive any payment or distribution of any kind or
character on account of any Guarantee Obligations or for the acquisition of any
of the Notes for cash or property or otherwise. Upon any such dissolution,
winding-up, liquidation, reorganization, receivership or similar proceeding, any
payment or distribution of assets of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Holders or the Trustee
would be entitled, except for the provisions hereof, shall be paid by such
Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Holders or by the
Trustee if received by them, directly to the holders of Guarantor Senior Debt
(pro rata to such holders on the basis of the respective amounts of Guarantor
Senior Debt held by such holders) or their respective Representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Guarantor
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of Guarantor Senior Debt remaining unpaid until all
such Guarantor Senior Debt has been paid in full in cash or Cash Equivalents
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of Guarantor Senior Debt.

 

(b)       To the extent any payment of Guarantor Senior Debt (whether by or on
behalf of a Guarantor, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then, if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Guarantor Senior Debt or part thereof originally
intended to be satisfied shall be deemed to be reinstated and outstanding as if
such payment had not occurred.

 

It is further agreed that any diminution (whether pursuant to court decree or
otherwise, including without limitation for any of the reasons described in the
preceding sentence) of any Guarantor’s obligation to make any distribution or
payment pursuant to any

 

105

--------------------------------------------------------------------------------

 

Guarantor Senior Debt, except to the extent such diminution occurs by reason of
the repayment (which has not been disgorged or returned) of such Guarantor
Senior Debt in cash or Cash Equivalents, shall have no force or effect for
purposes of the subordination provisions contained in this Article XII, with any
turnover of payments as otherwise calculated pursuant to this Article XII to be
made as if no such diminution had occurred.

 

(c)       In the event that, notwithstanding the foregoing, any payment or
distribution of assets of any Guarantor of any kind or character, whether in
cash, property or securities, shall be received by any Holder when such payment
or distribution is prohibited by this Section 12.3, such payment or distribution
shall be held in trust for the benefit of, and shall be paid over or delivered
to, the holders of Guarantor Senior Debt (pro rata to such holders on the basis
of the respective amount of Guarantor Senior Debt held by such holders) or their
respective Representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Guarantor Senior Debt may have been issued, as
their respective interests may appear, for application to the payment of
Guarantor Senior Debt remaining unpaid until all such Guarantor Senior Debt has
been paid in full in cash or Cash Equivalents, after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Guarantor Senior Debt.

 

(d)       The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
a Guarantor following the conveyance or transfer of all or substantially all of
its assets, to another corporation upon the terms and conditions provided in
Article V and as long as permitted under the terms of the Guarantor Senior Debt
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Guarantee of such
Guarantor hereunder in accordance with Article V.

 

SECTION 12.4          Payments May Be Paid Prior to Dissolution.

 

Nothing contained in this Article XII or elsewhere in this Indenture shall
prevent (i) any Guarantor, except under the conditions described in Sections
12.2 and 12.3, from making payments at any time for the purpose of making
payments on Guarantee Obligations, or from depositing with the Trustee or any
Paying Agent, any monies for such payments, or (ii) in the absence of actual
knowledge by the Trustee or any Paying Agent that a given payment would be
prohibited by Section 12.2 or 12.3, the application by the Trustee and any
Paying Agent of any monies deposited with them for the purpose of making such
payments on Guarantee Obligations to the Holders entitled thereto unless at
least one Business Day prior to the date upon which such payment would otherwise
become due and payable the Trustee and any Paying Agent shall have actually
received the written notice provided for in the first sentence of Section
10.2(b) (provided that, notwithstanding the foregoing, the Holders

 

106

--------------------------------------------------------------------------------

 

receiving any payments made in contravention of Sections 12.2 and/or 12.3 (and
the respective such payments) shall otherwise be subject to the provisions of
Section 12.2 and Section 12.3). Each Guarantor shall give prompt written notice
to the Trustee and any Paying Agent of any dissolution, winding-up, liquidation
or reorganization of such Guarantor, although any delay or failure to give any
such notice shall have no effect on the subordination provisions contained
herein.

 

SECTION 12.5          Holders To Be Subrogated to Rights of Lenders of Guarantor
Senior Debt.

 

Subject to the payment in full in cash or Cash Equivalents of all Guarantor
Senior Debt, the Holders shall be subrogated to the rights of the holders of
Guarantor Senior Debt of such Guarantor to receive payments or distributions of
cash, property or securities of such Guarantor applicable to such Guarantor
Senior Debt until all amounts owing on or in respect of the Guarantee
Obligations shall be paid in full; and, for the purposes of such subrogation, no
such payments or distributions to the holders of such Guarantor Senior Debt by
or on behalf of such Guarantor, or by or on behalf of the Holders by virtue of
this Article XII, which otherwise would have been made to the Holders shall, as
between such Guarantor and the Holders, be deemed to be a payment by such
Guarantor to or on account of such Guarantor Senior Debt, it being understood
that the provisions of this Article XII are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of Guarantor Senior Debt, on the other hand.

 

SECTION 12.6          Guarantee Obligations of the Guarantors Unconditional.

