Document:

Exhibit
4.4

 

CONFORMED
COPY

 

 

 

 

QUAD/GRAPHICS,
INC.

QUAD/TECH,
INC.

QUAD/TECH
EUROPE, INC.

QUAD/CREATIVE,
INC.

DUPLAINVILLE
TRANSPORT, INC.

QUAD/CARE,
INC.

QUAD/MARKETING,
INC.

QUAD/PAK,
INC.

THE
QUAD TECHNOLOGY GROUP, INC.

SILVER
SPRING REALTY, INC.

CHEMICAL
RESEARCH/TECHNOLOGY CO.

QUAD/WEST,
INC.

QUAD/MED,
INC.

 

 

NOTE
AGREEMENT

 

 

Dated
as of September 1, 1995

 

 

Re:   $43,000,000 7.14% Senior Secured Notes, Series 1995-1,
Tranche A

Due
September 1, 2010

$48,500,000
7.56% Senior Secured Notes, Series 1995-1, Tranche B

Due
September 1, 2015

and

$30,000,000
8.00% Senior Secured Notes, Series 1995-1, Tranche C

Due
September 1, 2020

 

 

 

 

TABLE OF CONTENTS

 

(Not a part of the
Agreement)

 

	
  SECTION

  	
   

  	
  HEADING

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  DESCRIPTION OF NOTES
  AND COMMITMENT

  	
   

  	
  I

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
   

  	
  Description
  of Notes

  	
   

  	
  I

  
	
  Section 1.2.

  	
   

  	
  Security
  for the Notes

  	
   

  	
  I-9

  
	
  Section 1.3.

  	
   

  	
  Commitment,
  Closing Date

  	
   

  	
  I-9

  
	
  Section 1.4.

  	
   

  	
  Several
  Commitments

  	
   

  	
  I-9

  
	
  Section 1.5.

  	
   

  	
  Additional
  Series of Notes

  	
   

  	
  I-10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  PREPAYMENT OF NOTES

  	
   

  	
  I-11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
   

  	
  Prepayments
  Generally

  	
   

  	
  I-11

  
	
  Section 2.2.

  	
   

  	
  Direct
  Payment

  	
   

  	
  I-11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  REPRESENTATIONS

  	
   

  	
  I-12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
   

  	
  Representations
  of the Obligors

  	
   

  	
  I-12

  
	
  Section 3.2.

  	
   

  	
  Representations
  of the Purchaser

  	
   

  	
  I-12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  CLOSING CONDITIONS

  	
   

  	
  I-12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
   

  	
  Closing
  Certificate

  	
   

  	
  I-12

  
	
  Section 4.2.

  	
   

  	
  Legal
  Opinions

  	
   

  	
  I-12

  
	
  Section 4.3.

  	
   

  	
  Related
  Transactions

  	
   

  	
  I-13

  
	
  Section 4.4.

  	
   

  	
  Execution
  and Recordation of Instruments

  	
   

  	
  I-13

  
	
  Section 4.5.

  	
   

  	
  Appraisal

  	
   

  	
  I-13

  
	
  Section 4.6.

  	
   

  	
  Insurance
  Certificate

  	
   

  	
  I-13

  
	
  Section 4.7.

  	
   

  	
  Legal
  Fees

  	
   

  	
  I-13

  
	
  Section 4.8.

  	
   

  	
  Environmental
  Audits and Surveys

  	
   

  	
  I-13

  
	
  Section 4.9.

  	
   

  	
  Title
  Insurance

  	
   

  	
  I-14

  
	
  Section 4.10.

  	
   

  	
  Legality

  	
   

  	
  I-14

  
	
  Section 4.11.

  	
   

  	
  Satisfactory
  Proceedings

  	
   

  	
  I-14

  
	
  Section 4.12.

  	
   

  	
  Waiver
  of Conditions

  	
   

  	
  I-14

  
	
  Section 4.13.

  	
   

  	
  Application
  of Certain Proceeds

  	
   

  	
  I-15

  
	
  Section 4.14.

  	
   

  	
  Conditions
  to Issuance of Additional Notes

  	
   

  	
  I-15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  OBLIGOR COVENANTS

  	
   

  	
  I-16

  

 

 

	
  Section 5.1.

  	
   

  	
  Corporate
  Existence, Etc.

  	
   

  	
  I-16

  
	
  Section 5.2.

  	
   

  	
  Insurance

  	
   

  	
  I-16

  
	
  Section 5.3.

  	
   

  	
  Taxes,
  Claims for Labor and Materials, Compliance with Laws

  	
   

  	
  I-16

  
	
  Section 5.4.

  	
   

  	
  Maintenance,
  Etc.

  	
   

  	
  I-18

  
	
  Section 5.5.

  	
   

  	
  Nature
  of Business

  	
   

  	
  I-18

  
	
  Section 5.6.

  	
   

  	
  Fixed
  Charge Coverage

  	
   

  	
  I-18

  
	
  Section 5.7.

  	
   

  	
  Consolidated
  Net Worth

  	
   

  	
  I-18

  
	
  Section 5.8.

  	
   

  	
  Payment
  of Dividends

  	
   

  	
  I-19

  
	
  Section 5.9.

  	
   

  	
  Ownership
  of Collateral and Bonds

  	
   

  	
  I-19

  
	
  Section 5.10.

  	
   

  	
  Repurchase
  of Notes

  	
   

  	
  I-19

  
	
  Section 5.11.

  	
   

  	
  Transactions
  with Affiliates

  	
   

  	
  I-19

  
	
  Section 5.12.

  	
   

  	
  Restricted
  Subsidiaries

  	
   

  	
  I-19

  
	
  Section 5.13.

  	
   

  	
  Reports
  and Rights of Inspection

  	
   

  	
  I-20

  
	
  Section 5.14.

  	
   

  	
  Completion
  of Hartford, Wisconsin Facility

  	
   

  	
  I-23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  EVENT OF DEFAULT AND
  REMEDIES THEREFOR

  	
   

  	
  I-23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Events
  of Default

  	
   

  	
  I-23

  
	
  Section 6.2.

  	
   

  	
  Notice
  to Holders

  	
   

  	
  I-25

  
	
  Section 6.3.

  	
   

  	
  Acceleration
  of Maturities

  	
   

  	
  I-26

  
	
  Section 6.4.

  	
   

  	
  Rescission
  of Acceleration

  	
   

  	
  I-27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  AMENDMENTS; WAIVERS;
  CONSENTS; SUPPLEMENTS AND RELEASE OF COLLATERAL

  	
   

  	
  I-27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Consent
  Required

  	
   

  	
  I-27

  
	
  Section 7.2.

  	
   

  	
  Solicitation
  of Holders

  	
   

  	
  I-28

  
	
  Section 7.3.

  	
   

  	
  Effect
  of Amendment or Waiver

  	
   

  	
  I-28

  
	
  Section 7.4.

  	
   

  	
  Supplements

  	
   

  	
  I-28

  
	
  Section 7.5.

  	
   

  	
  Release
  of Collateral

  	
   

  	
  I-28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  INTERPRETATION OF
  AGREEMENT; DEFINITIONS

  	
   

  	
  I-28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Definitions

  	
   

  	
  I-28

  
	
  Section 8.2.

  	
   

  	
  Accounting
  Principles

  	
   

  	
  I-35

  
	
  Section 8.3.

  	
   

  	
  Directly
  or Indirectly

  	
   

  	
  I-35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  I-36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1.

  	
   

  	
  Registered
  Notes

  	
   

  	
  I-36

  
	
  Section 9.2.

  	
   

  	
  Exchange
  of Notes

  	
   

  	
  I-36

  

 

4

 

	
  Section 9.3.

  	
   

  	
  Loss,
  Theft, etc. of Notes

  	
   

  	
  I-36

  
	
  Section 9.4.

  	
   

  	
  Expenses,
  Stamp Tax Indemnity

  	
   

  	
  I-37

  
	
  Section 9.5.

  	
   

  	
  Powers
  and Rights Not Waived; Remedies Cumulative

  	
   

  	
  I-37

  
	
  Section 9.6.

  	
   

  	
  Notices

  	
   

  	
  I-37

  
	
  Section 9.7.

  	
   

  	
  Successors
  and Assigns

  	
   

  	
  I-38

  
	
  Section 9.8.

  	
   

  	
  Survival
  of Covenants and Representations

  	
   

  	
  I-38

  
	
  Section 9.9.

  	
   

  	
  Severability

  	
   

  	
  I-38

  
	
  Section 9.10.

  	
   

  	
  Governing
  Law

  	
   

  	
  I-38

  
	
  Section 9.11.

  	
   

  	
  Captions

  	
   

  	
  I-38

  
	
  Section 9.12.

  	
   

  	
  Payment
  on Non-Business Day

  	
   

  	
  I-38

  
	
  Section 9.13.

  	
   

  	
  Additional
  Subsidiaries

  	
   

  	
  I-38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
   

  	
  I-40

  

 

5

 

ATTACHMENTS
TO NOTE AGREEMENT:

 

	
  Schedule I

  	
  —

  	
  Names and Addresses of
  Purchasers

  
	
  Schedule II

  	
  —

  	
  Additional Covenants

  
	
  Exhibit A-1

  	
  —

  	
  Form of 7.14%
  Senior Secured Note, Series 1995-1, Tranche A due September 1,
  2010

  
	
  Exhibit A-2

  	
  —

  	
  Form of 7.56%
  Senior Secured Note, Series 1995-1, Tranche B due September 1,
  2015

  
	
  Exhibit A-3

  	
  —

  	
  Form of 8.00%
  Senior Secured Note, Series 1995-1, Tranche C due September 1,
  2020

  
	
  Exhibit B

  	
  —

  	
  Form of Security
  Agreement

  
	
  Exhibit C

  	
  —

  	
  Closing Certificate of
  the Obligors

  
	
  Exhibit D

  	
  —

  	
  Description of Special
  Counsel’s Closing Opinion

  
	
  Exhibit E

  	
  —

  	
  Description of Closing
  Opinion of Counsel to the Obligors

  
	
  Exhibit F

  	
  —

  	
  Description of Closing
  Opinion of Corporate Counsel to the Obligors

  
	
  Exhibit G

  	
  —

  	
  Form of Supplement
  to Note Agreement

  
	
  Exhibit H

  	
  —

  	
  Form of Restricted
  Subsidiary Agreement

  

 

6

 

QUAD/GRAPHICS, INC.

W224 N3322 DuPlainville Road

Pewaukee, Wisconsin 53072

 

NOTE AGREEMENT

 

Re:                      $43,000,000
7.14% Senior Secured Notes, Series 1995-1, Tranche A

Due
September 1, 2010

$48,500,000
7.56% Senior Notes, Series 1995-1, Tranche B

Due
September 1, 2015

and

$30,000,000
8.00% Senior Secured Notes, Series 1995-1, Tranche C

Due
September 1, 2020

 

 

Dated as of

September 1,
1995

 

To the Purchasers
named in Schedule I

to this Agreement

 

Gentlemen:

 

The undersigned, QUAD/GRAPHICS,
INC., a Wisconsin corporation (the “Company”), QUAD/TECH,
INC., a Wisconsin corporation, QUAD/TECH EUROPE, INC., a Delaware corporation, QUAD/CREATIVE,
INC., a Wisconsin corporation, DUPLAINVILLE TRANSPORT, INC., a Wisconsin
corporation, QUAD/CARE, INC., a Wisconsin corporation, QUAD/MARKETING, INC., a
Wisconsin corporation, QUAD/PAK, INC., a Wisconsin corporation, THE QUAD
TECHNOLOGY GROUP, INC., a Wisconsin corporation, SILVER SPRING REALTY, INC., a
Wisconsin corporation, CHEMICAL RESEARCH/TECHNOLOGY CO., a Wisconsin
corporation, QUAD/WEST, INC., a Delaware corporation, and QUAD/MED, INC., a
Wisconsin corporation, jointly and severally, agree with the purchasers named
on Schedule I to this Agreement (the “Purchasers”)
as follows:

 

SECTION 1.                                                                    DESCRIPTION
OF NOTES AND COMMITMENT.

 

Section 1.1.        Description of Notes. The Obligors have authorized the issue
and sale of the following series of promissory notes of the Obligors:

 

SCHEDULE I

(to Note Agreement)

 

 

(i)          $43,000,000 aggregate principal amount of 7.14% Senior
Secured Notes, Series 1995-1, Tranche A, due September 1, 2010
(the “Tranche  A Notes”),
to be dated the date of issue, to bear interest from such date at the rate of
7.14% per annum, payable semiannually on the first day of each March and September in
each year (commencing March 1, 1996) and at maturity and to bear interest
on overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the rate of 9.14% per annum from the due
date thereof, whether by acceleration or otherwise, until paid, to be expressed
to mature on September 1, 2010, and to be substantially in the form
attached hereto as Exhibit A-1;

 

(ii) $48,500,000 aggregate principal amount of 7.56% Senior
Secured Notes, Series 1995-1, Tranche B, due September 1, 2015
(the “Tranche B Notes”), to be dated the date
of issue, to bear interest from such date at the rate of 7.56% per annum,
payable semiannually on the first day of each March and September in
each year (commencing March 1, 1996) and at maturity and to bear interest
on overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the rate of 9.56% per annum from the due
date thereof, whether by acceleration or otherwise, until paid, to be expressed
to mature on September 1, 2015, and to be substantially in the form
attached hereto as Exhibit A-2; and

 

(iii)         $30,000,000 aggregate principal amount of 8.00% Senior
Secured Notes, Series 1995-1, Tranche C, due September 1, 2020
(the “Tranche C Notes”), to be dated the date
of issue, to bear interest from such date at the rate of 8.00% per annum,
payable semiannually on the first day of each March and September in
each year (commencing March 1, 1996) and at maturity and to bear interest
on overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest at the rate equal to 10.00% per annum from the
due date thereof, whether by acceleration or otherwise, until paid, to be
expressed to mature on September 1, 2020, and to be substantially in the
form attached hereto as Exhibit A-3.

 

The term “Notes” as used herein shall include each Tranche A Note,
Tranche B Note and Tranche C Note (collectively, the “1995 Notes”)
delivered pursuant to this Agreement and each series of Additional Notes which
may from time to time be issued pursuant to the provisions of §1.5.  Interest on the
Notes shall be computed on the basis of a 360-day year of twelve 30-day
months.  The Notes are not subject to
prepayment or redemption at the option of the Obligors prior to their expressed
maturity dates except on the terms and conditions and in the amounts and with
the premium, if any, set forth in the Notes. 
The 1995 Notes and each other series of Notes

 

I-8

 

issued hereunder
are each herein sometimes referred to as Notes of a “series”
and the Tranche A Notes, Tranche B Notes, Tranche C Notes and
each other tranche of Notes issued hereunder are each herein sometimes referred
to as Notes of a “tranche.”

 

Section 1.2.        Security for the Notes. 
The Notes will be secured by (i) a Security Agreement dated as of September 1,
1995 (the “Security Agreement”) from the Company
to M&I Marshall & Ilsley Bank, as security trustee (sometimes
referred to as the “Security Trustee”),
on behalf of the holders of the Notes, in the form attached hereto as Exhibit B,
creating a valid and perfected first lien on the property therein described,
together with all other personal property granted to the Security Trustee
pursuant to the Security Agreement (the “Personal Property
Collateral”) and (ii) those certain Mortgages creating a valid
and perfected first lien on the property therein described and all other real
property granted to the Security Trustee (the “Real
Property Collateral” and together with the Personal Property
Collateral, the “Collateral”).

 

Section 1.3.        Commitment, Closing Date. 
Subject to the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, the Obligors agree to
issue and sell to each Purchaser, and each Purchaser agrees to purchase from
the Obligors, 1995 Notes of the Obligors in the aggregate principal amount and
of the tranche set forth opposite such Purchaser’s name in Schedule I, at
a price of 100% of the principal amount thereof on the Closing Date hereinafter
mentioned.

 

Delivery of the
1995 Notes will be made at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, against payment therefor in Federal or other
funds current and immediately available at the principal office of M&I
Marshall & Ilsley Bank, 770 North Water Street, Milwaukee, Wisconsin 53202,
ABA # 075-000-051 Account No. 27-8823 in the amount of the purchase
price at 10:00 A.M., Chicago time, on September 28, 1995 or such
later date (not later than September 29, 1995) as the Obligors shall specify
by not less than five Business Days’ prior written notice to each Purchaser
(the “Closing Date”).  The 1995 Notes delivered to each Purchaser on
the Closing Date will be delivered to each Purchaser in the form of a single
registered Note of the appropriate tranche and for the full amount of each
Purchaser’s purchase (unless different denominations are specified by such
Purchaser), registered in such Purchaser’s name or in the name of such nominee
as such Purchaser may specify and in substantially the form attached hereto as Exhibit A-1,
Exhibit A-2 or Exhibit A-3, respectively, as the case may be, all as
such Purchaser may specify at any time prior to the date fixed for delivery.

 

Section 1.4.        Several Commitments.  The
obligations of the Purchasers shall be several and not joint and no Purchaser
shall be liable or responsible for the acts or defaults of any other Purchaser.

 

I-9

 

Section 1.5.        Additional Series of Notes. 
The Obligors may, from time to time, in their sole discretion, but
subject to the terms hereof, issue and sell one or more additional series of
their promissory notes under the provisions of this Agreement pursuant to a
supplement to this Agreement (a “Supplement”)
in the form of Exhibit G hereto. 
Each additional series of Notes (collectively, the “Additional
Notes”) issued pursuant to a Supplement shall be subject to the
following terms and conditions:

 

(i)         each series of Additional Notes, when so issued, shall
be differentiated from all previous series by reference inscribed thereon to
the calendar year in which such series of Notes is issued separated by a hyphen
from a numerical reference (beginning with the number “1”) of the number of
series of Additional Notes issued in such calendar year (by example, if the
Obligors issued a second series of Notes hereunder in 1995, such series of
Additional Notes would be designated “1995-2”);

 

(ii)         each series of Additional Notes may be divided into
two or more tranches which shall be differentiated by separate sequential
alphabetical designations;

 

(iii)         all Additional Notes shall constitute senior
Indebtedness of the Obligors and shall rank pari passu with
all other outstanding Notes;

 

(iv)        each series of Additional Notes shall be dated the
date of issue, bear interest at such fixed rate or fixed rates, mature on such
date or dates, be subject to such mandatory and optional prepayment on the
dates and at the premiums, if any, as are set forth in such series of Notes,
and have such additional or different conditions precedent to closing and such
representations and warranties as shall be specified in the Supplement under
which such Additional Notes are issued;

 

(v)        all purchasers of Additional Notes (such Persons being
referred to as “Additional Purchasers”) shall be
Institutional Holders;

 

(vi)        each series of Additional Notes issued under this
Agreement shall be in substantially the form of Annex A to the Supplement
with such variations, omissions and insertions as are necessary or permitted
hereunder;

 

(vii)         the minimum principal amount of any Note issued under
a Supplement shall be $500,000, except as may be necessary to evidence the
outstanding amount of any Note originally issued in a denomination of $500,000
or more;

 

(viii)         each series of Additional Notes shall be issued in
accordance with Section 6.3 of the Security Agreement unless, pursuant to Section 8.4
of the Security

 

I-10

 

Agreement, the
lien of the Security Trustee on all of the Collateral has been, and remains,
released; and

 

(ix)          no Additional Notes shall be issued hereunder if at
the time of issuance thereof or after giving effect to the application of the
proceeds thereof, any Default or Event of Default shall have occurred and be
continuing.

 

SECTION 2.                                                                    PREPAYMENT
OF NOTES.

 

Section 2.1.        Prepayments Generally. 
The Notes of any series are not subject to prepayment or redemption at
the option of the Obligors prior to the expressed maturity dates except on the
terms and conditions and in the amounts and with the premium, if any, set forth
in the Notes of such series.  In the
event that any Default or Event of Default has occurred and is continuing, the
Obligors shall not make any optional prepayment of any series of Notes without
offering to prepay, on a pro rata basis, each other series of Notes then
outstanding which is then subject to optional prepayment provisions.  Each such prepayment shall be in accordance
with the optional prepayment provisions applicable to each such series of
Notes.

 

Section 2.2.        Direct Payment. 
Notwithstanding anything to the contrary in this Agreement or the Notes,
in the case of any Note owned by a Purchaser, Additional Purchaser or its
nominee or owned by any other Institutional Holder who is a registered holder
of Notes pursuant to §9.1 and who
has given written notice to the Obligors requesting that the provisions of this
Section shall apply, the Obligors will promptly and punctually pay when
due the principal thereof and premium, if any, and interest thereon, without
any presentment thereof directly to such Purchaser, Additional Purchaser or
such subsequent holder at the address of such Purchaser or Additional Purchaser
set forth in Schedule I or at such other address as such Purchaser,
Additional Purchaser or such subsequent holder may from time to time designate
in writing to the Obligors or, if a bank account is designated for such
Purchaser or Additional Purchaser on Schedule I hereto or in any written
notice to the Obligors from such Purchaser, Additional Purchaser or any such
subsequent holder, the Obligors will make such payments in immediately
available funds to such bank account no later than 10:00 A.M. Chicago
time, marked for attention as indicated, or in such other manner or to such
other account of such Purchaser, Additional Purchaser or such holder in any
bank in the United States as the Purchaser, Additional Purchaser or any such
subsequent holder may from time to time direct in writing.  The holder of any Notes to which this Section applies
agrees that in the event it shall sell or transfer any such Notes (i) it
will, prior to the delivery of such Notes (unless it has already done so), make
a notation thereon of all principal, if any, prepaid on such Notes and will
also note thereon the date to which interest has been paid on such Notes, and (ii) it
will promptly notify the Obligors of the name and address of the transferee of
any Notes so transferred.  With respect
to Notes to which this Section applies, the Obligors shall be entitled to
presume conclusively that the original or

 

I-11

 

such subsequent
Institutional Holder as shall have requested the provisions hereof to apply to its
Notes remains the holder of such Notes until (y) the Obligors shall have
received notice of the transfer of such Notes, and of the name and address of
the transferee, or (z) such Notes shall have been presented to the
Obligors as evidence of the transfer.

 

SECTION 3.                                                                    REPRESENTATIONS.

 

Section 3.1.        Representations of the Obligors. 
The Obligors represent and warrant that all representations set forth in
Exhibit C are true and correct as of the date hereof and are incorporated
herein by reference with the same force and effect as though herein set forth
in full.

 

Section 3.2.        Representations of the Purchaser.  Each Purchaser represents, and in entering into this
Agreement the Obligors understand, that such Purchaser is acquiring the 1995
Notes for the purpose of investment and not with a view to the distribution
thereof, and that such Purchaser has no present intention of selling,
negotiating or otherwise disposing of the 1995 Notes; it being understood,
however, that the disposition of such Purchaser’s property shall at all times
be and remain within such Purchaser’s control. 
Each Purchaser further represents that the source of funds to be used by
you to pay the purchase price of the 1995-1 Notes is an “insurance company
general account” within the meaning of Department of Labor Prohibited
Transaction Exemption 95-60 (“PTE”) (issued July 12,
1995) and the purchase of the Notes by you is eligible for and satisfies the
requirements of PTE 95-60.

 

SECTION 4.                                                                    CLOSING
CONDITIONS.

 

The obligations of
each Purchaser to purchase the 1995 Notes on the Closing Date shall be subject
to the performance by the Obligors of their agreements hereunder which by the
terms hereof are to be performed at or prior to the time of delivery of the
1995 Notes and to the following further conditions precedent:

 

Section 4.1.        Closing Certificate.  Concurrently
with the delivery of 1995 Notes to each such Purchaser on the Closing Date,
each such Purchaser shall have received a certificate dated the Closing Date,
signed by the President or a Vice President of each Obligor substantially in
the form attached hereto as Exhibit C, the truth and accuracy of which
shall be a condition to each such Purchaser’s obligation to purchase the Notes
proposed to be sold to each such Purchaser.

 

Section 4.2.        Legal Opinions.  Concurrently
with the delivery of 1995 Notes to each such Purchaser on the Closing Date,
each such Purchaser shall have received from Chapman and Cutler, who are acting
as special counsel to the Purchasers in this transaction, from Foley &
Lardner, counsel for the Obligors, and from Debra Kraft, Esq., corporate
counsel for the

 

I-12

 

Company, their
respective opinions dated the Closing Date, in form and substance satisfactory
to each such Purchaser, and covering the matters set forth in Exhibits D,
E-1, E-2 and F, respectively, hereto.

 

Section 4.3.        Related Transactions. 
On the Closing Date the Obligors shall have consummated the sale of the
entire principal amount of the 1995 Notes scheduled to be sold on the Closing
Date pursuant to this Agreement to the other Purchasers.

 

Section 4.4.        Execution and Recordation of Instruments. 
On or prior to the Closing Date, the Security Agreement and the
Mortgages shall have been duly executed, acknowledged and delivered by all
parties thereto and shall be in full force and effect, and the Mortgages and
all necessary financing statements and similar notices, if and to the extent
permitted or required by applicable law, shall have been recorded or filed for
record in each public office wherein such recording or filing is deemed
necessary or appropriate by each such Purchaser or special counsel to the
Purchasers to perfect the lien thereof as against creditors of or purchasers
from the Obligors.  Without limiting the
foregoing, all taxes, fees and other charges in connection with the execution,
delivery, recording and filing of the foregoing instruments shall have been
paid by the Obligors.

 

Section 4.5.        Appraisal.  On or prior to
the Closing Date, the Obligors shall have delivered to each Purchaser an
appraisal of the Collateral dated not more than 30 days prior to the Closing
Date, by Marshall and Stevens Incorporated, or any other appraiser satisfactory
to the Purchasers (the “Appraiser”),
satisfactory to the Purchasers in form, scope and substance and showing a
continuing use fair market value of the Collateral of at least $145,800,000.

