Document:

Exhibit
10.42

 

EIGHTH AMENDMENT TO CREDIT AGREEMENT; AND
SECOND AMENDMENT TO

SUBORDINATION AGREEMENT

 

EIGHTH
AMENDMENT AND CONSENT TO CREDIT AGREEMENT; AND SECOND AMENDMENT TO
SUBORDINATION AGREEMENT (collectively, this “Amendment”), dated as of May 21,
2003, among VERTIS HOLDINGS, INC. (f/k/a Big Flower Holdings, Inc.), a Delaware
corporation (“Holdings”), VERTIS, INC. (f/k/a Big Flower Press Holdings, Inc.),
a Delaware corporation (“Vertis”), VERTIS LIMITED (f/k/a Big Flower Limited), a
Wholly-Owned Subsidiary of Vertis and a limited company organized under the
laws of England (“VL”), VERTIS DIRECT MARKETING SERVICES (CROYDON) LIMITED
(f/k/a Olwen Direct Mail Limited), a Wholly-Owned Subsidiary of VL and a
limited company organized under the laws of England (“VDMS”), VERTIS DIGITAL
SERVICES LIMITED (f/k/a Big Flower Digital Services Limited), an indirect
Wholly-Owned Subsidiary of Vertis and a limited company organized under the
laws of England (“VDSL”), FUSION PREMEDIA GROUP LIMITED (f/k/a Troypeak Limited),
an indirect Wholly-Owned Subsidiary of Vertis and a limited company organized
under the laws of England (“Fusion”), PISMO LIMITED, an indirect Wholly-Owned
Subsidiary of Vertis and a limited company organized under the laws of England
(“Pismo”), VERTIS DIRECT RESPONSE LIMITED (f/k/a Colorgraphic Direct Response
Limited), a Wholly-Owned Subsidiary of VL and a limited company organized under
the laws of England (“VDRL”), and THE ADMAGIC GROUP LIMITED, an indirect
Wholly-Owned Subsidiary of Vertis and a limited company organized under the
laws of England (“Admagic” and, together with Vertis, VL, VDMS, VDSL, Fusion,
Pismo and VDRL, the “Borrowers”, and each, a “Borrower”), the Lenders from time
to time party to the Credit Agreement referred to below, J.P. MORGAN
SECURITIES, INC. and DEUTSCHE BANK SECURITIES, INC., as Joint Lead Arrangers
and Joint Book Managers (in such capacity, the “Joint Lead Arrangers”),
JPMORGAN CHASE BANK (f/k/a The Chase Manhattan Bank), as Administrative Agent
(the “Administrative Agent”), DEUTSCHE BANK TRUST COMPANY AMERICAS (f/k/a
Bankers Trust Company), as Syndication Agent, BANK OF AMERICA, N.A., as
Documentation Agent, and certain Managing Agents party to the Credit
Agreement.  All capitalized terms used
herein and not otherwise defined shall have the respective meanings provided
such terms in the Credit Agreement.

 

W I T N E S S E T H:

 

WHEREAS,
Holdings, the Borrowers, the Lenders, the Agents, the Joint Lead Arrangers and
the Managing Agents are parties to a Credit Agreement, dated as of December 7,
1999 (as amended, modified or supplemented from time to time to, but not
including, the date hereof, the “Credit Agreement”);

 

WHEREAS,
Holdings, the Borrowers, various Subsidiaries of Holdings and the
Administrative Agent are parties to a Subordination Agreement, dated as of
December 7, 1999 (as amended, modified or supplemented from time to time to,
but not including, the date hereof, the “Subordination Agreement”); and

 

 

WHEREAS,
subject to the terms and conditions of this Amendment, the parties hereto wish
to amend the Credit Agreement and the Subordination Agreement,  and
to enter into certain agreements relating to the Credit Agreement, in
each case as herein provided;

 

NOW,
THEREFORE, it is agreed:

 

I.                                         Amendments and Consents to Credit
Agreement.

 

1.                                       Section 4.02(c) of the Credit Agreement is hereby
amended by inserting the text “, 2003 Senior Secured Notes, 2003 Senior Secured
Note Refinancing Indebtedness” immediately after the text “Permitted Holdings
Senior Note Refinancing Indebtedness” in each place such text appears in said
Section.

 

2.                                       Section 4.02(g) of the Credit Agreement is hereby
amended by deleting said Section in its entirety and inserting the text “(g)
[Intentionally deleted].” in lieu thereof.

 

3.                                       Section 4.02(i) of the Credit Agreement is hereby
amended by (i) deleting the text “, (f) and (g)” appearing in the first
sentence of said Section and inserting the text “and (f)” in lieu thereof, (ii)
inserting the text “(A)” immediately after the text “provided that” appearing
in the first sentence of said Section, (iii) inserting the following text
immediately before the period at the end of the proviso appearing in the first
sentence of said Section:

 

“and (B) the Net
Cash Proceeds from the issuance of the 2003 Senior Secured Notes required to be
applied pursuant to Section 4.02(d) in accordance with this Section 4.02(i)
shall be applied (x) first, to repay the outstanding principal amount of
Term Loans in accordance with the requirements set forth above in this Section
4.02(i) and (y) second, with respect to such Net Cash Proceeds in excess
of the amount applied pursuant to preceding clause (x), to repay outstanding
Revolving Loans and Swingline Loans (without a reduction to the Total Revolving
Loan Commitment).”

 

4.                                       Section 8.01(f) of the Credit Agreement is hereby
amended by (i) inserting the text “Senior Secured Leverage Ratio,” immediately
after the text “Leverage Ratio,” appearing in said Section, (ii) deleting the
word “and” appearing immediately prior to the text “(xi)” appearing in clause
(z) of said Section and inserting a comma in lieu thereof and (iii) inserting
the text “and (xii)” immediately after the text “(xi)” appearing in clause (z)
of said Section.

 

5.                                       Section 8.01(h) of the Credit Agreement is hereby amended
by inserting the text “, the 2003 Senior Secured Notes, any 2003 Senior Secured
Note Refinancing Indebtedness” immediately after the text “any Permitted
Holdings Senior Note Refinancing Indebtedness” appearing in said Section.

 

6.                                       Section 8 of the Credit Agreement is hereby amended
by inserting the following new Section 8.23 immediately following Section 8.22
of the Credit Agreement.

 

“8.23 Mortgage Amendments, etc.  Within 45 days of the occurrence of the
Eighth Amendment Effective Date, (i) Holdings, Vertis and the U.S. Subsidiary
Guarantors, as applicable, shall have entered into such amendments to the
Mortgages as 

 

2

 

are necessary to give effect to the creation of the “second-priority”
Lien in favor of the holders of the 2003 Senior Secured Notes and 2003 Senior
Secured Note Refinancing Indebtedness on the terms permitted by Section
9.01(iv); provided that such amendments shall be consistent with the
amendments made to the U.S. Security Agreement pursuant to the amendment and
restatement thereof as contemplated by Section 5(v) of Part III of the Eighth
Amendment and otherwise be in form and substance satisfactory to the Collateral
Agent and (ii) each U.S. Credit Party shall have taken all actions as may be
necessary or, in the reasonable opinion of the Collateral Agent, reasonably
required under
local law (as advised by local counsel), to create, maintain, effect, perfect (or render enforceable against
third parties), preserve, maintain and
protect the security interests granted (or purported to be granted) by
the Mortgages (as amended as provided above) (including, without limitation,
the execution of financing statements).”

 

7.                                       Section 9.01(iv) of the Credit Agreement is hereby
amended by inserting the following text immediately after the text “Security
Documents” appearing in said Section:

 

 “(it being understood and
agreed that, from and after the Eighth Amendment Effective Date, the
obligations relating to the 2003 Senior Secured Notes Documents (and, after the
incurrence thereof, any 2003 Senior Secured Note Refinancing Indebtedness) may
be secured by Collateral (other than Excluded Collateral) pursuant to the U.S.
Security Documents (other than the U.S. Pledge Agreement), on a “second-priority”
basis to the Non-2003 Senior Secured Notes Obligations, all in accordance with
the amendments to (and/or amendments and restatements of) the various U.S.
Security Documents authorized pursuant to Part III, Section 5(v) of the Eighth
Amendment and Section 8.23, and any U.S. Security Documents thereafter entered
into may likewise secure such Indebtedness and related obligations on
substantially the same basis)”.

 

8.                                       Section 9.03(xii) of the Credit Agreement is hereby
amended by deleting the text of said Section in its entirety and inserting the
text “(xii) [intentionally deleted];” in lieu thereof.

 

9.                                       Section 9.03(xiv) of the Credit Agreement is hereby
amended by deleting the text of said Section in its entirety and inserting the
text “(xiv) [intentionally deleted];” in lieu thereof.