 

Nothing contained in this Article XII or elsewhere in this Indenture or in the
Guarantees is intended to or shall impair, as among the Guarantors, their
creditors other than the holders of Guarantor Senior Debt, and the Holders, the
obligation of the Guarantors, which is absolute and unconditional, to pay to the
Holders all amounts due and payable under the Guarantees as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the
Guarantors other than the holders of the Guarantor Senior Debt, nor shall
anything herein or therein prevent any Holder or the Trustee on its behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article XII of the
holders of Guarantor Senior Debt in respect of cash, property or securities of
the Guarantors received upon the exercise of any such remedy.

 

SECTION 12.7          Reliance on Judicial Order or Certificate of Liquidating
Agent.

 

Upon any payment or distribution of assets of a Guarantor referred to in this
Article XIII, the Trustee, subject to the provisions of Article VII hereof, and
the Holders shall

 

107

--------------------------------------------------------------------------------

 

be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any insolvency, bankruptcy, receivership, dissolution,
winding-up, liquidation, reorganization or similar case or proceeding is
pending, or upon a certificate of the trustee in bankruptcy, liquidating
trustee, receiver, assignee for the benefit of creditors, agent or other person
making such payment or distribution, delivered to the Trustee or the Holders,
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Guarantor Senior Debt and other
Indebtedness of such Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XII.

 

SECTION 12.8

 

Subordination Rights Not Impaired by Acts or Omissions of the Guarantors or
Lenders of Guarantor Senior Debt.

 

No right of any present or future holders of any Guarantor Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Guarantor
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by any Guarantor with the terms of this Indenture, regardless of
any knowledge thereof which any such holder may have or otherwise be charged
with.

 

Without in any way limiting the generality of the foregoing paragraph, the
holders of Guarantor Senior Debt may, at any time and from time to time, without
the consent of or notice to the Trustee, without incurring responsibility to the
Trustee or the Holders and without impairing or releasing the subordination
provided in this Article XII or the obligations hereunder of the Holders to the
holders of Guarantor Senior Debt, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Guarantor Senior Debt, or otherwise amend or supplement in
any manner Guarantor Senior Debt, or any instrument evidencing the same or any
agreement under which Guarantor Senior Debt is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Guarantor Senior Debt; (iii) release any Person liable in any manner
for the payment or collection of Guarantor Senior Debt; and (iv) exercise or
refrain from exercising any rights against the Guarantors and any other Person.

 

SECTION 12.9          Holders Authorize Trustee To Effectuate Subordination of
Guarantee Obligations.

 

Each Holder, by its acceptance of the Guarantee Obligations, authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate, as between the holders of Guarantor
Senior Debt and the Holders, the subordination provided in this Article XII, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of any
Guarantor (whether in bankruptcy, insolvency, receivership,

 

108

--------------------------------------------------------------------------------

 

reorganization or similar proceedings or upon an assignment for the benefit of
credits or otherwise) tending towards liquidation of the business and assets of
any Guarantor, the filing of a claim for the unpaid balance under its Guarantee
Obligations and accrued interest in the form required in those proceedings.

 

If the Trustee does not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Guarantor Senior Debt or
their Representative are or is hereby authorized to have the right to file and
are or is hereby authorized to file an appropriate claim for and on behalf of
the Holders. Nothing herein contained shall be deemed to authorize the Trustee
or the holders of Guarantor Senior Debt or their Representative to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Guarantee
Obligations or the rights of any Holder, or to authorize the Trustee or the
holders of Guarantor Senior Debt or their Representative to vote in respect of
the claim of any Holder in any such proceeding.

 

SECTION 12.10        This Article XII Not To Prevent Events of Default.

 

The failure to make a payment on account of principal of or interest on the
Guarantee Obligations by reason of any provision of this Article XII will not be
construed as preventing the occurrence of an Event of Default.

 

SECTION 12.11        Amendments or Modifications to Article XII.

 

Notwithstanding anything to the contrary contained in this Indenture, no
amendment or modification to any provision of this Article XII or the related
definitions used herein (other than to cure any ambiguity, defect, mistake or
inconsistency herein, so long as such amendment or modification does not
adversely affect the rights of the holders of any Guarantor Senior Debt then
outstanding) shall be permitted without the consent of the “Required Lenders,”
as such term is used in the Senior Credit Facility.

 

SECTION 12.12        No Fiduciary Duty of Trustee to Holders of Senior Debt.

 

The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Guarantor Senior Debt, and shall not be liable to any such holders if it shall
in good faith mistakenly pay over or distribute to the Holders of Notes or the
Company or any other Person, cash, property or securities to which any holders
of Guarantor Senior Debt shall be entitled by virtue of this Article XII or
otherwise. Nothing in this Section 12.12 shall affect the obligation of any
other such Person to hold such payment for the benefit of, and to pay such
payment over to, the holders of Guarantor Senior Debt or their Representative.

 

109

--------------------------------------------------------------------------------

 

ARTICLE XIII

 

MISCELLANEOUS

 

SECTION 13.1          Trust Indenture Act Controls.

 

The provisions of TTA §§ 310 through 317 that impose duties on any Person
(including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.

 

If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by the above paragraph, the imposed duties shall control.

 

SECTION 13.2          Notices.

 

Any notice or communication shall be sufficiently given if in writing and
delivered in Person or mailed by first-class mail or by telecopier, followed by
first-class mail, or by overnight service guaranteeing next-day delivery,
addressed as follows:

 

(a)

if to the Company or any Guarantor:

 

 

 

c/o Vertis, Inc.