 

Section 4.6.        Insurance Certificate. 
On the Closing Date, the Purchasers shall have received (a) from
the Obligors, a certificate dated the Closing Date executed by the President,
Vice President or the Treasurer of each Obligor certifying to the existence of
the insurance required by Section 2.11 of the Security Agreement and Section 2.6
of the Mortgages and the payment of all premiums due thereon and (b) from
the independent insurance broker for the Obligors, original certificates of
insurance issued by the insurance companies evidencing such insurance.

 

Section 4.7.        Legal Fees.  On the Closing
Date, the Obligors shall have paid Chapman and Cutler its fees and
disbursements to date relating to its representation as the Purchaser’s special
counsel in this transaction.

 

Section 4.8.        Environmental Audits and Surveys. 
On or prior to the Closing Date, the Obligors shall provide phase 1
environmental site assessments prepared in accordance with ASTM Standard
Practice E 1527 regarding the Real Property Collateral in form and substance

 

I-13

 

satisfactory to
the Purchasers, with any such audits to be paid for by the Obligors.  On or prior to the Closing Date, the Obligors
shall have caused a physical survey of the Real Property Collateral to be made
by a registered civil engineer or surveyor licensed in the state where such
Real Property Collateral is located in accordance with the “minimum standard
detail requirements for land title surveys” adopted by the American Land Title
Association and the American Congress on Surveying and Mapping, as revised and
in effect on the date hereof, and such survey shall be in form and substance
reasonably satisfactory to the Purchasers.

 

Section 4.9.        Title Insurance.  On or prior to
the Closing Date, the Obligors shall obtain a commitment from Chicago Title
Insurance Company or another title insurance company or companies of good
standing satisfactory to the Purchasers (collectively, the “Title
Company”), to issue policies of mortgage title insurance on a
standard ALTA Form Mortgage Title Insurance Policy (Loan Policy-1970 Form)
(“ALTA Policy”) covering the Real
Property Collateral in an amount equal to the Appraised Value, and showing good
and marketable record title to the Real Property Collateral to be vested in the
Company, insuring the holders of the Notes against loss or damage sustained by
reason of the Mortgages not being a first and paramount lien upon the title to
the Real Property Collateral.  Each such
ALTA Policy shall state that the standard exceptions have been deleted and
shall include the following endorsements, if permitted to be issued by the
jurisdiction in which the insured property is located:  (A) ALTA form 3.1 zoning endorsement; (B) Comprehensive
Endorsement 1 or ALTA form 9 endorsement; (C) a usury endorsement and
(D) to the extent reasonably necessary, affirmative coverage covering
access and insuring against loss due to encroachments.

 

Section 4.10.        Legality.  The 1995 Notes
shall qualify as a legal investment for each such Purchaser under the laws and
regulations of each jurisdiction to which each such Purchaser is subject (without
reference to any so-called “basket” provision which permits the making of an
investment without restrictions as to the character of the particular
investment being made) and each such Purchaser shall have received such
information as each such Purchaser shall reasonably request from the Obligors
to establish such fact.

 

Section 4.11.        Satisfactory Proceedings. 
All proceedings taken in connection with the transactions contemplated
by this Agreement, and all documents necessary to the consummation thereof,
shall be satisfactory in form and substance to the Purchasers and special
counsel to the Purchasers, and the Purchasers shall have received a copy
(executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.

 

Section 4.12.        Waiver of Conditions. 
If on the Closing Date the Obligors fail to tender to any Purchaser the
1995 Notes to be issued to such Purchaser on such date or if the conditions
specified in this §4 have not been
fulfilled, such Purchaser may thereupon elect to be relieved of

 

I-14

 

all further
obligations under this Agreement. 
Without limiting the foregoing, if the conditions specified in this §4 have not been fulfilled, such Purchaser may waive
compliance by the Obligors with any such condition to such extent as such
Purchaser may in such Purchaser’s sole discretion determine.  Nothing in this §4.12
shall operate to relieve the Obligors of any of their obligations hereunder or
to waive any of such Purchaser’s rights against the Obligors.

 

Section 4.13.        Application of Certain Proceeds. 
Concurrently with the delivery of the 1995 Notes to you on the Closing
Date, the Obligors shall apply the proceeds of the sale of the 1995 Notes to
prepay Debt under the Revolving Credit and Line of Credit referenced in
Annex 2 to Exhibit C in an aggregate principal amount not less than
$121,500,000, and for general corporate purposes, and you and your special
counsel shall have received evidence of such purchase, satisfactory in form and
substance to you.

 

Section 4.14.        Conditions to Issuance of Additional Notes.  The obligations of the Additional Purchasers
of each series of Additional Notes to purchase such Additional Notes shall be
subject to the following conditions precedent, in addition to the conditions
specified in the Supplement:

 

(a)          Compliance Certificate. 
A duly authorized financial officer of each of the Obligors shall have
executed and delivered a certificate of the Obligors dated the date of issue of
such series of Additional Notes stating that each such officer has reviewed the
provisions of this Agreement and setting forth the information and computations
(in sufficient detail) required in order to establish whether, after giving
effect to the issuance of the Additional Notes, the Obligors are in compliance
with the requirements of this Agreement and Section 2.5 of the Security
Agreement on such date.

 

(b)         Execution and Delivery of Supplement The Obligors and each such Additional
Purchaser shall execute and deliver a Supplement substantially in the form of Exhibit G
hereto.

 

(c)          Representations of Purchaser. 
Each Additional Purchaser, in the Supplement, shall have confirmed that
the representations set forth in §3.2 are true
and correct in all material respects on and as of the date of issue of the
Additional Notes with respect to such Additional Purchaser or shall make such
other representations and agreements as shall be reasonably satisfactory to the
Obligors and its counsel to establish (i) that the Additional Purchasers
are Institutional Holders, (ii) the source of funds, as such source
relates to a determination of compliance with ERISA and (iii) its
investment intent.

 

I-15

 

(d)         Closing Conditions.  The closing
conditions set forth in §§4.1 through 4.3 and §§4.10 through 4.12 shall have been updated and performed as of the date of
issuance of each series of Additional Notes with respect to such series of
Additional Notes.

 

(e)          Security Agreement  Conditions.  The Obligors shall have complied with each of
the conditions set forth in Section 6.3 of the Security Agreement unless
all liens for the benefit of the Holders have been, and remain, released
pursuant to Section 8.4 of the Security Agreement.

 

SECTION 5.                                                                    OBLIGOR
COVENANTS.

 

From and after the
Closing Date and continuing so long as any amount remains unpaid on any Note:

 

Section 5.1.        Corporate Existence, Etc. 
Each Obligor will preserve and keep in force and effect its corporate
existence and all licenses and permits necessary to the proper conduct of its
business, except where the failure to maintain its corporate existence or such
licenses and permits, would not, in each such case, materially and adversely
affect the condition (financial or otherwise) or operations of the Company or
of the Obligors taken as a whole.

 

Section 5.2.        Insurance.  In addition to
and not in limitation of Section 2.11 of the Security Agreement and Section 2.6
of the Mortgages, each Obligor will maintain insurance coverage by financially
sound and reputable insurers accorded a rating by A.M. Best, Inc. of
A- or better at the time of the renewal or issuance of any such policy and in
such forms and amounts and against such risks as are customary for corporations
of established reputation engaged in the same or a similar business and owning
and operating similar properties.  Each
Obligor understands and agrees that in determining the financial soundness of
each insurer it shall take into account as a major component of such decision
the creditworthiness of such insurer in light of the type and amount of
insurance to be provided by such insurer.

 

Section 5.3.        Taxes, Claims for Labor and Materials, Compliance
with Laws.  (a) Each Obligor will pay and discharge
when due all lawful taxes, assessments and governmental charges or levies
imposed upon each Obligor, or upon or in respect of all or any part of the
property or business of each Obligor, all trade accounts payable in accordance
with usual and customary business terms, and all claims for work, labor or
materials, which, in each case, if unpaid would be reasonably likely to become
a material lien or charge upon any property of any Obligor; provided each Obligor shall not be required to pay any such
tax, assessment, charge, levy, account payable or claim if (i) the
validity, applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale of
any property of any Obligor or any material interference with the use thereof
by any

 

I-16

 

Obligor, and (ii) each
Obligor shall set aside on its books, reserves deemed by it to be adequate with
respect thereto.  Each Obligor will promptly
comply and will cause each Subsidiary to comply with all laws, ordinances or
governmental rules and regulations to which it is subject, including
without limitation, the Occupational Safety and Health Act of 1970, the
Employee Retirement Income Security Act of 1974 and all laws, ordinances,
governmental rules and regulations relating to environmental protection in
all applicable jurisdictions, the violation of which would materially and
adversely affect the properties, business, prospects, profits or condition of
the Obligors or of the Obligors and their Subsidiaries taken as a whole or
would result in any lien or charge upon any property of the Obligors or any
Subsidiary, which lien is material to the Obligors or the Obligors and their
Subsidiaries taken as a whole.

 

(b)         In addition to and not in limitation of any other
covenant herein, including §5.3(a), the
Obligors will, and will cause each Subsidiary to comply in all respects with
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C. §9601 et seq., Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as
amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. §6901 et seq., the Federal Water Pollution Control Act, as amended
by the Clean Water Act of 1977, 33 U.S.C. §1251 et seq.,
the Toxic Substances Control Act of 1976, 15 U.S.C. §2601 et seq.,
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
§11001 et seq., the Clean Air Act of 1966, as
amended, 42 U.S.C. §7401 et seq., the
National Environmental Policy Act of 1975, 42 U.S.C. §4321, the Rivers and
Harbours Act of 1899, 33 U.S.C. §401 et seq., the
Occupational Safety and Health Act of 1970, as amended 29 U.S.C. §651 et seq., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C. §300(f) et seq. and,
but without duplication, all Environmental Legal Requirements described in
paragraph 17 of Exhibit C hereto, in all cases as amended from time
to time and all rules, regulations and guidance documents promulgated or
published thereunder, and any other federal, state, regional, county or local
statute, law, rule regulation or ordinance relating to public health,
safety or the environment, including, without limitation, relating to releases,
discharges, emissions or disposals to air, water, land or groundwater, to the
withdrawal or use of groundwater, to the use, handling or disposal of
polychlorinated biphenyls (PCB’s), asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of Hazardous Substances (including,
without limitation, petroleum, its derivatives, by-products or other
hydrocarbons), to exposure to toxic, hazardous, or other controlled, prohibited
or regulated substances, to the transportation, storage, disposal, management
or release of gaseous or liquid substances, and any regulation, order,
injunction, judgment, declaration, notice or demand issued thereunder, except,
in all instances, for matters that will not result in any liability, penalty or
loss that is material to the Obligors or to the Obligors and their Subsidiaries
taken as a whole and will not result in any liability, penalty or loss
whatsoever, to any holder of Notes.  The
Obligors will not and will not permit any Subsidiary to conduct any business,
operations or activity on the property, or employ or use the

 

I-17

 

personal property
or facilities, to manufacture, use, generate, treat, store, transport or
dispose of any Hazardous Substance (including, without limitation, petroleum,
its derivatives or by-products, or other hydrocarbons), or any other substance
which is prohibited, controlled or regulated under applicable law, or which
poses a threat or nuisance to safety, health or the environment, including,
without limitation, any business, operation or activity which would bring the
any Obligor or any Subsidiary, their property or facilities, within the ambit
of the Resource Conservation and Recovery Act of 1976, as amended by the Solid
and Hazardous Waste Amendments of 1984, 42 U.S.C. §6901 et seq.,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C. §9601 et seq., the Clean Air Act of
1966, as amended, 42 U.S.C. §7401 et seq., or
similar state, county, regional or local statute, law, regulation, rule or
ordinance, including, without limitation, any state statute providing for
financial responsibility for cleanup for the release or threatened release of
substances provided for thereunder, except in compliance with all applicable
laws and except, in all instances, for matters that will not result in any
liability, penalty or loss that is material to the Obligors or to the Obligors
and their Subsidiaries taken as a whole and will not result in any liability,
penalty, or loss whatsoever to any holder of Notes.

 

Section 5.4.        Maintenance, Etc.  Each Obligor
will maintain, preserve and keep its properties which are used or necessary in
the conduct of its business (whether owned in fee or a leasehold interest) in
good repair and working order and from time to time will make all necessary
repairs, replacements, renewals and additions so that at all times the
efficiency thereof, in all respects material to the condition of the Company or
the Obligors taken as a whole, shall be maintained.

 

Section 5.5.        Nature of Business.  The Obligors
will not engage in any business if, as a result, the general nature of the
business, taken on a consolidated basis, which would then be engaged in by the
Obligors would be substantially changed from the general nature of the business
engaged in by the Obligors during the five year period ending on the date of
this Agreement.

 

Section 5.6.        Fixed Charge Coverage. 
At the end of each quarterly fiscal period of the Obligors, the Obligors
will have a ratio of Consolidated Net Income Available for Fixed Charges to
Fixed Charges of not less than 1.50 to 1.00, for the period of the preceding
four fiscal quarters.

 

Section 5.7.        Consolidated Net Worth. 
The Obligors will at all times keep and maintain Consolidated Net Worth
at an amount not less than the sum of (i) $150,000,000 plus (ii) 40%
of Consolidated Net Income for each fiscal year beginning on or after January 1,
1995 determined on a cumulative basis; provided that
for purposes of any determination under this

 

I-18

 

§5.7, if Consolidated Net Income for any
particular fiscal year is a deficit figure, then Consolidated Net Income, for
that particular fiscal year, shall be deemed to be zero for the purposes of
this §5.7 and, accordingly, shall not reduce
the amount of Consolidated Net Worth required to be maintained by the Obligors
pursuant to this §5.7.

 

Section 5.8.        Payment of Dividends.  The Obligors will not enter into any agreement which
directly or indirectly restricts any Obligor from declaring or paying any
dividends, either in cash or property, to the Obligors.

 

Section 5.9.        Ownership of Collateral and Bonds. 
The Company will not sell, lease, transfer or otherwise dispose of all
or any of its interest in any Collateral except as expressly permitted in the
Financing Documents.  The Obligors shall
at all times own and hold 100% of any outstanding Industrial Development Bonds.

 

Section 5.10.        Repurchase of Notes.  Except
pursuant to and in accordance with the express provisions of the Notes, neither
the Obligors nor any Subsidiary or Affiliate, directly or indirectly, may
repurchase or make any offer to repurchase any Notes, unless the offer has been
made to repurchase Notes, pro rata, from all holders of the Notes at the same
time and upon the same terms.  In case
the Obligors repurchase any Notes, such Notes shall thereafter be cancelled and
no Notes shall be issued in substitution therefor.  Without limiting the foregoing, upon the
purchase or other acquisition of any Notes by the Obligors, any Subsidiary or
any Affiliate, such Notes shall no longer be outstanding for purposes of any
section of this Agreement relating to the taking by the holders of the Notes of
any actions with respect thereto, including, without limitation, §6.3, §6.4 and §7.1.

 

Section 5.11.        Transactions with Affiliates. 
The Obligors will not enter into or be a party to, any transaction or
arrangement with any Affiliate (including without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliate), except in the ordinary course of and pursuant to the
reasonable requirements of the Obligors’ business and upon fair and reasonable
terms such as might be obtained in a comparable arm’s length transaction with a
Person other than an Affiliate.

 

Section 5.12.        Restricted Subsidiaries.  No
Subsidiary of the Company may be designated a Restricted Subsidiary if, at the
time of such action or after giving effect thereto, a Default or Event of
Default shall have occurred and be continuing. 
No Subsidiary having been designated a Restricted Subsidiary may
thereafter be designated an Unrestricted Subsidiary unless, at the time the
Company proposes to designate such Restricted Subsidiary to be an Unrestricted
Subsidiary and after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing. 
In the event any Restricted Subsidiary is designated an Unrestricted

 

I-19

 

Subsidiary as
contemplated by this §5.12, such
Subsidiary may not thereafter again be designated as a Restricted Subsidiary.

 

Section 5.13.        Reports and Rights of Inspection. 
The Obligors will keep, and will cause each Subsidiary to keep, proper
books of record and account in which full and correct entries will be made of
all dealings or transactions of, or in relation to, the business and affairs of
the Obligors or such Subsidiary, in accordance with generally accepted
accounting principles consistently maintained (except for changes disclosed in
the financial statements furnished to the holders of the Notes pursuant to this
§5.13 and concurred in by the
independent public accountants referred to in §5.13(b) hereof),
and will furnish to each Institutional Holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):

 

(a)          Quarterly Statements. 
As soon as available and in any event within 45 days after the end of
each quarterly fiscal period (except the last) of each fiscal year, copies of:

 

(1)          consolidated balance sheets of the Obligors as of the
close of such quarter setting forth in comparative form the amount for the
corresponding period of the preceding fiscal year (which shall not include
footnotes or year end adjustment),

 

(2)          consolidated statements of income and cash flows of
the Obligors for such quarterly period and for the portion of the fiscal year
ending with such period, setting forth in comparative form the amount for the
corresponding period of the preceding fiscal year (which shall not include
footnotes or year end adjustment),

 

all in reasonable
detail and certified as complete and correct, by the President, the Vice
President-Finance or the Treasurer of the Obligors;

 

(b)         Annual Statements.  As soon as
available and in any event within 90 days after the close of each fiscal year
of the Obligors, copies of:

 

(1)          consolidated balance sheets of the Obligors as of the
close of such fiscal year, and

 

(2)          consolidated statements of income and retained
earnings and cash flows of the Obligors for such fiscal year,

 

I-20

 

 

 

in each case
setting forth in comparative form the consolidated figures for the preceding
fiscal year, all in reasonable detail and accompanied by an unqualified opinion
thereon of a firm of independent public accountants of recognized national
standing selected by the Obligors to the effect that the consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and present fairly, in all material respects, the financial position
of the Obligors and that the audits of such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards and that such accountants believe that such audits provide a
reasonable basis for the opinion of such accountants;

 

(c)          Audit Reports.  Promptly upon
receipt thereof, one copy of each interim or special audit made by independent
accountants of the books of any Obligor and any management letters received
from such accountants, provided, that
if and so long as no Default or Event of Default shall have occurred and be
continuing, the Obligors shall not be required to deliver any such management
letter which is not material to the condition (financial or otherwise) or
operations of an Obligor or the Obligors taken as a whole;

 

(d)         SEC and Other Reports. 
Promptly upon their becoming available, one copy of each financial
statement, proxy statement, or other written item required under the Articles
of Incorporation or By-laws of the Obligors or under Wisconsin or Delaware (and
any other jurisdiction under which an Obligor may be incorporated) law to be
sent by any Obligor to stockholders generally in their capacity as stockholders
and of each regular or periodic report, and any registration statement or
prospectus filed by any Obligor or any Subsidiary with any securities exchange
or the Securities and Exchange Commission or any successor agency, and copies
of any orders in any proceedings to which any Obligor or any of their
Subsidiaries is a party, issued by any governmental agency, Federal or state,
having jurisdiction over any Obligor or any of their Subsidiaries, but only to
the extent that such proceedings could materially and adversely affect the
condition (financial or otherwise) or operations of the Obligors or of the
Obligors and their Subsidiaries taken as a whole;

 

(e)          Requested Information. 
With reasonable promptness, such other data and information as the
Purchasers or any such Institutional Holder may reasonably request including,
without limitation, (i) information relative to the Collateral including
an appraisal of the Collateral containing a conclusion as to the third party
fair market value thereof, which appraisal shall be at the expense of the
Person requesting such appraisal, provided, however,
that such appraisal shall be at the expense of the Obligors if any Default or
Event of Default shall have occurred and then be continuing, and (ii) unaudited
consolidating financial statements covering Restricted and/or Unrestricted
Subsidiaries;

 

I-21

 

(f)         Officers’ Certificates. 
Within the periods provided (i) in paragraphs (a) and (b) above,
a certificate of the President, the Vice President-Finance or Treasurer of each
Obligor stating that he has reviewed the provisions of this Agreement and
setting forth: (1) the information and computations (in sufficient detail)
required in order to establish whether the Obligors were in compliance with the
requirements of §5.6 and §5.7,
at the end of the period covered by the financial statements then being
furnished, (2) whether there existed as of the date of such financial
statements and whether, to the best of his knowledge, there exists on the date
of the certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such condition
or event exists on the date of the certificate, specifying the nature and
period of existence thereof and the action the Obligors are taking and propose
to take with respect thereto and (3) a statement confirming that the
Obligors have taken all appropriate action necessary to maintain and preserve
the lien of the Security Trustee upon the Collateral described in the Security
Agreement and the Mortgages and (ii) in paragraph (b) above, a
certificate of the President, the Vice President-Finance or Treasurer of each
Obligor providing a list of each of the Obligors’ insurers which list shall
include such insurers’ ratings, if any, accorded by A.M. Best, Inc.,
Moody’s Investors Service, Inc., and Standard & Poor’s
Corporation; and

 

(g)         Accountant’s Certificates. 
Within the period provided in paragraph (b) above, a
certificate of the accountants who render an opinion with respect to such
financial statements, stating that they have reviewed this Agreement and
stating further, whether in making their audit, such accountants have become
aware of any Default or Event of Default under any of the terms or provisions
of this Agreement insofar as any such terms or provisions pertain to or involve
accounting matters or determinations, and if any such condition or event then
exists, specifying the nature and period of existence thereof.

 

Without limiting
the foregoing, the Obligors will permit each Institutional Holder of the then
outstanding Notes (or such Persons as such Institutional Holder may designate)
to visit and inspect, under the Obligors’ guidance, any of the properties of
the Obligors or any Subsidiary, including, without limitation, the Collateral,
to examine all their books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers, employees, and
independent public accountants (and by this provision the Obligors authorize
said accountants to discuss with each Institutional Holder the finances and
affairs of the Obligors and their Subsidiaries) all at such reasonable times
and as often as may be reasonably requested, provided,
that if and so long as no Default or Event of Default shall have occurred and
be continuing, any discussions between the independent public accountants of
the Obligors and the holder of any Notes shall relate to a determination of
compliance with the terms and provisions hereof or of the other Financing 

 

I-22

 

Documents, or the
specific financial statements with respect to which such independent public
accountants have given the opinion required by §5.13(b).  The Obligors shall not be required to pay or
reimburse any Institutional Holder for expenses which any such Institutional
Holder may incur in connection with any such visitation or inspection which
shall be conducted prior to the occurrence of a Default or Event of Default.

 

Section 5.14.        Completion of Hartford, Wisconsin Facility. 
The Obligors covenant and agree that the facility as described in the
appraisal required pursuant to §4.5 in
Hartford, Wisconsin (the “Facility”)
shall be completed and all certificates, approvals and other items necessary to
permit the Obligors to use the Facility for its intended purposes shall have
been obtained on or before February 1, 1996.

 

SECTION 6.                                                                    EVENT OF
DEFAULT AND REMEDIES THEREFOR.

 

Section 6.1.        Events of Default.  Any one or
more of the following shall constitute an “Event of Default”
as the term is used herein:

 

(a)          Default shall occur in the payment of interest on any
Note when the same shall have become due and such default shall continue for
more than one Business Day after the first to occur of (i) actual
knowledge of such failure to pay by a Responsible Officer of any Obligor or (ii) written
notice of such failure to the Obligors from a holder of Notes or from the
Security Trustee; or

 

(b)         Default shall occur in the making of any required prepayment
on any of the Notes as provided in §2.1 and such
default shall continue for more than one Business Day after the first to occur
of (i) actual knowledge of such failure to pay by a Responsible Officer of
any Obligor or (ii) written notice of such failure to the Obligors from a
holder of Notes or from the Security Trustee; or

 

(c)          Default shall occur in the making of any other payment
of the principal of any Note or the premium thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment and such default
shall continue for more than one Business Day after the first to occur of (i) actual
knowledge of such failure to pay by a Responsible Officer of any Obligor or (ii) written
notice of such failure to the Obligors from a holder of Notes or from the
Security Trustee; or

 

(d)         (i) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for redemption or otherwise)
of the principal of or interest or premium on any Material Indebtedness (other
than the Notes) of any Obligor and such default shall continue beyond the
period of grace, if any, allowed with respect thereto, or

 

I-23

 

(ii) default
or the happening of any event shall occur under any indenture, agreement, or
other instrument under which any Material Indebtedness of any Obligor may be
issued and the payment of such Material Indebtedness or any portion thereof
shall be accelerated; or

 

(e)          (i) Default shall occur in the observance or performance
of any covenant or agreement contained in §5.6 through §5.10 hereof, (ii) a Responsible Officer of any Obligor
shall have knowledge of a Default or Event of Default hereunder or shall have
received notice from any holder of the Notes with respect to the occurrence of
such Default or Event of Default and notice to such effect shall have not been
delivered to the holders of the Notes within 3 Business Days of such knowledge,
or (iii) a Responsible Officer of any Obligor shall have received a notice
from a holder of Indebtedness of any Obligor or shall have knowledge of any
action being taken by such holder under and pursuant to §6.2
and notice describing such notice and/or action shall have not been delivered
to the holders of the Notes within 8 Business Days of such knowledge; or

 

(f)         Default shall occur in the observance or performance
of any other provision of this Agreement which is not remedied within
30 days after the first to occur of (i) actual knowledge of such
Default by a Responsible Officer of any Obligor, or (ii) written notice
thereof by any holder of Notes to the Obligors; or

 

(g)         An Event of Default shall have occurred and be
continuing under the Security Agreement or the Mortgages; or

 

(h)         If any Obligor sells, leases, transfers or otherwise
disposes of, or encumbers or permits any lien or encumbrance to be attached to
all or any part of the Collateral except as otherwise expressly permitted
pursuant to the terms and conditions set forth in the Security Agreement and
the Mortgages; or

 

(i)         Default shall occur in the observance or performance
of Section 2.11 of the Security Agreement or Section 2.6 of the
Mortgages which is not remedied within 15 days after the first to occur of (i) such
failure first becoming known to a Responsible Officer of any Obligor or (ii) written
notice of such failure to the Obligors from a holder of Notes or from the
Security Trustee; or

 

(j)         Any Financing Document  shall
cease to be in full force and effect for any reason whatsoever, including,
without limitation, a determination by any governmental body or court that such
agreement is invalid, void or unenforceable or any Obligor shall contest or
deny in writing the validity or enforceability of any of its obligations under
the Security Agreement or any Mortgage; or

 

I-24

 

(k)          If any representation or warranty made by any Obligor
herein or in any Financing Document, or made by any Obligor in any statement or
certificate furnished by any Obligor in connection with the consummation of the
issuance and delivery of any series of the Notes or furnished by any Obligor
pursuant hereto, is untrue in any material respect as of the date of the
issuance or making thereof unless (i) such misstatement is capable of
being cured within a reasonable period of time which period of time shall not
in any event exceed 60 days, (ii) the Obligors are diligently seeking a
cure for such misstatement, (iii) the interests of the holders of the
Notes are not materially impaired during the period in which such cure is being
effected, (iv) such misstatement is cured within such 60-day period and (v) after
such misstatement shall have been cured, the holders of the Notes shall be in
the same position as such holders would have been in as if such misstatement
had not been made; or

 

(l)         Any Obligor becomes insolvent or bankrupt, is
generally not paying its debts as they become due (it being agreed that payment
of trade debt in accordance with normal trade custom and practice shall not
constitute a failure generally to pay debts as they become due) or makes an
assignment for the benefit of creditors, or any Obligor causes or suffers an
order for relief to be entered with respect to it under applicable Federal
bankruptcy law or applies for or consents to the appointment of a custodian,
trustee or receiver for any Obligor or for the major part of the property of
either; or

 

(m)          A custodian, trustee or receiver is appointed for any
Obligor or for the major part of the property of either and is not discharged
within 30 days after such appointment; or

 

(n)           Final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 is or are outstanding against any Obligor
or against any property or assets of either and any one of such judgments has
remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a
period of 30 days from the date of its entry; or

 

(o)           Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar
law or laws for the relief of debtors, are instituted by or against any Obligor
and, if instituted against any Obligor, are consented to or are not dismissed
within 60 days after such institution.

