Exhibit 10.3

 

HOLDINGS PLEDGE AGREEMENT

 

This HOLDINGS PLEDGE AGREEMENT, dated as of July 17, 2008 (together with all
amendments, if any, from time to time hereto, this “Agreement”) between VERTIS
HOLDINGS, INC., a Delaware corporation (the “Pledgor”) and GENERAL ELECTRIC
CAPITAL CORPORATION in its capacity as Agent for Lenders (“Agent”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain Senior Secured Priming and Superpriority
Debtor-In-Possession Credit Agreement, dated as of the date hereof, by and among
Vertis, Inc., as Borrower, Pledgor, the other Persons named therein as Credit
Parties, Agent and the Persons signatory thereto from time to time as Lenders
(including all annexes, exhibits and schedules thereto, and as from time to time
amended, restated, supplemented or otherwise modified (the “Credit Agreement”)
the Lenders have agreed to make Loans to, and incur Letter of Credit Obligations
for the benefit of, Borrower;

 

WHEREAS, Pledgor is the record and beneficial owner of the shares of Stock
listed in Part A of Schedule I hereto and the owner of the promissory notes and
Instruments listed in Part B of Schedule I hereto;

 

WHEREAS, Pledgor benefits from the credit facilities made available to Borrower
under the Credit Agreement; and

 

WHEREAS, in order to induce Agent and Lenders to make the Loans and to incur the
Letter of Credit Obligations as provided for in the Credit Agreement, Pledgor
has agreed to pledge the Pledged Collateral to Agent in accordance herewith.

 

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
contained and to induce Lenders to make Loans and to incur Letter of Credit
Obligations under the Credit Agreement, it is agreed as follows:

 

1.                                       DEFINITIONS.  UNLESS OTHERWISE DEFINED
HEREIN, TERMS DEFINED IN THE CREDIT AGREEMENT ARE USED HEREIN AS THEREIN
DEFINED, AND THE FOLLOWING SHALL HAVE (UNLESS OTHERWISE PROVIDED ELSEWHERE IN
THIS AGREEMENT) THE FOLLOWING RESPECTIVE MEANINGS (SUCH MEANINGS BEING EQUALLY
APPLICABLE TO BOTH THE SINGULAR AND PLURAL FORM OF THE TERMS DEFINED):

 

“Bankruptcy Code” means title 11, United States Code, as amended from time to
time, and any successor statute thereto.

 

“Instrument” has the meaning assigned to such term in the Credit Agreement.

 

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“Investment Property” has the meaning assigned to such term in the Credit
Agreement.

 

“Pledged Collateral” has the meaning assigned to such term in Section 2 hereof.

 

“Pledged Entity” means an issuer of Pledged Shares or Pledged Indebtedness.

 

“Pledged Indebtedness” means the Indebtedness evidenced by promissory notes and
Instruments listed on Part B of Schedule I hereto;

 

“Pledged Shares” means those shares listed on Part A of Schedule I hereto.

 

“Secured Obligations” has the meaning assigned to such term in Section 3 hereof.

 

2.                                       PLEDGE.  PLEDGOR HEREBY PLEDGES TO
AGENT, AND GRANTS TO AGENT FOR ITSELF AND THE BENEFIT OF LENDERS, A FIRST
PRIORITY SECURITY INTEREST IN ALL OF THE FOLLOWING (COLLECTIVELY, THE “PLEDGED
COLLATERAL”):

 

(A)          THE PLEDGED SHARES AND THE CERTIFICATES REPRESENTING THE PLEDGED
SHARES, AND ALL DIVIDENDS, DISTRIBUTIONS, CASH, INSTRUMENTS AND OTHER PROPERTY
OR PROCEEDS FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE DISTRIBUTED IN
RESPECT OF OR IN EXCHANGE FOR ANY OR ALL OF THE PLEDGED SHARES; AND

 

(B)         SUCH PORTION, AS DETERMINED BY AGENT AS PROVIDED IN
SECTION 6(D) BELOW, OF ANY ADDITIONAL SHARES OF STOCK OF A PLEDGED ENTITY FROM
TIME TO TIME ACQUIRED BY PLEDGOR IN ANY MANNER (WHICH SHARES SHALL BE DEEMED TO
BE PART OF THE PLEDGED SHARES), AND THE CERTIFICATES REPRESENTING SUCH
ADDITIONAL SHARES, AND ALL DIVIDENDS, DISTRIBUTIONS, CASH, INSTRUMENTS AND OTHER
PROPERTY OR PROCEEDS FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE
DISTRIBUTED IN RESPECT OF OR IN EXCHANGE FOR ANY OR ALL OF SUCH STOCK; AND

 

(C)          THE PLEDGED INDEBTEDNESS AND THE PROMISSORY NOTES OR INSTRUMENTS
EVIDENCING THE PLEDGED INDEBTEDNESS, AND ALL INTEREST, CASH, INSTRUMENTS AND
OTHER PROPERTY AND ASSETS FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE
DISTRIBUTED IN RESPECT OF THE PLEDGED INDEBTEDNESS; AND

 

(D)         ALL INVESTMENT PROPERTY AND ANY INSTRUMENTS EVIDENCING THE
INVESTMENT PROPERTY, AND ALL INTEREST, CASH, INSTRUMENTS AND OTHER PROPERTY AND
ASSETS FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE DISTRIBUTED IN
RESPECT OF THE INVESTMENT PROPERTY; AND

 

(E)          ALL ADDITIONAL INDEBTEDNESS ARISING AFTER THE DATE HEREOF AND OWING
TO PLEDGOR AND EVIDENCED BY PROMISSORY NOTES OR OTHER INSTRUMENTS, TOGETHER WITH
SUCH PROMISSORY NOTES AND INSTRUMENTS, AND ALL INTEREST, CASH, INSTRUMENTS AND
OTHER PROPERTY AND ASSETS FROM TIME TO TIME RECEIVED, RECEIVABLE OR OTHERWISE
DISTRIBUTED IN RESPECT OF THAT PLEDGED INDEBTEDNESS.

 

3.                                       SECURITY FOR OBLIGATIONS.  THIS
AGREEMENT SECURES, AND THE PLEDGED COLLATERAL IS SECURITY FOR, THE PROMPT
PAYMENT IN FULL WHEN DUE, WHETHER AT STATED MATURITY, BY ACCELERATION OR
OTHERWISE, AND PERFORMANCE OF ALL OBLIGATIONS OF ANY KIND UNDER OR IN CONNECTION
WITH THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ALL OBLIGATIONS OF
PLEDGOR NOW OR HEREAFTER EXISTING UNDER THIS AGREEMENT INCLUDING, WITHOUT
LIMITATION, ALL FEES, COSTS AND EXPENSES WHETHER

 

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IN CONNECTION WITH COLLECTION ACTIONS HEREUNDER OR OTHERWISE (COLLECTIVELY, THE
“SECURED OBLIGATIONS”).

 

4.                                       DELIVERY OF PLEDGED COLLATERAL.  ALL
CERTIFICATES AND ALL PROMISSORY NOTES AND INSTRUMENTS EVIDENCING THE PLEDGED
COLLATERAL SHALL BE DELIVERED TO AND HELD BY OR ON BEHALF OF AGENT, FOR ITSELF
AND THE BENEFIT OF LENDERS, PURSUANT HERETO.  ALL PLEDGED SHARES SHALL BE
ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF TRANSFER OR ASSIGNMENT IN BLANK, ALL
IN FORM AND SUBSTANCE SATISFACTORY TO AGENT AND ALL PROMISSORY NOTES OR OTHER
INSTRUMENTS EVIDENCING THE PLEDGED INDEBTEDNESS SHALL BE ENDORSED BY PLEDGOR.

