-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LqnN7RjLdtC9z74h5U22pKQDceWY5tFjyexCHeps0fdcdpARzxnHWq6Lg1zoydNi 9NAQ0O/egPvyooIBQAPrcw== 0001068800-06-000398.txt : 20060510 0001068800-06-000398.hdr.sgml : 20060510 20060510165109 ACCESSION NUMBER: 0001068800-06-000398 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060510 DATE AS OF CHANGE: 20060510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENVEO, INC CENTRAL INDEX KEY: 0000920321 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 841250533 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12551 FILM NUMBER: 06826931 BUSINESS ADDRESS: STREET 1: 8310 S VALLEY HWY #400 CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3037908023 MAIL ADDRESS: STREET 1: 8310 S VALLEY HWY #400 CITY: ENGLEWOOD STATE: CO ZIP: 80112 FORMER COMPANY: FORMER CONFORMED NAME: MAIL WELL INC DATE OF NAME CHANGE: 19950817 FORMER COMPANY: FORMER CONFORMED NAME: MAIL WELL HOLDINGS INC DATE OF NAME CHANGE: 19940328 10-Q 1 cenveo10q.txt ============================================================================== - ------------------------------------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006 COMMISSION FILE NUMBER 1-12551 ------------------------ CENVEO, INC. (Exact name of Registrant as specified in its charter.) COLORADO 84-1250533 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) ONE CANTERBURY GREEN 201 BROAD STREET STAMFORD, CT 06901 (Address of principal executive offices) (Zip Code) 203-595-3000 (Registrant's telephone number, including area code) ------------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer / / Accelerated filer /X/ Non-accelerated filer / / Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes / / No /X/ As of April 28, 2006 the registrant had 53,227,490 shares of common stock outstanding. - ------------------------------------------------------------------------------ ============================================================================== PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CENVEO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
MARCH 31, 2006 DECEMBER 31, 2005(A) -------------- -------------------- (UNAUDITED) ----------- ASSETS Current assets: Cash and cash equivalents............................ $ 1,394 $ 1,035 Accounts receivable, net............................. 223,701 247,277 Inventories, net..................................... 96,183 108,704 Receivables from sale of business.................... 72,559 -- Prepaid and other current assets..................... 22,440 25,767 ---------- ---------- Total current assets............................. 416,277 382,783 Property, plant and equipment, net....................... 281,750 317,606 Goodwill................................................. 255,632 311,146 Investment in affiliate.................................. 34,444 -- Other intangible assets, net............................. 22,664 23,961 Other assets, net........................................ 33,779 44,068 ---------- ---------- Total assets......................................... $1,044,546 $1,079,564 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Current maturities of long-term debt................. $ 2,822 $ 2,791 Accounts payable..................................... 140,381 124,901 Accrued compensation and related liabilities......... 42,473 53,765 Other current liabilities............................ 73,904 79,051 ---------- ---------- Total current liabilities........................ 259,580 260,508 Long-term debt........................................... 684,947 809,345 Deferred income taxes.................................... 4,692 10,045 Other liabilities........................................ 39,758 49,216 Commitments and contingencies Shareholders' equity (deficit): Preferred stock...................................... -- -- Common stock......................................... 532 530 Paid-in capital...................................... 239,940 239,432 Retained deficit..................................... (192,889) (305,091) Deferred compensation................................ -- (1,825) Accumulated other comprehensive income............... 7,986 17,404 ---------- ---------- Total shareholders' equity (deficit)............. 55,569 (49,550) ---------- ---------- Total liabilities and shareholders' equity (deficit)..... $1,044,546 $1,079,564 ========== ========== (A) Derived from the audited consolidated financial statements as of December 31, 2005. See notes to condensed consolidated financial statements.
1 CENVEO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------- 2006 2005 -------- -------- Net sales................................................... $426,678 $449,602 Cost of sales............................................... 337,623 364,150 Selling, general and administrative......................... 55,586 69,410 Amortization of intangible assets........................... 1,298 1,330 Restructuring, impairment and other charges................. 13,476 10,019 -------- -------- Operating income........................................ 18,695 4,693 (Gain) loss on sale of non-strategic businesses............. (123,352) 722 Interest expense............................................ 18,037 18,192 Other (income) expense...................................... 222 (11) -------- -------- Income (loss) from continuing operations before income taxes................................................. 123,788 (14,210) Income tax expense.......................................... 11,586 8,346 -------- -------- Net income (loss)....................................... $112,202 $(22,556) ======== ======== Income (loss) per share: Income (loss) per share--basic...................... $ 2.11 $ (0.47) ======== ======== Income (loss) per share--diluted.................... $ 2.10 $ (0.47) ======== ======== Weighted average shares--basic...................... 53,109 47,780 Weighted average shares--diluted.................... 53,536 47,780 See notes to condensed consolidated financial statements.
2 CENVEO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
THREE MONTHS ENDED MARCH 31, -------------------------- 2006 2005 --------- -------- Cash flows from operating activities: Net income (loss)......................................... $ 112,202 $(22,556) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization....................... 12,213 14,088 Non-cash charges, net............................... 10,151 5,610 (Gain) loss on sale of non-strategic businesses..... (123,352) 722 Changes in operating assets and liabilities: Accounts receivable................................. 2,877 (5,522) Inventories......................................... (2,601) (6,417) Accounts payable and accrued compensation and related liabilities............................... 7,929 (7,304) Other working capital changes....................... (6,085) (30) Other, net.......................................... 1,348 (1,437) --------- -------- Net cash provided by (used in) operating activities.................................... 14,682 (22,846) Cash flows from investing activities: Proceeds from divestitures, net..................... 119,380 3,058 Capital expenditures................................ (6,134) (6,478) Acquisition payments................................ (4,653) (3,653) Proceeds from sale of property, plant and equipment......................................... 326 21 --------- -------- Net cash provided by (used in) investing activities.................................... 108,919 (7,052) Cash flows from financing activities: Repayments under senior secured revolving credit facility, net..................................... (123,931) -- Borrowings under senior secured revolving credit facility, net..................................... -- 32,469 Repayments of long-term debt........................ (436) (565) Proceeds from exercise of stock options............. 1,110 28 --------- -------- Net cash provided by (used in) financing activities.................................... (123,257) 31,932 Effect of exchange rate changes on cash and cash equivalents............................................... 15 67 --------- -------- Net increase in cash and cash equivalents....... 359 2,101 Cash and cash equivalents at beginning of year.............. 1,035 796 --------- -------- Cash and cash equivalents at end of quarter................. $ 1,394 $ 2,897 ========= ======== See notes to condensed consolidated financial statements.
3 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements (the "Financial Statements") of Cenveo, Inc. and subsidiaries (collectively, "Cenveo" or the "Company") have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (the "SEC") and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of the Company, however, the Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company's financial position and results of operations and its cash flows as of and for the three-month period ended March 31, 2006. The results of operations for the three-month period ended March 31, 2006 are not indicative of the results to be expected for the full year primarily due to the effect of the March 31, 2006 sale of Supremex, Inc. and certain other assets (see Notes 3, 6 and 9) and seasonality (see "Item 2. Management's Discussion and Analysis of Financial Consolidation and Results of Operations - Seasonality"). These Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the "Form 10-K"). It has been the Company's practice to close its quarters on the Saturday closest to the last day of the calendar quarter so that each quarter has the same number of days and 13 full weeks. The financial statements and other financial information in this report are presented using a calendar convention. The reporting periods, which consist of 13 weeks ending on April 1, 2006 and April 2, 2005, are reported as ending on March 31, 2006 and 2005, respectively, since the effect is not material. RECLASSIFICATIONS. Certain prior year amounts have been reclassified to conform to the current year presentation. 2. STOCK-BASED COMPENSATION On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards 123 (revised 2004), Share-Based Payment ("SFAS 123R"), which requires the recognition of expense related to the fair value of the Company's stock-based compensation awards (including grants of employee stock options and restricted stock), using an appropriate fair value option-pricing model. The Company elected to use the modified prospective transition method as permitted by SFAS 123R and, therefore, has not restated its financial results for prior periods. The Company selected the Black-Scholes-Merton option-pricing model as the most appropriate fair-value method for its non-vested grants outstanding and is recognizing compensation cost on a straight-line basis over the vesting periods of the grants. Under this transition method, stock-based compensation expense for the three months ended March 31, 2006 includes compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of Statement of Financial Accounting Standards 123, Share-Based Payment ("SFAS 123"). The effect of the change from applying the original provisions of SFAS 123 during the three-month period ended March 31, 2006 is as follows (in millions, except per share data): Income from continuing operations, income before taxes and net income......................................... $ (0.6) ====== Cash flow from operations and financing activities...... $ -- ====== Earnings per share basic and diluted.................... $(0.01) ====== 4 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 2. STOCK-BASED COMPENSATION (CONTINUED) The Company did not issue any form of stock-based compensation in the first quarter of 2006. In addition, none of the Company's stock-based compensation awards vested in the first quarter of 2006. The only change to the Company's stock based compensation awards from the amounts presented as of December 31, 2005, was the exercise of approximately 183,000 stock options for shares of the Company's common stock and the cancellation of approximately 35,000 stock options. See Notes 1 and 15 in the Form 10-K. Prior to January 1, 2006, the Company accounted for stock-based compensation awards using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25"). This method required compensation expense to be recognized for the excess of the quoted market price of the stock at the grant date or the measurement date over the amount an employee must pay to acquire the stock. The following table illustrates the effect on net loss and net loss per common share as if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based compensation during the three-month period ended March 31, 2005 (in thousands, except per share data): Loss as reported........................................ $(22,556) Add: stock-based compensation expense determined under the intrinsic value method included in net loss, net of related taxes........................ 192 Less: stock-based compensation expense determined under fair value method, net of related taxes..... (1,304) -------- Pro forma net loss...................................... $(23,668) ======== Loss per share--basic and diluted: As reported......................................... $ (0.47) ======== Pro forma........................................... $ (0.50) ======== In November 2005, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("FSP"), No. 123 (R)-3, Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards. FSP No. 123 (R)-3 provides an elective alternative method that establishes a computational component to arrive at the beginning balance of the paid-in capital pool related to employee compensation and a simplified method to determine the subsequent impact on the paid-in capital pool of employee awards that are fully vested and outstanding upon the adoption of SFAS No. 123(R). This election is available for adoption until January 1, 2007. The Company is currently evaluating this transition method. 3. SALE OF NON-STRATEGIC BUSINESSES On March 31, 2006, the Company sold to Supremex Income Fund, a new open-ended trust formed under the laws of the Province of Quebec (the "Fund"), all of the shares of Supremex Inc. ("Supremex"), a Canadian subsidiary of the Company, and certain other assets of the envelope, forms and labels segment. At closing, the Company received proceeds of approximately $187 million, net of transaction expenses and subject to the finalization of a working capital adjustment and 11.4 million units of the Fund valued at approximately $98 million, based upon the Fund's initial public offering share price of $10.00 Canadian dollars per unit ($8.56 US per unit). The proceeds to the Company included approximately $72.6 million which are reported as receivables from sale of business on the condensed consolidated balance sheet as of March 31, 2006 of which approximately $70 million was received by the Company on April 20, 2006. The units in the Fund owned by the Company represented a 36.5% economic and voting interest in the Fund. The transaction resulted in a pre-tax gain of approximately $124 million in the first quarter of 2006, after the allocation of $55.8 million of goodwill 5 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. SALE OF NON-STRATEGIC BUSINESSES (CONTINUED) to the business as required by Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. The Company's investment in the Fund was $34.4 million as of March 31, 2006, based on its historical cost. Beginning with the second quarter of 2006, the Company's ownership interest in the Fund is being accounted for under the equity method. On April 28, 2006, the Company sold 2.5 million units of the Fund relating to an over-allotment option to the underwriters for approximately $21 million. The sale resulted in a reduction to the Company's economic and voting interest in the Fund to 28.6%. During the first quarter of 2005, the Company sold three non-strategic businesses for $3.1 million, and recognized a loss on sale of $0.7 million. From April 1, 2005 through December 31, 2005, the Company sold three additional businesses. The following table summarizes the net sales and operating income of all businesses that have been sold during 2005 and the first quarter of 2006, which are included in the condensed consolidated statements of operations (in thousands): THREE MONTHS ENDED MARCH 31, --------------------- 2006 2005 ------- ------- Net sales.................................. $41,763 $49,716 Operating income........................... $ 7,975 $ 8,151 Subsequent to these sales, the Company has continuing involvement with the entities; accordingly, the dispositions of these non-strategic businesses have not been accounted for as discontinued operations in the condensed consolidated financial statements. 4. INVENTORIES Inventories by major category are as follows (in thousands): MARCH 31, DECEMBER 31, 2006 2005 --------- ------------ Raw materials.............................. $ 29,335 $ 33,970 Work in process............................ 28,973 28,313 Finished goods............................. 43,849 52,320 -------- -------- 102,157 114,603 Reserves................................... (5,974) (5,899) -------- -------- Inventories, net........................... $ 96,183 $108,704 ======== ======== 6 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 5. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are as follows (in thousands):
MARCH 31, DECEMBER 31, 2006 2005 --------- ------------ Land and land improvements............................. $ 15,885 $ 18,460 Buildings and improvements............................. 94,838 108,229 Machinery and equipment................................ 462,103 500,535 Furniture and fixtures................................. 10,164 11,579 Construction in progress............................... 5,145 14,532 --------- --------- 588,135 653,335 Accumulated depreciation................................ (306,385) (335,729) --------- --------- Property, plant and equipment, net...................... $ 281,750 $ 317,606 ========= =========
6. COMPREHENSIVE INCOME (LOSS) A summary of comprehensive income (loss) is as follows (in thousands):
THREE MONTHS ENDED MARCH 31, ---------------------------- 2006 2005 --------- ------------ Net income (loss)........................................... $ 112,202 $ (22,556) Other comprehensive income (loss): Pension liability adjustment........................... (6,006) -- Currency translation adjustment........................ 15,421 (1,604) --------- --------- Comprehensive income (loss)................................. $ 121,617 $ (24,160) ========= =========
In connection with the sale of Supremex and certain other assets (Notes 3 and 9), the Company reversed the pension liability adjustment of $6.0 million and 63.5% of the currency translation adjustment of $14.3 million relating to the business sold. 7. LONG-TERM DEBT Long-term debt is as follows (in thousands):
MARCH 31, DECEMBER 31, 2006 2005 --------- ------------ Senior Secured Credit Facility, due 2008................ $ -- $123,931 Senior 9 5/8% Notes, due 2012........................... 350,000 350,000 Senior 7 7/8% Subordinated Notes, due 2013.............. 320,000 320,000 Other................................................... 17,769 18,205 -------- -------- 687,769 812,136 Less current maturities................................. (2,822) (2,791) -------- -------- Long-term debt.......................................... $684,947 $809,345 ======== ========
As of March 31, 2006, the Company was in compliance with all covenants under its debt agreements. 7 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES 2006 ACTIVITY Restructuring and impairment charges for the three months ended March 31, 2006 are as follows (in thousands):
ENVELOPES, FORMS AND COMMERCIAL LABELS PRINTING CORPORATE TOTAL ---------- ---------- --------- ------- Employee separation costs.............. $2,238 $3,938 $ 555 $ 6,731 Asset impairments...................... 1,865 45 -- 1,910 Equipment moving expenses.............. 770 1,103 -- 1,873 Lease termination expenses............. 1,877 -- -- 1,877 Building clean-up and other expenses... 175 910 -- 1,085 ------ ------ ------ ------- Total restructuring and impairment charges.......................... $6,925 $5,996 $ 555 $13,476 ====== ====== ====== =======
ENVELOPES, FORMS AND LABELS. The envelopes, forms and labels segment closed manufacturing plants in Denver, Colorado, and Kankakee, Illinois and an office location in Chicago, Illinois in the first quarter of 2006. As a result of these closures, the segment recorded impairment charges of $0.6 million related to equipment taken out of service at these locations, employee separation costs of $1.3 million related to workforce reductions, and equipment moving and other related expenses of $0.6 million. In addition, the segment recorded lease termination expenses of $1.9 million representing the net present value of the cost of an office and two building leases that are not expected to be recovered over their remaining terms which are no longer being used. The segment has plans for additional plant closures in 2006 and has recorded impairment charges of $0.6 million related to equipment that it expects to take out of service and has incurred $0.1 million in equipment moving expenses related to these plant closures. The segment incurred additional impairment charges of $0.7 million related to equipment taken out of service and equipment moving and other expenses of $0.2 million related to two plants closed in the fourth quarter of 2005. The segment incurred employee separation costs of $0.9 million related to workforce reductions at other locations relating to the Company's cost savings programs. COMMERCIAL PRINTING. The commercial printing segment closed a plant in Denver, Colorado and a plant in Phoenix, Arizona in the first quarter of 2006. In connection with the closures, the segment recorded employee separation costs of $1.2 million, moving expenses of $0.2 million and building clean-up and other expenses of $0.2 million. The commercial printing segment incurred employee separation costs of $1.3 million, moving expenses of $0.9 million for the redeployment of equipment and building cleaning and other expenses of $0.7 million for three plants closed in the fourth quarter of 2005. The commercial printing segment incurred employee separation costs of $1.4 million at other locations relating to the Company's cost savings initiatives. CORPORATE. In the fourth quarter of 2005, the Company made significant changes to its corporate management team and staff and moved its corporate headquarters from Denver, Colorado to Stamford, Connecticut. During the first quarter of 2006, the Company incurred additional employee separation costs of $0.6 million related to these changes. 8 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 8. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES (CONTINUED) 2005 ACTIVITY Restructuring, impairment and other charges for the three months ended March 31, 2005 are as follows (in thousands):
ENVELOPES, FORMS AND COMMERCIAL LABELS PRINTING CORPORATE TOTAL ---------- ---------- --------- ------- Employee separation costs.............. $ -- $ 396 $ -- $ 396 Asset impairments...................... -- 7,137 -- 7,137 Building clean-up and other expenses... (14) 549 -- 535 ------ ------ ------ ------- Total restructuring charges............ (14) 8,082 -- 8,068 Other charges.......................... -- -- 1,951 1,951 ------ ------ ------ ------- Total restructuring, impairment and other charges.................... $ (14) $8,082 $1,951 $10,019 ====== ====== ====== =======
COMMERCIAL PRINTING. The asset impairment charges relate to operations in the commercial printing segment that operated at a loss throughout 2004 and continued to perform poorly in the first quarter of 2005. During the three months ended March 31, 2005, management determined that the carrying value of the equipment at these plants would not be recoverable from the cash flows generated from their continued use. During the three months ended March 31, 2005, the commercial printing segment began the closure of a small printing operation located in Phoenix, Arizona and the consolidation of its production into its Los Angeles, California printing plant. The Company accrued employee separation costs of $0.4 million to cover the separation of 45 employees, and $0.4 million of building clean-up and other expenses associated with the shut-down of this plant. The Company substantially completed the consolidation of its printing operations in Seattle, Washington and San Francisco, California during the three months ended March 31, 2005. The restructuring expenses incurred during the three months ended March 31, 2005 were $0.2 million. CORPORATE. In January 2005, the Company's Chief Executive Officer resigned. The cost accrued during the three months ended March 31, 2005 as a result of this resignation was $2.0 million. A summary of the activity charged to the restructuring liabilities is as follows (in thousands):
LEASE EMPLOYEE PENSION TERMINATION SEPARATION WITHDRAWAL COSTS COSTS LIABILITIES TOTAL ----------- ---------- ----------- -------- Balance at December 31, 2005.......... $6,067 $ 3,734 $950 $ 10,751 Accruals.......................... 1,877 6,731 -- 8,608 Payments.......................... (707) (9,411) -- (10,118) ------ ------- ---- -------- Balance at March 31, 2006............. $7,237 $ 1,054 $950 $ 9,241 ====== ======= ==== ========
9 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 9. PENSION PLANS The components of the net periodic pension expense for the pension plans and the supplemental executive retirement plans are as follows (in thousands):
THREE MONTHS ENDED MARCH 31, --------------------- 2006 2005 ------- ----- Service cost........................................... $ 714 $ 659 Interest cost on projected benefit obligation.......... 887 829 Expected return on plan assets......................... (1,177) (928) Net amortization and deferral.......................... 209 175 ------- ----- Net periodic pension expense........................... $ 633 $ 735 ======= =====
The Company expects to contribute $1.1 million to its pension plans in 2006. As of March 31, 2006, contributions of $0.6 million had been made. In connection with the sale of Supremex on March 31, 2006 (Notes 3 and 6), the Company has no further obligation relating to Supremex's pension plans. 10. INCOME (LOSS) PER SHARE Basic income (loss) per share is computed based upon the weighted average number of common shares outstanding for the period. Diluted income (loss) per share reflects the potential dilution that could occur if options, restricted stock and restricted stock units to issue common stock were exercised computed using the treasury stock method. The only Company securities as of March 31, 2006 that could dilute basic income per share for periods subsequent to March 31, 2006 are: (1) outstanding stock options which are exercisable into 2,147,315 shares of the Company's common stock and (2) 436,600 shares of restricted stock and restricted stock units ("Restricted Stock") of the Company's common stock. The following table sets forth the computation of basic and diluted income (loss) per share (in thousands, except per share data):
THREE MONTHS ENDED MARCH 31, ----------------------- 2006 2005 -------- -------- Numerator for basic and diluted income (loss) per share: Net income (loss)................................... $112,202 $(22,556) ======== ======== Denominator weighted average common shares outstanding: Basic shares........................................ 53,109 47,780 Dilutive effect of stock options and Restricted Stock.......................................... 427 -- -------- -------- Diluted shares...................................... 53,536 47,780 ======== ======== Basic income (loss) per share........................... $ 2.11 $ (0.47) ======== ======== Diluted income (loss) per share......................... $ 2.10 $ (0.47) ======== ========
11. SEGMENT INFORMATION In the third quarter of 2005, the Company changed its management structure and realigned its manufacturing operations into two operating segments--the envelope, forms and labels segment and the commercial printing segment. The envelope, forms and labels segment is in the business of manufacturing customized envelopes and packaging products, stock envelopes, traditional and specialty business forms, and labels used for such applications as mailing, messaging and bar coding. The commercial printing segment is in the business of designing, manufacturing and distributing printed products which include advertising literature, corporate identity materials, financial printing, calendars, 10 CENVEO, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 11. SEGMENT INFORMATION (CONTINUED) greeting cards, brand marketing materials, catalogs, maps, CD packaging and direct mail. Segment data for 2005 has been restated to reflect the new operating segments. Operating income of each segment includes all costs and expenses directly related to the segment's operations. Corporate expenses include corporate general and administrative expenses. The following tables present certain segment information (in thousands):
THREE MONTHS ENDED MARCH 31, ----------------------------- 2006 2005 ---------- ------------ Net sales: Envelopes, forms and labels......................... $ 233,747 $ 233,883 Commercial printing................................. 192,931 215,719 ---------- ---------- Total............................................... $ 426,678 $ 449,602 ========== ========== Operating income (loss): Envelopes, forms and labels......................... $ 24,980 $ 20,153 Commercial printing................................. (40) (8,428) Corporate........................................... (6,245) (7,032) ---------- ---------- Total............................................... $ 18,695 $ 4,693 ========== ========== Restructuring, asset impairment and other charges: Envelopes, forms and labels......................... $ 6,925 $ (14) Commercial printing................................. 5,996 8,082 Corporate........................................... 555 1,951 ---------- ---------- Total............................................... $ 13,476 $ 10,019 ========== ========== Net sales by product line: Commercial printing................................. $ 191,893 $ 214,846 Envelopes........................................... 187,931 186,386 Business forms and labels........................... 46,854 48,370 ---------- ---------- Total............................................... $ 426,678 $ 449,602 ========== ========== MARCH 31, DECEMBER 31, 2006 2005 ---------- ------------ Identifiable assets: Envelopes, forms and labels......................... $ 468,568 $ 613,580 Commercial printing................................. 431,556 438,938 Corporate........................................... 144,422 27,046 ---------- ---------- Total............................................... $1,044,546 $1,079,564 ========== ==========
11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations of Cenveo, Inc. and its subsidiaries, which we refer to as Cenveo should be read in conjunction with the accompanying consolidated financial statements and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Item 7 of our 2005 Form 10-K describes our contractual obligations and the application of our critical accounting policies. There have been no significant changes as of March 31, 2006 pertaining to these topics, other than the repayment of all amounts outstanding of our senior secured credit facility primarily from the proceeds from the sale of our former subsidiary Supremex, Inc. ("Supremex") and certain other assets. See "Gain on Sale of Non-Strategic Businesses" below. FORWARD-LOOKING STATEMENTS Certain statements in this report, and in particular, statements found in Management's Discussion and Analysis of Financial Condition and Results of Operations, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We believe these forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of Cenveo. All such statements involve risks and uncertainties, and as a result, actual results could differ materially from those projected, anticipated or implied by these statements. Such forward-looking statements involve known and unknown risks. Risk Factors include general economic, business and labor conditions, particularly as affect the commercial printing, envelopes, labels and packaging businesses; adverse developments in the value of collateral securing financings; an adverse development in rating agency credit ratings or assessments; our substantial level of indebtedness, which imposes significant restrictions on the ability to implement our strategic initiatives; the ability to return to profitability on a consistent basis; the cyclical nature of our industry; dependence on sales that are not subject to long-term contracts; dependence on suppliers; the ability to recover the rising cost of key raw materials in markets that are highly price sensitive; the ability to meet customer demand for additional value-added products and services; the ability to timely or adequately respond to technological changes in the industry; the impact of the Internet and other electronic media on the demand for envelopes and printed material; postage rates; the ability to manage operating expenses; the ability to manage financing costs and interest rate risk; a decline in business volume and profitability that could result in a further impairment of goodwill; the ability to retain key management personnel; the ability to identify, manage or integrate future acquisitions; the costs associated with and the outcome of outstanding and future litigation; and changes in government regulations. In view of such uncertainties, investors should not place undue reliance on our forward-looking statements since such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. BUSINESS OVERVIEW We are a leading provider of print and visual communications, with one-stop services from design through fulfillment. Our broad portfolio of services and products include commercial printing, envelopes, labels, packaging and business documents delivered through a network of production, fulfillment and distribution facilities throughout North America. In September 2005, we initiated a major restructuring program that we expect to continue throughout 2006. We operate in two segments: envelopes, forms and labels and commercial printing. ENVELOPES, FORMS AND LABELS. Our envelopes, forms and labels segment specializes in the manufacturing and printing of customized envelopes for billing and remittance and direct mail advertising. This segment also produces business forms and labels, custom and stock envelopes and mailers sold to third-party dealers such as print distributors, office products suppliers and office-products retail chains. 12 COMMERCIAL PRINTING. Our commercial printing segment specializes in the printing of annual reports, car brochures, brand marketing collateral, financial communications, specialty packaging and general commercial printing. CONSOLIDATED OPERATING RESULTS Management's Discussion and Analysis of Financial Condition and Results of Operations includes an overview of our consolidated results for the three months ended March 31, 2006, followed by a discussion of the results of each of our business segments for the same period. A summary of our consolidated statement of operations is presented below. The summary presents reported net sales and operating income (loss) as well as the net sales and operating income (loss) of our operating segments that we use internally to assess our operating performance. Division sales exclude sales of divested operations and division operating income (loss) excludes corporate expenses, restructuring, impairment and other charges and the results of divested operations. It has been the Company's practice to close its quarters on the Saturday closest to the last day of the calendar month so that each quarter has the same number of days and 13 full weeks. The financial statements and other financial information in this report are presented using a calendar convention. The reporting periods, which consist of 13 weeks ending on April 1, 2006 and April 2, 2005, are reported as ending on March 31, 2006 and 2005, respectively, since the effect is not material.
