Document:

Exhibit
4.3

 

 

 

REGISTRATION
RIGHTS AGREEMENT

 

Dated as of June
6, 2003

 

By and Among

 

VERTIS, INC.,

 

the SUBSIDIARY
GUARANTORS

named herein

 

and

 

DEUTSCHE BANK
SECURITIES INC.

J.P. MORGAN SECURITIES INC.

BANC OF AMERICA SECURITIES LLC

FLEET SECURITIES, INC.

 

 

9 3/4 % Senior
Secured Second Lien Notes due 2009

 

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  
	
   

  	
   

  
	
  2.

  	
  Exchange Offer

  
	
   

  	
   

  
	
  3.

  	
  Shelf
  Registration

  
	
   

  	
   

  
	
  4.

  	
  Additional
  Interest

  
	
   

  	
   

  
	
  5.

  	
  Registration
  Procedures

  
	
   

  	
   

  
	
  6.

  	
  Registration
  Expenses

  
	
   

  	
   

  
	
  7.

  	
  Indemnification

  
	
   

  	
   

  
	
  8.

  	
  Rules 144
  and 144A

  
	
   

  	
   

  
	
  9.

  	
  Underwritten Registrations

  
	
   

  	
   

  
	
  10.

  	
  Miscellaneous

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  No Inconsistent Agreements

  
	
   

  	
  (b)

  	
  Adjustments Affecting Registrable Notes

  
	
   

  	
  (c)

  	
  Amendments and Waivers

  
	
   

  	
  (d)

  	
  Notices

  
	
   

  	
  (e)

  	
  Successors and Assigns

  
	
   

  	
  (f)

  	
  Counterparts

  
	
   

  	
  (g)

  	
  Headings

  
	
   

  	
  (h)

  	
  Governing Law

  
	
   

  	
  (i)

  	
  Severability

  
	
   

  	
  (j)

  	
  Notes Held by the Company or its Affiliates

  
	
   

  	
  (k)

  	
  Third Party Beneficiaries

  

 

i

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights
Agreement (the “Agreement”) is dated as of June 6, 2003, by and among
VERTIS, INC. a Delaware corporation (the “Company”), the subsidiaries of
the Company that are listed on the signature pages hereto (collectively, and
together with any subsidiary that in the future executes a supplemental
indenture pursuant to which such subsidiary agrees to guarantee the Notes (as
hereinafter defined), the “Guarantors” and, together with the Company,
the “Issuers”), and Deutsche Bank Securities Inc., J.P. Morgan Securities
Inc., Banc of America Securities LLC and Fleet Securities, Inc. (collectively,
the “Initial Purchasers”).

 

This Agreement is entered
into in connection with the Purchase Agreement, dated as of May 22, 2003, by
and among the Issuers and the Initial Purchasers (the “Purchase Agreement”),
which provides for the sale by the Company to the Initial Purchasers of
$350,000,000 aggregate principal amount of its 9 3/4 % Senior Secured Second
Lien Notes due 2009 (the “Notes”), guaranteed by the Guarantors (the “Guarantees”).  The Notes and the Guarantees are
collectively referred to herein as the “Securities.”  In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Issuers have agreed, among other things,
to provide the registration rights set forth in this Agreement for the benefit
of the Initial Purchasers and any subsequent holder or holders of the
Notes.  The execution and delivery of
this Agreement is a condition to the Initial Purchasers’ obligation to purchase
the Notes under the Purchase Agreement.

 

The parties hereby agree as follows:

 

1.  Definitions

 

As used in this Agreement, the following terms shall
have the following meanings:

 

Additional Interest:  See Section 4(a) hereof.

 

Advice:  See the last paragraph of Section 5 hereof.

 

Agreement:  See the introductory paragraphs hereto.

 

Applicable Period:  See Section 2(b) hereof.

 

Company:  See the introductory paragraphs hereto.

 

 

Effectiveness Date:  With respect to (i) the Exchange Offer
Registration Statement, the 180th day after the Issue Date and (ii) any
Shelf Registration Statement, the 60th day after the Filing Date with respect
thereto.

 

Effectiveness Period:  See Section 3(a) hereof.

 

Event Date:  See Section 4(b) hereof.

 

Exchange Act:  The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.

 

Exchange Notes:  See Section 2(a) hereof.

 

Exchange Offer:  See Section 2(a) hereof.

 

Exchange Offer
Registration Statement: 
See Section 2(a) hereof.

 

Filing Date:  (A) If no Registration Statement has
been filed by the Company pursuant to this Agreement, the 120th day after the
Issue Date; and (B) in any other case (which may be applicable
notwithstanding the consummation of the Exchange Offer), the 30th day after the
delivery of a Shelf Notice.

 

Guarantees:  See the introductory paragraphs hereto.

 

Guarantors:  See the introductory paragraphs hereto.

 

Holder:  Any holder of a Registrable Note or
Registrable Notes.

 

Indemnified Person:  See Section 7(c) hereof.

 

Indemnifying Person:  See Section 7(c) hereof.

 

Indenture:  The Indenture, dated as of June 6, 2003,
between the Issuers and The Bank of New York, as Trustee thereunder, pursuant
to which the Notes are issued, as amended or supplemented from time to time in
accordance with the terms thereof.

 

Initial Purchasers:  See the introductory paragraphs hereto.

 

Initial Shelf
Registration:  See
Section 3(a) hereof.

 

Inspectors:  See Section 5(n) hereof.

 

Issue Date:  June 6, 2003, the date of original issuance
of the Notes.

 

2

 

Issuers:  See the introductory paragraphs hereto.

 

NASD:  See Section 5(s) hereof.

 

Notes:  See the introductory paragraphs hereto.

 

Participant:  See Section 7(a) hereof.

 

Participating
Broker-Dealer:  See
Section 2(b) hereof.

 

Person:  An individual, trustee, corporation,
partnership, joint stock company, trust, unincorporated association, union,
business association, firm or other legal entity.

 

Private Exchange:  See Section 2(b) hereof.

 

Private Exchange Notes:  See Section 2(b) hereof.

 

Prospectus:  The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A under the Securities Act and any term sheet filed pursuant to
Rule 434 under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

 

Purchase Agreement:  See the introductory paragraphs hereto.

 

Records:  See Section 5(n) hereof.

 

Registrable Notes:  Each Security upon its original issuance and
at all times subsequent thereto, each Exchange Note (and the related Guarantees)
as to which Section 2(c)(iv) hereof is applicable upon original issuance and at
all times subsequent thereto and each Private Exchange Note (and the related
Guarantees) upon original issuance thereof and at all times subsequent thereto,
until (i) a Registration Statement (other than, with respect to any
Exchange Note as to which Section 2(c)(iv) hereof is applicable, the Exchange
Offer Registration Statement) covering such Security, Exchange Note or Private
Exchange Note has been declared effective by the SEC and such Security,
Exchange Note or such Private Exchange Note, as the case may be, has been
disposed of in accordance with such effective Registration Statement,
(ii) such Security has been exchanged pursuant to the Exchange Offer for
an Exchange Note or Exchange Notes that may be resold without restriction under
federal securities laws, (iii) such Security, Exchange Note or Private
Exchange Note, as the case may be, ceases to be outstanding for purposes of the
Indenture or (iv) such Security, Exchange

 

3

 

Note or Private Exchange Note, as the case may be, may be resold
without restriction pursuant to Rule 144 under the Securities Act.

 

Registration Statement:  Any registration statement of the Issuers that
covers any of the Notes, the Exchange Notes or the Private Exchange Notes filed
with the SEC under the Securities Act, including the Prospectus, amendments and
supplements to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.

 

Rule 144:  Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of the Issuers of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.

 

Rule 144A:  Rule 144A promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the SEC.

 

Rule 415:  Rule 415 promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC.

 

Securities Act:  The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

 

SEC:  The Securities and Exchange Commission.

 

Shelf Notice:  See Section 2(c) hereof.

 

Shelf Registration:  See Section 3(b) hereof.

 

Shelf Registration
Statement:  Any
Registration Statement relating to a Shelf Registration.

 

Subsequent Shelf
Registration:  See
Section 3(b) hereof.

 

TIA:  The Trust Indenture Act of 1939, as amended.

 

Trustee:  The trustee under the Indenture.

 

4

 

Underwritten registration
or underwritten offering: 
A registration in which Notes of one or more of the Issuers are sold to
an underwriter for reoffering to the public.

 

2.  Exchange Offer

 

(a)  To the
extent not prohibited by applicable laws, rules, regulations or applicable interpretations
of the staff of the SEC, the Issuers shall file with the SEC, no later than the
Filing Date, a Registration Statement (the “Exchange Offer Registration
Statement”) on an appropriate registration form with respect to a
registered offer (the “Exchange Offer”) to exchange any and all of the
Registrable Notes for the same aggregate principal amount of notes (the “Exchange
Notes”) of the Company, guaranteed by the Guarantors, that are identical in
all material respects to the Notes except that the Exchange Notes shall contain
no restrictive legend thereon.  The
Exchange Offer shall comply with all applicable tender offer rules and
regulations under the Exchange Act and other applicable laws. The Issuers shall
use their reasonable best efforts to (x) cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act on or
before the Effectiveness Date; (y) keep the Exchange Offer open for not
less than 30 days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is mailed to Holders; and (z) consummate the
Exchange Offer on or prior to the 45th day following the date on which the
Exchange Offer Registration Statement is declared effective by the SEC.  If, after the Exchange Offer Registration
Statement is initially declared effective by the SEC, the Exchange Offer or the
issuance of the Exchange Notes thereunder is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, the Exchange Offer Registration Statement shall be deemed not
to have become effective for purposes of this Agreement.

 

Each Holder that participates in the Exchange Offer
will be required to represent that any Exchange Notes to be received by it will
be acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, and that such
Holder is not an affiliate of any of the Issuers within the meaning of the
Securities Act.

 

Upon consummation of the Exchange Offer in accordance
with this Section 2, the provisions of this Agreement shall continue to
apply, solely with respect to Registrable Notes that are Private Exchange
Notes, Exchange Notes as to which Section 2(c)(iv) is applicable and Exchange
Notes held by Participating Broker-Dealers, and the Issuers shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which clause
2(c)(iv) hereof applies) pursuant to this Agreement.  No Notes other than the Exchange Notes shall be included in the
Exchange Offer Registration Statement.

 

5

 

(b)  The
Issuers shall include within the Prospectus contained in the Exchange Offer
Registration Statement a section entitled “Plan of Distribution,” reasonably
acceptable to the Holders, which shall contain such information as the Initial
Purchasers shall reasonably request.

 

The Issuers shall use their reasonable best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as is necessary to
comply with applicable law in connection with any resale of the Exchange Notes
covered thereby; provided, however, that such period shall not
exceed 180 days after such Exchange Offer Registration Statement is
declared effective (or such longer period if extended pursuant to the last
paragraph of Section 5 hereof) (the “Applicable Period”).

 

If, prior to consummation of the Exchange Offer, the
Initial Purchasers hold any Securities acquired by them that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment
in an initial distribution, or any Holder is not entitled to participate in the
Exchange Offer, the Issuers upon the request of any such Holder shall simultaneously
with the delivery of the Exchange Notes in the Exchange Offer, issue and deliver
to any such Holder, in exchange (the “Private Exchange”) for such
Securities held by any such Holder, the same principal amount of notes (the “Private
Exchange Notes”) of the Company, guaranteed by the Guarantors, that are
identical in all material respects to the Exchange Notes (except that they may
bear a customary legend with respect to restrictions on transfer).  The Private Exchange Notes shall be issued
pursuant to the same indenture as the Exchange Notes.  The Issuers shall use their reasonable best efforts to cause the
Private Exchange Notes, subsequent to the sale thereof pursuant to an effective
Shelf Registration (as defined in Section 3(b) hereof) and removal of any
legends restricting the transfer of such Private Exchange Notes, to bear the
same CUSIP number as the Exchange Notes.

 

Interest on the Exchange Notes and the Private
Exchange Notes will accrue from (A) the later of (i) the last
interest payment date on which interest was paid on the Notes surrendered in
exchange therefor or (ii) if the Notes are surrendered for exchange on a
date in a period which includes the record date for an interest payment date to
occur on or after the date of such exchange and as to which interest will be
paid, the date of such interest payment or (B) if no interest has been
paid on the Notes, from the Issue Date.

 

In connection with the Exchange Offer, the Issuers
shall:

 

(1)                  mail, or cause
to be mailed, to each Holder entitled to participate in the Exchange Offer a
copy of the Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal and related documents;

 

6

 

(2)                  keep the
Exchange Offer open for not less than 30 days after the date that notice of the
Exchange Offer is mailed to Holders (or longer if required by applicable law);

 

(3)                  utilize the
services of a depositary for the Exchange Offer with an address in the Borough
of Manhattan, The City of New York;

 

(4)                  permit Holders
to withdraw tendered Notes at any time prior to the close of business, New York
time, on the last business day on which the Exchange Offer shall remain open;
and

 

(5)                  otherwise comply
in all material respects with all applicable laws, rules and regulations.

 

As soon as practicable after the close of the Exchange
Offer and the Private Exchange, if any, the Issuers shall:

 

(1)                  accept for
exchange all Registrable Notes validly tendered and not validly withdrawn
pursuant to the Exchange Offer and the Private Exchange, if any;

 

(2)                  deliver to the
Trustee for cancellation all Registrable Notes so accepted for exchange; and

 

(3)                  cause the
Trustee to authenticate and deliver to each Holder of Securities, Exchange
Notes or Private Exchange Notes, as the case may be, equal in principal amount
to the Notes of such Holder so accepted for exchange.

 

The Exchange Offer and
the Private Exchange shall not be subject to any conditions, other than that
(i) the Exchange Offer or Private Exchange, as the case may be, does not
violate applicable law or any applicable interpretation of the staff of the
SEC, (ii) no action or proceeding shall have been instituted or threatened
in any court or by any governmental agency which would be reasonably likely to
materially impair the ability of the Issuers to proceed with the Exchange Offer
or the Private Exchange, and no material adverse development shall have
occurred in any existing action or proceeding with respect to the Issuers and
(iii) all governmental approvals shall have been obtained, which approvals
the Issuers deem necessary for the consummation of the Exchange Offer or
Private Exchange.

 

The Exchange Notes and
the Private Exchange Notes shall be issued under (i) the Indenture or
(ii) an indenture identical in all material respects to the Indenture and
which, in either case, has been qualified under the TIA or is exempt from such
qualification and shall provide that the Exchange Notes shall not be subject to
the transfer restrictions set forth in the Indenture.  The Indenture provides or such indenture shall provide that the

 

7

 

Exchange Notes, the Private Exchange Notes and the Notes shall vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes will have the right to vote or
consent as a separate class on any matter.

 

(c)  If, (i) because of any change in law or
in currently prevailing interpretations of the staff of the SEC, the Issuers
are not permitted to effect the Exchange Offer, (ii) the Exchange Offer is
not consummated within 225 days of the Issue Date, (iii) the Initial Purchasers
or any holder of Private Exchange Notes so requests in writing to the Company
at any time after the consummation of the Exchange Offer, or (iv) in the
case of any Holder that participates in the Exchange Offer, such Holder does
not receive Exchange Notes on the date of the exchange that may be sold without
restriction under state and federal securities laws (other than due solely to
the status of such Holder as an affiliate of the Issuers within the meaning of
the Securities Act) and so notifies the Company within 30 days after such
Holder first becomes aware of such restrictions, in the case of each of clauses
(i) to and including (iv) of this sentence, then the Issuers shall promptly
deliver to the Holders and the Trustee written notice thereof (the “Shelf
Notice”) and as promptly as possible shall file a Shelf Registration pursuant
to Section 3 hereof.

 

3.  Shelf
Registration

 

If at any time a Shelf
Notice is delivered as contemplated by Section 2(c) hereof, then:

 

(a)  Shelf Registration.  The Issuers shall as promptly as possible
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Notes not
permitted to be exchanged in the Exchange Offer in accordance with the terms of
this Agreement, Private Exchange Notes and Exchange Notes as to which Section
2(c)(iv) is applicable (the “Initial Shelf Registration”).  The Issuers shall use their reasonable best
efforts to file with the SEC the Initial Shelf Registration on or before the
applicable Filing Date.  The Initial
Shelf Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings).  The Issuers
shall not permit any Notes other than the Registrable Notes to be included in
the Initial Shelf Registration or any Subsequent Shelf Registration (as defined
below).

 

The
Issuers shall use their reasonable best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date and to keep the Initial Shelf Registration continuously
effective under the Securities Act until the date which is the earlier of two
years after the Issue Date (the “Effectiveness Period”), or such shorter
period ending when all Registrable

 

8

 

Notes covered by the
Shelf Registration have been sold in the manner set forth and as contemplated
in the Initial Shelf Registration or, if applicable, a Subsequent Shelf Registration;
provided, however, that the Effectiveness Period in respect of
the Initial Shelf Registration shall be extended to the extent required to
permit dealers to comply with the applicable prospectus delivery requirements
of Rule 174 under the Securities Act and as otherwise provided herein and shall
be subject to reduction to the extent that the applicable provisions of Rule
144(k) are amended or revised to reduce the two year holding period set forth
therein.

 

No
holder of Registrable Notes may include any of its Registrable Notes in any
Shelf Registration Statement pursuant to this Agreement unless and until such
holder furnishes to the Company in writing, within 15 business days after
receipt of a request therefor, such information as the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary prospectus included therein.  No holder of Registrable Notes shall be
entitled to Additional Interest pursuant to Section 4 hereof unless and
until such holder shall have provided all such reasonably requested
information.  Each holder of Registrable
Notes as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make information previously furnished to the Company by such Holder
not materially misleading.

 

(b)  Subsequent Shelf Registrations.  If the Initial Shelf Registration or any
Subsequent Shelf Registration ceases to be effective for any reason at any time
during the Effectiveness Period (other than because of the sale of all of the
Notes registered thereunder), the Issuers shall use their reasonable best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend the Initial Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional Shelf Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes covered by and not sold under the Initial Shelf
Registration or an earlier Subsequent Shelf Registration (each, a “Subsequent
Shelf Registration”).  If a
Subsequent Shelf Registration is filed, the Issuers shall use their reasonable
best efforts to cause the Subsequent Shelf Registration to be declared
effective under the Securities Act as soon as practicable after such filing and
to keep such subsequent Shelf Registration continuously effective for a period
equal to the number of days in the Effectiveness Period less the aggregate
number of days during which the Initial Shelf Registration or any Subsequent
Shelf Registration was previously continuously effective.  As used herein the term “Shelf
Registration” means the Initial Shelf Registration and any Subsequent Shelf
Registration.

 

9

 

(c)  Supplements and Amendments.  The Issuers shall promptly supplement and
amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable
Notes covered by such Registration Statement or by any underwriter of such
Registrable Notes.

 

(d)  Withdrawal of Stop Orders.  If the Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the Notes registered thereunder), the Issuers
shall use their reasonable best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof.

 

4.  Additional
Interest

 

(a)  The
Issuers and the Initial Purchasers agree that the Holders will suffer damages
if the Issuers fail to fulfill their respective obligations under
Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision.  Accordingly, the Issuers agree, to pay, jointly and severally, as
liquidated damages, additional interest on the Notes (“Additional Interest”)
under the circumstances and to the extent set forth below (each of which shall
be given independent effect):

 

(i)                  if
(A) neither the Exchange Offer Registration Statement nor the Initial Shelf
Registration has been filed on or prior to the Filing Date applicable thereto
or (B) notwithstanding that the Issuers have consummated or will consummate the
Exchange Offer, the Issuers are required to file a Shelf Registration and such
Shelf Registration is not filed on or prior to the Filing Date applicable
thereto, then, commencing on the day after any such Filing Date, Additional
Interest shall accrue on the principal amount of the Notes at a rate of 0.50%
per annum for the first 90 days immediately following such applicable Filing
Date, and such Additional Interest rate shall increase by an additional 0.50%
per annum at the beginning of each subsequent 90 day period; or

 

(ii)               if
(A) neither the Exchange Offer Registration Statement nor the Initial Shelf
Registration is declared effective by the SEC on or prior to the Effectiveness
Date applicable thereto or (B) notwithstanding that the Issuers have
consummated or will consummate the Exchange Offer, the Issuers are required to
file a Shelf Registration and such Shelf Registration is not declared effective
by the SEC on or prior to the Effectiveness Date applicable to such Shelf
Registration, then, commencing on the day after such Effectiveness Date,
Additional Interest shall accrue on the principal amount of the Notes at a rate
of 0.50% per annum for the first 90 days immediately following the day after
such Effectiveness Date, and such Additional

 

10

 

Interest rate
shall increase by an additional 0.50% per annum at the beginning of each
subsequent 90 day period; or

 

(iii)            if (A) the Issuers have not exchanged
Exchange Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to the 45th day after the date on which the Exchange
Offer Registration Statement relating thereto was declared effective or (B) if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness
Period, then Additional Interest shall accrue on the principal amount of the
Notes at a rate of 0.50% per annum for the first 90 days commencing on the
(x) 46th day after such effective date, in the case of (A) above, or (y)
the day such Shelf Registration ceases to be effective in the case of (B)
above, and such Additional Interest rate shall increase by an additional 0.50%
per annum at the beginning of each such subsequent 90 day period;

 

provided,
however, that the Additional Interest rate on the Notes may not accrue
under more than one of the foregoing clauses (i)-(iii) at any one time and
at no time shall the aggregate amount of additional interest accruing exceed in
the aggregate 1.0% per annum; provided, further, however,
that (1) upon the filing of the applicable Exchange Offer Registration
Statement or the applicable Shelf Registration as required hereunder (in the
case of clause (i) above of this Section 4), (2) upon the effectiveness of
the Exchange Offer Registration Statement or the applicable Shelf Registration
Statement as required hereunder (in the case of clause (ii) of this
Section 4), or (3) upon the exchange of the Exchange Notes for all
Notes tendered (in the case of clause (iii)(A) of this Section 4), or upon
the effectiveness of the applicable Shelf Registration Statement which had
ceased to remain effective (in the case of (iii)(B) of this Section 4),
Additional Interest on the Notes in respect of which such events relate as a
result of such clause (or the relevant subclause thereof), as the case may be,
shall cease to accrue.

 

(b)  The
Issuers shall notify the Trustee within one business day after each and every
date on which an event occurs in respect of which Additional Interest is
required to be paid (an “Event Date”). 
Any amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or
(a)(iii) of this Section 4 will be payable in cash semiannually on each
October 1 and April 1 (to the holders of record on the September 15 and March
15 immediately preceding such dates), commencing with the first such date
occurring after any such Additional Interest commences to accrue.  The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Registrable Notes, multiplied by a fraction, the numerator
of which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360 day year comprised of
twelve 30 day months and, in the case of a partial month, the actual
number of days elapsed), and the denominator of which is 360.

 

11

 

5.  Registration
Procedures

 

In connection with the
filing of any Registration Statement pursuant to Sections 2 or 3 hereof, the
Issuers shall effect such registrations to permit the sale of the Notes covered
thereby in accordance with the intended method or methods of disposition
thereof, and pursuant thereto and in connection with any Registration Statement
filed by the Issuers hereunder each of the Issuers shall:

 

(a)  Prepare
and file with the SEC prior to the applicable Filing Date, a Registration
Statement or Registration Statements as prescribed by Sections 2 or 3 hereof,
and use its reasonable best efforts to cause each such Registration Statement
to become effective and remain effective as provided herein; provided, however,
that, if (1) such filing is pursuant to Section 3 hereof or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Issuers shall
furnish to and afford the Holders of the Registrable Notes covered by such
Registration Statement or each such Participating Broker-Dealer, as the case
may be, their counsel and the managing underwriters, if any, a reasonable
opportunity to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed (in each case at least five business days prior to such
filing, or such later date as is reasonable under the circumstances).  The Issuers shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto if the Holders
of a majority in aggregate principal amount of the Registrable Notes covered by
such Registration Statement, their counsel, or the managing underwriters, if
any, shall reasonably object.

 

(b)  Prepare
and file with the SEC such amendments and post-effective amendments to each
Shelf Registration Statement or Exchange Offer Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period or
until consummation of the Exchange Offer, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; and
comply with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all Notes covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any Notes being sold by a Participating
Broker-Dealer covered by any such Prospectus.

 

12

 

(c)  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus
contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period relating thereto from whom any Issuer has received written
notice that it will be a Participating Broker-Dealer in the Exchange Offer,
notify the selling Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing underwriters,
if any, promptly (but in any event within two business days), and confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective under
the Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Issuers, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference therein and exhibits), (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a prospectus is required by the Securities Act
to be delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Issuers contained in any agreement (including any
underwriting agreement) contemplated by Section 5(m) hereof cease to be true
and correct in all material respects, (iv) of the receipt by any Issuer of
any notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer for offer
or sale in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement made in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material
respect or that requires the making of any changes in or amendments or
supplements to such Registration Statement, Prospectus or documents so that, in
the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of the
Issuers’ determination that a post-effective amendment to a Registration
Statement would be appropriate.

 

13

 

(d)  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use its reasonable best efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Registrable Notes
or the Exchange Notes to be sold by any Participating Broker-Dealer, for sale
in any jurisdiction, and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest possible date.

 

(e)  If a Shelf
Registration is filed pursuant to Section 3 and if requested by the
managing underwriter or underwriters (if any), the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering or any Participating Broker-Dealer,
(i) promptly as commercially practicable incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriter or underwriters (if any), such Holders, any Participating
Broker-Dealer or counsel for any of them reasonably request to be included
therein, (ii) make all required filings of such prospectus supplement or
such post-effective amendment as soon as commercially practicable after any
Issuer has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment, and (iii) supplement or
make amendments to such Registration Statement.

 

(f)  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a Prospectus
contained in the Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and to
each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, at the sole expense of the Issuers, one conformed
copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.

 

(g)  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating

 

14

 

Broker-Dealer, as
the case may be, their respective counsel, and the underwriters, if any, at the
sole expense of the Issuers, as many copies of the Prospectus or Prospectuses
(including each form of preliminary prospectus) and each amendment or
supplement thereto and any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to the last paragraph of this
Section 5, the Issuers hereby consent to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
and the underwriters or agents, if any, and dealers (if any), in connection
with the offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto.

 

(h)  Prior to
any public offering of Registrable Notes or any delivery of a Prospectus
contained in the Exchange Offer Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period, to
use its reasonable best efforts to register or qualify, and to cooperate with
the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, the managing underwriter or underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Notes for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or underwriters
reasonably request in writing; provided, however, that where
Exchange Notes held by Participating Broker-Dealers or Registrable Notes are
offered other than through an underwritten offering, the Issuers agree to cause
their counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary to enable the disposition in
such jurisdictions of the Exchange Notes held by Participating Broker-Dealers
or the Registrable Notes covered by the applicable Registration Statement; provided,
however, that no Issuer shall be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B) take any
action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or (C) subject itself to taxation
in excess of the dollar amount in any such jurisdiction where it is not then so
subject.

 

(i)  If a Shelf
Registration is filed pursuant to Section 3 hereof, cooperate with the
selling Holders of Registrable Notes and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Notes to be sold, which certificates
shall not bear any restrictive legends

 

15

 

and shall be in a
form eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may request.

 

(j)  Use its
reasonable best efforts to cause the Registrable Notes covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be reasonably necessary to enable
the seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be required
solely as a consequence of the nature of such selling Holder’s business, in
which case the Issuers will cooperate in all reasonable respects with the
filing of such Registration Statement and the granting of such approvals.

 

(k)  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as commercially practicable
prepare and (subject to Section 5(a) hereof) file with the SEC, at the
sole expense of the Issuers, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the purchasers
of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

(l)  Prior to
the effective date of the first Registration Statement relating to the
Registrable Notes, (i) provide the Trustee with certificates for the
Registrable Notes or Exchange Notes, as the case may be, in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes or Exchange Notes, as the case may be.

 

(m)  In
connection with any underwritten offering of Registrable Notes pursuant to a
Shelf Registration, enter into an underwriting agreement as is customary in
underwritten offerings of debt securities similar to the Notes in form and
substance reasonably satisfactory to the Company and take all such other
actions as are reasonably requested by the managing underwriter or underwriters
in order to expedite

 

16

 

or facilitate the
registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to, and covenants
with, the underwriters with respect to the business of the Company and its
subsidiaries and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case,
as are customarily made by issuers to underwriters in underwritten offerings of
debt securities similar to the Notes, and confirm the same in writing if and
when requested in form and substance reasonably satisfactory to the Issuers;
(ii) obtain the written opinion of counsel to the Issuers and written updates
thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters covering the matters
customarily covered in opinions reasonably requested in underwritten offerings
of debt securities similar to the Notes and such other matters as may be
reasonably requested by the managing underwriter or underwriters;
(iii) use its reasonable best efforts to obtain “cold comfort” letters and
updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the Registration
Statement), addressed to the underwriter, such letters to be in customary form
and covering matters of the type customarily covered in “cold comfort” letters
in connection with underwritten offerings of debt securities similar to the
Notes and such other matters as reasonably requested by the managing
underwriter or underwriters as permitted by the Statement on Auditing Standards
No. 72; and (iv) if an underwriting agreement is entered into, the same
shall contain indemnification provisions and procedures no less favorable to
the sellers and underwriters, if any, than those set forth in Section 7
hereof (or such other provisions and procedures acceptable to Holders of a
majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or agents,
if any).  The above shall be done at
each closing under such underwriting agreement, or as and to the extent
required thereunder.

 

(n)  If (1) a
Shelf Registration is filed pursuant to Section 3 hereof, or (2) a
Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, or each such Participating Broker-Dealer, as
the case may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent retained
by any such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the

17

 

“Inspectors”),
at the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and instruments of
the Company and its subsidiaries (collectively, the “Records”) as shall
be reasonably necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement and Prospectus.  Each Inspector shall agree in writing that
it will keep the Records confidential and that it will not disclose any of the
Records unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement or
Prospectus, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction,
(iii) disclosure of such information is necessary or advisable, in the
opinion of counsel for any Inspector, in connection with any action, claim,
suit or proceeding, directly or indirectly, involving or potentially involving
such Inspector and arising out of, based upon, relating to, or involving this
Agreement or the Purchase Agreement, or any transactions contemplated hereby or
thereby or arising hereunder or thereunder, or (iv) the information in
such Records has been made generally available to the public.  Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of any Issuer unless and until such is made
generally available to the public.  Each
selling Holder of such Registrable Notes and each such Participating
Broker-Dealer will be required to further agree that it will, upon learning
that disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company to undertake appropriate
action to prevent disclosure of the Records deemed confidential at the Issuers’
expense.