 

10.                                 Section 9.04(xiii) of the Credit Agreement is hereby
amended by (i) inserting the text “(I)” immediately after the text “result of”
appearing in clause (y) of said Section and (ii) inserting the text “and (II)
any exchange of Mezzanine Subordinated Debt for Qualified Preferred Stock
pursuant to Section 9.12(e)” immediately after the text “(xxiv) below”
appearing in said Section.

 

11.                                 Section 9.04 of the Credit Agreement is hereby
further amended by (i) deleting the word “and” appearing at the end of clause
(xxiv) of said Section, (ii) deleting the period at the end of clause (xxv) of
said Section and inserting a semi-colon in lieu thereof and (iii) inserting the
following new clauses (xxvi) and (xxvii) at the end of said Section:

 

3

 

“(xxvi)
Indebtedness of Vertis, and senior guarantees thereof by the U.S. Subsidiary
Guarantors, under the 2003 Senior Secured Notes and the other 2003 Senior
Secured Notes Documents in an aggregate principal amount at any time
outstanding not to exceed $350,000,000 (less any repayment of principal
thereof), so long as (A) such Indebtedness is incurred in accordance with the
requirements of the definition of 2003 Senior Secured Notes and (B) promptly
following the incurrence thereof, Net Cash Proceeds of such Indebtedness shall
have been applied to repay Loans in accordance with the requirements of
Sections 4.02(d) and (i); and

 

(xxvii) 2003
Senior Secured Note Refinancing Indebtedness, so long as no Default or Event of
Default is in existence at the time of the incurrence of such 2003 Senior
Secured Note Refinancing Indebtedness and immediately after giving effect
thereto.”

 

12.                                 Section 9.05 of the Credit Agreement is hereby
amended by (i) deleting the word “and” appearing at the end of clause (xxi) of
said Section, (ii) deleting the period appearing at the end of clause (xxii) of
said Section and inserting the text “; and” in lieu thereof and (iii) inserting
the following new clause (xxiii) at the end of said Section:

 

“(xxiii) so long as no Default or Event of
Default then exists or would exist immediately after giving effect thereto,
Vertis or any of its Wholly-Owned Domestic Subsidiaries may make a cash common
equity contribution to one or more U.K. Borrowers in an aggregate amount not to
exceed $45,000,000, so long as such U.K. Borrower(s) promptly use(s) the
proceeds of any such cash equity contribution to repay U.K. Borrowers
Multicurrency Facility Revolving Loans and/or U.K. Borrowers Multicurrency
Facility Swingline Loans”.

 

13.                                 Section 9.08 of the Credit Agreement is hereby
amended by deleting the table appearing in said Section in its entirety and
inserting the following new table in lieu thereof:

 

	
  Fiscal Quarter Ended

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2003

  	
   

  	
  1.60:1.00

  	
   

  
	
  June
  30, 2003

  	
   

  	
  1.50:1.00

  	
   

  
	
  September
  30, 2003

  	
   

  	
  1.50:1.00

  	
   

  
	
  December
  31, 2003

  	
   

  	
  1.50:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2004

  	
   

  	
  1.50:1.00

  	
   

  
	
  June
  30, 2004

  	
   

  	
  1.50:1.00

  	
   

  
	
  September
  30, 2004

  	
   

  	
  1.50:1.00

  	
   

  
	
  December
  31, 2004

  	
   

  	
  1.50:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2005

  	
   

  	
  1.50:1.00

  	
   

  
	
  June
  30, 2005

  	
   

  	
  1.50:1.00

  	
   

  
	
  September
  30, 2005

  	
   

  	
  1.50:1.00

  	
   

  
	
  December
  31, 2005

  	
   

  	
  1.60:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2006

  	
   

  	
  1.60:1.00

  	
   

  
	
  June
  30, 2006

  	
   

  	
  1.60:1.00

  	
   

  
	
  September
  30, 2006

  	
   

  	
  1.60:1.00

  	
   

  
	
  December
  31, 2006

  	
   

  	
  1.60:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2007 and each fiscal quarter of Holdings thereafter

  	
   

  	
  1.70:1.00

  	
   

  

 

4

 

14.                                 Section 9.09 of the Credit Agreement is hereby
amended by (i) inserting the text “(a)” immediately before the text “Holdings”
appearing at the beginning of said Section, (ii) deleting the table appearing
in said Section in its entirety and inserting the following new table in lieu
thereof:

 

	
  “Fiscal Quarter Ended

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2003

  	
   

  	
  6.15:1.00

  	
   

  
	
  June
  30, 2003

  	
   

  	
  6.50:1.00

  	
   

  
	
  September
  30, 2003

  	
   

  	
  6.50:1.00

  	
   

  
	
  December
  31, 2003

  	
   

  	
  6.50:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2004

  	
   

  	
  6.50:1.00

  	
   

  
	
  June
  30, 2004

  	
   

  	
  6.50:1.00

  	
   

  
	
  September
  30, 2004

  	
   

  	
  6.50:1.00

  	
   

  
	
  December
  31, 2004

  	
   

  	
  6.25:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
  June
  30, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
  September
  30, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
  December
  31, 2005

  	
   

  	
  6.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2006

  	
   

  	
  5.75:1.00

  	
   

  
	
  June
  30, 2006

  	
   

  	
  5.75:1.00

  	
   

  
	
  September
  30, 2006

  	
   

  	
  5.75:1.00

  	
   

  
	
  December
  31, 2006

  	
   

  	
  5.50:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March
  31, 2007

  	
   

  	
  5.25:1.00

  	
   

  
	
  June
  30, 2007 and each fiscal quarter of Holdings thereafter

  	
   

  	
  5.00:1.00

  	
   

  

 

5

 

and (iii) inserting the following new text at the end
of said Section:

 

“(b) Holdings will
not permit the Senior Secured Leverage Ratio at any time to exceed 2.00:1.00.”.

 

15.                                 Section 9.10 of the Credit Agreement is hereby
amended by (i) inserting the text “, any 2003 Senior Secured Notes Document”
immediately after the text “any Holdings Senior Notes Document” in each place
where such text appears in clause (i) of said Section, (ii) inserting text
“(A)” immediately after the text “Mezzanine Subordinated Debt may be” appearing
in the proviso contained in clause (ii) of said Section, (iii) inserting the
text “or (B) exchanged for Qualified Preferred Stock in accordance with the
requirements of Section 9.12(e) and any other relevant provisions of this
Agreement” immediately before the comma appearing at the end of the proviso
appearing in clause (ii) of said Section, (iv) inserting the text “, any 2003
Senior Secured Note” immediately after the first appearance of the text “any
Holdings Senior Note” in clause (iii) of said Section, (v) deleting the word
“and” appearing immediately prior to the text “(H)” appearing in the proviso in
clause (iii) of said Section and inserting a comma in lieu thereof and (vi)
inserting the following new subclauses (I) and (J) after subclause (H) of the
proviso contained in clause (iii) of said Section:

 

“, (I) 2003
Exchange Senior Secured Notes may be issued as contemplated by the definition
of 2003 Senior Secured Notes and consistent with the definition of 2003
Exchange Senior Secured Notes and (J) so long as no Default or Event of Default then exists or
would result therefrom, 2003 Senior Secured Notes and any 2003 Senior Secured
Note Refinancing Indebtedness incurred to Refinance same may be Refinanced with
2003 Senior Secured Note Refinancing Indebtedness in accordance with the
relevant requirements of this Agreement,”.

 

16.                                 Notwithstanding anything to the contrary contained
in Section 9.10 of the Credit Agreement or Section 33 of the Sixth Amendment,
in no event shall any amendment to the Mezzanine Subordinated Debt Documents
provide for the payment of cash interest on or prior to the Revolving Loan
Maturity Date.

 

17.                                 Section 9.12(a) of the Credit Agreement is hereby
amended by inserting the text “or (e)” immediately after the text “clause (c)”
appearing in said Section.

 

18.                                 Section 9.12(c) of the Credit Agreement is hereby
amended by inserting the text “(other than in connection with an exchange for
Mezzanine Subordinated Debt, which shall be permitted in accordance with the
requirements of Section 9.12(e) below)” after the first appearance of the text
“Qualified Preferred Stock” in said Section.

 

19.                                 Section 9.12 of the Credit Agreement is hereby
further amended by inserting the following new clause (e) after clause (d) of
said Section:

 

6

 

“(e) Holdings may issue Qualified Preferred
Stock in exchange for Mezzanine Subordinated Debt, so long as (x) no Default or
Event of Default shall exist at the time of any such issuance or immediately
after giving effect thereto and (y) with respect to each such issuance of
Qualified Preferred Stock, the aggregate liquidation preference thereof at the
time of issuance equals the aggregate principal amount of the Mezzanine
Subordinated Debt for which such Qualified Preferred Stock is so exchanged.”.

 

20.                                 Section 9.14(a) of the Credit Agreement is hereby
amended by inserting the text “, the 2003 Senior Secured Notes Documents”
immediately after the text “Permanent Senior Notes Documents” appearing in said
Section.