 

Section 6.2.        Notice to Holders.  When (a) any
Default or Event of Default described in the foregoing §6.1
has occurred, (b) any Holder gives any notice or takes any other action
with respect to such Default or Event of Default, or (c) the holder of any
other evidence of Indebtedness of any Obligor gives any notice or takes any
other action with respect to a claimed

 

I-25

 

default or event
of default on and/or with respect to such Indebtedness (other than notices with
respect to claimed defaults of a ministerial nature which in any event would
have no material adverse effect on the condition (financial or otherwise) of
any Obligor and its Subsidiaries, taken as a whole), in each such case the
Obligors agree to give notice within 3 Business Days of such event to all
Holders, such notice to be in writing and sent by registered or certified mail
or by telegram.

 

Section 6.3.        Acceleration of Maturities. 
When any Event of Default described in paragraph (a), (b) or (c) of
§6.1 has happened and is continuing,
any Holder may, by notice to the Obligors, declare the entire principal amount
of and all interest accrued on such Holder’s Note to be, and such Note shall
thereupon become forthwith due and payable, without any presentment, demand,
protest or other notice of any kind (other than as expressly required in this §6), all of which are expressly waived.  When any Event of Default described in
paragraphs (a) through (k), inclusive, or (n) of said §6.1 has happened and is continuing, the holder or holders
of 33-1/3% of the aggregate principal amount of any series of Notes at the time
outstanding may, by notice in writing sent by registered or certified mail to
the Obligors, declare or direct the Security Trustee to declare the entire
principal amount of and all interest accrued on all Notes of such series to be,
and all Notes of such series shall thereupon become forthwith due and payable,
without any presentment, demand, protest or other notice of any kind (other
than as expressly required in this §6), all of
which are expressly waived.  When any
Event of Default described in paragraph (l), (m) or (o) of §6.1 has occurred, then all outstanding Notes shall
immediately become due and payable without presentment, demand or notice of any
kind.  Upon the Notes of any series becoming
due and payable as a result of any Event of Default as aforesaid, the Obligors
will forthwith pay to the holders of such series of Notes the entire principal
and interest accrued on the Notes of such series.  Upon the Notes of any series becoming due and
payable as a result of any such Event of Default, the Obligors will forthwith
pay to the holders of the Notes of such series, in addition to the amounts
specified above, to the extent not prohibited by applicable law, an amount
equal to the Make-Whole Amount, if any, for such series of Notes determined as
of the date of declaration of acceleration. 
Without limiting the foregoing, when any Event of Default has happened
and is continuing the Security Trustee shall have all of the rights and
remedies described in §5.2 of the
Security Agreement and §4.5 of the
Mortgages and otherwise available at law or in equity, all as contemplated by Section 7.13
of the Security Agreement.  No course of
dealing on the part of any Holder nor any delay or failure on the part of any
Holder to exercise any right shall operate as a waiver of such right or
otherwise prejudice such holder’s rights, powers and remedies.  The Obligors further agree, to the extent
permitted by law, to pay to the Holders all costs and expenses incurred by them
in the collection of any Notes upon any default hereunder or thereon, including
reasonable compensation to such Holder’s or Holders’ attorneys for all services
rendered in connection therewith.

 

I-26

 

Section 6.4.        Rescission of Acceleration. 
The provisions of §6.3 are
subject to the condition that if the principal of and accrued interest on all
or any outstanding series of Notes have been declared immediately due and
payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (k), inclusive, or (n) of §6.1,
the holders of at least 66-2/3% in aggregate principal amount of the Notes of
such series then outstanding may, by written instrument filed with the Obligors,
rescind and annul such declaration and the consequences thereof, provided that
at the time such declaration is annulled and rescinded:

 

(a)          no judgment or decree has been entered for the payment
of any monies due pursuant to such series of Notes, this Agreement, the
Security Agreement or the Mortgages;

 

(b)         all arrears of interest upon all the Notes of such
series and all other sums payable under the Notes of such series, this
Agreement, the Security Agreement and the Mortgages (except any principal, interest
or premium on such series of Notes which has become due and payable solely by
reason of such declaration under §6.3) shall
have been duly paid; and

 

(c)          each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to §7.1;

 

and provided further, that no such rescission and annulment
shall extend to or affect any subsequent Default or Event of Default or impair
any right consequent thereto.

 

SECTION 7.                                                                    AMENDMENTS;
WAIVERS; CONSENTS; SUPPLEMENTS AND RELEASE OF COLLATERAL.

 

Section 7.1.        Consent Required.  Any term,
covenant, agreement or condition of this Agreement may, with the consent of the
Obligors, be amended or compliance therewith may be waived (either generally or
in a particular instance and either retroactively or prospectively), if the
Obligors shall have obtained the consent in writing of the Holders of the
following:  (i) at least 66-2/3% in
aggregate principal amount of outstanding Notes of each series and (ii) if
any series includes more than one tranche, at least 66-2/3% in aggregate
principal amount of outstanding Notes of all tranches thereof which mature more
than 12 months from the date of any such consent; provided
that without the written consent of the Holders of all of the Notes then
outstanding, no such waiver, modification, alteration or amendment shall be
effective (i) which will change the time of payment (including any
prepayment required by the Notes) of the principal of or the interest on any
Note or change the principal amount thereof or change the rate of interest
thereon, or (ii) which will change any of the provisions with respect to
optional

 

I-27

 

prepayments, or (iii) which
will change the percentage of Holders required to consent to any such
amendment, alteration or modification or any of the provisions of this §7 or §6 or the
Notes.

 

Section 7.2.        Solicitation of Holders.  So long as there are any Notes outstanding, the
Obligors will not solicit, request or negotiate for or with respect to any
proposed waiver or amendment of any of the provisions of this Agreement or the
Notes unless each holder of Notes (irrespective of the amount of Notes then
owned by it) shall be informed thereof by the Obligors and shall be afforded
the opportunity of considering the same and shall be supplied by the Obligors
with sufficient information to enable it to make an informed decision with
respect thereto.  The Obligors will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by
way of supplemental or additional interest, fee or otherwise, to any holder of
Notes as consideration for or as an inducement to entering into by any holder
of Notes of any waiver or amendment of any of the terms and provisions of this
Agreement or the Notes unless such remuneration is concurrently offered, on the
same terms, ratably to the holders of all Notes then outstanding.

 

Section 7.3.        Effect of Amendment or Waiver. 
Any such amendment or waiver shall apply equally to all of the Holders
and shall be binding upon them, upon each future Holder and upon the Obligors,
whether or not such Note shall have been marked to indicate such amendment or
waiver.  No such amendment or waiver
shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.

 

Section 7.4.        Supplements.  The Obligors
may enter into any Supplement providing for the issuance of one or more series
of Additional Notes consistent with §§1.5 and 4.14 hereof without obtaining the consent of any Holder of
any other series of Notes.

 

Section 7.5.        Release of Collateral. 
The Obligors may obtain the release of all of the Collateral from the
Security Trustee (as defined in the Security Agreement) in accordance with the
provisions of Section 8.4 of the Security Agreement.  Concurrently with the release, if any, of the
Security Documents, the covenants set forth in Schedule II hereto shall
take effect and upon the happening of such event, all references to the Security
Documents and the Collateral shall be of no force and effect so long as the
Notes remain unsecured.

 

SECTION 8.                                                                    INTERPRETATION
OF AGREEMENT; DEFINITIONS.

 

Section 8.1.        Definitions.  Unless the
context otherwise requires, the terms hereinafter set forth when used herein
shall have the following meanings and the following definitions shall be
equally applicable to both the singular and plural forms of any of the terms
herein defined:

 

“Additional
Notes” shall have
the meaning assigned thereto in §1.5.

 

I-28

 

“Affiliate” shall mean any Person (other than a
Restricted Subsidiary) (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, any Obligor, (ii) which beneficially owns or holds 5% or more of any
class of the Voting Stock of an Obligor or (iii) 5% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 5% or more of the
equity interest) of which is beneficially owned or held by any Obligor or a
Subsidiary.  The term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or
otherwise.

 

“Appraised
Value” with
regards to any Collateral, shall mean the value of such Collateral as set forth
in the appraisal required to be delivered pursuant to §4.5
hereof or any update of such appraisal prepared in accordance with the Security
Agreement.

 

“Business
Day” shall mean
each day (excluding Saturday and Sunday) which is not a day on which banking
institutions in Chicago, Illinois are obligated by law to close.

 

“Capitalized
Lease” shall mean
any lease with respect to which the obligation for Rentals is required to be
capitalized on a balance sheet of the lessee in accordance with generally
accepted accounting principles.

 

“Capitalized
Rentals” shall
mean as of the date of any determination the amount at which the aggregate
Rentals due and to become due under all Capitalized Leases under which an
Obligor is a lessee would be reflected as a liability on a consolidated balance
sheet of such Obligor.

 

“Collateral” shall have the meaning set forth in §1.2 hereof.

 

“Consolidated
Net Income” for
any period shall mean the gross revenues of the Obligors for such period less
all expenses and other proper charges (including taxes on income), determined
on a consolidated basis in accordance with generally accepted accounting
principles, but excluding in any event:

 

(a)          any gains or losses from extraordinary items;

 

(b)         net earnings and losses of Obligor accrued prior to
the date it became an Obligor;

 

(c)          net earnings and losses of any corporation (other than
a Restricted Subsidiary), substantially all the assets of which have been
acquired in any manner, realized by such other corporation prior to the date of
such acquisition;

 

I-29

 

(d)         net earnings and losses of any corporation (other than
a Restricted Subsidiary) with which an Obligor shall have consolidated or which
shall have merged into or with an Obligor prior to the date of such
consolidation or merger; and

 

(e)          net earnings of any business entity (other than a
Restricted Subsidiary) in which an Obligor has an ownership interest unless
such net earnings shall have actually been received by such Obligor in the form
of cash distributions.

 

“Consolidated
Net Income Available for Fixed Charges” for any period shall mean the sum of (i) Consolidated
Net Income during such period plus (to the extent deducted in determining
Consolidated Net Income), (ii) all provisions for any Federal, state or
other income taxes made by the Obligors during such period, (iii) Fixed
Charges during such period, and (iv) depreciation and amortization of debt
discount and expense during such period of the Obligors.

 

“Consolidated
Net Worth” shall
mean, as of the date of any determination thereof, stockholders’ equity
(including preferred stock) of the Obligors, all determined in accordance with
generally accepted accounting principles consolidating the Obligors.

 

“Default” shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving of notice, or
both, constitute an Event of Default as defined in §6.1.

 

“Environmental
Legal Requirement”
shall mean any applicable law relating to public health, safety or the
environment, including, without limitation, relating to releases, discharges or
emissions or disposals to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use, handling or disposal of polychlorinated
biphenyls (PCBs), asbestos or urea formaldehyde, to the treatment, storage,
disposal or management of Hazardous Substances (including, without limitation,
petroleum, its derivatives, by-products or other hydrocarbons), to exposure to
toxic, hazardous, or other controlled, prohibited or regulated substances, to
the transportation, storage, disposal, management or release of gaseous or
liquid substances and any handling, transportation, discharge or release of
gaseous or liquid substances and any regulation, order, injunction, judgment,
declaration, notice or demand issued pursuant to such statute or ordinance, in
each case applicable to the property or assets of the Obligors and their
Subsidiaries or the operation, construction or modification of any thereof,
including without limitation the following: 
the Clean Air Act of 1966, as amended, 42 U.S.C. §7401 et seq., the Federal Water Pollution Control Act, as amended
by the Clean Water Act of 1977, 33 U.S.C. §1251, et seq.,
the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §300(f) et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.
§2601 et seq., the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act of 1976,
as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. 

 

I-30

 

§6901 et seq., the Occupational Safety and Health Act of 1970, 29
U.S.C. §651 et seq., the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. §11001 et seq.,
the National Environmental Policy Act of 1975, 42 U.S.C. §4321, the Rivers and
Harbours Act of 1899, 33 U.S.C. §401, et seq. or
similar federal, state, county, regional or local statute, law, regulation, rule or
ordinance, including without limitation, any state statute providing for
financial responsibility for cleanup for the release or threatened release of
substances.

 

“Financing
Documents” shall
mean this Agreement, the Security Agreement, the Notes, the Mortgages and each
other document, security agreement, financing statement, supplements or other
agreement delivered at any time in connection with the transactions
contemplated by this Agreement.

 

“Fixed
Charges” for any
period shall mean on a consolidated basis the sum of (i) all Rentals
(excluding all Rentals on Capitalized Leases) payable during such period by the
Obligors and (ii) all Interest Charges on all Indebtedness (including
imputed interest in respect of Rentals on Capitalized Leases) of the Obligors.

 

“Guaranties” by any Person shall mean all obligations
(other than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Indebtedness (including, without limitation, Indebtedness of
any employee stock ownership plan), dividend or other obligation, of any other
Person (the “primary obligor”) in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person:  (i) to purchase such Indebtedness or
obligation or any property or assets constituting security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of such
Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, or (iii) to lease
property or to purchase Securities or other property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the Indebtedness or
obligation, or (iv) otherwise to assure the owner of the Indebtedness or
obligation of the primary obligor against loss in respect thereof.  For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Indebtedness for borrowed
money shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.

 

“Hazardous
Substance” shall
mean any hazardous or toxic chemical, waste, byproduct, pollutant, contaminant,
compound, product or substance, including, without limitation, asbestos,
polychlorinated biphenyls, petroleum (including crude oil or any fraction thereof),
and any 

 

I-31

 

material the
exposure to, or manufacture, possession, presence, use, generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal
remediation or handling or which, is prohibited, controlled or regulated by any
Environmental Legal Requirement.

 

“Holder” shall mean any Person which is, at the
time of reference, the registered holder of any Note.

 

“Indebtedness” of any Person shall mean and include all
obligations of such Person which in accordance with generally accepted
accounting principles shall be classified upon a balance sheet of such Person
as liabilities of such Person, and in any event shall include all (i) obligations
of such Person for borrowed money or which has been incurred in connection with
the acquisition of property or assets, (ii) obligations secured by any
lien or other charge upon property or assets owned by such Person, even though
such Person has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of property, (iv) Capitalized Rentals
under any Capitalized Lease and, but without duplication, (v) all
Guaranties including, without limitation, Guaranties of Indebtedness of any
employee stock ownership plan.  For the
purpose of computing the “Indebtedness”
of any Person, there shall be excluded any particular Indebtedness to the
extent that, upon or prior to the maturity thereof, there shall have been
deposited with the proper depository in trust the necessary funds (or evidences
of such Indebtedness, if permitted by the instrument creating such
Indebtedness) for the payment, redemption or satisfaction of such Indebtedness;
and thereafter such funds and evidences of Indebtedness so deposited shall not
be included in any computation of the assets of such Person.

 

“Industrial
Development Bonds”
shall mean those certain Thomaston-Upson County Industrial Development
Authority Industrial Development Revenue Bonds (Quad/Graphics, Inc.
Project) Series 1995-1 and each other series issued or to be issued
pursuant to that certain Indenture of Trust between Thomaston-Upson County
Industrial Development Authority and First Union National Bank of North
Carolina dated to be closed in the fourth quarter of the 1995 calendar year or
the first quarter, of the 1996 calendar year, and shall mean any other bonds of
a similar nature issued by a governmental or other municipal authority or
entity in order to finance the purchase of property which is pledged to the
Holders as part of the Collateral.

 

“Institutional
Holder” shall
mean any Holder which is a Purchaser or (a) an “accredited
investor,” as that term is defined in Rule 501 of the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, and (b) an insurance company, bank, savings and loan association,
trust company, investment company, charitable foundation, employee benefit plan

 

I-32

 

(as defined in
ERISA) or other institutional investor or financial institution and, for
purposes of the direct payment provisions of this Agreement, shall include any
nominee of any such Holder.

 

“Interest
Charges” for any
period shall mean all interest (including capitalized interest) on any
particular Indebtedness for which such calculations are being made.

 

“Interest
Payment Dates”
shall mean, with respect to the 1995 Notes, each March 1 and September 1
in each year.

 

“Lien” shall mean any interest in property
securing an obligation owed to, or a claim by, a Person other than the owner of
the property, whether such interest is based on the common law, statute or
contract, and including but not limited to the security interest lien arising
from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a
lease, consignment or bailment for security purposes.  The term “Lien” shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances (including,
with respect to stock, stockholder agreements, voting trust agreements,
buy-back agreements and all similar arrangements) affecting property.  For the purposes of this Agreement, the Obligors
shall be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement, Capitalized Lease or other arrangement
pursuant to which title to the property has been retained by or vested in some
other Person for security purposes and such retention or vesting shall
constitute a Lien.

 

“Make-Whole
Amount” with
respect to any series of Notes, shall have the respective meaning, if any, set
forth in the form of Notes for such series.

 

“Material
Indebtedness”
shall mean at any time one or more obligations of any Obligor for borrowed
money or in respect of interest rate swaps, interest rate exchange agreements,
currency swaps or currency exchange agreements (however denominated) which,
individually or in the aggregate, have, or relate to, an unpaid principal
amount for borrowed money of more than $10,000,000 or relating to any of the
other aforementioned agreements under which the Company’s aggregate liability
is more than $10,000,000.

 

“Mortgages” shall mean those certain Mortgage and
Security Agreements dated as of September 1, 1995 each from the Company to
M&I Marshall & Ilsley Bank as security trustee, granting the
Security Trustee a mortgage and security interest in the Real Property
Collateral and any additional grants of collateral interests in real property
of the Company to secure the Notes.

 

“Obligors”
shall mean the
Company and each other Restricted Subsidiary.

 

I-33

 

“Person” shall mean an individual, partnership,
joint venture, corporation, business trust, joint stock company, trust or
unincorporated organization, and a government or agency or political
subdivision thereof or other entity of whatever nature.

 

“Personal
Property Collateral”
shall have the meaning assigned thereto in §1.2.

 

“Real
Property Collateral”
shall have the meaning assigned thereto in §1.2.

 

“Rentals” shall mean and include all fixed rents
(including as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property other than any
such payments which constitute, in substance, tax indemnification payments or
payments applied to the acquisition by the lessee of the property subject to
such lease) payable by each Obligor, as lessee or sublessee under a lease of
real or personal property, but shall be exclusive of any amounts required to be
paid by each such Obligor (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes and similar
charges.  Fixed rents under any so-called,
“percentage leases” shall be computed solely on the basis of the minimum rents,
if any, required to be paid by the lessee regardless of sales volume or gross
revenues.

 

“Responsible
Officer” shall
mean the President, any Vice President, the Treasurer, the Chief Financial
Officer, any Assistant Treasurer, the Secretary and any Assistant Secretary,
from time to time, of each Obligor and any other officer of each Obligor who
performs the functions of the aforementioned officers or any other officer or employee
whose responsibilities include the knowledge of the terms and conditions of
this Agreement, the Notes or the Security Agreement.

 

“Restricted
Subsidiary” shall
mean and include a Person whose financial statements are required to be
consolidated with the Company’s financial statements in accordance with GAAP
which is organized under the laws of the United States or Canada or any State
or province thereof and which has substantially all of its assets within the
United States or Canada and which Person either (i) is a party to this
Agreement, (ii) is designated as such in Annex 1 to Exhibit C
hereto, or (iii) is subsequently designated as such in accordance with §5.12, provided that
such designation would not result in the violation of any of the terms of this
Agreement and provided, further, that the
Obligors and such subsequently designated Restricted Subsidiary have each
executed and delivered to each Holder a Restricted Subsidiary Agreement
substantially in the form of Exhibit H hereto (in sufficient counterparts
for distribution of an executed original to each Holder), together with an
opinion of counsel acceptable to the Holders to the effect that the Restricted
Subsidiary Agreement has been duly and validly authorized, executed and
delivered by the proposed new Restricted Subsidiary and constitutes the legal,
valid and binding obligation of such proposed Restricted Subsidiary,
enforceable against such Restricted Subsidiary in accordance with its terms
and, pursuant to said Restricted Subsidiary Agreement, the proposed

 

I-34

 

Restricted
Subsidiary is jointly and severally obligated with respect to the payment of
all obligations outstanding and to be outstanding under this Note Agreement and
the Notes (subject to the right of such Restricted Subsidiary to cease to be a
Restricted Subsidiary pursuant to the next sentence of this definition).  A restricted Subsidiary may be designated an
Unrestricted Subsidiary in accordance with §5.12.

 

“Security” shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.

 

“Security
Agreement” shall
have the meaning assigned thereto in §1.2.

 

“Security
Documents” shall
mean and include the Security Agreement and the Mortgages and any other agreements,
documents or instruments now or hereafter executed and delivered securing the
obligations of the Obligors under the Notes.

 

The term “subsidiary” shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of votes) of the
Voting Stock shall be owned by such parent corporation and/or one or more
corporations which are themselves subsidiaries of such parent corporation.  The term “Subsidiary”
shall mean a subsidiary of any Obligor.

 

“Supplement” shall have the meaning assigned thereto
in §1.5.

 

“Unrestricted
Subsidiary” shall
mean any Subsidiary of any Obligor which is not a Restricted Subsidiary.

 

“Voting
Stock” shall mean
Securities of any class or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).

 

Section 8.2.        Accounting Principles. 
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with generally accepted
accounting principles, to the extent applicable, except where such principles
are inconsistent with the requirements of this Agreement.

 

Section 8.3.        Directly or Indirectly. 
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether the action in question is taken directly or indirectly by
such Person.

 

I-35

 

SECTION 9.                                                                    MISCELLANEOUS.

 

Section 9.1.        Registered Notes.  The Obligors
shall cause to be kept at the principal office of the Company a register for
the registration and transfer of the Notes (hereinafter called the “Note Register”), and the Obligors will register or transfer
or cause to be registered or transferred, as hereinafter provided and under
such reasonable regulations as they may prescribe, any Note issued pursuant to
this Agreement.

 

At any time and
from time to time the registered Holder which has been duly registered as
hereinabove provided may transfer such Note upon surrender thereof at the principal
office of the Company duly endorsed or accompanied by a written instrument of
transfer duly executed by the registered Holder or its attorney duly authorized
in writing.

 

The Person in
whose name any registered Note shall be registered shall be deemed and treated
as the owner and a Holder for all purposes of this Agreement.  Payment of or on account of the principal,
premium, if any, and interest on any registered Note shall be made to or upon
the written order of such registered Holder.

 

Section 9.2.        Exchange of Notes.  At any time,
and from time to time, upon not less than ten days’ notice to that effect given
by the Holder of any Note initially delivered or of any Note substituted
therefor pursuant to §9.1, this §9.2 or §9.3, and, upon
surrender of such Note at its office, the Obligors will deliver in exchange
therefor, without expense to the Holder, except as set forth below, Notes for
the same aggregate principal amount and of the same series and tranche as the
then unpaid principal amount of the Note so surrendered, in the denomination of
$250,000 or any amount in excess thereof as such Holder shall specify, dated as
of the date to which interest has been paid on the Note so surrendered or, if
such surrender is prior to the payment of any interest thereon, then dated as
of the date of issue, payable to such Person or Persons, or assigns, as may be
designated by such Holder, and otherwise of the same form and tenor as the
Notes so surrendered for exchange.  The Obligors
may require the payment of a sum sufficient to cover any stamp tax or
governmental charge imposed upon such exchange or transfer.