 

(o)  Provide
the Trustee for the Registrable Notes or the Exchange Notes, as the case may
be, and cause the Indenture or the trust indenture provided for in Section 2(a)
hereof, as the case may be, to be qualified under the TIA not later than the
effective date of the first Registration Statement relating to the Registrable
Notes; and in connection therewith, cooperate with the trustee under any such
indenture and the Holders of the Registrable Notes, to effect such changes to
such indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its reasonable best
efforts to cause such trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed
with the SEC to enable such indenture to be so qualified in a timely manner.

 

18

 

(p)  Comply
with all applicable rules and regulations of the SEC and make generally
available to their respective securityholders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12 month period (or 90 days after the
end of any 12 month period if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Notes are sold to
underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date
of a Registration Statement, which statements shall cover said 12 month periods.

 

(q)  If the
Exchange Offer or a Private Exchange is to be consummated, upon delivery of the
Registrable Notes by Holders to the Company (or to such other Person as
directed by the Company) in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be, the Issuers shall mark, or cause to be marked, on
such Registrable Notes that such Registrable Notes are being cancelled in
exchange for the Exchange Notes or the Private Exchange Notes, as the case may
be; in no event shall such Registrable Notes be marked as paid or otherwise
satisfied.

 

(r)  Use its
best efforts to cause the Registrable Notes covered by a Registration Statement
or the Exchange Notes, as the case may be, to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration Statement or
the Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.

 

(s)  Cooperate
with each seller of Registrable Notes covered by any Registration Statement and
each underwriter, if any, participating in the disposition of such Registrable
Notes and their respective counsel in connection with any filings required to
be made with the National Association of Securities Dealers, Inc. (the “NASD”).

 

(t)  Use its
reasonable best efforts to take all other steps reasonably necessary to effect
the registration of the Exchange Notes and/or Registrable Notes covered by a
Registration Statement contemplated hereby.

 

The Issuers may require
each seller of Registrable Notes as to which any registration is being effected
to furnish to the Company such information regarding such seller and the
distribution of such Registrable Notes as the Company may, from time to time,
reasonably request.  The Issuers may
exclude from such registration the Registrable Notes of any seller so long as
such seller fails to furnish such information within a reasonable time after
receiving such request.  Each seller as
to which any Shelf Registration is being effected agrees

 

19

 

to furnish promptly to
the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such seller not materially
misleading.

 

Each Holder of
Registrable Notes and each Participating Broker-Dealer agrees by its
acquisition of such Registrable Notes or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, that, upon actual receipt of
any notice from the Issuers of the happening of any event of the kind described
in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will
forthwith discontinue disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such
Holder or Participating Broker-Dealer, as the case may be, until such Holder’s
or Participating Broker-Dealer’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) hereof, or until it is advised
in writing (the “Advice”) by the Issuers that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto.  In the event that
the Issuers shall give any such notice, each of the Effectiveness Period and
the Applicable Period shall be extended by the number of days during such
periods from and including the date of the giving of such notice to and including
the date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) hereof or (y) the Advice.

 

6.  Registration
Expenses

 

All reasonable fees and
expenses incident to the performance of or compliance with this Agreement by
the Issuers shall be borne by the Issuers whether or not the Exchange Offer
Registration Statement or any Shelf Registration Statement is filed or becomes
effective or the Exchange Offer is consummated, including, without limitation,
(i) all registration and filing fees (including, without limitation,
(A) fees with respect to filings required to be made with the NASD in
connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of the Exchange Notes, or
(y) as provided in Section 5(h) hereof, in the case of Registrable Notes
or Exchange Notes to be sold by a Participating Broker-Dealer during the
Applicable Period)), (ii) reasonable printing expenses, including, without
limitation, reasonable expenses of printing certificates for Registrable Notes
or Exchange Notes in a form eligible for deposit with The Depository Trust
Company and of printing prospectuses if the printing of prospectuses is
reasonably requested by the managing underwriter or underwriters, if any, by
the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or in respect of Exchange

 

20

 

Notes to be sold by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) reasonable messenger, telephone and delivery expenses,
(iv) reasonable fees and disbursements of counsel for the Issuers and, in
the case of a Shelf Registration, reasonable fees and disbursements of one
special counsel for all of the sellers of Registrable Notes (exclusive of any
counsel retained pursuant to Section 7 hereof), (v) fees and disbursements
of all independent certified public accountants referred to in Section
5(m)(iii) hereof (including, without limitation, the expenses of any special
audit and “cold comfort” letters required by or incident to such performance),
(vi) Securities Act liability insurance, if the Issuers desire such
insurance, (vii) fees and expenses of all other Persons retained by any of
the Issuers, (viii) internal expenses of the Issuers (including, without
limitation, all salaries and expenses of officers and employees of the Issuers
performing legal or accounting duties), (ix) the expense of any annual
audit, (x) the fees and expenses incurred in connection with the listing
of the Notes to be registered on any securities exchange, and the obtaining of
a rating of the Notes, in each case, if applicable, and (xi) the
reasonable expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, indentures and any other
documents necessary in order to comply with this Agreement.

 

7.  Indemnification

 

(a)  Each of the Issuers, jointly and severally,
agrees to indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, the officers, directors, employees and agents of each such Person, and
each Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act
(each, a “Participant”), from and against any and all losses, claims,
damages, judgments, liabilities and expenses (including, without limitation,
the reasonable legal fees and other expenses actually incurred in connection
with any suit, action or proceeding or any claim asserted) caused by, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment
thereto) or Prospectus (as amended or supplemented if any Issuer shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in the case of the Prospectus in the light of the
circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages or liabilities are caused by, arise out of or
are based upon any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Company in writing by such Participant
expressly for use therein; provided, however, that no Issuer will be liable if
such untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the final
Prospectus or any amendment or supplement thereto and any such loss, liability,
claim, or damage or expense suffered or

 

21

 

incurred by the
Participants resulted from any action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the final Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of
the sale of such Registrable Notes or Exchange Notes sold to such Person if required
by applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by any
Issuer with Section 5 of this Agreement.

 

(b)  Each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period
agrees, severally and not jointly, to indemnify and hold harmless each of the
Issuers, their directors, their officers who sign the Registration Statement
and their employees and agents and each Person, if any, who controls each
Issuer within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Issuers to each Participant, but only with reference to information relating to
such Holder of Registrable Notes or Participating Broker-Dealer selling
Exchange Notes during the Applicable Period  furnished to the Company in writing by
such Holder of Registrable Notes or each Participating Broker-Dealer selling
Exchange Notes during the Applicable Period expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary prospectus.  The
liability of any Holder of Registrable Notes and each Participating
Broker-Dealer that sells Exchange Notes during the Applicable Period under this
paragraph shall in no event exceed the proceeds received by such Holder of
Registrable Notes and each Participating Broker-Dealer that sells Exchange
Notes during the Applicable Period from sales of Registrable Notes or Exchange
Notes giving rise to such obligations.

 

(c)  If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any Person in respect of which indemnity may be sought
pursuant to either of the two preceding paragraphs, such Person (the “Indemnified
Person”) shall promptly notify the Persons against whom such indemnity may
be sought (the “Indemnifying Persons”) in writing, and the Indemnifying
Persons, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Persons may reasonably designate in such
proceeding and shall pay the reasonable fees and expenses actually incurred by
such counsel related to such proceeding; provided, however, that
the failure to so notify the Indemnifying Persons shall not relieve any of them
of any obligation or liability which any of them may have hereunder unless and
to the extent such failure results in the forfeiture by the Indemnifying
Persons of substantial rights and defenses and will not, in any even, relieve
the Indemnifying Persons from any obligations to any Indemnified Persons other
than the indemnification obligations provided hereunder.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but

 

22

 

the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless
(i) the Indemnifying Persons and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Persons shall have
failed within a reasonable period of time to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any
such proceeding (including any impleaded parties) include both any Indemnifying
Person and the Indemnified Person or any affiliate thereof and representation
of both parties by the same counsel would be inappropriate due to actual or
potential conflicting interests between them. 
It is understood that, unless there exists a conflict among Indemnified
Persons, the Indemnifying Persons shall not, in connection with such proceeding
or separate but substantially similar related proceeding in the same
jurisdiction arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred.  Any
such separate firm for the Participants and such control Persons of
Participants shall be designated in writing by Participants who sold a majority
in interest of Registrable Notes and Exchange Notes sold by all such
Participants and any such separate firm for the Issuers, their directors, their
officers and such control Persons of the Issuers shall be designated in writing
by the Company and shall be reasonably acceptable to the Holders.  The Indemnifying Persons shall not be liable
for any settlement of any proceeding effected without its prior written consent
(which consent shall not be unreasonably withheld or delayed), but if settled
with such consent or if there be a final nonappealable judgment for the
plaintiff for which the Indemnified Person is entitled to indemnification
pursuant to this Agreement, each of the Indemnifying Persons agrees to indemnify
and hold harmless each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested an Indemnifying Person to reimburse the
Indemnified Person for reasonable fees and expenses actually incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person
of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement; provided, however, that the Indemnifying
Person shall not be liable for any settlement effected without its consent pursuant
to this sentence if the Indemnifying Person is contesting, in good faith, the
request for reimbursement.  No
Indemnifying Person shall, without the prior written consent of the Indemnified
Persons (which consent shall not be unreasonably withheld or delayed), effect
any settlement or compromise of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party, or indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement (A) includes an unconditional written release of such
Indemnified Person, in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of such

 

23

 

proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to
act by or on behalf of such Indemnified Person.

 

(d)  If the indemnification provided for in
clauses (a) and (b) of this Section 7 is for any reason unavailable to, or
insufficient to hold harmless, an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions or alleged statements or omissions
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by any Issuer on the one hand or such Participant or such
other Indemnified Person, as the case may be, on the other, the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations appropriate
in the circumstances.

 

(e)  The parties agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined
by pro  rata allocation (even if the Participants were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph.  The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages,
judgments, liabilities and expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim.  Notwithstanding the
provisions of this Section 7, in no event shall, a Holder of Registrable
Notes or any Participating Broker-Dealer that Exchange Notes during the
Applicable Period, be required to contribute any amount in excess of the amount
by which proceeds received by such Holder of Registrable Notes or any
Participating Broker-Dealer that Exchange Notes during the Applicable Period
from sales of Registrable Notes or Exchange Notes, as the case may be, exceeds
the amount of any damages that such Holder of Registrable Notes or any
Participating Broker-Dealer that Exchange Notes during the Applicable Period
has otherwise been required to pay or has paid by reason of such untrue or
alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.

 

24

 

(f)  Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the Indemnifying Party to the Indemnified
Party as such losses, claims, damages, liabilities or expenses are
incurred.  The indemnity and
contribution agreements contained in this Section 7 and the representations and
warranties of the Issuers set forth in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigation made by
or on behalf of any Holder or any person who controls a Holder, any Issuer and
its directors, officers, employees or agents or any person controlling such
Issuer, and (ii) any termination of this Agreement.

 

(g)  The indemnity and contribution agreements
contained in this Section 7 will be in addition to any liability which the
Indemnifying Persons may otherwise have to the Indemnified Persons referred to
above.

 

8.  Rules 144 and
144A

 

Each of the Issuers
covenants and agrees that, so long as Registrable Notes remain outstanding, it
will file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations adopted by the SEC thereunder in
a timely manner in accordance with the requirements of the Securities Act and
the Exchange Act and, if at any time such Issuer is not permitted to file such
reports, such Issuer will, upon the request of any Holder or beneficial owner
of Registrable Notes, make publicly available annual reports and such
information, documents and other reports of the type specified in Sections 13
and 15(d) of the Exchange Act.  Each Issuer
further covenants for so long as any Registrable Notes remain outstanding, to
make available to any Holder or beneficial owner of Registrable Notes in
connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.

 

9.  Underwritten
Registrations

 

If any of the Registrable
Notes covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will manage the offering will be selected by the Holders of a majority in
aggregate principal amount of such Registrable Notes included in such offering
and shall be reasonably acceptable to the Company.

 

No Holder of Registrable
Notes may participate in any underwritten registration hereunder unless such
Holder (a) agrees to sell such Holder’s Registrable Notes on the basis provided
in any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all
questionnaires,

 

25

 

powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.

 

10.  Miscellaneous

 

(a)  No
Inconsistent Agreements.  As of
the date hereof, no Issuer has entered into any agreement with respect to any
of its Notes that is inconsistent with the rights granted to the Holders of
Registrable Notes in this Agreement or otherwise conflicts with the provisions
hereof.  The rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the rights
granted to the holders of any of the Issuers’ other issued and outstanding
Notes.  As of the date hereof, no Issuer
has entered into any agreement with respect to any of its Notes which will
grant to any Person piggyback registration rights with respect to any
Registration Statement required to be filed by the Issuers pursuant to this
Agreement.

 

(b)  Adjustments
Affecting Registrable Notes.  No
Issuer shall knowingly, directly or indirectly, take any action with respect to
the Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.

 

(c)  Amendments
and Waivers.  The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, otherwise than with
the prior written consent of (I) the Issuers and (II)(A) the Holders of
not less than a majority in aggregate principal amount of the then outstanding
Registrable Notes and (B) in circumstances that would adversely affect the
Participating Broker-Dealers, the Participating Broker-Dealers holding not less
than a majority in aggregate principal amount of the Exchange Notes held by all
Participating Broker-Dealers; provided, however, that
Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement) affected by any
such amendment, modification or supplement. 
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Notes whose Notes are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders of Registrable Notes may be
given by Holders of at least a majority in aggregate principal amount of the
Registrable Notes being sold pursuant to such Registration Statement.

 

(d)  Notices.  All notices and other communications
(including, without limitation, any notices or other communications to the
Trustee) provided for or permitted

 

26

 

hereunder shall be made
in writing by hand delivery, registered first-class mail, next-day air courier
or facsimile:

 

(i)                       if
to a Holder of the Registrable Notes or any Participating Broker-Dealer, at the
most current address of such Holder or Participating Broker-Dealer, as the case
may be, set forth on the records of the registrar under the Indenture, with a
copy in like manner to the Initial Purchasers as follows:

 

Deutsche Bank Securities
Inc.

31 West 52nd Street, 7th Floor

New York, New York  10019

Facsimile No:  (212) 250-7200

Attention:  Corporate Finance

 

with a copy to:

 

Cahill Gordon &
Reindel llp

80 Pine Street

New York, New York  10005

Facsimile No:  (212) 269-5420

Attention:  Luis R. Penalver, Esq.

 

(ii)                    if
to the Initial Purchasers, at the address specified in Section 10(d)(i);

 

(iii)                 if to the Company, at the address as
follows:

 

Vertis, Inc.

250 W. Pratt Street

Baltimore, Maryland  21201

Facsimile No.:  (410) 528-9287

Attention:  General Counsel

 

with a copy to:

 

Sullivan & Cromwell
LLP

125 Broad Street

New York, New York  10004

Facsimile No.:  (212) 558-3588

Attention:  Robert E. Buckholz, Jr.

 

All such notices and
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; five business days after being deposited in

 

27

 

the mail, postage
prepaid, if mailed; one business day after being timely delivered to a next-day
air courier; and upon receiving confirmation receipt by the addressee, if sent
by facsimile.

 

Copies of all such
notices, demands or other communications shall be concurrently delivered by the
Person giving the same to the Trustee at the address and in the manner
specified in such Indenture.

 

(e)  Successors
and Assigns.  This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto, the Holders and the Participating Broker-Dealers, provided
that nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Notes in violation of the terms of the Purchase Agreement
or the Indenture.

 

(f)  Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(g)  Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(h)  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

 

(i)  Severability.  If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction.  It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

 

(j)  Notes Held by
the Issuers or their Affiliates. 
Whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by any Issuer
or any of its affiliates (as such term is defined in Rule

 

28

 

405 under the Securities
Act) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.

 

(k)  Third Party
Beneficiaries.  Holders of
Registrable Notes and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement, and this Agreement may be enforced by such
Persons.

 

29

 

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

 

	
   

  	
  VERTIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUBSIDIARY GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRINTCO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

30

 

	
   

  	
  WEBCRAFT CHEMICALS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENTERON GROUP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIG
  FLOWER DIGITAL SERVICES

  (DELAWARE), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIG FLOWER DIGITAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
					

 

31

 

The foregoing Agreement
is hereby

confirmed and accepted as of the date first

above written.

 

 

	
  DEUTSCHE BANK
  SECURITIES INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ STEVEN WINOGRAD

  	
   

  
	
   

  	
  Name: Steven Winograd

  
	
   

  	
  Title: Managing
  Director

  
	
   

  
	
   

  
	
  By:

  	
  /s/ DAVID FLANNERY

  	
   

  
	
   

  	
  Name: David Flannery

  
	
   

  	
  Title: Managing
  Director

  
	
   

  
	
   

  
	
  J.P. MORGAN SECURITIES
  INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ CLAUDETTE KRAUS

  	
   

  
	
   

  	
  Name: Claudette Kraus

  
	
   

  	
  Title: Vice President

  
	
   

  
	
   

  
	
  BANC OF AMERICA
  SECURITIES LLC

  
	
   

  
	
   

  
	
  By:

  	
  /s/ STEPHAN JAEGER

  	
   

  
	
   

  	
  Name: Stephan Jaeger

  
	
   

  	
  Title: Principal

  
	
   

  
	
   

  
	
  FLEET SECURITIES, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ MARC MAINELLI

  	
   

  
	
   

  	
  Name: Marc Mainelli

  
	
   

  	
  Title: Director

  

 

32Exhibit
4.4

 

 

 

U.S. SECURITY
AGREEMENT

 

among

 

VERTIS HOLDINGS,
INC.

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

 

VERTIS, INC.

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

VARIOUS U.S. SUBSIDIARIES 

OF VERTIS, INC.

 

and

 

JPMORGAN CHASE
BANK 

(f/k/a The Chase Manhattan Bank),

as Collateral Agent

 

Dated as of
December 7, 1999

and 

Amended and Restated as of June 6, 2003

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I  SECURITY INTERESTS

  
	
   

  	
   

  
	
   

  	
  1.1  Grant of Security Interests

  
	
   

  	
  1.2  Power of Attorney

  
	
   

  	
   

  
	
  ARTICLE II  GENERAL REPRESENTATIONS, WARRANTIES AND
  COVENANTS

  
	
   

  	
   

  
	
   

  	
  2.1  Necessary Filings

  
	
   

  	
  2.2 
  No Liens

  
	
   

  	
  2.3  Other Financing Statements

  
	
   

  	
  2.4  Chief Executive Office; Records

  
	
   

  	
  2.5  Location of Inventory and Equipment

  
	
   

  	
  2.6 
  Recourse

  
	
   

  	
  2.7  Legal Names; Organizational Identification
  Number; Trade Names; Change of Name; etc.

  
	
   

  	
  2.8  Jurisdiction and Type of Organization

  
	
   

  	
  2.9  Collateral in the Possession of a Bailee

  
	
   

  	
  2.10  As-Extracted Collateral; Timber-to-be-Cut

  
	
   

  	
   

  
	
  ARTICLE III  SPECIAL PROVISIONS CONCERNING RECEIVABLES;
  CONTRACT RIGHTS; INSTRUMENTS

  
	
   

  	
   

  
	
   

  	
  3.1  Additional Representations and Warranties

  
	
   

  	
  3.2  Maintenance of Records

  
	
   

  	
  3.3  Direction to Account Debtors; Contracting
  Parties; etc.

  
	
   

  	
  3.4  Modification of Terms; etc.

  
	
   

  	
  3.5 
  Collection

  
	
   

  	
  3.6 
  Instruments

  
	
   

  	
  3.7  Further Actions

  
	
   

  	
  3.8  Assignors Remain Liable Under Receivables
  and Contracts

  
	
   

  	
  3.9  Deposit Accounts; etc.

  
	
   

  	
  3.10  Letter-of-Credit Rights

  
	
   

  	
  3.11  Commercial Tort Claims

  
	
   

  	
  3.12  Chattel Paper

  
	
   

  	
   

  
	
  ARTICLE IV  SPECIAL PROVISIONS CONCERNING TRADEMARKS

  
	
   

  	
   

  
	
   

  	
  4.1  Additional Representations and Warranties

  
	
   

  	
  4.2  Licenses and Assignments

  
	
   

  	
  4.3 
  Infringements

  
	
   

  	
  4.4  Preservation of Significant Marks

  
	
   

  	
  4.5  Maintenance of Registration

  
	
   

  	
  4.6  Future Registered Marks

  
	
   

  	
  4.7 
  Remedies

  

 

i

 

	
  ARTICLE V  SPECIAL PROVISIONS CONCERNING PATENTS,
  COPYRIGHTS AND TRADE SECRETS

  
	
   

  	
   

  
	
   

  	
  5.1  Additional Representations and Warranties

  
	
   

  	
  5.2  Licenses and Assignments

  
	
   

  	
  5.3 
  Infringements

  
	
   

  	
  5.4  Maintenance of Patents and Copyrights

  
	
   

  	
  5.5  Prosecution of Patent or Copyright
  Applications

  
	
   

  	
  5.6  Other Patents and Copyrights

  
	
   

  	
  5.7 
  Remedies

  
	
   

  	
   

  
	
  ARTICLE VI  PROVISIONS CONCERNING ALL COLLATERAL

  
	
   

  	
   

  
	
   

  	
  6.1  Protection of Collateral Agent’s Security

  
	
   

  	
  6.2  Warehouse Receipts Non-Negotiable

  
	
   

  	
  6.3  Further Actions

  
	
   

  	
  6.4  Financing Statements

  
	
   

  	
  6.5  Additional Information

  
	
   

  	
   

  
	
  ARTICLE VII  REMEDIES UPON OCCURRENCE OF EVENT OF
  DEFAULT

  
	
   

  	
   

  
	
   

  	
  7.1  Remedies; Obtaining the Collateral Upon
  Default

  
	
   

  	
  7.2  Remedies; Disposition of the Collateral

  
	
   

  	
  7.3  Waiver of Claims

  
	
   

  	
  7.4  Application of Proceeds

  
	
   

  	
  7.5  Remedies Cumulative

  
	
   

  	
  7.6  Discontinuance of Proceedings

  
	
   

  	
   

  
	
  ARTICLE VIII  II 
  INDEMNITY

  
	
   

  	
   

  
	
   

  	
  8.1 
  Indemnity

  
	
   

  	
  8.2  Indemnity Obligations Secured by
  Collateral; Survival

  
	
   

  	
   

  
	
  ARTICLE IX  DEFINITIONS

  
	
   

  	
   

  
	
  ARTICLE X  MISCELLANEOUS

  
	
   

  	
   

  
	
   

  	
  10.1 
  Notices

  
	
   

  	
  10.2  Waiver; Amendment; Notice of Acceleration

  
	
   

  	
  10.3  Obligations Absolute

  
	
   

  	
  10.4  Successors and Assigns

  
	
   

  	
  10.5  Headings Descriptive

  
	
   

  	
  10.6  GOVERNING LAW

  
	
   

  	
  10.7  Assignor’s Duties

  
	
   

  	
  10.8  Termination; Release

  
	
   

  	
  10.9  Counterparts

  
	
   

  	
  10.10  The Collateral Agent

  

 

ii

 

	
   

  	
  10.11  Severability

  
	
   

  	
  10.12  Limited Obligations

  
	
   

  	
  10.13  Additional Assignors

  
	
   

  	
  10.14  No Third Party Beneficiaries

  
	
   

  	
   

  
	
  ARTICLE
  XI  SPECIAL AGREEMENTS AND
  ACKNOWLEDGEMENTS BY SECURED CREDITORS

  

 

	
  ANNEX A

  	
  Schedule of Chief Executive Offices/Record
  Locations

  
	
  ANNEX B

  	
  Schedule of Inventory and Equipment Locations

  
	
  ANNEX C

  	
  Schedule of Legal Names, Organizational
  Identification Numbers and Trade and Fictitious Names

  
	
  ANNEX D

  	
  Schedule of Marks and Applications

  
	
  ANNEX E

  	
  Schedule of Patents and Applications

  
	
  ANNEX F

  	
  Schedule of Copyrights and Applications

  
	
  ANNEX G

  	
  Assignment of Security Interest in Certain
  Patents and Trademarks

  
	
  ANNEX H

  	
  Assignment of Security Interest in Certain
  Copyrights

  
	
  ANNEX I

  	
  The Collateral Agent

  
	
  ANNEX J

  	
  Schedule of Jurisdictions and Types of
  Organizations

  
	
  ANNEX K

  	
  Schedule of Deposit Accounts

  
	
  ANNEX L

  	
  Description of Commercial Tort Claims

  
	
  ANNEX M

  	
  Form of Control Agreement Regarding Deposit
  Accounts

  

 

iii

 

AMENDED AND RESTATED U.S.
SECURITY AGREEMENT

 

SECURITY AGREEMENT, dated as of December 7, 1999 and
amended and restated as of June 6, 2003 (as so amended and restated and as the
same may be further amended, restated, modified and/or supplemented from time
to time in accordance with the terms hereof, this “Agreement”), among each of
the undersigned (each, an “Assignor” and, together with each other entity which
becomes a party hereto pursuant to Section 10.13, collectively, the
“Assignors”) and JPMorgan Chase Bank (f/k/a The Chase Manhattan Bank), as
Collateral Agent (the “Collateral Agent”), for the benefit of the Secured
Creditors (as defined below).  Except as
otherwise defined in Article IX hereof, terms used herein and defined in the
Credit Agreement (as defined below) shall be used herein as therein defined.

 

W I T N E S S E T H :

 

WHEREAS, Vertis Holdings, Inc. (f/k/a Big Flower
Holdings, Inc.) (“Holdings”), Vertis, Inc. (f/k/a Big Flower Press Holdings,
Inc.) (“Vertis”), various U.K. Subsidiaries of Vertis from time to time party
thereto as borrowers (the “U.K. Borrowers”, and together with Vertis, the
“Borrowers”), various financial institutions from time to time party thereto
(the “Lenders”), J.P. Morgan Securities Inc. and Deutsche Bank Securities,
Inc., as Joint Lead Arrangers and Joint Book Managers (collectively, 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 (the “Syndication
Agent”), Bank of America, N.A., as Documentation Agent (the “Documentation
Agent”), and certain Managing Agents from time to time party thereto
(collectively, the “Managing Agents”, and together with the Lenders, the Joint
Lead Arrangers, the Administrative Agent, the Syndication Agent, the
Documentation Agent, the Managing Agents, each Issuing Lender, the Pledgee and
the Collateral Agent, the “Lender Creditors”), have entered into a Credit
Agreement, dated as of December 7, 1999, providing for the making of Loans to
the Borrowers and the issuance of, and participation in, Letters of Credit for
the respective accounts of the Borrowers as contemplated therein (as used
herein, the term “Credit Agreement” means the Credit Agreement described above
in this paragraph, as the same has been, and may from time to time be, amended,
modified, extended, renewed, replaced, restated, supplemented or refinanced
from time to time, and including any agreement extending the maturity of, or
refinancing or restructuring (including, but not limited to, the inclusion of
additional borrowers or guarantors thereunder or any increase in the amount
borrowed) of all or any portion of, the indebtedness under such agreement or
any successor agreement, whether or not with the same agent, trustee, representative,
lenders or holders; provided that, with respect to any agreement
providing for the refinancing or replacement of indebtedness under the Credit
Agreement, such agreement shall only be treated as, or as part of, the Credit
Agreement hereunder if (i) either (A) all obligations under the Credit
Agreement being refinanced or replaced shall be paid in full at the time of
such refinancing or replacement, and all commitments and letters of credit
issued pursuant to the refinanced or replaced Credit Agreement shall have
terminated in accordance with their terms or (B) the Required Lenders shall
have consented in writing to the refinancing or replacement indebtedness being
treated as indebtedness pursuant to the Credit Agreement, (ii) the refinancing or
replacement indebtedness shall be permitted to be incurred under the Credit
Agreement being refinanced or replaced (if such Credit Agreement is 

 

 

to remain outstanding)
and the other Credit Documents then in effect and under the 2003 Senior Secured
Notes Documents or the 2003 Senior Secured Note Refinancing Documents referred
to below (if the 2003 Senior Secured Notes (as defined below) or any 2003
Senior Secured Note Refinancing Indebtedness (as defined below), as the case
may be, remains outstanding) and (iii) a notice to the effect that the
refinancing or replacement indebtedness shall be treated as issued under the
Credit Agreement shall be delivered by Vertis to the Collateral Agent);

 

WHEREAS, Holdings and one or more of the Borrowers may
from time to time enter into one or more (i) interest rate protection
agreements (including, without limitation, interest rate swaps, caps, floors,
collars and similar agreements), (ii) foreign exchange contracts, currency
swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values
and/or (iii) other types of hedging agreements from time to time (each such
agreement or arrangement with an Other Creditor (as hereinafter defined), an
“Interest Rate Protection Agreement or Other Hedging Agreement”), with JPMorgan
Chase Bank (f/k/a The Chase Manhattan Bank) in its individual capacity
(“JPMCB”), any Lender or a syndicate of financial institutions organized by
JPMCB or any such Lender, or an affiliate of JPMCB or any such Lender (JPMCB,
any such Lender or Lenders or affiliate or affiliates of JPMCB or such Lender
or Lenders (even if JPMCB or any such Lender ceases to be a Lender under the
Credit Agreement for any reason) and any such institution that participates in
such Interest Rate Protection Agreements or Other Hedging Agreements, and in
each case their subsequent successors and assigns, collectively, the “Other
Creditors”);

 

WHEREAS, pursuant to the Holdings Guaranty, Holdings
has guaranteed to the Secured Creditors the payment when due of the Guaranteed
Obligations;

 

WHEREAS, pursuant to the Vertis Guaranty, Vertis has
guaranteed to the Secured Creditors the payment when due of the U.K. Guaranteed
Obligations;

 

WHEREAS, pursuant to a Subsidiaries Guaranty, dated as
of December 7, 1999 (as amended, restated, modified and/or supplemented from
time to time, the “U.S. Subsidiaries Guaranty”), each U.S. Subsidiary Guarantor
has jointly and severally guaranteed the payment when due of all Guaranteed
Obligations (as defined in the U.S. Subsidiaries Guaranty);

 