 

5.                                       REPRESENTATIONS AND WARRANTIES. 
PLEDGOR REPRESENTS AND WARRANTS TO AGENT THAT:

 

(A)          PLEDGOR IS, AND AT THE TIME OF DELIVERY OF THE PLEDGED SHARES TO
AGENT WILL BE, THE SOLE HOLDER OF RECORD AND THE SOLE BENEFICIAL OWNER OF SUCH
PLEDGED COLLATERAL PLEDGED BY PLEDGOR FREE AND CLEAR OF ANY LIEN THEREON OR
AFFECTING THE TITLE THERETO, EXCEPT FOR ANY LIEN CREATED BY THIS AGREEMENT AND
ANY LIENS PERMITTED UNDER THE CREDIT AGREEMENT; PLEDGOR IS AND AT THE TIME OF
DELIVERY OF THE PLEDGED INDEBTEDNESS TO AGENT WILL BE, THE SOLE OWNER OF SUCH
PLEDGED COLLATERAL FREE AND CLEAR OF ANY LIEN THEREON OR AFFECTING TITLE
THERETO, EXCEPT FOR ANY LIEN CREATED BY THIS AGREEMENT AND ANY LIENS PERMITTED
UNDER THE CREDIT AGREEMENT;

 

(B)         ALL OF THE PLEDGED SHARES HAVE BEEN DULY AUTHORIZED, VALIDLY ISSUED
AND ARE FULLY PAID AND NON-ASSESSABLE; THE PLEDGED INDEBTEDNESS HAS BEEN DULY
AUTHORIZED, AUTHENTICATED OR ISSUED AND DELIVERED BY, AND IS THE LEGAL, VALID
AND BINDING OBLIGATIONS OF, THE PLEDGED ENTITIES, AND NO SUCH PLEDGED ENTITY IS
IN DEFAULT THEREUNDER;

 

(C)          PLEDGOR HAS THE RIGHT AND REQUISITE AUTHORITY TO PLEDGE, ASSIGN,
TRANSFER, DELIVER, DEPOSIT AND SET OVER THE PLEDGED COLLATERAL PLEDGED BY
PLEDGOR TO AGENT AS PROVIDED HEREIN;

 

(D)         NONE OF THE PLEDGED SHARES OR PLEDGED INDEBTEDNESS HAS BEEN ISSUED
OR TRANSFERRED IN VIOLATION OF THE SECURITIES REGISTRATION, SECURITIES
DISCLOSURE OR SIMILAR LAWS OF ANY JURISDICTION TO WHICH SUCH ISSUANCE OR
TRANSFER MAY BE SUBJECT;

 

(E)          ALL OF THE PLEDGED SHARES ARE PRESENTLY OWNED BY PLEDGOR, AND,
OTHER THAN AS DESCRIBED ON SCHEDULE I HERETO, ARE PRESENTLY REPRESENTED BY THE
CERTIFICATES LISTED ON PART A OF SCHEDULE I HERETO.  AS OF THE DATE HEREOF,
THERE ARE NO EXISTING OPTIONS, WARRANTS, CALLS OR COMMITMENTS OF ANY CHARACTER
WHATSOEVER RELATING TO THE PLEDGED SHARES;

 

(F)            NO CONSENT, APPROVAL, AUTHORIZATION OR OTHER ORDER OR OTHER
ACTION BY, AND NO NOTICE TO OR FILING WITH, ANY GOVERNMENTAL AUTHORITY OR ANY
OTHER PERSON IS REQUIRED (I) FOR THE PLEDGE BY PLEDGOR OF THE PLEDGED COLLATERAL
PURSUANT TO THIS AGREEMENT OR FOR THE EXECUTION, DELIVERY OR PERFORMANCE OF THIS
AGREEMENT BY PLEDGOR, OR (II) FOR THE EXERCISE BY AGENT OF THE VOTING OR OTHER
RIGHTS PROVIDED FOR IN THIS AGREEMENT OR THE REMEDIES IN RESPECT OF THE PLEDGED
COLLATERAL PURSUANT TO THIS AGREEMENT, EXCEPT AS MAY BE REQUIRED IN CONNECTION
WITH SUCH DISPOSITION BY LAWS AFFECTING THE OFFERING AND SALE OF SECURITIES
GENERALLY;

 

(G)         THE ENTRY OF THE INTERIM ORDER AND/OR THE FINAL ORDER, AS
APPLICABLE, OR THE PLEDGE, ASSIGNMENT AND DELIVERY OF THE PLEDGED COLLATERAL
PURSUANT TO THIS AGREEMENT WILL CREATE A VALID FIRST PRIORITY LIEN ON AND A
FIRST PRIORITY PERFECTED SECURITY INTEREST IN FAVOR OF THE AGENT FOR THE

 

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BENEFIT OF AGENT AND LENDERS IN THE PLEDGED COLLATERAL AND THE PROCEEDS THEREOF,
SECURING THE PAYMENT OF THE SECURED OBLIGATIONS, SUBJECT TO NO OTHER LIEN OTHER
THAN LIENS PERMITTED UNDER THE CREDIT AGREEMENT;

 

(H)         THIS AGREEMENT HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY
PLEDGOR AND CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF PLEDGOR
ENFORCEABLE AGAINST PLEDGOR IN ACCORDANCE WITH ITS TERMS EXCEPT AS MAY BE
LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR OTHER LAWS
AFFECTING CREDITORS’ RIGHTS GENERALLY AND THE EFFECTS OF GENERAL PRINCIPLES OF
EQUITY;

 

(I)             THE PLEDGED SHARES CONSTITUTE 100% OF THE ISSUED AND OUTSTANDING
SHARES OF STOCK OF EACH PLEDGED ENTITY; AND

 

(J)             EXCEPT AS DISCLOSED ON PART B OF SCHEDULE I, NONE OF THE PLEDGED
INDEBTEDNESS IS SUBORDINATED IN RIGHT OF PAYMENT TO OTHER INDEBTEDNESS (EXCEPT
FOR THE SECURED OBLIGATIONS) OR SUBJECT TO THE TERMS OF AN INDENTURE.

 

The representations and warranties set forth in this Section 5 shall survive the
execution and delivery of this Agreement.

 

6.                                       COVENANTS.  PLEDGOR COVENANTS AND
AGREES THAT UNTIL THE TERMINATION DATE:

 

(A)          WITHOUT THE PRIOR WRITTEN CONSENT OF AGENT, PLEDGOR WILL NOT SELL,
ASSIGN, TRANSFER, PLEDGE, OR OTHERWISE ENCUMBER ANY OF ITS RIGHTS IN OR TO THE
PLEDGED COLLATERAL, OR ANY UNPAID DIVIDENDS, INTEREST OR OTHER DISTRIBUTIONS OR
PAYMENTS WITH RESPECT TO THE PLEDGED COLLATERAL OR GRANT A LIEN IN THE PLEDGED
COLLATERAL, UNLESS OTHERWISE EXPRESSLY PERMITTED BY THE CREDIT AGREEMENT;

 

(B)         PLEDGOR WILL, AT ITS EXPENSE, PROMPTLY EXECUTE, ACKNOWLEDGE AND
DELIVER ALL SUCH INSTRUMENTS AND TAKE ALL SUCH ACTIONS AS AGENT FROM TIME TO
TIME MAY REASONABLY REQUEST IN ORDER TO ENSURE TO AGENT AND LENDERS THE BENEFITS
OF THE LIENS IN AND TO THE PLEDGED COLLATERAL INTENDED TO BE CREATED BY THIS
AGREEMENT, INCLUDING THE FILING OF ANY NECESSARY CODE FINANCING STATEMENTS,
WHICH MAY BE FILED BY AGENT WITH OR (TO THE EXTENT PERMITTED BY LAW) WITHOUT THE
SIGNATURE OF PLEDGOR, AND WILL COOPERATE WITH AGENT, AT PLEDGOR’S EXPENSE, IN
OBTAINING ALL NECESSARY APPROVALS AND MAKING ALL NECESSARY FILINGS UNDER
FEDERAL, STATE, LOCAL OR FOREIGN LAW IN CONNECTION WITH SUCH LIENS OR ANY SALE
OR TRANSFER OF THE PLEDGED COLLATERAL;