 

Section 9.3.        Loss, Theft, etc. of Notes. 
Upon receipt of evidence satisfactory to the Obligors of the loss,
theft, mutilation or destruction of any Note, and in the case of any such loss,
theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Obligors, or in the event of
such mutilation upon surrender and cancellation of the Note, the Obligors will
make and deliver without expense to the Holder thereof, a new Note, of the same
series and tranche and of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Note.  If an Institutional
Holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of

 

I-36

 

loss, theft or
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Obligors.

 

Section 9.4.        Expenses, Stamp Tax Indemnity. 
Whether or not the transactions herein contemplated shall be
consummated, the Obligors agree to pay directly all of the Purchaser’s
out-of-pocket expenses in connection with the preparation, execution and
delivery of this Agreement, the Security Agreement and the Mortgages and the
transactions contemplated hereby, including but not limited to all filing and
recording fees, all Security Trustee’s fees, all fees relative to appraisals,
the fees and disbursements of Chapman and Cutler, special counsel to the
Purchasers, duplicating and printing costs and charges for shipping the Notes,
adequately insured to each Purchaser’s home office or at such other place as
such Purchaser may designate, and all expenses relating to any proposed or actual
amendment, waivers, consents, work-out, renegotiation or restructuring pursuant
to the provisions hereof, including without limitation, all legal fees and the
reasonable fees and expenses of any one investment banker or financial advisor
engaged by and representing the holders of the Notes.  The Obligors also agree that they will pay
and save the Purchasers harmless against any and all liability with respect to
stamp and other taxes, if any, which may be payable or which may be determined
to be payable in connection with the execution and delivery of this Agreement,
the Security Agreement, the Mortgages or the Notes, whether or not any Notes
are then outstanding and liability with respect to obtaining a so-called “private
placement number”.  The Obligors agree to
protect and indemnify the Purchasers against any liability for any and all
brokerage fees and commissions payable or claimed to be payable to any Person
engaged by or on behalf of the Obligors in connection with the transactions
contemplated by this Agreement and the Security Agreement and the Mortgages.

 

Section 9.5.        Powers and Rights Not Waived; Remedies Cumulative. 
No delay or failure on the part of any Holder in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of each
Holder are cumulative to and are not exclusive of any rights or remedies any
such Holder would otherwise have, and no waiver or consent, given or extended
pursuant to §7 hereof, shall extend to or
affect any obligation or right not expressly waived or consented to.

 

Section 9.6.        Notices.  All
communications provided for hereunder shall be in writing and, if to a Holder,
delivered or mailed by registered or certified mail or overnight courier
service, addressed to such Holder at such Holder’s address appearing on
Schedule I to this Agreement or such other address as any Holder may
designate to the Obligors in writing, and if to the Obligors, delivered or
mailed by registered or certified mail or overnight courier service to the
Company at DuPlainville Road, Pewaukee, Wisconsin 53072, Attention: Vice
President-

 

I-37

 

Finance with a
copy to Joseph B. Tyson, Jr., c/o Foley & Lardner, 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202-5367 or to such other address as
the Obligors may in writing designate to you or to the Holders.

 

Section 9.7.        Successors and Assigns. 
This Agreement shall be binding upon the Obligors and its successors and
assigns and shall inure to the benefit of each Purchaser and its successors and
assigns, including each successive Holder.

 

Section 9.8.        Survival of Covenants and Representations. 
All covenants, representations and warranties made by the Obligors
herein and in any certificates delivered pursuant hereto, whether or not in
connection with the Closing Date, shall survive the closing and the delivery of
this Agreement and the Notes.

 

Section 9.9.        Severability.  Should any
part of this Agreement for any reason be declared invalid, such decision shall
not affect the validity of any remaining portion, which remaining portion shall
remain in force and effect as if this Agreement had been executed with the
invalid portion thereof eliminated and it is hereby declared the intention of
the parties hereto that they would have executed the remaining portion of this
Agreement without including therein any such part, parts, or portion which may,
for any reason, be hereafter declared invalid.

 

Section 9.10.        Governing Law.  This Agreement
and the Notes issued and sold hereunder shall be governed by and construed in
accordance with Wisconsin law.

 

Section 9.11.        Captions.  The descriptive
headings of the various Sections or parts of this Agreement are for convenience
only and shall not affect the meaning or construction of any of the provisions
hereof.

 

Section 9.12.        Payment on Non-Business Day. 
In the event that any payment date hereunder or under the Notes shall
not be a Business Day, payment shall be made on the next succeeding Business
Day.  If such payment is made on such
next succeeding Business Day, no interest shall accrue on the amount of such
payment during such extension, but interest payable on the next interest
payment date shall accrue from the originally scheduled payment date.

 

Section 9.13.        Additional Subsidiaries.  (a) No
payment or payments made by any Obligor, any guarantor or any other Person or
received or collected by the Holders from any Obligor, any guarantor or any
other Person by virtue of any action or proceeding or any setoff or
appropriation or application at any time or from time to time in reduction of
or in payment of the obligations of the Obligors under this Note Agreement or
the Notes shall be deemed to modify, reduce, release or otherwise affect the
liability of any Restricted Subsidiary of the Company under the Note Agreement
or the Notes which shall, notwithstanding any such payment or

 

I-38

 

payments other
than payments made to the Holders by such Restricted Subsidiary or payments
received or collected by the Holders from such Restricted Subsidiary, remain
liable for the obligations of the Obligors under this Note Agreement and the
Notes until the obligations of the Obligors under this Note Agreement and the
Notes are paid in full.

 

(b)         The provisions of this subsection 9.13 shall survive
repayment of the Notes and termination of this Note Agreement.

 

(c)          The obligations hereunder and under the Notes may be
created without notice to the Restricted Subsidiaries, which shall be jointly
and severally liable therefor regardless of their failure to receive notice
thereof.

 

(d)         If a Restricted Subsidiary is designated an
Unrestricted Subsidiary by the Board of Directors of the Company in accordance
with §5.12, the designated Subsidiary shall
remain jointly and severally liable for all obligations of the Obligors under
this Note Agreement and the Notes until such time as the Company and the
designated Subsidiary shall have established, to the reasonable satisfaction of
the Holders, that no Default or Event of Default exists and such designation
does not cause a Default or Event of Default and would not have caused a
Default or Event of Default had it occurred as of the end of the most recent
fiscal quarter.  Assuming compliance with
the preceding sentence, and upon request, the Holders shall deliver to the
designated Subsidiary any instrument reasonably requested to evidence that such
Subsidiary is no longer a Restricted Subsidiary, nor liable for the obligations
of the Obligors under this Note Agreement and the Notes.

 

(e)          By signing a Restricted Subsidiary Agreement, in the
case of all subsequently-designated Restricted Subsidiaries, each such
Restricted Subsidiary agrees:  (x) to
be bound by all of the terms and provisions of this Note Agreement applicable
to Obligors, (y) that it is liable, jointly and severally, with all other
Obligors for the payment when due of all Notes and other obligations under this
Note Agreement, and (z) that the Holders can enforce such obligations
against such Restricted Subsidiary only until such time as that Restricted
Subsidiary has been designated an Unrestricted Subsidiary pursuant to §5.12 hereof and satisfied the conditions described in
subsection 9.12(d) above.

 

I-39

 

The execution
hereof by the Purchasers shall constitute a contract among the Obligors and the
Purchasers for the uses and purposes hereinabove set forth, and this Agreement
may be executed in any number of counterparts, each executed counterpart
constituting an original but all together only one agreement.

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ John C. Fowler

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Vice President-Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  
	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ John C. Fowler

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Their Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  by Quad/Graphics, Inc., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ John C. Fowler

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President-Finance

  

 

I-40

 

	
   

  	
  and by Quad/Creative, Inc.
  its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ John C. Fowler

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Treasurer

  

 

I-41

 

Accepted as of September 1,
1995.

 

	
   

  	
  AMERICAN UNITED LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Kent R. Adams

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

I-42

 

Accepted as of September 1,
1995.

 

	
   

  	
  PROVIDIAN LIFE AND
  HEALTH INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Frederick B. Howard

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Second Vice President - Investments

  

 

I-43

 

Accepted as of September 1,
1995.

 

	
   

  	
  INDIANAPOLIS LIFE INSURANCE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Gene E. Trueblood

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President, C.I.O. and Treasurer

  

 

I-44

 

Accepted as of September 1,
1995.

 

	
   

  	
  NEW ENGLAND MUTUAL LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Hanson C. Robbins

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Investment Officer

  

 

I-45

 

Accepted as of September 1,
1995.

 

	
   

  	
  AID ASSOCIATION FOR
  LUTHERANS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ James Abitz

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President - Securities

  

 

I-46

 

Accepted as of September 1,
1995.

 

	
   

  	
  THE
  EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Beatriz M. Cuervo

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Investment Officer

  

 

I-47

 

Accepted as of September 1,
1995.

 

	
   

  	
  CANADA
  LIFE INSURANCE COMPANY OF NEW YORK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Brian J. Lynch

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Assistant Treasurer

  

 

I-48

 

Accepted as of September 1,
1995.

 

	
   

  	
  CANADA
  LIFE INSURANCE COMPANY OF AMERICA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Brian J. Lynch

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Assistant Treasurer

  

 

I-49

 

Accepted as of September 1,
1995.

 

	
   

  	
  WOODMEN ACCIDENT AND
  LIFE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ M. F. Wilder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Senior Vice President and Treasurer

  

 

I-50

 

Accepted as of September 1,
1995.

 

	
   

  	
  THE MINNESOTA MUTUAL
  LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By MIMLIC Asset
  Management Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Lynne M. Mills

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

I-51

 

Accepted as of September 1,
1995.

 

	
   

  	
  FEDERATED MUTUAL
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By MIMLIC Asset
  Management Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Lynne M. Mills

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

I-52

 

Accepted as of September 1,
1995.

 

	
   

  	
  MUTUAL TRUST LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
  By MIMLIC Asset
  Management Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Alan Notvik

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

I-53

 

Accepted as of September 1,
1995.

 

	
   

  	
  FIRST
  NATIONAL LIFE INSURANCE COMPANY OF AMERICA

  
	
   

  	
   

  
	
   

  	
  By MIMLIC Asset
  Management Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Alan Notvik

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

I-54

 

Accepted as of September 1,
1995.

 

	
   

  	
  UNITED OF OMAHA LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Curtis R. Caldwell

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its First Vice President

  

 

I-55

 

Accepted as of September 1,
1995.

 

	
   

  	
  THE OHIO NATIONAL LIFE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Michael A. Boedeker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President, Fixed Income Securities

  

 

I-56

 

Accepted as of September 1,
1995.

 

	
   

  	
  OHIO NATIONAL LIFE
  ASSURANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Michael A. Boedeker

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President, Fixed Income Securities

  

 

I-57

 

Accepted as of September 1,
1995.

 

	
   

  	
  PHOENIX HOME LIFE
  MUTUAL INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Rosemary T. Strekel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President

  

 

I-58

 

Accepted as of September 1,
1995.

 

	
   

  	
  JOHN HANCOCK MUTUAL
  LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Anthony C.
  Urick

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Second Vice President

  

 

I-59

 

Accepted as of September 1,
1995.

 

	
   

  	
  JOHN  HANCOCK  VARIABLE LIFEINSURANCE  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Anthony C.
  Urick

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President - Investments

  

 

I-60

 

Accepted as of September 1,
1995.

 

	
   

  	
  SAFECO LIFE INSURANCE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Michael C. Knebel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its Vice President and Treasurer

  

 

I-61

 

ADDITIONAL COVENANTS

 

Section 5.[x]. Priority Debt.  The Obligors will not at any time permit
Priority Debt to exceed an amount equal to 15% of Consolidated Net Worth.

 

Section 5.[y]. Limitation on Liens.  The Obligors will not
create or incur, or suffer to be incurred or to exist, any Lien on its or their
property or assets, whether now owned or hereafter acquired, or upon any income
or profits therefrom, or transfer any property for the purpose of subjecting
the same to the payment of obligations in priority to the payment of its or
their general creditors, or acquire or agree to acquire any property or assets
upon conditional sales agreements or other title retention devices, except:

 

(a) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or demands of
mechanics and materialmen, provided payment thereof is not at the time required
by §5.3;

 

(b) Liens of or resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall not
have expired, or in respect of which the Obligors shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review shall
have been secured;

 

(c) Liens incidental to the conduct of business or
the ownership of properties and assets (including Liens in connection with
worker’s compensation, unemployment insurance and other like laws, warehousemen’s
and attorneys’ liens and statutory landlords’ liens) and Liens to secure the
performance of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
incurrence of Indebtedness, provided that such Liens do not, individually or in
the aggregate, materially impair the use of the property encumbered by any such
Lien in the operation of the business of the Obligors, taken as a whole, or the
value of the property so encumbered for the purposes of such business;

 

(d) Liens securing Indebtedness of an Obligor to
another Obligor;

 

(e) Liens incurred after the Closing Date given to
secure the payment of the purchase price incurred in connection with the
acquisition, construction or improvement of fixed assets of any Obligor, which
Liens are incurred contemporaneously with or within 180 days after the payment
of such purchase price, and Liens existing on such

 

SCHEDULE II

(to Note Agreement)

 

 

fixed assets at
the time of acquisition thereof or at the time of acquisition by any Obligor of
any business entity then owning such fixed assets, whether or not such existing
Liens were given to secure the payment of the purchase price of the fixed
assets to which they attach, provided  that (i) the
Lien shall attach solely to the fixed assets acquired, constructed or improved,
(ii) at the time of acquisition, construction or improvement of such fixed
assets, the aggregate amount remaining unpaid on all Indebtedness secured by
Liens on such fixed assets whether or not assumed by any Obligor shall not
exceed an amount equal to 100% of the fair market value at the time of
acquisition, construction or improvement of such fixed assets (as determined in
good faith by the Board of Directors of the Obligor incurring such Lien), and (iii) all
Indebtedness secured by such Liens shall have been incurred within the
applicable limitations of this Agreement; and

 

(f) in addition to the liens permitted under §5.[y](a) through
(e), Liens securing Priority Debt
permitted pursuant to §5.[x].

 

In the event any
property of any Obligor is subjected to a Lien which is not permitted by the
provisions of §5.[y] pursuant to a transaction
otherwise permitted hereunder (such Lien being referred to as a “Prohibited Lien”), an Event of Default shall not have
occurred hereunder if such Obligor, as the case may be, (i) shall have
received the prior written approval of the holders of 66-2/3% in aggregate
principal amount of the outstanding Notes of each series to the incurrence of
such Prohibited Lien and, (ii) shall make or cause to be made provisions
whereby the obligations of the Obligors under the Notes and this Agreement will
be secured equally and ratably with all other obligations secured by such
Prohibited Lien within 30 days of the incurrence of such Prohibited Lien,
pursuant to security arrangements satisfactory in form, scope and substance to
the holder or holders of not less than 66-2/3% in aggregate principal amount of
the Notes of each series.

 

Section 5.[z]. Mergers, Consolidations and Sales of
Assets.  The Obligors
will not (i) consolidate with or be a party to a merger with any other
corporation or (ii) sell, lease or otherwise dispose of all or
substantially all of the assets of the Obligors; provided,
however, that any Obligor may consolidate or merge with or into any
other corporation if (x) such Obligor shall be the surviving corporation
or, if such Obligor is not the surviving corporation, the surviving corporation
shall expressly assume in writing the obligations of such Obligor under the
Financing Documents and the surviving corporation, if other than such Obligor,
shall be a corporation organized and existing under the laws of the United
States, or a jurisdiction thereof, having the majority of its consolidated
assets and operations in the United States, and (y) at the time of such
consolidation or merger and after giving effect thereto no Default or Event of
Default shall have occurred and be continuing.

 

DEFINED TERMS:

 

II-89

 

“Priority
Debt” shall mean and include, as of the date of any
determination, all Indebtedness of any Obligor which is secured pursuant to any
Lien other than a Lien permitted pursuant to §5[y](a) through
(e).

 

II-90

 

QUAD/GRAPHICS, INC.

QUAD/TECH, INC.

QUAD/TECH EUROPE, INC.

QUAD/CREATIVE, INC.

DUPLAINVILLE TRANSPORT,
INC.

QUAD/CARE, INC.

QUAD/MARKETING, INC.

QUAD/PAK, INC.

THE QUAD TECHNOLOGY
GROUP, INC.

SILVER SPRING REALTY, INC.

CHEMICAL
RESEARCH/TECHNOLOGY CO.

QUAD/WEST, INC.

QUAD/MED, INC.

 

7.14% Senior
Secured Note, Series 1995-1, Tranche A

Due September 1,
2010

 

No. AR-3

September 28, 1995

$8,000,000

 

QUAD/GRAPHICS, INC.,
a Wisconsin corporation (the “Company”), QUAD/TECH,
INC., a Wisconsin corporation, QUAD/TECH EUROPE, INC., a Delaware corporation, QUAD/CREATIVE,
INC., a Wisconsin corporation, DUPLAINVILLE TRANSPORT, INC., a Wisconsin
corporation, QUAD/CARE, INC., a Wisconsin corporation, QUAD/MARKETING,          INC., a Wisconsin corporation,  QUAD/PAK, INC., a Wisconsin corporation, THE
QUAD TECHNOLOGY GROUP, INC., a Wisconsin corporation, SILVER SPRING REALTY,
INC., a    Wisconsin corporation, CHEMICAL
RESEARCH/TECHNOLOGY CO., a Wisconsin corporation, QUAD/WEST, INC., a
Delaware corporation, and QUAD/MED, INC., a Wisconsin corporation.(each,
including the Company and each other entity which becomes an Obligor (as
defined in the Note Agreement) from time to time, an “Obligor”
and collectively, the “Obligors”),
for value received, hereby promise, jointly and severally, to pay to

 

or registered assigns,

on the first day of September, 2010

the principal amount of

 

DOLLARS ($               )

 

and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the principal amount from time to time remaining unpaid hereon at the rate of 7.14%
per annum 

 

EXHIBIT A-1

(to Note Agreement)

 

 

from the date
hereof until maturity, payable semiannually on the first day of each March and
September in each year commencing March 1, 1996, and at maturity (the
“Tranche A Interest Payment Dates”).  The Obligors agree to pay interest on overdue
principal (including any overdue required or optional prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate of 9.14% per annum after maturity, whether
by acceleration or otherwise, until paid. 
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Pewaukee, Wisconsin in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts.

 

This
Tranche A Note is one of the 7.14% Senior Secured Notes, Series 1995-1,
Tranche A of the Obligors in the aggregate principal amount of $43,000,000
(the “Tranche A Notes”) issued or to be
issued along with the $48,500,000 aggregate principal amount of the 7.56%
Senior Secured Notes, Series 1995-1, Tranche B due September 1,
2015 and $30,000,000 aggregate principal amount of the 8.00% Senior Secured
Notes, Series 1995-1, Tranche C due September 1, 2020 under and
pursuant to the terms and provisions of the Note Agreement dated as of September 1,
1995 (the “Note Agreement”), entered into by the
Obligors with the original purchasers therein referred to and the Security
Agreement dated as of September 1, 1995 (the “Security
Agreement”) and the Mortgage and Security Agreements each dated as
of September 1, 1995 (the “Mortgages”)
from the Company to the Security Trustee. 
This Tranche A Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes (as defined in the Note Agreement)
of all series outstanding from time to time under the Note Agreement, the
Security Agreement and the Mortgages to all the benefits and security provided
for thereby or referred to therein to which Note Agreement, Security Agreement
and Mortgages reference is hereby made for the statement thereof.  Reference is hereby made to the Security
Agreement and the Mortgages for a description of the property thereby granted,
conveyed, assigned, affected and hypothecated, the nature and extent of the
security for the Notes, and rights of the holders of the Notes, the Security
Trustee and the Company in respect of such security and otherwise.

 

This
Tranche A Note and the other 1995 Notes (as defined in the Note Agreement)
outstanding under the Note Agreement may be declared due prior to their
expressed maturity dates and certain prepayments are required to be made
thereon, all in the events, on the terms and in the manner and amounts as
provided herein and in the Note Agreement.

 

The Tranche A
Notes are not subject to prepayment or redemption at the option of the Obligors
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth below.

 

(1)(a)           The Obligors jointly and severally
agree that on the first day of September in each year, commencing September 1,
2001 and ending September 1, 2009 both inclusive, they will

 

A-1-92

 

prepay and apply
and there shall become due and payable the sum of $4,300,000 on the principal
indebtedness evidenced by the Tranche A Notes.  No premium shall be payable in connection
with any required prepayment made pursuant to this paragraph (1)(a).  The entire unpaid principal amount of the
Tranche A Notes shall become due and payable on September 1, 2010.

 

(b)         Any payment of less than all of the
Tranche A Notes pursuant to the provisions of paragraph 2 shall be applied
first against the payment of principal at final maturity and then against the
prepayments required by paragraph (1)(a) with regard to Tranche A
Notes in the inverse order thereof.  To
the extent that any prepayment of any Tranche A Notes pursuant to the provisions
of paragraph 3  or repurchase
of any Tranche A Notes does not result in the prepayment of all of the
Tranche A Notes, then prepayments required to be made pursuant to the
provisions of paragraph (1)(a) with regard to the Tranche A Notes
shall, after the occurrence of each such prepayment pursuant to paragraph (3) or
repurchase, be reduced in the same proportion as the principal amount of
Tranche A Notes outstanding immediately preceding such partial prepayment
or repurchase has been reduced by such partial prepayment or repurchase to the
end that the remaining prepayments required to be made pursuant to the
provisions of paragraph (1)(a) on each of the Tranche A Notes
remaining outstanding will result in the same proportionate rate of prepayment
as if Tranche A Notes had not been prepaid pursuant to paragraph (3) or
repurchased, as the case may be.

 

(2)          Upon compliance with paragraph (4) and
in addition to the prepayments required by paragraph (1), the Obligors shall
have the right to prepay the outstanding Tranche A Notes, either (i) in
whole at any time or (ii) in part on any Tranche A Interest Payment
Date (but if in part then in units of $100,000 or an integral multiple of
$10,000 in excess thereof) by payment of the principal amount of the
Tranche A Notes, or portion thereof to be prepaid, and accrued interest on
the portion being prepaid to the date of such prepayment, together with a
premium equal to the Make-Whole Amount, determined as of five (5) Business
Days prior to the date of such prepayment pursuant to this paragraph (2); provided, however, that the Obligors shall not prepay
Tranche A Notes pursuant to this paragraph (2), unless they shall
concurrently prepay a pro-rata principal amount of the 1995 Notes of each other
tranche issued pursuant to the Note Agreement.

 

(3)(a)           In the event that the Obligors shall
have advance notice of a Change of Control reasonably expected to occur no more
than 120 days from the date of notice, then it shall provide written notice (a “Paragraph (3) Notice”) to all holders of the
Tranche A Notes of such proposed Change of Control, which Paragraph (3) Notice
shall include the information specified in paragraph (3)(c) and shall
request the consent of the holders of the Tranche A Notes to such Change of
Control.  Such consent of the holders of
the Tranche A Notes shall not be unreasonably withheld as determined in the
reasonable judgment of the holders of the Tranche A Notes.  Concurrently with the closing of the
transaction which causes or constitutes a Change of Control, the Obligors will
prepay all Tranche A Notes held by holders that have failed to consent

 

A-1-93

 

in writing to the
request contained in the Paragraph (3) Notice within 30 days after
receipt of such Paragraph (3) Notice, by payment of the principal
amount thereof, plus accrued interest thereon to the date of prepayment
together with a premium equal to the Make-Whole Amount with respect to the principal
amount of the Tranche A Notes being prepaid determined as of five (5) Business
Days prior to the date of such prepayment. 
Not less than five Business Days prior to the date of the closing of the
proposed transaction, the Obligors will furnish to each holder of
Tranche A Notes which has failed to consent a written confirmation of the
closing date.  Such prepayment option
with respect to the particular proposed Change of Control described in the
aforementioned Paragraph (3) Notice shall terminate in the event that
such Change of Control does not occur within 120 days of the date of the
Paragraph (3) Notice relating to such proposed Change of Control upon
substantially the terms described in such Paragraph (3) Notice.  The Obligors shall give additional
Paragraph (3) Notices and the holders of the Tranche A Notes
shall have the rights of prepayment as contemplated herein in the event of any
Change of Control which occurs after 120 days after the initial notice with
respect to such proposed Change of Control or which is pursuant to terms
substantially different than the terms applicable to the proposed Change of
Control previously described in the related Paragraph (3) Notice.

 

(b)         In the event the Obligors shall not
have advance notice of a Change of Control (as contemplated in
paragraph (3)(a)) and a Change of Control shall occur and the Obligors
have not provided the Paragraph (3) Notice pursuant to and in
accordance with paragraph (3)(a), the Obligors will, within five Business
Days after such Change of Control, give a Paragraph (3) Notice of
such event to all holders of the Tranche A Notes pursuant to
paragraph (3)(c) and shall request the consent of the holders of the
Tranche A Notes to such Change of Control. 
Such consent of the holders of the Tranche A Notes shall not be
unreasonably withheld as determined in the reasonable judgment of the holders
of the Tranche A Notes.  The Obligors
will prepay on the closing date designated in the Paragraph (3) Notice
given pursuant to this Paragraph (3)(b), all Tranche A Notes held by
all holders that have failed to consent in writing to the request contained in
the Paragraph (3) Notice at least five Business Days prior to the
date specified for prepayment, by payment of the principal amount thereof, plus
accrued interest thereon to the date of prepayment together with a premium
equal to the Make-Whole Amount with respect to the principal amount of the
Tranche A Notes being prepaid determined as of five (5) Business Days
prior to the date of such prepayment.