 

250 W. Pratt Street

 

18th Floor

 

Baltimore, MD 21201

 

Attention: Chief Financial Officer

 

Telecopier Number: (410) 528-9287

 

 

 

with a copy to:

 

 

 

Sullivan & Cromwell LLP

 

125 Broad Street

 

New York, New York 10004

 

Attention: Robert E. Buckholz, Jr., Esq.

 

Telecopier Number: (212) 558-3588

 

110

--------------------------------------------------------------------------------

 

(b)

if to the Trustee:

 

 

 

The Bank of New York

 

101 Barclay Street

 

New York, New York 10286

 

Attention: Corporate Trust Administration

 

Telecopier Number: (212) 815-5704

 

The Company or the Trustee by notice to the other may designate additional or
different addresses for subsequent notices or communications.

 

Any notice or communication mailed to a Securityholder, including any notice
delivered in connection with TIA § 310(b), TIA § 313(c), TIA § 314(a) and TIA §
315(b), shall be mailed to such Holder, first-class postage prepaid, at his
address as it appears on the registration books of the Registrar and shall be
sufficiently given to such Holder if so mailed within the time prescribed.

 

Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received, if
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.

 

SECTION 13.3          Communications by Holders with Other Holders.

 

Securityholders may communicate pursuant to TIA § 312(b) with other
Securityholders with respect to their rights under this Indenture, the Notes or
the Guarantees. The Company, the Guarantors, the Trustee, the Registrar and any
other Person shall have the protection of TIA § 312(c).

 

SECTION 13.4          Certificate and Opinion of Counsel as to Conditions
Precedent.

 

Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee at the request of
the Trustee (a) an Officers’ Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with (which officer signing such certificate
may rely, as to matters of law, on an Opinion of Counsel), (b) an Opinion of
Counsel in form and substance reasonably satisfactory to the Trustee stating
that, in the opinion of counsel, all such conditions have been complied with
(which counsel, as to factual matters, may rely on an Officers’ Certificate and
certificates of public officials) and

 

111

--------------------------------------------------------------------------------

 

(c) where applicable, a certificate or opinion by an independent certified
public accountant satisfactory to the Trustee that complies with TTA § 314(c).

 

SECTION 13.5          Statements Required in Certificate and Opinion of Counsel.

 

Each certificate and Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

 

(a) a statement that the Person making such certificate or rendering such
Opinion of Counsel has read such covenant or condition;

 

(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements contained in such certificate or Opinion
of Counsel are based;

 

(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

 

(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.

 

SECTION 13.6          Rules by Trustee, Paving Agent, Registrar.

 

The Trustee may make reasonable rules in accordance with the Trustee’s customary
practices for action by or at a meeting of Securityholders. The Paying Agent or
Registrar may make reasonable rules for its functions.

 

SECTION 13.7          Legal Holidays.

 

If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.

 

SECTION 13.8        Governing Law.

 

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AGREES TO SUBMIT
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES.

 

112

--------------------------------------------------------------------------------

 

SECTION 13.9          No Recourse Against Others.

 

No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the
Guarantees or this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Guarantees.

 

SECTION 13.10        Successors.

 

All agreements of the Company and the Guarantors in this Indenture, the Notes
and the Guarantees shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.

 

SECTION 13.11        Counterparts.

 

The parties may sign any number of counterparts of this Indenture. Each such
counterpart shall be an original, but all of them together represent the same
agreement.

 

SECTION 13.12        Severability.

 

In case any provision in this Indenture, the Notes or the Guarantees shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.

 

SECTION 13.13        Table of Contents, Headings, Etc.

 

The table of contents, cross-reference sheet and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference only,
and are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.

 

SECTION 13.14        No Adverse Interpretation of Other Agreements.

 

This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.

 

113

--------------------------------------------------------------------------------

 

SECTION 13.15        Benefits of Indenture.

 

Nothing in this Indenture, the Notes or the Guarantees, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture, the Notes or the Guarantees.

 

SECTION 13.16        Independence of Covenants.

 

All covenants and agreements in this Indenture shall be given independent effect
so that if any particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or otherwise
be within the limitations of, another covenant shall not avoid the occurrence of
a Default or an Event of Default if such action is taken or condition exists.

 

114

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the date first written above.

 

 

VERTIS, INC.,
as Issuer

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

 

 

 

 

 

 

THE BANK OF NEW YORK,
as Trustee

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

SUBSIDIARY GUARANTORS:

 

 

 

 

 

 

PRINTCO., INC.

 

 

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

 

 

 

 

 

 

WEBCRAFT, LLC

 

 

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

 

 

 

 

 

 

WEBCRAFT CHEMICALS, LLC

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

--------------------------------------------------------------------------------

 

 

ENTERON GROUP, LLC

 

 

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

 

 

 

 

 

 

BIG FLOWER DIGITAL SERVICES
(DELAWARE), INC.

 

 

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

 

 

 

 

 

 

BIG FLOWER DIGITAL LLC

 

 

 

 

By:

BIG FLOWER DIGITAL SERVICES
(DELAWARE), INC.

 

 

 

 

 

 

 

By:

/s/ John V. Howard, Jr.