 

21.                                 Section 9 of the Credit Agreement is hereby amended
by inserting the following new Section 9.17 immediately following Section 9.16
of the Credit Agreement:

 

“9.17                     Special
Covenant Relating To Cash Payments Made In Connection With 2003 Restructuring.  The Credit Agreement Parties will not permit
the aggregate amount of cash expenditures paid by Holdings or any of its
Subsidiaries in connection with the restructuring charges permitted to be added
back pursuant to clause (xii) of the first sentence of the definition
“Consolidated EBITDA” to exceed for any fiscal year of Holdings set forth below
the amount set forth opposite such fiscal year:

 

	
  Fiscal Year Ended

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2003

  	
   

  	
  $

  	
  5.5 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2004

  	
   

  	
  $

  	
  2.3 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2005

  	
   

  	
  $

  	
  2.1 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2006

  	
   

  	
  $

  	
  1.7 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2007

  	
   

  	
  $

  	
  1.2 million

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December
  31, 2008

  	
   

  	
  $

  	
  3.0 million

  	
  .”

  

 

22.                                 The definition of “Applicable Margin” appearing in
Section 11.01 of the Credit Agreement is hereby deleted in its entirety and the
following new definition is inserted in lieu thereof:

 

“Applicable
Margin” shall mean at all times a percentage per annum equal to (i) in the case
of Revolving Loans maintained as (x) Base Rate Loans, 2.50% and (y) Euro Rate
Loans, 3.50%, (ii) in the case of Swingline Loans maintained as (x) Base Rate
Loans, 2.50% and (y) Euro Rate Loans, 4.50%, and (iii) in the case of any
Commitment Commission, 0.50%.  It is
understood and agreed that the new “Applicable Margins” included in the first
sentence of this definition pursuant to the Eighth Amendment shall be effective
for all purposes of this Agreement on and after (but not for periods prior to)
the Eighth Amendment Effective Date, with the “Applicable Margins” (as in
effect prior 

 

7

 

to the Eighth
Amendment Effective Date) to be effective for such periods prior to the Eighth
Amendment Effective Date.”.

 

23.                                 The definition of “Change
of Control” appearing in Section 11.01 of the Credit Agreement is hereby
amended by inserting the text “any 2003 Senior Secured Notes Document, any 2003
Senior Secured Note Refinancing Indebtedness,” immediately after the text “any
Permitted Holdings Senior Note Refinancing Indebtedness,” in each place such
text appears in said definition.

 

24.                                 The definition of “Consolidated Debt” appearing in
Section 11.01 of the Credit Agreement is hereby amended by (i) deleting the
word “and” appearing at the end of clause (x) of the second sentence of said
definition and (ii) inserting the following text immediately before the period
at the end of said definition:

 

“and (z) all Mezzanine Subordinated Debt, Holdings Senior Notes,
Permitted Holdings Senior Note Refinancing Indebtedness and Qualified Preferred
Stock exchanged for Mezzanine Subordinated Debt in accordance with the
requirements of Section 9.12(e) shall be excluded in making any determination
of Consolidated Debt”.

 

25.                                 The definition of “Consolidated EBITDA” appearing in
Section 11.01 of the Credit Agreement is hereby amended by (i) deleting the
word “and” appearing at the end of clause (x) appearing in the first sentence
of said definition and inserting a semi-colon in lieu thereof, and (ii)
inserting the following text immediately after clause (xi) appearing in the
first sentence of said definition:

 

“and (xii) for any Test Period which includes any portion of the period
from April 1, 2003 to and including March 31, 2004, to the extent deducted in
any determination of Consolidated EBITDA (directly or through reductions to
Consolidated Net Income), severance costs, lease buy-out costs and certain
one-time restructuring costs not reported as such in accordance with GAAP (such
as retention bonuses and employee relocation costs) incurred (on an accrual
basis) by Holdings and its Subsidiaries on or after April 1, 2003 and on or
prior to March 31, 2004, so long as (x) the aggregate amount of all such costs
so incurred and added to Consolidated EBITDA pursuant to this clause (xii)
after the Eighth Amendment Effective Date does not exceed $15,000,000 and (y)
Holdings has at all times complied with the requirements of clause (z) of
Section 8.01(f), requiring Holdings to certify as to the amount and type of
such costs so incurred in any fiscal quarter of Holdings included in such Test
Period and added back to Consolidated EBITDA for such Test Period”.

 

26.                                 The definition of “Consolidated Net Interest Expense”
appearing in Section 11.01 of the Credit Agreement is hereby amended by (i)
deleting the word “and” appearing at the end of clause (ii) of the second
sentence of said definition and inserting a comma in lieu thereof and (ii)
inserting the following text immediately before the period at the end of the
second sentence of said definition:

 

“, (iv) any interest expense of Holdings attributable to Mezzanine
Subordinated Debt, Holdings Senior Notes and Permitted Holdings Senior Note
Refinancing Indebtedness 

 

8

 

during such period and (v) any Dividend requirements on Qualified
Preferred Stock exchanged for Mezzanine Subordinated Debt in accordance with
the requirements of Section 9.12(e) during such period otherwise treated as
interest expense pursuant to clause (iii) of the immediately preceding
sentence”.

 

27.                                 The definition of “Documents” appearing in Section
11.01 of the Credit Agreement is hereby amended by (i) deleting the word “and”
appearing immediately prior to the text “(xv)” appearing in said definition and
inserting a comma in lieu thereof and (ii) inserting the text “, (xvi) the 2003 Senior Secured Notes Documents and (xvii) the instruments and agreements
governing any 2003
Senior Secured Notes Refinancing
Indebtedness” immediately before the period at the end of said definition.

 

28.                                 The definition of “Holdings Senior Notes” appearing
in Section 11.01 of the Credit Agreement is hereby amended by deleting the text
“the Second Revised Financial Covenants Compliance Date” appearing in clause
(c) of said definition and inserting the text “Revolving Loan Maturity Date” in
lieu thereof.

 

29.                                 The definition of “Permitted Debt” appearing in
Section 11.01 of the Credit Agreement is hereby amended by inserting the text
“2003 Senior Secured Note Refinancing Indebtedness,” immediately after the text
“Permitted Senior Note Refinancing Indebtedness,” appearing in said definition.

 

30.                                 The definition of “Permitted Holdings Senior Note
Refinancing Indebtedness” appearing in Section 11.01 of the Credit Agreement is
hereby amended by deleting the text “the Second Revised Financial Covenants
Compliance Date” appearing in clause (d) of said definition and inserting the
text “Revolving Loan Maturity Date” in lieu thereof.

 

31.                                 The definition of “U.S. Security Agreement”
appearing in Section 11.01 of the Credit Agreement is hereby amended by
inserting the text “, it being understood that on and after the Eighth
Amendment Effective Date, the term “U.S. Security Agreement” shall mean the
Amended and Restated U.S. Security Agreement in the form entered into in
accordance with the requirements of Section 5(v) of Part III of the Eighth
Amendment, as the same may be further amended, amended and restated, modified
and/or supplemented from time to time in accordance with the terms hereof and
thereof” immediately before the period appearing in said definition.

 

32.                                 Section 11.01 of the Credit Agreement is hereby
amended by (i) deleting the definitions of “Excess Cash Flow” and “Mezzanine
Subordinated Debt” appearing in said Section and (ii) inserting the following
new definitions in appropriate alphabetical order:

 

“Consolidated
Senior Secured Debt” shall mean, at any time, Consolidated Debt at such time
which is secured by (or subject to) any Lien other than the Permitted Liens
described in clauses (ii), (iii) (except to the extent representing Liens on
assets subject to Capitalized Lease Obligations or securing obligations under
Receivables Facility), (v), (ix), (xi), (xiii), (xv) and (xvi) of Section 9.01
(including, without limitation, the aggregate principal amount of all Loans and
Letter of Credit Outstandings under this 

 

9

 

Agreement), provided,
however, that (i) the 2003 Senior Secured Notes and (ii) after the
incurrence thereof, the 2003 Senior Note Refinancing Indebtedness shall be
excluded for the purpose of any determination of Consolidated Senior Secured
Debt.

 

“Eighth Amendment”
shall mean the Eighth Amendment to this Agreement, dated as of May 21, 2003.

 

“Eighth Amendment Effective Date” shall have
the meaning provided in the Eighth Amendment.