THREE MONTHS ENDED MARCH 31, ----------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2006 2005 - ---------------------------------------- -------- -------- Division net sales.......................................... $384,915 $399,886 Divested operations..................................... 41,763 49,716 -------- -------- Net sales................................................... $426,678 $449,602 ======== ======== Division operating income................................... $ 29,886 $ 11,642 Corporate expenses...................................... 5,690 5,081 Restructuring, impairment and other charges............. 13,476 10,019 Divested operations..................................... (7,975) (8,151) -------- -------- Operating income............................................ 18,695 4,693 (Gain) loss on sale of non-strategic businesses......... (123,352) 722 Interest expense........................................ 18,037 18,192 Other non-operating (income) expense.................... 222 (11) -------- -------- Income (loss) before income taxes........................... 123,788 (14,210) Income tax expense...................................... 11,586 8,346 -------- -------- Net income (loss)........................................... $112,202 $(22,556) ======== ======== Income (loss) per share--basic.............................. $ 2.11 $ (0.47) ======== ======== Income (loss) per share--diluted............................ $ 2.10 $ (0.47) ======== ========
NET SALES Net sales declined $22.9 million in the first quarter of 2006 compared to the first quarter of 2005, primarily reflecting lower sales in our commercial printing segment. Net sales in our envelopes, forms and labels segment were consistent with the prior year. As a result of the sale of Supremex, future net sales for our envelopes, forms and labels segment will be lower. Excluding sales of operations that have been divested ("division net sales"), division net sales were also lower primarily due to lower commercial printing sales. Division net sales of envelopes, forms and labels increased in the first 13 quarter of 2006, as compared to the first quarter of 2005. See "Segment Operations" below for a more detailed discussion of the primary factors for the change in our net sales for our segments. OPERATING INCOME Operating income increased $14.0 million in the first quarter of 2006, as compared to the first quarter of 2005. The operating income of the envelopes, forms and labels segment increased $4.8 million and the operating loss of the commercial printing segment was reduced by $8.4 million. Excluding restructuring, impairment and other charges and operating income of divested operations, the operating income of our two segments ("division operating income") increased $18.2 million in the first quarter of 2006 as compared to the first quarter of 2005. These results reflect the benefits of our strategy of reducing fixed costs, improving the procurement of raw materials, improving productivity through plant consolidations and divesting or closing underperforming operations. See "Segment Operations" below for a more detailed discussion of the primary factors for the change in our operating income for our segments. CORPORATE EXPENSES. Corporate expenses include the costs of our corporate headquarters. These costs were higher in the first quarter of 2006, as compared to the first quarter of 2005, primarily due to additional costs that were incurred in the transition of the corporate headquarters from Denver, Colorado to Stamford, Connecticut and from stock option expense due to the adoption of a new accounting standard on January 1, 2006. See Note 2 to our condensed consolidated financial statements included herein. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES. In September 2005, a new senior management team implemented significant cost savings programs including the consolidation of purchasing activities, the rationalization of our manufacturing platform, corporate and field human resources reductions, implementation of company-wide purchasing initiatives and streamlining of our information technology infrastructure. As of March 31, 2006, our total liability for restructuring was approximately $9.2 million (see Note 8 to the condensed consolidated financial statements included herein). During the first quarter of 2006, we incurred $13.5 million of restructuring and impairment charges, which included $6.7 million for employee separation costs, $1.9 million for asset impairments, $1.9 million for lease termination costs and other exit costs of $3.0 million. We anticipate additional restructuring and impairment charges during the remainder of 2006. During the first quarter of 2005, we incurred $10.0 million of restructuring, impairment and other charges, which included $7.1 million for asset impairments, $0.5 million for other exit costs, $0.4 million for employee separation costs and $2.0 million of costs incurred as a result of the resignation of the Company's former Chief Executive Officer. GAIN ON SALE OF NON-STRATEGIC BUSINESSES. On March 31, 2006, the Company recorded a pre-tax gain of approximately $124 million on the sale of all of the shares of Supremex, a Canadian subsidiary of the Company, and certain other assets to Supremex Income Fund, a new open-ended trust formed under the laws of the Province of Quebec (the "Fund"). In connection with the sale we received net proceeds of approximately $187 million and 11.4 million units in the Fund, which represented a 36.5% economic and voting interest in the Fund. On April 28, 2006, we sold 2.5 million units in the Fund to the underwriters relating to an over-allotment option and received approximately $21 million, which reduced our economic and voting interest in the Fund to 28.6% (see Note 3 to our condensed consolidated financial statements included herein). INTEREST EXPENSE Interest expense decreased slightly to $18.0 million in the first quarter of 2006, as compared to $18.2 million in the first quarter of 2005, primarily due to decreased borrowings. Interest expense in the first quarter of 2006 reflects average outstanding debt of $815.9 million and a weighted average interest rate of 8.4%, compared to average outstanding debt of $828.2 million during the first quarter of 2005 and a weighted average interest rate of 8.2%. 14 INCOME TAXES Income tax expense for the quarter ended March 31, 2006 was $11.6 million, which consisted of tax on our Canadian operations of $3.2 million and income taxes of $8.4 million related to the sale of Supremex. During the first quarter of 2006, we did not recognize any tax benefit from the net operating losses of our domestic operations. In the first quarter of 2006, we provided income taxes for our Canadian operations at an effective rate of approximately 34%, as these operations are expected to generate taxable income in 2006. Income tax expense for the quarter ended March 31, 2005 was $8.3 million, which consisted of taxes on our Canadian operations of $4.6 million and a valuation allowance against foreign tax credits of $3.7 million. The Company recognized a $220 million gain for US income tax purposes on the sale of the Supremex and related assets. The utilization of our net operating and capital losses allowed the release of valuation allowances on deferred tax assets of $84.6 million in the first quarter of 2006, which offset the tax expense on the gain on sale of Supremex, except for $8.4 million which was primarily alternative minimum tax. We established valuation allowances of $6.6 million against tax benefits of the net operating losses of our domestic operations and alternative minimum tax credits generated in the first quarter of 2006, including $4.4 million relating to the gain on sale of Supremex. SEGMENT OPERATIONS Our chief executive officer monitors the performance of the ongoing operations of our two operating segments. We assess performance based on division net sales and division operating income. The summaries of sales and operating income of our two segments have been presented to show each segment without the sales of divested operations and to show the operating income of each segment without the results of divested operations and excluding restructuring, impairment and other charges. Sales and operating income of operations divested and restructuring, impairment and other charges are included in the tables below to reconcile segment sales and operating income reported in Note 11 to the condensed consolidated financial statements to division net sales and division operating income on which our segments are evaluated. ENVELOPES, FORMS AND LABELS
THREE MONTHS ENDED MARCH 31, ----------------------- (IN THOUSANDS) 2006 2005 - -------------- -------- -------- Segment net sales........................................... $233,747 $233,883 Divested operations..................................... (41,391) (44,012) -------- -------- Division net sales.......................................... $192,356 $189,871 ======== ======== Segment operating income.................................... $ 24,980 $ 20,153 Restructuring and impairment charges.................... 6,925 (14) Divested operations..................................... (8,838) (8,607) -------- -------- Division operating income................................... $ 23,067 $ 11,532 ======== ======== Division operating income margin............................ 12% 6%
DIVISION NET SALES Division net sales of our envelopes, forms and labels segment increased $2.5 million, or 1%, in the first quarter of 2006, as compared to 2005. The significant factors impacting division net sales in the first quarter of 2006 were as follows: * Sales of envelopes to our transactional and direct mail customers increased approximately $3.0 million. A significant portion of this increase was attributable to the direct mail segment of the market. 15 * Sales of envelopes and other products to the office products retail customers increased approximately $1.3 million. * Sales to our distributor channel declined approximately $1.8 million, primarily due to the closure of two plants in the second half of 2005 and not retaining certain low margin business. DIVISION OPERATING INCOME Division operating income of our envelopes, forms and labels segment increased $11.5 million, or 100%, in the first quarter of 2006, as compared to the first quarter of 2005. This increase in operating income was due to higher division net sales, improved margins and significantly lower fixed manufacturing, selling and administrative expenses. Higher sales and improved margins contributed approximately $2.1 million. Plant consolidations and aggressive cost reduction programs have reduced fixed manufacturing costs by approximately $5.9 million and selling and administrative expenses by approximately $3.5 million. COMMERCIAL PRINTING
THREE MONTHS ENDED MARCH 31, ----------------------- (IN THOUSANDS) 2006 2005 - -------------- -------- -------- Segment net sales........................................... $192,931 $215,719 Divested operations..................................... (372) (5,704) -------- -------- Division net sales.......................................... $192,559 $210,015 ======== ======== Segment operating loss...................................... $ (40) $ (8,428) Restructuring and impairment charges.................... 5,996 8,082 Divested operations..................................... 863 456 -------- -------- Division operating income................................... $ 6,819 $ 110 ======== ======== Division operating income margin............................ 4% 0%
DIVISION NET SALES Division net sales of the commercial printing segment declined $17.5 million, or 8%, in the first quarter of 2006, as compared to the first quarter of 2005. We anticipated lower sales at certain of our commercial printing plants during the first quarter of 2006 based on sales trends at the end of 2005. In addition, since the first quarter of 2005, we have closed five commercial printing plants that had weak market positions and eroding sales. Sales were approximately $7.5 million lower in the first quarter of 2006 due to these plant closures. Net sales at our plant located in the Boston market were $3.7 million lower in the first quarter of 2006 than in the prior year. This plant was sold on April 21, 2006. DIVISION OPERATING INCOME Despite the decline in sales, division operating income of our commercial printing segment increased $6.7 million in the first quarter of 2006, as compared to the first quarter of 2005. The measures we have taken to reduce the cost structure of this segment through plant closures, headcount reductions and cost control have more than offset the impact of lower sales. We have reduced fixed manufacturing costs of our ongoing operations by approximately $1.2 million, fixed selling expenses by approximately $2.6 million and administrative expenses by approximately $3.1 million. LIQUIDITY AND CAPITAL RESOURCES NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES. Net cash provided by operating activities was $14.7 million in the first quarter of 2006, which was primarily due to the net income adjusted for non cash items of $11.2 million and a decrease in our working capital of $2.1 million. 16 Net cash used by operating activities was $22.8 million in first quarter of 2005, which was primarily due to an increase in our working capital of $19.3 million and the net loss adjusted for non cash items of $2.1 million. NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES. Net cash provided by investing activities was $108.9 million in the first quarter of 2006, primarily reflecting cash proceeds of $119.4 million from the sale of Supremex and certain other assets, offset in part by capital expenditures of $6.1 million and deferred payments relating to acquisitions of $4.7 million. Net cash used in investing activities was $7.1 million in the first quarter of 2005, primarily reflecting capital expenditures of $6.5 million and a deferred payment relating to an acquisition of $3.7 million, offset in part by proceeds from the sale of non-strategic businesses of $3.1 million. NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES. Net cash used in financing activities was $123.3 million in the first quarter of 2006, primarily resulting from the repayment of our senior secured revolving credit facility with proceeds from the sale of Supremex. Net cash provided by financing activities was $31.9 million in the first quarter of 2005, primarily due to the increase in borrowings under our senior secured revolving credit facility of $32.5. LONG-TERM DEBT. Our total outstanding debt was $687.8 million at March 31, 2006, following the repayment of all amounts outstanding under our senior secured credit facility primarily with proceeds received on closing from the sale of Supremex. On April 20, 2006, we received approximately $71 million of proceeds from the sale of Supremex that was held in escrow since March 31, 2006 and used approximately $11 million of these proceeds to pay off another credit facility on our balance sheet as of March 31, 2006. As of April 28, 2006, we are investing approximately $54 million of the remaining proceeds from the sale of Supremex in short-term instruments. Pursuant to our indentures and following the pay down of amounts owed under our credit facilities in March 2006, we have up to one year to use the remaining proceeds to reinvest in our businesses or to tender for our outstanding notes. On March 31, 2006 we had outstanding letters of credit of approximately $28.5 million and $0.5 million of surety bonds related to performance and payment guarantees. In addition, we issued letters of credit of $0.9 million as credit enhancements in conjunction with other debt. Based on our experience with these arrangements, we do not believe that any obligations that may arise will be significant. Our current credit ratings are as follows:
SENIOR SENIOR SECURED CREDIT SENIOR SUBORDINATED REVIEW AGENCY FACILITY NOTES NOTES LAST UPDATE - -------------------------------------- -------------- ------ ------------ ------------ Standard & Poor's..................... BB- B+ B- January 2006 Moody's............................... Ba3 B1 B3 April 2006
In March 2006, we amended our $300 million senior secured credit facility at no cost to us, primarily to provide for the sale of certain assets such as Supremex. The terms of our existing debt do not have any rating triggers, and we do not believe that our current ratings will impact our ability to raise additional capital, should such funds be needed. We expect internally generated cash flow and the financing available under our senior secured credit facility will be sufficient to fund our working capital needs and long-term growth; however, this cannot be assured. SEASONALITY AND ENVIRONMENT Our commercial printing plants experience seasonal variations. Revenues from annual reports are generally concentrated from February through April. Revenues associated with holiday catalogs and automobile brochures tend to be concentrated from July through October. As a result of these seasonal variations, some of our commercial printing operations are at or near capacity at certain times during these periods. 17 In addition, several envelope market segments and certain segments of the direct mail market experience seasonality, with a higher percentage of the volume of products sold to these markets occurring during the fourth quarter of the year. This seasonality is due to the increase in sales to the direct mail market due to holiday purchases. Seasonality is offset by the diversity of our other products and markets, which are not materially affected by seasonal conditions. Environmental matters have not had a material financial impact on our historical operations and are not expected to have a material impact in the future. NEW ACCOUNTING PRONOUNCEMENTS We are required to adopt certain new accounting pronouncements. See Note 2 to our condensed consolidated financial statements included herein. AVAILABLE INFORMATION Our Internet address is: www.cenveo.com. We make available free of charge through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such documents are filed electronically with the Securities and Exchange Commission. In addition, our earnings conference calls are archived for replay on our website and presentations to securities analysts are also included on our website. LEGAL PROCEEDINGS From time to time we may be involved in claims or lawsuits that arise in the ordinary course of business. Accruals for claims or lawsuits have been provided for to the extent that losses are deemed probable and can be estimated. Although the ultimate outcome of these claims or lawsuits cannot be ascertained, on the basis of present information and advice received from counsel, it is our opinion that the disposition or ultimate determination of such claims or lawsuits will not have a material adverse effect on us. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risks such as changes in interest and foreign currency exchange rates, which may adversely affect results of operations and financial position. Risks from interest rate fluctuations and changes in foreign currency exchange rates are managed through normal operating and financing activities. In conjunction with our sale of Supremex, we entered into short-term foreign currency exchange forward contracts at varying rates to convert the Canadian dollar proceeds received on March 31, 2006 into U.S. dollars. We do not utilize derivatives for speculative purposes, nor do we hedge interest rate exposure through the use of swaps and options. Exposure to market risk from changes in interest rates relates primarily to our variable rate debt obligations. The interest on this debt is the London Interbank Offered Rate ("LIBOR") plus a margin. At March 31, 2006, we had variable rate debt outstanding of $12.2 million. A 1% increase in LIBOR on debt outstanding subject to variable interest rates would increase our annual interest expense and reduce our annual net income by approximately $0.1 million. We have operations in Canada, and thus are exposed to market risk for changes in foreign currency exchange rates of the Canadian dollar. In the three months ended March 31, 2006, a uniform 10% strengthening of the U.S. dollar relative to the Canadian dollar would have resulted in a decrease in sales and net income of approximately $5.4 million and $0.9 million, respectively. The effects of foreign currency exchange rates on future results would also be impacted by changes in sales levels or local currency prices. 18 ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes in our internal control over financial reporting made during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS There are inherent limitations in the effectiveness of any control system, including the potential for human error and the circumvention or overriding of the controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, our management, including our Chairman and Chief Executive Officer and our Chief Financial Officer, does not expect that our control system can prevent or detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity's operating environment or deterioration in the degree of compliance with policies or procedures. 19 PART II. OTHER INFORMATION ITEM 1A. RISK FACTORS In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2005, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. ITEM 6. EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------- ----------- 2.1* Acquisition Agreement, dated as of March 17, 2006, among Supremex Income Fund, Cenveo Corporation and Cenveo, Inc. 3.1 Articles of Incorporation--incorporated by reference to Exhibit 3(i) of the registrant's quarterly report of on Form 10-Q for the quarter ended June 30, 1997. 3.2 Articles of Amendment to the Articles of Incorporation dated May 17, 2004--incorporated by reference to Exhibit 3.2 to registrant's quarterly report on Form 10-Q for the quarter ended June 30, 2004. 3.3 Amendment to Articles of Incorporation and Certificate of Designations of Series A Junior Participating Preferred Stock of the Company dated April 20, 2005--incorporated by reference to Exhibit 3.1 to Cenveo Inc.'s current report on Form 8-K filed with the SEC on April 21, 2005. 3.4 Bylaws as amended and restated effective April 17, 2005--incorporated by reference to Exhibit 3.2 to registrant's current report on Form 8-K filed with the SEC on April 18, 2005. 4.1 Indenture dated as of March 13, 2002 between Mail-Well I Corporation and State Street Bank and Trust Company, as Trustee relating to Mail-Well I Corporation's $350,000,000 aggregate principal amount of 9 5/8% Senior Notes due 2012--incorporated by reference to Exhibit 10.30 to registrant's quarterly report on Form 10-Q for the quarter ended March 31, 2002. 4.2 Form of Senior Note and Guarantee relating to Mail-Well I Corporation's $350,000,000 aggregate principal amount 9 5/8% due 2012--incorporated by reference to Exhibit 10.31 to registrant's quarterly report on Form 10-Q for the quarter ended March 31, 2002. 4.3 Indenture dated as of February 4, 2004 between Mail-Well I Corporation and U.S. Bank National Association, as Trustee, and Form of Senior Subordinated Note and Guarantee relating to Mail-Well I Corporation's $320,000,000 aggregate principal amount of 7 7/8% Senior Subordinated Notes due 2013--incorporated by reference to Exhibit 4.5 to registrant's annual report on Form 10-K for the year ended December 31, 2003. 4.4 Registration Rights Agreement dated February 4, 2004, between Mail-Well I Corporation and Credit Suisse First Boston, as Initial Purchaser, relating to Mail-Well I Corporation's $320,000,000 aggregate principal amount of 7 7/8% Senior Subordinated Notes due 2013--incorporated by reference to Exhibit 4.6 to registrant's annual report on Form 10-K for the year ended December 31, 2003. 4.5 Rights Agreement dated April 20, 2005 between registrant and Computershare Trust Company, Inc.--incorporated by reference to Exhibit 4.1 to registrant's current report on Form 8-K dated (date of earliest event reported) April 17, 2005 filed with the SEC on April 21, 2005. 10.1 Form of Indemnity Agreement between Mail-Well, Inc. and each of its officers and directors--incorporated by reference from Exhibit 10.17 of Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994. 10.2 Form of Indemnity Agreement between Mail-Well I Corporation and each of its officers and directors--incorporated by reference from Exhibit 10.18 of Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994. 20 EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.3+ Form of M-W Corp. Employee Stock Ownership Plan effective as of February 23, 1994 and related Employee Stock Ownership Plan Trust Agreement--incorporated by reference from Exhibit 10.19 of Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994. 10.4 Form of M-W Corp. 401(k) Savings Retirement Plan--incorporated by reference from Exhibit 10.20 of Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994. 10.5+ Form of Mail-Well, Inc. Incentive Stock Option Agreement--incorporated by reference from Exhibit 10.22 of Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994. 10.6+ Form of Mail-Well, Inc. Nonqualified Stock Option Agreement--incorporated by reference from Exhibit 10.23 of Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994. 10.7+ 1997 Non-Qualified Stock Option Agreement--incorporated by reference from Exhibit 10.54 of Mail-Well, Inc.'s quarterly report on Form 10-Q for the quarter ended March 31, 1997. 10.8+ Mail-Well, Inc. 1998 Incentive Stock Option Plan Incentive Stock Option Agreement--incorporated by reference from Exhibit 10.59 to Mail-Well, Inc.'s quarterly report on Form 10-Q for the quarter ended March 31, 1998. 10.9+ Mail-Well, Inc. 2001 Long-Term Equity Incentive Plan--incorporated by reference from the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2001. 