 

(C)          PLEDGOR HAS AND WILL DEFEND THE TITLE TO THE PLEDGED COLLATERAL AND
THE LIENS OF AGENT IN THE PLEDGED COLLATERAL AGAINST THE CLAIM OF ANY PERSON AND
WILL MAINTAIN AND PRESERVE SUCH LIENS; AND

 

(D)         PLEDGOR WILL, UPON OBTAINING OWNERSHIP OF ANY ADDITIONAL STOCK OR
PROMISSORY NOTES OR INSTRUMENTS OF A PLEDGED ENTITY OR STOCK OR PROMISSORY NOTES
OR INSTRUMENTS OTHERWISE REQUIRED TO BE PLEDGED TO AGENT PURSUANT TO ANY OF THE
LOAN DOCUMENTS, WHICH STOCK, NOTES OR INSTRUMENTS ARE NOT ALREADY PLEDGED
COLLATERAL, PROMPTLY (AND IN ANY EVENT WITHIN THREE (3) BUSINESS DAYS) DELIVER
TO AGENT A PLEDGE AMENDMENT, DULY EXECUTED BY PLEDGOR, IN SUBSTANTIALLY THE FORM
OF SCHEDULE II HERETO (A “PLEDGE AMENDMENT”) IN RESPECT OF ANY SUCH ADDITIONAL
STOCK, NOTES OR INSTRUMENTS, PURSUANT TO WHICH PLEDGOR SHALL PLEDGE TO AGENT ALL
OF

 

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SUCH ADDITIONAL STOCK, NOTES AND INSTRUMENTS.  PLEDGOR HEREBY AUTHORIZES AGENT
TO ATTACH EACH PLEDGE AMENDMENT TO THIS AGREEMENT AND AGREES THAT ALL PLEDGED
SHARES AND PLEDGED INDEBTEDNESS LISTED ON ANY PLEDGE AMENDMENT DELIVERED TO
AGENT SHALL FOR ALL PURPOSES HEREUNDER BE CONSIDERED PLEDGED COLLATERAL.

 

7.                                       PLEDGOR’S RIGHTS.  AS LONG AS NO
DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING AND UNTIL
WRITTEN NOTICE SHALL BE GIVEN TO PLEDGOR IN ACCORDANCE WITH SECTION 8(A) HEREOF:

 

(A)          PLEDGOR SHALL HAVE THE RIGHT, FROM TIME TO TIME, TO VOTE AND GIVE
CONSENTS WITH RESPECT TO THE PLEDGED COLLATERAL, OR ANY PART THEREOF FOR ALL
PURPOSES NOT INCONSISTENT WITH THE PROVISIONS OF THIS AGREEMENT, THE CREDIT
AGREEMENT OR ANY OTHER LOAN DOCUMENT; PROVIDED, HOWEVER, THAT NO VOTE SHALL BE
CAST, AND NO CONSENT SHALL BE GIVEN OR ACTION TAKEN, WHICH WOULD HAVE THE EFFECT
OF IMPAIRING THE POSITION OR INTEREST OF AGENT IN RESPECT OF THE PLEDGED
COLLATERAL OR WHICH WOULD AUTHORIZE, EFFECT OR CONSENT TO (UNLESS AND TO THE
EXTENT EXPRESSLY PERMITTED BY THE CREDIT AGREEMENT):

 

(I)                                     THE DISSOLUTION OR LIQUIDATION, IN WHOLE
OR IN PART, OF A PLEDGED ENTITY;

 

(II)                                  THE CONSOLIDATION OR MERGER OF A PLEDGED
ENTITY WITH ANY OTHER PERSON;

 

(III)                               THE SALE, DISPOSITION OR ENCUMBRANCE OF ALL
OR SUBSTANTIALLY ALL OF THE ASSETS OF A PLEDGED ENTITY, EXCEPT FOR LIENS IN
FAVOR OF AGENT;

 

(IV)                              ANY CHANGE IN THE AUTHORIZED NUMBER OF SHARES,
THE STATED CAPITAL OR THE AUTHORIZED SHARE CAPITAL OF A PLEDGED ENTITY OR THE
ISSUANCE OF ANY ADDITIONAL SHARES OF ITS STOCK; OR

 

(V)                                 THE ALTERATION OF THE VOTING RIGHTS WITH
RESPECT TO THE STOCK OF A PLEDGED ENTITY; AND

 

(B)                                 (I)                                    
PLEDGOR SHALL BE ENTITLED, FROM TIME TO TIME, TO COLLECT AND RECEIVE FOR ITS OWN
USE ALL CASH DIVIDENDS AND INTEREST PAID IN RESPECT OF THE PLEDGED SHARES AND
PLEDGED INDEBTEDNESS TO THE EXTENT NOT IN VIOLATION OF THE CREDIT AGREEMENT
OTHER THAN ANY AND ALL: (A) DIVIDENDS AND INTEREST PAID OR PAYABLE OTHER THAN IN
CASH IN RESPECT OF ANY PLEDGED COLLATERAL, AND INSTRUMENTS AND OTHER PROPERTY
RECEIVED, RECEIVABLE OR OTHERWISE DISTRIBUTED IN RESPECT OF, OR IN EXCHANGE FOR,
ANY PLEDGED COLLATERAL; (B) DIVIDENDS AND OTHER DISTRIBUTIONS PAID OR PAYABLE IN
CASH IN RESPECT OF ANY PLEDGED SHARES IN CONNECTION WITH A PARTIAL OR TOTAL
LIQUIDATION OR DISSOLUTION OR IN CONNECTION WITH A REDUCTION OF CAPITAL, CAPITAL
SURPLUS OR PAID-IN CAPITAL OF A PLEDGED ENTITY; AND (C) CASH PAID, PAYABLE OR
OTHERWISE DISTRIBUTED, IN RESPECT OF PRINCIPAL OF, OR IN REDEMPTION OF, OR IN
EXCHANGE FOR, ANY PLEDGED COLLATERAL; PROVIDED, HOWEVER, THAT UNTIL ACTUALLY
PAID ALL RIGHTS TO SUCH DISTRIBUTIONS SHALL REMAIN SUBJECT TO THE LIEN CREATED
BY THIS AGREEMENT; AND

 

(ii)                                  all dividends and interest (other than
such cash dividends and interest as are permitted to be paid to Pledgor in
accordance with clause (i) above) and all other distributions in respect of any
of the Pledged Shares or Pledged Indebtedness, whenever paid or made, shall be
delivered to Agent to hold as Pledged Collateral and shall, if received by
Pledgor,

 

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be received in trust for the benefit of Agent, be segregated from the other
property or funds of Pledgor, and be forthwith delivered to Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement).