 

 

Name: John V. Howard, Jr.

 

 

Title: Sr. V.P.

 

 

 

 

Notice Address for all Guarantors:

 

 

 

 

Vertis, Inc.

 

 

250 W. Pratt Street

 

 

18th Floor

 

 

Baltimore, MD 21201

 

 

Attention:

Chief Financial
Officer

 

 

Telephone:

(410) 528-9800

 

 

Telecopy:

(410) 528-9287

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of the date first written above.

 

 

VERTIS, INC.,
as Issuer

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

THE BANK OF NEW YORK,
as Trustee

 

 

 

 

 

By:

/s/ Geovanni Barris

 

 

Name: GEOVANNI BARRIS

 

 

Title: VICE PRESIDENT

 

 

 

 

 

 

 

SUBSIDIARY GUARANTORS:

 

 

 

 

 

 

 

PRINTCO., INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

WEBCRAFT, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

WEBCRAFT CHEMICALS, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT A-1

 

[FORM OF SERIES A SECURITY]

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT
OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) (AN “ACCREDITED INVESTOR”), (2) AGREES THAT IT
WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE FOR THIS SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE),
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY

 

A-1-1

--------------------------------------------------------------------------------

 

REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” “UNITED
STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.

 

A-1-2

--------------------------------------------------------------------------------

 

No.

 

$[            ]

 

VERTIS, INC.

 

13½% SENIOR SUBORDINATED NOTE DUE 2009

 

VERTIS, INC. promises to pay to            or registered assigns the principal
sum of [                ] Dollars on December 7, 2009.

 

Interest Payment Dates: June 1 and December 1

 

Record Dates: May 15 and November 15

 

 

By:

 

 

 

Authorized Signature

 

 

 

 

 

 

 

By:

 

 

 

Authorized Signature

 

Dated: [               ], 2003

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the 13½% Senior Subordinated Notes due 2009 referred to in the
within-mentioned Indenture.

 

 

THE BANK OF NEW YORK,
as Trustee

 

 

 

 

 

 

 

By:

 

 

 

Authorized Signatory

 

A-1-3

--------------------------------------------------------------------------------

 

(REVERSE OF SECURITY)

 

 

13½% SENIOR SUBORDINATED NOTE DUE 2009

 

 

1.         Interest. VERTIS, INC., a Delaware corporation (the “Company”, which
term shall include any successor thereto in accordance with the Indenture),
promises to pay, until the principal hereof is paid or made available for
payment, interest (including any Accrued Bankruptcy Interest) on the principal
amount set forth on the reverse side hereof at a rate of 13½% per annum.
Interest on the Notes will accrue from and including the most recent date to
which interest has been paid or, if no interest has been paid, from and
including the date of issuance of such Notes through but excluding the date on
which interest is paid. Interest shall be payable in arrears on June 1 and
December 1 (each an “Interest Payment Date”). Interest will be computed on the
basis of a 360-day year of twelve full 30-day months.

 

To the extent a Note is issued for original issue after February 28, 2003, the
Holder of such Note is hereby obligated upon original issuance of such Note to
pay the Company in U.S. Legal Tender the amount of accrued and unpaid interest
on such Note from the later of February 28, 2003 or the most recently completed
Interest Payment Date to the date of original issuance of such Note.

 

2.         Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the May 15 or November 15 immediately preceding the
Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. At the Company’s option,
interest may be paid by check mailed to the registered address of the Holder of
this Note.

 

3.         Paying Agent and Registrar. Initially, The Bank of New York (the
“Trustee”) will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice.

 

4.         Indenture. The Company issued the Notes under an Indenture dated as
of February 28, 2003 (the “Indenture”) among the Company, the Guarantors and the
Trustee. This Note is one of an issue of Notes of the Company issued under the
Indenture. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code §§ 77aaa-77bbbb) as amended from time to time. The Notes are
subject to all such terms, and Securityholders are referred to the Indenture and
such Act for a statement of them. Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Indenture. The Notes are
general unsecured obligations of the Company limited in aggregate principal
amount to $293,500,000.

 

A-1-4

--------------------------------------------------------------------------------

 

Under Article XI of the Indenture, the payment of each Note is guaranteed on a
senior subordinated basis by the Guarantors.

 

5.         Optional Redemption. The Notes are not redeemable before January 1,
2005. Thereafter, the Company may redeem the Notes at its option, in whole or in
part, upon not less than 30 nor more than 60 days’ notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on January 1 of the year set
forth below:

 

Year

 

Percentage

 

 

 

 

 

2005

 

106.75

%

2006

 

104.50

%

2007

 

102.25

%

2008 and thereafter

 

100.00

%

 

In addition, the Company must pay accrued and unpaid interest on the Notes
redeemed.

 

6.         Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each holder of
Notes to be redeemed at his registered address. On and after the Redemption
Date, unless the Company defaults in making the redemption payment, interest
ceases to accrue on Notes or portions thereof called for redemption.

 

7.         Offers to Purchase. Sections 4.12 and 4.15 of the Indenture provide
that after an Asset Sale, or upon the occurrence of a Change of Control, and
subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of Notes in accordance with the procedures set
forth in the Indenture.

 

8.         Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay to it any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange any Note or portion of a Note selected for redemption, or transfer or
exchange any Notes for a period of 15 days before a selection of Notes to be
redeemed.