10.10+ Form of Non-Qualified Stock Option Agreement under 2001 Long-Term Equity Incentive Plan--incorporated by reference from Mail-Well, Inc.'s quarterly report on Form 10-Q for the quarter ended June 30, 2001. 10.11+ Form of Incentive Stock Option Agreement under 2001 Long-Term Equity Incentive Plan--incorporated by reference from Mail-Well, Inc.'s quarterly report on Form 10-Q for the quarter ended June 30, 2001. 10.12+ Form of Restricted Stock Award Agreement under 2001 Long-Term Equity Incentive Plan--incorporated by reference from Mail-Well, Inc.'s quarterly report on Form 10-Q for the quarter ended June 30, 2001. 10.13+ Form of Restricted Share Unit Award Agreement under 2001 Long-Term Equity Incentive Plan--incorporated by reference to Exhibit 10.13 of registrant's annual report on Form 10-K filed for the year ended December 31, 2005. 10.14 Second Amended and Restated Equipment Lease dated as of August 6, 2002 between Wells Fargo Bank Northwest, National Association, as trustee under MW 1997-1 Trust, and Mail- Well I Corporation--incorporated by reference to Exhibit 10.26 of registrant's quarterly report on Form 10-Q for the quarter ended September 30, 2002. 10.15 Second Amended and Restated Guaranty Agreement dated as of August 6, 2002, among Mail-Well I Corporation as Lessee, certain of its subsidiaries and registrant as Guarantors, Fleet Capital Corporation as Agent, and the Trust Certificate Purchasers named therein--incorporated by reference to Exhibit 10.27 of registrant's quarterly report on Form 10-Q for the quarter ended September 30, 2002. 10.16 Second Amended and Restated Participation Agreement dated as of August 6, 2002, among Mail-Well I Corporation as Lessee, Fleet Capital Corporation as Arranger and Agent, and the Trust Certificate Purchasers named therein--incorporated by reference to Exhibit 10.28 of registrant's quarterly report on Form 10-Q for the quarter ended September 30, 2002. 21 EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.17 Amendment Agreement No. 1 dated as of September 25, 2002, among Mail-Well I Corporation as Lessee, certain of its subsidiaries and registrant as Guarantors, Fleet Capital Corporation as Agent, and the Trust Certificate Purchasers named therein--incorporated by reference to Exhibit 10.29 of registrant's quarterly report on Form 10-Q for the quarter ended September 30, 2002. 10.18+ Form of Executive Severance Agreement entered into between the Company and certain of its executive officers--incorporated by reference to Exhibit 10.27 of registrant's annual report on Form 10-K filed the year ended December, 2002. 10.19 Amendment Agreement No. 2 dated as of March 25, 2004 among Mail-Well I Corporation as Lessee, certain of its subsidiaries and Mail-Well, Inc. as Guarantor, Fleet Capital Corporation as Agent, and the Trust Purchasers named therein--incorporated by reference to Exhibit 10.21 of registrant's quarterly report on Form 10-Q for quarter ended March 31, 2004. 10.20 Second Amended and Restated Credit Agreement dated March 25, 2004 among Mail-Well, Inc., Mail-Well I Corporation, certain subsidiaries of Mail-Well I, the lenders under the Second Amended and Restated Credit Agreement, and Bank of America, N.A., as administrative agent for the lenders--incorporated by reference to Exhibit 10.22 of the registrant's quarterly report on Form 10-Q for quarter ended March 31, 2004. 10.21 Second Amended and Restated Security Agreement dated March 25, 2004 among Mail-Well, Inc., Mail-Well I Corporation, certain subsidiaries of Mail-Well I, the lenders under the Second Amended and Restated Credit Agreement, and Bank of America, N.A., as administrative agent for the lenders--incorporated by reference to Exhibit 10.23 of registrant's quarterly report on Form 10-Q for quarter ended March 31, 2004. 10.22+ Cenveo, Inc. 2001 Long-Term Equity Incentive Plan, as amended--incorporated by reference to Exhibit 10.24 to registrant's quarterly report on Form 10-Q for the quarter ended June 30, 2004. 10.23 Amendment No. 1 to Second Amended and Restated Credit Agreement dated February 8, 2005 among the registrant, Cenveo Corporation, certain subsidiaries of Cenveo Corporation, the lenders under the Second Amended and Restated Credit Agreement, and Bank of America, N.A., as administrative agent for the lenders--incorporated by reference to Exhibit 10.23 to registrant's annual report on Form 10-K filed for the year ended December 31, 2004. 10.24 Settlement and Governance Agreement by and among the registrant, Burton Capital Management and Robert G. Burton, Sr., dated September 9, 2005--incorporated by reference to Exhibit 10.1 to the registrant's current report on Form 8-K dated (date of earliest event reported) September 9, 2005 filed with the SEC on September 12, 2005. 10.25+ Form of Amended and Restated Severance Agreement between the registrant and certain of its executives--incorporated by reference to Exhibit 10.2 to the registrant's current report on Form 8-K dated (date of earliest event reported) September 9, 2005 filed with the SEC on September 15, 2005. 10.26+ Employment Agreement dated as of October 27, 2005 between the registrant and Robert G. Burton, Sr.--incorporated by reference to Exhibit 10.29 of registrant's annual report on Form 10-K filed for the year ended December 31, 2005. 22 EXHIBIT NUMBER DESCRIPTION - ------- ----------- 10.27 Amendment No. 2 to Second Amended and Restated Credit Agreement dated December 23, 2005 among Cenveo, Inc., Cenveo Corporation, certain subsidiaries of Cenveo Corporation, the lenders under the Second Amended and Restated Credit Agreement, and Bank of America, N.A., as administrative agent for the lenders--incorporated by reference to Exhibit 10.30 of registrant's annual report on Form 10-K filed for the year ended December 31, 2005. 10.28 Amendment No. 1 to Second Amended and Restated Security Agreement dated December 23, 2005 among Cenveo, Inc., Cenveo Corporation, certain subsidiaries of Cenveo Corporation, the lenders under the Second Amended and Restated Security Agreement, and Bank of America, N.A., as administrative agent for the lenders--incorporated by reference to Exhibit 10.31 of registrant's annual report on Form 10-K filed for the year ended December 31, 2005. 10.29 Amendment No. 3 to Second Amended and Restated Credit Agreement dated January 20, 2006 among Cenveo, Inc., Cenveo Corporation, certain subsidiaries of Cenveo Corporation, the lenders under the Second Amended and Restated Credit Agreement, and Bank of America, N.A., as administrative agent for the lenders--incorporated by reference to Exhibit 10.32 of registrant's annual report on Form 10-K filed for the year ended December 31, 2005. 10.30* Underwriting Agreement dated March 17, 2006, among TD Securities Inc., CIBC World Markets Inc. and the other Underwriters signatory thereto, Supremex Income Fund, Supremex Inc., Cenveo Corporation and Cenveo, Inc. 10.31* Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement dated March 24, 2006 among Cenveo, Inc., Cenveo Corporation, certain subsidiaries of Cenveo Corporation, the lenders under the Second Amended and Restated Credit Agreement, and Bank of America, N.A., as administrative agent for the lenders. 31.1* Certification by Robert G. Burton, Sr., Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification by Sean S. Sullivan, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished as an exhibit to this report on Form 10-Q. - ----------------------------------- + Management contract or compensatory plan or arrangement. * Filed herewith. 23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Englewood, state of Colorado, on May 10, 2006. CENVEO, INC. By: /s/ ROBERT G. BURTON, SR. ----------------------------------------- Robert G. Burton, Sr. Chairman and Chief Executive Officer (Principal Executive Officer) By: /s/ SEAN S. SULLIVAN ----------------------------------------- Sean S. Sullivan Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) EX-2.1 2 ex2p1.txt Exhibit 2.1 ACQUISITION AGREEMENT DATED AS OF MARCH 17, 2006 AMONG SUPREMEX INCOME FUND CENVEO CORPORATION AND CENVEO, INC. i TABLE OF CONTENTS Page ARTICLE 1 PURCHASE AND SALE OF THE SHARES 1.1 Purchase and Sale...................................................1 1.2 Closing.............................................................1 1.3 Deliveries at the Closing...........................................1 1.4 Delivery Immediately Following the Closing..........................3 1.5 Closing Working Capital Adjustments.................................4 1.6 Withholding Taxes...................................................6 1.7 No Allocation to Restrictive Covenant...............................9 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF VENDOR AND CENVEO 2.1 Organization, Existence and Good Standing...........................9 2.2 Capacity; Authorization.............................................9 2.3 Ownership of Shares; Title.........................................10 2.4 Exclusivity of Representations and Warranties......................10 ARTICLE 3 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES 3.1 Organization, Existence and Good Standing..........................11 3.2 Capitalization of the Companies....................................11 3.3 No Conflict........................................................11 3.4 Required Authorizations............................................11 3.5 Financial Statements; Undisclosed Liabilities......................11 3.6 Business Since the Balance Sheet Date..............................12 3.7 Compliance with Law; Litigation; Injunctions.......................12 3.8 Material Contracts.................................................12 3.9 Employee Benefit Plans.............................................13 3.10 Employment-Related Matters.........................................13 3.11 Taxes..............................................................13 3.12 Permits............................................................14 3.13 Real Property......................................................14 3.14 Title; Condition of Assets.........................................14 3.15 Intellectual Property..............................................15 3.16 Insurance..........................................................15 3.17 Environmental Laws.................................................15 3.18 Affiliated Transactions............................................16 ii 3.19 Suppliers and Customers............................................16 3.20 Sufficiency of Assets..............................................16 3.21 Absence of Material Acquisitions...................................16 3.22 Relations With Auditors............................................16 3.23 Residency..........................................................16 3.24 Certain Amounts....................................................16 3.25 Full Disclosure....................................................16 3.26 Minute Books.......................................................16 3.27 Exclusivity of Representations and Warranties......................16 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER 4.1 Organization, Existence and Good Standing..........................17 4.2 Capacity; Authorization............................................17 4.3 Financial Statements; Undisclosed Liabilities......................17 4.4 The Trustees.......................................................18 4.5 Capitalization.....................................................18 4.6 Description of Securities..........................................18 4.7 Voting of Securities...............................................18 4.8 Issuance of Units..................................................18 4.9 Qualification......................................................18 4.10 Approval for Trading...............................................19 4.11 Transaction Expenses...............................................19 ARTICLE 5 COVENANTS 5.1 Access.............................................................19 5.2 Notice of Proceedings; Agreement to Defend.........................19 5.3 Consummation of Agreement..........................................20 5.4 Consummation of the Pre-Closing Transactions.......................20 5.5 Consummation of the Post-Closing Transactions......................20 5.6 Announcements......................................................20 5.7 Funding of Pension Plan Deficits; Payment of Intercompany Payables.20 5.8 Books and Records..................................................20 5.9 Amounts Collected and Paid Post-Closing............................21 5.10 Confidentiality....................................................21 5.11 Cooperation........................................................21 ARTICLE 6 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES 6.1 Completion of the Offering.........................................21 6.2 Consent; Release of Liens..........................................22 6.3 Term Facility......................................................22 iii ARTICLE 7 SURVIVAL; INDEMNIFICATION 7.1 Survival...........................................................22 7.2 Indemnification....................................................24 7.3 Indemnification Procedures.........................................26 ARTICLE 8 TERMINATION 8.1 Termination of Agreement...........................................28 8.2 Liabilities Upon Termination.......................................28 ARTICLE 9 GENERAL PROVISIONS 9.1 Expenses...........................................................29 9.2 Notices............................................................29 9.3 Governing Law......................................................30 9.4 Counterparts.......................................................31 9.5 Headings; Schedules; Exhibits......................................31 9.6 Entire Agreement...................................................31 9.7 Third-Party Beneficiaries..........................................31 9.8 Assignment.........................................................31 9.9 Severability.......................................................32 9.10 Amendments; Waiver.................................................32 9.11 Interpretation; Absence of Presumption.............................32 SCHEDULES Schedule 2.2 Capacity; Authorization Schedule 3.1 Jurisdiction of Organization of Each Company Schedule 3.2 Capitalization of Each Company Schedule 3.3 No Conflict Schedule 3.5(b) Undisclosed Liabilities Schedule 3.7 Litigation Schedule 3.10 Employment-Related Matters Schedule 3.11 Taxes Schedule 3.13(a) Owned Real Properties Schedule 3.13(b) Leased Real Property Schedule 3.14(a) Permitted Liens Schedule 3.16 Insurance iv Schedule 3.17 Environmental Laws Schedule 3.18 Affiliated Transactions Schedule 3.19 Suppliers and Customers Schedule 4.7 Voting of Securities Schedule 4.11 Transaction Expenses EXHIBITS Exhibit A Certain Defined Terms Exhibit B-1 Pre-Closing Transactions Exhibit B-2 Post-Closing Transactions Exhibit C Form of Reciprocal General Release Exhibit D-1 Form of Initial Note Series 1 Exhibit D-2 Form of Initial Note Series 2 Exhibit D-3 Form of Initial Note Series 3 Exhibit D-4 Form of Over-Allotment Note Exhibit E Form of Joinder Agreement Exhibit F Form of Nonsolicitation Agreement Exhibit G Form of Supply Agreement Exhibit H Form of Registration Rights Agreement Exhibit I Calculation of Target Working Capital Exhibit J Form of Amended and Restated Declaration of Trust ACQUISITION AGREEMENT --------------------- This ACQUISITION AGREEMENT dated as of March 17, 2006 (this "AGREEMENT") is among Cenveo, Inc., a Colorado corporation ("CENVEO"), Cenveo Corporation, a Delaware corporation ("VENDOR"), and Supremex Income Fund, an unincorporated open-ended trust established under the laws of the Province of Quebec ("BUYER"). Capitalized terms not otherwise defined in this Agreement are used as defined in Exhibit A. --------- Vendor owns all of the outstanding capital stock of Cenveo Canada Leasing Company, Inc., a corporation organized under the laws of Nova Scotia ("CENVEO CANADA"), which owns all of the outstanding capital stock of Supremex Inc., a corporation organized under the laws of Canada ("SUPREMEX"). Prior to the Closing, Supremex will amalgamate with Cenveo Canada (the "AMALGAMATION") to form Amalco and consummate the other Pre-Closing Transactions. Buyer intends to complete an initial public offering (the "OFFERING") of certain of its trust units to the public under the Prospectus. Buyer desires to purchase all of the outstanding shares of Amalco (the "SHARES"), and Vendor desires to sell the Shares, all on the terms and conditions hereafter set forth. After the Closing, Buyer will cause Amalco and AcquisiCo to consummate the Post-Closing Transactions. Accordingly, in consideration of the premises and of the respective covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: ARTICLE 1 --------- PURCHASE AND SALE OF THE SHARES ------------------------------- 1.1 Purchase and Sale. Upon the terms and subject to the ----------------- conditions set forth in this Agreement, Vendor shall sell the Shares to Buyer, without recourse, representation or warranty except as otherwise expressly provided herein, and Buyer shall purchase the Shares from Vendor, for a purchase price equal to the Purchase Price. 1.2 Closing. The closing of the sale and purchase of the ------- Shares (the "CLOSING") shall take place at the offices of Stikeman Elliott LLP, 1155 Rene-Levesque Blvd. West, 40th Floor, Montreal, Quebec H3B 3V2 immediately following the consummation of the closing of Units under the Underwriting Agreement. The term "CLOSING DATE" means the date on which the Closing occurs. 1.3 Deliveries at the Closing. Subject to the conditions set forth ------------------------- in this Agreement, at the Closing: 2 (a) Vendor shall deliver or cause to be delivered to Buyer: (i) one or more certificates representing the Shares, together with duly endorsed blank stock powers; (ii) a certificate of Industry Canada and Registraire des enterprises du Quebec indicating the good standing of Supremex Inc. and Cenveo Canada (the predecessor companies of Amalco) indicating Amalco's good standing in such jurisdiction as of a recent date, a certificate of Secretary of State of Delaware indicating Vendor's good standing in such state as of a recent date and a certificate of Secretary of State of Colorado indicating Cenveo's good standing in such state as of a recent date; (iii) a certificate of the Secretary of Cenveo certifying as to: (A) the full force and effect of resolutions of its board of directors attached thereto as an exhibit evidencing the authority of Cenveo to consummate the transactions contemplated by this Agreement; (B) the full force and effect of the articles of incorporation and bylaws of Cenveo attached thereto as exhibits; and (C) the incumbency of the officers of Cenveo with authority to execute this Agreement and the Ancillary Instruments to which Cenveo is a party; (iv) a certificate of the Secretary of Vendor certifying as to: (A) the full force and effect of resolutions of its board of directors and stockholder attached thereto as exhibits evidencing the authority of Vendor to consummate the transactions contemplated by this Agreement; (B) the full force and effect of the certificate of incorporation and bylaws of Vendor attached thereto as exhibits; and (C) the incumbency of the officers of Vendor with authority to execute this Agreement and the Ancillary Instruments to which Vendor is a party; (v) a certificate of the Secretary of Amalco certifying as to: (A) the full force and effect of resolutions of its board of directors attached thereto as an exhibit evidencing the authority of Amalco to consummate the transactions contemplated by the Ancillary Agreements to which it is a party; (B) the full force and effect of the certificate of amalgamation and bylaws of Amalco attached thereto as exhibits; and (C) the incumbency of the officers of Amalco with authority to execute the Ancillary Instruments to which Amalco is a party; (vi) the Reciprocal General Release, duly executed by Cenveo, Vendor and Amalco; (vii) the Nonsolicitation Agreement, duly executed by Cenveo and Amalco; (viii) the Supply Agreement, duly executed by Cenveo and Amalco; (ix) the Joinder Agreement, duly executed by Amalco; 3 (x) the minutes of board and stockholder meetings and the corporate seals of each Company to the extent any of the foregoing are in the actual possession of Cenveo at its principal executive offices; and (xi) all other certificates and other instruments, agreements and documents which are expressly required pursuant to this Agreement to be delivered by Cenveo or Vendor to Buyer at the Closing. (b) Buyer shall: (i) accept and purchase the Shares from Vendor and deliver to Vendor as payment therefor (A) the Initial Notes; and (B) the Over-Allotment Note; (ii) issue the Initial Vendor Units in the name of Vendor or such other nominee name or names as Vendor shall notify Buyer in writing at least 24 hours prior to the Closing Date in "book entry only" form in the depository service of The Canadian Depository for Securities Limited; (iii) issue the Over-Allotment Vendor Units in the name of Vendor or such other nominee name or names as Vendor shall notify Buyer in writing at least 24 hours prior to the date, if any, of the conversion of the Over-Allotment Note in "book entry only" form in the depository service of The Canadian Depository for Securities Limited; (iv) deliver or cause to be delivered to Vendor and Cenveo: (A) a certificate of the Secretary of Buyer certifying as to: (I) the full force and effect of resolutions of its trustees attached thereto as an exhibit evidencing the authority of Buyer to consummate the transactions contemplated by this Agreement; (II) the full force and effect of the Amended and Restated Declaration of Trust attached thereto as an exhibit; and (III) the incumbency of the officers of Buyer with authority to execute this Agreement and the Ancillary Instruments to which Buyer is a party; (B) the Reciprocal General Release, duly executed by Buyer; (C) the Nonsolicitation Agreement, duly executed by Buyer; (D) the Joinder Agreement, duly executed by Buyer; and (E) all other instruments, agreements and documents that are expressly required pursuant to this Agreement to be delivered by Buyer or Amalco at the Closing; and (v) deliver or cause to be delivered to Cenveo the Registration Rights Agreement, duly executed by Buyer. 1.4 Delivery Immediately Following the Closing. Immediately ------------------------------------------ following the Closing, Buyer shall cause Amalco to deliver to Vendor and Cenveo a certificate of the Secretary of Amalco certifying as to the full force and effect of resolutions of its board of directors attached thereto as an exhibit evidencing the ratification by its board of directors of each of the Ancillary Instruments to which it is a party. 4 1.5 Closing Working Capital Adjustments. ----------------------------------- (a) Not less than one Business Day prior to the Closing Date, Vendor shall prepare and deliver to Buyer a schedule (the "VENDOR'S CLOSING SCHEDULE") setting forth its good faith estimate of the Closing Working Capital (the "ESTIMATED CLOSING WORKING CAPITAL") and the calculation thereof in reasonable detail. The Estimated Closing Working Capital shall be based on the unaudited consolidated balance sheet of Supremex dated February 28, 2006 and the unaudited balance sheet of Cenveo Canada as of December 31, 2005, with such other adjustments as Vendor believes necessary to reflect its good faith estimate of changes from the date of such balance sheet to the Closing Date. (b) As promptly as practicable, but in no event later than 60 days, after the Closing Date, Buyer shall prepare and deliver to Vendor a schedule (the "BUYER'S CLOSING SCHEDULE") setting forth in reasonable detail Buyer's calculation of the Closing Working Capital along with a copy of the computations and workpapers used in connection with the preparation of Buyer's Closing Schedule. If Buyer employs a firm of independent accountants in connection with the preparation of Buyer's Closing Schedule, Buyer shall cause such independent accountants to deliver to Vendor and its representatives any computations and workpapers used in the preparation of Buyer's Closing Schedule. Upon reasonable advance notice, Buyer and its representatives will also give Vendor and its representatives access, during the normal business hours of Buyer and the Companies, to all personnel, books and records of the Companies as reasonably requested by Vendor to assist it in the preparation of Vendor's Dispute Notice. Vendor shall notify Buyer in writing (the "VENDOR'S DISPUTE NOTICE") within 30 days after receiving Buyer's Closing Schedule if Vendor disagrees with Buyer's calculation of the Closing Working Capital as set forth in Buyer's Closing Schedule, which notice shall set forth in reasonable detail, the basis for such disagreement, the dollar amounts involved and Vendor's calculation of the Closing Working Capital. If no Vendor's Dispute Notice is received by Buyer within such 30-day period, Buyer's calculation of the Closing Working Capital as set forth in Buyer's Closing Schedule shall be final and binding upon the parties hereto. (c) Upon receipt by Buyer of the Vendor's Dispute Notice, Vendor and Buyer shall negotiate in good faith to resolve any disagreement with respect to Closing Working Capital set forth in Vendor's Dispute Notice. To the extent Buyer and Vendor are unable to agree with respect to the Closing Working Capital within 30 days after receipt by Buyer of Vendor's Dispute Notice, Buyer and Vendor shall submit their dispute to the Accounting Firm for a binding resolution. Except as specified in the following sentence, the cost of any dispute resolution procedure (including the fees and expenses of the Accounting Firm and any arbitrator) pursuant to this Section 1.5 shall be borne, in its entirety, by the party whose calculation of the Purchase Price based upon its calculation of the Closing Working Capital as initially submitted to the Accounting Firm) is furthest away from the Purchase Price based upon the Closing Working Capital as determined by the Accounting Firm. The fees and expenses of Buyer's independent auditors (if any) and attorneys (if any) incurred in connection with the issuance of Buyer's Closing Schedule shall be borne by the Buyer, and the fees and expenses of the independent auditors (if any) and attorneys (if any) of Vendor incurred in connection with their review of Buyer's Closing Schedule shall be borne by Vendor. 