 

“Excluded Collateral” shall mean and include
(i) all capital stock, Notes, Instruments, Investment Property and other equity
interests and Securities owned or held by any Assignor, (ii) any and all
Collateral owned or held by Holdings, (iii) any and all assets of the Assignors
that are covered by a certificate of title issued by any foreign country or
governmental unit thereof or, in the case of Marks, Patents, Copyrights and
Permits, registered, filed or issued, as the case may be, under the laws of any
foreign country or governmental unit thereof and all other assets owned or held
by any Assignor situated, located or held outside the United States, in each
case, to the extent that the perfection of a security interest in such assets
cannot be effected under the laws of the United States or any State thereof,
(iv) any “collateral” under any U.K. Security Document, (v) any other “collateral”
under any other Security Document which is excluded as security for, or does
not secure, the obligations under the 2003 Senior Secured Notes or 2003 Senior
Secured Note Refinancing Indebtedness, to the extent such other “collateral”
constitutes (I) collateral of the type described in clause (i) above, (II)
collateral of any type owned or held by Holdings, (III) assets that are covered
by certificate of title issued by a foreign country or governmental unit
thereof or, in the case of intellectual property and permits, registered, filed
or issued, as the case may be, under the laws of any foreign country or
governmental unit thereof or other assets situated, located or held outside the
United States, in each case, to the extent that the perfection of a security
interest in such assets cannot be effected under the laws of the United States
or any State thereof or (IV) proceeds of any “collateral” described in
preceding clauses (I), (II) and (III) and (vi) all Proceeds of the Collateral
described in preceding clauses (i), (ii), (iii), (iv) and (v). All capitalized
terms used in this definition (other than the term “Collateral”) shall have the
meaning provided in the U.S. Security Agreement.

 

 “Mezzanine Subordinated Debt” shall mean the unsecured Mezzanine Subordinated
Notes due 2010 issued by Holdings under the Mezzanine Subordinated Debt
Documents, which notes bear interest at a rate of (i) at all times on and after
the Initial Borrowing Date and prior to the later to occur of (x) the Second
Revised Financial Covenants Compliance Date and (y) the date of the
effectiveness of the amendment described in Part I, Section 33 of the Sixth
Amendment, 12% per annum (all of which shall be payable in kind at all times
prior to the Revolving Loan Maturity Date) and (ii) at all times on after the
later to occur of the dates referred to in subclauses (x) and (y) of preceding
clause (i), 13% per annum (or such lesser percentage as may be agreed by
Holdings), all of which shall be payable in kind at all times prior to the Revolving
Loan Maturity Date.

 

10

 

“Non-2003 Senior Secured Notes Obligations”
shall mean all Obligations (as defined in the U.S. Security Agreement) other
than obligations (of every kind and nature) under 2003 Senior Secured Notes
Documents and, after the execution and delivery thereof, the instruments and
agreements governing the 2003 Senior Secured Notes Refinancing Indebtedness.

 

“Senior Secured Leverage Ratio” shall mean on
any date the ratio of (i) Consolidated Senior Secured Debt on such date to (ii)
Consolidated EBITDA for the Test Period most recently ended on or prior to such
date; provided that (x) if one or more Permitted Acquisitions is
effected on or after the first day of the respective Test Period and on or
prior to the date of determination, Consolidated EBITDA shall, for the purposes
of this definition only, be calculated on a Pro Forma Basis (but only giving
effect to adjustments described in clause (iii) of the definition of Pro Forma
Basis) after giving effect to such Permitted Acquisition and (y) if one or more
Significant Asset Sales is effected on or after the first day of the respective
Test Period and on or prior to the date of determination, Consolidated EBITDA
shall, for purposes of this definition only, be calculated on a Pro Forma Basis
(but only giving effect to adjustments described in clause (iii) of the
definition of Pro Forma Basis) after giving effect to such Significant Asset
Sale.

 

“2003 Exchange Senior Notes” shall mean senior notes issued in
exchange for 2003 Senior Secured Notes pursuant to the 2003 Senior Secured
Notes Indenture, which 2003  Exchange Senior Secured Notes are substantially
identical securities to the 2003 Senior Secured Notes issued pursuant to a
registered exchange offer or private exchange offer for the 2003 Senior Secured
Notes; provided that in no event will the issuance of any 2003  Exchange Senior Secured Notes increase the
aggregate principal amount of 2003 Senior Secured Notes theretofore outstanding
or otherwise result in an increase in the interest rate applicable to the 2003
Senior Secured Notes.

 

“2003 Senior Note Refinancing Indebtedness”
shall mean any Indebtedness of Vertis and its Subsidiaries issued to Refinance
2003 Senior Secured Notes or any Indebtedness issued to so Refinance any such
Indebtedness, so long as (a) such Indebtedness has a weighted average life to
maturity greater than or equal to the weighted average life to maturity of the
Indebtedness being refinanced, (b) such Indebtedness does not (i) increase the
amount of such Indebtedness outstanding immediately prior to such refinancing
or renewal (except to the extent of reasonable fees, commissions and expenses
actually paid in connection with such refinancing) or (ii) add guarantors,
obligors or security from that which applied to such Indebtedness being
refinanced or renewed, and (c) all other terms of such Indebtedness (including,
without limitation, with respect to the amortization, redemption provisions,
maturities, covenants, defaults and remedies), are not, taken as a whole, less
favorable in any material respect to Vertis and its Subsidiaries than those
previously existing with respect to the Indebtedness being refinancing or
renewed.

 

“2003 Senior Secured Notes” shall mean any Indebtedness
of Vertis evidenced by senior notes, so long as (a) such Indebtedness has
a final maturity no earlier than April 1, 2009 and no required amortizations
prior to such date, (b) such Indebtedness does not add 

 

11

 

guarantors or obligors from those that applied to the Permanent Senior
Notes, (c) such Indebtedness does not provide for security, except pursuant to
the Security Documents (as contemplated by Section 9.01(iv)), it being
understood that the terms of such Indebtedness may require (pursuant to a lien
covenant contained in the documentation therefor) that a pledge of any assets
of Vertis and its Subsidiaries to secure new debt of Vertis and its
Subsidiaries incurred after the Eighth Amendment Effective Date (excluding (A)
Indebtedness under the “Senior Credit Facility” (as defined in the Permanent
Senior Notes Indenture, without giving effect to any termination thereof) in an
aggregate principal amount equal to the remainder of (x) $380.0 million less
(y) the amount of the Attributed Receivables Facility Indebtedness, (B)
Indebtedness under Interest Rate Protection Agreements and Currency Agreements,
(C) Attributed Receivables Facility Indebtedness not to exceed $130.0 million
and (D) secured Indebtedness incurred in reliance on the “senior secured debt
leverage incurrence test” described in subclause (y) of clause (e) below)
secure such Indebtedness on an equal and ratable basis with such new debt (or
on a senior basis, if such new debt is subordinated to such Indebtedness), (d)
the interest rate applicable to such Indebtedness shall not exceed the rate
applicable to the Permanent Senior Notes, (e) all terms of such Indebtedness
(including, without limitation, with respect to amortiza­tion, redemption
provisions, maturities, covenants, defaults and remedies), are not, taken as a
whole, less favorable in any material respect to Vertis and its Subsidiaries
than those previously existing with respect to the Permanent Senior Notes,
except that (x) the initial amount of the basket for indebtedness under the
Credit Documents contained in the debt covenant in the indenture governing such
Indebtedness may be reduced from $670.0 million (as set forth in the
documentation governing the Permanent Senior Notes) to an amount equal to the
remainder of (x) $380.0 million less (y) the amount of the Attributed
Receivables Facility Indebtedness and (y) such Indebtedness may include a
“senior secured debt incurrence test” (which shall exclude Indebtedness of the
types referred to in clauses (A), (B) and (C) of the parenthetical clause
appearing in subclause (c) above) of 2.00:1.00 (at any time prior to January 1,
2005) and 1.75:1.0 (thereafter), it being understood that the terms and
conditions of such Indebtedness specifically required (or expressly permitted)
pursuant to the immediately preceding exceptions or the other subclauses of
this definition shall not be taken into account in making any determination
pursuant to this clause (e), and (f) the Net Cash Proceeds from the incurrence
of such Indebtedness shall have been applied to repay Loans in accordance with
the requirements of Sections 4.02(d) and (i). 
As used herein, the term “2003 Senior Secured Notes” shall also include
any 2003 Exchange Senior Secured Notes issued pursuant to the 2003 Senior
Secured Notes Indenture in exchange for theretofore outstanding 2003 Senior
Secured Notes as contemplated by the definition of 2003 Exchange Senior Secured
Notes.  The issuance of 2003 Senior
Secured Notes shall be deemed to be a representation and warranty by Vertis
that all conditions thereto have been satisfied in all material respects and
that same is permitted in accordance with the terms of this Agreement, which
representation and warranty shall be deemed to be a representation and warranty
for all purposes hereunder, including, without limitation, Sections 5.03(a) and
10.

 

“2003 Senior Secured Notes Documents” shall
mean the 2003 Senior Secured Notes Indenture, the 2003 Senior Secured Notes and
each other agreement, document or instrument relating to the issuance of the
2003 Senior Secured Notes.

 

12

 

“2003 Senior Secured Notes Indenture” shall
mean any indenture or similar agreement entered into in connection with the issuance
of 2003 Senior Secured Notes or 2003 Exchange Senior Notes.