 

9.         Persons Deemed Owners. The registered holder of a Note may be treated
as the owner of it for all purposes.

 

A-1-5

--------------------------------------------------------------------------------

 

10.       Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to the money
must look to the Company for payment as general creditors unless an “abandoned
property” law designates another Person.

 

11.       Amendment, Supplement, Waiver. The Company and the Trustee may,
without the consent of the holders of any outstanding Notes, amend, waive or
supplement the Indenture or the Notes for certain specified purposes, including,
among other things, curing ambiguities, defects or inconsistencies, maintaining
the qualification of the Indenture under the Trust Indenture Act of 1939 or
making any other change that does not adversely affect the rights of any Holder.
Other amendments and modifications of the Indenture or the Notes may be made by
the Company, the Guarantors and the Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of the outstanding Notes,
subject to certain exceptions requiring the consent of the Holders of the
particular Notes (and, in certain cases, holders of Designated Senior Debt) to
be affected.

 

12.       Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will, subject to certain exceptions, be released from
those obligations.

 

13.       Defaults and Remedies. Events of Default include: default in payment
of principal of or premium on the Notes at maturity, or upon acceleration,
redemption or otherwise; default in payment of interest on any Note for 30 days;
certain defaults under other Indebtedness; failure by the Company for 30 days
after written notice to it from the Trustee or Holders of at least 25% in
principal amount of the then outstanding Notes, to comply with any of the other
agreements or covenants in or provisions of the Indenture or the Notes; certain
events of bankruptcy or insolvency with respect to the Company and its
Significant Subsidiaries; certain final judgments that remain undischarged for
60 days after being entered; any Guarantee of a Significant Subsidiary ceases to
be in full force and effect; and any Guarantor that is a Significant Subsidiary
shall deny its obligations under its Guarantee. If an Event of Default occurs
and is continuing (and has not been waived in accordance with the provisions of
the Indenture), the Trustee or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes may declare all the Notes to be
immediately due and payable for an amount equal to 100% of the principal amount
of the Notes plus accrued interest to the date of payment, except that in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes become due and payable immediately without
further action or notice, subject to the rights of holders of Senior Debt.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the then

 

A-1-6

--------------------------------------------------------------------------------

 

outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders notice of any continuing Default or Event
of Default (except a Default or an Event of Default in payment of principal,
premium, if any, or interest) if and so long as a committee of its Responsible
Officers determines in good faith that withholding notice is in their interests.
The Company must furnish an annual compliance certificate to the Trustee.

 

14.       Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and its Subsidiaries to, among other things, pay
dividends and make distributions with respect to or repurchase or otherwise
acquire or retire for value any of their equity interests, make certain
Investments, incur additional Indebtedness, enter into transactions with
Affiliates, incur Liens, sell assets, merge or consolidate with any other Person
and sell, lease, transfer or otherwise dispose of substantially all of their
properties or assets. The limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.

 

15.       Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.

 

16.       No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

 

17.       Discharge of Indenture; Defeasance. The Indenture contains provisions
for defeasance at any time, upon compliance with certain conditions set forth
therein, of (i) the entire indebtedness of this Note or (ii) certain restrictive
covenants and Events of Default with respect to this Note.

 

18.       Authentication. This Note shall not be valid until the Trustee signs
the certificate of authentication on the other side of this Note.

 

19.       Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

 

20.       Subordination. The Notes are subordinated to all Senior Debt, which
includes any Indebtedness permitted to be incurred pursuant to the terms of the
“Limitation on

 

A-1-7

--------------------------------------------------------------------------------

 

Additional Indebtedness” covenant in the Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes. The Guarantees in respect
of the Notes are subordinated to all Guarantor Senior Debt of each Guarantor,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder, by its acceptance hereof, agrees
to be bound by such provisions and authorizes and expressly directs the Trustee,
on its behalf, to take such action as may be necessary or appropriate to
effectuate the subordination provided for in the Indenture and appoints the
Trustee its attorney-in-fact for such purposes.

 

21.       Registration Rights. Pursuant to the Registration Rights Agreement,
the Company will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for Notes of
a separate series issued under the Indenture (or a trust indenture substantially
identical to the Indenture in accordance with the terms of the Registration
Rights Agreement) which have been registered under the Securities Act, in like
principal amount and having identical terms as this Note. The Holders of the
Notes shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other conditions,
all pursuant to and in accordance with the terms of the Registration Rights
Agreement.

 

22.       GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

 

The provisions of this Note are expressly made subject to the more detailed
provisions set forth in the Indenture and the Registration Rights Agreement,
which shall for all purposes be controlling. The Company will furnish to any
Holder upon written request and without charge a copy of the Indenture. Requests
may be made to:

 

VERTIS, INC.