 

(c)         The Paragraph (3) Notice
required to be given by the Obligors pursuant to and in accordance with the
provisions of paragraph (3)(a) and (b) shall, in each case, be
in writing and shall set forth, to the best knowledge and belief of the
Obligors, (i) an offer to prepay all of the Tranche A Notes in
accordance with paragraph 3(a) or 3(b) of this Note, as the case may
be, (ii) a summary of the transaction or transactions causing or proposed
to cause the Change of Control, (iii) the name and address of the Person
or group of Persons acting in concert acquiring a majority of the votes for the
election of a majority of the Board of Directors, (iv) such financial or
other information as would be reasonably necessary for each holder to make an
informed

 

A-1-94

 

decision as to
whether to require a prepayment of such holder’s Tranche A Notes, (v) the
Make-Whole Amount if it were calculated as of the date of the Paragraph (3) Notice
and (vi) in the case of any Paragraph (3) Notice pursuant to
paragraph (3)(b), the date set for prepayment, if any, of the
Tranche A Notes which date shall not be less than 30 days or more than 45
days after the date of such notice.

 

(d)         “Change of Control”
shall mean any event which results in the legal or beneficial ownership of
shares of Voting Stock of the Company granting the holder or holders thereof a
majority of the votes for the election of a majority of the Board of Directors
of the Company being owned by any Person or group of Persons acting in concert
other than (i) Harry V. Quadracci, Harry R. Quadracci and
Thomas A. Quadracci, their respective spouses and descendants, spouses of
any such descendants, the executors, administrators, guardians or conservators
of the estates of any of the foregoing Persons and trustees holding shares of
Voting Stock of the Company for the benefit of any said Persons (the “Family Group”), or (ii) the Current Management
Group or (iii) if and so long as the Family Group owns and holds not less
than 10% of the Company’s Voting Stock, any employee stock ownership plan of
the Company whose trustee or a majority of whose trustees are Harry V.
Quadracci, Harry R. Quadracci and Thomas A. Quadracci, or any of
them, which owns and holds legal and beneficial ownership of shares of Voting
Stock of the Company granting the holder thereof a majority of the votes for
the election of a majority of the Board of Directors of the Company.

 

As used herein, “Current Management Group” shall mean, as of the date of any
determination thereof, a group consisting of one or more of Harry V.
Quadracci, Harry R. Quadracci, Thomas A. Quadracci or the individuals
then holding the following offices (collectively, “Senior
Officers”):  President, Chief
Executive Officer, Chairman of the Board of Directors, Vice President,
Finishing Operations, Senior Vice President, Sales and Administration, Vice
President, Distribution, Vice President, Finance, Vice President, Imaging
Operations, Vice President, Production, Vice President, Computer Sciences, Vice
President, Press Operations, Vice President, Manufacturing and Technology or at
such time as such offices no longer exist, such offices which include
substantially similar responsibilities; provided, however,
that any such individual shall not be deemed to be a member of the Current
Management Group unless such individual shall have a tenure as a Senior Officer
of at least two (2) years and the Management Group, as a whole, shall have
an average tenure as Senior Officers of at least five (5) years.

 

(4)          The Obligors will give written notice
of any prepayment of the Tranche A Notes pursuant to paragraph (2) to
each holder thereof not less than 30 days nor more than 60 days before the date
fixed for such optional prepayment specifying (i) the date fixed for such
prepayment, which shall be a Business Day, (ii) the section of the
Agreement or this Tranche A Note under which the prepayment is to be made,
(iii) the principal amount of the holder’s Tranche A Notes to be
prepaid on such date, (iv) in the case of a prepayment pursuant to 

 

A-1-95

 

paragraph (2), that a premium may be payable, (v) in
the case of a prepayment pursuant to paragraph (2), the date when such
premium will be calculated, and (vi) the accrued interest applicable to
the prepayment.  Such notice of
prepayment shall also include a certification by an authorized financial
officer certifying all facts which are conditions precedent to any such
prepayment.  Notice of such prepayment
having been so given, the aggregate principal amount of the Tranche A
Notes specified in such notice, together with the premium, if any, and accrued
interest thereon shall become due and payable on the prepayment date.  Whether or not any premium is payable, a
computation of the amount of any premium payable in connection with a
prepayment pursuant to paragraph (2), shall be furnished to the holders of
Tranche A Notes to be prepaid as soon as practicable after determination
of such premium and, in all events, not less than three (3) Business Days
prior to such prepayment.

 

(5)          All partial prepayments pursuant to
paragraphs (1) or (2) shall be applied on all Tranche A
Notes, ratably in accordance with the unpaid principal amounts thereof but only
in units of $1,000 and to the extent that such ratable application shall not
result in an even multiple of $1,000, adjustment may be made by the Obligors to
the end that successive applications shall result in substantially ratable
payments.

 

“Make-Whole
Amount” shall mean at any time with respect to Tranche A
Notes being prepaid or accelerated, if the Reinvestment Yield plus 0.50% at
such time is lower than the rate of interest on the Tranche A Notes being
prepaid or accelerated, the excess of (a) the present value of the
remaining principal and interest payments to become due (exclusive of accrued
interest on such Tranche A Notes through the date of prepayment or
acceleration) on that portion of the Tranche A Notes to be prepaid or
accelerated, taking into account, in the case of any partial prepayment of such
Tranche A Notes pursuant to paragraph (2), the application of such
prepayment required to be made pursuant to the first sentence of paragraph (1) to
the scheduled prepayments and payments on such Tranche A Notes, all
determined by discounting such prepayments and payments at a rate that is equal
to the Reinvestment Yield plus 0.50% over (b) the aggregate principal
amount of the Tranche A Notes then to be prepaid or accelerated.  If the Reinvestment Yield plus 0.50% at the
time of such prepayment is equal to or higher than the stated rate of interest
on the Tranche A Notes being prepaid, the Make-Whole Amount for such
tranche shall be zero.

 

“Reinvestment
Yield” shall be the weekly average of the yields published in
the weekly statistical release designated H.15(519) of the Federal Reserve
System under the caption “U.S. Government Securities-Treasury Constant
Maturities” (the “Statistical Release”) or if the
Statistical Release is not published, of such reasonably comparable index as
may be designated by the holders of 66-2/3% in aggregate principal amount of
the outstanding 1995 Notes being prepaid, for the maturity corresponding to the
remaining Weighted Average Life to Maturity of each tranche of Notes being
prepaid as of the date of such acceleration or prepayment, as the case may be,
rounded to the nearest month.  If no
maturity exactly corresponds to such rounded

 

A-1-96

 

 

Weighted Average
Life to Maturity, the yields for the two most closely corresponding published
maturities shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Yield shall be interpolated from such yield on a
straight-line basis, rounding in each of such relevant periods to the nearest
month.  For purposes of calculating the
Reinvestment Yield, the most recent Statistical Release published prior to the
date of determination of the premium to be paid hereunder shall be used.

 

“Weighted
Average Life to Maturity” shall mean as at the time of the determination thereof the number of
years obtained by dividing the Remaining Dollar-years of the tranche of Notes
being prepaid by the aggregate amount of all remaining scheduled principal and
interest payments (including the payments at final maturity) to be made on such
tranche of Notes.  The term “Remaining Dollar-years” of each tranche of Notes means the
product obtained by (1) multiplying (A) the amount of each of the
remaining scheduled principal and interest payments (including the payments at
final maturity), by (B) the number of years (calculated at the nearest
one-twelfth) which will elapse between the date of determination of the
Weighted Average Life to Maturity of each tranche of Notes and the date such
required payment is due and (2) totaling all the products obtained in (1).

 

This
Tranche A Note is registered on the books of the Obligors and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Tranche A Note or its attorney duly
authorized in writing.  Payment of or on
account of principal, premium, if any, and interest on this Tranche A Note
shall be made only to or upon the order in writing of the registered holder.

 

THIS
TRANCHE A  NOTE AND SAID NOTE AGREEMENT ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF WISCONSIN.

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its
  Vice President-Finance

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  

 

A-1-97

 

	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  and By
  Quad/Creative, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  

 

THIS
TRANCHE A NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND CANNOT BE RESOLD EXCEPT PURSUANT TO REGISTRATION UNDER SAID ACT
OR AN EXEMPTION THEREFROM.

 

A-1-98

 

QUAD/GRAPHICS, INC.

QUAD/TECH, INC.

QUAD/TECH EUROPE, INC.

QUAD/CREATIVE, INC.

DUPLAINVILLE TRANSPORT,
INC.

QUAD/CARE, INC.

QUAD/MARKETING, INC.

QUAD/PAK, INC.

THE QUAD TECHNOLOGY
GROUP, INC.

SILVER SPRING REALTY,
INC.

CHEMICAL
RESEARCH/TECHNOLOGY CO.

QUAD/WEST, INC.

QUAD/MED, INC.

 

7.56% Senior
Secured Note, Series 1995-1, Tranche B

Due September 1,
2015

 

	
  No. BR-

  
	
          ,        

  
	
  $

  

 

QUAD/GRAPHICS, INC.,
a Wisconsin corporation (the “Company”), QUAD/TECH,
INC., a Wisconsin corporation, QUAD/TECH EUROPE, INC., a Delaware corporation, QUAD/CREATIVE,
INC., a Wisconsin corporation, DUPLAINVILLE TRANSPORT, INC., a Wisconsin
corporation, QUAD/CARE, INC., a Wisconsin corporation, QUAD/MARKETING, INC., a
Wisconsin corporation, QUAD/PAK, INC., a Wisconsin corporation, THE QUAD
TECHNOLOGY GROUP, INC., a Wisconsin corporation, SILVER SPRING REALTY, INC., a
Wisconsin corporation, CHEMICAL RESEARCH/TECHNOLOGY CO., a Wisconsin
corporation, QUAD/WEST, INC., a Delaware corporation, and QUAD/MED, INC., a
Wisconsin corporation (each, including the Company and each other entity which
becomes an Obligor (as defined in the Note Agreement) from time to time, an “Obligor” and collectively, the “Obligors”),
for value received, hereby promise, jointly and severally, to pay to

 

or registered assigns,

on the first day of September, 2015

the principal amount of

 

DOLLARS ($               )

 

and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the principal amount from time to time remaining unpaid hereon at the rate of 7.56%
per annum 

 

EXHIBIT A-2

(to Note Agreement)

 

 

from the date
hereof until maturity, payable semiannually on the first day of each March and
September in each year commencing March 1, 1996, and at maturity (the
“Tranche B Interest Payment Dates”).  The Obligors agree to pay interest on overdue
principal (including any overdue required or optional prepayment of principal)
and premium, if any, and (to the extent legally enforceable) on any overdue
installment of interest, at the rate of 9.56% per annum after maturity, whether
by acceleration or otherwise, until paid. 
Both the principal hereof and interest hereon are payable at the
principal office of the Company in Pewaukee, Wisconsin in coin or currency of
the United States of America which at the time of payment shall be legal tender
for the payment of public and private debts.

 

This
Tranche B Note is one of the 7.56% Senior Secured Notes, Series 1995-1,
Tranche B of the Obligors in the aggregate principal amount of $48,500,000
(the “Tranche B Notes”) issued or to be
issued along with the $43,000,000 aggregate principal amount of the 7.14%
Senior Secured Notes, Series 1995-1, Tranche A due September 1,
2010 and $30,000,000 aggregate principal amount of the 8.00% Senior Secured
Notes, Series 1995-1, Tranche C due September 1, 2020 under and
pursuant to the terms and provisions of the Note Agreement dated as of September 1,
1995 (the “Note Agreement”), entered into by the
Obligors with the original purchasers therein referred to and the Security
Agreement dated as of September 1, 1995 (the “Security
Agreement”) and the Mortgage and Security Agreements each dated as
of September 1, 1995 (the “Mortgages”)
from the Company to the Security Trustee. 
This Tranche B Note and the holder hereof are entitled equally and
ratably with the holders of all other Notes (as defined in the Note Agreement)
of all series outstanding from time to time under the Note Agreement, the
Security Agreement and the Mortgages to all the benefits and security provided
for thereby or referred to therein to which Note Agreement, Security Agreement
and Mortgages reference is hereby made for the statement thereof.  Reference is hereby made to the Security
Agreement and the Mortgages for a description of the property thereby granted,
conveyed, assigned, affected and hypothecated, the nature and extent of the
security for the Notes, and rights of the holders of the Notes, the Security
Trustee and the Company in respect of such security and otherwise.

 

This
Tranche B Note and the other 1995 Notes (as defined in the Note Agreement)
outstanding under the Note Agreement may be declared due prior to their
expressed maturity dates and certain prepayments are required to be made
thereon, all in the events, on the terms and in the manner and amounts as
provided herein and in the Note Agreement.

 

The Tranche B
Notes are not subject to prepayment or redemption at the option of the Obligors
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth below.

 

(1)(a) The Obligors jointly and severally agree that
on the first day of September in each year, commencing September 1,
2006 and ending September 1, 2014 both inclusive, they will

 

A-2-100

 

prepay and apply
and there shall become due and payable the sum of $4,850,000 on the principal
indebtedness evidenced by the Tranche B Notes.  No premium shall be payable in connection
with any required prepayment made pursuant to this paragraph (1)(a).  The entire unpaid principal amount of the
Tranche B Notes shall become due and payable on September 1, 2015.

 

(b) Any payment of less than all of the
Tranche B Notes pursuant to the provisions of paragraph 2 shall be applied
first against the payment of principal at final maturity and then against the
prepayments required by paragraph (1)(a) with regard to Tranche B
Notes in the inverse order thereof.  To
the extent that any prepayment of any Tranche B Notes pursuant to the
provisions of paragraph 3  or repurchase
of any Tranche B Notes does not result in the prepayment of all of the
Tranche B Notes, then prepayments required to be made pursuant to the
provisions of paragraph (1)(a) with regard to the Tranche B Notes
shall, after the occurrence of each such prepayment pursuant to paragraph (3) or
repurchase, be reduced in the same proportion as the principal amount of
Tranche B Notes outstanding immediately preceding such partial prepayment
or repurchase has been reduced by such partial prepayment or repurchase to the
end that the remaining prepayments required to be made pursuant to the
provisions of paragraph (1)(a) on each of the Tranche B Notes
remaining outstanding will result in the same proportionate rate of prepayment
as if Tranche B Notes had not been prepaid pursuant to paragraph (3) or
repurchased, as the case may be.

 

(2) Upon compliance with paragraph (4) and in
addition to the prepayments required by paragraph (1), the Obligors shall have
the right to prepay the outstanding Tranche B Notes, either (i) in
whole at any time or (ii) in part on any Tranche B Interest Payment
Date (but if in part then in units of $100,000 or an integral multiple of
$10,000 in excess thereof) by payment of the principal amount of the
Tranche B Notes, or portion thereof to be prepaid, and accrued interest on
the portion being prepaid to the date of such prepayment, together with a
premium equal to the Make-Whole Amount, determined as of five (5) Business
Days prior to the date of such prepayment pursuant to this paragraph (2); provided, however, that the Obligors shall not prepay
Tranche B Notes pursuant to this paragraph (2), unless they shall
concurrently prepay a pro-rata principal amount of the 1995 Notes of each other
tranche issued pursuant to the Note Agreement.

 

(3)(a) In the event that the Obligors shall have
advance notice of a Change of Control reasonably expected to occur no more than
120 days from the date of notice, then it shall provide written notice (a “Paragraph (3) Notice”) to all holders of the
Tranche B Notes of such proposed Change of Control, which Paragraph (3) Notice
shall include the information specified in Paragraph (3)(c) and shall
request the consent of the holders of the Tranche B Notes to such change
of Control.  Such consent of the holders
of the Tranche B Notes shall not be unreasonably withheld as determined in
the reasonable judgment of the holders of the Tranche B Notes.  Concurrently with the closing of the transaction
which causes or constitutes a Change of Control, the Obligors will prepay all
Tranche B Notes held by holders that have failed to consent in

 

A-2-101

 

writing to the
request contained in the Paragraph (3) Notice within 30 days after
receipt of such Paragraph (3) Notice, by payment of the principal
amount thereof, plus accrued interest thereon to the date of prepayment
together with a premium equal to the Make-Whole Amount with respect to the
principal amount of the Tranche B Notes being prepaid determined as of
five (5) Business Days prior to the date of such prepayment.  Not less than five Business Days prior to the
date of the closing of the proposed transaction, the Obligors will furnish to
each holder of Tranche B Notes which has failed to consent a written
confirmation of the closing date.  Such
prepayment option with respect to the particular proposed Change of Control
described in the aforementioned Paragraph (3) Notice shall terminate
in the event that such Change of Control does not occur within 120 days of the
date of the Paragraph (3) Notice relating to such proposed Change of
Control upon substantially the terms described in such Paragraph (3) Notice.  The Obligors shall give additional
Paragraph (3) Notices and the holders of the Tranche B Notes
shall have the rights of prepayment as contemplated herein in the event of any
Change of Control which occurs after 120 days after the initial notice with
respect to such proposed Change of Control or which is pursuant to terms
substantially different than the terms applicable to the proposed Change of
Control previously described in the related Paragraph (3) Notice.

 

(b) In the event the Obligors shall not have
advance notice of a Change of Control (as contemplated in
paragraph (3)(a)) and a Change of Control shall occur and the Obligors
have not provided the Paragraph (3) Notice pursuant to and in
accordance with Paragraph (3)(a), the Obligors will, within five Business
Days after such Change of Control, give a Paragraph (3) Notice of
such event to all holders of the Tranche B Notes pursuant to
paragraph (3)(c) and shall request the consent of the holders of the
Tranche B Notes to such change of Control. 
Such consent of the holders of the Tranche B Notes shall not be
unreasonably withheld as determined in the reasonable judgment of the holders
of the Tranche B Notes.  The
Obligors will prepay on the closing date designated in the Paragraph (3) Notice
given pursuant to this paragraph (3)(b), all Tranche B Notes held by
all holders that have failed to consent in writing to the request contained in
the Paragraph (3) Notice at least five Business Days prior to the
date specified for prepayment, by payment of the principal amount thereof, plus
accrued interest thereon to the date of prepayment together with a premium
equal to the Make-Whole Amount with respect to the principal amount of the
Tranche B Notes being prepaid determined as of five (5) Business Days
prior to the date of such prepayment.

 

(c) The Paragraph (3) Notice required to
be given by the Obligors pursuant to and in accordance with the provisions of
paragraph (3)(a) and (b) shall, in each case, be in writing and
shall set forth, to the best knowledge and belief of the Obligors, (i) an
offer to prepay all of the Tranche B Notes in accordance with paragraph 3(a) or
3(b) of this Note, as the case may be, (ii) a summary of the
transaction or transactions causing or proposed to cause the Change of Control,
(iii) the name and address of the Person or group of Persons acting in
concert acquiring a majority of the votes for the election of a majority of the
Board of Directors, (iv) such financial or other information as would be
reasonably necessary for each holder to make an informed

 

A-2-102

 

decision as to whether
to require a prepayment of such holder’s Tranche B Notes, (v) the
Make-Whole Amount if it were calculated as of the date of the Paragraph (3) Notice
and (vi) in the case of any Paragraph (3) Notice pursuant to
paragraph (3)(b), the date set for prepayment, if any, of the
Tranche B Notes which date shall not be less than 30 days or more than 45
days after the date of such notice.

 

(d) “Change of Control”
shall mean any event which results in the legal or beneficial ownership of
shares of Voting Stock of the Company granting the holder or holders thereof a
majority of the votes for the election of a majority of the Board of Directors
of the Company being owned by any Person or group of Persons acting in concert
other than (i) Harry V. Quadracci, Harry R. Quadracci and
Thomas A. Quadracci, their respective spouses and descendants, spouses of
any such descendants, the executors, administrators, guardians or conservators
of the estates of any of the foregoing Persons and trustees holding shares of
Voting Stock of the Company for the benefit of any said Persons (the “Family Group”), or (ii) the Current Management
Group or (iii) if and so long as the Family Group owns and holds not less
than 10% of the Company’s Voting Stock, any employee stock ownership plan of
the Company whose trustee or a majority of whose trustees are Harry V.
Quadracci, Harry R. Quadracci and Thomas A. Quadracci, or any of
them, which owns and holds legal and beneficial ownership of shares of Voting
Stock of the Company granting the holder thereof a majority of the votes for
the election of a majority of the Board of Directors of the Company.

 

As used herein, “Current Management Group” shall mean, as of the date of any
determination thereof, a group consisting of one or more of Harry V. Quadracci,
Harry R. Quadracci, Thomas A. Quadracci or the individuals then
holding the following offices (collectively, “Senior
Officers”):  President, Chief
Executive Officer, Chairman of the Board of Directors, Vice President,
Finishing Operations, Senior Vice President, Sales and Administration, Vice
President, Distribution, Vice President, Finance, Vice President, Imaging
Operations, Vice President, Production, Vice President, Computer Sciences, Vice
President, Press Operations, Vice President, Manufacturing and Technology or at
such time as such offices no longer exist, such offices which include
substantially similar responsibilities; provided, however,
that any such individual shall not be deemed to be a member of the Current
Management Group unless such individual shall have a tenure as a Senior Officer
of at least two (2) years and the Management Group, as a whole, shall have
an average tenure as Senior Officers of at least five (5) years.

 

(4) The Obligors will give written notice of any
prepayment of the Tranche B Notes pursuant to paragraph (2) to
each holder thereof not less than 30 days nor more than 60 days before the date
fixed for such optional prepayment specifying (i) the date fixed for such
prepayment, which shall be a Business Day, (ii) the section of the
Agreement or this Tranche B Note under which the prepayment is to be made,
(iii) the principal amount of the holder’s Tranche B Notes to be
prepaid on such date, (iv) in the case of a prepayment pursuant to

 

A-2-103

 

paragraph (2),
that a premium may be payable, (v) in the case of a prepayment pursuant to
paragraph (2), the date when such premium will be calculated, and (vi) the
accrued interest applicable to the prepayment. 
Such notice of prepayment shall also include a certification by an
authorized financial officer certifying all facts which are conditions
precedent to any such prepayment.  Notice
of such prepayment having been so given, the aggregate principal amount of the
Tranche B Notes specified in such notice, together with the premium, if
any, and accrued interest thereon shall become due and payable on the
prepayment date.  Whether or not any
premium is payable, a computation of the amount of any premium payable in
connection with a prepayment pursuant to paragraph (2), shall be furnished
to the holders of Tranche B Notes to be prepaid as soon as practicable
after determination of such premium and, in all events, not less than three (3) Business
Days prior to such prepayment.

 

(5) All partial prepayments pursuant to
paragraphs (1) or (2) shall be applied on all outstanding
Tranche B Notes ratably in accordance with the unpaid principal amounts
thereof but only in units of $1,000 and to the extent that such ratable
application shall not result in an even multiple of $1,000, adjustment may be
made by the Obligors to the end that successive applications shall result in
substantially ratable payments.

 

“Make-Whole
Amount” shall
mean at any time with respect to Tranche B Notes being prepaid or
accelerated, if the Reinvestment Yield plus 0.50% at such time is lower than
the rate of interest on the Tranche B Notes being prepaid or accelerated,
the excess of (a) the present value of the remaining principal and
interest payments to become due (exclusive of accrued interest on such
Tranche B Notes through the date of prepayment or acceleration) on that
portion of the Tranche B Notes to be prepaid or accelerated, taking into
account, in the case of any partial prepayment of such Tranche B Notes
pursuant to paragraph (2), the application of such prepayment required to
be made pursuant to the first sentence of paragraph (1) to the scheduled
prepayments and payments on such Tranche B Notes, all determined by
discounting such prepayments and payments at a rate that is equal to the
Reinvestment Yield plus 0.50% over (b) the aggregate principal amount of
the Tranche B Notes then to be prepaid or accelerated.  If the Reinvestment Yield plus 0.50% at the
time of such prepayment or acceleration is equal to or higher than the stated
rate of interest on the Tranche B Notes being prepaid, the Make-Whole
Amount for such tranche shall be zero.

 

“Reinvestment
Yield” shall be
the weekly average of the yields published in the weekly statistical release
designated H.15(519) of the Federal Reserve System under the caption “U.S.
Government Securities-Treasury Constant Maturities” (the “Statistical
Release”) or if the Statistical Release is not published, of such
reasonably comparable index as may be designated by the holders of 66-2/3% in
aggregate principal amount of the outstanding 1995 Notes being prepaid, for the
maturity corresponding to the remaining Weighted Average Life to Maturity of
each tranche of Notes being prepaid as of the date of such acceleration or
prepayment, as the case may be, rounded to the nearest month.  If no maturity exactly corresponds to such
rounded 

 

A-2-104

 

Weighted Average
Life to Maturity, the yields for the two most closely corresponding published
maturities shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Yield shall be interpolated from such yield on a
straight-line basis, rounding in each of such relevant periods to the nearest
month.  For purposes of calculating the
Reinvestment Yield, the most recent Statistical Release published prior to the
date of determination of the premium to be paid hereunder shall be used.

 

“Weighted
Average Life to Maturity” shall mean as at the time of the determination thereof the number of
years obtained by dividing the Remaining Dollar-years of the tranche of Notes
being prepaid by the aggregate amount of all remaining scheduled principal and
interest payments (including the payments at final maturity) to be made on such
tranche of Notes.  The term “Remaining Dollar-years” of each tranche of Notes means the
product obtained by (1) multiplying (A) the amount of each of the
remaining scheduled principal and interest payments (including the payments at
final maturity), by (B) the number of years (calculated at the nearest
one-twelfth) which will elapse between the date of determination of the
Weighted Average Life to Maturity of each tranche of Notes and the date such
required payment is due and (2) totaling all the products obtained in (1).