 

II.                                     Amendments
to Subordination Agreement.

 

1.                                       The
definition of “Required Senior Creditors” appearing in Section 7 of
the Subordination Agreement is hereby amended by (i) redesignating clauses (v),
(w), (x), (y) and (z) appearing in the proviso of said definition as clauses
(t), (u), (v), (w) and (x), respectively, (ii) deleting the word “and”
appearing immediately before clause (x) of said definition (as redesignated
pursuant to preceding clause (i)) and (iii) inserting the text “, (y) all
outstanding 2003 Senior Secured Note Obligations (as defined below) and (z) all
2003 Senior Secured Note Refinancing Obligations (as defined below)”
immediately before the period at the end of said definition.

 

2.                                       The
definition of “Senior Creditors” appearing in Section 7 of the
Subordination Agreement is hereby amended by inserting the text “, the 2003
Senior Secured Noteholders, the 2003 Senior Secured Note Refinancing Creditors”
immediately after the text “the Permitted Holdings Senior Note Refinancing
Creditors” appearing in said definition.

 

3.                                       The
definition of “Senior Indebtedness” appearing in Section 7 of the
Subordination Agreement is hereby amended by (i) deleting the word “and”
appearing at the end of clause (vi) of said definition, (ii) deleting the
period appearing at the end of clause (vii) of said definition and inserting a
semi-colon in lieu thereof and (iii) inserting the following new clauses (viii)
and (viv) at the end of said definition:

 

“(viii)  all
Obligations (including Obligations which, but for the auto­matic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabili­ties
(includ­ing, without limitation, indemnities, Fees and interest thereon) of the
respective Credit Party (whether as obligor, guarantor or otherwise) to the
2003 Senior Secured Noteholders, now exist­ing or hereafter incurred under,
arising out of or in connection with any 2003 Senior Secured Notes Document to
which it is at any time a party (including, without limitation, all such
obligations and liabilities of the respective Credit Party under the 2003
Senior Secured Notes Indenture (if a party thereto) and under any other
guarantee by it of obligations pursuant to the 2003 Senior Secured Notes
Documents) and the due per­form­ance and compliance by the respective Credit
Party with the terms of each such 2003 Senior Secured Notes Document (all such
obligations and liabili­ties under this clause (viii) being herein collectively
called the “2003 Senior Secured Note Obligations”); and

 

(viv)  all
Obligations (including Obligations which, but for the auto­matic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabili­ties
(includ­ing, without limitation, indemnities, Fees and interest thereon) of the
respective Credit Party (whether as obligor, guarantor or otherwise) to the
2003 Senior Secured Note Refinancing Creditors, now exist­ing or hereafter
incurred under, arising out of or in connection with any 2003 Senior Secured Note
Refinancing Indebtedness (and any agreement or instrument governing or
evidencing the same) to which it is at any time a 

 

13

 

party (including,
without limitation, all such obligations and liabilities of the respective
Credit Party under any guarantee by it of obligations under, or relating to,
pursuant to 2003 Senior Secured Note Refinancing Indebtedness) and the due per­form­ance
and compliance by the respective Credit Party with the terms of all such 2003
Senior Secured Note Refinancing Indebtedness (and each agreement and instrument
governing or evidencing the same) (all such obligations and liabili­ties under
this clause (v) being herein collectively called the “2003 Senior Secured
Note Refinancing Obligations”).”.

 

4.                                       Section
7 of the Subordination Agreement is hereby further amended by inserting the
following definitions in appropriate alphabetical order:

 

“2003 Senior
Secured Noteholders” shall mean the holders from time to time of the 2003
Senior Secured Notes.

 

“2003 Senior
Secured Note Refinancing Creditors” shall mean the holders from time to
time of 2003 Senior Secured Note Refinancing Indebtedness.

 

III.                                 Miscellaneous
Provisions.

 

1.                                       In
order to induce the Lenders to enter into this Amendment, each Credit Agreement
Party hereby represents and warrants that:

 

(a)                                  no Default or Event of Default exists as
of the Eighth Amendment Effective Date, both immediately before and immediately
after giving effect to this Amendment; and

 

(b)                                 all of the representations and warranties
contained in the Credit Agreement or the other Credit Documents are true and
correct in all material respects on the Eighth Amendment Effective Date both
immediately before and immediately after giving effect to this Amendment, with
the same effect as though such representations and warranties had been made on
and as of the Eighth Amendment Effective Date (it being understood that any
repre­sen­tation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).

 

2.                                       This
Amendment is limited as specified and shall not constitute a modifi­cation,
acceptance or waiver of any other provision of the Credit Agreement, the
Subordination Agreement or any other Credit Document.

 

3.                                       This
Amendment may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which counterparts when
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. 
A complete set of counterparts shall be lodged with Holdings and the
Administrative Agent.

 

4.                                       THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

14

 

5.                                       This
Amendment shall become effective on the date (the “Eighth Amendment Effective
Date”) when each of the following
conditions shall have been satisfied; provided that the Eighth Amendment
Effective Date may occur concurrently with the last of such conditions to be
satisfied:

 

(i) each Credit Agreement Party, each Party
(as defined in the Subordination Agreement) party to the Subordination
Agreement, the Administrative Agent, the Lenders constituting the Required
Lenders and the Majority Lenders holding Revolving Loan Commitments shall have
signed a counterpart hereof (whether the same or different counter­parts) and
shall have delivered (including by way of facsimile transmission) the same to
the Administrative Agent at its Notice Office;

 

(ii) the Lenders shall have received an
amendment to the Mezzanine Subordinated Debt Agreement executed by Holdings and
the Required Noteholders under, and as defined in, the Mezzanine Subordinated
Debt Agreement, which amendment shall amend the interest payment provisions in
accordance with the restrictions contained in this Amendment and otherwise be
in form and substance satisfactory to the Administrative Agent;

 

(iii) Holdings and Vertis shall
have paid to the Administrative Agent and the Lenders all fees, costs and
expenses (including legal fees and expenses but excluding the Amendment Fee
referred to Section 6 below) payable to the Administrative Agent and the
Lenders to the extent then due;

 

(iv) the 2003 Senior Secured Notes shall have been issued
generating Net Cash Proceeds of approximately $330.7 million, $267.9 million of
which shall have been applied to repay (in full) all outstanding Term Loans and
$62.0 million of outstanding Revolving Loans, in each case in accordance with
the requirements of the Credit Agreement (as amended hereby);

 

(v) 
each U.S. Credit Party shall have duly authorized, executed and
delivered an amendment and restatement of the U.S. Security Agreement in the
form of the existing U.S. Security Agreement but modified to provide for the
following:

 

(1) the obligations relating to the 2003
Senior Secured Notes Documents (and, after the incurrence thereof, any 2003
Senior Secured Note Refinancing Indebtedness) shall be permitted to be secured
by Collateral (other than Excluded Collateral) on a “second-priority” basis to
the Non-2003 Senior Secured Notes Obligations;

 

(2) the Lien described in preceding clause
(1) shall be a “silent” second lien, meaning, inter  alia, that
until the Credit Agreement is terminated and all Obligations owing under the
Credit Agreement have been indefeasibly paid in full in cash, the holders of
such Lien shall not have any right to (a) enforce the lien or foreclose upon
the Collateral, (b) vote in any bankruptcy or similar proceeding in respect of
Holdings or any of its Subsidiaries (any such proceeding, a “Bankruptcy”)
with respect to, or take any other actions concerning, the 

 

15

 

Collateral, (c) receive any proceeds from any sale, transfer or other
disposition of the Collateral, (d) oppose any sale, transfer or other
disposition of the Collateral, (e) object to any debtor-in-possession financing
in any Bankruptcy which is provided by one or more Lenders among others
(including on a priming basis), (f) object to the use of cash collateral in
respect of the Collateral in any Bankruptcy, or (g) seek or object to the
Lenders seeking any adequate protection or relief from the automatic stay with
respect to the Collateral in any Bankruptcy; and

 

(3) the grant by the holders of such second
lien of a power of attorney in favor of the Collateral Agent to permit the
Collateral Agent or the Lenders to effectuate any sale, transfer or other
disposition of the Collateral;

 

and such amended and restated U.S. Security Agreement shall (x)
otherwise be in form and substance satisfactory to the Collateral Agent and (y)
be in full force and effect;

 

(vi) each U.S. Credit Party shall have taken
all actions as may be necessary or, in the reasonable opinion of the Collateral
Agent, reasonably required under local law (as advised by local counsel), to create, maintain, effect, perfect (or
render enforceable against third parties),
preserve, maintain and protect the security interests granted (or purported to
be granted) by the U.S. Security Agreement (including, without
limitation, the execution of financing statements);

 

(vii) 
the Administrative Agent shall have received from each U.S. Credit Party
true and correct certified copies of resolutions of the Board of Directors of
such Person with respect to the matters set forth in this Amendment, and such
resolutions shall in form and substance satisfactory to the Administrative
Agent;

 

(viii) 
the Administrative Agent shall have received from each of (x) Sullivan
& Cromwell LLP, special New York counsel to the Credit Agreement Parties,
(y) John Howard, General Counsel to Holdings, and (z) local counsel
satisfactory to the Administrative Agent, an opinion addressed to each Agent, the
Collateral Agent and each of the Lenders and dated the date of the 2003 Senior
Secured Notes Indenture, which opinions shall, in each case, cover such matters
incident to the 2003 Senior Secured Notes and the other transactions
contemplated in connection therewith as the Administrative Agent may reasonably
request and include an opinion as to no conflict with any material Indebtedness
outstanding after giving effect to the 2003 Senior Secured Notes Documents and
the transactions contemplated thereunder and otherwise in form and substance
satisfactory to the Administrative Agent; and

 

(ix) the Administrative Agent shall
have received a certificate signed on behalf of Holdings by an appropriate officer of Holdings,
stating that the conditions in clauses (iii) through (vii), inclusive, above
and Section 5.03(a) of the Credit Agreement have been satisfied on such date.