250 W. Pratt Street

18th Floor

Baltimore, MD 21201

Attention: Chief Financial Officer

 

A-1-8

--------------------------------------------------------------------------------

 

ASSIGNMENT FORM

 

If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:

 

I or we assign and transfer this Note to

 

 

 

 

 

 

 

(Insert assignee’s social security or tax ID number)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Print or type assignee’s name, address and zip code) and irrevocably appoint

 

agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

 

 

Date:

 

 Your signature:

 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

Signature Guarantee:

 

 

--------------------------------------------------------------------------------

 

OPTION OF HOLDER TO ELECT PURCHASE

 

 

If you wish to have this Note purchased by the Company pursuant to Section 4.12
or 4.15 of the Indenture, check the Box: o

 

If you wish to have a portion of this Note purchased by the Company pursuant to
Section 4.12 or 4.15 of the Indenture, state the amount:

 

$           

 

Date:

 

 Your Signature:

 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

Signature Guarantee:

 

 

--------------------------------------------------------------------------------

EXHIBIT A-2

 

[FORM OF SERIES B SECURITIES]

 

No.

 

$

 

VERTIS, INC.

 

131/2% SENIOR SUBORDINATED NOTE DUE 2009

 

 

sum of

 

VERTIS, INC. promises to pay to
Dollars on December 7, 2009.

 

or registered assigns the principal

 

Interest Payment Dates: June 1 and December 1

 

Record Dates: May 15 and November 15

 

 

 

By:

 

 

 

Authorized Signature

 

 

 

 

 

 

 

By:

 

 

 

Authorized Signature

 

 

Dated: [             ], 2003

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the l31/2% Senior Subordinated Notes due 2009 referred to in the
within-mentioned Indenture.

 

 

THE BANK OF NEW YORK,
as Trustee

 

 

 

 

 

 

 

By:

 

 

 

Authorized Signatory

 

A-2-1

--------------------------------------------------------------------------------

 

(REVERSE OF SECURITY)

 

 

131/2% SENIOR SUBORDINATED NOTE DUE 2009

 

 

1.         Interest. VERTIS, INC., a Delaware corporation (the “Company”, which
term shall include any successor thereto in accordance with the Indenture),
promises to pay, until the principal hereof is paid or made available for
payment, interest (including any Accrued Bankruptcy Interest) on the principal
amount set forth on the reverse side hereof at a rate of 131/2% per annum.
Interest on the Notes will accrue from and including the most recent date to
which interest has been paid or, if no interest has been paid, from and
including the date of issuance of such Notes through but excluding the date on
which interest is paid. Interest shall be payable in arrears on June 1 and
December 1 (each an “Interest Payment Date”). Interest will be computed on the
basis of a 360-day year of twelve full 30-day months.

 

To the extent a Note is issued for original issue after February 28, 2003, the
Holder of such Note is hereby obligated upon original issuance of such Note to
pay the Company in U.S. Legal Tender the amount of accrued and unpaid interest
on such Note from the later of February 28, 2003 or the most recently completed
Interest Payment Date to the date of original issuance of such Note.

 

2.         Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the Persons who are registered Holders of Notes at the
close of business on the May 15 or November 15 immediately preceding the
Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect
principal payments. The Company will pay principal, premium, if any, and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. At the Company’s option,
interest may be paid by check mailed to the registered address of the Holder of
this Note.

 

3.         Paying Agent and Registrar. Initially, The Bank of New York (the
“Trustee”) will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice.

 

4.         Indenture. The Company issued the Notes under an Indenture dated as
of February 28, 2003 (the “Indenture”) among the Company, the Guarantors and the
Trustee. This Note is one of an issue of Notes of the Company issued under the
Indenture. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S. Code §§ 77aaa-77bbbb) as amended from time to time. The Notes are
subject to all such terms, and Securityholders are referred to the Indenture and
such Act for a statement of them. Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Indenture. The Notes are
general unsecured obligations of the Company limited in aggregate principal
amount to $293,500,000.

 

A-2-2

--------------------------------------------------------------------------------

 

Under Article XI of the Indenture, the payment of each Note is guaranteed on a
senior subordinated basis by the Guarantors.

 

5.         Optional Redemption. The Notes are not redeemable before January 1,
2005. Thereafter, the Company may redeem the Notes at its option, in whole or in
part, upon not less than 30 nor more than 60 days’ notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
redeemed during the twelve-month period commencing on January 1 of the year set
forth below:

 

Year

 

Percentage

 

 

 

 

 

2005

 

106.75

%

2006

 

104.50

%

2007

 

102.25

%

2008 and thereafter

 

100.00

%

 

In addition, the Company must pay accrued and unpaid interest on the Notes
redeemed.

 

6.         Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each holder of
Notes to be redeemed at his registered address. On and after the Redemption
Date, unless the Company defaults in making the redemption payment, interest
ceases to accrue on Notes or portions thereof called for redemption.

 

7.         Offers to Purchase. Sections 4.12 and 4.15 of the Indenture provide
that after an Asset Sale, or upon the occurrence of a Change of Control, and
subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of Notes in accordance with the procedures set
forth in the indenture.

 

8.         Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. A
Holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay to it any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange any Note or portion of a Note selected for redemption, or transfer or
exchange any Notes for a period of 15 days before a selection of Notes to be
redeemed.

 

9.         Persons Deemed Owners. The registered holder of a Note may be treated
as the owner of it for all purposes.

 

A-2-3

--------------------------------------------------------------------------------

 

10.       Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to the money
must look to the Company for payment as general creditors unless an “abandoned
property” law designates another Person.