5 (d) Not later than 30 days after the engagement of the Accounting Firm (as evidenced by its written acceptance by facsimile or otherwise to the parties) (such 30-day period, the "BRIEFING PERIOD"), Vendor and Buyer shall submit simultaneous briefs to the Accounting Firm (with a copy to the other party) setting forth their respective positions regarding the issues in dispute, and not later than 30 days after the submission of such briefs (the "REPLY PERIOD") Vendor and Buyer shall submit simultaneous reply briefs (with a copy to the other party). If an additional briefing, a hearing or other information is required by the Accounting Firm, the Accounting Firm shall give notice thereof to the parties as soon as practicable before the expiration of the Reply Period, and the parties shall promptly respond with a view to minimizing any delay in the decision date. Vendor and Buyer shall instruct the Accounting Firm to render its decision resolving the dispute within 30 days after the Reply Period or, in the event additional briefing, a hearing or other information is required, within 30 days after the completion of such additional briefing, the completion of such hearing, or the submission of such additional information, as the case may be. In resolving any disputed item, the Accounting Firm (i) shall be bound by the provisions of this Section 1.5 and the definition of Closing Working Capital (and the definitions included in such definition), (ii) shall limit its review to matters still in dispute as specifically set forth in the Vendor's Dispute Notice (and only to the extent such matters are still in dispute at the commencement of the Briefing Period) and (iii) shall further limit its review solely to whether the Buyer's Closing Schedule has been prepared in accordance with this Section 1.5. The determination of any item that is a component of the Closing Working Capital and is the subject of a dispute cannot, however, be in excess of, or less than, the greatest or lowest value, respectively, claimed for any particular item in the Buyer's Closing Schedule or the Vendor's Dispute Notice. Vendor and Buyer agree that judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. The Closing Working Capital as agreed upon by Vendor and Buyer, as deemed agreed upon pursuant to the last sentence of Section 1.5(b) or as determined by the Accounting Firm in accordance with Section 1.5(c) and Section 1.5(d), shall be termed the "FINAL CLOSING WORKING CAPITAL." (e) If the Final Closing Working Capital is greater than the Estimated Closing Working Capital, Buyer shall pay to Vendor the amount of such excess. If the Estimated Closing Working Capital is greater than the Final Closing Working Capital, Vendor shall pay to Buyer the amount of such excess. Buyer and Vendor agree that, except to the extent otherwise expressly provided under Sections 1.5(f) and (g), any payment required to be made pursuant to this Section 1.5(e) shall be made in Canadian Dollars within five Business Days after the Final Closing Working Capital becomes final and binding on the parties hereto by wire transfer in immediately available funds to a bank account or bank accounts designated by Vendor or Buyer, as the case may be, to the other party, as applicable. Any payment pursuant to the first and second sentences of this Section 1.5(e) shall constitute a payment in respect of the Purchase Price. (f) In the event that (i) any amount is due to Vendor pursuant to the first sentence of Section 1.5(e) and (ii) Vendor has not delivered a certificate under subsection 116(4) of the Income Tax Act (Canada) (the "TAX ACT") as referred to in Section 1.6 to Buyer on or before the date of payment contemplated by Section 1.5(e)(i), then payment of 25% of such amount shall be made by delivery on such date by Buyer (A) to Vendor of a promissory note (in substantially the same form as Initial Note Series 2) in an amount equal to such 25% of such 6 amount, and (B) to TD Trust Company by wire transfer of immediately available funds in Canadian Dollars in an amount equal to the amount of the promissory note referred to in clause (A) above, which amount of Canadian Dollars shall be held by TD Trust Company on substantially the same terms as amounts held by it as contemplated by Section 1.6 and the Tax Escrow Agreement with respect to the Initial Notes and the settlement thereof. (g) In the event that (i) any amount is due to Vendor pursuant to the first sentence of Section 1.5(e) and (ii) Vendor has not delivered a certificate under Section 1100 of the Taxation Act (Quebec) (the "QUEBEC TAX ACT") as referred to in Section 1.6 to Buyer on or before the date of payment contemplated by Section 1.5(e)(i), then payment of 12% of such amount shall be made by delivery on such date by Buyer (A) to Vendor of a promissory note (in substantially the same form as Initial Note Series 3) in an amount equal to such 12% of such amount, and (B) to TD Trust Company by wire transfer of immediately available funds in Canadian Dollars in an amount equal to the amount of the promissory note referred to in clause (A) above, which amount of Canadian Dollars shall be held by TD Trust Company on substantially the same terms as amounts held by it as contemplated by Section 1.6 and the Tax Escrow Agreement with respect to the Initial Notes and the settlement thereof. (h) Buyer agrees that following the Closing through the date on which the Final Closing Working Capital becomes final and binding it shall not, and will cause each of the Companies to, take any actions with respect to any accounting books, records, policies or procedures on which the Closing Working Capital are to be based that (i) are inconsistent with the practices prior to the Closing Date or (ii) would make it impossible or impracticable to calculate the Closing Working Capital in the manner and utilizing the methods required hereby. 1.6 Withholding Taxes. ----------------- With respect to the payment of the Purchase Price to be made by Buyer to Vendor on the Closing Date: (a) If Vendor has delivered to Buyer, prior to the Closing Date, a certificate (a "SECTION 116 CERTIFICATE") issued by the Minister of National Revenue under subsection 116(2) of the Tax Act with a certificate limit which is equal to or greater than an amount equal to or greater than the Closing Purchase Price, Buyer shall (immediately after the resale of the Shares by Buyer to AcquisiCo) pay to Vendor by wire transfer of immediately available funds the face amount of the Initial Note Series 2. (b) If Vendor has delivered to Buyer, prior to the Closing Date a certificate (a "QUEBEC CERTIFICATE") issued by the Minister of Revenue of Quebec under Section 1098 of the Quebec Tax Act with a certificate limit which is equal to or greater than the Closing Purchase Price, Buyer shall (immediately after the resale of the Shares by Buyer to AcquisiCo) pay to Vendor by wire transfer of immediately available funds the face amount of the Initial Note Series 3. (c) If Vendor has delivered the Section 116 Certificate to Buyer with a certificate limit less than the Closing Purchase Price, prior to the Closing Date, Buyer shall (immediately after the resale of the Shares by Buyer to AcquisiCo) pay to Vendor by wire 7 transfer of immediately available funds the face amount of the Initial Note Series 2 minus 25% of such difference. The remaining balance of such face amount shall be remitted by Buyer to TD Trust Company and shall be held by TD Trust Company in accordance with this Section 1.6 and the Tax Escrow Agreement. (d) If Vendor has delivered a Quebec Certificate to Buyer with a certificate limit less than the Closing Purchase Price, prior to the Closing Date, Buyer shall (immediately after the resale of the Shares by Buyer to AcquisiCo) pay to Vendor by wire transfer of immediately available funds the face amount of the Initial Note Series 3 minus 12% of such difference. The remaining balance of such face amount shall be remitted by Buyer to TD Trust Company and shall be held by TD Trust Company in accordance with this Section 1.6 and the Tax Escrow Agreement. (e) If Vendor has not delivered to Buyer prior to the Closing Date a Section 116 Certificate, Buyer shall not pay to Vendor in cash on the Closing Date any portion of the Initial Note Series 2 and an amount equal to the face value of the Initial Note Series 2 shall be remitted by Buyer to TD Trust Company and shall be held by TD Trust Company in accordance with this Section 1.6 and the Tax Escrow Agreement. (f) If Vendor has not delivered to Buyer prior to the Closing Date a Quebec Certificate, Buyer shall not pay to Vendor in cash on the Closing Date any portion of the Initial Note Series 3 and an amount equal to the face value of the Initial Note Series 3 shall be remitted by Buyer to TD Trust Company and shall be held by TD Trust Company in accordance with this Section 1.6 and the Tax Escrow Agreement. (g) If Section 1.6(a) does not apply and Vendor delivers to Buyer on or after the Closing and prior to the day that is 29 calendar days after the end of the calendar month in which Closing occurs or, if such day is not a Business Day, the immediately preceding Business Day (the "REMITTANCE DATE") a certificate issued by the Minister of National Revenue under subsection 116(4) of the Tax Act, Buyer shall, as soon as is reasonably practicable (but in no event later than two Business Days) following delivery to Buyer of such certificate, instruct TD Trust Company to pay to Vendor by wire transfer of immediately available funds the amount previously remitted in accordance with Sections 1.6(c) or 1.6(e), as the case may be, by Buyer to TD Trust Company. (h) If Section 1.6(b) does not apply and Vendor delivers to Buyer on or after the Closing and prior to the Remittance Date a certificate issued by the Minister of Revenue of Quebec under Section 1100 of the Quebec Tax Act, Buyer shall, as soon as is reasonably practicable (but in no event later than two Business Days) following delivery to Buyer of such certificate, instruct TD Trust Company to pay to Vendor by wire transfer of immediately available funds the amount previously remitted in accordance with Sections 1.6(d) or 1.6(f), as the case may be, by Buyer to TD Trust Company. (i) If Section 1.6(a) does not apply, Vendor fails to deliver to Buyer prior to the Remittance Date a certificate issued by the Minister of National Revenue under subsection 116(4) of the Tax Act and Buyer has not received a letter from the Canada Revenue Agency ("CRA") acceptable to Buyer acting reasonably (a "CRA COMFORT LETTER") 8 indicating that it need not remit any amount under Section 116 of the Tax Act until the CRA has completed its review of the application for a Section 116 Certificate, then (A) Buyer shall instruct TD Trust Company to remit, to the Receiver General of Canada on the Remittance Date and in accordance with the provisions of the Tax Act, the amount previously remitted in accordance with sections 1.6(c) or 1.6(e), as the case may be, by Buyer to TD Trust Company, and (B) any amount paid by TD Trust Company to the Receiver General of Canada shall constitute a payment in respect of the Initial Note Series 2 once the Receiver General of Canada acknowledges receipt of the payment thereof. (j) If Section 1.6(b) does not apply, Vendor fails to deliver to Buyer prior to the Remittance Date a certificate issued by the Minister of Revenue of Quebec under Section 1100 of the Quebec Tax Act and Buyer has not received a letter from Revenue Quebec ("RQ") acceptable to Buyer acting reasonably (a "RQ COMFORT LETTER") indicating that it need not remit any amount under Section 1101 of the Quebec Tax Act until RQ has completed its review of the application for a Quebec Certificate, then (A) Buyer shall instruct TD Trust Company to remit, to the Minister of Revenue of Quebec on the Remittance Date and in accordance with the provisions of the Quebec Tax Act, the amount previously remitted in accordance with sections 1.6(d) or 1.6(f), as the case may be, by Buyer to TD Trust Company, and (B) any amount paid by TD Trust Company to the Minister of Revenue of Quebec shall constitute a payment in respect of the Initial Note Series 3 once the Minister of Revenue of Quebec acknowledges receipt of the payment thereof. (k) If a CRA Comfort Letter is received by Buyer prior to the Remittance Date, then the Remittance Date shall, for the purposes of Sections 1.6(g) or 1.6(i), mean the date provided for in the CRA Comfort Letter. (l) If a RQ Comfort Letter is received by Buyer prior to the Remittance Date, then the Remittance Date shall, for the purposes of Sections 1.6(h) or 1.6(j), mean the date provided for in the RQ Comfort Letter. (m) Buyer, Cenveo and Vendor acknowledge that TD Trust Company may be obliged to pay an amount, on or after 30 days after the end of the calendar month in which Closing occurs, to the Receiver General of Canada, in accordance with subsection 116(5) of the Tax Act as tax on behalf of Vendor and that such payment constitutes a payment in respect of the Initial Note Series 2 once the Receiver General of Canada acknowledges the receipt of payment thereof. (n) Buyer, Cenveo and Vendor acknowledge that TD Trust Company may be obliged to pay an amount, on or after 30 days after the end of the calendar month in which Closing occurs, to the Minister of Revenue of Quebec, in accordance with Section 1101 of the Quebec Tax Act as tax on behalf of Vendor and that such payment constitutes a payment in respect of the Initial Note Series 3 once the Minister of Revenue of Quebec acknowledges receipt of the payment thereof. (o) If, pursuant to Sections 1.5(e) and 7.3(g), adjustments are made after the Closing Date resulting in an increase in the Purchase Price, such increase shall be paid by Buyer to Vendor, subject to the application of this Section 1.6; provided, however, that amounts to be -------- ------- remitted to TD Trust Company shall be determined by reference to the lesser of such increase in Purchase Price or the excess, if any, of the Purchase Price (as increased) over the applicable certificate amount, if any. 9 (p) If any Over-Allotment Vendor Units are issued to Vendor, Vendor shall promptly thereafter remit to TD Trust Company an amount equal to the lesser of 25% (with respect to amounts that may be payable to the Receiver General of Canada unless Vendor delivers to Buyer prior to the issuance of such Units a certificate issued by the Minister of National Revenue under subsection 116(4) of the Tax Act) and 12% (with respect to amounts that may be payable to the Minister of Revenue of Quebec unless Vendor delivers to Buyer prior to the issuance of such Units a certificate issued by the Minister of Revenue of Quebec under Section 1100 of the Quebec Tax Act) of the lesser of (x) the product of CDN$0.55 and the number of Over-Allotment Vendor Units so issued and (y) the excess, if any, of the sum of the Closing Purchase Price and such product over the applicable certificate amount, if any. (q) Any earnings in amounts held in escrow pursuant to the Tax Escrow Agreement shall be remitted to Vendor in accordance with the terms thereof. (r) Notwithstanding anything to the contrary contained in this Agreement, any payment by Buyer to Vendor pursuant to this Agreement shall be subject to the provisions of this Section 1.6. 1.7 No Allocation to Restrictive Covenant. The parties agree ------------------------------------- that no portion of the Purchase Price is allocated to a "restrictive covenant", as that term is defined in July 18, 2005 draft legislation to amend the Tax Act. However, if any portion of the Purchase Price is determined by tax authorities to be in respect of a "restrictive covenant", then Buyer and Vendor agree that the full amount of such portion be subject to an election under such draft legislation in order for such amount to be treated as proceeds of disposition of the Shares. If any Canadian provincial taxing authority proposes a similar provision, and it is determined by such provincial tax authority that any portion of the Purchase Price is in respect of a "restrictive covenant", then Buyer and Vendor shall make a similar provincial election. ARTICLE 2 --------- REPRESENTATIONS AND WARRANTIES OF VENDOR AND CENVEO --------------------------------------------------- Vendor and Cenveo jointly and severally (or solidarily) represent and warrant to Buyer that, except as set forth in the Schedules or the Prospectus: 2.1 Organization, Existence and Good Standing. Vendor and ----------------------------------------- Cenveo are each corporations duly incorporated and validly existing as a corporation in good standing under the laws of the State of Delaware and Colorado, respectively. 2.2 Capacity; Authorization. Vendor and Cenveo have full ----------------------- corporate power and authority to execute, deliver and perform this Agreement and the Ancillary Instruments to which they are a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each of Vendor and Cenveo of this Agreement and the 10 Ancillary Instruments to which they are or at the Closing will be a party and the consummation by Vendor and Cenveo of the transactions contemplated hereby and thereby, including without limitation the issuance to Vendor of the Initial Vendor Units, and the Over-Allotment Vendor Units, if any, pursuant to the Over-Allotment Notes: (i) have been authorized by all necessary action on the part of Vendor and Cenveo; and (ii) in the case of clauses (B) and (C) with such exceptions as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect or a material adverse effect on the ability of Vendor or Cenveo to perform their respective obligations hereunder: do not and will not (A) violate the certificate of incorporation or bylaws of Vendor or Cenveo; or (B) constitute a default under any contract to which either of them is a party; or (C) violate any Law. This Agreement has been and, when executed and delivered at the Closing, the Ancillary Instruments to which Vendor or Cenveo (as applicable) is a party will be, duly executed and delivered by Vendor and Cenveo. This Agreement constitutes and, when executed and delivered at the Closing, the Ancillary Instruments to which Vendor or Cenveo (as applicable) is a party will constitute, the legal, valid and binding obligation of Vendor and Cenveo, enforceable against them in accordance with their respective terms, except as such enforceability may be limited by applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). 2.3 Ownership of Shares; Title. Vendor is the sole record and -------------------------- beneficial owner of the Shares. Vendor has, and shall transfer to Buyer at the Closing, good title to the Shares free and clear of all Liens except for (a) Liens created by this Agreement and (b) restrictions imposed by applicable securities laws. 2.4 Exclusivity of Representations and Warranties. EXCEPT FOR --------------------------------------------- THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS ARTICLE 2 AND IN ARTICLE 3, THE SHARES ARE BEING SOLD HEREUNDER ON A "WHERE IS AND AS IS" BASIS, AND NEITHER VENDOR NOR CENVEO MAKES ANY REPRESENTATION OR WARRANTY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER IMPLIED WARRANTY CONCERNING THE SHARES, THE COMPANIES OR ANY OTHER MATTER WHATSOEVER. VENDOR AND CENVEO HEREBY DISCLAIM ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY VENDOR OR CENVEO OR ANY OTHER PERSON TO BUYER OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER INFORMATION IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. ARTICLE 3 --------- REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES ------------------------------------------------------ Vendor and Cenveo jointly and severally (or solidarily) represent and warrant to Buyer that, except as set forth in the Schedules or the Prospectus (with the exception of the following 11 "Risk Factors" therein: "Litigation" and (other than the last paragraph) "Environment, Health and Safety Requirements"): 3.1 Organization, Existence and Good Standing. Each Company is ----------------------------------------- the type of entity listed on Schedule 3.1, was duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization. 3.2 Capitalization of the Companies. ------------------------------- (a) The authorized and outstanding capital stock of each Company is as set forth on Schedule 3.2. The Shares and the other outstanding shares of capital stock of the Companies have been duly and validly authorized and issued, are fully paid and have not been issued in violation of any preemptive or other contractual rights. Other than as contemplated hereby, there is no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly (i) calls for the issuance, sale, pledge or other disposition by any Company of any of its equity interests or any securities convertible into, or other rights to acquire, any such equity interests, (ii) relates to the voting or control of such equity interests or rights or (iii) obligates any Company to grant, offer or enter into any of the foregoing. (b) No Company has any Subsidiaries or investments in, or joint venture agreements with, any other Person. 3.3 No Conflict. The execution, delivery and performance by ----------- each of Vendor and Cenveo of this Agreement and the Ancillary Instruments to which they are or at the Closing will be a party and the consummation by Vendor and Cenveo of the transactions contemplated hereby and thereby: (i) do not and will not violate the certificate of incorporation or bylaws of any of the Companies; (ii) with such exceptions as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, constitute a default under any contract to which either of them or any Company is a party; or (iii) with such exceptions as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, violate any Law. 3.4 Required Authorizations. To the Knowledge of Vendor and ----------------------- Cenveo, there is no requirement of any Company to make any filing or registration with, give any notice to or obtain the consent of any Governmental Authority as a condition to the lawful completion of the transactions contemplated by this Agreement except for filings, notifications and consents that have not been obtained and where the failure to do so would not have a Material Adverse Effect. 3.5 Financial Statements; Undisclosed Liabilities. --------------------------------------------- (a) The consolidated balance sheets of Supremex as of December 31, 2004 and 2005 (such balance sheet as of December 31, 2005, the "BALANCE SHEET"; December 31, 2005 is referred to as the "BALANCE SHEET DATE"), the consolidated statements of earnings and cash flows of Supremex for the years ended December 31, 2003, 2004 and 2005, together with the notes thereto and the unaudited balance sheet of Cenveo Canada as of December 31, 2005 (collectively, the "FINANCIAL STATEMENTS") present fairly, in all material respects, the consolidated financial position of Supremex or Cenveo Canada, as the case may be, as of the applicable dates, and the results of operations and cash flows of Supremex for the applicable 12 periods in conformity with Canadian generally accepted accounting principles ("GAAP"), except as otherwise indicated in the Financial Statements. (b) Except as reflected, reserved against or otherwise disclosed in the Balance Sheet, as of the Balance Sheet Date, Supremex did not have any liabilities or obligations that would have been required to be reflected by it in the Balance Sheet in accordance with GAAP and that would be reasonably likely to have a Material Adverse Effect. 3.6 Business Since the Balance Sheet Date. Except as ------------------------------------- contemplated by this Agreement, since the Balance Sheet Date, (x) the Companies have operated their business, taken as a whole, in the ordinary course, and (y) there has not been: (a) any Material Adverse Effect; (b) any acquisition of all or substantially all of the assets or properties or of the securities or business of any other Person by any Company or any merger, consolidation or amalgamation involving any Company; (c) through the date of this Agreement, any incurrence by any Company of any indebtedness for borrowed money or incurrence, assumption or guarantee of, or any other act to become responsible for, any obligations of any other Person, or making of loans or advances by any Company to any Person, other than in the ordinary course of business; or (d) any change in the financial or accounting practices or policies of any Company, except as required by Law or GAAP. 3.7 Compliance with Law; Litigation; Injunctions. None of the -------------------------------------------- Companies is in violation of any Law, Permit or Order applicable to it and, since December 31, 2003, the Companies have conducted and currently are conducting the Business in compliance with all applicable Laws, except in each case for violations the existence of which and cost of remedying would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. As of the date of this Agreement, (i) there is no action, suit or other judicial or administrative proceeding pending or, to the Knowledge of Vendor and Cenveo, overtly threatened against any Company, at law or in equity, before any Governmental Authority which is reasonably likely to, individually or in the aggregate, have a Material Adverse Effect, and (ii) none of the Companies is a party to, or subject to or bound by, any Order which has or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. To the Knowledge of Vendor and Cenveo, since December 31, 2003, none of the Companies has received any written notice of any alleged violation of any such Laws, except with respect to such violations that are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. 