 

In the event the condition described in clause (v) above shall not have
been satisfied on or prior to June 20, 2003, any signature page to this Amendment
theretofore tendered by any Lender 

 

16

 

shall be deemed withdrawn at such time and clause (i) above shall
thereafter be deemed not to be satisfied.

 

6.                                       The
Borrowers hereby covenant and agree (on a joint and several basis) that, so
long as the Eighth Amendment Effective Date occurs, they shall pay (in U.S.
Dollars) to each Lender with a Revolving Loan Commitment which executes and
delivers to the Administrative Agent (or its designee) a counterpart hereof by
12:00 Noon (New York City time) on May 22, 2003, a non-refundable cash fee (the
“Amendment Fee”) in an amount equal to 25 basis points (0.25%) of an amount
equal to the Revolving Loan Commitment of such Lender (as in effect on the
Eighth Amendment Effective Date), which Amendment Fee shall not be subject to
counterclaim or set-off, or be otherwise affected by, any claim or dispute
relating to any other matter and shall be paid by the Borrowers to the
Administrative Agent for distribution to the Lenders not later than the second
Business Day following the Eighth Amendment Effective Date.

 

7.                                       From
and after the Eighth Amendment Effective Date, all references in the Credit
Agreement and each of the other Credit Documents to the Credit Agreement and
the Subordination Agreement shall be deemed to be references to the Credit
Agreement or the Subordination Agreement, as the case may be, as modified
hereby.

 

*      *      *

 

17

 

 

IN
WITNESS WHEREOF, the parties hereto have caused their duly authorized officers
to execute and deliver this Amendment as of the date first above written.

 

	
   

  	
  VERTIS HOLDINGS, INC. (f/k/a Big Flower Holdings,
  Inc.), 

  
	
   

  	
   

  	
  as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS, INC. (f/k/a Big Flower Press Holdings,
  Inc.), 

  
	
   

  	
   

  	
  as a Borrower and a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS LIMITED (f/k/a Big Flower Limited),

  
	
   

  	
   

  	
  as a Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FUSION PREMEDIA GROUP LIMITED (f/k/a Troypeak
  Limited),

  as a Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  

 

18

 

	
   

  	
  PISMO LIMITED, as a Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS
  DIRECT RESPONSE LIMITED (f/k/a Colorgraphic Direct Response Limited),

  
	
   

  	
   

  	
  as a Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS DIRECT MARKETING SERVICES 

  
	
   

  	
   

  	
  (CROYDON) LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS DIGITAL SERVICES LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK,

  
	
   

  	
   

  	
  Individually, and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT T. SACKS

  
	
   

  	
   

  	
  Name: ROBERT T. SACKS

  
	
   

  	
   

  	
  Title: Managing Director

  

 

19

 

	
   

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS (f/k/a Bankers
  Trust Company),

  
	
   

  	
   

  	
  Individually, and as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory Shefrin

  
	
   

  	
   

  	
  Name: GREGORY SHEFRIN

  
	
   

  	
   

  	
  Title:Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
  Individually, and as Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT KLAWINSKI

  
	
   

  	
   

  	
  Name: Robert Klawinski

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID BELANGER

  
	
   

  	
   

  	
  Name: David Belanger

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADDISON CDO,
  LIMITED (#1279)

  
	
   

  	
  By:

  	
  Pacific
  Investment Management Company LLC,

  as its Investment Advisor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/
  MOHAN V. PHANSALKAR

  
	
   

  	
   

  	
   

  	
  Name: Mohan V. Phansalkar

  
	
   

  	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

20

 

	
   

  	
  ATHENA CDO,
  LIMITED (#1277)

  
	
   

  	
  By:

  	
  Pacific
  Investment Management Company LLC,

  as its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MOHAN V.
  PHANSALKAR

  
	
   

  	
   

  	
  Mohan V. Phansalkar

  	
   

  
	
   

  	
   

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEDFORD CDO,
  LIMITED (#1276)

  
	
   

  	
  By:

  	
  Pacific
  Investment Management Company LLC, as its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MOHAN V.
  PHANSALKAR

  
	
   

  	
   

  	
  Mohan V. Phansalkar

  	
   

  
	
   

  	
   

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAFTIVA III
  FINANCE LTD. (ACCT. 275),

  as advised by Pacific Investment Management Company LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID
  DYER

  
	
   

  	
           Name:

  	
  David Dyer

  	
   

  
	
   

  	
           Title:

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAFTIVA IV
  FINANCE LTD. (ACCT. 1275)

  as advised by Pacific Investment Management Company LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DAVID
  OYER

  	
   

  
	
   

  	
           Name:

  	
  David Oyer

  	
   

  
	
   

  	
           Title:

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CATALINA CDO
  LTD (#1287)

  
	
   

  	
  By: 

  	
  Pacific
  Investment Management Company LLC, as its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MOHAN V.
  PHANSALKAR

  	
   

  
	
   

  	
   

  	
  Name: Mohan V. Phansalkar

  	
   

  
	
   

  	
   

  	
  Title: Executive Vice President

  	
   

  
								

 

21

 

	
   

  	
  DEALNO
  COMPANY (#274)

  
	
   

  	
  By:

  	
  Pacific
  Investment Management Company LLC,

  as its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MOHAN V.
  PHANSALKAR

  
	
   

  	
   

  	
  Name: Mohan V. Phansalkar

  	
   

  
	
   

  	
   

  	
  Title: Executive Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JISSEKIKUN
  FUNDING, LTD. (#1288)

  
	
   

  	
  By:

  	
  Pacific
  Investment Management Company LLC,

  as its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MOHAN V.
  PHANSALKAR

  
	
   

  	
   

  	
  Name: Mohan V. Phansalkar

  	
   

  
	
   

  	
   

  	
  Title: Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ROYALTON
  COMPANY (#280)

  
	
   

  	
  By:

  	
  Pacific
  Investment Management Company LLC,

  as its Investment Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MOHAN V.
  PHANSALKAR

  
	
   

  	
   

  	
  Name: Mohan V. Phansalkar

  	
   

  
	
   

  	
   

  	
  Title: Executive Vice President

  	
   

  
							

 

	
   

  	
  BOEING
  CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ JAMES C.
  HAMMERSMITH

  
	
   

  	
   

  	
  Name: James
  C. Hammersmith

  
	
   

  	
   

  	
  Title:  Senior
  Documentation Officer

  

 

	
   

  	
  CREDIT
  AGRICOLE INDOSUEZ

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ LARRY
  MATERI

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Larry
  Materi

  	
   

  
	
   

  	
   

  	
   

  	
  Title:  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PAUL A.
  DYTRYCH

  	 

	
   

  	
   

  	
  Name: Paul
  A. Dytrych

  	 

	
   

  	
   

  	
  Title:  Vice
  President, Senior Relationship Manager 

  	 

								

 

	
   

  	
  GALLATIN
  FUNDING I LTD.

  
	
   

  	
  By: Bear
  Stearns Asset Management Inc.

  
	
   

  	
  as its
  Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ NIALL D.
  ROSEMARY

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Niall
  D. Rosemary

  
	
   

  	
   

  	
   

  	
  Title:
  Associate Director

  

 

22

 

	
   

  	
    GRAYSTON
  CLO 2001-01 LTD.

  
	
   

  	
    By:
  Bear Stearns Asset Management Inc.