WHEREAS, Vertis, as issuer, and the Subsidiary
Guarantors, as guarantors, will enter into the 2003 Senior Secured Notes
Indenture (as defined below) with the trustee thereunder (in such capacity,
together with any successor trustee, the “2003 Senior Secured Notes Indenture
Trustee”), providing for the issuance of 2003 Senior Secured Notes by Vertis
(with the holders from time to time of such 2003 Senior Secured Notes being
herein called the “2003 Senior Secured Noteholders”);

 

WHEREAS, pursuant to certain of the 2003 Senior
Secured Notes Documents, the Assignors have jointly and severally guaranteed
the payment when due of all obligations and liabilities of Vertis under or with
respect to the 2003 Senior Secured Notes Documents;

 

WHEREAS, 2003 Senior Secured Note Refinancing
Indebtedness may from time to time be incurred in accordance with the
requirements of the Credit Agreement in respect of the 2003 Senior Secured
Notes or any Indebtedness issued to so Refinance such Indebtedness, and 

 

2

 

any such 2003 Senior
Secured Note Refinancing Indebtedness may be (in accordance with the terms
thereof and to the extent permitted pursuant to the Credit Agreement) (x)
guaranteed by various of the Assignors and (y) secured hereunder as provided
herein (with any holders of such 2003 Senior Secured Note Refinancing
Indebtedness from time to time being herein collectively called the “2003
Senior Secured Note Refinancing Noteholders”, with any designated
representative of 2003 Senior Secured Note Refinancing Noteholders with 2003
Senior Secured Note Refinancing Indebtedness under a given 2003 Senior Secured
Note Refinancing Indenture being herein called a “2003 Senior Secured Note
Refinancing Trustee” and with all documentation evidencing any 2003 Senior
Secured Note Refinancing Indebtedness or any guaranties thereof being herein
called the “2003 Senior Secured Note Refinancing Documents”);

 

WHEREAS, the Assignors have heretofore entered into a
U.S. Security Agreement, dated as of December 7, 1999 (the “Original U.S.
Security Agreement”);

 

WHEREAS, it was a condition precedent to the making of
Loans to the Borrowers and the issuance of, and participation in, Letters of
Credit for the respective accounts of the Borrowers under the Credit Agreement
and to the Other Creditors entering into Interest Rate Protection Agreements or
Other Hedging Agreements that each Assignor shall have executed and delivered
to the Collateral Agent the Original U.S. Security Agreement;

 

WHEREAS, it is a condition precedent to the issuance
of the 2003 Senior Secured Notes by the Vertis under the 2003 Senior Secured
Notes Indenture that each Assignor shall have executed and delivered to the
Collateral Agent this Agreement, providing for, inter  alia, the
grant of a security interest to secure the 2003 Senior Secured Notes
Obligations on the terms set forth therein;

 

WHEREAS, it is a condition precedent to the
effectiveness of the Eighth Amendment to the Credit Agreement, dated as of May
21, 2003, that each Assignor enter into an amendment and restatement of the
Original U.S. Security Agreement in the form of this Agreement; and

 

WHEREAS, each Assignor desires to execute this
Agreement to satisfy the conditions described in the two preceding paragraphs;

 

NOW, THEREFORE, in consideration of the foregoing and
the other benefits accruing to each Assignor, the receipt and sufficiency of
which are hereby acknowledged, (i) each Assignor hereby makes the following
representations and warranties to the Collateral Agent for the benefit of the
Secured Creditors (as defined below), (ii) each Assignor hereby covenants and
agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows and (iii) the parties hereto agree that the Original U.S. Security
Agreement shall be and hereby is amended and restated in its entirety as
follows:

 

ARTICLE I

 

SECURITY INTERESTS

 

1.1  Grant
of Security Interests.  (a)  As security
for the prompt and complete payment and performance when due of all of the
Obligations (excluding the 2003 Senior Secured 

 

3

 

Notes Obligations
and the 2003 Senior Secured Note Refinancing Obligations in the case of an
assignment, transfer, grant or pledge of Excluded 2003 Senior Secured Notes
Collateral by any Assignor), each Assignor does hereby assign and transfer unto
the Collateral Agent for the benefit of the Secured Creditors (excluding the
2003 Senior Secured Notes Creditor and the 2003 Senior Secured Note Refinancing
Creditors (if any) in the case of any assignment, transfer, pledge or grant of
Excluded 2003 Senior Secured Notes Collateral by any Assignor), and does hereby
pledge and grant to the Collateral Agent for the benefit of the Secured
Creditors (excluding the 2003 Senior Secured Notes Creditor and the 2003 Senior
Secured Note Refinancing Creditors (if any) in the case of any assignment,
transfer, pledge or grant of Excluded 2003 Senior Secured Notes Collateral by
any Assignor), a continuing security interest in, all of the right, title and
interest of such Assignor in, to and under all of the following personal
property and fixtures (and all rights therein) of such Assignor, or in which or
to which such Assignor has any rights, in each case, whether now existing or
hereafter from time to time acquired:

 

(i)                                     each
and every Receivable;

 

(ii)                                  all
Contracts, together with all Contract Rights arising thereunder;

 

(iii)                               all Inventory;

 

(iv)                              the
Cash Collateral Account and any other cash collateral account established for
such Assignor for the benefit of the Secured Creditors and all moneys,
securities and instruments deposited or required to be deposited in such Cash
Collateral Account;

 

(v)                                 all
Equipment;

 

(vi)                              all
Marks, together with the registrations and right to all renewals thereof, and
the goodwill of the business of such Assignor symbolized by the Marks;

 

(vii)                           all Patents and Copyrights
and all reissues, renewals and extensions thereof;

 

(viii)                        all computer programs of such
Assignor and all intellectual property rights therein and all other proprietary
information of such Assignor, including, but not limited to, Trade Secrets and
Trade Secret Rights;

 

(ix)                                all
insurance policies;

 

(x)                                   all
other Goods, General Intangibles, Chattel Paper (including, without limitation,
all Tangible Chattel Paper and all Electronic Chattel Paper), Documents and
Instruments of such Assignor (except Documents and Instruments otherwise
covered by the U.S. Pledge Agreement);

 

(xi)                                all
Permits;

 

(xii)                             all cash;

 

4

 

(xiii)                          all Commercial Tort Claims;

 

(xiv)                         all Perfected Deposit Accounts
and all other Deposit Accounts maintained by such Assignor with any Person who
shall have entered into a “control agreement” or other arrangement with such
Assignor and the Collateral Agent in respect of such other Deposit Account,
together with all monies, securities, Instruments and other investments
deposited or required to be deposited in any of the foregoing;

 

(xv)                            all
Investment Property (except to the extent otherwise covered by the U.S. Pledge
Agreement);

 

(xvi)                         all Letter-of-Credit Rights
(whether or not the respective letter of credit is evidenced by a writing);

 

(xvii)                      all Software and all Software licensing
rights, all writings, plans, specifications and schematics, all engineering
drawings, customer lists, goodwill and licenses, and all recorded data of any
kind or nature, regardless of the medium of recording;

 

(xviii)                   all Supporting Obligations;

 

(xix)                           all Proceeds and products of
any and all of the foregoing (all of the above, including this clause (xix),
collectively, the “Collateral”).

 

(b)                                 Notwithstanding
anything to the contrary contained above in this Section 1 or elsewhere in this
Agreement, no Excluded 2003 Senior Secured Notes Collateral hereunder shall
secure any of the 2003 Senior Secured Notes Obligations or the 2003 Senior
Secured Note Refinancing Obligations (although the Excluded 2003 Senior Secured
Notes Collateral shall secure all other Obligations hereunder).

 

(c)                                  As
security for the prompt and complete payment and performance when due of all of
the 2003 Senior Secured Notes Obligations, each Assignor does hereby assign and
transfer unto the Collateral Agent and does hereby pledge and grant to the
Collateral Agent for the benefit of the 2003 Senior Secured Notes Creditor, a
continuing security interest in, all of the right, title and interest of such
Assignor in, to and under all of the Collateral (other than the Excluded 2003
Senior Secured Notes Collateral), whether now existing or hereafter from time
to time acquired, subject to the Liens on such Collateral in favor of the
Collateral Agent for the benefit of the Lender Creditors and the Other
Creditors.  It is understood and agreed that
the assignment, transfer, pledge and grant described in the preceding sentence
has been incorporated herein (out of an abundance of caution) to ensure that
this Agreement, which first provides for the 2003 Senior Secured Notes
Obligations to be secured as provided herein on the Restatement Effective Date,
validly gives rise to the grant of a security interest securing the 2003 Senior
Secured Notes Obligations.

 

(d)                                 Notwithstanding
anything to the contrary contained in this Section 1.1 or elsewhere in this
Agreement, each of the parties hereto acknowledges and agrees that (x) the
security interest granted pursuant to this Agreement (including pursuant to
this Section 1.1) to the Collateral Agent (i) for the benefit of Lender
Creditors and Other Creditors, shall be a “first” 

 

5

 

priority senior security interest in the Collateral
and the Excluded 2003 Senior Secured Notes Collateral, and (ii) for the benefit
of the 2003 Senior Secured Notes Creditor and the 2003 Senior Secured Note
Refinancing Creditors (if any), shall be a “second” priority security interest
in the Collateral (other than the Excluded 2003 Senior Secured Notes
Collateral) fully junior, subordinated and subject to the security interest
granted for the benefit of the Lender Creditors and the Other Creditors on the
terms and conditions set forth in this Agreement, in the other Security
Documents, in the 2003 Senior Secured Note Documents and in the 2003 Senior
Secured Note Refinancing Documents and all other rights and benefits afforded
hereunder to the 2003 Senior Secured Notes Creditor and the 2003 Senior Secured
Note Refinancing Creditors (if any) are expressly subject to the terms and
conditions of this Agreement, the other Security Documents, the 2003 Senior
Secured Note Documents and the 2003 Senior Secured Note Refinancing
Documents,  and (y) in the event of any
conflict between the provisions of this Agreement or any other Security
Document and the provisions of (A) the 2003 Senior Secured Note Documents or
(B) 2003 Senior Secured Note Refinancing Documents, the terms of this Agreement
and the other Security Documents shall prevail.

 

(e)                                  The
security interest of the Collateral Agent under this Agreement extends to all
Collateral of the kind which is the subject of this Agreement which any
Assignor may acquire at any time during the continuation of this Agreement.

 

1.2  Power
of Attorney.  Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem to be necessary or advisable to
accomplish the purposes of this Agreement, which appointment as attorney is
coupled with an interest.

 

ARTICLE II

 

GENERAL REPRESENTATIONS, WARRANTIES AND

COVENANTS

 

Each Assignor represents, warrants and covenants,
which representations, warranties and covenants shall survive execution and
delivery of this Agreement, as follows:

 

2.1  Necessary
Filings.  (i)  All filings, registrations
and recordings necessary or appropriate to create, preserve, protect and
perfect the security interest granted by such Assignor to the Collateral Agent
for the benefit of the Secured Creditors (excluding the 2003 Senior Secured
Notes Creditor and the 2003 Senior Secured Note Refinancing Creditors (if any)
in the case of any assignment, transfer, pledge or grant of Excluded 2003
Senior Secured Notes Collateral by any Assignor) hereby in respect of the
Collateral (other than Excluded Deposit Accounts) have been accomplished (or,
in the case of Collateral for which it is necessary to file a UCC-1 financing
statement in order to perfect a security interest in such Collateral, such
filings will be accomplished within 10 days following the Restatement Effective
Date (or to the extent 

 

6

 

such Collateral is acquired after the Restatement
Effective Date, within 10 days following the date of the acquisition of such
Collateral)), and (ii) the security interest granted to the Collateral Agent
pursuant to this Agreement in and to the Collateral (other than Excluded
Deposit Accounts) constitutes (or, in the case of Collateral referred to in the
second parenthetical in clause (i) above, upon compliance with the requirements
of such parenthetical, will constitute) a perfected security interest therein
prior to the rights of all other Persons therein and subject to no other Liens
(other than Permitted Liens) and is entitled to all the rights, priorities and
benefits afforded by the Uniform Commercial Code or other relevant law as
enacted in any relevant jurisdiction to perfected security interests.

 

2.2  No Liens. 
Such Assignor is, and as to all Collateral acquired by it from time to
time after the Restatement Effective Date such Assignor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Permitted Liens and Liens
created under this Agreement), and such Assignor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Collateral Agent.

 

2.3  Other
Financing Statements.  As of the Restatement
Effective Date, there is no financing statement evidencing a valid security
interest against Holdings or any of its Subsidiaries (or similar statement or
instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral (other than (x)
those created under this Agreement or the Original U.S. Security Agreement, (y)
as may be filed in connection with Permitted Liens and (z) those with respect
to which appropriate termination statements executed by the secured lender
thereunder have been delivered or shall be delivered to the Collateral Agent
pursuant to the terms of the Secured Debt Agreements), and at all times prior
to the Termination Date, such Assignor will not execute or authorize to be
filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Assignor
or as permitted by the Secured Debt Agreements.

 

2.4  Chief
Executive Office; Records.  As of the
Restatement Effective Date, the chief executive office of such Assignor is
located at the address or addresses indicated on Annex A hereto.  Such Assignor will not move its chief
executive office except to such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.4.  The originals of all documents evidencing
all Receivables, Contract Rights and Trade Secret Rights of such Assignor and
the only original books of account and records of such Assignor relating thereto
are, and will continue to be, kept at such chief executive office or at such
new locations as such Assignor may establish in accordance with the last
sentence of this Section 2.4.  All
Receivables, Contract Rights and Trade Secret Rights of such Assignor are, and
will continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, the office locations
described above or such new location established in accordance with the last
sentence of this Section 2.4.  No
Assignor shall establish new locations for such offices until (i) it shall
have given to the Collateral Agent not less than 15 days’ prior written notice
of its intention to do so, clearly describing such new location and providing
such other information in connection therewith as the Collateral Agent may
reasonably request, (ii) with respect to such new location, it shall have
taken all action, satisfactory to the Collateral

 

7

 

Agent, to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby at all times
fully perfected and in full force and effect, (iii) at the request of the
Collateral Agent, it shall have furnished an opinion of counsel reasonably
acceptable to the Collateral Agent to the effect that all financing or
continuation statements and amendments or supplements thereto have been filed
in the appropriate filing office or offices, and (iv) the Collateral Agent
shall have received evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and
maintain the perfection and priority of) the security interest granted hereby.

 

2.5  Location
of Inventory and Equipment.  All
Inventory and Equipment held on the Restatement Effective Date by each Assignor
is located at one of the locations shown on Annex B hereto, provided, however,
that (i) Inventory and Equipment located at a “home office” site of an Assignor
and (ii) Inventory and Equipment with an aggregate fair market value of less
than $500,000 located in a given location, are not, in either case, listed on
Annex B hereto.  Such Assignor agrees
that, subject to the proviso in the preceding sentence, all Inventory and
Equipment now held or subsequently acquired by it shall be kept at (or shall be
in transport to) any one of the locations shown on Annex B hereto, or such
new location as such Assignor may establish in accordance with the last
sentence of this Section 2.5.  Such
Assignor may establish a new location for Inventory and Equipment only if (i)
it shall have given to the Collateral Agent not less than 15 days’ prior
written notice of its intention to do so, clearly describing such new location
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, (ii) with respect to such new location, it shall
take all action as the Collateral Agent may reasonably request to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the request of the Collateral Agent, it shall have furnished an opinion of
counsel reasonably acceptable to the Collateral Agent to the effect that all
financing or continuation statements and amendments or supplements thereto have
been filed in the appropriate filing office or offices, and (iv) the Collateral
Agent shall have received evidence that all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken, in order to perfect (and
maintain the perfection and priority of) the security interest granted hereby.

 

2.6  Recourse. 
This Agreement is made with full recourse to each Assignor and pursuant
to and upon all the warranties, representations, covenants and agreements on
the part of such Assignor contained herein and in the other Secured Debt
Agreements and otherwise in writing in connection herewith or therewith.

 

2.7  Legal
Names; Organizational Identification Number; Trade Names; Change of Name; etc. 
The exact legal name of each Assignor, and the organizational
identification number (if any) of each Assignor, as of the Restatement
Effective Date is listed on Annex C hereto for such Assignor.  No Assignor has or operates in any
jurisdiction under, or in the five years preceding the Restatement Effective
Date has had or has operated in any jurisdiction under, any trade names,
fictitious names or other names except its legal name and such other trade or
fictitious names as are listed on Annex C hereto for such Assignor.  No Assignor shall change its legal name,
organizational identification number (if any) or assume or operate in any
jurisdiction under any trade, fictitious or other name except its legal name,
organizational identification

 

8

 

number and those trade names in each case listed on
Annex C hereto for such Assignor and those that may be established in
accordance with the immediately succeeding sentence of this Section 2.7.  No Assignor shall change its legal name or
organizational identification number or assume or operate in any jurisdiction
under any new trade, fictitious or other name until (i) it shall have given to
the Collateral Agent not less than 15 days’ prior written notice of its
intention so to do, clearly describing such new name and the jurisdictions in
which such new name shall be used and providing such other information in
connection therewith as the Collateral Agent may reasonably request, (ii) with
respect to such new name and/or jurisdiction, it shall have taken all action to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force
and effect and (iii) the Collateral Agent shall have received evidence that all
other actions (including, without limitation, the payment of all filing fees
and taxes, if any, payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of) the security
interest granted hereby.  In addition,
to the extent that any Assignor does not have an organizational identification
number on the date hereof and later obtains one, such Assignor shall promptly
thereafter notify the Collateral Agent of such organizational identification
number and shall take all actions reasonably satisfactory to the Collateral
Agent to the extent necessary to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted hereby fully
perfected and in full force and effect.

 

2.8  Jurisdiction
and Type of Organization.  The jurisdiction
of organization of each Assignor, and the type of organization of each
Assignor, as of the Restatement Effective Date is listed on Annex J hereto for
such Assignor.  No Assignor shall change
its jurisdiction of organization or its type of organization until (i) it shall
have given to the Collateral Agent not less than 15 days’ prior written notice
of intention so to do, clearly describing such new jurisdiction of organization
and/or type of organization and providing such other information in connection
therewith as the Collateral Agent may reasonably request and (ii) with respect
to such new jurisdiction of organization and/or type of organization, it shall
have taken all actions reasonably requested by the Collateral Agent to maintain
the security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect.

 

2.9  Collateral
in the Possession of a Bailee.  If any Inventory or other Goods are at any time in the possession
of a bailee, the respective Assignor shall promptly notify the Collateral Agent
thereof and, subject to the last sentence hereof, if requested by the
Collateral Agent, shall use its reasonable best efforts to promptly obtain an
acknowledgment from such bailee, in form and substance reasonably satisfactory
to the Collateral Agent, that the bailee holds such Collateral for the benefit
of the Collateral Agent and shall act upon the instructions of the Collateral
Agent, without the further consent of the respective Assignor. The Collateral
Agent agrees with the Assignors that the Collateral Agent shall not make any
such request or give any such instructions unless an Event of Default has
occurred and is continuing or would occur after taking into account any action by
the respective Assignor with respect to any such bailee.

 

2.10  As-Extracted
Collateral; Timber-to-be-Cut.  On the
Restatement Effective Date, no Assignor owns, or expects to acquire, any
property which constitutes, or would constitute, As-Extracted Collateral or
Timber-to-be-Cut.  If at any time after
the Restatement

 

9

 

Effective Date any Assignor owns, acquires or obtains
rights to any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall
furnish the Collateral Agent with prompt written notice thereof (which notice
shall describe in reasonable detail the As-Extracted Collateral and/or
Timber-to-be-Cut and the locations thereof) and shall take all actions as may
be deemed reasonably necessary or desirable by the Collateral Agent to perfect
the security interest of the Collateral Agent therein.

 

ARTICLE III

 

SPECIAL PROVISIONS CONCERNING

RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS

 

3.1  Additional
Representations and Warranties.  As of the
time when each of its Receivables arises, each Assignor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto (i) will represent the genuine legal, valid and binding obligation
of the account debtor evidencing indebtedness unpaid and owed by the respective
account debtor arising out of the performance of labor or services or the sale
or lease and delivery of the inventory, materials, equipment or merchandise
listed therein, or both, enforceable in accordance with their respective terms
(except to the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws generally
affecting creditors’ rights and by equitable principles (regardless of whether
enforcement is sought in equity or law)), (ii) will be the only original
writings evidencing and embodying such obligation of the account debtor named
therein (other than copies created for general accounting purposes) and (iii)
will be in compliance and will conform in all material respects with all
applicable federal, state and local laws and applicable laws of any relevant
foreign jurisdiction.

 

3.2  Maintenance
of Records.  Each Assignor will keep and maintain at its
own cost and expense satisfactory and complete records of its Receivables and
Contracts, including, but not limited to, records of all payments received, all
credits granted thereon, all merchandise returned and all other dealings
therewith, and such Assignor will make the same available on such Assignor’s
premises to the Collateral Agent for inspection, at such Assignor’s own cost and
expense, at any and all reasonable times and intervals as the Collateral Agent
may reasonably request.  Upon the
occurrence and during the continuance of an Event of Default and at the request
of the Collateral Agent, such Assignor shall, at its own cost and expense,
deliver all tangible evidence of its Receivables and Contract Rights
(including, without limitation, all documents evidencing the Receivables and
all Contracts) and such books and records to the Collateral Agent or to its
representatives (copies of which evidence and books and records may be retained
by such Assignor).  Upon the occurrence
of an Event of Default, if the Collateral Agent so directs, such Assignor shall
legend, in form and manner satisfactory to the Collateral Agent, the Receivables
and the Contracts, as well as books, records and documents of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.

 

10

 

3.3  Direction
to Account Debtors; Contracting Parties; etc.  Upon the
occurrence and during the continuance of an Event of Default, and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in preceding clause
(x), and (z) that the Collateral Agent may enforce collection of any such
Receivables or Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such
Assignor.  Upon the occurrence and
during the continuance of an Event of Default, without notice to or assent by
any Assignor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account in the manner provided in
Section 7.4 of this Agreement.  The
costs and expenses (including attorneys’ fees) of collection incurred pursuant
to this Section 3.3, whether incurred by any Assignor or the Collateral Agent,
shall be borne by such Assignor.

 

3.4  Modification
of Terms; etc.  No Assignor shall rescind or cancel any
indebtedness evidenced by any Receivable, or modify any term thereof or make
any adjustment with respect thereto, or extend or renew the same, or compromise
or settle any material dispute, claim, suit or legal proceeding relating
thereto, or sell any Receivable, or interest therein, without the prior written
consent of the Collateral Agent, except as permitted by Section 3.5.  No Assignor shall rescind or cancel any
indebtedness evidenced by any Contract, or modify any term thereof or make any
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or sell any Contract, or interest therein, without the prior written consent of
the Collateral Agent, except (i) as permitted by Section 3.5 or (ii) so
long as no Event of Default is then in existence, to the extent that the
aggregate cost to such Assignor resulting from any such recission,
cancellation, modification, adjustment, extension, compromise, settlement or
sale is not material to such Assignor. 
Each Assignor will duly fulfill all material obligations on its part to
be fulfilled under or in connection with the Receivables and Contracts and will
do nothing to impair the rights of the Collateral Agent in the Receivables or
the Contracts, except as permitted by this Section 3.4 and Section 3.5.

 

3.5  Collection. 
Each Assignor shall use commercially reasonable efforts consistent with
its past practices to endeavor to cause to be collected from the account debtor
named in each of its Receivables or obligor under any Contract, as and when due
(including, without limitation, amounts, services or products which are
delinquent, such amounts, services or products to be collected in accordance
with generally accepted lawful collection procedures) any and all amounts,
services or products owing under or on account of such Receivable or Contract,
and apply forthwith upon receipt thereof all such amounts, services or
products as are so collected to the outstanding balance of such Receivable or
under such Contract, except that, prior to the occurrence of an Event of
Default, any Assignor may allow as adjustments to amounts, services or products
owing under its Receivables and Contracts (i) an extension or renewal of
the time or times of payment or exchange, or settlement for less than the total
unpaid balance, which such Assignor finds appropriate in accordance with
reasonable business judgment and (ii) a refund or credit due as a result
of returned or damaged merchandise or improperly performed services.  The costs and expenses (including, without
limitation, attorneys’ fees) of collection 

 

11

 

incurred pursuant to this Section 3.5, whether
incurred by an Assignor or the Collateral Agent, shall be borne by the relevant
Assignor.

 

3.6  Instruments. 
If any Assignor owns or acquires any Instrument constituting Collateral,
such Assignor will within 10 days notify the Collateral Agent thereof and, upon
request by the Collateral Agent, promptly deliver such Instrument to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent as
further security hereunder, provided that such Assignor shall not be required
to take such action if and to the extent that such Instrument is required to be
and has been delivered to the Pledgee under the U.S. Pledge Agreement.

 

3.7  Further
Actions.  Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers
of attorney, certificates, reports and other assurances or instruments and take
such further steps, including any and all actions as may be necessary under the
Federal Assignment of Claims Act, relating to its Receivables, Contracts,
Instruments and other property or rights covered by the security interest
hereby granted, as the Collateral Agent may reasonably request to preserve and
protect its security interest in the Collateral.

 

3.8  Assignors
Remain Liable Under Receivables and Contracts. 
Anything herein to the contrary notwithstanding, the Assignors shall
remain liable under each of the Receivables and each Contract to observe and
perform all of the conditions and obligations to be observed and performed by them
thereunder, all in accordance with the terms of the agreement giving rise to
such Receivables or such Contract. 
Neither the Collateral Agent nor any other Secured Creditor shall have
any obligation or liability under any Receivable (or any agreement giving rise
thereto) or any Contract by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any other Secured Creditor of any payment
relating to such Receivable or such Contract pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of any Assignor under or pursuant to any
Receivable (or any agreement giving rise thereto) or any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by them or as to the sufficiency of any performance by any party under
any Receivable (or any agreement giving rise thereto) or any Contract, to
present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to them or to
which they may be entitled at any time or times.

 

3.9  Deposit
Accounts; etc. 
(a) No Assignor maintains, or at any time after the Restatement
Effective Date shall establish or maintain, any demand, time, savings, passbook
or similar account, except for such accounts maintained with a bank (as defined
in Section 9-102 of the UCC) whose jurisdiction (determined in accordance with
Section 9-304 of the UCC) is within a State of the United States.  Annex K hereto accurately sets forth,
as of the date of this Agreement, for each Assignor, each Deposit Account
maintained by such Assignor (including a description thereof and the respective
account number), the name of the respective bank with which such Deposit
Account is maintained, and the jurisdiction of the respective bank with respect
to such Deposit Account.  For each
Perfected Deposit Account (other than the Cash Collateral Account or any other
Deposit Account maintained with the Collateral Agent which

 

12

 

may be construed as same), the respective Assignor shall cause the bank
with which the Perfected Deposit Account is maintained to execute and deliver
to the Collateral Agent, within 45 days after the Restatement Effective Date
or, if later, at the time of the establishment of the respective Perfected
Deposit Account, a “control agreement” in the form of Annex M hereto
(appropriately completed), with such changes thereto as may be acceptable to
the Collateral Agent.  If any bank with
which such a Perfected Deposit Account is maintained refuses to, or does not,
enter into such a “control agreement”, then the respective Assignor shall
promptly (and in any event within 45 days after the date of this Agreement or,
if later, 45 days after the opening of such account) close the respective
Perfected Deposit Account and transfer all balances therein to the Cash
Collateral Account or another Deposit Account meeting the requirements of this
Section 3.9.  If any bank with which
such a Perfected Deposit Account is maintained refuses to subordinate all its
claims with respect to such Perfected Deposit Account to the Collateral Agent’s
security interest therein on terms satisfactory to the Collateral Agent, then
the Collateral Agent, at its option, may (x) require that such Perfected
Deposit Account be terminated in accordance with the immediately preceding
sentence or (y) agree to a “control agreement” without such subordination, provided
that in such event the Collateral Agent may at any time, at its option,
subsequently require that such Perfected Deposit Account be terminated (within
30 days after notice from the Collateral Agent) in accordance with the
requirements of the immediately preceding sentence.

 

(b)                                 After
the Restatement Effective Date, no Assignor shall establish any new demand,
time, savings, passbook or similar account, except for Excluded Deposit
Accounts and such other Deposit Accounts established and maintained with banks
and meeting the requirements of preceding clause (a).  At the time any Perfected Deposit Account is established, the
appropriate “control agreement” shall be entered into in accordance with the
requirements of preceding clause (a) and the respective Assignor shall furnish
to the Collateral Agent a supplement to Annex K hereto containing the relevant
information with respect to the respective Perfected Deposit Account and the
bank with which same is established.

 

3.10  Letter-of-Credit Rights. 
If any Assignor is at any time a beneficiary under a letter of credit
with a stated amount of $2,500,000 or more, such Assignor shall promptly notify
the Collateral Agent thereof and, at the request of the Collateral Agent, such
Assignor shall, pursuant to an agreement in form and substance reasonably
satisfactory to the Collateral Agent, use its reasonable best efforts to (i)
arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to the Collateral Agent of the proceeds of any drawing under such
letter of credit or (ii) arrange for the Collateral Agent to become the
transferee beneficiary of such letter of credit, with the Collateral Agent
agreeing, in each case, that the proceeds of any drawing under the letter of
credit are to be applied as provided in this Agreement after the occurrence and
during the continuance of an Event of Default.

 

3.11  Commercial Tort Claims. 
All Commercial Tort Claims of each Assignor and any events or
circumstances that would reasonably be expected to give rise to any Commercial
Tort Claims of each Assignor as of the date of this Agreement are described in
Annex L hereto.  If any Assignor shall
at any time and from time to time after the Restatement Effective Date become
aware of any Commercial Tort Claims (x) that are the subject of a binding
arbitration, court decision or equivalent resolution (regardless of whether
such determination is final) in favor of such Assignor in an amount (taking the
greater of the 

 

13

 

aggregate claimed damages
thereunder or the reasonably estimated value thereof) of $5,000,000 or more or
(y) which are material (as determined in the good faith judgment of the
management of such Assignor), such Assignor shall (i) promptly notify the
Collateral Agent thereof in a writing signed by such Assignor and describing
the details thereof and shall grant to the Collateral Agent in such writing a
security interest in all such Commercial Tort Claims and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to be in form
and substance reasonably satisfactory to the Collateral Agent and (ii) perform
all actions reasonably requested by the Collateral Agent to perfect such
security interest in such Commercial Tort Claims.  For its part, the Collateral Agent acknowledges and agrees that
(I) the proceeds of any Commercial Tort Claim will be applied as provided in
this Agreement only after the occurrence and during the continuance of an Event
of Default and prior thereto will be promptly paid to the respective Assignor
and (II) for purposes of compliance with the preceding sentence of this Section
3.11, no Assignor shall be required to provide any privileged information
relating to a Commercial Tort Claim referred to in clause (y) of the preceding
sentence.