3.8 Material Contracts. Except for such breaches, defaults or ------------------ events as have not had and are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, (a) none of the Companies nor, to the Knowledge of Vendor and Cenveo, any other party to any Material Contract is in breach of or default under any Material Contract and (b) no event has occurred which (after notice or lapse of time or both) would become a breach or default by any Company under any Material Contract. 13 3.9 Employee Benefit Plans. With such exceptions as are not ---------------------- reasonably likely to have, individually or in the aggregate, a Material Adverse Effect: (a) each Company Plan has been established and administered substantially in accordance with its terms and in compliance with all applicable Laws; (b) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the Knowledge of Vendor and Cenveo, threatened with respect to any Company Plan; and (c) no audit or, to the Knowledge of Vendor and Cenveo, investigation by any Governmental Authority is pending, or to the Knowledge of Vendor and Cenveo, threatened, with respect to any Company Plan. 3.10 Employment-Related Matters. With such exceptions as are -------------------------- not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, as of the date of this Agreement, (a) no employees of any Company are covered by a collective bargaining agreement, (b) there is no labor strike, organized work stoppage, lockout or other labor controversy presently pending or, to the Knowledge of Vendor and Cenveo, threatened against any Company, (c) to the Knowledge of Vendor and Cenveo, there is no union organization campaign relating to any employees of any Company, (d) there is no unfair labor practice charge or complaint against any Company pending or, to the Knowledge of Vendor and Cenveo, threatened before any Governmental Authority, (e) to the Knowledge of Vendor and Cenveo, no charges with respect to or relating to any employee of any Company are pending before any Governmental Authority responsible for the prevention of unlawful employment practices. 3.11 Taxes. Except as provided for in the Financial Statements ----- or in the Final Closing Working Capital: (a) The Companies have prepared and duly and timely filed all Tax Returns required to be prepared or filed by them and have correctly and completely reported all income and information required to be reported thereon, have timely paid all Taxes that are or may become due and payable on or prior to the date hereof and have made adequate provision for Taxes in their Financial Statements for the period ended December 31, 2005. (b) Since December 31, 2005, the Companies have only incurred liabilities for Taxes in the ordinary course of business except as a result of the Pre-Closing Transactions to occur before the Closing. (c) There are no outstanding waivers of any limitation periods or agreements providing for an extension of time for the filing of any Tax Return or for the assessment or reassessment for collection of Tax for which any of the Companies is or may be liable, or for the payment of any Tax by the Companies, and there are no outstanding objections to any assessment or reassessment of Taxes. Any proposed deficiencies have been paid, settled or otherwise resolved. (d) There are no liabilities for Taxes or any grounds that could prompt an assessment or reassessment of the Companies nor have the Companies received any notice from any Governmental Authorities that an audit, investigation, assessment or reassessment of Taxes is proposed, excluding items set forth on Schedule 3.11. 14 (e) The Companies have withheld from each payment made by them the amount of all Taxes and other deductions required to be withheld and has paid such amounts when due, or made adequate provision for the payment of such amounts to the proper Governmental Authorities. (f) The Companies have collected from each receipt from any of the past and present customers (or other Persons paying amounts to the Companies) the amount of all Taxes (including goods and services tax and provincial sales taxes) required to be collected and have paid and remitted such Taxes when due, in the form required under applicable Laws or made adequate provision for the payment of such amounts to the proper Governmental Authorities. The amount of Tax collected but not remitted by the Companies will be retained in the appropriate accounts and remitted by the Companies to the appropriate Governmental Authorities when due. 3.12. Permits. With such exceptions as are not reasonably likely -------- to have, in the aggregate, a Material Adverse Effect, (a) all Permits that are presently required for the operation of any Company, as currently conducted, have been duly obtained and are in full force and effect and (b) there is no action pending or, to the Knowledge of Vendor and Cenveo, overtly threatened against any Company to terminate the rights of any Company under any of such Permits. 3.13 Real Property. ------------- (a) Schedule 3.13(a) lists the real property owned by each ---------------- Company (the "OWNED REAL PROPERTIES"). Except as set forth on Schedule 3.13(a), no Company owns any real property. Each Company has good title to the Owned Real Properties owned by it, free and clear of any Liens other than Permitted Liens or any conditions that a current, accurate survey or physical inspection of any Owned Real Property would show. No Company has leased any Owned Real Property or portion thereof. (b) Schedule 3.13(b) lists all leases, subleases and ---------------- licenses relating to any real property to which any Company is a party or pursuant to which any Company occupies any real property. Each Company has a valid and binding leasehold interest in the real property leased by it and the right to quiet enjoyment of such real property. (c) With such exceptions as are not reasonably likely to have, in the aggregate, a Material Adverse Effect, no Company has received written notice of, nor to the Knowledge of Vendor and Cenveo does there exist, any condemnation proceeding affecting any portion of the real properties owned, leased, subleased or licensed by any Company. 3.14 Title; Condition of Assets. -------------------------- (a) Each Company has good title to, or valid leasehold interests in, all of the assets that it purports to own or lease, free and clear of any Liens other than Permitted Liens. (b) The tangible personal property of the Companies is in all material respects in working condition, reasonable wear and tear and loss due to normal operations excepted. 15 3.15 Intellectual Property. To the Knowledge of Vendor and --------------------- Cenveo, the Companies own or have the right to use all Intellectual Property and all Technology used or held for use in the conduct of their respective businesses without any conflict with the rights of others, in each case with such exceptions as are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect and subject to limitations contained in any applicable license agreement; provided, however, that no representation -------- ------- or warranty is made as to the extent to which ownership of or right to use any particular Intellectual Property or Technology includes the exclusive right to use such Intellectual Property or Technology. 3.16 Insurance. Schedule 3.16 lists all material liability and --------- ------------- casualty insurance policies in force as of the date of this Agreement for the benefit of any Company. 3.17 Environmental Laws. With such exceptions as are set forth ------------------ on Schedule 3.17 or not reasonably likely to have, in the aggregate, a ------------- Material Adverse Effect: (a) each Company complies and, since December 31, 2003, has been in compliance with all applicable Environmental Laws; (b) no Company has any Knowledge of any grounds to revoke any of its Environmental Permits; (c) since December 31, 2003, no Company has been convicted of an offence or been subjected to any claim, judgment, Order, injunction or other proceeding or been fined or otherwise sentenced for non-compliance with any Environmental Laws in connection with the business of the Companies and have not settled any claim or other proceeding in connection therewith; (d) other than notices relating to matters that have been resolved, no Company has received written notice alleging that it may be potentially responsible for any remedial, corrective, preventative or other response action from any Governmental Authority under any Environmental Law; (e) there are no claims, written notices, judgments or consent decrees pending or threatened by any other Person relating to any Hazardous Substances against any of the Companies, including any relating to off-site disposal and/or transportation of Hazardous Substances in violation of any Environmental Laws; (f) no Company has assumed any liability of any Person for cleanup, remediation, removal, compliance or required capital expenditures in connection with any matters pertaining to the Environment; (g) each Company has provided or made available to Buyer true and complete copies of all Environmental Reports prepared within the last three years in Cenveo's possession or control; and (h) there are no underground storage tanks or surface impoundments that are located on real property currently owned or leased by any Company in violation of any Environmental Laws. 16 3.18 Affiliated Transactions. As of the date of this Agreement, ----------------------- no Affiliate of any Company is a party to any agreement with any Company. 3.19 Suppliers and Customers. Schedule 3.19 lists the names of ----------------------- ------------- the top 10 (based on invoice price) suppliers of products and/or services to, and customers of, the Companies during each of calendar year 2004 and 2005. 3.20 Sufficiency of Assets. The assets owned by the Companies --------------------- on the date of this Agreement are sufficient for them to operate the business conducted by them on substantially the same basis as heretofore conducted by them. 3.21 Absence of Material Acquisitions. During the three years -------------------------------- prior to the date of this Agreement, none of the Companies has acquired the business or capital stock of any Person for an amount in excess of CDN$10,000,000. 3.22 Relations With Auditors. Ernst & Young LLP are independent ----------------------- with respect to the Companies within the meaning of the applicable Laws relating to securities matters and of the Code of Ethics of Chartered Accountants of Quebec, and there has not been any disagreement (within the meaning of National Instrument 51-102 of the Canadian Securities Regulators) between the Companies and Ernst & Young LLP with respect to the financial statements of the Companies that appear in the Prospectus. 3.23 Residency. None of the Companies, other than Buffalo --------- Envelope Inc., is a non-resident of Canada for the purposes of the Tax Act. 3.24 Certain Amounts. As of December 31, 2005, the aggregate --------------- book value of the assets in Canada of the Companies, Cenveo and their respective Affiliates controlled by Cenveo was less than CDN$400 million, and during the fiscal year ended December 31, 2005, the aggregate gross revenues from sales in, to and from Canada of the Companies, Cenveo and their respective Affiliates controlled by Cenveo was less than CDN$400 million. 3.25 Full Disclosure. The Prospectus (other than the sections --------------- of the Prospectus entitled "Canadian Federal Income Tax Considerations," "Plan of Distribution," "Eligibility for Investment" and "Description of the Fund" and the information and statements provided in writing by the Underwriters specifically for use in the Prospectus as to which no representation or warranty is given) constitutes full, true and plain disclosure of all material facts relating to the Business and does not contain any misrepresentation (as defined in applicable Laws relating to securities matters). 3.26 Minute Books. To the Knowledge of Vendor and Cenveo, the ------------ minute books of the Companies made available to counsel for Buyer constitute all the minute books in the Companies' possession. 3.27 Exclusivity of Representations and Warranties. EXCEPT FOR --------------------------------------------- THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE 2 AND THIS ARTICLE 3, THE SHARES ARE BEING SOLD HEREUNDER ON A "WHERE IS AND AS IS" BASIS, AND NEITHER VENDOR NOR CENVEO MAKES ANY REPRESENTATION OR WARRANTY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY 17 OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER IMPLIED WARRANTY CONCERNING THE SHARES, THE COMPANIES OR ANY OTHER MATTER WHATSOEVER. VENDOR AND CENVEO HEREBY DISCLAIM ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY VENDOR OR CENVEO OR ANY OTHER PERSON TO BUYER OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER INFORMATION IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. ARTICLE 4 --------- REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer hereby represents and warrants to Vendor and Cenveo as follows: 4.1 Organization, Existence and Good Standing. Buyer is an ----------------------------------------- unincorporated open-ended trust duly formed and validly existing and in good standing under the laws of the Province of Quebec. 4.2 Capacity; Authorization. Buyer has all requisite trust ----------------------- power and authority to execute, deliver and perform this Agreement and the Ancillary Instruments to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Buyer of this Agreement and the Ancillary Instruments to which it is or at the Closing will be a party and the consummation by Buyer of the transactions contemplated hereby and thereby: (i) have been authorized by all necessary action on the part of Buyer; and (ii) in the case of clauses (B) and (C) with such exceptions as are not reasonably likely to have a material adverse effect on the ability of Buyer to perform its obligations hereunder: (A) do not and will not violate the declaration of trust of Buyer, as in effect from time to time; (B) or constitute a default under any contract to which it is a party or (C) violate any Law. This Agreement has been and, when executed and delivered at the Closing, the Ancillary Instruments to which Buyer is a party will be, duly executed and delivered by Buyer. This Agreement constitutes and, when executed and delivered at the Closing, the Ancillary Instruments to which Buyer is a party will constitute, the legal, valid and binding obligation of Buyer, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). 4.3 Financial Statements; Undisclosed Liabilities. --------------------------------------------- (a) The consolidated balance sheets of Buyer as of February 10, 2006 (such balance, the "BUYER'S BALANCE SHEET"; February 10, 2006 is referred to as the "BUYER'S BALANCE SHEET DATE"), together with the notes thereto have been prepared in accordance with 18 the applicable books and records of Buyer and present fairly, in all material respects, the consolidated financial position of Buyer as of such date in conformity with GAAP. (b) Buyer has no assets or liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent or otherwise) except for assets, liabilities and obligations incurred as a result of the formation of Buyer or its execution and delivery of this Agreement or the Underwriting Agreement. 4.4 The Trustees. The trustees of Buyer, acting in such ------------ capacity, have all necessary power and authority to administer, control and hold title to Buyer's assets and to execute its undertakings as described in the Prospectus. 4.5 Capitalization. (a) Immediately prior to Closing and -------------- completion of the transactions described under the heading "Funding and Related Transactions - Closing Transactions" in the Prospectus, Buyer's authorized capital consists of an unlimited number of Units of which 10 Units are issued and outstanding as of the date hereof; (b) immediately following Closing, assuming the over-allotment option contemplated by the Underwriting Agreement has not been exercised, there will be 31,311,667 Units issued and outstanding; (c) except for such over-allotment option, no person, firm or corporation has any agreement or option, or right or privilege (whether pre-emptive or contractual) capable of becoming an option or other agreement for the purchase from Buyer of any unissued Units or other securities of Buyer; and (d) immediately following Closing, Buyer will not hold interests in any other entity other than Supremex, Amalco, AcquisiCo and Buffalo Envelope Inc. 4.6 Description of Securities. The description of the ------------------------- securities of Buyer, including the Units, in the Prospectus is, in all material respects, a true, complete and accurate description of the rights, privileges, restrictions, terms and conditions attaching to such securities. 4.7 Voting of Securities. Except as contained in the -------------------- Registration Rights Agreement or the Amended and Restated Declaration of Trust, no agreement is currently in force or effect that, in any manner, affects the voting or control of any of the securities of Buyer and, at the Closing, no such agreement will be in force or effect. 4.8 Issuance of Units. At the Closing, the Initial Vendor ----------------- Units will be validly created and will be duly authorized and issued as fully paid and non-assessable. At the time of the delivery of the Over-Allotment Vendor Units upon conversion, if any, of the Over-Allotment Note in accordance with the terms thereof, such Over-Allotment Vendor Units will be validly created and will be duly authorized and issued as fully paid and non-assessable. 4.9 Qualification. All documents have been filed, all ------------- requisite proceedings have been taken and all legal requirements have been fulfilled by Buyer to qualify the Vendor Units for distribution and sale to Vendor under the applicable laws of Canada and the laws of the provinces of Canada. All documents have been filed, all requisite proceedings have been taken and all legal requirements have been fulfilled by Buyer to qualify the Vendor Units for distribution and sale by Vendor under the applicable laws of Canada and the laws of the provinces of Canada, provided, that the -------- distribution and sale by Vendor thereof is not a "control distribution" as such term is defined in Section 1.1 of NI 45-102. 19 4.10 Approval for Trading. The Vendor Units have been -------------------- conditionally approved for trading on the TSX, subject to satisfaction of the listing conditions set forth in the conditional approval letter of the TSX dated March 16, 2006. 4.11 Transaction Expenses. Except as set forth on Schedule 4.11, -------------------- ------------- neither Supremex, nor Cenveo Canada nor any of their respective Subsidiaries has paid, and none of them shall, prior to the consummation of the Closing pay, any costs or expenses incurred in connection with any of the transactions contemplated by this Agreement ("TRANSACTION EXPENSES"). ARTICLE 5 --------- COVENANTS --------- 5.1 Access. At the reasonable request of Buyer, and upon ------ reasonable advance notice, Vendor shall from time to time prior to the Closing give or cause to be given to the officers, employees, accountants, counsel, lenders and their agents and representatives, potential lenders and their agents and representatives and other authorized representatives of Buyer (collectively, "BUYER'S REPRESENTATIVES") full access during normal business hours to any and all premises, properties, files, books, records, documents and other information of the Companies. Notwithstanding the foregoing, Buyer shall not have access to personnel records of the Companies relating to individual performance or evaluation records, medical histories or other information that in Vendor's good faith opinion is sensitive or the disclosure of which could subject Cenveo, Vendor or the Companies to risk of liability. Buyer shall, and Buyer shall cause Buyer's Representatives to, conduct its (or their) investigation in a manner designed to avoid any unreasonable interference with the operations of the Companies. 5.2 Notice of Proceedings; Agreement to Defend. ------------------------------------------ (a) Each party to this Agreement will notify the other promptly in writing upon (i) such party's becoming aware of any Order or judgment restraining or enjoining the consummation of this Agreement or the transactions contemplated hereby or any complaint or overtly threatened complaint seeking such an Order or judgment or (ii) such party's receiving any notice from any Governmental Authority of its intention (A) to institute an investigation into, or institute a suit or proceeding to restrain or enjoin, the consummation of this Agreement or the transactions contemplated hereby or (B) to nullify or render ineffective this Agreement or such transactions if consummated. (b) In the event any Person brings a suit or claim, or commences an action, investigation or other proceeding, which challenges the validity or legality of this Agreement or the transactions contemplated by this Agreement or any instrument or document contemplated hereby, the parties hereto agree to consult and to cooperate with each other and use reasonable best efforts to defend against such suit, claim, action, investigation or other proceeding and, in the event an injunction or other Order is issued in connection with any of the foregoing, to use reasonable best efforts to have such injunction lifted or such Order set aside so that the transactions contemplated by this Agreement and the instruments and documents contemplated hereby may proceed. 20 5.3 Consummation of Agreement. Each party hereto shall use ------------------------- reasonable best efforts to fulfill and perform all conditions and obligations on its part to be fulfilled and performed under this Agreement and the Ancillary Instruments to which it is a party, and to cause the transactions contemplated hereby and thereby to be fully carried out. 5.4 Consummation of the Pre-Closing Transactions. Prior to the -------------------------------------------- consummation of the Closing each party to this Agreement will cause the Pre-Closing Transactions for which it is responsible (it is understood and agreed that the Pre-Closing Transactions for which a party is responsible shall be those Pre-Closing Transactions that are required to be performed by such party) to occur. 5.5 Consummation of the Post-Closing Transactions. Immediately --------------------------------------------- following the consummation of the Closing, each party to this Agreement will cause the Post-Closing Transactions for which it or any of its subsidiaries is responsible (it is understood and agreed that the Post-Closing Transactions for which a party is responsible shall be those Post-Closing Transactions that are required to be performed by such party) to occur. Each party to this Agreement shall carry out and perform its respective obligations with respect to each item set forth under "Other Post-Closing Adjustment" in Exhibit B-2 hereto. 5.6 Announcements. Prior to the consummation of the Closing, ------------- no party hereto will (and each such party will cause the Affiliates controlled by it not to) issue any press release or otherwise make any public statement with respect to the transactions contemplated hereby without the prior written consent of the other parties, except as and to the extent that such party or any of its Affiliates determines in good faith that it is so obligated by Law, in which case such party shall give notice to the other parties in advance of such party's or its Affiliate's intent to make such announcement or issue such press release and the parties hereto shall use reasonable best efforts to cause a mutually agreeable release or announcement to be issued. 5.7 Funding of Pension Plan Deficits; Payment of Intercompany --------------------------------------------------------- Payables. Prior to the Amalgamation, Cenveo will make a CDN$10,000,000 cash - -------- capital contribution to Supremex in respect of its pension plan funding deficit in the following sequence: first a subscription in such amount for shares of Cenveo Canada, then a subscription in such amount utilizing all such cash by Cenveo Canada for shares of Supremex, and then a capital contribution in such amount utilizing all such cash by Supremex to such plan. After the Amalgamation and prior to the Closing, Cenveo will make an additional CDN$3,757,000 cash capital contribution to Amalco in respect of its pension plan funding deficit in the same such sequence. Cenveo and Amalco, as the case may be, shall pay off or cause to be paid off or otherwise cancelled at the Closing all intercompany payables (other than Intercompany Payables) owed to or by Supremex or any of its Subsidiaries to Cenveo or any of its Subsidiaries (other than Supremex or any of its Subsidiaries). 5.8 Books and Records. ----------------- (a) For a period of six years after the Closing Date, Buyer shall maintain and make available to Vendor and Cenveo the books and records of the Companies for inspection and copying at the expense of Vendor and Cenveo, provided, that there is no mark-up of the actual direct -------- out-of-pocket cost thereof. 