 

This
Tranche B Note is registered on the books of the Obligors and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Tranche B Note or its attorney duly
authorized in writing.  Payment of or on
account of principal, premium, if any, and interest on this Tranche B Note
shall be made only to or upon the order in writing of the registered holder.

 

THIS TRANCHE B  NOTE AND SAID NOTE
AGREEMENT ARE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
WISCONSIN.

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its
  Vice President-Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  

 

A-2-105

 

	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  and By
  Quad/Creative, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  

 

THIS
TRANCHE B NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND CANNOT BE RESOLD EXCEPT PURSUANT TO REGISTRATION UNDER SAID ACT
OR AN EXEMPTION THEREFROM.

 

A-2-106

 

QUAD/GRAPHICS, INC.

QUAD/TECH, INC.

QUAD/TECH EUROPE, INC.

QUAD/CREATIVE, INC.

DUPLAINVILLE TRANSPORT,
INC.

QUAD/CARE, INC.

QUAD/MARKETING, INC.

QUAD/PAK, INC.

THE QUAD TECHNOLOGY
GROUP, INC.

SILVER SPRING REALTY,
INC.

CHEMICAL
RESEARCH/TECHNOLOGY CO.

QUAD/WEST, INC.

QUAD/MED, INC.

 

8.00% Senior
Secured Note, Series 1995-1, Tranche C

Due September 1,
2020

 

	
  No. CR-

  
	
  ,     

  
	
  $

  

 

QUAD/GRAPHICS, INC.,
a Wisconsin corporation (the “Company”),
QUAD/TECH, INC., a Wisconsin corporation, QUAD/TECH EUROPE, INC., a Delaware
corporation, QUAD/CREATIVE, INC., a Wisconsin corporation, DUPLAINVILLE
TRANSPORT, INC., a Wisconsin corporation, QUAD/CARE, INC., a Wisconsin
corporation, QUAD/MARKETING, INC., a Wisconsin corporation, QUAD/PAK, INC., a
Wisconsin corporation, THE QUAD TECHNOLOGY GROUP, INC., a Wisconsin
corporation, SILVER SPRING REALTY, INC., a Wisconsin corporation, CHEMICAL
RESEARCH/TECHNOLOGY CO., a Wisconsin corporation, QUAD/WEST, INC., a Delaware
corporation, and QUAD/MED, INC., a Wisconsin corporation (each, including the
Company, and each other entity which becomes an Obligor (as defined in the Note
Agreement) from time to time

 

an “Obligor” and collectively, the “Obligors”)
for value received, hereby promises, jointly and severally to pay to

 

or registered assigns,

on the first day of September, 2020

the principal amount of

 

DOLLARS ($               )

 

EXHIBIT A-3

(to Note Agreement)

 

 

and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the principal amount from time to time remaining unpaid hereon at the rate of 8.00%
per annum from the date hereof until maturity, payable semiannually on the
first day of each March and September in each year commencing March 1,
1996, and at maturity (the “Tranche C Interest
Payment Dates”).  The Obligors
agree to pay interest on overdue principal (including any overdue required or
optional prepayment of principal) and premium, if any, and (to the extent
legally enforceable) on any overdue installment of interest, at the rate of
10.00% per annum after maturity, whether by acceleration or otherwise, until
paid.  Both the principal hereof and
interest hereon are payable at the principal office of the Company in Pewaukee,
Wisconsin in coin or currency of the United States of America which at the time
of payment shall be legal tender for the payment of public and private debts.

 

This
Tranche C Note is one of the 8.00% Senior Secured Notes, Series 1995-1,
Tranche C of the Obligors in the aggregate principal amount of $30,000,000
(the “Tranche C Notes”) issued or to be
issued along with the $43,000,000 aggregate principal amount of the 7.14%
Senior Secured Notes, Series 1995-1, Tranche A due September 1,
2010 and $48,500,000 aggregate principal amount of the 7.56% Senior Secured
Notes, Series 1995-1, Tranche B due September 1, 2015 under and
pursuant to the terms and provisions of the Note Agreement dated as of September 1,
1995 (the “Note Agreement”), entered into by the
Obligors with the original purchasers therein referred to and the Security Agreement
dated as of September 1, 1995 (the “Security Agreement”)
and the Mortgage and Security Agreements each dated as of September 1,
1995 (the “Mortgages”) from the Company to the
Security Trustee.  This Tranche C
Note and the holder hereof are entitled equally and ratably with the holders of
all other Notes (as defined in the Note Agreement) of all series outstanding
from time to time under the Note Agreement, the Security Agreement and the
Mortgages to all the benefits and security provided for thereby or referred to
therein to which Note Agreement, Security Agreement and Mortgages reference is
hereby made for the statement thereof. 
Reference is hereby made to the Security Agreement and the Mortgages for
a description of the property thereby granted, conveyed, assigned, affected and
hypothecated, the nature and extent of the security for the Notes, and rights
of the holders of the Notes, the Security Trustee and the Company in respect of
such security and otherwise.

 

This
Tranche C Note and the other 1995 Notes (as defined in the Note Agreement)
outstanding under the Note Agreement may be declared due prior to their
expressed maturity dates and certain prepayments are required to be made
thereon, all in the events, on the terms and in the manner and amounts as
provided herein and in the Note Agreement.

 

The Tranche C
Notes are not subject to prepayment or redemption at the option of the Obligors
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth below.

 

A-3-108

 

(1)(a) The Obligors jointly and severally agree that
on the first day of September in each year, commencing September 1,
2007 and ending September 1, 2019 both inclusive, they will prepay and
apply and there shall become due and payable the amount set forth opposite such
date on Schedule A hereto on the principal indebtedness evidenced by the
Tranche C Notes.  No premium shall
be payable in connection with any required prepayment made pursuant to this
paragraph (1)(a).  The entire unpaid
principal amount of the Tranche C Notes shall become due and payable on September 1,
2020.

 

(b) Any payment of less than all of the
Tranche C Notes pursuant to the provisions of paragraph 2 shall be applied
first against the payment of principal at final maturity and then against the
prepayments required by paragraph (1)(a) with regard to Tranche C
Notes in the inverse order thereof.  To
the extent that any prepayment of any Tranche C Notes pursuant to the
provisions of paragraph 3  or repurchase
of any Tranche C Notes does not result in the prepayment of all of the
Tranche C Notes, then prepayments required to be made pursuant to the
provisions of paragraph (1)(a) with regard to such series of
Tranche C Notes shall, after the occurrence of each such prepayment
pursuant to paragraph (3) or repurchase, be reduced in the same proportion
as the principal amount of Tranche C Notes outstanding immediately
preceding such partial prepayment or repurchase has been reduced by such
partial prepayment or repurchase to the end that the remaining prepayments
required to be made pursuant to the provisions of paragraph (1)(a) on each
of the Tranche C Notes remaining outstanding will result in the same proportionate
rate of prepayment as if Tranche C Notes of such series had not been
prepaid pursuant to paragraph (3) or repurchased, as the case may be.

 

(2) Upon compliance with paragraph (4) and in
addition to the prepayments required by paragraph (1), the Obligors shall have
the right to prepay the outstanding Tranche C Notes, either (i) in
whole at any time or (ii) in part on any Tranche C Interest Payment
Date (but if in part then in units of $100,000 or an integral multiple of
$10,000 in excess thereof) by payment of the principal amount of the
Tranche C Notes, or portion thereof to be prepaid, and accrued interest on
the portion being prepaid to the date of such prepayment, together with a
premium equal to the Make-Whole Amount, determined as of five (5) Business
Days prior to the date of such prepayment pursuant to this paragraph (2); provided, however, that the Obligors shall not prepay
Tranche C Notes pursuant to this paragraph (2), unless it shall
concurrently prepay a pro-rata principal amount of the 1995 Notes of each other
tranche issued pursuant to the Note Agreement.

 

(3)(a) In the event that the Obligors shall have
advance notice of a Change of Control reasonably expected to occur no more than
120 days from the date of notice, then it shall provide written notice (a “Paragraph (3) Notice”) to all holders of the
Tranche C Notes of such proposed Change of Control, which Paragraph (3) Notice
shall include the information specified in paragraph (3)(c) and shall
request the consent of the holders of the Tranche C Notes to such Change
of Control.  Such consent of the holders
of the Tranche C Notes shall not be

 

A-3-109

 

unreasonably
withheld as determined in the reasonable judgment of the holders of the Tranche C
Notes.  Concurrently with the closing of
the transaction which causes or constitutes a Change of Control, the Obligors
will prepay all Tranche C Notes held by holders that have failed to
consent in writing to the request contained in the Paragraph (3) Notice
within 30 days after receipt of such Paragraph (3) Notice, by payment
of the principal amount thereof, plus accrued interest thereon to the date of
prepayment together with a premium equal to the Make-Whole Amount with respect
to the principal amount of the Tranche C Notes being prepaid determined as
of five (5) Business Days prior to the date of such prepayment.  Not less than five Business Days prior to the
date of the closing of the proposed transaction, the Obligors will furnish to
each holder of Tranche C Notes which has failed to consent, a written
confirmation of the closing date.  Such
prepayment option with respect to the particular proposed Change of Control
described in the aforementioned Paragraph (3) Notice shall terminate
in the event that such Change of Control does not occur within 120 days of the
date of the Paragraph (3) Notice relating to such proposed Change of
Control upon substantially the terms described in such Paragraph (3) Notice.  The Obligors shall give additional Paragraph (3) Notices
and the holders of the Tranche C Notes shall have the rights of prepayment
as contemplated herein in the event of any Change of Control which occurs after
120 days after the initial notice with respect to such proposed Change of
Control or which is pursuant to terms substantially different than the terms
applicable to the proposed Change of Control previously described in the
related Paragraph (3) Notice.

 

(b) In the event the Obligors shall not have
advance notice of a Change of Control (as contemplated in
paragraph (3)(a)) and a Change of Control shall occur and the Obligors
have not provided the Paragraph (3) Notice pursuant to and in
accordance with paragraph (3)(a), the Obligors will, within five Business
Days after such Change of Control, give a Paragraph (3) Notice of
such event to all holders of the Tranche C Notes pursuant to
paragraph (3)(c) and shall request the consent of the holders of the
Tranche C Notes to such Change of Control. 
Such consent of the holders of the Tranche C Notes shall not be
unreasonably withheld as determined in the reasonable judgment of the holders
of the Tranche C Notes.  The
Obligors will prepay on the closing date designated in the Paragraph (3) Notice
given pursuant to this paragraph (3)(b), all Tranche C Notes held by
all holders that have failed to consent in writing to the request contained in
the Paragraph (3) Notice at least five Business Days prior to the
date specified for prepayment, by payment of the principal amount thereof, plus
accrued interest thereon to the date of prepayment together with a premium
equal to the Make-Whole Amount with respect to the principal amount of the
Tranche C Notes being prepaid determined as of five (5) Business Days
prior to the date of such prepayment.

 

(c) The Paragraph (3) Notice required to
be given by the Obligors pursuant to and in accordance with the provisions of
paragraph (3)(a) and (b) shall, in each case, be in writing and
shall set forth, to the best knowledge and belief of the Obligors, (i) an
offer to prepay all of the Tranche C Notes in accordance with paragraph 3(a) or
3(b) of this Note, as the case may be, (ii) a summary of the
transaction or transactions causing or proposed to cause the Change of Control,

 

A-3-110

 

(iii) the
name and address of the Person or group of Persons acting in concert acquiring
a majority of the votes for the election of a majority of the Board of
Directors, (iv) such financial or other information as would be reasonably
necessary for each holder to make an informed decision as to whether to require
a prepayment of such holder’s Tranche C Notes, (v) the Make-Whole
Amount if it were calculated as of the date of the Paragraph (3) Notice
and (vi) in the case of any Paragraph (3) Notice pursuant to
paragraph (3)(b), the date set for prepayment, if any, of the
Tranche C Notes which date shall not be less than 30 days or more than 45
days after the date of such notice.

 

(d) “Change of Control”
shall mean any event which results in the legal or beneficial ownership of
shares of Voting Stock of the Company granting the holder or holders thereof a
majority of the votes for the election of a majority of the Board of Directors
of the Company being owned by any Person or group of Persons acting in concert
other than (i) Harry V. Quadracci, Harry R. Quadracci and
Thomas A. Quadracci, their respective spouses and descendants, spouses of
any such descendants, the executors, administrators, guardians or conservators
of the estates of any of the foregoing Persons and trustees holding shares of
Voting Stock of the Company for the benefit of any said Persons (the “Family Group”), (ii) the Current Management Group or (iii) if
and so long as the Family Group owns and holds not less than 10% of the Company’s
Voting Stock, any employee stock ownership plan of the Company whose trustee or
a majority of whose trustees are Harry V. Quadracci, Harry R.
Quadracci and Thomas A. Quadracci, or any of them, which owns and holds
legal and beneficial ownership of shares of Voting Stock of the Company
granting the holder thereof a majority of the votes for the election of a
majority of the Board of Directors of the Company.

 

As used herein, “Current Management Group” shall mean, as of the date of any
determination thereof, a group consisting of one or more of Harry V.
Quadracci, Harry R. Quadracci, Thomas A. Quadracci or the individuals
then holding the following offices (collectively, “Senior
Officers”): President, Chief Executive Officer, Chairman of the
Board of Directors, Vice President, Finishing Operations, Senior Vice
President, Sales and Administration, Vice President, Distribution, Vice
President, Finance, Vice President, Imaging Operations, Vice President,
Production, Vice President, Computer Sciences, Vice President, Press
Operations, Vice President, Manufacturing and Technology or at such time as
such officers no longer exist, such offices which include substantially similar
responsibilities; provided, however, that any such
individual shall not be deemed to be a member of the Current Management Group
unless such individual shall have a tenure as a Senior Officer of at least two (2) years
and the Management Group, as a whole, shall have an average tenure as Senior
Officers of at least five (5) years.

 

(4) The Obligors will give written notice of any
prepayment of the Tranche C Notes pursuant to paragraph (2) to
each holder thereof not less than 30 days nor more than 60 days before the date
fixed for such optional prepayment specifying (i) the date fixed for such

 

A-3-111

 

prepayment, which
shall be a Business Day, (ii) the section of the Agreement or this
Tranche C Note under which the prepayment is to be made, (iii) the
principal amount of the holder’s Tranche C Notes to be prepaid on such
date, (iv) in the case of a prepayment pursuant to paragraph (2),
that a premium may be payable, (v) in the case of a prepayment pursuant to
paragraph (2), the date when such premium will be calculated, and (vi) the
accrued interest applicable to the prepayment. 
Such notice of prepayment shall also include a certification by an
authorized financial officer certifying all facts which are conditions
precedent to any such prepayment.  Notice
of such prepayment having been so given, the aggregate principal amount of the
Tranche C Notes specified in such notice, together with the premium, if
any, and accrued interest thereon shall become due and payable on the
prepayment date.  Whether or not any
premium is payable, a computation of the amount of any premium payable in
connection with a prepayment pursuant to paragraph (2), shall be furnished
to the holders of Tranche C Notes to be prepaid as soon as practicable
after determination of such premium and, in all events, not less than three (3) Business
Days prior to such prepayment.

 

(5) All partial prepayments pursuant to
paragraphs (1) or (2) shall be applied on all outstanding
Tranche C Notes ratably in accordance with the unpaid principal amounts
thereof but only in units of $1,000 and to the extent that such ratable
application shall not result in an even multiple of $1,000, adjustment may be
made by the Obligors to the end that successive applications shall result in
substantially ratable payments.

 

“Make-Whole
Amount” shall
mean at any time with respect to Tranche C Notes being prepaid or
accelerated, if the Reinvestment Yield plus 0.50% at such time is lower than
the rate of interest on the Tranche C Notes being prepaid or accelerated,
the excess of (a) the present value of the remaining principal and
interest payments to become due (exclusive of accrued interest on such
Tranche C Notes through the date of prepayment or acceleration) on that
portion of the Tranche C Notes to be prepaid or accelerated, taking into
account, in the case of any partial prepayment of such Tranche C Notes
pursuant to paragraph (2), the application of such prepayment required to
be made pursuant to the first sentence of paragraph (1) to the scheduled
prepayments and payments on such Tranche C Notes, all determined by
discounting such prepayments and payments at a rate that is equal to the
Reinvestment Yield plus 0.50% over (b) the aggregate principal amount of
the Tranche C Notes then to be prepaid or accelerated.  If the Reinvestment Yield plus 0.50% at the
time of such prepayment or acceleration is equal to or higher than the stated
rate of interest on the Tranche C Notes being prepaid, the Make-Whole
Amount for such tranche shall be zero.

 

“Reinvestment
Yield” shall be
the weekly average of the yields published in the weekly statistical release
designated H.15(519) of the Federal Reserve System under the caption “U.S.
Government Securities-Treasury Constant Maturities” (the “Statistical
Release”) or if the Statistical Release is not published, of such
reasonably comparable index as may be designated by the holders of 66-2/3% in
aggregate principal amount of the outstanding 1995 Notes being 

 

A-3-112

 

prepaid, for the
maturity corresponding to the remaining Weighted Average Life to Maturity of
each tranche of Notes being prepaid as of the date of such acceleration or
prepayment, as the case may be, rounded to the nearest month.  If no maturity exactly corresponds to such
rounded Weighted Average Life to Maturity, the yields for the two most closely
corresponding published maturities shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Yield shall be interpolated
from such yield on a straight-line basis, rounding in each of such relevant
periods to the nearest month.  For
purposes of calculating the Reinvestment Yield, the most recent Statistical
Release published prior to the date of determination of the premium to be paid
hereunder shall be used.

 

“Weighted
Average Life to Maturity” shall mean as at the time of the determination thereof the number of
years obtained by dividing the Remaining Dollar-years of the tranche of Notes
being prepaid by the aggregate amount of all remaining scheduled principal and
interest payments (including the payments at final maturity) to be made on such
tranche of Notes.  The term “Remaining Dollar-years” of each tranche of Notes means the
product obtained by (1) multiplying (A) the amount of each of the
remaining scheduled principal and interest payments (including the payments at
final maturity), by (B) the number of years (calculated at the nearest
one-twelfth) which will elapse between the date of determination of the
Weighted Average Life to Maturity of each tranche of Notes and the date such
required payment is due and (2) totaling all the products obtained in (1).

 

This
Tranche C Note is registered on the books of the Obligors and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Tranche C Note or its attorney duly
authorized in writing.  Payment of or on
account of principal, premium, if any, and interest on this Tranche C Note
shall be made only to or upon the order in writing of the registered holder.

 

THIS
TRANCHE C  NOTE AND SAID NOTE AGREEMENT ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF WISCONSIN.

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its
  Vice President-Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  

 

A-3-113

 

	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  
	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  Quad/Creative, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  

 

THIS
TRANCHE C NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND CANNOT BE RESOLD EXCEPT PURSUANT TO REGISTRATION UNDER SAID ACT
OR AN EXEMPTION THEREFROM.

 

A-3-114

 

SCHEDULE A

 

	
  DATE

  	
   

  	
  AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 1,
  2007

  	
   

  	
  1,000,000

  	
   

  
	
  September 1,
  2008

  	
   

  	
  1,000,000

  	
   

  
	
  September 1,
  2009

  	
   

  	
  1,000,000

  	
   

  
	
  September 1,
  2010

  	
   

  	
  1,000,000

  	
   

  
	
  September 1,
  2011

  	
   

  	
  2,143,857

  	
   

  
	
  September 1,
  2012

  	
   

  	
  2,143,857

  	
   

  
	
  September 1,
  2013

  	
   

  	
  2,143,857

  	
   

  
	
  September 1,
  2014

  	
   

  	
  2,143,857

  	
   

  
	
  September 1,
  2015

  	
   

  	
  2,143,857

  	
   

  
	
  September 1,
  2016

  	
   

  	
  2,143,857

  	
   

  
	
  September 1,
  2017

  	
   

  	
  3,284,214

  	
   

  
	
  September 1,
  2018

  	
   

  	
  3,284,214

  	
   

  
	
  September 1,
  2019

  	
   

  	
  3,284,214

  	
   

  

 

 

QUAD/GRAPHICS, INC.

QUAD/TECH, INC.

QUAD/TECH EUROPE, INC.

QUAD/CREATIVE, INC.

DUPLAINVILLE TRANSPORT,
INC.

QUAD/CARE, INC.

QUAD/MARKETING, INC.

QUAD/PAK, INC.

THE QUAD TECHNOLOGY
GROUP, INC.

SILVER SPRING REALTY,
INC.

CHEMICAL
RESEARCH/TECHNOLOGY CO.

QUAD/WEST, INC.

QUAD/MED, INC.

 

CLOSING CERTIFICATE

 

To the Purchasers
listed on Schedule I

to the Note
Agreement

 

Gentlemen:

 

This certificate
is delivered to the Purchasers in compliance with the requirements of the Note
Agreement dated as of September 1, 1995, (the “Agreement”)
entered into by the undersigned, Quad/Graphics, Inc., a Wisconsin
Corporation (the “Company”), Quad/Tech, Inc.,
a Wisconsin corporation, Quad/Tech Europe, Inc., a Delaware corporation,
Quad/Creative, Inc., a Wisconsin corporation, DuPlainville Transport, Inc.,
a Wisconsin corporation, Quad/Care, Inc., a Wisconsin corporation,
Quad/Marketing, Inc., a Wisconsin corporation,  Quad/Pak, Inc., a Wisconsin corporation,
The Quad Technology Group, Inc., a Wisconsin corporation, Silver Spring Realty, Inc.,
a Wisconsin corporation, Chemical Research/Technology Co., a Wisconsin
corporation, Quad/West, Inc., a Delaware corporation, and Quad/Med, Inc.,
a Wisconsin corporation, (each, including the Company, an “Obligor”
and collectively, the “Obligors”)
with the Purchasers, and as an inducement to and as part of the consideration
for each Purchaser’s purchase on this date of $43,000,000 aggregate principal
amount of the 7.14% Senior Secured Notes, Series 1995-1, Tranche A due September 1,
2010 (the “Tranche A Notes”), $48,500,000
aggregate principal amount of the 7.56% Senior Secured Notes, Series 1995-1,
Tranche B due September 1, 2015 (the “Tranche B Notes”)
and $30,000,000 aggregate principal amount of the 8.00% Senior Secured Notes, Series 1995-1,
Tranche C due September 1, 2020 (the “Tranche C Notes”
and together with the Tranche A Notes and Tranche B Notes, the “Notes”) of the Obligors pursuant to the Agreement among the
Obligors and the Purchasers, and pursuant to the Security Agreement dated as of
September 1, 1995 (the “Security Agreement”)
from the

 

EXHIBIT C

(to Note Agreement)

 

 

Obligors to the
Security Trustee.  The terms which are
capitalized herein shall have the same meanings as in the Agreement.

 

The Obligors
jointly and severally represent and warrant to each Purchaser as follows:

 

1. Subsidiaries.  Annex 1 attached hereto states the name
of each of the Obligors’ Subsidiaries, its jurisdiction of incorporation, or
formation in the case of a partnership, and the percentage of its Voting Stock,
or ownership interest in the case of a partnership, owned by the each Obligor
and its Subsidiaries.  Each Obligor and
each Subsidiary has good and marketable title to all of the shares it purports
to own of the stock of each other Subsidiary, free and clear in each case of
any lien.  All such shares have been duly
issued and are fully paid and non-assessable (except in accordance with Wis.
Stat. §180.0622).

 

2. Corporate Organization and
Authority.  Each Obligor

 

(a) is a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation, or formation in
the case of a partnership;

 

(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties and to carry
on its business as now conducted and as presently proposed to be conducted
except where the failure to be so licensed or qualified would not materially
and adversely affect the condition (financial or otherwise) or operations of
any Obligor or of the Obligors taken as a whole; and

 

(c) is duly licensed or qualified and is in good
standing as a foreign corporation or partnership or equivalent thereof in each
jurisdiction wherein the nature of the business transacted by it or the nature
of the property owned or leased by it makes such licensing or qualification
necessary except where the failure to be so licensed or qualified would not
materially and adversely affect the condition (financial or otherwise) or
operations of any Obligor or of the Obligors taken as a whole.

 

3. Business and Property.  Each Purchaser has heretofore been furnished
with a copy of the private placement memorandum dated June, 1995 (the “Memorandum”) prepared by SPP Hambro & Co. and NBD
Bank which generally sets forth the business conducted and proposed to be
conducted by the Obligors and their Subsidiaries and the principal properties
of the Obligors and their Subsidiaries.

 

4. Financial Statements.  (a)  The consolidated balance sheets of
the Obligors as of December 31 in each of the years 1990 to 1994 both
inclusive, and the statements of consolidated income and retained earnings and
cash flows for the fiscal years ended December 31, 1990 

 

C-117

 

through 1994
accompanied by a report thereon containing an opinion unqualified as to scope
limitations imposed by the Obligors and otherwise without qualification except
as therein noted, by Arthur Andersen & Co., have been delivered to
each Purchaser and have been prepared in accordance with generally accepted
accounting principles consistently applied except as therein noted, are correct
and complete and present fairly the financial position of the Obligors as of
such dates and the results of their operations and changes in their financial
position for such periods.  The unaudited
consolidated balance sheets of the Obligors as of June 30, 1995, and the
unaudited statements of income and cash flows for the six-month period ended on
said date prepared by the Obligors have been prepared in accordance with
generally accepted accounting principles consistently applied, are correct and
complete and present fairly the financial position of the Obligors as of said
date and the results of their operations and their cash flows for such period
except for matters included in footnotes in accordance with generally accepted
accounting principles and except for year end adjustments.