 

3.12  Chattel Paper. 
Upon the request of the Collateral Agent made at any time or from time
to time, each Assignor shall promptly furnish to the Collateral Agent a list of
all Electronic Chattel Paper held or owned by such Assignor.  Furthermore, if requested by the Collateral
Agent, each Assignor shall promptly take all actions which are reasonably
practicable so that the Collateral Agent has “control” of all Electronic
Chattel Paper in accordance with the requirements of Section 9-105 of the
UCC.  Each Assignor will promptly (and
in any event within 10 days) following any request by the Collateral Agent,
deliver all of its Tangible Chattel Paper to the Collateral Agent.

 

ARTICLE IV

 

SPECIAL PROVISIONS
CONCERNING TRADEMARKS

 

4.1  Additional
Representations and Warranties.  Each
Assignor represents and warrants that it is the true, lawful, sole and
exclusive owner of or otherwise has the right to use the Marks listed in Annex
D hereto and that said listed Marks constitute all Marks registered in the
United States Patent and Trademark Office or the equivalent thereof in any
foreign country that such Assignor presently owns and all unregistered
Significant Marks that such Assignor now owns, licenses or uses for products developed
by such Assignor in connection with its business.  Each Assignor further warrants that it has no knowledge of any
material third party claim that any aspect of such Assignor’s present or
contemplated business operations infringes or will infringe any rights in any
trademark, service mark or trade name. 
Each Assignor represents and warrants that it is the beneficial and
record owner of all trademark registrations and applications listed in Annex D
hereto and that said registrations are valid, subsisting and have not been
canceled and that such Assignor is not aware of any material third-party claim
that any of said registrations is invalid or unenforceable, or that there is
any reason that any of said applications will not pass to registration.  Each Assignor represents and warrants that
upon the recordation of an Assignment of Security Interest in United States
Trademarks and Patents in the form of Annex G hereto in the United States
Patent and Trademark Office, together with filings on Form UCC-1 pursuant to
this Agreement, all filings, registrations and recordings necessary or
appropriate to perfect the security interest granted to the Collateral Agent in
the United States Marks covered by this Agreement under federal law will have
been accomplished.  Each

 

14

 

Assignor agrees to execute such an Assignment of
Security Interest in United States Trademark and Patents covering all right,
title and interest in each United States Mark, and the associated goodwill, of
such Assignor, and to record the same. 
Each Assignor hereby grants to the Collateral Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of an Event of
Default, any document which may be required by the United States Patent and
Trademark Office or secretary of state or equivalent governmental agency of any
State of the United States or any foreign jurisdiction in order to effect an
absolute assignment of all right, title and interest in each Mark, and record
the same.

 

4.2  Licenses
and Assignments.  Each Assignor hereby agrees not to divest
itself of any material right under any Significant Mark absent prior written
approval of the Collateral Agent, except as otherwise permitted by this
Agreement or the Credit Agreement.

 

4.3  Infringements. 
Each Assignor agrees, promptly upon learning thereof, to notify the
Collateral Agent in writing of the name and address of, and to furnish such
pertinent information that may be available with respect to, (i) any party who
such Assignor believes is infringing or diluting or otherwise violating in any
material respect any of such Assignor’s rights in and to any Significant Mark,
or (ii) with respect to any party claiming that such Assignor’s use of any
Significant Mark violates in any material respect any property right of that
party.  Each Assignor further agrees,
unless otherwise agreed by the Collateral Agent, to prosecute, in accordance
with reasonable business practices, any Person infringing any Significant Mark
owned by such Assignor.

 

4.4  Preservation
of Significant Marks.  Each Assignor agrees to use
its Significant Marks in interstate or foreign commerce, as the case may be,
during the time in which this Agreement is in effect, sufficiently to preserve
such Significant Marks as valid and subsisting trademarks or service marks
under the laws of the United States or the relevant foreign jurisdiction; provided
that no Assignor shall be obligated to preserve any Mark to the extent the
Assignor determines, in its reasonable business judgment, that the preservation
of such Mark is no longer desirable in the conduct of its business.

 

4.5  Maintenance
of Registration.  Each Assignor shall, at its own expense and
in accordance with reasonable business practices, process all documents
required by the Trademark Act of 1946, as amended, 15 U.S.C. §§ 1051 et
seq. and any foreign equivalent thereof to maintain trademark
registrations, including but not limited to affidavits of continued use and
applications for renewals of registration in the United States Patent and
Trademark Office or equivalent governmental agency in any foreign jurisdiction
for all of its registered Significant Marks pursuant to 15 U.S.C.
§§ 1058(a), 1059 and 1065 or any foreign equivalent thereof, as applicable,
and shall pay all fees and disbursements in connection therewith and shall not
abandon any such filing of affidavit of use or any such application of renewal
prior to the exhaustion of all administrative and judicial remedies without
prior written consent of the Collateral Agent; provided that no Assignor
shall be obligated to maintain any Mark to the extent such Assignor determines,
in its reasonable business judgment, that the maintenance of such Mark is no
longer necessary or desirable in the conduct of its business.  Subject to Section 4.4, each Assignor agrees
to notify the Collateral Agent 30 days prior to the dates on which the
affidavits of use or the applications for renewal registration are due with
respect to any registered 

 

15

 

Significant Mark that the affidavits of use or the
renewal is being processed or being abandoned, as the case may be.

 

4.6  Future
Registered Marks.  If any registration for any Mark issues
hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral
Agent a copy of such certificate, and an assignment for security in such Mark,
to the Collateral Agent and at the expense of such Assignor, confirming the
assignment for security in such Mark to the Collateral Agent hereunder, the
form of such assignment for security to be substantially the same as the form
hereof or in such other form as may be reasonably satisfactory to the
Collateral Agent.

 

4.7  Remedies. 
If an Event of Default shall occur and be continuing, the Collateral
Agent may, by written notice to the relevant Assignor, take any or all of the
following actions:  (i) declare the
entire right, title and interest of such Assignor in and to each of the Marks,
together with all trademark rights and rights of protection to the same and the
goodwill of such Assignor’s business symbolized by said Marks and the right to
recover for past infringements thereof, vested in the Collateral Agent for the
benefit of the Secured Creditors (excluding the 2003 Senior Secured Notes
Creditor and the 2003 Senior Secured Note Refinancing Creditors (if any), in
the case of Marks and rights therein owned or held by any Assignor which
constitute Excluded 2003 Senior Secured Notes Collateral), in which event such
rights, title and interest shall immediately vest, in the Collateral Agent for
the benefit of the relevant Secured Creditors, and the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 4.1 to
execute, cause to be acknowledged and notarized and to record an absolute
assignment with the applicable agency; (ii) take and use or sell the Marks and
the goodwill of such Assignor’s business symbolized by the Marks and the right
to carry on the business and use the assets of such Assignor in connection with
which the Marks have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks in any manner
whatsoever, directly or indirectly, and, if requested by the Collateral Agent,
change such Assignor’s corporate name to eliminate therefrom any use of any
Mark and execute such other and further documents that the Collateral Agent may
request to further confirm this and to transfer ownership of the Marks and
registrations and any pending trademark applications therefor in the United
States Patent and Trademark Office or any equivalent government agency or
office in any foreign jurisdiction to the Collateral Agent.

 

ARTICLE V

 

SPECIAL PROVISIONS
CONCERNING PATENTS,

COPYRIGHTS AND TRADE SECRETS

 

5.1  Additional
Representations and Warranties.  Each
Assignor represents and warrants that it is the true and lawful exclusive owner
of or otherwise has the right to use all (i) Trade Secret Rights of such
Assignor, (ii) rights in the Patents of such Assignor listed in Annex E hereto
and that said Patents constitute all the patents and applications for patents
that such Assignor now owns and (iii) rights in the Copyrights of such Assignor
listed in Annex F hereto, and that such Copyrights include all registrations of
copyrights and applications for copyright registrations that the Assignor now
owns.  Each Assignor further represents
and warrants that it 

 

16

 

has the right to use and practice under all Patents
and Copyrights that it owns and has the exclusive right to exclude others from
using or practicing under any Patents it owns. 
Each Assignor further warrants that it has no knowledge of any material
third party claim that any aspect of such Assignor’s present or contemplated
business operations infringes or will infringe any rights in any Patent or Copyright
or that such Assignor has misappropriated any Trade Secrets, Trade Secret
Rights or other proprietary information. 
Each Assignor represents and warrants that upon the recordation of an
Assignment of Security Interest in United States Trademarks and Patents in the
form of Annex G hereto in the United States Patent and Trademark Office and the
recordation of an Assignment of Security Interest in United States Copyrights
in the form of Annex H hereto in the United States Copyright Office, together
with filings on Form UCC-1 pursuant to this Agreement, all filings,
registrations and recordings necessary or appropriate to perfect the security
interest granted to the Collateral Agent in the United States Patents and
United States Copyrights covered by this Agreement under federal law will have
been accomplished.  Each Assignor agrees
to execute an Assignment of Security Interest in United States Trademarks and
Patents covering all right, title and interest in each United States Patent of
such Assignor and to record the same, and to execute such an Assignment of
Security Interest in United States Copyrights covering all right, title and
interest in each United States Copyright of such Assignor and to record the
same.  Each Assignor hereby grants to
the Collateral Agent an absolute power of attorney to sign, upon the occurrence
and during the continuance of any Event of Default, any document which may be
required by the United States Patent and Trademark Office or equivalent
governmental agency in any foreign jurisdiction or the United states Copyright
Office or equivalent governmental agency in any foreign jurisdiction in order
to effect an absolute assignment of all right, title and interest in each
Patent and Copyright of such Assignor, as the case may be, and to record the
same.

 

5.2  Licenses
and Assignments.  Each Assignor hereby agrees not to divest
itself of any right under any Significant Patent or Significant Copyright
absent prior written approval of the Collateral Agent, except as otherwise
permitted by this Agreement or the Credit Agreement.

 

5.3  Infringements. 
Each Assignor agrees, promptly upon learning thereof, to furnish the
Collateral Agent in writing with all pertinent information available to such
Assignor with respect to any infringement, contributing infringement or active
inducement to infringe any of such Assignor’s rights in any Significant Patent
or Significant Copyright or to any claim that the practice of any Significant
Patent or the use of any Significant Copyright of such Assignor violates any
property right of a third party, or with respect to any misappropriation of any
Trade Secret Right of such Assignor or any claim that practice of any Trade
Secret Right of such Assignor violates any property right of a third party.  Each Assignor further agrees, absent
direction of the Collateral Agent to the contrary, diligently to prosecute, in
accordance with reasonable business practices, any Person infringing any
Significant Patent or Significant Copyright of such Assignor or any Person misappropriating
any Trade Secret Right of such Assignor .

 

5.4  Maintenance
of Patents and Copyrights.  At its own
expense, each Assignor shall make timely payment of all post-issuance fees
required pursuant to 35 U.S.C. § 41 and any foreign equivalent thereof to
maintain in force rights under each of its Significant Patents, and to apply as
permitted pursuant to applicable law for any renewal of each of its Significant

 

17

 

Copyrights, in any case absent prior written consent
of the Collateral Agent; provided that no Assignor shall be obligated to
pay any such fees or apply for any such renewal to the extent that such
Assignor determines, in its reasonable business judgment, that the maintenance
of such Patent or Copyright is no longer necessary or desirable in the conduct
of its business.

 

5.5  Prosecution
of Patent or Copyright Applications.  At its own
expense, each Assignor shall diligently prosecute, in accordance with
reasonable business practices and subject to Section 5.4, all of its
applications for Patents listed in Annex E hereto and for Copyrights
listed in Annex F hereto and shall not abandon any such application prior to
exhaustion of all administrative and judicial remedies, absent written consent of
the Collateral Agent.

 

5.6  Other
Patents and Copyrights.  Within 30
days of the acquisition or issuance of a United States Patent or of a Copyright
registration, or of filing of an application for a United States Patent or
Copyright registration, the relevant Assignor shall deliver to the Collateral
Agent a copy of said Patent or Copyright or certificate or registration of, or
application therefor, as the case may be, with an assignment for security as to
such Patent or Copyright, as the case may be, to the Collateral Agent and at
the expense of such Assignor, confirming the assignment for security, the form
of such assignment for security to be substantially the same as the form hereof
or in such other form as may be satisfactory to the Collateral Agent.

 

5.7  Remedies. 
If an Event of Default shall occur and be continuing, the Collateral
Agent may by written notice to the relevant Assignor, take any or all of the
following actions:  (i) declare the
entire right, title, and interest of such Assignor in each of the Patents and
Copyrights vested in the Collateral Agent for the benefit of the Secured
Creditors (excluding the 2003 Senior Secured Notes Creditor and the 2003 Senior
Secured Note Refinancing Creditors (if any), in the case of Patents and Copyrights
and rights therein owned or held by any Assignor which constitute Excluded 2003
Senior Secured Notes Collateral), in which event such right, title, and
interest shall immediately vest in the Collateral Agent for the benefit of the
relevant Secured Creditors, and the Collateral Agent shall be entitled to
exercise the power of attorney referred to in Section 5.1 to execute, cause to
be acknowledged and notarized and to record an absolute assignment with the
applicable agency; (ii) take and use, practice or sell the Patents, Copyrights
and Trade Secret Rights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights and/or Trade Secret Rights directly or indirectly, and such Assignor
shall execute such other and further documents as the Collateral Agent may
request further to confirm this and to transfer ownership of the Patents,
Copyrights and Trade Secret Rights to the Collateral Agent for the benefit of
the Secured Creditors (excluding the 2003 Senior Secured Notes Creditor and the
2003 Senior Secured Note Refinancing Creditors (if any), in the case of Patents
and Copyrights and rights therein owned or held by any Assignor which
constitute Excluded 2003 Senior Secured Notes Collateral).

 

ARTICLE VI

 

PROVISIONS CONCERNING ALL
COLLATERAL

 

6.1  Protection
of Collateral Agent’s Security.  Each
Assignor will do nothing to impair the rights of the Collateral Agent in the
Collateral.  Each Assignor will at all
times keep 

 

18

 

its Inventory and
Equipment insured in favor of the Collateral Agent, at such Assignor’s own
expense to the extent and in the manner provided in the Secured Debt
Agreements.  If any Assignor shall fail
to insure its Inventory and Equipment in accordance with the terms of the
Credit Agreement, or if any Assignor shall fail to so endorse and deposit all
policies or certificates with respect thereto, the Collateral Agent shall have
the right (but shall be under no obligation) to procure such insurance and such
Assignor agrees to promptly reimburse the Collateral Agent for all costs and
expenses of procuring such insurance. 
Except as otherwise permitted to be retained or expended by the relevant
Assignor pursuant to the Credit Agreement (or, after the Credit Document
Obligations Termination Date, any other Secured Debt Agreement), the Collateral
Agent shall, at the time such proceeds of such insurance are distributed to the
Secured Creditors, apply such proceeds in accordance with the Credit Agreement
(or, after the Credit Document Obligations Termination Date, in accordance with
the instructions of the Required Senior Creditors), or after the Obligations
have been accelerated or otherwise become due and payable, in accordance with
Section 7.4.  Each Assignor assumes all
liability and responsibility in connection with the Collateral acquired by it
and the liability of such Assignor to pay the Obligations shall in no way be
affected or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to such
Assignor.

 

6.2  Warehouse
Receipts Non-Negotiable.  Each
Assignor agrees that if any warehouse receipt or receipt in the nature of a
warehouse receipt is issued with respect to any of its Inventory, such
warehouse receipt or receipt in the nature thereof shall not be “negotiable”
(as such term is used in Section 7-104 of the Uniform Commercial Code as in
effect in any relevant jurisdiction or under other relevant law).

 

6.3  Further
Actions.  Each Assignor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such lists, descriptions and designations of its
Collateral, warehouse receipts, receipts in the nature of warehouse receipts,
bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral.

 

6.4  Financing
Statements.  Each Assignor agrees to execute and deliver
to the Collateral Agent such financing statements, in form acceptable to the
Collateral Agent, as the Collateral Agent may from time to time reasonably
request or as are reasonably necessary or desirable in the opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as enacted in any and all relevant jurisdictions or any other
relevant law.  Each Assignor will pay
any applicable filing fees, recordation taxes and related expenses relating to
its Collateral.  Each Assignor hereby
authorizes the Collateral Agent to file any such financing statements
(including, without limitation, (x) financing statements which list the
Collateral specifically and/or “all assets” as collateral and (y) “in lieu of”
financing statements) without the signature of such Assignor where permitted by
law.

 

19

 

6.5  Additional
Information.  Each Assignor will, at its own expense, from
time to time upon the reasonable request of the Collateral Agent, promptly (and
in any event within 10 days after its receipt of the respective request)
furnish to the Collateral Agent such information with respect to the Collateral
(including the identity of the Collateral or such components thereof as may
have been requested by the Collateral Agent, the value and location of such
Collateral, etc.) as may be requested by the Collateral Agent.  Without limiting the forgoing, each Assignor
agrees that it shall promptly (and in any event within 10 days after its
receipt of the respective request) furnish to the Collateral Agent such updated
Annexes hereto as may from time to time be reasonably requested by the
Collateral Agent.

 

ARTICLE VII

 

REMEDIES UPON OCCURRENCE
OF EVENT OF DEFAULT

 

7.1  Remedies;
Obtaining the Collateral Upon Default.  Each
Assignor agrees that, if any Event of Default shall have occurred and be
continuing, then and in every such case, the Collateral Agent, in addition to
any rights now or hereafter existing under applicable law and under the other
provisions of this Agreement, shall have all rights as a secured creditor under
the Uniform Commercial Code in all relevant jurisdictions and such additional
rights and remedies to which a secured creditor is entitled under the laws in
effect in all relevant jurisdictions and may also:

 

(i)                                     personally,
or by agents or attorneys, immediately take possession of the Collateral or any
part thereof, from such Assignor or any other Person who then has possession of
any part thereof with or without notice or process of law, and for that purpose
may enter upon such Assignor’s premises where any of the Collateral is located
and remove the same and use in connection with such removal any and all
services, supplies, aids and other facilities of such Assignor;

 

(ii)                                  instruct
the obligor or obligors on any agreement, instrument or other obligation
(including, without limitation, the Receivables and the Contracts) constituting
the Collateral to make any payment required by the terms of such agreement,
instrument or other obligation directly to the Collateral Agent and may
exercise any and all remedies of such Assignor in respect of such Collateral;

 

(iii)                               instruct all banks which
have entered into a control agreement with the Collateral Agent to transfer all
monies, securities and instruments held by such depository bank to the Cash
Collateral Account and withdraw all monies, securities and instruments in the
Cash Collateral Account for application to the Obligations in accordance with
Section 7.4;

 

(iv)                              sell,
assign or otherwise liquidate, or direct such Assignor to sell, assign or
otherwise liquidate, any or all of the Collateral or any part thereof in
accordance with Section 7.2, or direct the relevant Assignor to sell, assign or
otherwise liquidate any or all of the Collateral or any part thereof, and, in
each case, take possession of the proceeds of any such sale or liquidation;

 

20

 

(v)                                 take
possession of the Collateral or any part thereof, by directing the relevant
Assignor in writing to deliver the same to the Collateral Agent at any place or
places designated by the Collateral Agent, in which event such Assignor shall
at its own expense;

 

(x)  forthwith
cause the same to be moved to the place or places so designated by the
Collateral Agent and there delivered to the Collateral Agent;

 

(y)  store and
keep any Collateral so delivered to the Collateral Agent at such place or
places pending further action by the Collateral Agent as provided in Section
7.2; and

 

(z)  while the
Collateral shall be so stored and kept, provide such guards, other security and
maintenance services as shall be necessary to protect the same and to preserve
and maintain them in good condition;

 

(vi)                              license
or sublicense, whether on an exclusive or nonexclusive basis, any Marks,
Patents or Copyrights included in the Collateral for such term and on such
conditions and in such manner as the Collateral Agent shall in its sole
judgment determine;

 

(vii)                           apply any monies constituting
Collateral or proceeds thereof in accordance with Section 7.4; and

 

(viii)                        take any other action as
specified in clauses (1) through (5), inclusive, of Section 9-607 of the UCC.

 

it being understood that
each Assignor’s obligation so to deliver the Collateral is of the essence of
this Agreement and that, accordingly, upon application to a court of equity
having jurisdiction, the Collateral Agent shall be entitled to a decree
requiring specific performance by such Assignor of said obligation.  By accepting the benefits of this Agreement
and each other Security Document, the Secured Creditors expressly acknowledge
and agree that this Agreement and each other Security Document may be enforced
only by the action of the Collateral Agent acting upon the instructions of the
Required Secured Creditors and that no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or any other
Security Document or to realize upon the security to be granted hereby or
thereby, it being understood and agreed that such rights and remedies shall be
exercised exclusively by the Collateral Agent for the benefit of the Secured
Creditors upon the terms of this Agreement and the other Security Documents.

 

7.2  Remedies;
Disposition of the Collateral.  Any
Collateral repossessed by the Collateral Agent under or pursuant to Section 7.1
and any other Collateral whether or not so repossessed by the Collateral Agent,
may be sold, assigned, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at the
place of sale the property to be sold, and in general in such manner, at such
time or times, at such place or places and on such terms as the Collateral
Agent may, in compliance with any mandatory requirements of applicable law,
determine to be commercially reasonable. 
Any of the Collateral

 

21

 

may be sold, leased or otherwise disposed of, in the
condition in which the same existed when taken by the Collateral Agent or after
any overhaul or repair at the expense of the relevant Assignor which the
Collateral Agent shall determine to be commercially reasonable.  Any such disposition which shall be a private
sale or other private proceedings permitted by such requirements shall be made
upon not less than 10 days’ written notice to the relevant Assignor specifying
the time at which such disposition is to be made and the intended sale price or
other consideration therefor, and shall be subject, for the 10 days after the
giving of such notice, to the right of the relevant Assignor or any nominee of
such Assignor to acquire the Collateral involved at a price or for such other
consideration at least equal to the intended sale price or other consideration
so specified.  Any such disposition
which shall be a public sale permitted by such requirements shall be made upon
not less than 10 days’ written notice to the relevant Assignor specifying the
time and place of such sale and, in the absence of applicable requirements of
law, shall be by public auction (which may, at the Collateral Agent’s option,
be subject to reserve), after publication of notice of such auction not less
than 10 days prior thereto in two newspapers in general circulation to be
selected by the Collateral Agent.  To
the extent permitted by any such requirement of law, the Collateral Agent on
behalf of the Secured Creditors (or certain of them) may bid for and become the
purchaser of the Collateral or any item thereof, offered for sale in accordance
with this Section without accountability to the relevant Assignor.  If, under mandatory requirements of
applicable law, the Collateral Agent shall be required to make disposition of
the Collateral within a period of time which does not permit the giving of
notice to the relevant Assignor as hereinabove specified, the Collateral Agent
need give such Assignor only such notice of disposition as shall be reasonably
practicable in view of such mandatory requirements of applicable law.  Each Assignor agrees to do or cause to be
done all such other acts and things as may be reasonably necessary to make such
sale or sales of all or any portion of the Collateral of such Assignor valid
and binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all courts,
arbitrations or governmental instrumentalities, domestic or foreign, having
jurisdiction over any such sale or sales, all at such Assignor’s expense.

 

7.3  Waiver
of Claims.  Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S
TAKING POSSESSION OR THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR WOULD
OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF
ANY STATE, and such Assignor hereby further waives, to the extent permitted by
law:

 

(i)                                     all
damages occasioned by such taking of possession or any such disposition except
any damages which are the direct result of the Collateral Agent’s gross
negligence or willful misconduct;

 

(ii)                                  all
other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Collateral Agent’s rights
hereunder; and

 

22

 

(iii)                               all rights of redemption,
appraisement, valuation, stay, extension or moratorium now or hereafter in
force under any applicable law in order to prevent or delay the enforcement of
this Agreement or the absolute sale of the Collateral or any portion thereof,
and each Assignor, for itself and all who may claim under it, insofar as it or
they now or hereafter lawfully may, hereby waives the benefit of all such laws.

 

Any sale of, or
the grant of options to purchase, or any other realization upon, any Collateral
shall operate to divest all right, title, interest, claim and demand, either at
law or in equity, of the relevant Assignor therein and thereto, and shall be a
perpetual bar both at law and in equity against such Assignor and against any
and all Persons claiming or attempting to claim the Collateral so sold,
optioned or realized upon, or any part thereof, from, through and under such
Assignor.

 

7.4  Application
of Proceeds.  (a)  All moneys collected by the
Collateral Agent upon any sale or other disposition of any Collateral (other
than Excluded 2003 Senior Secured Notes Collateral) pursuant to the enforcement
of this Agreement or the exercise of any of the remedial provisions hereof (or,
if any other Security Document requires proceeds of “collateral” thereunder
(other than Excluded Collateral) to be applied in accordance with the terms of
this Agreement, by such other “collateral agent” thereunder pursuant to the
enforcement of such Security Document or the exercise of the remedial
provisions thereof), together with all other moneys received by the Collateral
Agent hereunder (or such other “collateral agent” under such other Security
Documents) as a result of any such enforcement or the exercise of any such
remedial provisions (other than with respect to Excluded Collateral) or as a
result of any distribution of any Collateral (or “collateral” under any other
Security Document, as the case may be) (in each case, other than Excluded
Collateral) upon the bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding involving the
readjustment of the obligations and indebtedness of any Credit Party, or the
application of any Collateral (or “collateral” under any other Security
Document, as the case may be) (in each case, other than Excluded Collateral) to
the payment thereof or any distribution of Collateral (or “collateral” under
any other Security Document, as the case may be) (in each case, other than
Excluded Collateral) upon the liquidation or dissolution of any Credit Party,
or the winding up of the assets or business of any Credit Party or under any
Mortgage Policies (to the extent same does not constitute Excluded Collateral),
shall be applied as follows:

 

(i)                                     first,
to the payment of all Obligations owing the Collateral Agent of the type
described in clauses (v), (vi) and (vii) of the definition of “Obligations”;

 

(ii)                                  second,
to the extent proceeds remain after the application pursuant to the preceding
clause (i), an amount equal to the outstanding Primary Obligations shall be
paid to the relevant Secured Creditors as provided in Section 7.4(f), with (x)
each such Secured Creditor receiving an amount equal to its outstanding Primary
Obligations or, if the proceeds are insufficient to pay in full all such
Primary Obligations, its Pro Rata Share of the amount remaining to be
distributed, (y) the amount received by any Lender Creditor in respect of
Primary Obligations consisting of Credit Document Obligations pursuant to this
clause (ii) to be applied (a) first, in satisfaction of the Primary
Obligations owing to such Lender Creditor by Vertis (other than Primary
Obligations owing by Vertis pursuant to its Vertis  Guaranty) and by the U.S. Subsidiary Guarantors 

 

23

 

(other
than Primary Obligations owing by them pursuant to the U.S. Subsidiaries
Guaranty which represent a guarantee of the Primary Obligations of the U.K.
Borrowers consisting of Credit Document Obligations) and (b) second, to
the extent proceeds remain after the application pursuant to preceding
subclause (a), in satisfaction of all other Primary Obligations owing to such
Lender Creditor by Vertis and the U.S. Subsidiary Guarantors and (z) the amount
received by any Other Creditor in respect of Primary Obligations consisting of
Other Obligations pursuant to this clause (ii) to be applied (a) first,
in satisfaction of the Primary Obligations owing to such Other Creditor by
Vertis (other than Primary Obligations owing by Vertis pursuant to its Vertis
Guaranty) and by Domestic Subsidiaries of Vertis (other than Primary
Obligations owing by them pursuant to the U.S. Subsidiaries Guaranty which
represent a guarantee of the Primary Obligations of Foreign Subsidiaries of
Vertis consisting of Other Obligations) and (b) second, to the extent
proceeds remain after the application pursuant to preceding subclause (b), in
satisfaction of all other Primary Obligations owing to such Other Creditor by
Vertis and its Subsidiaries;

 

(iii)                               third, to the
extent proceeds remain after the application pursuant to the preceding clauses
(i) and (ii), an amount equal to the outstanding Secondary Obligations shall be
paid to the relevant Secured Creditors as provided in Section 7.4(f), with each
such Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all such
Secondary Obligations, its Pro Rata Share of the amount remaining to be
distributed;

 

(iv)                              fourth,
to the extent proceeds remain after the applications pursuant to preceding
clauses (i) through (iii), an amount equal to the outstanding Tertiary
Obligations shall be paid to the 2003 Senior Secured Notes Creditor and the
2003 Senior Secured Note Refinancing Creditors (if any) as provided in Section
7.4(f), with (x) each such Secured Creditor to receive an amount equal to its
the outstanding Tertiary Obligations or, if the proceeds are insufficient to
pay in full all such Tertiary Obligations, its Pro Rata Share of the amount
remaining to be distributed and (y) the amount received by each such Secured
Creditor in respect of Tertiary Obligations consisting of 2003 Senior Secured
Notes Obligations or 2003 Senior Secured Note Refinancing Obligations pursuant
to this clause (ii) to be applied (a) first, to pay in full the Tertiary
Obligations owing to the 2003 Senior Secured Notes Indenture Trustee in its
capacity as such under the 2003 Senior Secured Notes Indenture and each 2003
Senior Secured Refinancing Note Indenture Trustee in its capacity as such under
the relevant 2003 Senior Secured Note Refinancing Indenture (or, if the
proceeds are insufficient to pay in full all such Tertiary Obligations owing to
such Secured Creditor, such Secured Creditor’s Pro Rata Share of the amount
remaining to be distributed) and (b) second, to the extent proceeds
remain after the application pursuant to preceding subclause (a), to pay in
full all other Tertiary Obligations consisting of 2003 Senior Secured Notes
Obligations or 2003 Senior Secured Note Refinancing Obligations owing to 2003
Senior Secured Noteholders or the 2003 Senior Secured Refinancing Noteholders,
as the case may be (or, if the proceeds are insufficient to pay in full all
such Tertiary Obligations owing to such noteholders, the relevant Secured
Creditor’s Pro Rata Share of the amount remaining to be distributed); and

 

24

 

(v)                                 fifth,
to the extent proceeds remain after the applications pursuant to preceding
clauses (i) through (iv), inclusive, and following the termination of this
Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to
whomever may be lawfully entitled to receive such surplus.