21 (b) For a period of six years after the Closing Date, Vendor and Cenveo shall maintain and make available to Buyer the books and records of the Companies for inspection and copying at the expense of Vendor and Cenveo, provided, that there is no mark-up of the actual direct out-of-pocket cost thereof. 5.9 Amounts Collected and Paid Post-Closing. --------------------------------------- (a) After consummation of the Closing, Buyer shall promptly (and in any event, with respect to each amount collected, not later than the last day of the month after the month in which such amount was collected) pay to Vendor, Cenveo or any of their respective Subsidiaries (as applicable) all amounts collected by Buyer or Amalco or any of their respective Subsidiaries that belong to Vendor, Cenveo or any of their respective Subsidiaries. (b) After consummation of the Closing, Vendor and Cenveo shall promptly (and in any event, with respect to each amount collected, not later than the last day of the month after the month in which such amount was collected) pay to Buyer, Amalco or any of their respective Subsidiaries (as applicable) all amounts collected by Vendor, Cenveo or any of their respective Subsidiaries that belong to Buyer, Amalco or any of their respective Subsidiaries. 5.10 Confidentiality. Cenveo and Vendor shall maintain the --------------- confidentiality of any confidential information relating to the inquiries by the Competition Bureau expressly described in the Prospectus under the caption "Legal Proceedings" but only insofar as they relate to conduct that occurred prior to the Closing; provided, however, that this Section 5.10 -------- ------- shall not restrict: (i) any disclosure required by applicable Law or any securities exchange; (ii) any disclosure on a confidential basis to the advisors or representatives of Cenveo or Vendor; or (iii) any disclosure of information that: (A) is publicly available as of the date of this Agreement; (B) after the date of this Agreement, becomes publicly available through no fault of the disclosing party; or (C) is received by Vendor or Cenveo from a third party not, to the knowledge of Vendor or Cenveo, subject to any obligation of confidentiality with respect to such information. 5.11 Cooperation. Buyer, Cenveo and Vendor shall cooperate with ----------- one another in preparing and filing any necessary reports or other documents with the U.S. Securities and Exchange Commission in connection with this Agreement and the transactions contemplated hereby. ARTICLE 6 --------- CONDITIONS TO THE OBLIGATIONS OF THE PARTIES -------------------------------------------- The obligations of the parties under this Agreement to effect the Closing are subject to the satisfaction of each of the following conditions prior to or at the Closing, each of which may be waived (as conditions to their obligations) by the each party in its sole discretion: 6.1 Completion of the Offering. Buyer shall have sold the -------------------------- Units to the Underwriters pursuant to the Underwriting Agreement. 22 6.2 Consent; Release of Liens. The lenders under Cenveo's ------------------------- existing revolving credit facility shall have consented to the transactions contemplated by this Agreement and all Liens on the assets and shares of Cenveo Canada and Supremex and the Subsidiaries of Supremex securing such facility shall be released and discharged simultaneously with the consummation of the Closing. 6.3 Term Facility. The Term Facility (as defined in the ------------- Prospectus) shall have been made available to Amalco. ARTICLE 7 --------- SURVIVAL; INDEMNIFICATION ------------------------- 7.1 Survival. -------- (a) All representations, warranties, covenants and agreements contained in this Agreement shall survive (and not be affected in any respect by) the Closing indefinitely and any investigation conducted by any party hereto. Notwithstanding the foregoing: (i) the covenants and agreements contained in Sections 5.1 (Access; Confidentiality), 5.2 (Notice of Proceedings; Agreement to Defend), 5.3 (Consummation of Agreement), 5.4 (Consummation of the Pre-Closing Transactions), 5.6 (Announcements) and 5.7 (Funding of Pension Plan Deficits) and the related indemnity obligations contained in the applicable subsection of Section 7.2 shall terminate as of the consummation of the Closing; (ii) the covenants and agreements contained in Section 5.5 (Consummation of the Post-Closing Transactions) and the related indemnity obligations contained in the applicable subsection of Section 7.2 shall terminate on, and no claim or action with respect thereto may be brought after the consummation of all of the Post-Closing Transactions; (iii) the covenants and agreements contained in Section 7.2(a)(iii) shall terminate on, and no claim or action with respect thereto may be brought after, the date that is 30 months after the Closing Date; (iv) the covenants and agreements contained in Section 7.2(a)(iv) and (vi) shall survive indefinitely; (v) the representations and warranties contained in this Agreement and the related indemnity obligations for the inaccuracy thereof set forth in the applicable subsection of Section 7.2 shall terminate on, and no claim or action with respect thereto may be brought after, the date that is 18 months after the Closing Date, except that: (A) the representations and warranties contained in Section 3.17 (Environmental Laws) and the related indemnity obligations for the 23 inaccuracy thereof contained in the applicable subsection of Section 7.2 shall survive until the date that is 30 months after the Closing Date; (B) the representations and warranties contained in Section 3.11 (Taxes) and the related indemnity obligations for the inaccuracy thereof contained in the applicable subsection of Section 7.2 shall survive until the later of the date that is 24 months after the Closing Date and 90 days following the date on which the relevant Governmental Authorities are no longer able to assess liability with respect to the period in question; and (C) the representations and warranties contained in Section 3.25 (Full Disclosure) and the related indemnity obligations for the inaccuracy thereof contained in the applicable subsection of Section 7.2 shall survive until the date that is three years and 90 days after the Closing Date (i.e., the date on which the Fund is no longer liable for a misrepresentation under the Prospectus (as defined in the Underwriting Agreement) pursuant to applicable Canadian securities laws); and (D) the representations and warranties contained in Sections 2.1 (Organization, Existence and Good Standing), 2.2 (Capacity; Authorization), 2.3 (Ownership of Shares), 3.1 (Organization, Existence and Good Standing), 3.2 (Capitalization), 4.1 (Organization, Existence and Good Standing), 4.2 (Capacity; Authorization) and 4.4 through 4.9 and 4.11 and the related indemnity obligations for the inaccuracy thereof contained in the applicable subsection of Section 7.2 shall survive indefinitely (it is understood and agreed that the limitations contained in Section 2.4 (Exclusivity of Representations and Warranties) and 3.27 (Exclusivity of Representations and Warranties) and the related limitation on the indemnity obligations with respect thereto shall also survive indefinitely); (vi) the covenants and agreements contained in Section 7.2(a)(v) and (vii) shall survive until the later of the date that is 24 months after the Closing Date and 90 days after the expiration of the applicable statute of limitations; (vii) the covenants and agreements contained in Section 5.8 (books and records) and the related indemnity obligations for breaches thereof contained in the applicable subsection of Section 7.2 shall terminate on, and no claim or action with respect thereto may be brought after the sixth anniversary of the Closing Date; (viii) the covenants and agreements contained in Section 5.9 (Amounts Collected and Paid Post-Closing) and the related indemnity obligations for breaches thereof contained in the applicable subsection of Section 7.2 shall survive indefinitely; and (ix) nothing in this Section 7.1 shall limit the ability of a party to this Agreement to bring a claim for fraud. (b) The representations, warranties and covenants that terminate pursuant to this Section 7.1, and the liability of any party hereto with respect thereto pursuant to this 24 Article 7, shall not terminate with respect to any claim, whether or not fixed as to liability or liquidated as to amount, with respect to which the Indemnifying Party has been given written notice from the Indemnified Party setting forth the facts upon which the claim for indemnification is based and a reasonable estimate of the amount of the claims prior to the expiration of the applicable survival period based on information available at that time. 7.2 Indemnification. --------------- (a) Vendor and Cenveo hereby jointly and severally (solidarily) agree to indemnify and hold harmless Buyer from, and to reimburse Buyer for, on a Net After-Tax Basis, any Losses that are the direct result of: (i) the inaccuracy of any representation or warranty of Vendor or Cenveo contained in Article 2 or 3 of this Agreement; (ii) the breach by Vendor or Cenveo of, or failure by Vendor or Cenveo to perform, any of their respective covenants or agreements contained in this Agreement; (iii) the existing and potential inquiries by the Competition Bureau referred to in the Prospectus under the caption "Legal Proceedings" but only insofar as they relate to conduct that occurred prior to the Closing; (iv) the environmental liabilities and costs relating to the Omemee Ontario property to be sold by Supremex to an Affiliate of Cenveo in connection with the Pre-Closing Transactions; (v) (A) the third party accrued liability reflected in the Financial Statements and more particularly described in note 7 therein, (B) any other liabilities relating to Cenveo Canada but only to the extent arising prior to the Amalgamation (irrespective of when asserted); (C) the tax deductibility of intercompany management fees in respect of periods prior to the Closing between Supremex, on the one hand, and Cenveo and its non-Canadian Affiliates, on the other hand, that have been or will be claimed as deductible by Supremex in Tax Returns prepared on a basis consistent with its Tax Returns filed prior to the Closing and (D) any withholding Taxes, including gross up and indemnity obligations under contracts with respect to withholding Taxes imposed with respect to payments made by the Companies prior to the Closing; provided, however, that this Section 7.2(a)(v) shall be void and of -------- ------- no force or effect if Buyer or any of its Affiliates (including any Company) or any of their respective agents or representatives shall initiate communications with any Governmental Authority regarding any of the foregoing; (vi) the environmental liabilities and costs relating to the LaSalle property and disclosed on Schedule 3.17; and (vii) any net Tax liability resulting from the sale of assets formerly owned by Cenveo Canada as part of the Pre-Closing Transactions. 25 Notwithstanding anything contained in this Agreement to the contrary: (u) Vendor and Cenveo shall not be responsible for any Losses under Sections 7.2(a)(i) or (ii) with respect to an individual matter or series of related matters until the cumulative aggregate amount of such Losses (calculated on a Net After-Tax Basis but excluding any such Losses to the extent recovered by Buyer or any of its Affiliates, including the Companies, pursuant to Section 7.3(f) hereof) exceeds CDN$50,000 (the "MINI-BASKET AMOUNT"), in which case the amount of such Losses (calculated on a Net After-Tax Basis) shall then count towards, or be included in, the Basket Amount; (v) subject to the preceding clause (u), Vendor and Cenveo shall not be responsible for any Losses under Sections 7.2(a)(i) or (ii) until the cumulative aggregate amount of such Losses (calculated on a Net After-Tax Basis but excluding any such Losses to the extent recovered by Buyer pursuant to Section 7.3(f) hereof) exceeds CDN$1,000,000 (the "BASKET AMOUNT"), in which case Vendor and Cenveo shall then be liable only for such Losses (calculated on a Net After-Tax Basis) in excess of CDN$500,000; (w) Vendor and Cenveo shall not be responsible for any Losses under Sections 7.2(a)(v)(A) or (B) or 7.2(a)(vii) with respect to an individual matter or series of related matters until the cumulative aggregate amount of such Losses (calculated on a Net After-Tax Basis but excluding any such Losses to the extent recovered by Buyer pursuant to by Section 7.3(f) hereof) exceeds CDN$50,000 (the "CENVEO CANADA BASKET AMOUNT"), in which case Vendor and Cenveo shall then be liable only for such Losses (calculated on a Net After-Tax Basis but excluding any such Losses to the extent recovered by Buyer pursuant to by Section 7.3(f) hereof) in excess of CDN$25,000; (x) the cumulative aggregate indemnity obligation of Vendor and Cenveo under this Section 7.2(a) shall in no event exceed one-half of the sum of (A) the original principal amount of the Initial Notes, plus (B) the remaining balance of the Supremex ---- Loan Payable (as defined in Exhibit B-1) that is repaid in the ----------- Post-Closing Transactions, plus (C) if and only if the ---- over-allotment option contemplated by the Underwriting Agreement has been exercised, the net cash proceeds actually received by Vendor from Buyer upon repayment of the Over-Allotment Note; (y) Vendor and Cenveo shall in no event have any indemnity obligation under Section 7.2(a), other than Sections 7.2(a)(iii), (iv), (v), (vi) and (vii), if in a public offering of securities they would be able to establish a due diligence defense (of the nature provided under Canadian law) to a claim by a third party relating to matters within the scope of such indemnity obligation, except with respect to any claim based on the representations and warranties contained in Sections 2.1, 2.2 (other than clause (ii)(B) thereof), 2.3, 3.1 and 3.2(a); and (z) Buyer shall not be entitled to indemnification under this Section 7.2(a) for any Losses to the extent a reserve with respect to such Loss is included in the calculation or determination of Final Closing Working Capital. 26 (b) Buyer hereby agrees to indemnify and hold harmless Vendor and Cenveo from, and to reimburse Vendor and Cenveo for, on a Net After-Tax Basis, any Losses, that are the direct result of: (i) the inaccuracy of any representation or warranty of Buyer contained in Article 4 of this Agreement; or (ii) the breach by Buyer of, or failure by Buyer to perform, any of its covenants or agreements contained in this Agreement. 7.3 Indemnification Procedures. -------------------------- (a) As promptly as practicable, and in any event within 30 days, after Buyer, Vendor or Cenveo shall receive any notice of, or otherwise become aware of, the commencement of any Action, the assertion of any claim, the occurrence of any event, the existence of any fact or circumstance, or the incurrence of any Loss, for which indemnification is provided for by Section 7.2(a) or (b) hereof (an "INDEMNIFICATION EVENT"), the party entitled to such indemnification (an "INDEMNIFIED PARTY") shall give written notice (an "INDEMNIFICATION CLAIM") to the party from which such indemnification is (or, under such assumption, could be) sought (an "INDEMNIFYING PARTY") describing in reasonable detail the Indemnification Event and the basis on which indemnification is sought. If the Indemnifying Party is not so notified by the Indemnified Party within 30 days after the date of the receipt by the Indemnified Party or any of its Affiliates of notice of, or of the Indemnified Party or any of its Affiliates otherwise becoming aware of, any particular Indemnification Event, the Indemnifying Party shall be relieved of all liability hereunder in respect of such Indemnification Event (or the facts or circumstances giving rise thereto) to the extent that such Indemnifying Party is prejudiced or harmed as a consequence of such failure (and, to such extent, all Losses resulting from such Indemnification Event shall thereafter be disregarded for purposes of determining whether the Basket Amount, the Mini-Basket Amount or the Cenveo Canada Basket Amount has been exceeded), and in any event the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Party was overdue in giving, and had not given, such notice. (b) If any Indemnification Event involves the claim of a third party (a "THIRD-PARTY CLAIM"), the Indemnifying Party shall (whether or not the Indemnified Party is entitled to claim indemnification under Section 7.2(a) or (b), as the case may be) be entitled to, and the Indemnified Party shall provide the Indemnifying Party with the right to, participate in, and assume sole control over, the defense and settlement of such Third-Party Claim (with counsel reasonably satisfactory to the Indemnified Party); provided, however, that: (i) except in the case of -------- ------- claims relating to Taxes (other than any such claims that could affect the liability of the Companies for Taxes that are not indemnified hereunder), the Indemnified Party shall be entitled to participate in the defense of such Third-Party Claim and to employ counsel at its own expense to assist in the handling of such Third-Party Claim; and (ii) except in the case of claims relating to Taxes (other than any such claims that could affect the liability of the Companies for Taxes that are not indemnified hereunder), the Indemnifying Party shall obtain the prior written approval of the Indemnified Party, which approval shall not be unreasonably withheld, conditioned or delayed, before entering into any settlement of such Third-Party Claim or ceasing 27 to defend against such Third-Party Claim if: (x) as a result of such settlement or ceasing to defend, injunctive or other equitable relief would be imposed against the Indemnified Party; or (y) in the case of a settlement, the Indemnified Party would not thereby receive from the claimant an unconditional release from all further liability in respect of such Third-Party Claim, or (z) such settlement would affect the liability of the Companies for Taxes that are not indemnified hereunder. After written notice by the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of any such Third-Party Claim, the Indemnifying Party shall not be liable hereunder to indemnify any Person for any Legal Expenses subsequently incurred in connection therewith. If the Indemnifying Party does not assume sole control over the defense or settlement of such Third-Party Claim as provided in this Section 7.3(b) within a reasonable period of time, or, after assuming such control, fails to defend against such Third-Party Claim (it being agreed that settlement of such Third-Party Claim does not constitute such a failure to defend), the Indemnified Party shall have the right (as to itself) to defend and, upon obtaining the written consent of the Indemnifying Party, settle the claim in such manner as it may deem appropriate, and the Indemnifying Party shall promptly reimburse the Indemnified Party therefor in accordance with (and to the extent provided for (subject to, and not disregarding, the last paragraph of Section 7.2(a)) in) Section 7.2(a) or (b), as appropriate. The Indemnifying Party shall not be liable under Section 7.2(a) for any settlement or compromise effected without its consent. (c) The Indemnified Party and the Indemnifying Party shall each cooperate fully (and shall each cause its Affiliates to cooperate fully) with the other in the defense of any Third-Party Claim pursuant to Section 7.3(b). Without limiting the generality of the foregoing, each such Person shall furnish the other such Person (at the expense of the Indemnifying Party) with such documentary or other evidence as is then in its or any of its Affiliates' possession as may reasonably be requested by the other Person for the purpose of defending against any such Third-Party Claim. (d) Upon payment of any amount pursuant to any Indemnification Claim, the Indemnifying Party shall be subrogated, to the extent of such payment, to all of the Indemnified Party's rights of recovery (and, if Vendor or Cenveo are the Indemnifying Party, the Indemnified Party shall cause Vendor and Cenveo to be subrogated to all of Buyer's and the Companies' rights of recovery) against any third party with respect to the matters to which such Indemnification Claim relates. (e) Except as expressly provided in the Nonsolicitation Agreement, the Supply Agreement, the Registration Rights Agreement, the Declaration of Trust and the other Ancillary Instruments, the rights and remedies of Buyer, Vendor and Cenveo under this Article 8 are exclusive and in lieu of any and all other rights and remedies which Buyer, Vendor or Cenveo, as the case may be, may have against the other, under this Agreement or otherwise. All claims for indemnification must be asserted, if at all, in good faith and in accordance with the provisions of Section 7.3(a) and, to the extent applicable to such claims, within the relevant time period set forth in Section 7.1(a). (f) Where an Indemnified Party is at any time entitled to recover from some other Person (including an insurer) any sums in respect of any matter giving rise to a claim under this Agreement, such Indemnified Party shall take all reasonable steps to enforce such recovery 28 prior to taking action against an Indemnifying Party and, in the event the Indemnified Party recovers any amount from such other Person, the amount of the claim against the Indemnifying Parties shall be reduced by the amounts recovered or if an indemnity payment has already been made to the Indemnified Party prior to the Indemnified Party recovering any such sum, such Indemnified Party shall promptly pay to the Indemnifying Party an amount equal to such sum, less any expense incurred by such Indemnified Party in connection with the recovery of such sum, but in no event shall any such payment exceed the amount of such indemnity payment. (g) As a condition to its right to indemnification hereunder, Buyer and its Affiliates (including, following the Closing, the Companies) (i) shall not, without the consent of Vendor and Cenveo, file any Tax Return (including any amended Tax Return) or take any position with any Governmental Authority which would result in any Tax liability for which Vendor and Cenveo are required to indemnify Buyer pursuant to Section 7.2 and (ii) shall take any actions reasonably requested by Vendor and Cenveo to avoid such liability. (h) Any payment made by Buyer, Vendor or Cenveo pursuant to this Article 7 shall be deemed an adjustment to the Purchase Price. ARTICLE 8 --------- TERMINATION ----------- 8.1 Termination of Agreement. This Agreement may be terminated at ------------------------ any time on or prior to the Closing: (i) by the mutual consent of Vendor, Cenveo and Buyer; (ii) by Buyer, on the one hand, or Vendor and Cenveo, on the other hand, at any time following termination of the Underwriting Agreement or at any time if the Closing has not occurred by April 29, 2006; or (iii) by Buyer, on the one hand, or Vendor and Cenveo, on the other hand, if any court or Governmental Authority of competent jurisdiction in the United States shall have issued an Order, or taken any other action, permanently prohibiting the transactions contemplated by this Agreement, and such Order, or other action, shall have become final and non-appealable. If Buyer or Vendor and Cenveo shall terminate this Agreement pursuant to the foregoing provisions of this Section 8.1, such termination shall be effected by written notice to the other party or parties specifying the provision pursuant to which such termination is made. 8.2 Liabilities Upon Termination. In the event of termination ---------------------------- of this Agreement pursuant to Section 8.1, written notice thereof shall forthwith be given by the terminating party or parties to the other parties, and this Agreement shall thereupon terminate and become void and have no effect, and the transactions contemplated hereby shall be abandoned without further action by the parties hereto and no party (Vendor and Cenveo, on the one hand, and Buyer, on the other hand) shall thereafter be liable to the other hereunder. 29 ARTICLE 9 --------- GENERAL PROVISIONS ------------------ 9.1 Expenses. Buyer shall bear all of the expenses incurred by -------- the parties in connection with the transactions contemplated by this Agreement, including accounting and legal fees or any stamp or transfer Taxes incurred in connection herewith, provided that Buyer shall not pay any such expenses at or prior to the consummation of the Closing or reserve any such expenses for payment after the consummation of the Closing without the prior written approval of Vendor and Cenveo. 9.2 Notices. Any notice or other communication required or ------- permitted to be given hereunder or (except to the extent expressly set forth therein) any Ancillary Instrument will be in writing and shall be delivered via an overnight courier such as Federal Express or delivered against receipt (including by confirmed facsimile transmission), as follows: (a) If to Vendor or Cenveo: Cenveo, Inc. One Canterbury Green 201 Broad Street, 6th Floor Stamford, CT 06901 Fax No: 203-595-3071 Attention: General Counsel with a copy to: Hughes Hubbard & Reed LLP One Battery Park Plaza New York, NY 10004 Fax No: (212) 422-4726 Attention: Kenneth A. Lefkowitz (b) If to Buyer: 7213 Cordner Lasalle, Quebec, Canada H8N 2J7 Fax No: (514) 595-3092 Attention: Gilles Cyr, President with a copy to: Stikeman Elliott LLP 1155 Rene-Levesque Blvd. West Suite 4000 Montreal, Quebec H3B 3V2 Fax No: (514) 397-3222 Attention: Franziska Ruf 30 or to such other address as the party may have furnished in writing in accordance with the provisions of this Section. Any notice or other communication shall be deemed to have been given, made and received upon receipt. Either party may change the address to which notices are to be addressed by giving the other party notice in the manner herein set forth. 