  
	
   

  	
    as
  its Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ NIALL D.
  ROSEMARY

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Niall
  D. Rosemary

  
	
   

  	
   

  	
   

  	
  Title:
  Associate Director

  

 

	
   

  	
  GENERAL
  ELECTRIC CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ROBERT M.
  KADLICK

  	
   

  
	
   

  	
  Name: Robert
  M. Kadlick

  
	
   

  	
  Title: Duly
  Authorized Signatory

  

 

	
   

  	
  KZH
  CYPRESSTREE-1 LLC

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ DORIAN
  HERRERA

  	
   

  
	
   

  	
   

  	
   

  	
  Name: DORIAN
  HERRERA

  
	
   

  	
   

  	
   

  	
  Title:
  AUTHORIZED AGENT

  

 

	
   

  	
  MADISON AVENUE CDO IV, LIMITED,

  
	
   

  	
  by Metropolitan Life Insurance Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ JAMES R. DINGHOR

  
	
   

  	
   

  	
  Name: James R. Dinghor

  
	
   

  	
   

  	
  Title: Director

  

 

	
   

  	
  METROPOLITAN LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ JAMES R. DINGHOR

  
	
   

  	
   

  	
  Name: James R. Dinghor

  
	
   

  	
   

  	
  Title: Director

  

 

	
   

  	
  MORGAN STANLEY PRIME INCOME TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ SHEILA A. FINNERTY

  
	
   

  	
   

  	
  Name: Sheila A. Finnerty

  
	
   

  	
   

  	
  Title: Executive Director

  
	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  MATEXIS BANQUES POPULAIRES

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   /s/ JOSEPH A. MILLER

  
	
   

  	
   

  	
  Name: JOSEPH A. MILLER

  
	
   

  	
   

  	
  Title: ASSISTANT VICE PRESIDENT

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   /s/ YOSMERY D. ORTEGA

  
	
   

  	
   

  	
  Name: YOSMERY D. ORTEGA

  
	
   

  	
   

  	
  Title: ASSOCIATE

  
	
   

  	
   

  	
   

  

23

 

	
   

  	
  PROMETHEUS INVESTMENT FUNDING NO. 1 LTD.

  
	
   

  	
  By: HVB Credit Advisors LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ THOMAS L. MOWAT

  
	
   

  	
   

  	
  Name: THOMAS L. MOWAT

  
	
   

  	
   

  	
  Title: DIRECTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ ELIZABETH TALLMADGE

  
	
   

  	
   

  	
  Name: ELIZABETH TALLMADGE

  
	
   

  	
   

  	
  Title: MANAGING DIRECTOR

       CHIEF INVESTMENT OFFICER

  

 

	
   

  	
  STANFIELD CLO LTD.

  
	
   

  	
  By:

  	
  Stanfield Capital Partners LLC

  
	
   

  	
   

  	
     as its Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name: 
  Christopher A. Bondy

  
	
   

  	
   

  	
  Title: Partner

  

 

	
   

  	
  STANFIELD RMF TRANSATLANTIC CDO LTD.

  
	
   

  	
  By:

  	
  Stanfield Capital Partners LLC

  
	
   

  	
   

  	
     aslite Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name: Christopher A. Bondy

  
	
   

  	
   

  	
  Title: Partner

  

 

	
   

  	
  SUNAMERICA SENIOR FLOATING RATE FUND INC.

  
	
   

  	
  By:

  	
  Stanfield Capital Partners LLC

  
	
   

  	
   

  	
  as subadvisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name: Christopher A. Bondy

  
	
   

  	
   

  	
  Title: Partner

  

 

	
   

  	
  HAMILTON
  CDO, LTD.

  
	
   

  	
  By:

  	
  Starrfield
  Capital

  Partners LLG

  
	
   

  	
  As Its
  Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name:
  Christopher A. Bondy

  
	
   

  	
   

  	
  Title:
  Partner

  
				

 

24

 

	
   

  	
  WINDSOR LOAN
  FUNDING, LIMITED

  
	
   

  	
  By:

  	
  Stanfield
  Capital Partners LLC

  as its Investment Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  CHRISTOPHER A BONDY

  
	
   

  	
   

  	
  Name:
  Christopher A Bondy

  
	
   

  	
   

  	
  Title:
  Partner

  

 

	
   

  	
  STANFIELD
  QUANTRO CLO, LTD.

  
	
   

  	
  By:

  	
  Stanfield
  Capital Partners LLC

  As its Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/
  CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name:
  Christopher A. Bondy

  
	
   

  	
   

  	
  Title:
  Partner

  
				

 

	
   

  	
  STANFIELD
  ARBITRAGE CDO, LTD.

  
	
   

  	
  By:

  	
  Stanfield
  Capital Partners LLC

  
	
   

  	
   

  	
  as its
  Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name:
  Christopher A. Bondy

  
	
   

  	
   

  	
  Title:
  Partner

  

 

	
   

  	
  STANFIELD
  CARRERA CLO, LTD.

  
	
   

  	
   

  	
  By:

  	
  Stanfield
  Capital Partners LLC

  
	
   

  	
   

  	
  as its
  Collateral Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  CHRISTOPHER A. BONDY

  
	
   

  	
   

  	
  Name:
  Christopher A. Bondy

  
	
   

  	
   

  	
  Title:
  Partner

  
					

 

	
   

  	
  TEXTRON
  FINANCIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ MATHEW R.
  COYAR

  
	
   

  	
   

  	
  Name: Mathew
  R. Coyar

  
	
   

  	
   

  	
  Title: Vice
  President

  

 

	
   

  	
  VAN KAMPEN
  SENIOR INCOME TRUST

  
	
   

  	
  By: Van
  Kampen Investment Advisory Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ BRAD
  LANGS

  
	
   

  	
   

  	
  Name: BRAD
  LANGS

  
	
   

  	
   

  	
  Title:
  EXECUTIVE DIRECTOR

  

 

	
   

  	
  VAN KAMPEN
  PRIVATE RATE INCOME TRUST

  
	
   

  	
  By: Van
  Kampen Investment Advisory Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ BRAD
  LANGS

  
	
   

  	
   

  	
  Name: BRAD
  LANGS

  
	
   

  	
   

  	
  Title:
  EXECUTIVE DIRECTOR

  

 

25

 

Each of undersigned Subsidiaries of Holdings hereby
(i) consents to the provisions of this Amendment and (ii) acknowledges that it
is a U.K. Subsidiary Guarantor for all purposes of the Credit Documents.

 

	
   

  	
  ABACUS STUDIOS LIMITED, as a U.K.

  
	
   

  	
   

  	
  Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMAGIC LIMITED, as a U.K. Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRODUCTION REPSONSE LIMITED, as a U.K. Subsidiary
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS
  DIRECT MARKETING SERVICES (LEICESTER) LIMITED., as a U.K. Subsidiary
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  

 

26

 

	
   

  	
  VERTIS FULFILLMENT SERVICES, LIMITED.,

  
	
   

  	
   

  	
  as a U.K. Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS HARVEY HUNTER, LIMITED, as a

  
	
   

  	
   

  	
  U.K. Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS MAILING SERVICES LIMITED, as a 

  
	
   

  	
   

  	
  U.K. Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS MARKETING SERVICES LIMITED, as

  
	
   

  	
   

  	
  a U.K. Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ DEAN D. DURBIN

  
	
   

  	
   

  	
  Name: Dean D. Durbin

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  

 

27EXHIBIT 10.22
                                                                   -------------

                                LOCK-UP AGREEMENT

     THIS LOCK-UP AGREEMENT (the "Lock-up  Agreement") is entered into effective
as of June 9,  2003,  by and  between  Roger D.  Hurst  (the  "Shareholder"),  a
shareholder of AspenBio, Inc., a Colorado corporation (the ("Company"),  and the
Company;

     WHEREAS, after giving effect to the Agreement entered this date between the
Company and the Shareholder,  Shareholder  beneficially owns (within the meaning
of Rule 13d-3 under the Securities  Exchange Act of 1934, as amended)  1,996,757
shares of common  stock,  no par value  per share of the  Company  (the  "Common
Stock");

     WHEREAS,   Shareholder   understands  that  the  Company  needs  additional
financing  and believes that a lock-up on transfer of the  Shareholder's  shares
will improve the Company's prospects for obtaining additional financing;

     WHEREAS, for valuable  consideration,  the receipt and sufficiency of which
is hereby  acknowledged,  the  Shareholder has agreed to enter into this Lock-up
Agreement.

     NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:

     1. Lock-up on Transfer of Shares
     --------------------------------

          (a) The Shareholder agrees not, directly or indirectly, to sell, offer
     to sell,  contract  to  sell,  assign,  pledge,  hypothecate,  encumber  or
     otherwise transfer, or enter into any contract, option or other arrangement
     or  understanding  with  respect to the sale,  assignment,  pledge or other
     disposition of  (collectively,  "Transfer")  any rights with respect to (i)
     1,797,081  shares of the Common Stock  currently  owned by Shareholder  and
     (ii) any  Common  Stock  owned by  Shareholder  as a result  of  additional
     issuances by the Company,  for a period  commencing  on the date hereof and
     continuing  through  September  30, 2004 (the "Lock-up  Period")  except as
     expressly  provided  herein.  The foregoing  restriction has been expressly
     agreed to  preclude  Shareholder  from  engaging  in any  hedging  or other
     transaction  during the Lock-up  Period  that is designed to or  reasonably
     expected  to lead to or result in a  Transfer  of the  Common  Stock.  Such
     prohibited hedging or other transaction would include,  without limitation,
     any short sale (whether or not against the box) or any  purchase,  sale, or
     grant of any right (including,  without limitation, any put or call option)
     with respect to the Common  Stock or with  respect to any  security  (other
     than a  broad-based  market basket or index) that  includes,  relates to or
     derives any significant part of its value from the Common Stock.