 

(b)                                 All moneys collected by the Collateral
Agent upon any sale or other disposition of any Excluded 2003 Senior Secured
Notes Collateral pursuant to the enforcement of this Agreement or the exercise
of any of the remedial provisions hereof (or, if any other Security Document
requires proceeds of Excluded Collateral thereunder to be applied in accordance
with the terms of this Agreement, by such other “collateral agent” thereunder
pursuant to the enforcement of such Security Document or the exercise of the
remedial provisions thereof), together with all other moneys received by the
Collateral Agent hereunder (or such other “collateral agent” under such other
Security Documents) with respect to Excluded 2003 Senior Secured Notes
Collateral (or Excluded Collateral, as applicable) as a result of any such
enforcement or the exercise of any such remedial provisions or as a result of
any distribution of any Excluded 2003 Senior Secured Notes Collateral (or
Excluded Collateral, as applicable) upon the bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding involving the readjustment of the obligations and indebtedness of
any Credit Party, or the application of any Excluded 2003 Senior Secured Notes
Collateral (or Excluded Collateral, as applicable) to the payment thereof or
any distribution of the Excluded 2003 Senior Secured Notes Collateral (or
Excluded Collateral, as applicable) upon the liquidation or dissolution of any
Credit Party, or the winding up of the assets or business of any Credit Party
or under any Mortgage Policy covering Excluded 2003 Senior Secured Notes
Collateral (or Excluded Collateral, as applicable), shall be applied as
follows:

 

(i)                                     first,
to the payment of all Obligations owing the Collateral Agent of the type
described in clauses (v), (vi) and (vii) of the definition of “Obligations”;

 

(ii)                                  second,
but subject to the provisions of following clauses (h) and (i), to the extent
proceeds remain after the application pursuant to the preceding clause (i), an
amount equal to the outstanding Primary Obligations shall be paid to the
Secured Creditors as provided in Section 7.4(f), with (x) each Secured Creditor
receiving an amount equal to its outstanding Primary Obligations or, if the
proceeds are insufficient to pay in full all such Primary Obligations, its Pro
Rata Share of the amount remaining to be distributed, (y) the amount received
by any Lender Creditor in respect of Primary Obligations consisting of Credit
Document Obligations pursuant to this clause (ii) to be applied (a) first,
in satisfaction of the Primary Obligations owing to such Lender Creditor by
Vertis (other than Primary Obligations owing by Vertis pursuant to its
Vertis  Guaranty) and by the U.S.
Subsidiary Guarantors (other than Primary Obligations owing by them pursuant to
the U.S. Subsidiaries Guaranty which represent a guarantee of the Primary
Obligations of the U.K. Borrowers consisting of Credit Document Obligations)
and (b) second, to the extent proceeds remain after the application
pursuant to preceding subclause (b), in satisfaction of all other Primary
Obligations owing to such Lender Creditor by Vertis and the U.S. Subsidiary
Guarantors and (z) the amount received by any Other Creditor in respect of
Primary Obligations consisting of Other Obligations pursuant to this clause
(ii) to be applied (a) first, in satisfaction of the Primary Obligations

 

25

 

owing
to such Other Creditor by Vertis (other than Primary Obligations owing by
Vertis pursuant to its Vertis Guaranty) and by Domestic Subsidiaries of Vertis
(other than Primary Obligations owing by them pursuant to the U.S. Subsidiaries
Guaranty which represent a guarantee of the Primary Obligations of Foreign
Subsidiaries of Vertis consisting of Other Obligations) and (b) second,
to the extent proceeds remain after the application pursuant to preceding
subclause (b), in satisfaction of all other Primary Obligations owing to such
Other Creditor by Vertis and its Subsidiaries;

 

(iii)                               third, but
subject to the provisions of following clauses (h) and (i), to the extent
proceeds remain after the application pursuant to the preceding clauses (i) and
(ii), an amount equal to the outstanding Secondary Obligations shall be paid to
the applicable Secured Creditors as provided in Section 7.4(f), with each such
Secured Creditor receiving an amount equal to its outstanding Secondary
Obligations or, if the proceeds are insufficient to pay in full all such
Secondary Obligations, its Pro Rata Share of the amount remaining to be
distributed; and

 

(iv)                              fourth,
to the extent proceeds remain after the applications pursuant to preceding
clauses (i) through (iii), inclusive, and following the termination of this
Agreement pursuant to Section 10.8(a) hereof, to the relevant Assignor or to
whomever may be lawfully entitled to receive such surplus.

 

(c)                                  For
purposes of this Agreement (i) “Pro Rata Share” shall mean, when calculating a
Secured Creditor’s portion of any distribution or amount, that amount
(expressed as a percentage) equal to a fraction the numerator of which is the
then unpaid amount of such Secured Creditor’s Primary Obligations, Secondary
Obligations or Tertiary Obligations, as the case may be, and the denominator of
which is the then outstanding amount of all Primary Obligations, Secondary
Obligations or Tertiary Obligations, as the case may be, (ii) “Primary
Obligations” shall mean (x) in the case of Credit Document Obligations, all
principal of, and interest on, all Loans, all Unpaid Drawings theretofore made
(together with all interest accrued thereon), the aggregate Stated Amounts of
all Letters of Credit issued (or deemed issued) under the Credit Agreement, and
all Fees (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of any Assignor at
the rate provided for in the respective documentation, whether or not a claim
for post-petition interest is allowed in any such case, proceeding or other
action), (y) in the case of the Other Obligations, all amounts due under any
Interest Rate Protection Agreement or Other Hedging Agreement (excluding
indemnities, fees (including, without limitation, attorneys’ fees) and similar
obligations and liabilities but including all interest on such amounts that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Assignor at the rate provided for in the respective documentation, whether or
not a claim for post-petition interest is allowed in any such case, proceeding
or other action), (iii) “Secondary Obligations” shall mean all Credit Document
Obligations and all Other Obligations which, in each case, do not constitute
Primary Obligations and (iv) “Tertiary Obligations” shall mean all 2003 Senior
Secured Notes Obligations and, on and after the incurrence of 2003 Senior
Secured Note Refinancing Indebtedness, all 2003 Senior Secured Note Refinancing
Obligations.  Furthermore, and notwithstanding
anything to the contrary contained elsewhere in this Agreement, to the extent
that, after the Restatement Effective Date, the relevant Secured Creditors
amend or modify the Credit Documents, the 2003 Senior Secured Notes Documents, 

 

26

 

any 2003 Senior Secured Note Refinancing Documents or
the other Secured Debt Agreements in a manner which has the effect of
increasing the outstanding amount of the Primary Obligations, Secondary
Obligations or Tertiary Obligations, as the case may be, above the amounts
thereof as then in effect, then to the extent additional amounts are owing as a
result thereof, such additional amounts shall be deemed to constitute Primary
Obligations, Secondary Obligations or Tertiary Obligations, as the case may be,
in each case so long as the amendments or modifications which effect such
increased amounts are made in accordance with the requirements set forth in
clause (x) of the second proviso appearing in the first sentence of Section
10.2(a) below.

 

(d)                                 When
payments to Secured Creditors are based upon their respective Pro Rata Shares,
the amounts received by such Secured Creditors hereunder shall be applied (for
purposes of making determinations under this Section 7.4 only) (i) first,
to their Primary Obligations, (ii) second, to the Secondary Obligations
(other than Secondary Obligations constituting indemnity or reimbursement
obligations not then due and owing and for which no claim has been made at the
time of the proposed payment), (iii) third, to their Tertiary Obligations.

 

(e)                                  Each
of the Secured Creditors agrees and acknowledges that if the Lender Creditors
are to receive a distribution on account of undrawn amounts with respect to
Letters of Credit issued (or deemed issued) under the Credit Agreement (which
shall only occur after all outstanding Loans and Unpaid Drawings with respect
to such Letters of Credit have been paid in full), such amounts shall be paid
to the Administrative Agent under the Credit Agreement and held by it, for the
equal and ratable benefit of the Lender Creditors, as cash security for the
repayment of Obligations owing to the Lender Creditors as such.  If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of
all outstanding Letters of Credit, and after the application of all such cash
security to the repayment of all Obligations owing to the Lender Creditors
after giving effect to the termination of all such Letters of Credit, if there
remains any excess cash, such excess cash shall be returned by the
Administrative Agent to the Collateral Agent for distribution in accordance
with Section 7.4(a) or (b) hereof, as applicable.

 

(f)                                    Except
as set forth in Section 7.4(e), all payments required to be made hereunder
shall be made (w) if to the Lender Creditors, to the Administrative Agent under
the Credit Agreement for the account of (and for distribution to) the Lender
Creditors, (x) if to the 2003 Senior Secured Notes Creditor, to the 2003 Senior
Secured Notes Indenture Trustee under the 2003 Senior Secured Notes Indenture
for the account of (and for distribution to) the 2003 Senior Secured Notes
Indenture Trustee and the 2003 Senior Secured Noteholders in accordance with
the requirements of the 2003 Senior Secured Notes Indenture, (y) if to a 2003
Senior Secured Note Refinancing Creditor, to the 2003 Senior Secured Note
Refinancing Trustee designated under the relevant 2003 Senior Secured Note
Refinancing Indenture for the account of (and for distribution to) such 2003
Senior Secured Note Refinancing Trustee and the 2003 Senior Secured Note
Refinancing Noteholders in accordance with the requirements of the relevant
2003 Senior Secured Note Refinancing Documents and (z) if to the Other
Creditors, to the Authorized Representative for the Other Creditors or, in the
absence of such an Authorized Representative, directly to the Other Creditors.

 

27

 

(g)                                 For
purposes of applying payments received in accordance with this Section 7.4, the
Collateral Agent shall be entitled to rely upon (i) the Administrative Agent
under the Credit Agreement, (ii) the 2003 Senior Secured Notes Indenture
Trustee under the 2003 Senior Secured Notes Indenture, (iii) the respective
2003 Senior Secured Note Refinancing Trustee as designated under the relevant
2003 Senior Secured Note Refinancing Indenture and (iv) each Authorized
Representative of an Other Creditor (or, in the absence of any such Authorized
Representative, directly upon the Other Creditors), for a determination (which
each Authorized Representative for any Secured Creditor and the Secured
Creditors agree to provide upon request of the Collateral Agent) of the
outstanding Primary Obligations, Secondary Obligations and Tertiary Obligations
(and Dollar Equivalents thereof) owed to the Lender Creditors, the Other
Creditors, the 2003 Senior Secured Notes Creditors or the 2003 Senior Secured
Note Refinancing Creditors, as the case may be.  Unless it has actual knowledge (including by way of written
notice from any Lender Creditor, any Other Creditor or any of their respective
Representatives) to the contrary, the Administrative Agent and each other
Representative, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume that
no Secondary Obligations are outstanding. 
Unless it has actual knowledge (including by way of written notice from
an Other Creditor) to the contrary, the Collateral Agent, in acting hereunder,
shall be entitled to assume that no Interest Rate Protection Agreements or
Other Hedging Agreements are in existence.

 

(h)                                 Notwithstanding anything to the contrary
contained above, to the extent monies or proceeds to be applied pursuant to
this Section 7.4 consist of proceeds received from a sale or other disposition
of Excess Exempted Foreign Corporation Voting Stock, such proceeds will be
applied as otherwise required above in this Section 7.4(b), but for this
purpose treating the outstanding Primary Obligations and Secondary Obligations
as only those obligations secured by the Excess Exempted Foreign Corporation
Voting Stock in accordance with the provisions of clause (A) to the proviso
appearing at the end of Section 3.1 of the U.S. Pledge Agreement.  In determining whether any Excess Exempted
Foreign Corporation Voting Stock has been sold or otherwise disposed of, the
Pledgee shall treat any sale or disposition of Voting Stock of any Exempted
Foreign Corporation as first being a sale of Voting Stock which is not Excess
Exempted Foreign Corporation Voting Stock until such time as the stock sold
represents 65% of the total combined voting power of all classes of Voting
Stock of the respective Exempted Foreign Corporation and, after such threshold
has been met, any further sales of Voting Stock of the respective Exempted
Foreign Corporation shall be treated as sales of Excess Exempted Foreign
Corporation Voting Stock.

 

(i)                                     Notwithstanding anything to the contrary
contained above, to the extent monies or proceeds to be applied pursuant to
this Section 7.4 consists of proceeds received under any U.K. Security Document
(other than a U.S. Charge Over Shares and Notes), such proceeds will be applied
as otherwise required above in this Section 7.4(b), but for this purpose
treating the outstanding Primary Obligations and Secondary Obligations as only
those obligations secured by the respective such U.K. Security Document.

 

(j)                                     It is understood and agreed that each of
the Assignors shall remain jointly and severally liable to the relevant Secured
Creditors to the extent of any deficiency between (x) the amount of the
proceeds of the Collateral received by such Secured Creditors hereunder and 

 

28

 

(y) the aggregate amount of the sums referred to in
clause (a) or (b), as the case may be, of this Section 7.4.

 

7.5  Remedies
Cumulative.  Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement or any
other Secured Debt Agreement now or hereafter existing at law, in equity or by
statute and each and every right, power and remedy whether specifically herein
given or otherwise existing may, subject to the last sentence of Section 7.1,
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by the Collateral Agent.  All such rights, powers and remedies shall be cumulative and the
exercise or the beginning of the exercise of one shall not be deemed a waiver
of the right to exercise any other or others. 
No delay or omission of the Collateral Agent in the exercise of any such
right, power or remedy and no renewal or extension of any of the Obligations
shall impair any such right, power or remedy or shall be construed to be a
waiver of any Default or Event of Default or an acquiescence therein.  No notice to or demand on any Assignor in
any case shall entitle it to any other or further notice or demand in similar
or other circumstances or constitute a waiver of any of the rights of the
Collateral Agent to any other or further action in any circumstances without
notice or demand.  In the event that the
Collateral Agent shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Collateral Agent may
recover expenses, including attorneys’ fees, and the amounts thereof shall be
included in such judgment.

 

7.6  Discontinuance
of Proceedings.  In case the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.

 

ARTICLE VIIIII

 

INDEMNITY

 

8.1  Indemnity.  (a)  Each Assignor
jointly and severally agrees to indemnify, reimburse and hold the Collateral
Agent, each other Secured Creditor and their respective successors, assigns,
employees, agents and servants (hereinafter in this Section 8.1 referred to
individually as an “Indemnitee,” and, collectively, as “Indemnitees”) harmless
from any and all liabilities, obligations, losses, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs,
expenses or disbursements (including attorneys’ fees and expenses) (for the
purposes of this Section 8.1 the foregoing are collectively called “expenses”)
of whatsoever kind and nature imposed on, asserted against or incurred by any
of the Indemnitees in any way relating to or arising out of this Agreement, any
other Secured Debt Agreement or any other document executed in connection
herewith or therewith or in any other way connected with the administration of
the transactions contemplated hereby or thereby or the enforcement of any of
the terms of, or the preservation of any rights under any thereof, or in any 

 

29

 

way relating to or arising out of the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition, or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), the violation by an Assignor of the laws of any country,
state or other governmental body or unit, any tort (including, without limitation,
claims arising or imposed under the doctrine of strict liability, or for or on
account of injury to or the death of any Person (including any Indemnitee), or
property damage), or contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section 8.1(a) for losses, damages or liabilities
to the extent caused by the gross negligence or willful misconduct of such
Indemnitee.  Each Assignor agrees that
upon written notice by any Indemnitee of the assertion of such a liability,
obligation, loss, damage, injury, penalty, claim, demand, action, suit or
judgment, the relevant Assignor shall assume full responsibility for the
defense thereof.  Each Indemnitee agrees
to use its commercially reasonable efforts to promptly notify the relevant
Assignor of any such assertion of which such Indemnitee has knowledge.

 

(b)                                 Without
limiting the application of Section 8.1(a), each Assignor agrees, jointly and
severally, to pay, or reimburse the Collateral Agent for any and all fees,
costs and expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Collateral Agent’s Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon or
in respect of the Collateral, premiums for insurance with respect to the
Collateral and all other fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Collateral Agent’s interest
therein, whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.

 

(c)                                  Without
limiting the application of Section 8.1(a) or (b), each Assignor agrees,
jointly and severally, to pay, indemnify and hold each Indemnitee harmless from
and against any loss, costs, damages and expenses which such Indemnitee may
suffer, expend or incur in consequence of or growing out of any
misrepresentation by any Assignor in this Agreement, any other Secured Debt
Agreement or in any writing contemplated by or made or delivered pursuant to or
in connection with this Agreement or any other Secured Debt Agreement.

 

(d)                                 If
and to the extent that the obligations of any Assignor under this Section 8.1
are unenforceable for any reason, such Assignor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.

 

8.2  Indemnity
Obligations Secured by Collateral; Survival.  Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral.  The indemnity obligations (but not the
security interests in the “Collateral”) of each Assignor contained in this
Article VIII shall continue in full force and effect notwithstanding the full
payment of all Credit Document Obligations, the full repayment of all the 2003
Senior Secured Notes Obligations, the full repayment of all 2003 Senior Secured
Note Refinancing Obligations, the termination of all Interest Rate Protection 

 

30

 

Agreements or Other Hedging Agreements and Letters of
Credit, and the payment of all other Obligations and notwithstanding the
discharge thereof.

 

ARTICLE IX

 

DEFINITIONS

 

The following terms shall have the meanings herein
specified.  Such definitions shall be
equally applicable to the singular and plural forms of the terms defined.  Except as otherwise defined in this Article
IX, terms used in this Agreement shall have the meaning provided such terms in
the Credit Agreement (or, at any time on and after the Credit Documents
Obligations Termination Date, the Credit Agreement as in effect on such date
(without giving effect to the termination thereof)).

 

“Administrative Agent” shall have the meaning provided
in the recitals to this Agreement.

 

“Agreement” shall have the meaning provided in the
preamble to this Agreement.

 

“As-Extracted Collateral” shall mean “as-extracted
collateral” as such term is defined in the Uniform Commercial Code as in effect
on the date hereof in the State of New York.

 

“Assignor” shall have the meaning provided in the
preamble to this Agreement.

 

“Authorized Representative” shall have the meaning
provided in Annex I hereto.

 

“Borrowers” shall have the meaning provided in the
recitals to this Agreement.

 

“Cash Collateral Account” shall mean a non-interest
bearing cash collateral account maintained with, and in the sole dominion and
control of, the Collateral Agent for the benefit of the Secured Creditors
(excluding the 2003 Senior Secured Notes Creditor and the 2003 Senior Secured
Note Refinancing Creditors, in the case of cash constituting Excluded 2003
Senior Secured Notes Collateral).

 

“Chattel Paper” shall mean “chattel paper” as such
term is defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York. 
Without limiting the foregoing, the term “Chattel Paper” shall in any
event include all Tangible Chattel Paper and all Electronic Chattel Paper.

 

“Class” shall have the meaning provided in Section
10.2 of this Agreement.

 

“Collateral” shall have the meaning provided in
Section 1.1(a) of this Agreement.

 

“Collateral Agent” shall have the meaning provided in
the preamble to this Agreement.

 

31

 

“Commercial Tort Claims” shall mean “commercial tort
claims” as such term is defined in the Uniform Commercial Code as in effect on
the Restatement Effective Date in the State of New York.

 

“Contract Rights” shall mean all rights of any
Assignor under each Contract, including, without limitation, (i) any and all
rights to receive and demand payments under any or all Contracts, (ii) any and
all rights to receive and compel performance under any or all Contracts and
(iii) any and all other rights, interests and claims now existing or in the
future arising in connection with any or all Contracts.

 

“Contracts” shall mean all contracts between any
Assignor and one or more additional parties (including, without limitation, any
Interest Rate Protection Agreement or Other Hedging Agreement).

 

“Copyrights” shall mean any United States or foreign
copyright owned by any Assignor, including any registrations of any Copyright
in the United States Copyright Office or the equivalent thereof in any foreign
country, as well as any application for a United States or foreign copyright
registration now or hereafter made with the United States Copyright Office or
the equivalent thereof in any foreign jurisdiction by any Assignor.

 

“Credit Agreement” shall have the meaning provided in
the recitals to this Agreement.

 

“Credit Document Obligations” shall have the meaning
provided in the definition of “Obligations” in this Article IX.

 

“Credit Document Obligations Termination Date” shall
mean that date upon which all Credit Document Obligations (other than those
arising from indemnities for which no request has been made) have been paid in
full in cash in accordance with the terms of the respective Credit Documents
and all Commitments and Letters of Credit under the Credit Agreement have been
terminated.

 

“Credit Documents” shall mean the “Credit Documents” under,
and as defined in, the Credit Agreement and shall include any credit
documentation executed and delivered in connection with any replacement or
refinancing Credit Agreement.

 

“Default” shall mean any event which, with notice or
lapse of time, or both, would constitute an Event of Default.

 

“Deposit Accounts” shall mean all “deposit accounts”
as such term is defined in the Uniform Commercial Code as in effect on the
Restatement Effective Date in the State of New York.

 

“Documentation Agent” shall have the meaning provided
in the recitals to this Agreement.

 

“Documents” shall mean “documents” as such term is
defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York.

 

32

 

“Electronic Chattel Paper” shall mean “electronic
chattel paper” as such term is defined in the Uniform Commercial Code as in
effect on the Restatement Effective Date in the State of New York.

 

“Equipment” shall mean any “equipment,” as such term
is defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York, now or hereafter owned by any Assignor
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles now or hereafter
owned by any Assignor and any and all additions, substitutions and replacements
of any of the foregoing and all accessories thereto, wherever located, together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto.

 

“Event of Default” shall mean (i) any Event of Default
under, and as defined in, the Credit Agreement,  (ii) any payment default under any Interest Rate Protection
Agreement or Other Hedging Agreement, any 2003 Senior Secured Notes Document or
any 2003 Senior Secured Note Refinancing Document (in any such case, after the
expiration of any applicable grace period) and (iii) on and after the Credit
Document Obligations Termination Date, either (x) any Event of Default under,
and as defined in, the 2003 Senior Secured Note Indenture or (y) any Event of
Default under, and as defined in, any 2003 Senior Secured Notes Refinancing
Document.

 

“Excess Exempted Foreign Corporation Voting Stock” shall
have the meaning provided in the U.S. Pledge Agreement.

 

“Excluded Collateral” shall mean and include (i)
Excluded 2003 Senior Secured Notes Collateral, (ii) any “collateral” or
“charged assets” under any U.K. Security Document (including the U.K. Security
Agreement Collateral) and (iii) and any other “collateral” under any other
Security Document which is excluded as security for, or does not secure, the
2003 Senior Secured Notes Obligations and/or the 2003 Senior Secured Note
Refinancing Obligations, to the extent such other “collateral” constitutes (I)
collateral of the type described in clause (i) of the definition of “Excluded
2003 Senior Secured Notes Collateral”, (II) collateral of any type owned or
held by Holdings, (III) 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 (including, without limitation, intellectual property and
permits, registered, filed or issued under the laws of any foreign country or
governmental unit thereof) or (IV) proceeds of any “collateral” described in
preceding clauses (I), (II) and (III).

 

“Excluded Deposit Account” shall mean (i) payroll
accounts, (iii) other accounts used solely for disbursement purposes and (iii)
any other Deposit Account (other than the Cash Collateral Account and any other
Deposit Account maintained with the Collateral Agent) which is not a Perfected
Deposit Account.

 

“Excluded 2003 Senior Secured Notes 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, XL Ventures, Inc., or XL
Ventures (Delaware), Inc., (iii) any and all assets that are owned or held by
any Assignor situated, located or held outside the United States, in 

 

33

 

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 (including, without limitation, intellectual
property and permits, registered, filed or issued under the laws of any foreign
country or governmental unit thereof), (iv) any “collateral” or “charged
assets” under any U.K. Security Document (including the U.K. Security Agreement
Collateral), (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 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).

 

“Exempted Foreign Corporation” shall have the meaning
provided in the U.S. Pledge Agreement.

 

“First Lien Creditor” shall mean, collectively, the
Lender Creditors and the Other Creditors.

 

“First Lien Obligations” shall mean, collectively, the
Credit Document Obligations and the Other Obligations.

 

“General Intangibles” mean “general intangibles” as
such term is defined in the Uniform Commercial Code as in effect on the
Restatement Effective Date in the State of New York.

 

“Goods” shall mean “goods” as such term is defined in
the Uniform Commercial Code as in effect on the Restatement Effective Date in
the State of New York.

 

“Health-Care-Insurance Receivable” shall mean any
“health-care-insurance receivable” as such term is defined in the Uniform
Commercial Code as in effect on Restatement Effective Date in the State of New
York.

 

“Holdings” shall have the meaning provided in the
recitals to this Agreement.

 

“Indemnitee” shall have the meaning provided in
Section 8.1 of this Agreement.

 

“Instrument” shall mean “instrument” as such term is
defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York.

 

“Interest Rate Protection Agreement or Other Hedging
Agreement” shall have the meaning provided in the recitals to this Agreement.

 

“Inventory” shall mean merchandise, inventory and
goods, and all additions, substitutions and replacements thereof and all
accessions thereto, wherever located, together with all goods, supplies,
incidentals, packaging materials, labels, materials and any other items used or
usable in manufacturing, processing, packaging or shipping same; in all stages
of production—from

 

34

 

raw materials through work-in-process to finished
goods — and all products and proceeds of whatever sort and wherever located and
any portion thereof which may be returned, rejected, reclaimed or repossessed
by the Collateral Agent from any Assignor’s customers, and shall specifically
include all “inventory” as such term is defined in the Uniform Commercial Code
as in effect on the Restatement Effective Date in the State of New York, now or
hereafter owned by any Assignor.

 

“Investment Property” shall mean “investment property”
as such term is defined in the Uniform Commercial Code as in effect on the
Restatement Effective Date in the State of New York.

 

“Joint Lead Arrangers” shall have the meaning provided
in the recitals to this Agreement.

 

“Lender Creditors” shall have the meaning provided in
the recitals to this Agreement.

 

“Lenders” shall have the meaning provided in the
recitals to this Agreement.

 

“Letter-of-Credit Rights” shall mean “letter-of-credit
rights” as such term is defined in the Uniform Commercial Code as in effect on
the Restatement Effective Date in the State of New York.

 

“Liens” shall mean any security interest, mortgage,
pledge, lien, claim, charge, encumbrance, title retention agreement, lessor’s
interest in a financing lease or analogous instrument, in, of, or on any
Assignor’s property.

 

“Location” of any Assignor, shall mean such Assignor’s
“location” as determined pursuant to Section 9-307 of the UCC.

 

“Managing Agents” shall have the meaning provided in
the recitals to this Agreement.

 

“Marks” shall mean all right, title and interest in
and to any United States or foreign trademarks, service marks and trade names
now held or hereafter acquired by any Assignor, including any registration or
application for registration of any trademarks and service marks in the United
States Patent and Trademark Office, or the equivalent thereof in any State of
the United States or in any foreign country, and any trade dress including
logos, designs, trade names, company names, business names, fictitious business
names and other business identifiers used by any Assignor in the United States
or any foreign country.

 

“Non-2003 Senior Secured
Notes Obligations” shall mean all Obligations other than 2003 Senior Secured
Notes Obligations and 2003 Senior Secured Note Refinancing Obligations.

 

“Non-2003 Senior Secured Notes Obligations Termination Date” shall
mean the date upon which the Total Commitment under the Credit Agreement has
been terminated, all Letters of Credit issued under the Credit Agreement have
been terminated, no Note under the 

 

35

 

Credit Agreement is outstanding and all Loans
thereunder have been indefeasibly repaid in full in cash, all Interest Rate
Protection Agreements and Other Hedging Agreements entered into with any Other
Creditors have been terminated, and all other Obligations (other than (I) the
2003 Senior Secured Notes Obligations, (II) the 2003 Senior Secured Note Refinancing Obligations and (III) those
Obligations arising from indemnities for which no claim has been made) then
owing have been indefeasibly paid in full in cash in accordance with the terms
of the relevant Secured Debt Agreements governing the same.