 

11.       Amendment, Supplement, Waiver. The Company, the Guarantors and the
Trustee may, without the consent of the holders of any outstanding Notes, amend,
waive or supplement the Indenture or the Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or inconsistencies,
maintaining the qualification of the Indenture under the Trust Indenture Act of
1939 or making any other change that does not adversely affect the rights of any
Holder. Other amendments and modifications of the Indenture or the Notes may be
made by the Company, the Guarantors and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
outstanding Notes, subject to certain exceptions requiring the consent of the
Holders of the particular Notes (and, in certain cases, holders of Designated
Senior Debt) to be affected.

 

12.       Successor Corporation. When a successor corporation assumes all the
obligations of its predecessor under the Notes and the Indenture and the
transaction complies with the terms of Article V of the Indenture, the
predecessor corporation will, subject to certain exceptions, be released from
those obligations.

 

13.       Defaults and Remedies. Events of Default include: default in payment
of principal of or premium on the Notes at maturity, or upon acceleration,
redemption or otherwise; default in payment of interest on any Note for 30 days;
certain defaults under other Indebtedness; failure by the Company or its
Subsidiaries for 30 days after written notice to it from the Trustee or Holders
of at least 25% in principal amount of the then outstanding Notes, to comply
with any of the other agreements or covenants in or provisions of the Indenture
or the Notes; certain events of bankruptcy or insolvency with respect to the
Company and its Significant Subsidiaries; certain final judgments that remain
undischarged for 60 days after being entered; any Guarantee of a Significant
Subsidiary ceases to be in full force and effect; and any Guarantor that is a
Significant Subsidiary shall deny its obligations under its Guarantee. If an
Event of Default occurs and is continuing (and has not been waived in accordance
with the provisions of the Indenture), the Trustee or the Holders of at least
25% in aggregate principal amount of the then outstanding Notes may declare all
the Notes to be immediately due and payable for an amount equal to 100% of the
principal amount of the Notes plus accrued interest to the date of payment,
except that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes become due and payable
immediately without further action or notice, subject to the rights of holders
of Senior Debt. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Notes. Subject to certain limitations,
Holders of a majority in principal

 

A-2-4

--------------------------------------------------------------------------------

 

amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders notice of any
continuing Default or Event of Default (except a Default or an Event of Default
in payment of principal, premium, if any, or interest) if and so long as a
committee of its Responsible Officers determines in good faith that withholding
notice is in their interests. The Company must furnish an annual compliance
certificate to the Trustee.

 

14.       Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and its Subsidiaries to, among other things, pay
dividends and make distributions with respect to or repurchase or otherwise
acquire or retire for value any of their Equity Interests, make certain
Investments, incur additional Indebtedness, enter into transactions with
Affiliates, incur Liens, sell assets, merge or consolidate with any other Person
and sell, lease, transfer or otherwise dispose of substantially all of their
properties or assets. The limitations are subject to a number of important
qualifications and exceptions. The Company must annually report to the Trustee
on compliance with such limitations.

 

15.       Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.

 

16.       No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company, as such, shall
have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

 

17.       Discharge of Indenture; Defeasance. The Indenture contains provisions
for defeasance at any time, upon compliance with certain conditions set forth
therein, of (i) the entire indebtedness of this Note or (ii) certain restrictive
covenants and Events of Default with respect to this Note.

 

18.       Authentication. This Note shall not be valid until the Trustee signs
the certificate of authentication on the other side of this Note.

 

19.       Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

 

20.       Subordination. The Notes are subordinated to all Senior Debt, which
includes any Indebtedness permitted to be incurred pursuant to the terms of the
“Limitation on

 

A-2-5

--------------------------------------------------------------------------------

 

Additional Indebtedness” covenant in the Indenture, unless the instrument under
which such Indebtedness is incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes. The Guarantees in respect
of the Notes are subordinated to all Guarantor Senior Debt of each Guarantor,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed. Each Holder, by its acceptance hereof, agrees
to be bound by such provisions and authorizes and expressly directs the Trustee,
on its behalf, to take such action as may be necessary or appropriate to
effectuate the subordination provided for in the Indenture and appoints the
Trustee its attorney-in-fact for such purposes.

 

21.       GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

 

The provisions of this Note are expressly made subject to the more detailed
provisions set forth in the Indenture, which shall for all purposes be
controlling. The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:

 

VERTIS, INC.

250 W. Pratt Street

18th Floor

Baltimore, MD 21201

Attention: Chief Financial Officer

 

A-2-6

--------------------------------------------------------------------------------

 

ASSIGNMENT FORM

 

If you the holder want to assign this Note, fill in the form below and have your
signature guaranteed:

 

I or we assign and transfer this Note to

 

(Insert assignee’s social security or tax ID number)

 

 

 

 

(Print or type assignee’s name, address and zip code) and irrevocably appoint

 

agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

 

 

Date:

 

 Your signature:

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

Signature Guarantee:

 

 

--------------------------------------------------------------------------------

 

OPTION OF HOLDER TO ELECT PURCHASE

 

 

If you wish to have this Note purchased by the Company pursuant to Section 4.12
or 4.15 of the Indenture, check the Box: o

 

If you wish to have a portion of this Note purchased by the Company pursuant to
Section 4.12 or 4.15 of the Indenture, state the amount:

 

$                     

 

Date:

 

 Your signature:

 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

 

Signature Guarantee:

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

FORM OF LEGEND FOR BOOK-ENTRY SECURITIES

 