          (b) The  Shareholder  also  agrees and  consents  to the entry of stop
     transfer  instructions  with  the  Company's  Transfer  Agent  against  the
     Transfer of Common Stock held by Shareholder  except in compliance with the
     terms and conditions of this Lock-up Agreement.

          (c) The restrictions  contained in this Lock-up  Agreement shall apply
     to  Shareholder  with  respect  to  any  and  all  Transfers  of any of the
     Company's  Common Stock with the exception of that Common Stock acquired by
     the  Shareholder  on the  open  market.  Any and all  other  Transfers  are
     prohibited by this Agreement.

<PAGE>

     2. Early Termination of Lock-Up Period.
     ---------------------------------------

          (a) In the event any  Common  Stock of  Shareholder  is subject to any
     involuntary  transfer,  whether by reason of death,  bankruptcy  or divorce
     proceedings  or otherwise,  the  transferee of such Common Stock shall take
     such Common Stock subject to this Lock-up Agreement. Any purported transfer
     of any Common  Stock of  Shareholder  that is not in  accordance  with this
     Lock-Up Agreement shall be null and void, and shall not operate to transfer
     any  right,  title  or  interest  in such  Common  Stock  to the  purported
     transferee.  The  Shareholder  agrees that the  Company  shall not cause or
     permit the  transfer of any Common Stock of  Shareholder  to be made on its
     books unless the transfer is  permitted by this Lock-up  Agreement  and has
     been made in accordance with its terms.

          (b) The  restrictions  contained in this Lock-up  Agreement  shall not
     apply to any  Transfer by  Shareholder  with  respect to  transfers  of any
     Common Stock acquired on the open market.

     3. Price Gateways.
     ------------------

     Notwithstanding  anything contained herein to the contrary, at such time as
the closing price of the Common Stock (OTCBB:APNB) on the OTC Bulletin Board, or
such other market as the Common Stock is then publicly traded, equals or exceeds
each price  target  (the  "Gateway  Price") set forth on Schedule A hereto for a
period of twenty  consecutive  trading  days,  the  corresponding  percentage of
Common Stock (the  "Release  Percentage")  set forth on Schedule A multiplied by
the total number of shares of Common Stock (the "Total Number")  subject to this
Agreement shall be released from the restrictions in this Lock-up  Agreement for
so long as the price of the  Common  Stock  remains  equal to, or  exceeds  such
Gateway  Price.  Any sale of Common Stock so released  shall  require  duplicate
confirmation (by Shareholder's broker and the Company) to the effect that it was
consummated at or above the relevant Gateway Price.

     4. Representations, Warranties and Covenants of the Shareholder.
     ----------------------------------------------------------------

     Shareholder represents and warrants to, and agrees with, the Company that:

          (a) this Lock-up  Agreement  has been duly  executed and  delivered by
     Shareholder and  constitutes a valid and binding  obligation of Shareholder
     enforceable in accordance with its terms;

          (b) neither the execution  and delivery of this Lock-up  Agreement nor
     the consummation of the transactions contemplated hereby will result in any
     breach or violation  of, be in conflict  with or constitute a default under
     any  agreement or instrument  to which  Shareholder  is a party or by which
     Shareholder may be affected or is bound;

          (c) Shareholder is not subject to or obligated under any provisions of
     any law, regulation,  order,  judgment or decree which would be breached or
     violated  by the  execution,  delivery  and  performance  of  this  Lock-up
     Agreement  by  Shareholder  and  the   consummation  of  the   transactions
     contemplated hereby; and

                                        2
<PAGE>

          (d) Shareholder is now, and will be at all times up to the termination
     of this Lock-up  Agreement,  the record and beneficial  owner of the Common
     Stock  which at such time is subject to Transfer  restrictions  pursuant to
     the terms hereof,  free and clear of any pledge,  lien,  security interest,
     mortgage,  charge, claim, equity, option, proxy, voting restriction,  right
     of first refusal, limitation on disposition,  adverse claim of ownership or
     use or  encumbrance  of any  kind,  other  than  pursuant  to this  Lock-up
     Agreement.

     5. Miscellaneous.
     -----------------

          (a) Specific Performance.  Shareholder acknowledges that damages would
     be an  inadequate  remedy for any breach of the  provisions of this Lock-up
     Agreement and agrees that the obligations of Shareholder hereunder shall be
     specifically  enforceable  and  Shareholder  shall  not take any  action to
     impede  the  Company  from  seeking  to  enforce  such  right  of  specific
     performance.  Shareholder  agrees that monetary damages may not be adequate
     compensation  for  any  loss  incurred  by  reason  of  any  breach  of his
     obligations  in this Lock-up  Agreement  and hereby  agrees to waive in any
     action for specific performance of any such obligation,  the defense that a
     remedy at law would be adequate.

          (b) Notices. All notices, demands and other communications to be given
     or delivered under or by reason of the provisions of this Lock-up Agreement
     shall be in  writing  and  shall be given  and shall be deemed to have been
     given when personally delivered or three days after being mailed, if mailed
     by first class mail, return receipt requested,  or one day after being sent
     by reputable  overnight delivery service,  or when receipt is acknowledged,
     if sent by facsimile,  telecopy or other  electronic  transmission  device.
     Notices,  demand and  communications  to Shareholder  and the Company will,
     unless  another  address is  specified  in writing,  be sent to the address
     indicated  below,  except that  notices of change of address  shall only be
     effective upon receipt:

         If to Shareholder:

         Roger D. Hurst
         1585 S. Perry Street
         Castle Rock, CO  80104
         Fax:  (303) 798-8332

         If to the Company:

         AspenBio, Inc.
         1585 S. Perry Street
         Castle Rock, CO 80104
         Fax:   (303) 798-8332

          (c) Assignment.  This Lock-up  Agreement and all the provisions hereof
     will be binding  upon and inure to the  benefit of the  parties  hereto and
     their respective successors and permitted assigns, except that neither this
     Lock-up Agreement nor any of the rights, interests or obligations hereunder
     may be assigned by the Shareholder hereto without the prior written consent
     of the Company.

                                        3
<PAGE>

          (d) Governing  Law. The internal law,  without regard for conflicts of
     law  principals,  of the  State  of  Colorado  will  govern  all  questions
     concerning the  construction,  validity and  interpretation of this Lock-up
     Agreement and the  performance of the  obligations  imposed by this Lock-up
     Agreement.

          (e)  Counterparts.  This Lock-up  Agreement  may be executed in one or
     more counterparts, any one of which need not contain the signatures of more
     than one party, but all such  counterparts  taken together shall constitute
     one and the same instrument.

          (f) Severability.  Whenever  possible,  each provision of this Lock-up
     Agreement  will be  interpreted in such manner as to be effective and valid
     under  applicable  law, but if any  provision of this Lock-up  Agreement is
     held to be prohibited by or invalid under  applicable  law, such  provision
     will be  ineffective  only to the extent of such  provision or  invalidity,
     without  invalidating  the  remainder of such  provision  or the  remaining
     provisions of this Lock-up Agreement.

          (g)  Amendment  Waiver.  This Lock-up  Agreement may not be amended or
     waived  except,  (i) in a writing  executed by the party against which such
     amendment  or  waiver  is  sought  to be  enforced,  and (ii)  without  the
     expressed  written consent of the Company.  No course of dealing between or
     among any persons  having any  interest in this Lock-up  Agreement  will be
     deemed  effective to modify or amend any part of this Lock-up  Agreement or
     any rights or  obligations of any person under or by reason of this Lock-up
     Agreement.

          (h) Review by Shareholder.  The Shareholder has had the opportunity to
     review this Lock-up  Agreement with legal counsel and other advisors as the
     Shareholder deemed advisable,  prior to the Shareholder's execution of this
     Agreement, and the Shareholder has not relied on any advice of Patton Boggs
     LLP.

          (i) Complete  Agreement.  This Lock-up Agreement contains the complete
     agreement   between   the   parties   hereto  and   supersedes   any  prior
     understandings,  agreements or  representations  by or between the parties,
     written or oral, which may have related to the subject matter hereof in any
     way.

     IN WITNESS WHEREOF, the parties hereby have executed this Lock-up Agreement
as of the date first written above.

ASPENBIO, INC.

By:    /s/ Gregory Pusey                      /s/  Roger D. Hurst
       -----------------------------          ----------------------------------
Name:  Gregory Pusey                          Roger D. Hurst
Title: Chairman of the Board of Directors

                                        4
<PAGE>

                                   SCHEDULE A

Gateway Price                                        Release Percentage
-------------                                        ------------------
   $4.00                                                    20%
   $5.00                                                    30%

                                        5

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