 

“Obligations” shall mean (i) the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of 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 and all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of Holdings or any other Credit Party at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such case, proceeding or other action) of each Assignor owing
to the Lender Creditors, now existing or hereafter incurred under, arising out
of or in connection with any Credit Document to which such Assignor is a party
(including, in the case of each Guarantor, all such obligations and
indebtedness under any Guarantee to which such Assignor is a party) and the due
performance and compliance by each Assignor with the terms, conditions and
agreements of each such Credit Document (all such obligations and liabilities under
this clause (i), except to the extent consisting of obligations or indebtedness
with respect to Interest Rate Protection Agreements or Other Hedging
Agreements, being herein collectively called the “Credit Document
Obligations”); (ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of 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 and all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of Holdings
or any other Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such case, proceeding or other action) of each Assignor owing to the Other
Creditors, now existing or hereafter incurred under, arising out of or in
connection with any Interest Rate Protection Agreement or Other Hedging
Agreement, whether such Interest Rate Protection Agreement or Other Hedging
Agreement is now in existence or hereafter arising, including, in the case of
each Assignor that is a Guarantor, all obligations under its Guarantee in
respect of Interest Rate Protection Agreements or Other Hedging Agreements, and
the due performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in any such Interest Rate Protection
Agreement or Other Hedging Agreement (all such obligations and indebtedness
under this clause (ii) being herein collectively called the “Other
Obligations”); (iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due), liabilities and indebtedness (including,
without limitation, indemnities, fees and expenses, all interest thereon and
all interest that accrues after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of Holdings or any other Credit Party at the rate provided for in
the respective documentation, whether or not a claim for post-petition interest
is allowed in any such case, proceeding or other action) of each 

 

36

 

Assignor owing to the 2003 Senior Secured Noteholders
and the 2003 Senior Secured Notes Creditor, whether now existing or hereafter
incurred under, arising out of or in connection with any 2003 Senior Secured
Notes Document to which such Assignor is a party (including, in the case of each
Assignor that provides a guaranty under the 2003 Senior Secured Notes
Documents, all such obligations and indebtedness under such guaranty) and the
due performance and compliance by each Assignor with all of the terms,
conditions and agreements contained in each such 2003 Senior Secured Notes
Document (all such obligations and liabilities under this clause (iii) being
herein collectively called the “2003 Senior Secured Notes Obligations”); (iv)
the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due), liabilities and indebtedness (including, without limitation,
indemnities, fees and expenses, all interest thereon and all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of Holdings
or any other Credit Party at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such case, proceeding or other action) of each Assignor owing to the 2003 Senior
Secured Note
Refinancing Noteholders and the 2003 Senior Secured Note Refinancing Creditors, whether now
existing or hereafter incurred under, arising out of or in connection with any 2003 Senior
Secured Note
Refinancing Document to which such Assignor is a party (including, in the case
of each Assignor that provides a guaranty under the 2003 Senior Secured Notes
Refinancing Documents, all such obligations and indebtedness under such
guaranty) and the due performance and compliance by each Assignor with all of
the terms, conditions and agreements contained in each such 2003 Senior Secured
Note Refinancing Document (all such obligations and liabilities under this
clause (iv) being herein collectively called the “2003 Senior Secured Note
Refinancing Obligations”); (v) any and all sums advanced by the Collateral Agent
in order to preserve the Collateral or preserve its security interest in the
Collateral; (vi) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of each Assignor
referred to in clauses (i), (ii), (iii), (iv), (v) and (vi) after an Event of
Default shall have occurred and be continuing, the reasonable expenses of
re-taking, holding, preparing for sale or lease, selling or otherwise disposing
of or realizing on the Collateral, or of any exercise by the Collateral Agent
of its rights hereunder, together with reasonable attorneys’ fees and court
costs; and (vii) all amounts paid by any Indemnitee as to which such Indemnitee
has the right to reimbursement under Section 8.1 of this Agreement.  It is acknowledged and agreed that the
“Obligations” shall include extensions of credit of the types described above,
whether outstanding on the date of this Agreement or extended from time to time
after the date of this Agreement; provided that in the case of additional
extensions of credit included as “Obligations” hereunder by way of an amendment
or modification to this Agreement, such amendment or modification (and the
additional extension of credit permitted thereby) shall comply with the
requirements of clause (x) of the second proviso appearing in the first
sentence of Section 10.2(a).  Notwithstanding
anything to the contrary contained above in this definition, obligations and
liabilities which would otherwise constitute Obligations pursuant to clauses
(iii), (iv) and (v) of the first sentence of this definition shall not
constitute Obligations for purposes of (or be secured pursuant to) this
Agreement to the extent incurred (or guaranteed) in violation of the provisions
of Section 9.04 of the Credit Agreement as same is in effect on the Eighth
Amendment Effective Date (but only with respect to that portion of indebtedness
outstanding (or guaranteed) in violation thereof), it being understood and
agreed, however, that the 2003 Senior 

 

37

 

Notes Obligations incurred
on the Restatement Effective Date do not violate the provisions of Section 9.04
of the Credit Agreement as in effect on such date.

 

“Original U.S. Security Agreement” shall have the
meaning provided in the recitals to this Agreement.

 

“Other Creditors” shall have the meaning provided in
the recitals to this Agreement.

 

“Other Obligations” shall have the meaning provided in
the definition of “Obligations” in this Article IX.

 

“Other Obligations Termination Date” shall mean the
date upon which all Interest Rate Protection Agreements and Other Hedging
Agreements entered into with any Other Creditors have been terminated and all
Other Obligations (other than those Other Obligations arising from indemnities for
which no claim has been made) have been indefeasibly paid in full in cash.

 

“Patents” shall mean any United States or foreign
patent with respect to which any Assignor now or hereafter has any right, title
or interest, and any divisions, continuations (including, but not limited to,
continuations-in-parts) and improvements thereof, as well as any application
for a United States or foreign patent now or hereafter made by any Assignor.

 

 “Perfected
Deposit Account” shall mean and included (i) any Deposit Account set forth on
Annex K hereto on the Restatement Effective Date and designated as such on said
Schedule and (ii) any other concentration, operating or accounts of a similar
nature as those described in the preceding clause (i) established by an Assignor
after the Restatement Effective Date.

 

“Permits” shall mean, to the extent permitted to be
assigned by the terms thereof or by applicable law, all licenses, permits,
rights, orders, variances, franchises or authorizations (including certificates
of need) of or from any governmental authority or agency.

 

“Permitted Business” shall have the meaning provided
in the Credit Agreement.

 

“Pledged Securities” shall have the meaning provided
in the U.S. Pledge Agreement.

 

“Pledgee” shall have the meaning provided in the U.S.
Pledge Agreement.

 

“Primary Obligations” shall have the meaning provided
in Section 7.4(c) of this Agreement.

 

“Proceeds” shall have the meaning provided in the
Uniform Commercial Code as in effect in the State of New York on the
Restatement Effective Date or under other relevant law and, in any event, shall
include, but not be limited to, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to the Collateral Agent or any Assignor
from time to time with respect to any of the Collateral, (ii) any and all
payments (in any form whatsoever) 

 

38

 

made or due and payable to any Assignor from time to
time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental authority
(or any person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.

 

“Pro  Rata Share” shall have the meaning
provided in Section 7.4(c) of this Agreement.

 

“Receivable” shall mean any “account” as such term is
defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York, and in any event shall include but
shall not be limited to, all rights to payment of any monetary obligation,
whether or not earned by performance, (i) for property that has been or is to
be sold, leased, licensed, assigned or otherwise disposed of, (ii) for services
rendered or to be rendered, (iii) for a policy of insurance issued or to be
issued, (iv) for a secondary obligation incurred or to be incurred, (v) for
energy provided or to be provided, (vi) for the use or hire of a vessel under a
charter or other contract, (vii) arising out of the use of a credit or charge
card or information contained on or for use with the card, or (viii) as
winnings in a lottery or other game of chance operated or sponsored by a State,
governmental unit of a State, or person licensed or authorized to operate the
game by a State or governmental unit of a State.  Without limiting the foregoing, the term “account” shall include
all Health-Care-Insurance Receivables.

 

“Registered Organization” shall have the meaning provided
in the Uniform Commercial Code as in effect on the Restatement Effective Date
in the State of New York.

 

“Required Secured Creditors” shall mean (i) at all
times prior to the occurrence of the Credit Document Obligations Termination
Date, the Required Lenders (or, to the extent required by Section 13.12 of the
Credit Agreement, each of the Lenders), (ii) at all times on and after the
Credit Document Obligations Termination Date and prior to the Other Obligations
Termination Date, the holders of at least the majority of the then outstanding
Other Obligations (determined by the Collateral Agent in such reasonable manner
as is acceptable to it) and (iii) at all times on and after the Other
Obligations Termination Date, the 2003 Senior Secured Notes Indenture Trustee
and the 2003 Senior Secured Note Refinancing Trustees acting in accordance with
the provisions of the 2003 Senior Secured Notes Indenture or the relevant 2003
Senior Secured Notes Refinancing Indenture (with the consent of the holders of
the requisite percentage of the then outstanding 2003 Senior Secured Notes
Obligations and 2003 Senior Secured Note Refinancing Obligations.

 

“Requisite Creditors” shall have the meaning provided
in Section 10.2 of this Agreement.

 

“Restatement Effective Date” shall mean the date of
the execution and delivery of this Agreement by each of the undersigned
Assignors and the Collateral Agent.

 

“Secondary Obligations” shall have the meaning
provided in Section 7.4(c) of this Agreement.

 

39

 

“Second Lien Creditor” shall mean, collectively, the
2003 Senior Secured Notes Creditor and the 2003 Senior Secured Note Refinancing
Creditors.

 

“Secured Creditors” shall mean, collectively, the
Lender Creditors, the Other Creditors, the 2003 Senior Secured Notes Creditor
and the 2003 Senior Secured Note Refinancing Creditors (if any).

 

“Secured Debt Agreements” shall mean and include (i)
this Agreement, (ii) the Credit Agreement, the other Credit Documents and, to
the extent then in effect, any Interest Rate Protection Agreement or Other
Hedging Agreement entered into with any Other Creditors, (iii) the 2003 Senior
Secured Notes Documents and (iv) to the extent then in effect, any 2003 Senior
Secured Note Refinancing Documents.

 

“Security” shall mean “security” as such term is
defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York.

 

“Security Document” shall mean each Security Document
(as defined in the Credit Agreement).

 

“Significant Copyrights” shall mean those Copyrights
which the Assignor believes in its reasonable judgment to be material to its
business and any Copyright which the failure to maintain would have a material
adverse effect on the value of the Copyrights taken as a whole.

 

“Significant Marks” shall mean those Marks which the
relevant Assignor believes in its reasonable judgment to be material to its
business and any Mark which the failure to maintain or to keep valid and
subsisting would have a material adverse effect on the value of the Marks taken
as a whole.

 

“Significant Patents” shall mean those Patents which
the relevant Assignor believes in its reasonable judgment to be material to its
business and any Patent which the failure to maintain would have a material
adverse effect on the value of the Patents taken as a whole.

 

“Software” shall mean “software” as such term is
defined in the Uniform Commercial Code as in effect on the Restatement
Effective Date in the State of New York.

 

“Supporting Obligations” shall mean any “supporting
obligation” as such term is defined in the Uniform Commercial Code as in effect
on the Restatement Effective Date in the State of New York, now or hereafter
owned by any Assignor, or in which any Assignor has any rights, and, in any event,
shall include, but shall not be limited to all of such Assignor’s rights in any
Letter-of-Credit Right or secondary obligation that supports the payment or
performance of, and all security for, any Receivable, Chattel Paper, Document,
General Intangible, Instrument or Investment Property.

 

“Syndication Agent” shall have the meaning provided in
the recitals to this Agreement.

 

40

 

“Tangible Chattel Paper” shall mean “tangible chattel
paper” as such term is defined in the Uniform Commercial Code as in effect on
the date hereof in the State of New York.

 

“Termination Date” shall have the meaning provided in
Section 10.8 of this Agreement.

 

“Tertiary Obligations” shall have the meaning provided
in Section 7.4(c) of this Agreement.

 

“Timber-to-be-Cut” shall mean “timber-to-be-cut” as
such term is used in the Uniform Commercial Code as in effect on the
Restatement Effective Date in the State of New York.

 

“Trade Secret Rights” shall mean the rights of an
Assignor in any Trade Secrets it holds or owns.

 

“Trade Secrets” means any secretly held existing
engineering and other data, information, production procedures and other
know-how relating to the design, manufacture, assembly, installation, use,
operation, marketing, sale and servicing of any products or business of an
Assignor worldwide, whether written or not written.

 

“Trust Indenture Act” shall mean the Trust Indenture
Act of 1939, as amended, and the rules and regulations promulgated thereunder
from time to time.

 

“2003 Senior Secured Note Refinancing Creditor” shall
mean each 2003 Senior Secured Note Refinancing Trustee for the benefit of
itself and the 2003 Senior Secured Note Refinancing Noteholders under the
relevant 2003 Senior Secured Note Refinancing Indenture.

 

“2003 Senior Secured Note Refinancing Documents” shall
have the meaning provided in the recitals to this Agreement.

 

“2003 Senior Secured Note Refinancing Indenture” shall
mean any indenture governing any 2003 Senior Secured Note Refinancing Indebtedness.

 

“2003 Senior Secured Note Refinancing Noteholders”
shall have the meaning provided in the recitals to this Agreement.

 

“2003 Senior Secured Note Refinancing Obligations”
shall have the meaning provided in the definition of Obligations.

 

“2003 Senior Secured Note Refinancing Trustee” shall
have the meaning provided in the recitals to this Agreement.

 

“2003 Senior Secured Noteholders” shall have the
meaning provided in the recitals to this Agreement.

 

41

 

“2003 Senior Secured Notes” shall mean Vertis’ 9-3/4%
2003 Senior Secured Notes due April 1, 2009 issued pursuant to the 2003 Senior
Secured Notes Indenture and otherwise in accordance with the requirements of
the definition of “2003 Senior Secured Notes” contained in the Credit
Agreement, as the same may be amended, modified and/or supplemented from time
to time in accordance with the terms thereof and of the Credit Agreement.  For purposes of this Agreement, the term
“2003 Senior Secured Notes” shall include any senior secured notes issued in
exchange for 2003 Senior Secured Notes (as defined above in the absence of this
sentence) pursuant to the 2003 Senior Secured Notes Indenture, so long as same
are issued in accordance with the requirements of the definition of “2003
Exchange Senior Notes” appearing in the Credit Agreement (as in effect on the
Restatement Effective Date).

 

“2003 Senior Secured Notes Creditor” shall mean the
2003 Senior Secured Notes Indenture Trustee for the benefit of itself and the
2003 Senior Secured Noteholders.

 

“2003 Senior Secured Notes Documents” shall mean the
2003 Senior Secured Notes, the 2003 Senior Secured Notes Indenture and the
other documents and instruments executed and delivered with respect to the 2003
Senior Secured Notes or the 2003 Senior Secured Notes Indenture, in each case
as in effect on the Restatement Effective Date and the same may be amended,
modified and/or supplemented time to time in accordance with the terms thereof
and of the Credit Agreement.

 

“2003 Senior Secured Notes Indenture” shall mean the
Indenture, dated as of June 6, 2003, among Vertis and the 2003 Senior
Secured Notes Indenture Trustee, as in effect on the Restatement Effective Date
and as the same may be amended, modified and/or supplemented from time to time
in accordance with the terms thereof and of the Credit Agreement.

 

“2003 Senior Secured Notes Indenture Trustee” shall
have the meaning provided in the recitals to this Agreement.

 

“2003 Senior Secured Notes Obligations” shall have the
meaning provided in the definition of Obligations.

 

“U.S. Subsidiaries Guaranty” shall have the meaning
provided in the recitals to this Agreement.

 

“Vertis” shall have the meaning provided in the
recitals to this Agreement.

 

“Voting Stock” shall have the meaning provided in the
U.S. Pledge Agreement.

 

ARTICLE X

 

MISCELLANEOUS

 

10.1  Notices. 
Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be deemed
to have been duly given or made when delivered to the party to which such
notice, request, demand or other communication is required or permitted to be
given or made under this Agreement, addressed:

 

42

 

 

(a)                                  if
to any Assignor, at its address set forth opposite its signature below;

 

(b)                                 if
to the Collateral Agent:

 

JPMorgan Chase Bank

270 Park Avenue, 47th Floor

New York, New York  

Attention:  Robert Sacks

Telephone No.:  (212) 270-4118

Facsimile No.:  (212) 270-5120

 

(c)                                  if
to any Lender Creditor (other than the Collateral Agent), at such address as
such Lender Creditor shall have specified in the Credit Agreement; and

 

(d)                                 if
to any other Secured Creditor, (x) to the Authorized Representative for such
Secured Creditor or (y) if there is no such Authorized Representative, at such
address as such Secured Creditor shall have specified in writing to each
Assignor and the Collateral Agent;

 

or at such other
address as shall have been furnished in writing by any Person described above
to the party required to give notice hereunder.

 

10.2  Waiver;
Amendment; Notice of Acceleration.  (a) None of
the terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by each Assignor
directly and adversely affected thereby and the Collateral Agent (with the
consent of the Required Secured Creditors); provided, that (i)
additional Assignors may be added as parties hereto from time to time in
accordance with Section 10.13 without the consent of any other Assignor or of
the Secured Creditors, and (ii) any change, waiver, modification or variance
affecting the rights and benefits of any Class (as defined below), with
outstanding Obligations of the respective Class secured hereby at such time, of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall require the written consent of the Requisite Creditors (as defined below)
of such affected Class; provided  further, however, that
notwithstanding anything to the contrary provided in clause (ii) of the
immediately preceding proviso, (x) the Required Secured Creditors may agree to
modifications to this Agreement for the purpose, among other things, of
securing additional extensions of credit (including, without limitation,
pursuant to the Credit Agreement or any refinancing or extension thereof) and
adding new creditors as “Secured Creditors” hereunder (either as part of an
existing Class of Secured Creditors or as a newly created Class) and such
changes shall not require the written consent of the Requisite Creditors of the
various Classes, so long as such extensions (and resulting addition) do not
otherwise give rise to an express violation of the terms of the Credit
Agreement, the 2003 Senior Secured Notes Documents and/or the 2003 Senior
Secured Note Refinancing Documents and (y) said clause (ii) shall not apply to
any release of Collateral or any Assignor (or the termination of this
Agreement) effected in accordance with the requirements of Section 10.8 of this
Agreement, as the case may be. For the purpose of this Agreement, the term
“Class” shall mean each class of Secured Creditors with outstanding Obligations
secured hereby at such time, i.e., whether (w) the Lender Creditors as
holders of the Credit Document Obligations, (x) the Other Creditors as holders
of the Other Obligations, (y) the 2003 Senior Secured Notes Creditor (with
respect to the 2003 Senior 

 

43

 

Secured Notes Obligations) or (z) the 2003 Senior
Secured Note Refinancing Creditors (with respect to the 2003 Senior Secured
Note Refinancing Obligations).  For the
purpose of this Agreement, the term “Requisite Creditors” of any Class shall
mean each of (w) with respect to the Credit Document Obligations, the Required
Lenders, (x) with respect to the Other Obligations, the holders of at least a
majority of all Other Obligations outstanding from time to time under the
Interest Rate Protection Agreements or Other Hedging Agreements (as determined
by the Collateral Agent in such reasonable manner as is acceptable to it), (y)
with respect to the 2003 Senior Secured Notes Obligations, the 2003 Senior
Secured Notes Creditor acting at the direction of the requisite percentage of
the holders of the 2003 Senior Secured Notes Obligations outstanding from time
to time and (z) with respect to the 2003 Senior Secured Note Refinancing
Obligations, the 2003 Senior Secured Note Refinancing Creditors acting at the
direction of the requisite percentage of the holders of the 2003 Senior Secured
Note Refinancing Obligations outstanding from time to time.

 

(b)                                 Each
Secured Creditor (other than an Other Creditor), by its acceptance of the
benefits of this Agreement, hereby authorizes its Authorized Representative to,
and each such Authorized Representative (by such authorization) hereby agrees
to, deliver to the Collateral Agent and each other Authorized Representative:

 

(i)                                     in
the case of the Administrative Agent, prompt written notice of the acceleration
of any Credit Document Obligations (such notice to be provided in the same
manner and substantially contemporaneously with any notice provided to Vertis),
although the failure to deliver any such notice shall not affect the validity
of such acceleration;

 

(ii)                                  in
the case of the 2003 Senior Secured Notes Indenture Trustee, prompt written
notice of the acceleration of the 2003 Senior Secured Notes Obligations (such
notice to be provided in the same manner and substantially contemporaneously
with any notice provided to the Vertis), although the failure to deliver any
such notice shall not affect the validity of such acceleration; and

 

(iii)
                            in the case
of a 2003 Senior Secured Note Refinancing Trustee designated under any 2003
Senior Secured Note Refinancing Indenture, prompt written notice of the
acceleration of the 2003 Senior Secured Note Refinancing Obligations (such
notice to be provided in the same manner and substantially contemporaneously
with any notice provided to the Vertis), although the failure to deliver any
such notice shall not affect the validity of such acceleration.

 

10.3  Obligations
Absolute.  The obligations of each Assignor hereunder
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement or any other Secured Debt
Agreement; (c) any renewal, extension, amendment or modification of or addition
or supplement to or deletion from any Secured Debt Agreement or any security
for any of the Obligations; (d)  any
waiver, consent, extension, indulgence or other action or inaction under or in
respect of any such agreement or instrument including, without limitation, this
Agreement; (e)  any furnishing of any 

 

44

 

additional
security to the Collateral Agent or its assignee or any acceptance thereof or
any release of any security by the Collateral Agent or its assignee; or (f) any
limitation on any party’s liability or obligations under any such instrument or
agreement or any invalidity or unenforceability, in whole or in part, of any
such instrument or agreement or any term thereof; whether or not any Assignor
shall have notice or knowledge of any of the foregoing.  The rights and remedies of the Collateral
Agent herein provided are cumulative and not exclusive of any rights or
remedies which the Collateral Agent would otherwise have.

 

10.4  Successors
and Assigns.  This Agreement shall be binding upon each
Assignor and its successors and assigns and shall inure to the benefit of the
Collateral Agent and its successors and assigns; provided, that no
Assignor may transfer or assign any or all of its rights or obligations
hereunder without the prior written consent of the Collateral Agent (with the
consent of the Required Secured Creditors). 
Any Person that becomes a Secured Creditor after the Restatement
Effective Date by its acceptance of any Note, any 2003 Senior Secured Note, any
2003 Senior Secured Note Refinancing Document, any Interest Rate Protection
Agreement or Hedging Agreement or the benefits of this Agreement, as the case
may be, shall be bound by the terms hereof; it being understood that, as
between (i) the 2003 Senior Secured Noteholders and the 2003 Senior Secured
Notes Creditor and (ii) the 2003 Senior Secured Note Refinancing Noteholders
and the 2003 Senior Secured Note Refinancing Creditors, no 2003 Senior Secured
Noteholder or 2003 Senior Secured Note Refinancing Noteholder, as the case may
be, shall have any right to give any direction to the Collateral Agent with
respect to any Collateral or take any action or exercise any right of a Secured
Creditor under this Agreement or any other Security Documents, with all such
directions, actions or rights to be given, taken or exercised, as the case may
be, by the 2003 Senior Secured Notes Creditor or the respective 2003 Senior
Secured Note Refinancing Creditor, as the case may be, acting for the benefit
of the holders of the 2003 Senior Secured Notes Obligations or the respective
2003 Senior Secured Note Refinancing Obligations, as the case may be, provided
that nothing contained in the preceding clause shall be construed to limit the
agreements set forth in the last sentence of Section 7.1. All agreements,
statements, representations and warranties made by each Assignor herein or in
any certificate or other instrument delivered by such Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the
Secured Creditors and shall survive the execution and delivery of this
Agreement and each other Secured Debt Agreement regardless of any investigation
made by the Secured Creditors or on their behalf.

 

10.5  Headings
Descriptive.  The headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

10.6  GOVERNING
LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.  EACH ASSIGNOR AND EACH SECURED CREDITOR
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

45

 

10.7  Assignor’s
Duties.  It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any
manner to perform or fulfill any of the obligations of any Assignor under or
with respect to any Collateral.

 

10.8  Termination;
Release.  (a)  After the Termination Date
(as defined below), this Agreement shall terminate (provided that all
indemnities set forth herein including, without limitation, in Section 8.1
hereof shall survive such termination) and the Collateral Agent, at the request
and expense of the relevant Assignor, will execute and deliver to such Assignor
a proper instrument or instruments (including Uniform Commercial Code
termination statements on form UCC-3) acknowledging the satisfaction and
termination of this Agreement, and will duly assign, transfer and deliver to
such Assignor (without recourse and without any representation or warranty)
such of the Collateral as may be in the possession of the Collateral Agent and
as has not theretofore been sold or otherwise applied or released pursuant to
this Agreement.  As used in this
Agreement, “Termination Date” shall mean the date upon which both (i) the
Non-2003 Senior Secured Notes Obligations Termination Date shall have then (or
theretofore) occurred and (ii) all 2003 Senior Secured Notes Obligations and
2003 Senior Secured Note Refinancing Obligations (other than those arising from
indemnities for which no claim has been made) then owing have been paid in full
(or been defeased in accordance with the terms of the 2003 Senior Secured Notes
Indenture or any 2003 Senior Secured Note Refinancing Document, as the case may
be).

 

(b)                                 In
the event that any part of the Collateral is sold or otherwise disposed of (to
a Person other than Holdings or a Subsidiary thereof) (x) at any time prior to
the Credit Document Obligations Termination Date, in connection with a sale or
other disposition permitted by the Credit Agreement or is otherwise released at
the direction of the Required Secured Creditors or (y) at any time thereafter,
in connection with a sale or other disposition permitted by the other Secured
Debt Agreements or is otherwise released at the direction of the Required
Secured Creditors, and the proceeds of any such sale or disposition or other
release are applied in accordance with the terms of the Credit Agreement or
such other Secured Debt Agreement, as the case may be, to the extent required
to be so applied, such Collateral will sold, disposed of or released free and
clear of the Liens created by this Agreement and the Collateral Agent, at the
request and expense of such Assignor, will (i) duly assign, transfer and
deliver to such Assignor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold,
disposed of or released and as may be in the possession of the Collateral Agent
and has not theretofore been released pursuant to this Agreement and/or (ii)
execute such releases and discharges in respect of such Collateral as is then
being (or has been) so sold, disposed of or released as such Assignor may
reasonably request.

 

(c)                                  At
any time that the respective Assignor desires that Collateral be released as
provided in the foregoing Section 10.8(a) or (b), it shall deliver to the Collateral
Agent a certificate signed by an Authorized Officer stating that the release of
the respective Collateral is permitted pursuant to Section 10.8(a) or (b).  If requested by the Collateral Agent
(although the Collateral Agent shall have no obligation to make any such
request), the relevant Assignor shall

 

46

 

furnish
appropriate legal opinions (from counsel, which may be in-house counsel,
reasonably acceptable to the Collateral Agent) to the effect set forth in the
immediately preceding sentence.

 

(d)                                 The
Collateral Agent shall have no liability whatsoever to any other Secured
Creditor as the result of any release of Collateral by it in accordance with
(or which the Collateral Agent in the absence of gross negligence or willful
misconduct believes to be in accordance with) this Section 10.8.

 

(e)                                  Without
limiting the foregoing provisions of this Section 10.8, to the extent
applicable following the qualification of the 2003 Senior Secured Notes
Indenture and/or any indenture governing 2003 Senior Secured Note Refinancing
Indebtedness under the Trust Indenture Act, (i) the Assignors shall comply with
Section 314(d) of the Trust Indenture Act in connection with the release of
property or Liens hereunder and (ii) the parties hereto agree that if any
amendments to this Agreement or any other Security Documents are required in
order to comply with the provisions of the Trust Indenture Act, such parties
shall cooperate and act in good faith to effect such amendments as promptly as
practicable.

 

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

 

10.10  The
Collateral Agent.  The Collateral Agent will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement.  It is expressly understood
and agreed that the obligations of the Collateral Agent as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement and Annex I hereto.  The
Collateral Agent shall act hereunder on the terms and conditions set forth in
Section 12 of the Credit Agreement and in Annex I hereto, the terms of which
shall be deemed incorporated herein by reference as fully as if the same were
set forth herein in their entirety.  In
the event that any provision set forth in Section 12 of the Credit Agreement in
respect of the Collateral Agent conflicts with any provision set forth in Annex
I hereto, the provisions of Annex I hereto shall govern (except that the
Lenders shall remain obligated to indemnify the Collateral Agent pursuant to
Section 12 of the Credit Agreement, to the extent the Collateral Agent is not
indemnified by Secured Creditors pursuant to Annex I).

 

10.11  Severability.  Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

10.12  Limited
Obligations.  It is the desire and intent of each Assignor
and the Secured Creditors that this Agreement shall be enforced against each
Assignor to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.  Notwithstanding anything to the contrary
contained herein, in 

 

47

 

furtherance of the foregoing, it is noted that as to
each Assignor that is a Subsidiary of Holdings and which has executed a
guaranty of any of the Obligations pursuant to a Secured Debt Agreement, the
obligations of such Subsidiary thereunder may have been limited as provided
therein.

 

10.13  Additional
Assignors.  It is understood and agreed that any
Subsidiary of Holdings that is required to become a party to this Agreement
after the date hereof pursuant to the requirements of the Credit Agreement, the
2003 Senior Secured Notes Indenture or any 2003 Senior Secured Note Refinancing
Document shall become an Assignor hereunder by (x) executing a counterpart
hereof and/or an assumption agreement, in each case in form and substance
satisfactory to the Collateral Agent, (y) delivering supplements to Annexes A
through F hereto and Annexes J through M hereto, as are necessary to cause such
Annexes to be complete and accurate with respect to such additional Assignor on
such date and (z) taking all actions as specified in this Agreement, the Credit
Agreement, the 2003 Senior Secured Notes Indenture and any 2003 Senior Secured
Note Refinancing Document, in each case with all documents required above to be
delivered to the Collateral Agent and with all documents and action required
above to be taken to the reasonable satisfaction of the Collateral Agent.

 

10.14  No
Third Party Beneficiaries. This Agreement is entered into solely for the
benefit of the parties hereto and their respective successors and assigns and
for the benefit of the Secured Creditors from time to time and their respective
successors and assigns and, except for the Secured Creditors and their
successors and assigns, there shall be no third party beneficiaries hereof, nor
shall any Person other than the parties hereto and their respective successors
and assigns, and the Secured Creditors and their respective successors and
assigns, be entitled to enforce the provisions hereof or have any claims
against any party hereto (or any Secured Creditor) or their successors and
assigns arising from, or under, this Agreement.

 

*  *  *

 

48

 

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

 

Address:

 

	
   

  	
  VERTIS
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRINTCO.,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT
  CHEMICALS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  

 

 

	
   

  	
  ENTERON
  GROUP, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIG
  FLOWER DIGITAL SERVICES

      (DELAWARE), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BIG
  FLOWER DIGITAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Big
  Flower Digital Services

  (Delaware), Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  XL
  VENTURES, INC. (f/k/a XL Capital

  Corporation and Big Flower Capital Corporation)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XL
  VENTURES (DELAWARE), INC. (f/d/a

  XL Capital (Delaware), Inc.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DEAN D. DURBIN

  	
   

  
	
   

  	
   

  	
  Name:
  Dean D. Durbin

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  

 

 

	
   

  	
   

  	
   

  
	
  JPMORGAN
  CHASE BANK

  (f/k/a The Chase Manhattan Bank),

  as Collateral Agent, as Assignee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  BRUCE BORDEN

  	
   

  	
   

  	
   

  
	
   

  	
  Name:
  Bruce Borden

  	
   

  	
   

  
	
   

  	
  Title:
  Vice President

  	
   

  	
   

  
					

 

 

	
   

  	
  ANNEX A

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

 

SCHEDULE OF CHIEF EXECUTIVE
OFFICES/RECORD LOCATIONS

 

A.                         Chief
Executive Offices

 

[To Be Provided By and
For Each Assignor]

 

B.                           Other
Record Locations

 

[To Be Provided By and
For Each Assignor]

 

 

	
   

  	
  ANNEX B

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

 

SCHEDULE OF INVENTORY AND
EQUIPMENT LOCATIONS

 

[To Be Provided By and For Each Assignor]

 

 

	
   

  	
  ANNEX C

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

 

SCHEDULE OF LEGAL NAMES,
TRADE AND FICTITIOUS NAMES, ETC.