 

Any Global Security authenticated and delivered hereunder shall bear a legend
(which would be in addition to any other legends required in the case of a
Restricted Security) in substantially the following form:

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

B-1

--------------------------------------------------------------------------------

 

EXHIBIT C

 

Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors

 

                  ,        

 

The Bank of New York
101 Barclay Street
New York, NY 10286

 

Attention: Corporate Trust Administration

 

Re:                  Vertis, Inc. (the “Company”) 131/2%
Senior Subordinated Notes due 2009 (the “Securities”)

 

Ladies and Gentlemen:

 

In connection with our proposed purchase of $             aggregate principal
amount of the Securities, we confirm that:

 

1.         We have received such information as we deem necessary in order to
make our investment decision.

 

2.         We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the “Securities Act”).

 

3.         We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell or otherwise transfer any Securities prior to the
date which is two years after the original issuance of the Securities, we will
do so only (i) to the Company or any subsidiary thereof, (ii) inside the United
States in accordance with Rule 144A under the Securities Act to a person whom we
reasonably believe is a “qualified institutional buyer” (as defined in Rule 144A
under the Securities Act), (iii) inside the United States to an accredited
investor (as defined below) that,

 

C-1

--------------------------------------------------------------------------------

 

prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the Securities, (iv)
outside the United States in an offshore transaction in accordance with Rule 904
of Regulation S under the Securities Act, (v) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any Person purchasing any of the Securities
from us a notice advising such purchaser that resales of the Securities are
restricted as stated herein.

 

4.         We understand that, on any proposed resale of any Securities, we will
be required to furnish to you and the Company such certification, legal opinions
and other information as you and the Company may reasonably require to confirm
that the proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend to the
foregoing effect.

 

5.         We are an institutional “accredited investor” (as defined in Rule
501(a)(l), (2), (3) or (7) of Regulation D under the Securities Act)(an
“accredited investor”) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are acting
are each able to bear the economic risk of our or their investment, as the case
may be.

 

6.         We are acquiring the Securities purchased by us for our account or
for one or more accounts (each of which is an accredited investor) as to each of
which we exercise sole investment discretion.

 

C-2

--------------------------------------------------------------------------------

 

You and the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

 

 

 

Very truly yours,

 

 

 

 

 

 

 

 

 

 

 

[Name of Transferee]

 

 

 

 

 

 

 

By:

 

 

 

 

Authorized Signature

 

C-3

--------------------------------------------------------------------------------

 

EXHIBIT D

 

Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S

 

                         ,       

 

The Bank of New York
101 Barclay Street
New York, NY  10286

 

Attention: Corporate Trust Administration

 

Re:

 

Vertis, Inc. (the “Company”) 131/2% Senior

 

 

Subordinated Notes due 2009 (the “Securities”)

 

Dear Sirs:

 

In connection with our proposed sale of $                    aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the “Securities Act”), and, accordingly, we represent that:

 

(1)       the offer of the Securities was not made to a Person in the United
States;

 

(2)       either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any Person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any Person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;

 

(3)       no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;

 

(4)       the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and

 

(5)       we have advised the transferee of the transfer restrictions applicable
to the Securities.

 

D-1

--------------------------------------------------------------------------------

 

You and the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.

 

 

 

 

Very truly yours,

 

 

 

 

 

 

 

 

 

 

 

[Name of Transferor]

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Authorized Signature

 

D-2

--------------------------------------------------------------------------------

 

EXHIBIT E

 

[FORM OF NOTATION ON NOTE
RELATING TO GUARANTEES]

 

GUARANTEES

 

 

The Guarantors (as defined in the Indenture (the “Indenture”) referred to in the
Note upon which this notation is endorsed and each hereinafter referred to as a
“Guarantor”) have unconditionally guaranteed on a senior subordinated basis
(such guarantee by each Guarantor being referred to herein as the “Guarantee”)
(i) the due and punctual payment of the principal of and interest on the Notes
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration or otherwise and interest on the overdue principal, if any, and
interest on any interest, if any, to the extent lawful, of the Notes and all
other obligations of the Company to the Holders all in accordance with the terms
set forth in of the Indenture and (ii) in case of any extension of time of
payment or renewal of any Notes or of any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise.

 

The obligations of each Guarantor to the Holders and the Trustee of the Notes
pursuant to the Guarantee and the Indenture are expressly set forth and are
expressly subordinated and subject in right of payment to the prior payment in
full of all Guarantor Senior Debt of such Guarantor, to the extent and in the
manner provided, in Article XII of the Indenture, and reference is hereby made
to such Indenture for the precise terms of the Guarantee therein made.

 

No past, present or future stockholder, director, officer, employee or
incorporator, as such, of any of the Guarantors shall have any liability for any
obligation of the Guarantors under the Guarantee or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of a Note by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Guarantees.

 

 

SUBSIDIARY GUARANTORS:

 

 

 

 

 

PrintCo., Inc.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

E-1

--------------------------------------------------------------------------------

 

 

Webcraft, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Webcraft Chemicals, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Enteron Group, LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

E-2

--------------------------------------------------------------------------------

 

 

Big Flower Digital Services (Delaware), Inc.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

Big Flower Digital LLC

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

E-3

--------------------------------------------------------------------------------