9.3 Governing Law. ------------- (a) Except where and only to the extent that specific provisions of Canadian law are expressly made applicable by some other Section of this Agreement, this Agreement and (except to the extent expressly set forth therein) each Ancillary Instrument shall be governed by, and construed in accordance with, the laws of the State of New York. (b) Except as and to the extent provided in the penultimate sentence of Section 1.5(d), any controversy or claim arising out of or relating to this Agreement or (except to the extent as otherwise expressly set forth therein) the Ancillary Instruments, or otherwise, including any controversy or claim involving the parent company, subsidiaries, or affiliates under common control of any party (a "DISPUTE"), shall be resolved by arbitration in accordance with the International Arbitration Rules of the International Centre for Dispute Resolution ("ICDR RULES"). The arbitration shall be conducted in the English language in Montreal, Quebec, Canada, by three arbitrators, one named by each party and the third appointed in accordance with the ICDR Rules. The award of the arbitrators may be entered in any court of competent jurisdiction. The arbitrators, by accepting appointment, must undertake to exert their best efforts to conduct the process so as to issue an award within nine months of the appointment of the last arbitrator. Any party may seek emergency, interim or provisional relief prior to the appointment of a full arbitral tribunal from any court of competent jurisdiction, without waiver of this agreement to arbitrate. The arbitral tribunal shall be guided, but not bound, in ruling on the exchange and taking of evidence by the IBA Rules on the Taking of Evidence in International Commercial Arbitration. The arbitral tribunal may award the costs and expenses of the arbitration as provided in the ICDR Rules, but each party shall bear its own attorneys fees. (c) Buyer has appointed Stikeman Elliott LLP as its authorized agent ("BUYER'S AUTHORIZED AGENT") upon whom process may be served in any Action arising out of or relating to this Agreement. Such appointment is irrevocable, except that Buyer may at any time or from time to time appoint a successor authorized agent by giving Cenveo and Vendor written notice of same (which such notice shall contain the representations, warranties and agreements of Buyer set forth in the last two sentences of this Section 9.3(c)). Buyer represents and warrants that Buyer's Authorized Agent has agreed to act as agent for service of process and has agreed to take all action, including the filing of all documents and instruments, that may be necessary, appropriate or desirable in order to continue such appointment in full force and effect as aforesaid. Service of process upon Buyer's Authorized Agent shall be deemed in every respect to constitute effective service of process upon Buyer. (d) Each of Cenveo and Vendor has appointed Stikeman Elliott LLP as its authorized agent ("CENVEO'S AND VENDOR'S AUTHORIZED AGENT") upon whom process may be 31 served in any Action arising out of or relating to this Agreement. Such appointment is irrevocable, except that Vendor or Cenveo may at any time or from time to time appoint a successor authorized agent by giving Buyer written notice of same (which such notice shall contain the representations, warranties and agreements of Cenveo or Vendor, as the case may be, set forth in the last two sentences of this Section 9.3(d)). Each of Cenveo and Vendor represents and warrants that Cenveo's and Vendor's Authorized Agent has agreed to act as agent for service of process and has agreed to take all action, including the filing of all documents and instruments, that may be necessary, appropriate or desirable in order to continue such appointment in full force and effect as aforesaid. Service of process upon Cenveo's and Vendor's Authorized Agent shall be deemed in every respect to constitute effective service of process upon Cenveo and Buyer, as the case may be. 9.4 Counterparts. This Agreement may be executed in two or ------------ more counterparts, each of which will be deemed an original, but all of which together shall constitute but one and the same instrument. 9.5 Headings; Schedules; Exhibits. The headings, subheadings ----------------------------- and captions in this Agreement and in any Schedule hereto are for reference purposes only and are not intended to affect the meaning or interpretation of this Agreement. References in this Agreement to particular Sections, Articles or Schedules are references to particular Sections, Articles or Schedules as the case may be, of or to this Agreement. All definitions of terms contained in this Agreement shall be equally applicable to both the singular and plural forms of the terms defined, unless otherwise indicated. Any information disclosed in any Schedule or in the Prospectus shall be deemed fully disclosed for the purposes of all of the Schedules and shall be deemed to qualify all representations and warranties of Vendor and Cenveo. Neither the specification (directly or indirectly by reference to a defined term hereof) of any dollar amount in the representations and warranties set forth in Article 2, 3 or 4 or the indemnification provisions of Article 7 nor the inclusion of any items in the Schedules shall be deemed to constitute an admission by Vendor, Cenveo or Buyer, or otherwise imply, that any such amount or such items so included are material for the purposes of this Agreement. The inclusion of, or reference to, any item within any particular Schedule does not constitute an admission by Vendor, Cenveo or Buyer that such item meets any or all of the criteria set forth in this Agreement for inclusion on such Schedule. 9.6 Entire Agreement. This Agreement and the other Ancillary ---------------- Instruments contain the entire agreement among the parties hereto with respect to their subject matter and supersede all negotiations, prior discussions, agreements, arrangements, and understandings, written or oral, relating to the subject matter of this Agreement and there are no other covenants, provisions, agreements, representations or warranties, whether written or oral, among the parties hereto with respect to such subject matter. 9.7 Third-Party Beneficiaries. This Agreement is not intended ------------------------- to confer any rights or remedies upon any Person other than the parties hereto and their assigns expressly permitted pursuant to Section 9.8. 9.8 Assignment. This Agreement and all of the provisions ---------- hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder may be 32 assigned by any party hereto without the prior written consent of the other party which shall not be unreasonably withheld; provided, however, that: (i) -------- ------- Vendor or Cenveo, upon notice to Buyer, and Buyer, upon notice to Vendor and Cenveo, or in each case their respective successors and permitted assigns, may assign this Agreement (A) to an Affiliate of any such Person or (B) to any Person that acquires all or substantially all the assets of either of them; provided that clause (B) shall not apply to any proposed assignment by -------- Buyer to a Person who is or may be, or whose parent company, Subsidiaries or Affiliates is or may be, directly or indirectly, a competitor of Vendor, Cenveo or any Affiliate of either of them; (ii) Buyer, upon notice to Vendor and Cenveo, and Vendor or Cenveo, upon notice to Buyer, or in each case their respective successors and permitted assigns, may: (A) assign its rights under this Agreement to one of its Subsidiaries; and (B) collaterally assign or grant security in its rights under this Agreement to one or more financial institutions (or any person acting on behalf thereof) lending monies to it or any of its Subsidiaries; provided that no such notice shall -------- be required with respect to Liens granted as of the Closing Date in favor of the lender(s) under the New Credit Facilities (as defined in the Prospectus); and (iii) Vendor and its permitted assigns pursuant to this Section 9.8, upon notice to Buyer, may from time to time assign its rights under Sections 4.1, 4.2 and 4.6 through 4.10 to a transferee of Units acquired by Vendor from Buyer hereunder. 9.9 Severability. If any one or more of the provisions of this ------------ Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement will not be affected thereby and the parties will use all reasonable efforts to substitute one or more valid, legal and enforceable provisions which, insofar as practicable, implement the purposes and intents hereof. To the extent permitted by applicable law, each party waives any provision of law that renders any provision of this Agreement invalid, illegal or unenforceable in any respect. 9.10 Amendments; Waiver. This Agreement may not be amended or ------------------ modified except by written agreement of the parties. No breach of any covenant, agreement, representation or warranty made herein shall be deemed waived unless expressly waived in writing by the party who might assert such breach. 9.11 Interpretation; Absence of Presumption. With regard to -------------------------------------- each and every term and condition of this Agreement and the Ancillary Instruments, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto. [The next page is the signature page] 33 The parties have caused this Acquisition Agreement to be duly executed as of the date first written above. CENVEO, INC. By: /s/ Sean S. Sullivan ------------------------------- Name: Sean S. Sullivan Title: CFO CENVEO CORPORATION By: /s/ Sean S. Sullivan ------------------------------- Name: Sean S. Sullivan Title: CFO SUPREMEX INCOME FUND By: /s/ Gilles Cyr ----------------------------- Name: Gilles Cyr Title: Trustee EXHIBIT A --------- CERTAIN DEFINED TERMS 1. For purposes of the Agreement to which this Exhibit A is --------- attached, the following terms shall have the respective meanings specified below. "ACCOUNTING FIRM" means PricewaterhouseCoopers LLP. "ACQUISICO" means 4273681 Canada Inc., a corporation organized under the Canada Business Corporations Act. "ACTION" means an action, suit or proceeding, at law or in equity. "AFFILIATE" means, as to any specified Person, any other Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "AMALCO" means the new entity, a corporation to be formed under the laws of Canada from the Amalgamation. "AMENDED AND RESTATED DECLARATION OF TRUST" means the amended and restated declaration of trust of Buyer in the form attached as Exhibit J. --------- "ANCILLARY INSTRUMENTS" means all schedules, exhibits, certificates, agreements, documents or statements delivered pursuant to the Agreement or the transactions contemplated hereby, including, without limitation, the Underwriting Agreement. "ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement among Buffalo Envelope, Inc., Supremex, Buyer, Vendor and Cenveo pursuant to which, among other things, Buffalo Envelope, Inc. is acquiring a division of Vendor that is engaged in the business of providing envelopes and related products directly to consumers and to direct mail marketing agents within the upstate New York and northwest Pennsylvania markets. "BASE PURCHASE PRICE" means an amount equal to the excess of (i) the sum of (A) the value of the Initial Vendor Units (based on the initial price per Unit to the public in the Offering), (B) CDN$75,000,000 (i.e., the proceeds from the Term Facility (as defined in the Prospectus)), (C) the total proceeds of the Offering (excluding the over-allotment option contemplated by the Underwriting Agreement) and (D) the face amount of the Over-Allotment Note over (ii) the sum of (A) all the fees (including applicable goods and services taxes and sales taxes) approved prior to Closing in writing by Cenveo relating to the Offering, the credit facilities and the acquisition of the Shares and the U.S. Business Assets payable by the Fund, AcquisiCo and Buffalo Envelope Inc., (B) the outstanding amount of the Alberta Finance LP loan payable at Closing by Amalco and (C) the Purchase Price (as defined in the Asset Purchase Agreement). A-2 "BUSINESS" means (except as expressly set forth in the Agreement) the business of the Companies as presently conducted consisting of the manufacturing and marketing of a broad range of stock and custom envelopes and related products. "BUSINESS DAY" means any day except Saturday, Sunday or any other day on which commercial banks in Montreal, Quebec, Canada or New York, New York are authorized or required by Law to remain closed. "CLOSING PURCHASE PRICE" means the Base Purchase Price (i) plus the amount, if any, by which the Estimated Closing Working Capital exceeds the Target Working Capital, or (ii) minus the amount, if any, by which the Target Working Capital exceeds the Estimated Closing Working Capital. "CLOSING WORKING CAPITAL" means the Working Capital as of 12:01 a.m. (Quebec time) on the Closing Date, taking into account all transactions contemplated by the Agreement to occur on the Closing. "COMPANIES" means Supremex (or, after the Amalgamation, Amalco) and its Subsidiaries. "COMPANY PLANS" means each material severance, retention, employment, change-in-control, bonus, incentive, deferred compensation, supplemental retirement or other employee benefit plan, agreement, program, policy or arrangement with respect to the employees of the Companies that is maintained, sponsored or entered into by any Company or with respect to which any Company has any material liability. "CONTRACTS" means all contracts and all other legally binding agreements, commitments and undertakings to which any Company is a party. "ENVIRONMENT" means the Environment or natural Environment as defined in any Environmental Law and includes air, land, surface water, groundwater, or other water, soil, subsurface strata, vegetation, animal life, the Environment in the workplace, and any sewer system. "ENVIRONMENTAL LAW" means any applicable Canadian federal or provincial, United States federal or state, or local directive, statute, law, rule, regulation, ordinance or rule of common law in effect and any judicial or administrative decisions, including any judicial or administrative order, consent decree or judgment, relating to the control of any pollutant or Hazardous Substance, the protection of the Environment or the effect of the Environment on human health. "ENVIRONMENTAL PERMITS" means any license, permit, order, consent, approval, registration, authorization, qualification or filing required under any Environmental Law. "ENVIRONMENTAL REPORT" means any document concerning an environmental assessment or audit commissioned by any Company that addresses any issue of noncompliance with, or liability under, any Environmental Law. A-3 "GOVERNMENTAL AUTHORITY" means any government, any governmental, administrative or regulatory entity, authority, commission, board, agency, instrumentality, bureau or political subdivision and any court, tribunal or judicial or arbitral body (whether Canadian, U.S. or any other national, federal, provincial, state or local entity or, in the case of an arbitral body, whether governmental, public or private). "GOVERNMENTAL AUTHORIZATION" means any approval, consent, license, permit, Order, waiver, or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Authority or pursuant to any applicable Law, including the lapse of any waiting period thereunder. "HAZARDOUS SUBSTANCES" means any substance, material or waste which is regulated, classified or otherwise characterized as hazardous, toxic, pollutant, contaminant or words of similar meaning or regulatory effect by any Environmental Law, including petroleum and its by-products, asbestos or asbestos-containing materials, polychlorinated biphenyls, urea formaldehyde insulation and radioactive materials. "INITIAL NOTE SERIES 1" means the Promissory Note in the form attached as Exhibit D-1. ----------- "INITIAL NOTE SERIES 2" means the Promissory Note in the form attached as Exhibit D-2. ----------- "INITIAL NOTE SERIES 3" means the Promissory Note in the form attached as Exhibit D-3. ----------- "INITIAL NOTES" means the Initial Note Series 1, Initial Note Series 2 and Initial Note Series 3. "INITIAL VENDOR UNITS" means the 8,947,439 newly-issued Units to be issued to Vendor at the Closing. "INTELLECTUAL PROPERTY" means trademarks, trade names, service marks, patents, copyrights, applications therefor and licenses or other rights in respect thereof. "INTERCOMPANY PAYABLES" means all intercompany trade payables owed to or by Supremex or any of its Subsidiaries to Cenveo, Inc. or any of its Subsidiaries (other than Supremex or any of its Subsidiaries). "JOINDER AGREEMENT" means the Joinder Agreement in the form attached as Exhibit E pursuant to which, among other things, Amalco assumes --------- as a co-obligor all of the obligations of Buyer under the Agreement and becomes jointly and severally liable with Buyer for all of Buyer's obligations thereunder. "KNOWLEDGE" of any Person means the actual knowledge of such Person without investigation. "LAWS" means all laws, constitutions, statutes, directives, codes, ordinances, decrees, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, Orders, decisions, ruling or awards, consent orders, consent decrees and policies of any Governmental Authority, including general principles of A-4 common and civil law and equity, binding on or affecting the Person referred to in the context in which such word is used. "LEGAL EXPENSES" means the reasonable fees, costs and expenses of any kind incurred by any Person indemnified under Article 7 and its counsel in investigating, preparing for, defending against or providing evidence, producing documents or taking other action with respect to any threatened or asserted claim. "LIEN" means any lien (including any Tax lien), pledge, mortgage, security interest, defect in title or encumbrance. "LOSSES" means all losses, damages, liabilities and claims, and fees, costs and expenses of any kind related thereto including, without limitation, Legal Expenses. Notwithstanding anything to the contrary contained in the Agreement, Losses shall not include lost profits or consequential, special, indirect or punitive damages. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the financial condition, results of operations or business of the Companies taken as a whole, other than material adverse effect (i) resulting from (a) conditions affecting the Canadian or United States economy or financial markets in general or the industries in which the Companies operate as a whole and not having a disproportionate effect on the Companies as a whole, (b) changes in any Law applicable to any Company after the date of the Agreement, (c) changes in GAAP after the date of the Agreement or (d) any attack on, outbreak or escalation of hostilities or act of terrorism involving, Canada or the United States, (ii) that constitutes a seasonal reduction in the revenues or earnings of any Company that is consistent with such Company's past operating history, or (iii) that arises, directly or indirectly, from an act or omission of Buyer (or an Affiliate of Buyer) or from an act or omission of Vendor, Cenveo or any Company to which Buyer has consented. "MATERIAL CONTRACTS" means, other than the Underwriting Agreement, all of the following Contracts to which any Company is a party: (a) any such Contract involving annual payments to or from any Company of $400,000 or more, except commitments which may be terminated without liability or penalty by the Company that is a party thereto on not more than 30 days' notice; (b) any such Contract containing any provision or covenant prohibiting or limiting the ability of any Company to engage in any business activity or to compete with any Person; (c) any such Contract that creates or obligates any Company to participate in any joint venture, limited liability company, partnership agreements, shareholders arrangement or other similar arrangement; and (d) any such Contract relating to the lease of real property which requires an annual payment of more than $100,000. "NET AFTER-TAX BASIS" means, with respect to the calculation of any indemnification payment owed to any party pursuant to the Agreement, calculation thereof in a manner taking A-5 into account any Taxes owing by the indemnified party or its Affiliates as a result of receipt or accrual of the indemnity payment and any savings in Taxes realized by the indemnified party or its Affiliates as a result of the indemnified liability. "NONSOLICITATION AGREEMENT" means the Nonsolicitation Agreement among Cenveo, Inc., Buyer and Amalco in the form attached as Exhibit F. --------- "ORDER" means any preliminary or permanent injunction or other order or decree of a Governmental Authority of competent jurisdiction. "OVER-ALLOTMENT NOTE" means the Convertible Promissory Note in the form attached as Exhibit D-4. ----------- "OVER-ALLOTMENT VENDOR UNITS" means the newly-issued Units, if any, issuable to Vendor upon conversion of the Over-Allotment Note in accordance with the terms thereof. "PERMITTED LIENS" means (i) Liens for Taxes not yet due and payable, that are payable without penalty or that are being contested in good faith, (ii) Liens arising or resulting from any action taken by Buyer or any of its Affiliates, (iii) Liens created by, arising out of or specifically contemplated or permitted by the Agreement, (iv) Liens identified in the Schedules, (v) with respect to real property or interests therein, any minor defects or irregularities in title, (vi) materialmen's, mechanics', workmen's, repairmen's, employees' or other like Liens arising in the course of construction or in the ordinary course of operations or maintenance in each such case securing obligations which are not delinquent or are being contested in good faith and for which adequate reserves have been taken or securing obligations which are bonded in a reasonable manner, (vii) zoning restrictions, easements, licenses or other restrictions on the use of real property or other minor irregularities in title thereto or encumbrances thereon, so long as the same do not, individually or in the aggregate, materially interfere with or impair the use of such real property in the manner normally used, (viii) except for Liens disclosed on Schedule 3.14(a) (which will be released upon consummation of the Closing), Liens disclosed in any title reports made available to Buyer or otherwise disclosed to Buyer in writing, in each case prior to the date of the Agreement, (ix) Liens arising out of judgments or awards with respect to which at the time an appeal or proceeding for review is being prosecuted in good faith if adequate reserves with respect thereto have been established and are being maintained and with respect to which there shall have been secured a stay of execution pending such appeal or proceeding for review and (x) such other Liens as in the aggregate would not be reasonably likely to have a Material Adverse Effect. "PERMITS" means all licenses, permits, orders, consents, approvals, registrations, authorizations, qualifications and filings which are required to be made under all applicable Laws of the U.S. (federal, state or local) or any other jurisdiction with all applicable Governmental Authorities. "PERSON" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof. "POST-CLOSING TRANSACTIONS" means the transactions described on Exhibit B-2. - ----------- A-6 "PRE-CLOSING TRANSACTIONS" means the transactions described on Exhibit B-1. - ----------- "PROSPECTUS" has the meaning assigned to such term in the Underwriting Agreement. "PURCHASE PRICE" means (except as expressly set forth in the Agreement) the Base Purchase Price (i) plus the amount, if any, by which the Final Closing Working Capital exceeds the Target Working Capital, or (ii) minus the amount, if any, by which the Target Working Capital exceeds the Final Closing Working Capital. "RECIPROCAL GENERAL RELEASE" means the reciprocal general release in the form attached as Exhibit C providing for, among other things, the --------- release by Cenveo and Vendor, on the one hand, and Buyer and Amalco, on the other hand of all claims against the other (with certain specified exceptions). "REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement among Buyer and Vendor in the form attached hereto as Exhibit H. "SUBSIDIARY" means, with respect to any specified Person, any other corporation, partnership, joint venture, association or other entity in respect of which such specified Person directly, or indirectly through one or more other Subsidiaries, either (i) owns not less than a majority of the overall economic equity or (ii) has the power to elect a majority of the board of directors (or individuals serving a function similar to that of a board of directors of a corporation). "SUPPLY AGREEMENT" means the Supply Agreement between Cenveo, Inc. and Amalco in the form attached as Exhibit G. --------- "TARGET WORKING CAPITAL" means CDN$22,600,000. "TAXES" means all taxes, assessments, duties, levies, fees and other governmental charges of any kind whatsoever (including taxes on or with respect to net or gross income, employment, value added, rent, excise, occupancy, licensing, sales, goods and services, harmonized sales, use, transfer, ad valorem, intangibles, gross receipts, personal property, real -- ------- property, land transfer, development, occupancy, health, payroll, customs duties and import and export, social services and security, franchise, doing business, withholding (including gross up and indemnity obligations under contracts with respect to withholding Taxes), payroll, stamp and capital) of Canada (federal, provincial or local), the United States (federal, state or local) or other applicable jurisdiction, together with any interest thereon, penalties, additions to tax or additional amounts with respect thereto. "TAX ESCROW AGREEMENT" means the escrow