 

[To Be Provided By and For Each Assignor]

 

 

	
   

  	
  ANNEX D

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

SCHEDULE OF MARKS AND
APPLICATIONS

 

[Name of Assignor]

 

	
  Mark

  	
   

  	
  Reg. No.

  	
   

  	
  Reg. Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[To Be Provided By Each
Assignor]

 

 

	
   

  	
  ANNEX E

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

SCHEDULE OF PATENTS AND
APPLICATIONS

 

[Name of Assignor]

 

	
  Patent

  	
   

  	
  Patent No.

  	
   

  	
  Issue Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[To Be Provided By Each
Assignor]

 

 

	
   

  	
  ANNEX F

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

SCHEDULE OF COPYRIGHTS AND
APPLICATIONS

 

[Name of Assignor]

 

	
  Copyright
  Title

  	
   

  	
  Copyright Reg. No.

  	
   

  	
  Publication Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[To Be Provided By Each
Assignor]

 

 

	
   

  	
  ANNEX G

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

FORM OF ASSIGNMENT OF
SECURITY INTEREST

IN CERTAIN PATENTS AND TRADEMARKS

 

FOR GOOD AND VALUABLE CONSIDERATION, receipt and
sufficiency of which are hereby acknowledged,                                                  ,
a                   
corporation (the “Assignor”) with principal offices at                                                         ,
hereby assigns and grants to JPMorgan Chase Bank (f/k/a The Chase Manhattan
Bank), as Collateral Agent (the “Assignee”) with principal offices at 270 Park
Avenue, New York, New York 10017, a security interest in (i) all of the
Assignor’s right, title and interest in and to the trademarks, trademark
registrations and trademark applications (the “Marks”) set forth on Schedule A
attached hereto; (ii) all of the Assignor’s right, title and interest in and to
the patents and patent applications (the “Patents”) set forth on Schedule B
attached hereto, in each case together with (iii) all Proceeds (as such term is
defined in the Security Agreement referred to below) of the Marks and Patents,
(iv) the goodwill of the businesses with which the Marks are associated and,
(v) all causes of action arising prior to or after the date hereof for
infringement of any of the Marks and Patents or unfair competition regarding
the same.

 

THIS ASSIGNMENT OF SECURITY INTEREST (this
“Assignment”), is made to secure the satisfactory performance and payment of
all the Obligations of the Assignor, as such term is defined in the Security
Agreement, among Assignor, the other assignors from time to time party thereto
and the Assignee, dated as of December 7, 1999 and amended and restated as of
June        , 2003 (as so amended and
restated and as the same may be further amended, restated, modified and/or
supplemented from time to time, the “Security Agreement”).

 

This Assignment has been granted in conjunction with
the security interest granted to the Assignee under the Security
Agreement.  The rights and remedies of
the Assignee with respect to the security interest granted herein are without
prejudice to, and are in addition to those set forth in the Security Agreement,
all terms and provisions of which are incorporated herein by reference.  In the event that any provisions of this
Assignment are deemed to conflict with the Security Agreement, the provisions
of the Security Agreement shall govern.

 

 

IN WITNESS WHEREOF, the
undersigned have executed this Assignment as of the       
day of                                  ,
          .

 

 

	
   

  	
  [

  	
   

  	
  ]

  
	
   

  	
   

  	
  as
  Assignor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK

  
	
   

  	
   

  	
  (f/k/a
  The Chase Manhattan Bank), as

  Collateral Agent, as Assignee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  

 

2

 

	
  STATE
  OF NEW YORK

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  	
   

  

 

 

On this         
day of              ,
        , before me personally
came                                 
who, being by me duly sworn, did state as follows:  that [s]he is                                      
of [Name of Assignor], that [s]he is authorized to execute the foregoing
Assignment on behalf of said corporation and that [s]he did so by authority of
the Board of Directors of said corporation.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  	
   

  

 

 

	
  STATE
  OF NEW YORK

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  	
   

  

 

 

On this                       
day of                   ,
                ,
before me personally came                                    
who, being by me duly sworn, did state as follows:  that [s]he is                                       
of JPMORGAN CHASE BANK (f/k/a The Chase Manhattan Bank), that [s]he is
authorized to execute the foregoing Assignment on behalf of said company and
that [s]he did so by authority of said company.

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  	
   

  

 

 

SCHEDULE A

 

 

	
  MARK

  	
   

  	
  REG. NO.

  	
   

  	
  REG. DATE

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Each Assignor to
provide]

 

 

SCHEDULE B

 

Patents and Patent
Applications

Owned By [Name of Assignor]

 

 

	
  Patent

  	
   

  	
  Patent No.

  	
   

  	
  Issue Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[Each Assignor to
provide]

 

 

	
   

  	
  ANNEX H

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

FORM OF ASSIGNMENT OF
SECURITY INTEREST

IN CERTAIN COPYRIGHTS

 

WHEREAS,                       ,
a                
corporation (the “Assignor”), having its chief executive office at                                                                                                            ,
is the owner of all right, title and interest in and to the copyrights and
associated copyright registrations and applications for registration set forth
in Schedule A attached hereto;

 

WHEREAS, JPMORGAN CHASE BANK (f/k/a The Chase
Manhattan Bank), as Collateral Agent, having its principal offices at 270 Park
Avenue, New York, New York 10017 (the “Assignee”), desires to acquire a
security interest in, and lien upon all of the Assignor’s right, title and
interest to,  said copyrights and
copyright registrations and applications therefor; and

 

WHEREAS, the Assignor is willing to assign and to
grant to the Assignee a security interest in and lien upon the copyrights and
copyright registrations and applications therefor described above.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt of which is hereby acknowledged, and subject to the terms and
conditions of the Security Agreement, dated as of December 7, 1999 and amended
and restated as of June    , 2003, made by the Assignor,
the other assignors from time to time party thereto and the Assignee (as so
amended and restated and as the same may be further amended, restated, modified
and/or supplemented from time to time, the “Security Agreement”), the Assignor
hereby assigns to the Assignee, and grants to the Assignee a security interest
in, and lien upon all of Assignor’s right, title and interest to, the
copyrights and copyright registrations and applications therefor set forth in
Schedule A attached hereto (the “Copyrights”), together with (i) all Proceeds
(as such terms is defined in the Security Agreement) of the Copyrights and (ii)
all causes of action arising prior to or after the date hereof for infringement
of any Copyright.

 

THIS ASSIGNMENT OF SECURITY INTEREST (this
“Assignment”) has been granted in conjunction with the security interest granted
to the Assignee under the Security Agreement. 
The rights and remedies of the Assignee with respect to the security
interest granted herein are without prejudice to, and are in addition to those
set forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference.  In
the event that any provisions of this Assignment are deemed to conflict with
the Security Agreement, the provisions of the Security Agreement shall govern.

 

 

IN WITNESS WHEREOF, the undersigned have executed this
Assignment at New York, New York, as of the                   
day of                       ,
        .

 

 

	
   

  	
  [

  	
  ],

  
	
   

  	
  as
  Assignor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK

  
	
   

  	
   

  	
  (f/k/a
  The Chase Manhattan Bank),

  as Collateral Agent, as Assignee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

2

 

	
  STATE
  OF NEW YORK

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  	
   

  

 

On this              
day of             ,
        , before me personally
came                                
                ,
who being duly sworn, did depose and say that [s]he is                                        
of [Name of Assignor], that [s]he is authorized to execute the foregoing
Assignment on behalf of said corporation and that [s]he did so by authority of
the Board of Directors of said corporation.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  	
   

  

 

 

	
  STATE
  OF NEW YORK

  	
  )

  	
   

  
	
   

  	
  )

  	
  ss.:

  
	
  COUNTY
  OF NEW YORK

  	
  )

  	
   

  

 

 

On this             
day of            ,
        , before me personally
came                        
                    ,
who being duly sworn, did depose and say that [s]he is                                                          
of JPMORGAN CHASE BANK (f/k/a The Chase Manhattan Bank), that [s]he is
authorized to execute the foregoing Assignment on behalf of said company and
that [s]he did so by authority of the Board of Directors of said company.

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  	
   

  

 

 

	
   

  	
  ANNEX I

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

THE COLLATERAL AGENT(1)

 

1.  Appointment.  The Secured Creditors, by their acceptance
of the benefits of the Security Agreement to which this Annex I is attached
(the “Security Agreement”) hereby irrevocably designate JPMorgan Chase Bank
(and any successor Collateral Agent) to act as specified herein and therein.  Each Secured Creditor hereby irrevocable
authorizes, and each holder of any Obligation by the acceptance of such
Obligation and by the acceptance of the benefits of the Security Agreement
shall be deemed irrevocably to authorize, the Collateral Agent to take such
action on its behalf under the provisions of the Security Agreement and any
instruments and agreements referred to therein and to exercise such powers and
to perform such duties hereunder and thereunder as are specifically delegated
to or required of the Collateral Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto.  The Collateral Agent may perform any of its duties hereunder or
thereunder by or through its authorized agents, sub-agents or employees.  The Collateral Agent, for itself and its
successors and assigns, hereby accepts such appointment created hereby upon the
terms and conditions specified herein.

 

2.  Nature of Duties.  (a) 
The Collateral Agent shall have no duties or responsibilities except
those expressly set forth herein or in the Security Agreement.  The duties of the Collateral Agent shall be
mechanical and administrative in nature; the Collateral Agent shall not have by
reason of this Agreement, any other Credit Document or any other Secured Debt
Agreement a fiduciary relationship in respect of any Secured Creditor; and
nothing in this Agreement, any other Credit Document or any other Secured Debt
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Collateral Agent any obligations in respect of the Security
Agreement except as expressly set forth herein and therein.

 

(b)  The Collateral Agent shall not be
responsible for insuring the Collateral or for the payment of taxes, charges or
assessments or discharging of Liens upon the collateral or otherwise as to the
maintenance of the Collateral.

 

(c)  The Collateral Agent shall not be required
to ascertain or inquire as to the performance by any Assignor of any of the
covenants or agreements contained in the Security Agreement, any other Credit
Document or any other Secured Debt Agreement.

 

(d)  The Collateral Agent shall be under no
obligation or duty to take any action under, or with respect to, the Security
Agreement if taking such action (i) would subject the Collateral Agent to a tax
in any jurisdiction where it is not then subject to a tax or (ii) would

 

(1)               Unless otherwise
defined herein, all capitalized terms used herein (x) and defined in the
Security Agreement, are used herein as therein defined and (y) not defined in
the Security Agreement, are used herein as defined in the Credit Agreement
referenced in the Security Agreement.

 

 

require the Collateral Agent to qualify to do business, or obtain any
license, in any jurisdiction where it is not then so qualified or licensed or
(iii) would subject the Collateral Agent to in
personam jurisdiction in any locations where it is not then so
subject.

 

(e)  Notwithstanding any other provision of this
Annex I, neither the Collateral Agent nor any of its officers, directors,
employees, affiliates or agents shall, in its individual capacity, be
personally liable for any action taken or omitted to be taken by it in
accordance with, or pursuant to this Annex I of, the Security Agreement, unless
caused by its or their own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision).

 

(f)                                          Notwithstanding any other provision of
the Security Agreement or this Annex I, the Collateral Agent shall not be
responsible or liable for perfecting, or maintaining the priority of, the Liens
created pursuant to the Security Agreement.

 

3.  Lack of Reliance on the Collateral Agent.  Independently and without reliance upon the
Collateral Agent, each Secured Creditor, to the extent it deems appropriate,
has made and shall continue to make (i) its own independent investigation of
the financial condition and affairs of each Assignor and its Subsidiaries in
connection with the making and the continuance of the Obligations and the taking
or not taking of any action in connection therewith, and (ii) its own appraisal
of the creditworthiness of each Assignor and its Subsidiaries, and the
Collateral Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Secured Creditor with any credit or other
information with respect thereto, whether coming into its possession before the
extension of any Obligations or the purchase of any Notes or 2003 Senior
Secured Notes or at any time or times thereafter.  The Collateral Agent shall not be responsible or liable in any
manner whatsoever to any Secured Creditor for the correctness of any recitals,
statements, information, representations or warranties herein, in the other
Secured Debt Agreements or in any document, certificate or other writing
delivered in connection herewith or therewith or for the execution,
effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Security Agreement or the
security interests granted thereunder or the financial condition of any
Assignor or any Subsidiary of any Assignor or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of the Security Agreement or any other Secured Debt Agreement, or
the financial condition of any Assignor or any Subsidiary of any Assignor, or
the existence or possible existence of any default or Event of Default under
any Secured Debt Agreement.  The
Collateral Agent makes no representations as to the value or condition of the
Collateral or any part thereof, or as to the title of any Assignor thereto or
as to the security afforded by the Security Agreement.

 

4.  Certain Rights of the Collateral Agent.  (b) 
No Secured Creditor shall have the right to take any action with respect
to (or against) any Collateral, or cause the Collateral Agent to take any
action with respect to (or against) any Collateral, with only the Required
Secured Creditors having the right to direct the Collateral Agent by written
instruction in accordance with Section 4(d) hereof to take any such
action.  Except for actions required to
be taken by the Collateral Agent in accordance with the Security Agreement, if
the Collateral Agent shall request instructions from the Required Secured
Creditors with respect to any act or action (including failure to act) in
connection with the Security Agreement and the Required Secured Creditors 

 

2

 

shall fail to instruct the Collateral Agent with respect to any act or
action (including failure to act and refrain from acting) in connection with
the Security Agreement, the Collateral Agent shall be entitled to refrain from
such act or taking such action unless and until it shall have received express
instructions from the Required Secured Creditors and to the extent requested,
appropriate indemnification in respect of actions to be taken, and the
Collateral Agent shall not incur liability to any Secured Creditor or any other
Person by reason of so refraining. 
Without limiting the foregoing, (x) no Secured Creditor shall have any
right of action whatsoever against the Collateral Agent as a result of the
Collateral Agent acting or refraining from acting hereunder or under the Security
Agreement in accordance with the instructions of the Required Secured Creditors
or as expressly provided in the Security Agreement and (y) without limiting
preceding clause (x), the Collateral Agent shall not be liable to any Secured
Creditor or any other Person for any action taken or omitted to be taken by it
hereunder or under the Security Agreement, unless caused by its gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).

 

(b)  Notwithstanding anything to the
contrary contained herein (and subject to Section 2(f) of this Annex I), the
Collateral Agent is authorized, but not obligated, (i) to take any action
reasonably required to perfect or continue the perfection of the liens on the
Collateral for the benefit of the Secured Creditors and (ii) when instructions
from the Required Secured Creditors have been requested by the Collateral Agent
but have not yet been received, to take any action which the Collateral Agent,
in good faith, believes to be reasonably required to promote and protect the
interests of the Secured Creditors in the Collateral; provided that once
instructions have been received, the actions of the Collateral Agent shall be
governed thereby and the Collateral Agent shall not take any further action
which would be contrary thereto.

 

(c) 
Notwithstanding anything to the contrary contained herein or in the
Security Agreement, the Collateral Agent shall not be required to take or
refrain from taking, and shall have no liability to any Secured Creditor for
taking or refraining from taking, any action that exposes or, in the good faith
judgment of the Collateral Agent may expose, the Collateral Agent or its
officers, directors, agents or employees to personal liability, unless the
Collateral Agent shall be adequately indemnified as provided herein or that is,
or in the good faith judgment of the Collateral Agent may be, contrary to the
Security Agreement, any other Secured Debt Agreement or applicable law.

 

(d)  For
purposes of the Security Agreement, each Secured Creditor shall appoint a
Person as such Secured Creditor’s authorized representative (each, an
“Authorized Representative”) for the purpose of giving or delivering any
notices or instructions thereunder.  Any
instructions given by the Required Secured Creditors to the Collateral Agent
pursuant to the Security Agreement shall be in writing signed by the Authorized
Representative(s) of the various Secured Creditors comprising the Required
Secured Creditors with respect to such instructions and such instructions shall
certify to and for the benefit of the Collateral Agent that the Secured
Creditors issuing or delivering such instructions constitute the Required
Secured Creditors for purposes of this Section 4 and the instructions being
delivered.  The Collateral Agent shall
be entitled to conclusively and absolutely rely on such instructions and
certification as to the identity of the Required Secured Creditors with respect
to such instructions, and the Collateral Agent shall not be required to take
any action, and shall not be liable to any Secured Creditor for 

 

3

 

failing or refusing to act, pursuant to any
instructions which are not given or delivered by the Authorized Representatives
of various Secured Creditors comprising the Required Secured Creditors with
respect to such instructions.  The
parties hereto acknowledge that the Authorized Representative of each of the Secured
Creditors shall be (x) the Administrative Agent, in the case of the Lender
Creditors, (y) the 2003 Senior Secured Notes Indenture Trustee, in the case of
the 2003 Senior Secured Notes Creditor (on behalf of the 2003 Senior Secured
Noteholders) and (z) in the case of any Other Creditor, such representative as
may be designated by such Other Creditor by written notice to the Collateral
Agent from time to time.

 

5.  Reliance; Interpretation.  The Collateral Agent shall be entitled to
rely, and shall be fully protected in relying, upon, any note, writing,
resolution, notice, statement, certificate, telex, teletype or telescopes
message, cablegram, radiogram, order or other document or telephone message
signed, sent or made by the proper Person or entity, and, with respect to all
legal matters pertaining hereto or to the Security Agreement and its duties
thereunder and hereunder, upon advice of counsel selected by it.  If, in its good faith judgment, the
Collateral Agent reasonably believes that any instructions given or delivered
pursuant to the Security Agreement require judicial interpretation or are
invalid or otherwise contrary to the provisions of the Security Agreement, any
other Secured Debt Agreement or applicable law, the Collateral Agent shall have
the right to petition a court of competent jurisdiction to determine the
validity of, or otherwise interpret, any such instructions.  In such event, the Collateral Agent shall
not be required to carry out such instructions unless directed to do so, or it
is determined that it may do so, by such court.

 

6.  Indemnification.  To the extent the Collateral Agent is not
reimbursed and indemnified by the Assignors under the Security Agreement, the
Secured Creditors will reimburse and indemnify the Collateral Agent, in
proportion to their respective outstanding principal amounts (including, for
this purpose, the Stated Amount of outstanding Letters of Credit, as well as
any unpaid Primary Obligations in respect of Interest Rate Protection
Agreements and Other Hedging Agreements, as outstanding principal) of
Obligations, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Collateral Agent in performing its duties hereunder, or in
any way relating to or arising out of its actions as Collateral Agent in
respect of the Security Agreement except for those resulting solely from the
Collateral Agent’s own gross negligence or willful misconduct (as determined by
a court of competent jurisdiction in a final and non-appealable decision).  The indemnities set forth in this Section 6
shall survive the repayment of all Obligations, with the respective
indemnification at such time to be based upon the outstanding principal amounts
(determined as described above) of Obligations at the time of the respective
occurrence upon which the claim against the Collateral Agent is based or, if
same is not reasonably determinable, based upon the outstanding principal
amounts (determined as described above) of Obligations as in effect immediately
prior to the termination of the Security Agreement.  The indemnities set forth in this Section 6 are in addition to
any indemnities provided by the Lenders to the Collateral Agent pursuant to the
Credit Agreement, with the effect being that the Lenders shall be responsible
for indemnifying the Collateral Agent to the extent the Collateral Agent does
not receive payments pursuant to this Section 6 from the Secured Creditors
(although in such event, and upon the payment in full of all such amounts 

 

4

 

owing to the Collateral Agent by the Lenders, the
Lenders shall be subrogated to any rights of the Collateral Agent to receive
payment from the Secured Creditors).

 

7.  The Collateral Agent in its Individual
Capacity.  With respect to its
obligations as a lender under the Credit Agreement and any other Credit
Documents to which the Collateral Agent is a party, and to act as agent under
one or more of such Credit Documents, the Collateral Agent shall have the
rights and powers specified therein and herein for a “Lender”, or an “Agent”,
as the case may be, and may exercise the same rights and powers as though it
were not performing the duties specified herein; and the terms “Lenders”,
“Required Lenders”, “holders of Notes”, or any similar terms shall, unless the
context clearly otherwise indicates, include the Collateral Agent in its
individual capacity.  The Collateral
Agent and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, investment banking, trust or other business with
any Assignor or any Affiliate or Subsidiary of any Assignor as if it were not
performing the duties specified herein or in the other Credit Documents, and
may accept fees and other consideration from the Assignors for services in
connection with the Credit Agreement, the other Credit Documents and otherwise
without having to account for the same to the Secured Creditors.

 

8.  Holders.  The Collateral Agent may deem and treat the
payee of any Note or the registered owner of any 2003 Senior Secured Note as
the owner thereof for all purposes hereof unless and until written notice of
the assignment, transfer or endorsement thereof, as the case may be, shall have
been filed with the Collateral Agent. 
Any request, authority or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any
Note or the registered owner of any 2003 Senior Secured Note, shall be final
and conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or 2003 Senior Secured Note or of
any Note or 2003 Senior Secured Note issued in exchange therefor.

 

9.  Resignation
and Removal of the Collateral Agent.  (a)  The Collateral Agent may resign from the
performance of all of its functions and duties hereunder and under the Security
Agreement at any time by giving 30 Business Days’ prior or written notice to
Vertis and the Secured Creditors.  Such
resignation shall take effect upon the appointment of a successor Collateral
Agent pursuant to clause (b) or (c) below.

 

(b)  If a
successor Collateral Agent shall not have been appointed within said 30
Business Day period by the Required Secured Creditors, the Collateral Agent,
with the consent (unless an Event of Default shall exist, in which case no such
consent shall be required) of Vertis (which consent shall not be unreasonably
withheld or delayed) shall then appoint a successor Collateral Agent who shall
serve as Collateral Agent hereunder or thereunder until such time, if any, as
the Required Secured Creditors appoint a successor Collateral Agent as provided
above.

 

(c)  If no
successor Collateral Agent has been appointed pursuant to clause (b) above by
the 30th Business Day after the date of such notice of resignation
was given by the Collateral Agent, as a result of a failure by Vertis to
consent to the appointment of such a successor Collateral Agent, (i) the
Required Secured Creditors shall then appoint a successor Collateral Agent who
shall serve as Collateral Agent hereunder or thereunder or (ii) if the Required
Secured Creditors shall have failed to appoint a successor Collateral Agent by
the 35th 

 

5

 

Business Day after the date such notice of resignation
was given by the Collateral Agent, the Collateral Agent may appoint (or
petition a court of competent jurisdiction to appoint) a successor Collateral
Agent who shall serve as Collateral Agent hereunder or thereunder, in either
such case until such time, if any, as the Required Secured Creditors appoint a
successor Collateral Agent as provided above.

 

(d) Notwithstanding anything to the contrary contained
herein, the Required Secured Creditors may remove the Collateral Agent by an
instrument in writing executed by the Required Secured Creditors and,
thereupon, appoint a successor Collateral Agent designated by the Required
Secured Creditors, effective as provided in Section 9(e) below.

 

(e)  The resignation or removal of a Collateral
Agent shall become effective only upon the execution and delivery of such
documents or instruments as are necessary to transfer the rights and
obligations of the Collateral Agent under the Security Agreement and the
recording or filing of such documents, instruments or financing statements as
may be necessary to maintain the priority and perfection of any security
interest granted by the Security Agreement. 
Copies of each such document or instrument shall be delivered to each of
Vertis, the Administrative Agent, the 2003 Senior Secured Notes Indenture
Trustee and each 2003 Senior Secured Note Refinancing Trustee (if any).  The appointment of a successor Collateral
Agent pursuant to this Section 9 shall become effective upon the acceptance of
such appointment (and execution by such successor of the documents, instruments
or financing statements referred to above) and such successor Collateral Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent.

 

(f)  After any resignation or removal hereunder
of the Collateral Agent, the indemnification provisions specified in this Annex
I and in the Security Agreement shall continue to inure to its benefit as to
any actions taken or omitted to be taken by it in connection with its agency
hereunder while it was Collateral Agent.

 

10.  Co-Collateral Agents; Separate Collateral
Agents.  (a)  If at any time or times it shall be
necessary or prudent in order to conform to any law of any jurisdiction in
which any of the Collateral shall be located, or the Collateral Agent shall be
advised by counsel, satisfactory to it, that it is necessary or prudent in the
interest of the Collateral Agent or the Secured Creditors, then the Collateral
Agent shall be entitled to appoint one or more sub-collateral agents or
co-collateral agents, and in such case the Collateral Agent, Vertis and each of
the other Assignors having an interest in the Collateral located in the
jurisdiction in which such separate or sub-collateral agent or co-collateral
agent is to act shall execute and deliver all instruments and agreements
necessary or proper to constitute another bank or trust company, or one or more
individuals approved by the Collateral Agent, either to act as co-collateral
agent or co-collateral agents jointly with the Collateral Agent originally
named herein or any successor or successors, or to act as a separate or
sub-collateral agent or agents of the Collateral Agent and the Secured
Creditors in respect of any or all of the Collateral.  If Vertis and each of the other Assignors having an interest in
the Collateral located in the jurisdiction in which such separate or
sub-collateral agent or co-collateral agent is to act shall not have joined in
the execution of such instruments or agreements within 10 days after the
receipt of a written request from the Collateral Agent so to do, or if a
Default or an Event of Default shall be continuing, the Collateral Agent may
act under the foregoing provisions of this Section 10 without the 

 

6

 

concurrence of Vertis and the other Assignors, and Vertis and each of
the other Assignors hereby irrevocably appoint the Collateral Agent as their
agent and attorney to act for them under the foregoing provisions of this
Section 10 in either of such contingencies.

 

(b)                                 Every
separate or sub-collateral agent (and all references herein to a “separate
collateral agent” shall be deemed to refer also to a “sub-collateral agent” or
a “collateral sub-agent”) and every co-collateral agent, other than any
collateral agent which may be appointed as successor to any Collateral Agent,
shall, to the extent permitted by applicable law, be appointed and act and be
such, subject to the following provisions and conditions, namely:

 

(i)                                     all
rights, remedies, powers, duties and obligations conferred upon, reserved to or
imposed upon the Collateral Agent in respect of the custody, control and
management of monies, papers or securities shall be exercised solely by the
Collateral Agent hereunder;

 

(ii)                                  all
rights, remedies, powers, duties and obligations conferred upon, reserved to or
imposed upon the Collateral Agent hereunder shall be conferred, reserved or
imposed and exercised or performed by the Collateral Agent and such separate
collateral agent or separate collateral agents or co-collateral agent or
co-collateral agents, jointly or severally, as shall be provided in the instrument
appointing such separate collateral agent or separate collateral agents or
co-collateral agent or co-collateral agents, except to the extent that, under
any law of any jurisdiction in which any particular act or acts are to be
performed, the Collateral Agent shall be incompetent or unqualified to perform
such act or acts, in which event such rights, remedies, powers, duties and
obligations shall be exercised and performed by such separate collateral agent
or separate collateral agents or co-collateral agent or co-collateral agents;

 

(iii)                               no
power given hereby to, or which it is provided hereby may be exercised by, any
such separate collateral agent or separate collateral agents or co-collateral
agent or co-collateral agents shall be exercised hereunder by such separate
collateral agent or separate collateral agents or co-collateral agent or
co-collateral agents except (subject to applicable law) jointly with, or with
the consent or at the direction in writing of, the Collateral Agent (which
direction shall be made in accordance with the provisions of the Security
Agreement);

 

(iv)                              all
provisions of the Security Agreement relating to the Collateral Agent or to
releases of Collateral shall apply to any such separate collateral agent or
separate collateral agents or co-collateral agent or co-collateral agents;

 

(v)                                 no
collateral agent constituted under this Section 10 shall be personally liable
by reason of any act or omission of any other separate or co-collateral agent
or the Collateral Agent hereunder; and

 

(vi)                              the
Collateral Agent at any time by an instrument in writing, executed by it, may
accept the resignation of any such separate collateral agent or co-collateral
agent and the Collateral Agent or the Required Secured Creditors may
individually or jointly 

 

7

 

remove any such separate
collateral agent or co-collateral agent, and in that case, by an instrument in
writing executed by the Collateral Agent or the Required Secured Creditors, as
the case may be, and the Collateral Agent or the Required Secured Creditors, as
the case may be, may appoint a successor to such separate collateral agent or
co-collateral agent, as the case may be, anything herein contained to the
contrary notwithstanding.  If Vertis and
each of the other Assignors shall not have joined in the execution of any such
instrument within 10 days after the receipt of a written request from the
Collateral Agent so to do, or if a Default or an Event of Default shall be
continuing, the Collateral Agent shall have the power to accept the resignation
of or remove any such separate collateral agent or co-collateral agent and to
appoint a successor to such separate collateral agent or co-collateral agent,
as the case may be, and to execute any such instrument without the concurrence
of Vertis or such other Assignor, and Vertis and each of the other Assignors
hereby irrevocably appoint the Collateral Agent their agent and attorney to act
for them in such connection in either of such contingencies.  If the Collateral Agent shall have appointed
a separate collateral agent or separate collateral agents or co-collateral
agent or co-collateral agents as above provided, the Collateral Agent may at
any time, by an instrument in writing, accept the resignation of or remove any
such separate collateral agent or co-collateral agent, the successor to any
such separate collateral agent or co-collateral agent to be appointed by Verts
and each of the other Assignors and the Collateral Agent, or by the Collateral Agent
alone, as hereinabove provided in this Section 10.

 

11.  Acknowledgment
of Priorities of Security Interests and Liens.  (a)  Each of the Secured
Creditors acknowledges and agrees to the relative priorities as to the
Collateral (and the application of the proceeds therefrom) as provided in the
Security Documents (including Section 7.4 of the Security Agreement) and
acknowledges and agrees that such priorities (and the application of proceeds
from the Collateral) shall not be affected or impaired in any manner whatsoever
including, without limitation, on account of (i) the invalidity, irregularity,
diminution in value or unenforceability of all or any part of any Secured Debt
Agreement or any of the Obligations thereunder, (ii) the actual date and time of
creation, execution, delivery, recording, filing, attachment or perfection of
any security interests in the Collateral, (iii) any nonperfection of any Lien
purportedly securing any of the Obligations (including, without limitation,
whether any such Lien is now perfected, hereafter ceases to be perfected, is
avoidable by any bankruptcy trustee or otherwise is set aside, invalidated or
lapses), (iv) any amendment, change or modification of any Secured Debt
Agreement, (v) any impairment, modification, change, exchange, release or
subordination of or limitation on, any liability of, or stay of actions or lien
enforcement proceedings against, any Assignor, its property, or its estate in
bankruptcy resulting from any bankruptcy, arrangement, readjustment, composition,
liquidation, rehabilitation, similar proceeding or otherwise involving or
affecting any Assignor, (vi) any distribution of the Collateral upon the
liquidation or dissolution of Holdings or any of its Subsidiaries, or the
winding up of the assets or business of Holdings or any of its Subsidiaries,
(vii) the initiation of any bankruptcy, moratorium, reorganization or other
insolvency proceeding with respect to Holdings or any of its Subsidiaries or
(viii) the taking of possession of any of the Collateral by the Collateral
Agent or any of the Secured Creditors.