 

8.                                       DEFAULTS AND REMEDIES; PROXY.

 

(A)          UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AND DURING THE
CONTINUATION OF SUCH EVENT OF DEFAULT, AND CONCURRENTLY WITH WRITTEN NOTICE TO
PLEDGOR, AGENT (PERSONALLY OR THROUGH AN AGENT) IS HEREBY AUTHORIZED AND
EMPOWERED TO TRANSFER AND REGISTER IN ITS NAME OR IN THE NAME OF ITS NOMINEE THE
WHOLE OR ANY PART OF THE PLEDGED COLLATERAL, TO EXCHANGE CERTIFICATES OR
INSTRUMENTS REPRESENTING OR EVIDENCING PLEDGED COLLATERAL FOR CERTIFICATES OR
INSTRUMENTS OF SMALLER OR LARGER DENOMINATIONS, TO EXERCISE THE VOTING AND ALL
OTHER RIGHTS AS A HOLDER WITH RESPECT THERETO, TO COLLECT AND RECEIVE ALL CASH
DIVIDENDS, INTEREST, PRINCIPAL AND OTHER DISTRIBUTIONS MADE THEREON, TO SELL IN
ONE OR MORE SALES AFTER TEN (10) DAYS’ NOTICE OF THE TIME AND PLACE OF ANY
PUBLIC SALE OR OF THE TIME AT WHICH A PRIVATE SALE IS TO TAKE PLACE (WHICH
NOTICE PLEDGOR AGREES IS COMMERCIALLY REASONABLE) THE WHOLE OR ANY PART OF THE
PLEDGED COLLATERAL AND TO OTHERWISE ACT WITH RESPECT TO THE PLEDGED COLLATERAL
AS THOUGH AGENT WAS THE OUTRIGHT OWNER THEREOF.  ANY SALE SHALL BE MADE AT A
PUBLIC OR PRIVATE SALE AT AGENT’S PLACE OF BUSINESS, OR AT ANY PLACE TO BE NAMED
IN THE NOTICE OF SALE, EITHER FOR CASH OR UPON CREDIT OR FOR FUTURE DELIVERY AT
SUCH PRICE AS AGENT MAY DEEM FAIR, AND AGENT MAY BE THE PURCHASER OF THE WHOLE
OR ANY PART OF THE PLEDGED COLLATERAL SO SOLD AND HOLD THE SAME THEREAFTER IN
ITS OWN RIGHT FREE FROM ANY CLAIM OF PLEDGOR OR ANY RIGHT OF REDEMPTION.  EACH
SALE SHALL BE MADE TO THE HIGHEST BIDDER, BUT AGENT RESERVES THE RIGHT TO REJECT
ANY AND ALL BIDS AT SUCH SALE WHICH, IN ITS DISCRETION, IT SHALL DEEM
INADEQUATE.  DEMANDS OF PERFORMANCE, EXCEPT AS OTHERWISE HEREIN SPECIFICALLY
PROVIDED FOR, NOTICES OF SALE, ADVERTISEMENTS AND THE PRESENCE OF PROPERTY AT
SALE ARE HEREBY WAIVED AND ANY SALE HEREUNDER MAY BE CONDUCTED BY AN AUCTIONEER
OR ANY OFFICER OR AGENT OF AGENT.  PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND
APPOINTS AGENT AS THE PROXY AND ATTORNEY-IN-FACT OF PLEDGOR WITH RESPECT TO THE
PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES, WITH FULL
POWER OF SUBSTITUTION TO DO SO.  THE APPOINTMENT OF AGENT AS PROXY AND
ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE
TERMINATION DATE.  IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED SHARES, THE
APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF
THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN
CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT
SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES ON THE
RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF THE
PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT
OF DEFAULT.  NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY DUTY TO
EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.

 

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(B)         IF, AT THE ORIGINAL TIME OR TIMES APPOINTED FOR THE SALE OF THE
WHOLE OR ANY PART OF THE PLEDGED COLLATERAL, THE HIGHEST BID, IF THERE BE BUT
ONE SALE, SHALL BE INADEQUATE TO DISCHARGE IN FULL ALL THE SECURED OBLIGATIONS,
OR IF THE PLEDGED COLLATERAL BE OFFERED FOR SALE IN LOTS, IF AT ANY OF SUCH
SALES, THE HIGHEST BID FOR THE LOT OFFERED FOR SALE WOULD INDICATE TO AGENT, IN
ITS DISCRETION, THAT THE PROCEEDS OF THE SALES OF THE WHOLE OF THE PLEDGED
COLLATERAL WOULD BE UNLIKELY TO BE SUFFICIENT TO DISCHARGE ALL THE SECURED
OBLIGATIONS, AGENT MAY, ON ONE OR MORE OCCASIONS AND IN ITS DISCRETION, POSTPONE
ANY OF SAID SALES BY PUBLIC ANNOUNCEMENT AT THE TIME OF SALE OR THE TIME OF
PREVIOUS POSTPONEMENT OF SALE, AND NO OTHER NOTICE OF SUCH POSTPONEMENT OR
POSTPONEMENTS OF SALE NEED BE GIVEN, ANY OTHER NOTICE BEING HEREBY WAIVED;
PROVIDED, HOWEVER, THAT ANY SALE OR SALES MADE AFTER SUCH POSTPONEMENT SHALL BE
AFTER TEN (10) DAYS’ NOTICE TO PLEDGOR.

 

(C)          IF, AT ANY TIME WHEN AGENT IN ITS SOLE DISCRETION DETERMINES,
FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT,
THAT, IN CONNECTION WITH ANY ACTUAL OR CONTEMPLATED EXERCISE OF ITS RIGHTS (WHEN
PERMITTED UNDER THIS SECTION 8) TO SELL THE WHOLE OR ANY PART OF THE PLEDGED
SHARES HEREUNDER, IT IS NECESSARY OR ADVISABLE TO EFFECT A PUBLIC REGISTRATION
OF ALL OR PART OF THE PLEDGED COLLATERAL PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED (OR ANY SIMILAR STATUTE THEN IN EFFECT) (THE “ACT”), PLEDGOR SHALL,
IN AN EXPEDITIOUS MANNER, CAUSE THE PLEDGED ENTITIES TO:

 

(I)                                     USE COMMERCIALLY REASONABLE EFFORTS TO
PREPARE AND FILE WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”)
A REGISTRATION STATEMENT WITH RESPECT TO THE PLEDGED SHARES AND IN GOOD FAITH
USE COMMERCIALLY REASONABLE EFFORTS TO CAUSE SUCH REGISTRATION STATEMENT TO
BECOME AND REMAIN EFFECTIVE;

 

(II)                                  USE COMMERCIALLY REASONABLE EFFORTS TO
PREPARE AND FILE WITH THE COMMISSION SUCH AMENDMENTS AND SUPPLEMENTS TO SUCH
REGISTRATION STATEMENT AND THE PROSPECTUS USED IN CONNECTION THEREWITH AS MAY BE
NECESSARY TO KEEP SUCH REGISTRATION STATEMENT EFFECTIVE AND TO COMPLY WITH THE
PROVISIONS OF THE ACT WITH RESPECT TO THE SALE OR OTHER DISPOSITION OF THE
PLEDGED SHARES COVERED BY SUCH REGISTRATION STATEMENT WHENEVER AGENT SHALL
DESIRE TO SELL OR OTHERWISE DISPOSE OF THE PLEDGED SHARES;

 

(III)                               USE COMMERCIALLY REASONABLE EFFORTS TO
FURNISH TO AGENT SUCH NUMBERS OF COPIES OF A PROSPECTUS AND A PRELIMINARY
PROSPECTUS, IN CONFORMITY WITH THE REQUIREMENTS OF THE ACT, AND SUCH OTHER
DOCUMENTS AS AGENT MAY REQUEST IN ORDER TO FACILITATE THE PUBLIC SALE OR OTHER
DISPOSITION OF THE PLEDGED SHARES BY AGENT;

 