 

(b) Since December 31, 1994, there has been no
change in the condition, financial or otherwise, of the Obligors as shown on
the consolidated balance sheet as of such date (except changes in the ordinary
course of business), none of which individually or in the aggregate materially
affects adversely nor, so far as the Obligors can now foresee, will materially
affect adversely the properties, business, prospects, profits or condition
(financial or otherwise) of any Obligor or the Obligors, taken as a whole.

 

5. Indebtedness.  Annex 2 attached hereto correctly
describes all Indebtedness of the Obligors outstanding on September 1,
1995.

 

6. Full Disclosure.  The financial statements referred to in
paragraph 4 do not, nor does the Memorandum or any other written statement
furnished by any Obligor to each Purchaser in connection with the negotiation
of the sale of the 1995 Notes (including the Memorandum), contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading.  There is no fact peculiar to any Obligor or
any of their Subsidiaries which the Obligors have not disclosed to each
Purchaser in writing which materially affects adversely nor, so far as the
Obligors can now foresee, will materially affect adversely the properties,
business, prospects, profits or condition (financial or otherwise) of any
Obligor or the Obligors, taken as a whole.

 

7. Pending Litigation.  There are no proceedings pending or, to the
knowledge of any Obligor threatened, against or affecting any Obligor in any
court or before any governmental authority or arbitration board or tribunal which
involve the possibility of materially and adversely affecting the properties,
business, prospects, profits or condition (financial or otherwise) of any
Obligor or the Obligors, taken as a whole. 
No Obligor is in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.

 

C-118

 

8. Title to Properties.  Each Obligor has good and marketable title in
fee simple (or its equivalent under applicable law) to all the real property
and has good title to all the other property it purports to own, including that
reflected in the most recent audited balance sheet referred to in
paragraph 4, except as sold or otherwise disposed of in the ordinary
course of business and except for liens disclosed in the financial statements
or the notes to the financial statements referred to in paragraph 4 hereof or
otherwise permitted by the Security Agreement or the Mortgages.

 

9. Patents and Trademarks.  Each Obligor owns or possesses all the
patents, trademarks, trade names, service marks, copyright, licenses and rights
with respect to the foregoing necessary, in all material respects, for the
present and planned future conduct of its business, without any known conflict
with the rights of others.

 

10. Sale Is Legal and
Authorized.  The sale of the
1995 Notes and compliance by each Obligor with all of the provisions of the
Financing Documents —

 

(a) are within the corporate powers of each Obligor
and have been duly authorized by proper corporate action on the part of each
Obligor;

 

(b) assuming the accuracy of the representation of
the Purchasers contained in §3.2 of the
Agreement, will not violate any provisions of any law or any order of any court
or governmental authority or agency and will not conflict with or result in any
breach of any of the terms, conditions or provisions of, or constitute a
default under the Articles (or Certificate) of Incorporation or By-laws of any
Obligor or any indenture or other agreement or instrument to which any Obligor
is a party or by which any of them may be bound or result in the imposition of
any liens or encumbrances on any property of any Obligor; and

 

(c) have been duly authorized by proper corporate
action on the part of each Obligor (no action by the stockholders of any
Obligor being required by law, by the Articles (or Certificate) of
Incorporation or the By-laws of any Obligor or otherwise), executed and
delivered by each Obligor and the Financing Documents constitute the legal,
valid and binding obligations, contracts and agreements of each Obligor
enforceable in accordance with their respective terms.

 

11. No Defaults.  No Default or Event of Default as defined in
the Agreement has occurred and is continuing. 
No Obligor is in default in the payment of principal or interest on any
Material Indebtedness and no event of default exists under any Material
Indebtedness.  To the best knowledge of
the Obligors after reasonable inquiry, no event has occurred and is

 

C-119

 

continuing under
the provisions of any such instrument or agreement which with the lapse of time
or the giving of notice, or both, would constitute an event of default
thereunder.

 

12. Governmental Consent.  No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by each Obligor of the
Financing Documents or compliance by each Obligor with any of the provisions of
the Financing Documents.

 

13. Taxes.  All tax returns required to be filed by each
Obligor or any other Subsidiary in any jurisdiction have, in fact, been filed,
and all taxes, assessments, fees and other governmental charges upon each
Obligor or any other Subsidiary or upon any of their respective properties,
income or franchises, which are shown to be due and payable in such returns
have been paid.  The Obligors do not know
of any proposed additional tax assessment against it, or any other Subsidiary,
for which adequate provision has not been made on its accounts.  The Federal income tax liability of each
Obligor and each other Subsidiaries has been finally determined by the Internal
Revenue Service and satisfied for all taxable years up to and including the
taxable year ended December 31, 1985 and no material controversy in
respect of additional income taxes due since said date is pending or to the
knowledge of any Obligor threatened.  The
provisions for taxes on the books of each Obligor and each other Subsidiary are
adequate for all open years, and for its current fiscal period.

 

14. Use of Proceeds.  The net proceeds from the sale of the 1995
Notes will be used to prepay Indebtedness under the Revolving Line and Line of
Credit referenced in Annex 2 hereto in an aggregate principal amount of
not less than $121,500,000.  None of the
transactions contemplated in the Agreement (including, without limitation
thereof, the use of proceeds from the issuance of the 1995 Notes) will violate
or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulation issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R., Chapter II.  Neither the Obligors nor any other Subsidiary
owns or intends to carry or purchase any “margin stock” within the meaning of
said Regulation G.  None of the
proceeds from the sale of the 1995 Notes will be used to purchase, or refinance
any borrowing, the proceeds of which were used to purchase any “security”
within the meaning of the Securities Exchange Act of 1934, as amended.

 

15. Private Offering.  Neither the Obligors, directly or indirectly,
nor any agent on their behalf has offered or will offer the 1995 Notes or any
similar Security or has solicited or will solicit an offer to acquire the 1995
Notes or any similar Security from or has otherwise approached or negotiated or
will approach or negotiate in respect of the 1995 Notes or any similar Security
with any Person other than you and not more than 85 other institutional
investors, each of whom was offered a portion of the Notes at private sale for
investment.

 

C-120

 

Neither the
Obligors, directly or indirectly, nor any agent on their behalf has offered or
will offer the Notes or any similar Security or has solicited or will solicit
an offer to acquire the 1995 Notes or any similar Security from any Person so
as to bring the issuance and sale of the 1995 Notes within the provisions of Section 5
of the Securities Act of 1933, as amended.

 

16. Employee Retirement Income
Security Act of 1974.  The
consummation of the transactions provided for in the agreement and compliance
by the Obligors with the provisions thereof and the 1995 Notes issued
thereunder will not involve any prohibited transaction within the meaning of
the Employee Retirement Income Security Act of 1974 (“ERISA”)
or Section 4975 of the Internal Revenue Code of 1986, as amended.  No “employee pension benefit
plans”, as defined in ERISA and subject to Title IV thereof (“Plans”), maintained by the any Obligor or any Person which
is under common control with any Obligor within the meaning of Section 4001(b) of
ERISA, nor any trusts created thereunder, have incurred any “accumulated funding deficiency” as defined in Section 302
of ERISA in excess of $250,000, nor does the present value of all benefits
vested under all Plans exceed, as of January 1, 1994, the last annual
valuation date for which figures are presently available, by more than $100,000
the value of the assets of the Plans allocable to such vested benefits.

 

17.          Compliance with Law.  Each Obligor and each Subsidiary (a) is
not in violation of any laws, ordinances, franchises, governmental rules or
regulations to which it is subject including, without limitation, any
Environmental Legal Requirement; and (b) has not failed to obtain any
licenses, permits, franchises, certificates of public convenience and necessity
or other governmental authorizations necessary to the ownership of its property
or to the conduct of its business; which violation or failure to obtain is
reasonably likely to materially adversely affect the business, prospects,
properties or condition (financial or otherwise) of any Obligor or the Obligors
and their Subsidiaries, taken as a whole, or the ability of the Obligors to
perform their obligations contained in the Financing Documents.

 

Neither the
Obligors nor any other Subsidiary is the subject of a “Superfund”
evaluation conducted by any governmental agency, and neither the Obligors nor
any other Subsidiary has acquired, incurred or assumed, directly or indirectly,
any material contingent liability in connection with the release of any
hazardous substance into the environment with respect to its property.

 

The Obligors
jointly and severally represent and warrant that neither the Obligors nor any
other Subsidiary has given, or received, any notice, letter, citation, order,
warning, complaint, inquiry, claim or demand from any governmental body that: (i) the
Company or any Subsidiary has violated, or is about to violate, any Environment
Legal Requirement; (ii) there has been a release, or there is a threat of
release, of Hazardous Substances (including, without limitation, petroleum, its
by-products or derivatives, or other hydrocarbons) from the property,
facilities, 

 

C-121

 

equipment or
vehicles of the Obligors or any other Subsidiary; (iii) the Obligors or
any other Subsidiary may be or is liable, in whole or in part, for the costs or
cleaning up, remedying or responding to a release of Hazardous Substances
(including, without limitation, petroleum, its by-products or derivatives, or
other hydrocarbons); (iv) any of the property or assets of the Obligors or
any other Subsidiary are subject to a lien in favor of any governmental entity
for any liability, costs or damages, under federal, state or local
environmental law, rule or regulation arising from or costs incurred by
such governmental entity in response to a release of a hazardous substance
(including, without limitation, petroleum, its by-products or derivatives, or
other hydrocarbons).

 

The Obligors
jointly and severally warrant and represent that the real property of each
Obligor or any other Subsidiary and facilities thereon, including all personal
property, are free from contamination, that there has not been thereon a
release, discharge or emission, or threat of release, discharge or emission, of
any Hazardous Substance, gas or liquid (including, without limitation,
petroleum, its derivatives or by-products, or other hydrocarbons), or any other
substance, gas or liquid, which is prohibited, controlled or regulated under
applicable law, or which poses a threat or nuisance to safety, health or the environment,
and that the property does not contain, or is not affected by: (i) asbestos,
(ii) urea formaldehyde foam insulation, (iii) polychlorinated
biphenyls (PCB’s), or landfills, land disposals or dumps.  The Company owns underground storage tanks
containing petroleum or petroleum by-products. 
The underground storage tanks are maintained in accordance with
applicable law, rule and regulation.

 

The foregoing
representations and warranties contained in this paragraph 17 are subject in
all instances to matters that the Obligors jointly and severally represent and
warrant will not, individually or in the aggregate, give rise to any liability,
penalty or loss that will be materially adverse to any Obligor or to the
Obligors and their Subsidiaries taken as a whole or to any liability, penalty
or loss whatsoever to any Holder of 1995 Notes.

 

18. Title to Collateral.  The Company has good and marketable title to
the Collateral (as defined in the Agreement) subject only to the lien of the
Security Agreement or the Mortgages, as the case may be and to Permitted
Encumbrances (as defined in the Security Agreement and the Mortgages,
respectively).  The Company has employed
the identifying number set forth in the first column (entitled “Number”) of the first page of Exhibit A to the
Security Agreement to identify the respective item of Personal Property
Collateral set opposite each such number (and for no other property of the
Company) in connection with the granting of any lien or encumbrance prior to
the date hereof on such item of Personal Property Collateral.

 

19. Personal Property.  The Personal Property Collateral constitutes
personal property within the meaning of the laws of each jurisdiction in which
Personal Property Collateral is located.

 

C-122

 

20. Use of Collateral.  The Personal Property Collateral
is useful to, and is currently being used by, the Company in its ordinary
course of business.

 

21. Status of Collateral.  None of the Collateral constitutes Restricted
Property as defined in that certain Revolving Credit Agreement, dated as of August 3,
1994, by and among the Obligors and the banks parties thereto.

 

C-123

 

Dated: September       ,
1995

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  John
  C. Fowler

  
	
   

  	
  Vice
  President-Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  
	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its
  Vice President-Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  and
  By Quad/Creative, Inc.

  
	
   

  	
  its General Partner

  

 

C-124

 

	
   

  	
  By

  
	
   

  	
  Its Treasurer

  

 

C-125

 

SUBSIDIARIES OF THE
OBLIGORS

 

1.                                      RESTRICTED SUBSIDIARIES:

 

	
  NAME
  OF

  SUBSIDIARY

  	
   

  	
  JURISDICTION OF

  INCORPORATION

  (OR FORMATION IN

  THE CASE OF A

  PARTNERSHIP)

  	
   

  	
  PERCENTAGE OF VOTING STOCK (OR 

  PERCENTAGE OWNERSHIP IN THE CASE OF
  A PARTNERSHIP) OWNED BY COMPANY

  AND EACH OTHER SUBSIDIARY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Tech, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Tech
  Europe, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100% by
  Quad/Tech, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Creative, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DuPlainville
  Transport, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Care, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Marketing, Inc.
  (Inactive)

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Pak, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Quad Technology
  Group, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Silver Spring
  Realty, Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chemical
  Research/Technology Co.

  	
   

  	
  Wisconsin

  	
   

  	
  92.5% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  7.5% by
  Quad/Creative, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/West, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quad/Med. Inc.

  	
   

  	
  Wisconsin

  	
   

  	
  100% by
  Quad/Graphics, Inc.

  

 

ANNEX 1

(to Exhibit C)

 

 

2.                                      SUBSIDIARIES (OTHER THAN RESTRICTED
SUBSIDIARIES):

 

	
  NAME
  OF

  SUBSIDIARY

  	
   

  	
  JURISDICTION OF 

  INCORPORATION

  	
   

  	
  PERCENTAGE OF VOTING STOCK OWNED

  BY COMPANY AND EACH OTHER

  SUBSIDIARY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NONE

  	
   

  	
   

  

 

127

 

DESCRIPTION OF
INDEBTEDNESS OF OBLIGORS

 

Principal Balances

as of September 1, 1995

 

 

	
   

  	
   

  	
  PRINCIPAL

  	
   

  	
  TYPE OF

  	
   

  	
  TYPE OF

  
	
  LENDER

  	
   

  	
  BALANCE

  	
   

  	
  COLLATERAL

  	
   

  	
  LOAN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lomira IDB

  	
   

  	
  1,000,000

  	
   

  	
  Finishing Line

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sussex IDB

  	
   

  	
  1,000,000

  	
   

  	
  Finishing Line

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MetLife

  	
   

  	
  5,378,302

  	
   

  	
  Press

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Mutual

  	
   

  	
  55,000,000

  	
   

  	
  Sussex, Pewaukee,
  Lomira, Wisconsin Plants

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6/30/90 Senior Secured
  Notes

  	
   

  	
  32,142,859

  	
   

  	
  Press and
  Finishing Lines

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7/30/92 Senior Secured
  Notes

  	
   

  	
  35,700,000

  	
   

  	
  Press and
  Finishing Lines

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10/1/93 Senior Secured
  Notes

  	
   

  	
  45,000,000

  	
   

  	
  Press and
  Finishing Lines

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Bank

  	
   

  	
  8,875,000

  	
   

  	
  Saratoga
  Springs, New York Plant

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  City of West Allis

  	
   

  	
  3,863,519

  	
   

  	
  West Allis,
  Wisconsin Plant

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thomaston IDB

  	
   

  	
  5,000,000

  	
   

  	
  Thomaston, Georgia
  Plant and Finishing Line

  	
   

  	
  Term Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolving Credit

  	
   

  	
  138,000,000

  	
   

  	
  Unsecured

  	
   

  	
  Revolving Credit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Line of Credit

  	
   

  	
  25,000,000

  	
   

  	
  Unsecured

  	
   

  	
  Revolving Credit

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commercial Paper

  	
   

  	
  49,868,000

  	
   

  	
  Unsecured

  	
   

  	
  Commercial Paper

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Industrial Bank of
  Japan

  	
   

  	
  15,000,000

  	
   

  	
  Unsecured

  	
   

  	
  Bid Loan

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  420,827,680

  	
   

  	
   

  	
   

  	
   

  

 

ANNEX 2

(to Exhibit C)

 

 

DESCRIPTION OF SPECIAL
COUNSEL’S CLOSING OPINION

 

The closing
opinion of Chapman and Cutler, special counsel to the Purchasers, called for by
§4.2 of the Note Agreement, shall be
dated the Closing Date and addressed to the Purchasers, shall be satisfactory
in scope and form and substance to the Purchasers and shall be to the effect
that:

 

(1) The Company is a corporation, validly existing
under the laws of the State of Wisconsin, has the corporate power and the
corporate authority to execute and deliver the Note Agreement and to issue the
Notes;

 

(2) The Note Agreement has been duly authorized by
all necessary corporate action on the part of the Company, has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding contracts of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors’ rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law);

 

(3) The Notes being delivered on the date hereof
have been duly authorized by all necessary corporate action on the part of the
Company, and the Notes being delivered on the date hereof have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors’ rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law);

 

(4) The issuance, sale and delivery of the Notes
being delivered on the date hereof under the circumstances contemplated by the
Note Agreement does not, under existing law, require the registration of the
Notes being delivered on the date hereof under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.

 

The opinion of
Chapman and Cutler shall also state that the opinion of Foley &
Lardner is satisfactory in scope and form to Chapman and Cutler and that, in
their opinion, the Purchasers and Chapman and Cutler are justified in relying
thereon and shall cover such other matters relating to the sale of the Notes as
the Purchaser may reasonably request.  In
rendering the opinion set forth in paragraph 1 above, Chapman and Cutler
may rely solely upon an examination of the Articles of Incorporation certified
by, and a certificate of status from, the Secretary of State of Wisconsin and
the By-laws of the Company.

 

EXHIBIT D

(to Note Agreement)

 

 

With respect to
matters of fact upon which such opinion is based, Chapman and Cutler may rely
on appropriate certificates of public officials and officers of the
Company.  With respect to the matters
covered in paragraphs (1), (2) and (3), Chapman and Cutler may rely upon
the opinion of Foley & Lardner and Debra Kraft, Esq. with respect
to matters of Wisconsin law.  Chapman and
Cutler shall not opine on matters of Georgia law.

 

D-131

 

DESCRIPTION OF CLOSING
OPINION OF COUNSEL TO THE OBLIGORS

 

The closing opinion of Foley & Lardner, counsel for the
Obligors, which is called for by §4.2 of the
Note Agreement, shall be dated the Closing Date and addressed to the
Purchasers, shall be satisfactory in scope and form to the Purchasers and shall
be to the effect that:

 

(1)          The Note Agreement and the other
Financing Documents (except the Notes) have been duly authorized by all
necessary corporate action on the part of each Obligor which is a party
thereto, have been duly executed and delivered by each Obligor which is a party
thereto and constitute the legal, valid and binding contracts of each Obligor
which is a party thereto enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors’ rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).

 

(2)          The Notes being delivered on the date
hereof have been duly authorized by all necessary corporate action on the part
of each Obligor which is a party thereto, have been duly executed and delivered
by each Obligor which is a party thereto and constitute the legal, valid and
binding obligations of each Obligor which is a party thereto enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors’ rights generally, and subject to applicable
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors’ rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law).

 

(3)          The issuance and sale of the Notes
being delivered on the date hereof and the execution, delivery and performance
by each Obligor which is a party thereto of the Note Agreement and the other
Financing Documents do not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or
imposition of any lien or encumbrance upon any of the property of any Obligor
pursuant to the provisions of the Articles (or Certificate as the case may be)
of Incorporation or By-laws of any Obligor or any agreement or other instrument
known to such counsel to which any Obligor is a party or by which any Obligor
or any of its property may be bound;

 

(4)          The issuance, sale and delivery of the
Notes being delivered on the date hereof under the circumstances contemplated
by the Note Agreement does not under existing law require the registration of
the Notes being delivered on the date hereof under the Securities Act of 1933,
as amended, or the qualification of an indenture in respect thereof under the
Trust Indenture Act of 1939, as amended.

 

EXHIBIT E

(to Note Agreement)

 

 

(5)          Except as set forth on Annex 3 to
Exhibit C attached hereto, to the knowledge of such counsel after due
inquiry, there are no proceedings pending or threatened against or affecting
any Obligor or its Subsidiaries in any court or before any governmental
authority or arbitration board or tribunal which, if adversely determined,
would individually or in the aggregate materially and adversely affect the
financial condition of the Obligors and their Subsidiaries, taken as a whole,
or the Obligors’ ability to perform their obligations under the Financing
Documents or the legality, validly or enforceability of the Obligors’
obligations under the Financing Documents. 
The Obligors and their Subsidiaries are not in default with respect to
any order or any court or any governmental authority or arbitration board or
tribunal which default would materially and adversely affect the financial
condition of the Obligors or the business or the properties of the Obligors and
their Subsidiaries, taken as a whole, the ability of the Obligors to perform
their obligations under the Financing Documents or on the legality, validity or
enforceability of the Obligors’ obligations under the Financing Documents.

 

(6)          No approval, consent or withholding of
objection on the part of, or filing, registration or qualification with, any
governmental body, Federal, state or local, is necessary as a condition to the
lawful execution and delivery of the Financing Documents;

 

(7)          The Mortgages and the Security
Agreement, or financing statements relative thereto, have been recorded or
filed for record in all public offices, if any, wherein such filing or
recordation is necessary to perfect the lien thereof against creditors of and
purchasers from the Company.  Such
Mortgages and Security Agreement constitute a valid lien on the Collateral
specifically described in the Granting Clauses thereof.  Such real property and equipment shall be
subject to no other liens, notice of which has been given by the filing of a
deed or financing statement in such office (except as permitted by the
Mortgages and Security Agreement). 
Counsel shall be permitted to rely on the Company’s identifying number (e.g. “HT-39”) with regards to Personal Property Collateral
in such searches, provided that counsel shall
review the liens, if any, on the “principal components” of such equipment; and

 

(8)          The issuance of the Notes on the date
hereof and the use of the proceeds from the sale of the Notes by the Obligors
in accordance with the provisions of the Note Agreement does not violate or
conflict with Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System.

 

The opinion of Foley & Lardner shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably
request.  With respect to matters of fact
on which such opinion is based, such counsel shall be entitled to rely on
appropriate certificates of public officials and officers of the Obligor.  With respect to the matters covered in
paragraph (4) above, Foley & Lardner may assume the accuracy of
the representation of the Purchasers contained in

 

E-133

 

§3.2 of the Note Agreement.  With respect to the opinion in
paragraph (5) above to the effect that the Collateral is not subject
to liens other than the Mortgages and the Security Agreement, Foley &
Lardner may rely upon a search of real estate records and local and central
Uniform Commercial Code filings and, as to liens not required to be of record,
on affidavits of officers of the Obligors. 
Such opinion shall permit subsequent institutional holders of the Notes
to rely upon such opinion and permit any proposed institutional offeree to
review such opinion.  Such opinion shall
cover the laws of the States of Wisconsin and Georgia and Federal law.

 

E-134

 

DESCRIPTION OF CLOSING OPINION OF CORPORATE
COUNSEL TO THE OBLIGORS

 

The closing opinion of Debra Kraft, Esq., corporate counsel for
the Obligors, which is called for by §4.2 of the
Note Agreement, shall be dated the Closing Date and addressed to the
Purchasers, shall be satisfactory in scope and form to the Purchasers and shall
be to the effect that:

 

(1)          Each Obligor is a corporation, duly
incorporated and validly existing under the laws of the State of Wisconsin (or
Delaware, as the case may be) and has filed all annual reports required by the
Secretary of State of Wisconsin (or Delaware, as the case may be) through December 31,
1994, has the corporate power and the corporate authority to enter into and
perform the Note Agreement, the Security Agreement and the Mortgages and to
issue the Notes and has the full corporate power and the corporate authority to
conduct the activities in which it is now engaged and is duly licensed or
qualified and is in good standing as a foreign corporation in each jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business transacted by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not materially
and adversely affect the condition (financial or otherwise) or operations of
the Obligors or of the Obligors and their Subsidiaries taken as a whole; and

 

(2)          Each Subsidiary is a corporation duly
organized, legally existing and in good standing under the laws of its
jurisdiction of incorporation and is duly licensed or qualified and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such
licensing or qualification necessary and all of the issued and outstanding
shares of capital stock of each such Subsidiary have been duly issued, are
fully paid and non-assessable (except in accordance with Wis. Stat. §180.0622)
and are owned by the Obligors, by one or more Subsidiaries, or by the Obligors
and one or more Subsidiaries.

 

The opinion of Debra Kraft, Esq. shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably
request.  With respect to matters of fact
on which such opinion is based, such counsel shall be entitled to rely on
appropriate certificates of public officials and officers of the Obligors.  Such opinion shall permit subsequent
institutional holders of the Notes to rely upon such opinion and permit any
proposed institutional offeree to review such opinion.

 

EXHIBIT F

(to Note Agreement)

 

 

 

 

 

QUAD/GRAPHICS,
INC.

QUAD/TECH,
INC.

QUAD/TECH
EUROPE, INC.

QUAD/CREATIVE,
INC.

DUPLAINVILLE
TRANSPORT, INC.

QUAD/CARE,
INC.

QUAD/MARKETING,
INC.

QUAD/PAK,
INC.

THE
QUAD TECHNOLOGY GROUP, INC.

SILVER
SPRING REALTY, INC.

CHEMICAL
RESEARCH/TECHNOLOGY CO.

QUAD/WEST,
INC.

QUAD/MED,
INC.