 

8

 

(b) Each Secured Creditor, by its acceptance of the
benefits hereunder and of the Security Agreement, hereby agrees for the benefit
of the other Secured Creditors that, to the extent any additional or substitute
collateral for any of the Obligations of the type covered by the Security
Agreement is delivered by an Assignor to or for the benefit of any Secured
Creditor, such collateral shall be subject to the provisions of this Annex I
and of the Security Agreement  and, in
the event such collateral constitutes “Excluded 2003 Senior Secured Notes
Collateral”, be subject to the same limitations as are set forth in the
Security Agreement for Excluded 2003 Senior Secured Notes Collateral.

 

(c)  Each of
the Secured Creditors hereby agrees not to challenge or question in any
proceeding the validity or enforceability of any Security Document (in each
case as a whole or any term or provision contained therein) or the validity of
any Lien or financing statement in favor of the Collateral Agent for the
benefit of the Secured Creditors as provided in the respective Security
Document, or the relative priority of any such Lien.

 

(d)  If any
Secured Creditor shall acquire by indemnification, subrogation, contract or
otherwise (including pursuant to the Security Documents), any lien, estate,
right or other interest in, or possession or control of, any of the assets of
any Assignor that would otherwise constitute Collateral to secure (or providing
security for) the respective Obligations owed to such Secured Creditor, that
lien, estate, right or other interest shall, and any such possession or control
shall, be held for the benefit of the Secured Creditors under the applicable
Security Documents and shall be subject to the relative priorities set forth in
the respective Security Documents.

 

12.  Sharing
Arrangements.  (a)  The Secured Creditors hereby agree that the
provisions of the Security Documents with respect to allocations and
distributions of proceeds of the Collateral shall prevail notwithstanding any
event or circumstance, including, without limitation, in the event that,
through the operation of any bankruptcy, reorganization, insolvency or other
laws or otherwise, any prior creditors’ security interest in the Collateral is
avoided in whole or in part or is enforced with respect to some, but not all,
of the respective Obligations then outstanding.

 

(b)  The
Secured Creditors agree that none of them shall be entitled to benefit from any
avoidance action affecting or otherwise relating to any distribution or
allocation made in accordance with the Security Documents, whether by
preference or otherwise, it being understood and agreed that the benefit of any
such avoidance action otherwise allocable to them shall instead be allocated
and turned over for application in accordance with the priorities set forth in
the respective Security Documents.

 

(c)                                  In the event that any payment or
distribution shall be received by any Secured Creditor in a manner that is
inconsistent with the provisions of Section 7.4 of the Security Agreement, such
payment or distribution shall be held by the respective Secured Creditor for
the benefit of, and shall be paid over or delivered to, the respective Secured
Creditors entitled thereto for application to such Secured Creditors’
Obligations (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of any Assignor at
the rate provided for in the respective documentation for such Obligations,
whether 

 

9

 

or not a claim for post-petition interest is allowed
in any such proceeding) in accordance with Section 7.4 of the Security
Agreement.

 

13.  Provisions
in the Event of Insolvency Proceedings. 
Without limiting the other provisions of this Annex I, upon the
commencement of a case under the Bankruptcy Code by or against any Assignor:

 

(a)  The
Security Documents shall remain in full force and effect and enforceable
pursuant to their respective terms in accordance with Section 510(a) of the
Bankruptcy Code, and all references herein to such Assignor shall be deemed to
apply to such entity as debtor-in-possession and to any trustee in bankruptcy
for the estate of such entity.

 

(b)  In any
such case under the Bankruptcy Code, each Second Lien Creditor agrees not to
take any action or vote in any way so as to contest (1) the validity or
enforceability of any of the Security Documents or any of the Obligations
thereunder, (2) the validity, priority or enforceability of the Liens,
mortgages, assignments and security interests granted pursuant to the Security
Documents with respect to the First Lien Obligations, or (3) the relative
rights and duties of the holders of the First Lien Obligations, the 2003 Senior
Secured Notes Obligations and the 2003 Senior Secured Note Refinancing
Obligations (as applicable) granted and/or established in any Security Document
with respect to such Liens, mortgages, assignments, and security interests.

 

(c)  So long as
any First Lien Obligations are outstanding, without the express written consent
of the Required Lenders (or, after all Credit Document Obligations have been
repaid in full in cash in accordance with the terms thereof and the Total
Commitment and all Letters of Credit have been terminated, the holders of a
majority of the Other Obligations), none of the Second Lien Creditors shall (i)
with respect to any rights under any Secured Debt Agreement, seek in respect of
any part of the Collateral or proceeds thereof or any Lien which may exist
thereon, any relief from or modification of the automatic stay as provided in
Section 362 of the Bankruptcy Code or seek or accept any form of adequate
protection under either or both Sections 362 and 363 of the Bankruptcy Code
with respect thereto except, with respect to the Second Lien Obligations, to
the extent that their receipt of any such adequate protection would not reduce
(or would not have the effect of reducing) or adversely affect the adequate
protection that the First Lien Creditors otherwise would be entitled to receive
(it being understood that, in any event, any such adequate protection shall
only be afforded to the Second Lien Creditors if the First Lien Creditors are
satisfied with the adequate protection afforded to the First Lien Creditors),
(ii) oppose or object to any First Lien Creditor obtaining a Lien or grant of
administrative claim in connection with a grant of adequate protection, use of
cash collateral or post-petition financing under Section 362, 363 or 364 of the
Bankruptcy Code, (iii) oppose or object to the use of cash collateral by an
Assignor, (iv) oppose or object to any post-petition financing (including any
debtor-in-possession financing) provided by any of the First Lien Creditors or
provided by a third party pursuant to Section 364 of the Bankruptcy Code
(including on a priming basis) on terms acceptable to the Required Lenders (or,
after all Credit Document Obligations have been repaid in full in cash in
accordance with the terms thereof and the Total Commitment and all Letters of
Credit have been terminated, the holders of a majority of the Other
Obligations), (v) oppose or object to or withhold consent from the disposition
of assets by any Assignor under Section 363(b) or (f) of the Bankruptcy Code,
(vi) oppose, object to, or vote 

 

10

 

against any plan of reorganization or disclosure
statement the terms of which are consistent with the rights of the First Lien
Creditors under the Security Documents under which the Liens, mortgages,
assignments and security interests and the priority thereof are granted and
established, (vii) make an election pursuant to Section 1111(b) of the
Bankruptcy Code, (viii) oppose or object to the determination of the extent of
any Liens held by any of the First Lien Creditors or the value of any claims of
First Lien Creditors under Section 506(a) of the Bankruptcy Code, or (ix)
oppose or object to the payment of interest and expenses as provided under
Sections 506(b) and (c) of the Bankruptcy Code.

 

(d)  In the
event that any of the First Lien Obligations shall be paid in full and
subsequently, for whatever reason (including, but not limited to, an order or
judgment for disgorgement of a preference under Title 11 of the United Stated
Code, or any similar law, or the settlement of any claim in respect thereof),
formerly paid or satisfied First Lien Obligations become unpaid or unsatisfied,
the terms and conditions of this Annex I shall be fully applicable thereto
until all such First Lien Obligations are again paid in full in cash.

 

14.  Special
Releases and Waivers.  (a)                                     Each Secured Creditor agrees that neither
the Collateral Agent nor the Required Secured Creditors (in directing the
Collateral Agent to take any action with respect to the Collateral) shall have
any duty or obligation to realize first upon any type of Collateral (including
Excluded Collateral) or to sell, dispose of or otherwise liquidate all or any
portion of the Collateral in any manner that would maximize the return to any
Class of Secured Creditors holding Obligations of any type (whether Credit
Document Obligations, Other Obligations, 2003 Senior Secured Notes Obligations
or 2003 Senior Secured Note Refinancing Obligations), notwithstanding that the
order and timing of any such realization, sale, disposition or liquidation may
affect the amount of proceeds actually received by such Class of Secured
Creditors from such realization, sale, disposition or liquidation.

 

(b)                                 Each of the Second Lien Creditors waives
any claim which each such Second Lien Creditor may now or hereafter have
against the First Lien Creditors (or their representatives) arising out of (i)
any and all actions which the Collateral Agent or the First Lien Creditors take
or omit to take (including, without limitation, actions with respect to the
creation, perfection or continuation of Liens on the Collateral, actions with
respect to the occurrence of an Event of Default, actions with respect to the
foreclosure upon, sale, release, or depreciation of, or failure to realize
upon, any of the security for the Obligations and actions with respect to the
collection of any claim for all or any part of the Obligations from any account
debtor, guarantor or any other party) in accordance with the respective Secured
Debt Agreements or any other agreement related thereto or to the collection of
the Obligations or the valuation, use, protection or release of the security
for the Obligation, (ii) the Collateral Agent’s or the First Lien Creditors’
election, in any proceeding instituted under the Bankruptcy Code, of the
application of Section 1111(b) of the Bankruptcy Code and/or (iii) any
borrowing of, or grant of a security interest or administrative expense
priority under Section 364 of the Bankruptcy Code to, any Assignor as
debtor-in-possession.

 

15.  Right
to Amend. Etc.  (a) As between the
2003 Senior Secured Notes Creditor and the 2003 Senior Secured Note Refinancing
Creditors on the one hand and the other Secured Creditors (including, without
limitation, the Lenders) on the other hand, it is agreed that 

 

11

 

the Secured Creditors (excluding the 2003 Senior Secured Notes Creditor
and the 2003 Senior Secured Note Refinancing Creditors in their capacities as
such) may at any time and from time to time, in their sole discretion, and
without any obligation to give any notice or receive any consent from the 2003
Senior Secured Notes Creditor and any 2003 Senior Secured Note Refinancing
Creditor in their capacities as such, (i) change the manner, place or terms of
payment, or change or extend the time of payment of, or renew, alter,
refinance, increase or add to the Non-2003 Senior Secured Notes Obligations,
(ii) obtain, release, or dispose of any Collateral for the Non-2003 Senior
Secured Notes Obligations (subject, however, to Sections 10.2 and 10.8 of the
Security Agreement), or (iii) amend or supplement in any manner the Security
Agreement and the other Credit Documents or any other agreements or instruments
evidencing, securing or relating to the Non-2003 Senior Secured Notes
Obligations (subject, however, in the case of the Credit Document Obligations,
to Section 13.12 of the Credit Agreement and Section 10.2 of the Security
Agreement), and the provisions of this Annex I shall continue in full force and
effect with respect to all such Non-2003 Senior Secured Notes Obligations.

 

16.                                 Nature
of Obligations; Post-Petition Interest. (a) The 2003 Senior Secured Notes
Creditor hereby acknowledges and agrees that (i) the 2003 Senior Secured Notes
Creditor’s claims against the Assignors in respect of the Collateral constitute
junior claims separate and apart (and of a different class) from the senior
claims of the Lender Creditors and the Other Creditors against the Assignors in
respect of the Collateral and (ii) the Primary Obligations and Secondary
Obligations include all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor at the rate provided for
in the respective Secured Debt Agreements governing the same, whether or not a
claim for post-petition interest is allowed in any such case, proceeding or
other action.  To further effectuate the
intent of the parties as provided in the immediately preceding sentence, if it
is held that the claims against the Assignors in respect of the Collateral
constitute only one secured claim (rather than separate classes of senior and
junior claims), then the 2003 Senior Secured Notes Creditor hereby acknowledges
and agrees that all distributions pursuant to Section 7.4 of the Security
Agreement or otherwise shall be made as if there were separate classes of
senior and junior secured claims against the Assignors in respect of the
Collateral (with the effect being that, to the extent that the aggregate value
of the Collateral is sufficient (for this purpose ignoring all claims held by
the 2003 Senior Secured Notes Creditor and any 2003 Senior Secured Note
Refinancing Creditor), the Lender Creditors and the Other Creditors shall be
entitled to receive, in addition to amounts distributed to them in respect of
principal, pre-petition interest and other claims, all amounts owing in respect
of post-petition interest at relevant contract rate (even though such claims
may or may not be allowed in whole or in part in the respective bankruptcy, insolvency,
reorganization or similar proceeding) before any distribution is made in
respect of the claims held by the 2003 Senior Secured Notes Creditor, with the
2003 Senior Secured Notes Creditor hereby acknowledging and agreeing to turn
over to the holders of the Non-2003 Senior Secured Notes Obligations all
amounts otherwise received or receivable by it to the extent needed to
effectuate the intent of this sentence even if such turn-over of amounts has
the effect of reducing the amount of the claim of the 2003 Senior Secured Notes
Creditor.

 

12

 

(b) Each 2003 Senior
Secured Note Refinancing Creditor hereby acknowledges and agrees that (i) such
2003 Senior Secured Note Refinancing Creditor’s claims against the Assignors in
respect of the Collateral constitute junior claims separate and apart (and of a
different class) from the senior claims of 
the Lender Creditors and the Other Creditors against the Assignors in
respect of the Collateral and (ii) the Primary Obligations and Secondary
Obligations include all interest that accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Assignor at the rate provided for in
the respective Secured Debt Agreements governing the same, whether or not a
claim for post-petition interest is allowed in any such case, proceeding or
other action.  To further effectuate the
intent of the parties as provided in the immediately preceding sentence, if it
is held that the claims against the Assignors in respect of the Collateral
constitute only one secured claim (rather than separate classes of senior and
junior claims), then each 2003 Senior Secured Note Refinancing Creditor hereby
acknowledges and agrees that all distributions pursuant to Section 7.4 of the
Security Agreement or otherwise shall be made as if there were separate classes
of senior and junior secured claims against the Assignors in respect of the
Collateral (with the effect being that, to the extent that the aggregate value
of the Collateral is sufficient (for this purpose ignoring all claims held by
the 2003 Senior Secured Notes Creditor and each 2003 Senior Secured Note
Refinancing Creditor), the Lender Creditors and the Other Creditors shall be
entitled to receive, in addition to amounts distributed to them in respect of
principal, pre-petition interest and other claims, all amounts owing in respect
of post-petition interest at relevant contract rate (even though such claims may
or may not be allowed in whole or in part in the respective bankruptcy,
insolvency, reorganization or similar proceeding) before any distribution is
made in respect of the claims held by any 2003 Senior Secured Note Refinancing
Creditor, with each 2003 Senior Secured Note Refinancing Creditor hereby
acknowledging and agreeing to turn over to the holders of the Non-2003 Senior
Secured Notes Obligations all amounts otherwise received or receivable by it to
the extent needed to effectuate the intent of this sentence even if such
turn-over of amounts has the effect of reducing the amount of the claim of such
2003 Senior Secured Note Refinancing Creditor.

 

17.  Each of
the agreements and acknowledgments made by each Secured Creditor is made on
behalf of itself and its successors and assigns and is deemed effective by
virtue of such Secured Creditors acceptance of the benefits of the Security
Agreement and the other Security Documents.

 

13

 

	
   

  	
  ANNEX J

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

SCHEDULE OF TYPE
OF ORGANIZATION

AND JURISDICTION OF ORGANIZATION

 

	
  Exact
  Legal Name of Each Assignor

  	
   

  	
  Type of

  Organization (or, if

  the Assignor is an

  Individual, so

  indicate)

  	
   

  	
  Registered

  Organization

  (Yes/No)

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Assignor’s Location (for

  purposes of 

  NY UCC § 9-307)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
  ANNEX K

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

SCHEDULE OF
DEPOSIT ACCOUNTS

 

	
  Name of

  Assignor

  	
   

  	
  Description

  of Deposit Account

  	
   

  	
  Account

  Number

  	
   

  	
  Name of Bank,

  Address and

  Contact

  Information

  	
   

  	
  Jurisdiction of Bank

  (determined in

  accordance with

  UCC § 9-304)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
  ANNEX L

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

DESCRIPTION OF
COMMERCIAL TORT CLAIMS

 

	
  Name of
  Assignor

  	
   

  	
  Description of Commercial Tort Claims

  
	
   

  	
   

  	
   

  

 

 

	
   

  	
  ANNEX M

  
	
   

  	
  to

  
	
   

  	
  U.S.
  SECURITY AGREEMENT

  

 

FORM OF CONTROL AGREEMENT
REGARDING DEPOSIT ACCOUNTS

 

AGREEMENT (as amended, modified or supplemented from
time to time, this “Agreement”), dated as of                      
       ,          ,
among the undersigned assignor (the “Assignor”), JPMORGAN CHASE BANK (f/k/a The
Chase Manhattan Bank), not in its individual capacity but solely as Collateral
Agent (in such capacity and together with its           
successors or assigns in such capacity, the “Collateral Agent”), and                        
(the “Deposit Account Bank”), as the bank (as defined in Section 9-102 of the
UCC as in effect on the date hereof in the State of                               
(the “UCC”)) with which one or more deposit accounts (as defined in Section
9-102 of the UCC) listed in Annex A attached hereto (which Annex A has been
prepared by the Assignor and as to which the Assignor represents that such
deposit account constitutes the only Perfected Deposit Account(s) (as defined
in the Security Agreement referred to below) maintained with the Deposit
Account Bank) are maintained by the Assignor with the Deposit Account Bank (the
“Deposit Accounts”).

 

W I T N E S S E T
H :

 

WHEREAS, the Assignor, various other Assignors and the
Collateral Agent have entered into a Security Agreement, dated as of December
7, 1999 and amended and restated as of June          ,
2003 (as so amended and restated and as the same may be further amended,
restated, modified and/or supplemented from time to time, the “Security
Agreement”), under which, among other things, in order to secure the payment of
the Obligations (as defined in the Security Agreement) the Assignor, the
Assignor has granted a security interest to the Collateral Agent for the
benefit of the Secured Creditors (as defined in the Security Agreement) in all
of the right, title and interest of the Assignor in and into any and all
deposit accounts (as defined in Section 9-102 of the UCC) and in all monies,
securities, instruments and other investments deposited therein from time to
time (collectively, herein called the “Collateral”); and

 

WHEREAS, the Assignor desires that the Deposit Account
Bank enter into this Agreement in order to establish “control” (as defined in
Section 9-104 of the UCC) in each Deposit Account maintained with the Deposit
Account Bank, and to provide for the rights of the parties under this Agreement
with respect to such Deposit Accounts;

 

NOW THEREFORE, in consideration of the premises and
the mutual promises and agreements contained herein, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.                                       Assignor’s
Dealings with Deposit Accounts; Notice of Exclusive Control. Until the
Deposit Account Bank shall have received from the Collateral Agent a Notice of
Exclusive Control (as defined below), the Assignor shall be entitled to present
items drawn on and otherwise to withdraw or direct the disposition of funds
from the Deposit Accounts and give instructions in respect of the Deposit
Accounts; provided, however, that the Assignor may not, and the
Deposit Account Bank agrees that it shall not permit the Assignor to, without
the Collateral Agent’s prior written consent, close any Deposit Account.  If the Collateral Agent 

 

 

shall give to the Deposit Account Bank a notice of the Collateral
Agent’s exclusive control of the Deposit Accounts, which notice states that it
is a “Notice of Exclusive Control” (a “Notice of Exclusive Control”), only the
Collateral Agent shall be entitled to withdraw funds from the Deposit Accounts,
to give any instructions in respect of the Deposit Accounts and any funds held
therein or credited thereto or otherwise to deal with the Deposit Accounts.

 

2.                                       Collateral
Agent’s Right to Give Instructions as to Deposit Accounts.  (a)  Notwithstanding the foregoing
or any separate agreement that the Assignor may have with the Deposit Account
Bank, the Collateral Agent shall be entitled, for purposes of this Agreement,
at any time following the delivery of a Notice of Exclusive Control to give the
Deposit Account Bank instructions as to the withdrawal or disposition of any
funds from time to time credited to any Deposit Account, or as to any other
matters relating to any Deposit Account or any other Collateral, without
further consent from the Assignor.  The
Assignor hereby irrevocably authorizes and instructs the Deposit Account Bank,
and the Deposit Account Bank hereby agrees, to comply with any such
instructions from the Collateral Agent without any further consent from the
Assignor.  Such instructions may include
the giving of stop payment orders for any items being presented to any Deposit
Account for payment.  The Deposit
Account Bank shall be fully entitled to rely on, and shall comply with,  such instructions from the Collateral Agent
even if such instructions are contrary to any instructions or demands that the
Assignor may give to the Deposit Account Bank. 
In case of any conflict between instructions received by the Deposit
Account Bank from the Collateral Agent and the Assignor, the instructions from
the Collateral Agent shall prevail.

 

(b)                                 It is understood and agreed that the
Deposit Account Bank’s duty to comply with instructions from the Collateral
Agent regarding the Deposit Accounts is absolute, and the Deposit Account Bank
shall be under no duty or obligation, nor shall it have the authority, to
inquire or determine whether or not such instructions are in accordance with
the Security Agreement or any other Credit Document (as defined in the Security
Agreement), nor seek confirmation thereof from the Assignor or any other
Person.

 

3.                                       Assignor’s Exculpation and
Indemnification of Depository Bank.  The Assignor
hereby irrevocably authorizes and instructs the Deposit Account Bank to follow
instructions from the Collateral Agent regarding the Deposit Accounts even if
the result of following such instructions from the Collateral Agent is that the
Deposit Account Bank dishonors items presented for payment from any Deposit
Account.  The Assignor further confirms
that the Deposit Account Bank shall have no liability to the Assignor for
wrongful dishonor of such items in following such instructions from the
Collateral Agent.  The Deposit Account
Bank shall have no duty to inquire or determine whether the Assignor’s
obligations to the Collateral Agent are in default or whether the Collateral
Agent is entitled, under any separate agreement between the Assignor and the
Collateral Agent, to give any such instructions.  The Assignor further agrees to be responsible for the Deposit
Account Bank’s customary charges and to indemnify the Deposit Account Bank from
and to hold the Deposit Account Bank harmless against any loss, cost or expense
that the Deposit Account Bank may sustain or incur in acting upon instructions
which the Deposit Account Bank believes in good faith to be instructions from
the Collateral Agent.

 

2

 

4.                                       Subordination of Security Interests;
Deposit Account Bank’s Recourse to Deposit Accounts. 
The Deposit Account Bank hereby subordinates any claims and security
interests it may have against, or with respect to, any Deposit Account at any
time established or maintained with it by the Assignor (including any amounts,
investments, instruments or other Collateral from time to time on deposit
therein) to the security interests of the Collateral Agent (for the benefit of
the Secured Creditors) therein, and agrees that no amounts shall be charged by
it to, or withheld or set-off or otherwise recouped by it from, any Deposit
Account of the Assignor or any amounts, investments, instruments or other
Collateral from time to time on deposit therein; provided that the Deposit
Account Bank may, however, from time to time debit the Deposit Accounts for any
of its customary charges in maintaining the Deposit Accounts or for
reimbursement for the reversal of any provisional credits granted by the
Deposit Account Bank to any Deposit Account, to the extent, in each case, that
the Assignor has not separately paid or reimbursed the Deposit Account Bank
therefor.

 

5.                                       Representations, Warranties and Covenants
of Deposit Account Bank.  The Deposit Account Bank
represents and warrants to the Collateral Agent that:                                                                                                   

 

(a)                                  The
Deposit Account Bank constitutes a “bank” (as defined in Section 9-102 of the
UCC) and that the jurisdiction (determined in accordance with Section 9-304 of
the UCC) of the Deposit Account Bank for purposes of each Deposit Account
maintained by the Assignor with the Deposit Account Bank shall be one or more
States within the United States.

 

(b)                                 The
Deposit Account Bank shall not permit any Assignor to establish any demand,
time, savings, passbook or other account with it which it does not constitute a
“deposit account” (as defined in Section 9-102 of the UCC).

 

(c)                                  The account agreements between the
Deposit Account Bank and the Assignor relating to the establishment and general
operation of the Deposit Accounts provide, whether specifically or generally,
that the laws of
                          
govern secured transactions relating to the Deposit Accounts and that the
Deposit Account Bank’s “jurisdiction” for purposes of Section 9-304 of the UCC
in respect of the Deposit Accounts is                                         .  The Deposit Account Bank will not, without
the Collateral Agent’s prior written consent, amend any such account agreement
so that the Deposit Account Bank’s jurisdiction for purposes of
Section 9-304 of the UCC is other than a jurisdiction permitted pursuant
to preceding clause (a).  All account
agreements in respect of each Deposit Account in existence on the date hereof
are listed on Annex A hereto and copies of all such account agreements have been
furnished to the Collateral Agent.  The
Deposit Account Bank will promptly furnish to the Collateral Agent a copy of
the account agreement for each Deposit Account hereafter established by the
Deposit Account Bank for the Assignor.

 

(d)                                 The Deposit Account Bank has not entered
and will not enter, into any agreement with any other Person by which the
Deposit Account Bank is obligated to comply with instructions from such other
Person as to the disposition of funds from any Deposit Account or other dealings
with any Deposit Account or other of the Collateral.

 

3

 

(e)                                  On the date hereof, the Deposit Account
Bank maintains no Perfected Deposit Accounts (as defined in the Security
Agreement) for the Assignor other than the Deposit Accounts specifically
identified in Annex A hereto.

 

(f)                                    Any items or funds received by the
Deposit Account Bank for the Assignor’s Deposit Accounts will be credited to
said Deposit Accounts in accordance with this Agreement.

 

6.                                       Deposit Account Statements and
Information.  The Deposit Account Bank agrees, and is
hereby authorized and instructed by the Assignor, to furnish to the Collateral
Agent upon its reasonable request, at its address indicated below, copies of
all account statements and other information relating to each Deposit Account
that the Deposit Account Bank sends to the Assignor and to disclose to the
Collateral Agent all other information reasonably requested by the Collateral
Agent regarding any Deposit Account.

 

7.                                       Conflicting Agreements. 
This Agreement shall have control over any conflicting agreement between
the Deposit Account Bank and the Assignor.

 

8.                                       Merger or Consolidation of Deposit
Account Bank.  Without the execution or filing of any paper
or any further act on the part of any of the parties hereto, any bank into
which the Deposit Account Bank may be merged or with which it may be
consolidated, or any bank resulting from any merger to which the Deposit
Account Bank shall be a party, shall be the successor of the Deposit Account
Bank hereunder and shall be bound by all provisions hereof which are binding
upon the Deposit Account Bank and shall be deemed to affirm as to itself all
representations and warranties of the Deposit Account Bank contained herein.

 

9.                                       Notices.

 

(a)  All
notices and other communications provided for in this Agreement shall be in
writing (including facsimile) and sent to the intended recipient at its address
or telex or facsimile number set forth below:

 

If to the Collateral Agent, at:

 

JPMorgan Chase Bank

270 Park Avenue, 47th Floor

New York, New York  10017

Attention:
[                                   ]

Telephone No.:  (212)
       -         

Telecopier No.:  (212)
       -         

 

If to the Assignor, at:

                                                      

                                                      

                                                      

 

 

4

 

If to the Deposit Account Bank, at:

 

                                                      

                                                      

                                                      

 

 

or, as to any party, to
such other address or telex or facsimile number as such party may designate
from time to time by notice to the other parties.

 

(b)                                 Except as otherwise provided herein, all
notices and other communications hereunder shall be delivered by hand or by
commercial overnight courier (delivery charges prepaid), or mailed, postage
prepaid, or telexed or faxed, addressed as aforesaid, and shall be effective
(i) three business days after being deposited in the mail (if mailed), (ii)
when delivered (if delivered by hand or courier) and (iii) or when transmitted
with receipt confirmed (if telexed or faxed); provided that notices to
the Collateral Agent shall not be effective until actually received by it.

 

10.                                 Amendment.  This
Agreement may not be amended, modified or supplemented except in writing
executed and delivered by all the parties hereto.

 

11.                                 Binding Agreement. 
This Agreement shall bind the parties hereto and their successors and
assign and shall inure to the benefit of the parties hereto and their
successors and assigns.  Without limiting
the provisions of the immediately preceding sentence, the Collateral Agent at
any time or from time to time may designate in writing to the Deposit Account
Bank a successor Collateral Agent (at such time, if any, as such entity becomes
the Collateral Agent under the Security Agreement, or at any time thereafter)
who shall thereafter succeed to the rights of the existing Collateral Agent
hereunder and shall be entitled to all of the rights and benefits provided
hereunder.

 

12.                                 Continuing Obligations. 
The rights and powers granted herein to the Collateral Agent have been
granted in order to protect and further perfect its security interests in the
Deposit Accounts and other Collateral and are powers coupled with an interest
and will be affected neither by any purported revocation by the Assignor of
this Agreement or the rights granted to the Collateral Agent hereunder or by
the bankruptcy, insolvency, conservatorship or receivership of the Assignor or
the Deposit Account Bank or by the lapse of time.  The rights of the Collateral Agent hereunder and in respect of
the Deposit Accounts and the other Collateral, and the obligations of the
Assignor and Deposit Account Bank hereunder, shall continue in effect until the
security interests of Collateral Agent in the Deposit Accounts and such other
Collateral have been terminated and the Collateral Agent has notified the
Deposit Account Bank of such termination in writing.

 

13.                                 Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

 

14.                                 Counterparts. 
This Agreement may be executed in any number of counterparts, all of
which shall constitute one and the same instrument, and any party hereto may
execute this Agreement by signing and delivering one or more counterparts.

 

5

 

15.                                 Notice of Exclusive Control. 
Notwithstanding anything to the contrary contained herein, the
Collateral Agent hereby covenants and agrees (x) not to furnish to the Deposit
Account Bank a Notice of Exclusive Control at any time no Default or Event of
Default is then in existence and (y) to promptly revoke any Notice of Exclusive
Control previously given to a Deposit Account Bank at such time as the
underlying Default or Event of Default (and all other Defaults and Events of
Default) are cured or waived in accordance with the terms of the Credit
Agreement and the other Secured Debt Agreements; provided that the
liability of the Collateral Agent to the Assignor and any other Person for any
failure to act as set forth above shall be limited as, and to the extent,
provided in the Security Agreement.

 

*     *    
*

 

6

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