(IV)                              USE COMMERCIALLY REASONABLE EFFORTS TO
REGISTER OR QUALIFY THE PLEDGED SHARES COVERED BY SUCH REGISTRATION STATEMENT
UNDER SUCH OTHER SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTIONS WITHIN THE
UNITED STATES AND PUERTO RICO AS AGENT SHALL REQUEST, AND DO SUCH OTHER
REASONABLE ACTS AND THINGS AS MAY BE REQUIRED OF IT TO ENABLE AGENT TO
CONSUMMATE THE PUBLIC SALE OR OTHER DISPOSITION IN SUCH JURISDICTIONS OF THE
PLEDGED SHARES BY AGENT;

 

(V)                                 FURNISH, AT THE REQUEST OF AGENT, ON THE
DATE THAT SHARES OF THE PLEDGED COLLATERAL ARE DELIVERED TO THE UNDERWRITERS FOR
SALE PURSUANT TO SUCH REGISTRATION OR, IF THE SECURITY IS NOT BEING SOLD THROUGH
UNDERWRITERS, ON THE DATE THAT THE REGISTRATION STATEMENT WITH RESPECT TO SUCH
PLEDGED SHARES BECOMES EFFECTIVE, (A) AN OPINION, DATED SUCH DATE, OF THE
INDEPENDENT COUNSEL REPRESENTING SUCH REGISTRANT FOR THE PURPOSES OF SUCH
REGISTRATION, ADDRESSED

 

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TO THE UNDERWRITERS, IF ANY, AND IN THE EVENT THE PLEDGED SHARES ARE NOT BEING
SOLD THROUGH UNDERWRITERS, THEN TO AGENT, IN CUSTOMARY FORM AND COVERING MATTERS
OF THE TYPE CUSTOMARILY COVERED IN SUCH LEGAL OPINIONS; AND (B) A COMFORT
LETTER, DATED SUCH DATE, FROM THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF
SUCH REGISTRANT, ADDRESSED TO THE UNDERWRITERS, IF ANY, AND IN THE EVENT THE
PLEDGED SHARES ARE NOT BEING SOLD THROUGH UNDERWRITERS, THEN TO AGENT, IN A
CUSTOMARY FORM AND COVERING MATTERS OF THE TYPE CUSTOMARILY COVERED BY SUCH
COMFORT LETTERS AND AS THE UNDERWRITERS OR AGENT SHALL REASONABLY REQUEST.  THE
OPINION OF COUNSEL REFERRED TO ABOVE SHALL ADDITIONALLY COVER SUCH OTHER LEGAL
MATTERS WITH RESPECT TO THE REGISTRATION IN RESPECT OF WHICH SUCH OPINION IS
BEING GIVEN AS AGENT MAY REASONABLY REQUEST.  THE LETTER REFERRED TO ABOVE FROM
THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SHALL ADDITIONALLY COVER SUCH OTHER
FINANCIAL MATTERS (INCLUDING INFORMATION AS TO THE PERIOD ENDING NOT MORE THAN
FIVE (5) BUSINESS DAYS PRIOR TO THE DATE OF SUCH LETTER) WITH RESPECT TO THE
REGISTRATION IN RESPECT OF WHICH SUCH LETTER IS BEING GIVEN AS AGENT MAY
REASONABLY REQUEST; AND

 

(VI)                              OTHERWISE USE COMMERCIALLY REASONABLE EFFORTS
TO COMPLY WITH ALL APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, AND MAKE
AVAILABLE TO ITS SECURITY HOLDERS, AS SOON AS REASONABLY PRACTICABLE BUT NOT
LATER THAN 18 MONTHS AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT, AN
EARNINGS STATEMENT COVERING THE PERIOD OF AT LEAST 12 MONTHS BEGINNING WITH THE
FIRST FULL MONTH AFTER THE EFFECTIVE DATE OF SUCH REGISTRATION STATEMENT, WHICH
EARNINGS STATEMENT SHALL SATISFY THE PROVISIONS OF SECTION 11(A) OF THE ACT.

 

(D)         ALL EXPENSES INCURRED IN COMPLYING WITH SECTION 8(C) HEREOF,
INCLUDING, WITHOUT LIMITATION, ALL FILING FEES (INCLUDING ALL EXPENSES INCIDENT
TO FILING WITH THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.), PRINTING
EXPENSES, FEES AND DISBURSEMENTS OF COUNSEL FOR THE REGISTRANT, THE FEES AND
EXPENSES OF COUNSEL FOR AGENT, EXPENSES OF THE INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS (INCLUDING ANY SPECIAL AUDITS INCIDENT TO OR REQUIRED BY ANY SUCH
REGISTRATION) AND EXPENSES OF COMPLYING WITH THE SECURITIES OR BLUE SKY LAWS OR
ANY JURISDICTIONS, SHALL BE PAID BY PLEDGOR.

 

(E)          IF, AT ANY TIME WHEN AGENT SHALL DETERMINE TO EXERCISE ITS RIGHT TO
SELL THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL HEREUNDER, SUCH PLEDGED
COLLATERAL OR THE PART THEREOF TO BE SOLD SHALL NOT, FOR ANY REASON WHATSOEVER,
BE EFFECTIVELY REGISTERED UNDER THE ACT, AGENT MAY, IN ITS DISCRETION (SUBJECT
ONLY TO APPLICABLE REQUIREMENTS OF LAW), SELL SUCH PLEDGED COLLATERAL OR PART
THEREOF BY PRIVATE SALE IN SUCH MANNER AND UNDER SUCH CIRCUMSTANCES AS AGENT MAY
DEEM NECESSARY OR ADVISABLE, BUT SUBJECT TO THE OTHER REQUIREMENTS OF THIS
SECTION 8, AND SHALL NOT BE REQUIRED TO EFFECT SUCH REGISTRATION OR TO CAUSE THE
SAME TO BE EFFECTED.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IN ANY
SUCH EVENT, AGENT IN ITS DISCRETION (X) MAY, IN ACCORDANCE WITH APPLICABLE
SECURITIES LAWS, PROCEED TO MAKE SUCH PRIVATE SALE NOTWITHSTANDING THAT A
REGISTRATION STATEMENT FOR THE PURPOSE OF REGISTERING SUCH PLEDGED COLLATERAL OR
PART THEREOF COULD BE OR SHALL HAVE BEEN FILED UNDER SAID ACT (OR SIMILAR
STATUTE), (Y) MAY APPROACH AND NEGOTIATE WITH A SINGLE POSSIBLE PURCHASER TO
EFFECT SUCH SALE, AND (Z) MAY RESTRICT SUCH SALE TO A PURCHASER WHO IS AN
ACCREDITED INVESTOR UNDER THE ACT AND WHO WILL REPRESENT AND AGREE THAT SUCH
PURCHASER IS PURCHASING FOR ITS OWN ACCOUNT, FOR INVESTMENT AND NOT WITH A VIEW
TO THE DISTRIBUTION OR SALE OF SUCH PLEDGED COLLATERAL OR ANY PART THEREOF.  IN
ADDITION TO A PRIVATE SALE AS PROVIDED ABOVE IN THIS SECTION 8, IF ANY OF THE
PLEDGED COLLATERAL SHALL NOT BE FREELY DISTRIBUTABLE TO THE PUBLIC WITHOUT
REGISTRATION UNDER THE ACT (OR SIMILAR STATUTE) AT THE TIME OF ANY PROPOSED SALE
PURSUANT TO THIS SECTION 8, THEN AGENT SHALL NOT BE REQUIRED TO EFFECT SUCH
REGISTRATION OR CAUSE THE SAME TO BE

 

8

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EFFECTED BUT, IN ITS DISCRETION (SUBJECT ONLY TO APPLICABLE REQUIREMENTS OF
LAW), MAY REQUIRE THAT ANY SALE HEREUNDER (INCLUDING A SALE AT AUCTION) BE
CONDUCTED SUBJECT TO RESTRICTIONS:

 

(I)                                     AS TO THE FINANCIAL SOPHISTICATION AND
ABILITY OF ANY PERSON PERMITTED TO BID OR PURCHASE AT ANY SUCH SALE;

 

(II)                                  AS TO THE CONTENT OF LEGENDS TO BE PLACED
UPON ANY CERTIFICATES REPRESENTING THE PLEDGED COLLATERAL SOLD IN SUCH SALE,
INCLUDING RESTRICTIONS ON FUTURE TRANSFER THEREOF;

 

(III)                               AS TO THE REPRESENTATIONS REQUIRED TO BE
MADE BY EACH PERSON BIDDING OR PURCHASING AT SUCH SALE RELATING TO THAT PERSON’S
ACCESS TO FINANCIAL INFORMATION ABOUT PLEDGOR AND SUCH PERSON’S INTENTIONS AS TO
THE HOLDING OF THE PLEDGED COLLATERAL SO SOLD FOR INVESTMENT FOR ITS OWN ACCOUNT
AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF; AND

 

(IV)                              AS TO SUCH OTHER MATTERS AS AGENT MAY, IN ITS
DISCRETION, DEEM NECESSARY OR APPROPRIATE IN ORDER THAT SUCH SALE
(NOTWITHSTANDING ANY FAILURE SO TO REGISTER) MAY BE EFFECTED IN COMPLIANCE WITH
THE BANKRUPTCY CODE AND OTHER LAWS AFFECTING THE ENFORCEMENT OF CREDITORS’
RIGHTS AND THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

(F)            PLEDGOR RECOGNIZES THAT AGENT MAY BE UNABLE TO EFFECT A PUBLIC
SALE OF ANY OR ALL THE PLEDGED COLLATERAL AND MAY BE COMPELLED TO RESORT TO ONE
OR MORE PRIVATE SALES THEREOF IN ACCORDANCE WITH CLAUSE (E) ABOVE.  PLEDGOR ALSO
ACKNOWLEDGES THAT ANY SUCH PRIVATE SALE MAY RESULT IN PRICES AND OTHER TERMS
LESS FAVORABLE TO THE SELLER THAN IF SUCH SALE WERE A PUBLIC SALE AND,
NOTWITHSTANDING SUCH CIRCUMSTANCES, AGREES THAT ANY SUCH PRIVATE SALE SHALL NOT
BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY UNREASONABLE MANNER SOLELY BY
VIRTUE OF SUCH SALE BEING PRIVATE.  AGENT SHALL BE UNDER NO OBLIGATION TO DELAY
A SALE OF ANY OF THE PLEDGED COLLATERAL FOR THE PERIOD OF TIME NECESSARY TO
PERMIT THE PLEDGED ENTITY TO REGISTER SUCH SECURITIES FOR PUBLIC SALE UNDER THE
ACT, OR UNDER APPLICABLE STATE SECURITIES LAWS, EVEN IF PLEDGOR AND THE PLEDGED
ENTITY WOULD AGREE TO DO SO.

 

(G)         PLEDGOR AGREES TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW
THAT FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT
IT WILL NOT AT ANY TIME PLEAD, CLAIM OR TAKE THE BENEFIT OF ANY APPRAISAL,
VALUATION, STAY, EXTENSION, MORATORIUM OR REDEMPTION LAW NOW OR HEREAFTER IN
FORCE IN ORDER TO PREVENT OR DELAY THE ENFORCEMENT OF THIS AGREEMENT, OR THE
ABSOLUTE SALE OF THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL OR THE
POSSESSION THEREOF BY ANY PURCHASER AT ANY SALE HEREUNDER, AND PLEDGOR WAIVES
THE BENEFIT OF ALL SUCH LAWS TO THE EXTENT IT LAWFULLY MAY DO SO.  PLEDGOR
AGREES THAT IT WILL NOT INTERFERE WITH ANY RIGHT, POWER AND REMEDY OF AGENT
PROVIDED FOR IN THIS AGREEMENT OR NOW OR HEREAFTER EXISTING AT LAW OR IN EQUITY
OR BY STATUTE OR OTHERWISE, OR THE EXERCISE OR BEGINNING OF THE EXERCISE BY
AGENT OF ANY ONE OR MORE OF SUCH RIGHTS, POWERS OR REMEDIES.  NO FAILURE OR
DELAY ON THE PART OF AGENT TO EXERCISE ANY SUCH RIGHT, POWER OR REMEDY AND NO
NOTICE OR DEMAND WHICH MAY BE GIVEN TO OR MADE UPON PLEDGOR BY AGENT WITH
RESPECT TO ANY SUCH REMEDIES SHALL OPERATE AS A WAIVER THEREOF, OR LIMIT OR
IMPAIR AGENT’S RIGHT TO TAKE ANY ACTION OR TO EXERCISE ANY POWER OR REMEDY
HEREUNDER, WITHOUT NOTICE OR DEMAND, OR PREJUDICE ITS RIGHTS AS AGAINST PLEDGOR
IN ANY RESPECT.

 

(H)         PLEDGOR FURTHER AGREES THAT A BREACH OF ANY OF THE COVENANTS
CONTAINED IN THIS SECTION 8 WILL CAUSE IRREPARABLE INJURY TO AGENT, THAT AGENT
SHALL HAVE NO ADEQUATE REMEDY AT LAW IN

 

9

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RESPECT OF SUCH BREACH AND, AS A CONSEQUENCE, AGREES THAT EACH AND EVERY
COVENANT CONTAINED IN THIS SECTION 8 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST
PLEDGOR, AND PLEDGOR HEREBY WAIVES AND AGREES NOT TO ASSERT ANY DEFENSES AGAINST
AN ACTION FOR SPECIFIC PERFORMANCE OF SUCH COVENANTS EXCEPT FOR A DEFENSE THAT
THE SECURED OBLIGATIONS ARE NOT THEN DUE AND PAYABLE IN ACCORDANCE WITH THE
AGREEMENTS AND INSTRUMENTS GOVERNING AND EVIDENCING SUCH OBLIGATIONS.

 

9.                                       WAIVER.  NO DELAY ON AGENT’S PART IN
EXERCISING ANY POWER OF SALE, LIEN, OPTION OR OTHER RIGHT HEREUNDER, AND NO
NOTICE OR DEMAND WHICH MAY BE GIVEN TO OR MADE UPON PLEDGOR BY AGENT WITH
RESPECT TO ANY POWER OF SALE, LIEN, OPTION OR OTHER RIGHT HEREUNDER, SHALL
CONSTITUTE A WAIVER THEREOF, OR LIMIT OR IMPAIR AGENT’S RIGHT TO TAKE ANY ACTION
OR TO EXERCISE ANY POWER OF SALE, LIEN, OPTION, OR ANY OTHER RIGHT HEREUNDER,
WITHOUT NOTICE OR DEMAND, OR PREJUDICE AGENT’S RIGHTS AS AGAINST PLEDGOR IN ANY
RESPECT.

 

10.                                 ASSIGNMENT.  AGENT MAY ASSIGN, ENDORSE OR
TRANSFER ANY INSTRUMENT EVIDENCING ALL OR ANY PART OF THE SECURED OBLIGATIONS AS
PROVIDED IN, AND IN ACCORDANCE WITH, THE CREDIT AGREEMENT, AND THE HOLDER OF
SUCH INSTRUMENT SHALL BE ENTITLED TO THE BENEFITS OF THIS AGREEMENT.