 

 

SUPPLEMENT
TO NOTE AGREEMENT

 

 

Dated as of                                    

 

Re:          $                        
          % Senior Secured
Notes, Series           
Tranche    

Due                                

 

 

 

EXHIBIT G

(to Note Agreement)

 

 

SUPPLEMENT TO NOTE AGREEMENT

 

Dated as of

                                       ,
19   

 

To the Purchaser
named in

Schedule I
hereto which is

a
signatory of this Agreement

 

Ladies
and Gentlemen:

 

This Supplement to Note Agreement (the “Supplement”)
is between QUAD/GRAPHICS, INC. (the “Company”) QUAD/TECH,
INC., a Wisconsin corporation, QUAD/TECH EUROPE, INC., a Delaware corporation, QUAD/CREATIVE,
INC., a Wisconsin corporation, DUPLAINVILLE TRANSPORT, INC., a Wisconsin
corporation, QUAD/CARE, INC., a Wisconsin corporation, QUAD/MARKETING, INC., a
Wisconsin corporation, QUAD/PAK, INC., a Wisconsin corporation, THE QUAD
TECHNOLOGY GROUP, INC., a Wisconsin corporation, SILVER SPRING REALTY, INC., a
Wisconsin corporation, CHEMICAL RESEARCH/TECHNOLOGY CO., a Wisconsin corporation,
QUAD/WEST, INC., a Delaware corporation, and QUAD/MED, INC., a Wisconsin
corporation (each, including the Company, an “Obligor”
and collectively, the “Obligors”)
whose post office address is DuPlainville Road, Pewaukee, Wisconsin 53072 and
the Institutional Holders named on Schedule I attached hereto (the “Purchasers”).

 

Reference is hereby made to that certain Note Agreement dated as of September 1,
1995, as amended and supplemented from time to time, (the “Note
Agreement”) between the Obligors and the purchasers listed on
Schedule I thereto.  Reference is
further made to §4.14 (b) thereof which
requires that prior to the delivery of any Additional Notes the Obligors and
each Additional Purchaser execute and deliver a Supplement.  All capitalized terms not otherwise defined
herein shall have the same meaning as specified in the Note Agreement.

 

The Obligors hereby jointly and severally agree with you as follows:

 

1.             The Obligors have
authorized the issue and sale of
$                    
aggregate principal amount of its
          % Senior Secured
Notes, Series          Tranche
          , (the “Series         Notes”)
to be dated the date of issue, and to be substantially in the form attached
hereto as Annex A.

 

2.             Subject to the
terms and conditions hereof and as set forth in the Note Agreement and on the
basis of the representations and warranties hereinafter set forth, the Obligors
agree to

 

EXHIBIT G

(to Note Agreement)

 

 

issue and sell to you, and you agree to purchase from
the Obligors, Series      Notes in the principal
amount set forth opposite your name on Schedule S-I hereto at a price of
      % of the principal amount thereof on the
closing date hereafter mentioned.

 

3.             Delivery of the
$                    
in aggregate principal amount of the Series      Notes
will be made at the offices of
                                                  ,
                              ,
                  ,
against payment therefor in Federal Reserve or other funds current and
immediately available at the principal office of [COMPANY BANK] in the amount
of the purchase price at 10:00 A.M., [BANK CITY] time, on
                    ,
           or such later date
(not later than           )
as shall mutually be agreed upon by the Obligors and the Purchasers of the Series         
Notes (the “Closing Date”).

 

4.             The Obligors and
you agree to be bound by and comply with the terms and provisions of the Note
Agreement as if you were an original signatory to the Note Agreement.

 

5.             [Representations of
Additional Purchasers responsive to §4.14(c).]

 

G-138

 

The execution hereof shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  
	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  
	
   

  	
   

  
	
  Accepted as of
                      ,         

  	
  and By
  Quad/Creative, Inc.

  
	
   

  	
  its General
  Partner

  

 

G-139

 

	
   

  	
  By

  
	
   

  	
  Its

  
	
   

  	
   

  
	
   

  	
  [VARIATION]

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  	
   

  

 

G-140

 

QUAD/GRAPHICS, INC.

QUAD/TECH, INC.

QUAD/TECH EUROPE, INC.

QUAD/CREATIVE, INC.

DUPLAINVILLE TRANSPORT, INC.

QUAD/CARE, INC.

QUAD/MARKETING, INC.

QUAD/PAK, INC.

THE QUAD TECHNOLOGY GROUP, INC.

SILVER SPRING REALTY, INC.

CHEMICAL RESEARCH/TECHNOLOGY CO.

QUAD/WEST, INC.

QUAD/MED, INC.

 

[        ]%
Senior Secured Note, Series [      ]

Due [                                  ],
[          ]

 

No. [      ]

 

[Date of Issue]

 

$

 

QUAD/GRAPHICS, INC., a Wisconsin corporation (the “Company”),
QUAD/TECH, INC., a Wisconsin corporation, QUAD/TECH EUROPE, INC., a Delaware
corporation, QUAD/CREATIVE, INC., a Wisconsin corporation, DUPLAINVILLE
TRANSPORT, INC., a Wisconsin corporation, QUAD/CARE, INC., a Wisconsin
corporation, QUAD/MARKETING, INC., a Wisconsin corporation, QUAD/PAK, INC., a
Wisconsin corporation, THE QUAD TECHNOLOGY GROUP, INC., a Wisconsin
corporation, SILVER SPRING REALTY, INC., a Wisconsin corporation, CHEMICAL
RESEARCH/TECHNOLOGY CO., a Wisconsin corporation, QUAD/WEST, INC., a Delaware
corporation, and QUAD/MED, INC., a Wisconsin corporation (each, including the
Company, an “Obligor” and collectively, the “Obligors”) for value received, hereby promise jointly and
severally to pay to

 

 

or registered assigns,

on the[      ] day of [                              ],
[            ]

the principal amount of

 

ANNEX A

(to Exhibit G, Supplement
to Note Agreement)

 

 

DOLLARS ($               )

 

and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the principal amount from time to time remaining unpaid hereon at the rate of [      ]%
per annum from the date hereof until maturity, payable [                                ]
on the [      ] of each March and September in
each year commencing [                                  ],
and at maturity.  The Obligors agree to
pay interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the rate of [2% plus
coupon] per annum after maturity, whether by acceleration or otherwise, until
paid.  Both the principal hereof and
interest hereon are payable at the principal office of the Company in Pewaukee,
Wisconsin in coin or currency of the United States of America which at the time
of payment shall be legal tender for the payment of public and private debts.

 

This Series [      ]
Note is one of the [      ]% Senior Secured
Notes, Series [      ] of the Obligors in
the aggregate principal amount of $[      ],000,000
(the “Series [      ] Notes”) issued or to be issued under and pursuant to the
terms and provisions of the Note Agreement dated as of September 1, 1995
(the “Note Agreement”), entered into by the
Obligors with the original purchasers therein referred to and the Security
Agreement dated as of September 1, 1995 (the “Security
Agreement”) and the Mortgages each dated as of September 1,
1995 (the “Mortgages”) from the Company to the
Security Trustee.  This Series [      ]
Note and the holder hereof are entitled equally and ratably with the holders of
all other Notes (as defined in the Note Agreement) of all series outstanding
from time to time under the Note Agreement and the Security Agreement and the
Mortgages to all the benefits and security provided for thereby or referred to
therein to which Note Agreement and Security Agreement and Mortgages reference
is hereby made for the statement thereof. 
Reference is hereby made to the Security Agreement and the Mortgages for
a description of the property thereby granted, conveyed, assigned, affected and
hypothecated, the nature and extent of the security for the Notes, and rights
of the holders of the Notes, the Security Trustee and the Company in respect of
such security and otherwise.

 

This Series [      ]
Note (as defined in the Note Agreement) outstanding under the Note Agreement
may be declared due prior to their expressed maturity dates and certain
prepayments are required to be made thereon, all in the events, on the terms
and in the manner and amounts as provided in the Note Agreement.

 

The Series [      ]
Notes are not subject to prepayment or redemption at the option of the Obligors
prior to their expressed maturity dates except on the terms and conditions and
in the amounts and with the premium, if any, set forth below.

 

[INSERT PREPAYMENT
PROVISIONS]

 

142

 

This Series [      ]
Note is registered on the books of the Obligors and is transferable only by
surrender thereof at the principal office of the Obligors duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of this Series         
Note or its attorney duly authorized in writing.  Payment of or on account of principal,
premium, if any, and interest on this Series [    ]
Note shall be made only to or upon the order in writing of the registered
holder.

 

143

 

THIS SERIES [      ] NOTE AND SAID NOTE AGREEMENT ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF WISCONSIN.

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  
	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/WEST, INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Its

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  Quad/Creative, Inc.

  
	
   

  	
  its General
  Partner

  

 

144

 

	
   

  	
  By

  
	
   

  	
  Its

  

 

THIS SERIES [      ] NOTE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND CANNOT BE
RESOLD EXCEPT PURSUANT TO REGISTRATION UNDER SAID ACT OR AN EXEMPTION
THEREFROM.

 

145

 

FORM OF RESTRICTED SUBSIDIARY AGREEMENT

 

THIS RESTRICTED SUBSIDIARY AGREEMENT, dated as of
                        ,
19    , between and among QUAD/GRAPHICS, INC., a Wisconsin
corporation (the “Company”), Quad/Tech, Inc.,
a Wisconsin corporation, Quad/Tech Europe, Inc., a Delaware corporation,
Quad/Creative, Inc., a Wisconsin corporation, DuPlainville Transport, Inc.,
a Wisconsin corporation, Quad/Care, Inc., a Wisconsin corporation,
Quad/Marketing, Inc., a Wisconsin corporation,  Quad/Pak, Inc., a Wisconsin corporation,
The Quad Technology Group, Inc., a Wisconsin corporation, Silver Spring
Realty, Inc., a Wisconsin corporation, Chemical Research/Technology Co., a
Wisconsin corporation, Quad/West, Inc., a Delaware corporation, and
Quad/Med, Inc., a Wisconsin corporation (individually, including the
Company, an “Obligor” and collectively, the “Obligors”),
                              ,
a
                        
corporation [or general partnership] (the “New Restricted Subsidiary”),
and each of the Holders (as defined in the Note Agreements), under that certain
Note Agreement dated as of September 1, 1995 by and among the Obligors and
the Holders party thereto (the “Note Agreement”).

 

WITNESSES:

 

WHEREAS, the New Restricted Subsidiary wishes to become an Obligor
under the Note Agreement and become obligated, jointly and severally, to pay
when due all Obligations under the Note Agreement and the Notes; and

 

WHEREAS, the New Restricted Subsidiary has determined that it is in its
best interest to become a Restricted Subsidiary.

 

NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by the New Restricted Subsidiary, and in order to induce
the Holders and any future holders of Notes to consider the financial condition
of the New Restricted Subsidiary in evaluating the Companies’ compliance with
the covenants contained in the Note Agreement and the Notes, the parties hereto
hereby agree as follows:

 

1.         Definitions.  Terms not defined herein shall have the
meaning assigned to them in the Note Agreement.

 

2.         Representations.  The Obligors and the New Restricted
Subsidiary jointly and severally, represent and warrant to the Holders that:

 

EXHIBIT H

(to Note Agreement)

 

 

 

(a)          The New Restricted Subsidiary
satisfies the definition of “Restricted Subsidiary”
in the Note Agreement and is a [corporation,
partnership, etc.] which is
     per cent owned by the Obligors;

 

(b)         This Restricted Subsidiary Agreement
has been duly and validly authorized, executed and delivered by the Obligors
and the New Restricted Subsidiary, and constitutes the legal, valid and binding
obligation of each such party enforceable in accordance with its terms and the
terms of the Note Agreement; and

 

(c)          No Default or Event of Default exists
or will result from the designation of the New Restricted Subsidiary as a
Restricted Subsidiary, nor would any such Default or Event of Default have
resulted had such designation been effective as of the most recently ended
fiscal quarter of the Obligors.

 

3.         Undertakings.  The Note Agreement is hereby incorporated
into this Restricted Subsidiary Agreement by reference and made a part hereof
as if set forth in full herein.  The New
Restricted Subsidiary hereby agrees to each and every covenant, agreement, term
and provision of the Note Agreement (including any amendments and supplements
thereto made after the date hereof in accordance with the terms of the Note
Agreement).  The New Restricted
Subsidiary hereby specifically agrees with the Holders as follows:

 

(a)          The New Restricted Subsidiary agrees
to become, and by this Restricted Subsidiary Agreement has become, an Obligor;

 

(b)         The New Restricted Subsidiary agrees to
be bound by all the terms and provisions of the Note Agreement, including those
covenants, agreements and restrictions applicable to Obligors;

 

(c)          The New Restricted Subsidiary agrees
that it is liable, jointly and severally, with the Obligors for the payment
when due of all obligations under the Note Agreement; and

 

(d)         The New Restricted Subsidiary agrees
that it is liable, jointly and severally, with the Obligors for the payment
when due of all obligations under the Notes.

 

The provisions of this Section 3 shall be effective from the date
of this Restricted Subsidiary Agreement until the date on which the Holders
deliver a release to the New Restricted Subsidiary pursuant to §9.12 of the Note Agreement. 
Any such releases previously delivered to the New Restricted Subsidiary
as a consequence of its prior designation as an Unrestricted Subsidiary are
hereby cancelled and declared to be null and void.

 

H-147

 

IN WITNESS WHEREOF,
the parties hereto have caused this Restricted Subsidiary Agreement to be duly
executed and delivered by their respective duly authorized officers, as of the
date first above written.

 

 

	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUAD/TECH, INC.

  
	
   

  	
  QUAD/TECH EUROPE, INC.

  
	
   

  	
  QUAD/CREATIVE, INC.

  
	
   

  	
  DUPLAINVILLE TRANSPORT,
  INC.

  
	
   

  	
  QUAD/CARE, INC.

  
	
   

  	
  QUAD/MARKETING, INC.

  
	
   

  	
  QUAD/PAK, INC.

  
	
   

  	
  THE QUAD TECHNOLOGY
  GROUP, INC.

  
	
   

  	
  SILVER SPRING REALTY,
  INC.

  
	
   

  	
  QUAD/MED, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
  Their

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHEMICAL
  RESEARCH/TECHNOLOGY CO.

  
	
   

  	
   

  
	
   

  	
  By
  Quad/Graphics, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

H-148

 

	
   

  	
  and by
  Quad/Creative, Inc.

  
	
   

  	
  its
  General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NEW RESTRICTED
  SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [VARIATION]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

H-149Exhibit 10.1

 

QUAD/GRAPHICS, INC.

 

1999 NONQUALIFIED STOCK
OPTION PLAN

 

1.             Purpose.  The purpose of the Quad/Graphics, Inc.
1999 Nonqualified Stock Option Plan (the “Plan”) is to promote the best
interests of Quad/Graphics, Inc. (the “Company”) and its shareholders by
providing (a) employees of the Company and its Related Corporations (as
defined in Section 3) and (b) members of the Company’s Board of
Directors (the “Board”) who are not employees of the Company or its Related
Corporations with an opportunity to acquire or increase their proprietary
interest in the Company and thereby develop a stronger incentive to put forth
maximum effort for the continued success and growth of the Company.  In addition, the opportunity to acquire or
increase a proprietary interest in the Company will aid in attracting and
retaining key personnel of outstanding ability and persons of exceptional
competence as members of the Board.  It
is intended that the options issued pursuant to the Plan will constitute
nonqualified stock options that do not meet the requirements of incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”), or any successor provision thereto.  Each option granted under the Plan shall be
evidenced by a written option agreement with the recipient thereof (an “Option
Agreement”) setting forth the terms and conditions of the grant and the
exercise of the subject option, as determined by the Board in accordance with
the Plan.

 

2.             Administration.  The Plan shall be administered by the
Board.  The Board may, in its discretion,
delegate to another committee of the Board or to one or more senior officers of
the Company any or all of the authority and responsibility of the Board hereunder,
except to the extent prohibited by any applicable law or rules.  Any such

 

 

allocation
or delegation may be revoked by the Board at any time.  To the extent that the Board has delegated to
such other committee or one or more officers the authority and responsibility
of the Board hereunder, all references to the Board herein shall include such
other committee or one or more officers. 
Subject to the provisions of the Plan, the Board, in its complete and
sole discretion, shall select the persons to whom options shall be granted;
shall determine the number and class of shares to be embraced in each option,
the time at which the option is to be granted, the option period, the option
price and the manner in which options become exercisable; and shall establish
such other provisions of the Option Agreements as the Board may deem necessary
or desirable.  The Board may adopt such rules and
regulations for carrying out the Plan as it may deem proper and in the best
interest of the Company.  The
interpretation by the Board of any provision of the Plan or an Option Agreement
shall be final.

 

3.             Eligibility.  Any employee (“Employee”) of the Company, or
its present and future parent corporation and/or subsidiaries, as defined in
Sections 424(e) and (f) of the Code (“Related Corporations”),
including any Employee who is a director of the Company or its Related
Corporations, whose judgment, initiative and efforts contribute materially, in
the opinion of the Board, to the successful performance of the Company or its
Related Corporations, shall be eligible to receive options under the Plan.  In addition, any member of the Board (“Director”)
who is not also an Employee of the Company or its Related Corporations shall be
eligible to receive options under the Plan. 
The Board’s decisions and determinations under the Plan need not be
uniform and may be made selectively among recipients, whether or not they are
similarly situated.  The Board’s

 

2

 

designation
of a recipient of options hereunder in any year shall not require the Board to
designate such person to receive options in any other year.

 

4.             Shares
Subject to the Plan.  The shares to
be subject to options under the Plan shall, in the sole discretion of the
Board, be shares of the Company’s Class A Common Stock, $0.025 par value (“Class A
Stock”) or the Company’s Class B Common Stock, $0.025 par value (“Class B
Stock” and, together with Class A Stock, “Stock”), and may be either
authorized and unissued or treasury shares. 
The total amount of Stock for which options may be granted under the
Plan will be determined by the Board from time to time, with such amount
subject to adjustment as provided in Section 9.  In the event that an option granted under the
Plan to any optionee expires, is cancelled or is terminated unexercised as to
any shares of Stock covered thereby, then such shares thereafter shall be
available for the granting of additional options under the Plan.

 

5.             Option
Price.  The option price per share of
Stock shall be fixed by the Board at the time of the grant of an option
hereunder.

 

6.             Grant
of Options.  Subject to the terms and
conditions of the Plan, the Board may from time to time grant to such Employees
and Directors as the Board may determine options to purchase such number of
shares of Stock and on such terms and conditions as the Board may
determine.  More than one option may be
granted to the same optionee.  The day on
which the Board approves the granting of an option shall be considered as the
date on which such option is granted, unless otherwise provided by the Board.

 

3

 

7.             Option
Period.  The Board shall determine
and set forth in the particular Option Agreement the period during which each
option may be exercised (the “Option Period”).

 

8.             Exercise
of Options.  An Option may be
exercised, in whole or in part, in accordance with the terms of the particular
Option Agreement to which the option is subject, but only within the Option
Period and only by delivery to the Company of a written notice of exercise
specifying the number of shares with respect to which the option is being
exercised.  Any notice of exercise shall
be accompanied by full payment of the option price of the shares being
purchased in cash or its equivalent or such other consideration as allowed by
the terms of the particular Option Agreement to which the option is subject or
as deemed adequate by the Board.  No
shares shall be issued until full payment therefor has been made or arranged,
and the granting of an option to an individual shall give such individual no
rights as a shareholder except as to shares actually issued to him or her upon
proper exercise.

 

9.             Capital
Adjustments Affecting Common Stock. 
In the event of any capital adjustment, whether resulting from a stock dividend,
stock split, reorganization, split-off, split-up, merger, consolidation,
combination or exchange of shares, extraordinary distribution or the like, then
the number and/or kind of shares of Stock subject to the Plan and the number
and/or kind of shares under option in then-outstanding Option Agreements shall
coincidentally be considered to be adjusted in a manner consistent with such
capital adjustment.  In the event there
is any change other than as specified above in the number or kind of outstanding
shares of Stock or of any other stock or other securities into which such Stock
shall have been changed or for which it shall have been

 

4

 

exchanged,
then the Board may, in its sole discretion, determine that such change or
exchange equitably requires an adjustment in the number and/or kind of shares
of Stock subject to the Plan and the number and/or kind of shares under option
in then-outstanding Option Agreements. 
If any such adjusted number determined pursuant to the preceding
sentences includes a fractional share, then such adjusted number shall be
reduced to the next lower whole number without any offsetting or compensating
adjustments.  The option price per share
of any shares under option shall similarly be considered to be adjusted so that
there will be no disproportionate change in the aggregate purchase price
payable upon exercise of any such option, except insofar as the number of
shares subject to the Plan or an outstanding option is reduced to eliminate any
fractional shares.

 

10.           Corporate
Mergers and Other Consolidations. 
The Board may also grant options having terms and provisions which vary
from those specified in the Plan provided that any options granted pursuant to
this Section 10 are granted in substitution for, or in connection with the
assumption of, existing options granted by another corporation and assumed or
otherwise agreed to be provided by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition or other
reorganization to which the Company is a party.

 

11.           Amendment, Modification and
Termination.

 

11.1         The Board may, at any time, amend,
alter, suspend, discontinue or terminate the Plan; provided, however, that
shareholder approval of any amendment of the Plan shall be obtained if
otherwise required by the Code, or any rules promulgated thereunder, or
any applicable federal or state law, rule or regulation.  Termination of the Plan shall not affect the
rights of optionees with respect to options previously granted to

 

5

 

them, and all unexpired options shall
continue in force and effect after termination of the Plan except as they may
lapse or be terminated by their own terms and conditions.

 

11.2         Amendment of Agreements.  The Board, subject to the same shareholder
approval requirements set forth above, may amend an Option Agreement at any
time; provided that no amendment may, in the absence of written consent to the
change by the affected optionee, adversely affect the rights of any optionee
under any Option Agreement effective under the Plan prior to the date such
amendment is adopted.

 

12.           Effective
Date and Term of Plan.  The effective
date of the Plan is March 31, 1999. 
The Plan shall terminate on such date as may be determined by the Board
pursuant to Section 11.1 (the “Termination Date”).  Unless otherwise expressly provided in an
applicable Option Agreement, any options granted before the Termination Date
shall extend beyond the Termination Date and, to the extent set forth in the
Plan, the authority of the Board to administer the Plan and to amend, alter,
adjust, suspend, discontinue or terminate any such award, or to waive any
conditions or restrictions with respect to any such award, and the authority of
the Board to amend the Plan and the Option Agreement as provided herein, shall
extend beyond the Termination Date.

 

13.           Tax
Withholding.  The Company or any
Related Corporation may deduct and withhold from any cash otherwise payable to
an optionee such amounts as may be required for the purpose of satisfying the
Company’s or such Related Corporation’s obligation to withhold federal, state
or local taxes.  Further, in the event
the amount so withheld is insufficient for such purpose, the Company may
require as a condition precedent to the issuance or transfer of any shares of
Stock upon or after exercise of any option that the optionee pay to the Company
upon its demand, or otherwise make

 

6

 

arrangements
satisfactory to the Company for payment of, such amount as may be requested by
the Company in order to satisfy its obligation to withhold any such taxes.  If the amount so requested is not paid, or if
such arrangements are not made, the Company may refuse to issue or transfer
shares of Stock upon or after exercise of the option.

 

With the consent of the Board, an
optionee may be permitted to satisfy the Company’s withholding tax requirements
by electing to have the Company withhold shares of Stock otherwise issuable to
the optionee or to deliver to the Company shares of Stock having a fair market
value on the date income is recognized pursuant to the exercise of an option
equal to the amount required to be withheld. 
The election shall be made in writing and shall be made according to
such rules and in such form as the Board may determine.

 

14.           Miscellaneous.

 

14.1         Stock Transfer Restrictions.

 

(a)           Shares of Stock purchased under the
Plan may not be sold or otherwise disposed of except (i) pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the “Act”), or in a transaction which, in the opinion of counsel for the
Company, is exempt from registration under the Act; and (ii) in compliance
with state securities laws.  Further, as
a condition to issuance of shares of Stock purchased under the Plan, the
optionee or his or her heirs, legatees or legal representatives, as the case
may be, may be required by the Board to execute and deliver to the Company a
restrictive stock transfer agreement in such form, and subject to such terms
and conditions, as shall be reasonably determined or approved by the Board,
which agreement, among

 

7

 

other things, may impose certain
restrictions on the sale or other disposition of any shares of Stock acquired
under the Plan.  The Board may waive the
foregoing restrictions, in whole or in part, in any particular case or cases or
may terminate such restrictions whenever the Board determines that such
restrictions afford no substantial benefit to the Company.

 

(b)           All certificates for shares delivered
under the Plan pursuant to the exercise of an option shall be subject to such
stock transfer orders and other restrictions as the Board may deem advisable
under the Plan and any applicable federal or state securities laws, and the
Board may cause a legend or legends to be put on any such certificates to make
appropriate references to such restrictions.

 

14.2         Option Agreement.  No person shall have any rights under any
options granted under the Plan unless and until the Company and the person to
whom the options were granted shall have executed an Option Agreement pursuant
to Section 1 hereof.

 

14.3         Requirements of Law.  The granting of options under the Plan, and
the issuance of shares of Stock in connection with the exercise of such
options, shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities exchanges
as may be required.

 

14.4         Governing Law.  The Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of the State of
Wisconsin.

 

14.5         Severability.  If any provision of the Plan or any Option
Agreement (a) is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person or option, or (b) would
disqualify the Plan, any Option 

 

8

 

Agreement or any option under any law deemed
applicable by the Board, then such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Board, materially altering
the intent of the Plan, any Option Agreement or any option, then such provision
shall be stricken as to such jurisdiction, person, or the Plan or Option
Agreement and the remainder of the Plan and any such Option Agreement shall
remain in full force and effect.

 

9

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