 

11.                                 TERMINATION.  IMMEDIATELY FOLLOWING THE
TERMINATION DATE, AGENT SHALL DELIVER TO PLEDGOR THE PLEDGED COLLATERAL PLEDGED
BY PLEDGOR AT THE TIME SUBJECT TO THIS AGREEMENT AND ALL INSTRUMENTS OF
ASSIGNMENT EXECUTED IN CONNECTION THEREWITH, FREE AND CLEAR OF THE LIENS HEREOF
AND, EXCEPT AS OTHERWISE PROVIDED HEREIN, ALL OF PLEDGOR’S OBLIGATIONS HEREUNDER
SHALL AT SUCH TIME TERMINATE.

 

12.                                 LIEN ABSOLUTE.  ALL RIGHTS OF AGENT
HEREUNDER, AND ALL OBLIGATIONS OF PLEDGOR HEREUNDER, SHALL BE ABSOLUTE AND
UNCONDITIONAL IRRESPECTIVE OF:

 

(A)          ANY LACK OF VALIDITY OR ENFORCEABILITY OF THE CREDIT AGREEMENT, ANY
OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT GOVERNING OR EVIDENCING
ANY SECURED OBLIGATIONS;

 

(B)         ANY CHANGE IN THE TIME, MANNER OR PLACE OF PAYMENT OF, OR IN ANY
OTHER TERM OF, ALL OR ANY PART OF THE SECURED OBLIGATIONS, OR ANY OTHER
AMENDMENT OR WAIVER OF OR ANY CONSENT TO ANY DEPARTURE FROM THE CREDIT
AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT
GOVERNING OR EVIDENCING ANY SECURED OBLIGATIONS;

 

(C)          ANY EXCHANGE, RELEASE OR NON-PERFECTION OF ANY OTHER COLLATERAL, OR
ANY RELEASE OR AMENDMENT OR WAIVER OF OR CONSENT TO DEPARTURE FROM ANY GUARANTY,
FOR ALL OR ANY OF THE SECURED OBLIGATIONS;

 

(D)         THE INSOLVENCY OF ANY CREDIT PARTY; OR

 

(E)          ANY OTHER CIRCUMSTANCE WHICH MIGHT OTHERWISE CONSTITUTE A DEFENSE
AVAILABLE TO, OR A DISCHARGE OF, PLEDGOR.

 

13.                                 RELEASE.  PLEDGOR CONSENTS AND AGREES THAT
AGENT MAY AT ANY TIME, OR FROM TIME TO TIME, IN ITS DISCRETION:

 

10

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

 

(A)          RENEW, EXTEND OR CHANGE THE TIME OF PAYMENT, AND/OR THE MANNER,
PLACE OR TERMS OF PAYMENT OF ALL OR ANY PART OF THE SECURED OBLIGATIONS; AND

 

(B)         EXCHANGE, RELEASE AND/OR SURRENDER ALL OR ANY OF THE COLLATERAL
(INCLUDING THE PLEDGED COLLATERAL), OR ANY PART THEREOF, BY WHOMSOEVER
DEPOSITED, WHICH IS NOW OR MAY HEREAFTER BE HELD BY AGENT IN CONNECTION WITH ALL
OR ANY OF THE SECURED OBLIGATIONS; ALL IN SUCH MANNER AND UPON SUCH TERMS AS
AGENT MAY DEEM PROPER, AND WITHOUT NOTICE TO OR FURTHER ASSENT FROM PLEDGOR, IT
BEING HEREBY AGREED THAT PLEDGOR SHALL BE AND REMAIN BOUND UPON THIS AGREEMENT,
IRRESPECTIVE OF THE VALUE OR CONDITION OF ANY OF THE COLLATERAL, AND
NOTWITHSTANDING ANY SUCH CHANGE, EXCHANGE, SETTLEMENT, COMPROMISE, SURRENDER,
RELEASE, RENEWAL OR EXTENSION, AND NOTWITHSTANDING ALSO THAT THE SECURED
OBLIGATIONS MAY, AT ANY TIME, EXCEED THE AGGREGATE PRINCIPAL AMOUNT THEREOF SET
FORTH IN THE CREDIT AGREEMENT, OR ANY OTHER AGREEMENT GOVERNING ANY SECURED
OBLIGATIONS.  PLEDGOR HEREBY WAIVES NOTICE OF ACCEPTANCE OF THIS AGREEMENT, AND
ALSO PRESENTMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR OF ANY AND ALL OF THE
SECURED OBLIGATIONS, AND PROMPTNESS IN COMMENCING SUIT AGAINST ANY PARTY HERETO
OR LIABLE HEREON, AND IN GIVING ANY NOTICE TO OR OF MAKING ANY CLAIM OR DEMAND
HEREUNDER UPON PLEDGOR.  NO ACT OR OMISSION OF ANY KIND ON AGENT’S PART SHALL IN
ANY EVENT AFFECT OR IMPAIR THIS AGREEMENT.

 

14.                                 REINSTATEMENT.  THIS AGREEMENT SHALL REMAIN
IN FULL FORCE AND EFFECT AND CONTINUE TO BE EFFECTIVE SHOULD ANY PETITION BE
FILED BY OR AGAINST PLEDGOR OR ANY PLEDGED ENTITY FOR LIQUIDATION OR
REORGANIZATION, SHOULD PLEDGOR OR ANY PLEDGED ENTITY BECOME INSOLVENT OR MAKE AN
ASSIGNMENT FOR THE BENEFIT OF CREDITORS OR SHOULD A RECEIVER OR TRUSTEE BE
APPOINTED FOR ALL OR ANY SIGNIFICANT PART OF PLEDGOR’S OR A PLEDGED ENTITY’S
ASSETS, AND SHALL CONTINUE TO BE EFFECTIVE OR BE REINSTATED, AS THE CASE MAY BE,
IF AT ANY TIME PAYMENT AND PERFORMANCE OF THE SECURED OBLIGATIONS, OR ANY PART
THEREOF, IS, PURSUANT TO APPLICABLE LAW, RESCINDED OR REDUCED IN AMOUNT, OR MUST
OTHERWISE BE RESTORED OR RETURNED BY ANY OBLIGEE OF THE SECURED OBLIGATIONS,
WHETHER AS A “VOIDABLE PREFERENCE”, “FRAUDULENT CONVEYANCE”, OR OTHERWISE, ALL
AS THOUGH SUCH PAYMENT OR PERFORMANCE HAD NOT BEEN MADE.  IN THE EVENT THAT ANY
PAYMENT, OR ANY PART THEREOF, IS RESCINDED, REDUCED, RESTORED OR RETURNED, THE
SECURED OBLIGATIONS SHALL BE REINSTATED AND DEEMED REDUCED ONLY BY SUCH AMOUNT
PAID AND NOT SO RESCINDED, REDUCED, RESTORED OR RETURNED.

 

15.                                 MISCELLANEOUS.

 

(A)          AGENT MAY EXECUTE ANY OF ITS DUTIES HEREUNDER BY OR THROUGH AGENTS
OR EMPLOYEES AND SHALL BE ENTITLED TO ADVICE OF COUNSEL CONCERNING ALL MATTERS
PERTAINING TO ITS DUTIES HEREUNDER.

 

(B)         PLEDGOR AGREES TO PROMPTLY REIMBURSE AGENT FOR ACTUAL OUT-OF-POCKET
EXPENSES, INCLUDING, WITHOUT LIMITATION, REASONABLE COUNSEL FEES, INCURRED BY
AGENT IN CONNECTION WITH THE ADMINISTRATION AND ENFORCEMENT OF THIS AGREEMENT.

 

(C)          NEITHER AGENT, NOR ANY OF ITS RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS OR COUNSEL SHALL BE LIABLE FOR ANY ACTION LAWFULLY TAKEN OR
OMITTED TO BE TAKEN BY IT OR THEM HEREUNDER OR IN CONNECTION HEREWITH, EXCEPT
FOR ITS OR THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION.

 

(D)         THIS AGREEMENT SHALL BE BINDING UPON PLEDGOR AND ITS SUCCESSORS AND
ASSIGNS (INCLUDING A DEBTOR-IN-POSSESSION ON BEHALF

 

11

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OF PLEDGOR), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY, AGENT AND
ITS SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE, AND NONE OF THE TERMS OR PROVISIONS OF THIS
AGREEMENT MAY BE WAIVED, ALTERED, MODIFIED OR AMENDED EXCEPT IN WRITING DULY
SIGNED FOR AND ON BEHALF OF AGENT AND PLEDGOR.

 

16.                                 SEVERABILITY.  IF FOR ANY REASON ANY
PROVISION OR PROVISIONS HEREOF ARE DETERMINED TO BE INVALID AND CONTRARY TO ANY
EXISTING OR FUTURE LAW, SUCH INVALIDITY SHALL NOT IMPAIR THE OPERATION OF OR
EFFECT THOSE PORTIONS OF THIS AGREEMENT WHICH ARE VALID.

 

17.                                 NOTICES.  EXCEPT AS OTHERWISE PROVIDED
HEREIN, WHENEVER IT IS PROVIDED HEREIN THAT ANY NOTICE, DEMAND, REQUEST,
CONSENT, APPROVAL, DECLARATION OR OTHER COMMUNICATION SHALL OR MAY BE GIVEN TO
OR SERVED UPON ANY OF THE PARTIES BY ANY OTHER PARTY, OR WHENEVER ANY OF THE
PARTIES DESIRES TO GIVE OR SERVE UPON ANY OTHER A COMMUNICATION WITH RESPECT TO
THIS AGREEMENT, EACH SUCH NOTICE, DEMAND, REQUEST, CONSENT, APPROVAL,
DECLARATION OR OTHER COMMUNICATION SHALL BE IN WRITING AND EITHER SHALL BE
DELIVERED IN PERSON OR SENT BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, WITH PROPER POSTAGE PREPAID, OR BY FACSIMILE TRANSMISSION AND
CONFIRMED BY DELIVERY OF A COPY BY PERSONAL DELIVERY OR UNITED STATES MAIL AS
OTHERWISE PROVIDED HEREIN:

 

If to Agent, at:

 

GENERAL ELECTRIC CAPITAL

CORPORATION

500 West Monroe Street

Chicago, Illinois 60661

ATTN:  Vertis, Inc., Account Officer

Fax:  (617) 607-9174

 

With a copy to:

 

GENERAL ELECTRIC CAPITAL

CORPORATION

201 Merritt 7

P.O. Box 5201

Norwalk, Connecticut  06851

ATTN:  General Counsel

Global Sponsor Finance

Fax:  (203) 956-4216

 

and

 

12

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GENERAL ELECTRIC CAPITAL

CORPORATION

500 West Monroe Street

Chicago, Illinois 60661

ATTN:  Corporate Counsel

Global Sponsor Finance

Fax:  (312) 441-6876

 

and

 

Winston & Strawn LLP

200 Park Avenue

New York, NY 10166

Attn: William D. Brewer, Esq.

Fax: (212) 294-4700

 

and

 

Winston & Strawn LLP

35 West Wacker Drive

Chicago, IL 60601

Attn: Brian I. Swett, Esq.

          Peter J. Young, Esq.

Fax: (312) 558-5700

 

If to Pledgor, at:

 

Vertis Holdings, Inc.

250 West Pratt Street

Baltimore, MD  21201

ATTN:  Treasurer

Fax:  (410) 454-0887

 

With a copy to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn: Warren T. Buhle, Esq.

Fax: (212) 310-8007

 

13

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or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice.  Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 17, (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid, or (d) when delivered, if hand-delivered by
messenger.  Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.

 

18.                                 SECTION TITLES.  THE SECTION TITLES
CONTAINED IN THIS AGREEMENT ARE AND SHALL BE WITHOUT SUBSTANTIVE MEANING OR
CONTENT OF ANY KIND WHATSOEVER AND ARE NOT A PART OF THE AGREEMENT BETWEEN THE
PARTIES HERETO.

 

19.                                 COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, WHICH SHALL, COLLECTIVELY AND
SEPARATELY, CONSTITUTE ONE AGREEMENT.  THIS AGREEMENT MAY BE AUTHENTICATED BY
MANUAL SIGNATURE, FACSIMILE OR, IF APPROVED IN WRITING BY AGENT, ELECTRONIC
MEANS, ALL OF WHICH SHALL BE EQUALLY VALID.

 

20.                                 BENEFIT OF LENDERS.  ALL SECURITY INTERESTS
GRANTED OR CONTEMPLATED HEREBY SHALL BE FOR THE BENEFIT OF AGENT AND LENDERS,
AND ALL PROCEEDS OR PAYMENTS REALIZED FROM THE PLEDGED COLLATERAL IN ACCORDANCE
HEREWITH SHALL BE APPLIED TO THE OBLIGATIONS IN ACCORDANCE WITH THE TERMS OF THE
CREDIT AGREEMENT.

 

21.                                 AUTHORIZATION.  EACH PLEDGOR HEREBY
IRREVOCABLY AUTHORIZES THE AGENT AT ANY TIME AND FROM TIME TO TIME TO FILE IN
ANY FILING OFFICE IN ANY UNIFORM COMMERCIAL CODE JURISDICTION ANY INITIAL
FINANCING STATEMENTS AND AMENDMENTS THERETO THAT (A) INDICATE THE PLEDGED
COLLATERAL (I) AS ALL ASSETS OF SUCH PLEDGOR OR WORDS OF SIMILAR EFFECT,
REGARDLESS OF WHETHER ANY PARTICULAR ASSET COMPRISED IN THE PLEDGED COLLATERAL
FALLS WITHIN THE SCOPE OF ARTICLE 9 OF THE CODE OR SUCH JURISDICTION, OR (II) AS
BEING OF AN EQUAL OR LESSER SCOPE OR WITH GREATER DETAIL, AND (B) CONTAIN ANY
OTHER INFORMATION REQUIRED BY PART 5 OF ARTICLE 9 OF THE CODE FOR THE
SUFFICIENCY OR FILING OFFICE ACCEPTANCE OF ANY FINANCING STATEMENT OR AMENDMENT,
INCLUDING WHETHER SUCH PLEDGOR IS AN ORGANIZATION, THE TYPE OF ORGANIZATION AND
ANY ORGANIZATION IDENTIFICATION NUMBER ISSUED TO SUCH PLEDGOR.  EACH
PLEDGOR AGREES TO FURNISH ANY SUCH INFORMATION TO THE AGENT PROMPTLY UPON
REQUEST.  EACH PLEDGOR ALSO RATIFIES ITS AUTHORIZATION FOR THE AGENT TO HAVE
FILED IN ANY UNIFORM COMMERCIAL CODE JURISDICTION ANY INITIAL FINANCING
STATEMENTS OR AMENDMENTS THERETO IF FILED PRIOR TO THE DATE HEREOF.

 

14

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[Signature Page Follows]

 

15

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

 

 

 

VERTIS HOLDINGS, INC.

 

 

 

By:

/s/ John V. Howard, Jr.

 

Name:

John V. Howard, Jr.

 

Title:

Chief Legal Officer

 

 

 

 

 

GENERAL ELECTRIC CAPITAL
CORPORATION

 

 

 

By:

/s/ Alan Garson

 

Name:

Alan Garson

 

Its Duly Authorized Signatory

 

 

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