agreement to be entered into among Cenveo, Buyer and TD Trust Company. "TAX RETURN" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes required to be filed with any Governmental Authority, including any schedule or attachment thereto, and including any amendment thereof. A-7 "TECHNOLOGY" means trade secrets, proprietary information, software and computer programs and source code data relating thereto, research records, test information, market surveys, marketing know-how, inventions, know-how, processes and procedures. "TRANSACTIONS" means the Pre-Closing Transactions and the Post-Closing Transactions and all transactions that shall occur at the consummation of the Closing. "TSX" means the Toronto Stock Exchange. "UNDERWRITING AGREEMENT" means the Underwriting Agreement dated as of the date of the Agreement among Buyer, Vendor and the underwriters named therein relating to the Offering. "UNITS" has the meaning assigned to such term in the Underwriting Agreement. "VENDOR UNITS" means, collectively, the Initial Vendor Units and the Over-Allotment Vendor Units. "WORKING CAPITAL" means, as of any date of determination the sum of (a) the consolidated current assets (excluding current income tax receivables) of Amalco minus the consolidated current liabilities (excluding ----- current income tax payables) of Amalco and (b) the consolidated current assets of the Business (as defined in the Asset Purchase Agreement) minus ----- the consolidated current liabilities of the Business (as defined in the Asset Purchase Agreement); provided, however, that Working Capital shall -------- ------- exclude all intercompany payables (other than Intercompany Payables) owed to or by Supremex or any of its Subsidiaries to Cenveo or any of its Subsidiaries (other than Supremex or any of its Subsidiaries), or any other intercompany amounts that are cancelled at the Closing. No accruals for any Transaction Expenses shall be included in any calculation of Working Capital, except for the prepaid expenses to the extent set forth on Schedule 4.11. Working Capital shall be prepared using the same - ------------- methodologies and accounting practices, procedures and policies used to determine the Target Working Capital, the computation of which is set forth on Exhibit I. --------- A-8 2. The following terms are defined in the sections of the Agreement indicated: DEFINED TERM SECTION - -------------------------------------------------------------- -------------- AGREEMENT.......................................................PARTY RECITALS AMALCO..........................................................PARTY RECITALS AMALGAMATION....................................................PARTY RECITALS BALANCE SHEET...........................................................3.5(a) BALANCE SHEET DATE......................................................3.5(a) BASKET AMOUNT...........................................................7.2(a) BRIEFING PERIOD.........................................................1.5(d) BUYER...........................................................PARTY RECITALS BUYER'S AUTHORIZED AGENT................................................9.3(c) BUYER'S BALANCE SHEET...................................................4.3(a) BUYER'S BALANCE SHEET DATE..............................................4.3(a) BUYER'S CLOSING SCHEDULE................................................1.5(b) BUYER'S REPRESENTATIVES....................................................5.2 CENVEO..........................................................PARTY RECITALS CENVEO CANADA...................................................PARTY RECITALS CENVEO CANADA BASKET AMOUNT.............................................7.2(a) CENVEO'S AND VENDOR'S AUTHORIZED AGENT..................................9.3(d) CLOSING....................................................................1.2 CLOSING DATE...............................................................1.2 CRA.....................................................................1.6(i) CRA COMFORT LETTER......................................................1.6(i) DISPUTE.................................................................9.3(b) ESTIMATED CLOSING WORKING CAPITAL.......................................1.5(a) FINAL CLOSING INTERCOMPANY PAYABLES.....................................1.5(d) FINANCIAL STATEMENTS....................................................3.5(a) GAAP....................................................................3.5(a) ICDR RULES..............................................................9.3(b) INDEMNIFICATION CLAIM...................................................7.3(a) INDEMNIFICATION EVENT...................................................7.3(a) INDEMNIFIED PARTY.......................................................7.3(a) INDEMNIFYING PARTY......................................................7.3(a) MINI-BASKET AMOUNT......................................................7.2(a) OFFERING........................................................PARTY RECITALS OWNED REAL PROPERTIES..................................................3.13(a) QUEBEC CERTIFICATE......................................................1.6(b) QUEBEC TAX ACT..........................................................1.5(g) REMITTANCE DATE.........................................................1.6(g) REPLY PERIOD............................................................1.5(d) RQ......................................................................1.6(j) RQ COMFORT LETTER.......................................................1.6(j) SECTION 116 CERTIFICATE.................................................1.6(a) A-9 SHARES..........................................................PARTY RECITALS SUPREMEX........................................................PARTY RECITALS THIRD-PARTY CLAIM.......................................................7.3(b) TRANSACTION EXPENSES......................................................4.11 VENDOR..........................................................PARTY RECITALS VENDOR'S CLOSING SCHEDULE...............................................1.5(a) VENDOR'S DISPUTE NOTICE.................................................1.5(b) EX-10.30 3 ex10p30.txt Exhibit 10.30 EXECUTION COPY -------------- UNDERWRITING AGREEMENT March 17, 2006 Supremex Income Fund Supremex Inc. 7213 Cordner Lasalle, Quebec Canada H8N 2J7 Cenveo, Inc. Cenveo Corporation One Canterbury Green 201 Broad Street, 6th Floor Stamford, Connecticut United States of America 06901 The undersigned, TD Securities Inc., CIBC World Markets Inc., BMO Nesbitt Burns Inc., Desjardins Securities Inc., National Bank Financial Inc., Scotia Capital Inc., Canaccord Capital Corporation and Genuity Capital Markets G.P. (collectively, the "Underwriters" and each individually an "Underwriter") understand that Supremex Income Fund (the "Fund") proposes to issue and sell to the Underwriters 17,500,000 trust units of the Fund (the "Purchased Units"), which Purchased Units shall have the material attributes described in and contemplated by the Final Prospectus (as defined below) dated March 17, 2006 and executed concurrently with the execution of this Agreement. The Underwriters propose to distribute the Purchased Units in Canada pursuant to the Final Prospectus and in the United States pursuant to a U.S. Private Placement Memorandum for the private placement of the Purchased Units in the United States in accordance with Rule 144A (as defined below), all in the manner contemplated by this Agreement. Based on the foregoing, and subject to the terms and conditions contained in this Agreement, the Underwriters, jointly and not solidarily, on the basis of the percentages set forth in section 19 of this Agreement, agree to purchase from the Fund and by its acceptance hereof, the Fund agrees to sell to the Underwriters, the Purchased Units on the Closing Date (as defined below) at a price of $10.00 per Purchased Unit for all but not less than all of the Purchased Units (the "Purchase Price"), representing an aggregate purchase price of $175,000,000. By acceptance of this Agreement, the Fund grants to the Underwriters an unassignable right to purchase, jointly and not solidarily, up to 2,500,000 additional Units (the "Additional Units") on the same basis as the purchase of the Purchased Units to cover over-allotments made in connection with the offering of the Purchased Units, if any, and for market stabilization purposes, and the Fund covenants and agrees to do all such acts and things as may be required or advisable in order for such right to be exercisable in the manner described in the Prospectus (defined below). If TD Securities Inc. and CIBC World Markets Inc. (together, the "Lead Underwriters"), on behalf of the Underwriters, elect to exercise such right, the Lead Underwriters shall notify the Fund in writing, which notice shall specify the number of - 2 - Additional Units to be purchased by the Underwriters and the date on which such Additional Units are to be purchased, which date may be the same as the Closing Date but not earlier than the Closing Date and shall not be later than 30 days after the Closing Date. Such date shall not be earlier than three Business Days (as defined below) nor later than five Business Days after the date of such notice. If any Additional Units are purchased, each Underwriter agrees, jointly and not solidarily, to purchase that number of Additional Units (subject to such adjustments to eliminate fractional units as Lead Underwriters may determine) equal to the total number of Additional Units to be purchased multiplied by the percentage set out in section 19 of this Agreement opposite the name of such Underwriter. The Purchased Units and the Additional Units are hereinafter collectively referred to as the "Units". In consideration of the Underwriters' agreement to purchase the Units which will result from the acceptance by the Fund of this offer, and in consideration of the services to be rendered by the Underwriters in connection therewith, the Fund agrees to cause AcquisiCo to pay to the Underwriters a fee of $0.55 per Unit (the "Underwriting Fee"). Such Underwriting Fee shall be due and payable at the Closing Time (as defined below) against payment for the Purchased Units and, if applicable, at the Option Closing Time (as defined below), against payment for the Additional Units, as the case may be. DEFINITIONS In this Agreement: "1933 ACT" means the United States Securities Act of 1933, as amended; "1934 ACT" means the United States Securities Exchange Act of 1934, as amended; "ACQUISICO" means 4273681 Canada Inc.; "ACQUISITION AGREEMENT" means the acquisition agreement dated as of the date hereof among the Fund, Cenveo US and Cenveo providing for, among other things, the completion of the transactions described under the heading "Funding and Related Transactions -Closing Transactions" in the Prospectus; "ADDITIONAL UNITS" has the meaning given to it above; "AFFILIATE" has the meaning given to it in the Securities Act (Quebec); "AGREEMENT" means the agreement resulting from the acceptance by the Fund of the offer made by the Underwriters by this letter; "AMALCO" means (i) prior to the Closing, the corporation to result from the amalgamation of Supremex and Cenveo Canada, and (ii) on and after the Closing, the corporation to result from the amalgamation of the corporation referred to in (i) with AcquisiCo; "AMENDED PRELIMINARY PROSPECTUS" means the amended and restated preliminary long form prospectus dated February 24, 2006 (in both the English and French languages - 3 - unless the context indicates otherwise) amending and restating as of such date the Preliminary Prospectus; "BUSINESS" means the business of the Material Subsidiaries as conducted immediately prior to the Closing consisting of the manufacturing and marketing of a broad range of stock and custom envelopes and related products; "BUSINESS DAY" means any day, other than a Saturday or Sunday, on which TD Canada Trust and the Canadian Imperial Bank of Commerce, in Montreal, Quebec are both open for commercial banking business during normal banking hours; "CANADIAN SECURITIES LAWS" means all applicable securities laws in each of the Qualifying Provinces and the respective rules, regulations, blanket orders and blanket rulings under such laws together with applicable published policies, policy statements and notices of the securities regulatory authorities in the Qualifying Provinces; "CANADIAN SECURITIES REGULATORS" means the applicable securities commission or securities regulatory authority in each of the Qualifying Provinces; "CBCA" means the Canada Business Corporations Act and the regulations thereunder, as amended; "CDS" means the Canadian Depository for Securities Limited; "CENVEO" means Cenveo, Inc.; "CENVEO CANADA" means Cenveo Canada Leasing Company, Inc.; "CENVEO DEPEW ACQUISITION AGREEMENT" means the asset purchase agreement among Cenveo, Cenveo US, the Fund, AcquisiCo and Buffalo Envelope Inc. and to be entered on the Closing Date providing for, among other things, the acquisition by Buffalo Envelope Inc. of certain assets, and the assumption of certain liabilities, in each case of a division of Cenveo US that is engaged in the business of providing envelopes and related products directly to consumers and to direct mail marketing agents within the upstate New York and northwest Pennsylvania markets; "CENVEO US" means Cenveo Corporation; "COST SUPPORT AGREEMENT" means the cost support agreement entered into on or prior to Closing among the Fund and AcquisiCo with respect to the payment by AcquisiCo of certain Offering and related costs; "CLAIM" has the meaning given to it in section 15(a); "CLOSING" means the completion of the issue and sale by the Fund of the Purchased Units and the purchase by the Underwriters of the Purchased Units pursuant to this Agreement; "CLOSING DATE" means March 31, 2006 or such other date as the Fund and the Underwriters may agree upon in writing or as may be changed pursuant to section 7 but in any event shall not be later than April 29, 2006; - 4 - "CLOSING TIME" means 8:00 a.m. (Eastern time) on the Closing Date; "CLOSING TRANSACTIONS" means the transactions described under the heading "Funding and Related Transactions - Closing Transactions" in the Prospectus; "DISTRIBUTION" means a distribution for the purposes of Canadian Securities Laws or any of them; "FINAL MRRS DECISION DOCUMENT" means the decision document issued pursuant to NP 43-201 evidencing the issuance by the Canadian Securities Regulators of a receipt for the Final Prospectus in accordance with NP 43-201; "FINAL PROSPECTUS" means the (final) long form prospectus dated March 17, 2006 (in both the English and French languages unless the context indicates otherwise), prepared by the Fund and relating to the distribution of the Purchased Units; "FINANCIAL INFORMATION" means, collectively, the information appearing in the English language version of the Preliminary Prospectus, the Amended Preliminary Prospectus, and the Final Prospectus (a) under the heading "Definition of EBITDA, Adjusted EBITDA and Distributable Cash", (b) under the heading "Prospectus Summary - Selected Consolidated Financial Information"; (c) under the heading "Prospectus Summary - Summary Analysis of Distributable Cash"; (d) under the heading "Selected Consolidated Financial Information"; (e) under the heading "Summary Analysis of Distributable Cash" (f) under the heading "Reconciliation of EBITDA and Adjusted EBITDA to Historical Results"; (g) under the heading "Consolidated Capitalization of the Fund"; (h) under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operation of the Business"; and (i) under the heading "Auditors' Consent", together with all non-GAAP financial information (including, without limitation, EBITDA, Adjusted EBITDA and distributable cash) set forth in the Prospectus; "FINANCIAL STATEMENTS" means the audited balance sheet of the Fund as at February 10, 2006, the audited consolidated financial statements of Supremex for the years ended December 31, 2005, 2004 and 2003, and the unaudited pro forma consolidated financial statements of the Fund included in the Prospectus, including all notes thereto and the auditor's report on such audited financial statements, as applicable; "FUND" has the meaning given to it above; "FUND DECLARATION OF TRUST" means the declaration of trust made as of February 10, 2006, governed under the laws of Quebec, pursuant to which the Fund was established, as amended, supplemented or restated from time to time; "GAAP" means Canadian generally accepted accounting principles; "GUARANTEES" means collectively the guarantees by Supremex, Cenveo Canada, PNG Inc. and Innova Envelope Inc., as applicable, of the obligations of Cenveo and its affiliates and related security interests granted by such guarantors in support thereof under: (a) the US$300 million senior secured credit facility of Cenveo with a group of banks which matures in June 2008, (b) the note indenture pursuant to which the US$320 - 5 - million of 7-7/8% senior subordinated notes of Cenveo due 2013 were issued, (c) the note indenture pursuant to which the US$350 million 9-5/8% senior notes of Cenveo due 2012 were issued, and (d) any agreement or instrument ancillary to the agreements referred to in (a), (b) or (c) above; "INDEMNIFIED PARTY" has the meaning given to it in section 15(a); "INDEMNIFIER" has the meaning given to it in section 15(a); "INITIAL NOTES" means the unsecured notes issued by the Fund to Cenveo US in consideration for all of the shares of Amalco; "LEAD UNDERWRITERS" has the meaning given to it above; "MANAGEMENT UNITS" means the 2,364,228 trust units of the Fund to be issued to certain management employees of Supremex in accordance with the Subscription and Escrow Agreement; "MATERIAL CHANGE" means a material change for the purposes of Canadian Securities Laws or, where undefined under applicable Canadian Securities Laws, means a change in the business, operations or capital of the Fund, Supremex or Amalco that would reasonably be expected to have a significant effect on the market price or value of the Units and includes a decision to implement such a change made by the board of Trustees of the Fund, the board of directors or, alternatively, by senior management of Supremex or Amalco, as applicable, where they believe that confirmation of the decision by the board of directors of Supremex or Amalco, as applicable, is probable; "MATERIAL FACT" means a material fact for the purposes of Canadian Securities Laws or, where undefined under applicable Canadian Securities Laws, means a fact that significantly affects or would reasonably be expected to have a significant effect on the market price or value of the Units; "MATERIAL SUBSIDIARIES" means Supremex, Cenveo Canada, Amalco, AcquisiCo and Buffalo Envelope Inc., except where this term is used in section 5(b) where "Material Subsidiaries" shall exclude Cenveo Canada, and "MATERIAL SUBSIDIARY" means any one of them; "MISREPRESENTATION" means a misrepresentation for the purposes of Canadian Securities Laws or, where undefined under applicable Canadian Securities Laws, means any untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made; "MRRS" means the Mutual Reliance Review System; "NP 43-201" means National Policy 43-201 - Mutual Reliance Review System for Prospectuses and Annual Information Forms adopted by the Canadian Securities Regulators and its related memorandum of understanding; - 6 - "NEW CREDIT FACILITIES" means the credit facilities to be established in favour of AcquisiCo on Closing as described in the Prospectus under "New Credit Facilities"; "NON-SOLICITATION AGREEMENT" means the non-solicitation agreement among the Fund, Amalco, Cenveo US and Cenveo to be entered on the Closing Date as described in the Prospectus under "Business of Supremex - Relationship with Cenveo"; "NOTE INDENTURE" means the note indenture to be entered into on or prior to Closing between AcquisiCo and Computershare Investor Services Inc., as trustee thereunder, pursuant to which Supremex will issue Notes, as amended, supplemented or restated from time to time; "NOTES" means the unsecured notes issued by AcquisiCo or Amalco from time to time in accordance with the Note Indenture; "NOTICE" has the meaning given to it in section 24; "OPTION CLOSING" means completion of the sale by the Fund of the Additional Units and the purchase by the Underwriters of the Additional Units pursuant to this Agreement; "OPTION CLOSING DATE" means the date for the Option Closing set out in the notice of exercise of the over-allotment option provided by the Underwriters to the Fund or on such other date as the Underwriters and the Fund may agree, but in no case later than April 29, 2006; "OPTION CLOSING TIME" means 8:00 a.m. (Eastern time) on the Option Closing Date or such other time on the Option Closing Date as may be agreed to by the Fund and the Underwriters; "OVER-ALLOTMENT NOTE" means the promissory note of the Fund in favour of Cenveo US, substantially in the form attached to the Acquisition Agreement, in the amount of $23,625,000, the terms of which shall provide, among other things, that such note is repayable as follows and cannot be repaid otherwise than as follows: (i) by the issuance of units of the Fund, (ii) in cash representing the net issue price of the units of the Fund to be issued upon exercise of the over-allotment option, or (iii) a combination of (i) and (ii); "PRELIMINARY PROSPECTUS" means the preliminary long form prospectus dated February 15, 2006 (in both the English and French languages unless the context indicates otherwise) prepared by the Fund relating to the distribution of the Units; "PRELIMINARY U.S. PLACEMENT MEMORANDUM" means the preliminary U.S. private placement memorandum of the Fund dated February 24, 2006 for the placement of the Units in the United States in accordance with Rule 144A; "PROSPECTUS" means, collectively, the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus; "PROSPECTUS AMENDMENT" means any amendment to the Preliminary Prospectus, the Amended Preliminary Prospectus or the Final Prospectus; - 7 - "PURCHASE PRICE" has the meaning given to it above; "PURCHASED UNITS" has the meaning given to it above; "QUALIFYING PROVINCES" means all of the provinces of Canada; "QUALIFYING STATES" means each of the U.S. States into which the Purchased Units are offered or sold; "REGISTRATION RIGHTS AGREEMENT" means the registration rights agreement to be entered into on or prior to Closing among the Fund and Cenveo US as described in the Prospectus under "Funding and Related Transactions - Registration Rights"; "RELATED AGREEMENTS" means the Fund Declaration of Trust, the Note Indenture, the Notes, the Initial Notes, the Over-Allotment Note, the Acquisition Agreement, the Tax Escrow Agreement, the New Credit Facilities, the Supply Agreement, the Non-Solicitation Agreement, the Cenveo Depew Acquisition Agreement, the Subscription and Escrow Agreement, the Registration Rights Agreement and the Cost Support Agreement; "REGULATION S" means Regulation S under the 1933 Act; "RULE 144A" means Rule 144A under the 1933 Act; "SEC" means the United States Securities Exchange Commission; "SELLING FIRM" has the meaning given to it in section 3; "SUBSCRIPTION AND ESCROW AGREEMENT" means the subscription and escrow agreement described under the heading "Executive Compensation - Management Profit Sharing Plan" in the Prospectus; "SUBSIDIARY" has the meaning given to it in the Securities Act (Quebec); "SUPPLY AGREEMENT" means the product supply agreement among the Fund, Amalco and Cenveo to be entered on the Closing Date as described in the Prospectus under "Business of Supremex - Relationship with Cenveo"; "SUPREMEX" means Supremex Inc.; "TAX ESCROW AGREEMENT" means the escrow agreement to be entered into on or prior to Closing among Cenveo US, the Fund and TD Trust Company., as escrow agent; "TRANSFER AGENT" means Computershare Investor Services Inc.; "TRUSTEES" means the trustees of the Funds, appointed from time to time; "TSX" means the Toronto Stock Exchange; "UNDERWRITER" and "UNDERWRITERS" have the respective meanings given to them above; "UNDERWRITING FEE" has the meaning given to it above; - 8 - "UNITS" has the meaning given to it above; "U.S. PLACEMENT MEMORANDUM" means the private placement memorandum of the Fund dated March 17, 2006 for the placement of the Units in the United States in accordance with Rule 144A; and "U.S. SECURITIES LAWS" means all applicable securities laws of the United States including, but not limited to, the 1933 Act and the 1934 Act and including the state securities laws of each of the U.S. States in which the Units are offered and the respective rules, regulations, orders and rulings under such laws, together with applicable published policies, policy statements and notices of the securities regulatory authorities in the United States and in each of the U.S. States. Unless otherwise expressly provided in this Agreement, words importing only the singular number include the plural and vice versa and words importing gender include all genders. Reference to "Sections" or "Clauses" are to the appropriate section or clause of this Agreement. The parties acknowledge that this Agreement is being executed on behalf of the Fund by its trustee and that the obligations of the Fund hereunder shall not be binding upon any of the trustees of the Fund personally or on any unitholder of the Fund in any manner whatsoever in respect of any indebtedness, obligation or liability of the Fund arising hereunder or arising in connection herewith or from the matters to which this Agreement relates, if any, including without limitation, claims based on negligence, which shall be limited to, and satisfied only, out of the Trust Assets (as defined in the Fund Declaration of Trust). All references to dollars or "$" are to Canadian dollars unless otherwise expressed. TERMS AND CONDITIONS 1. COMPLIANCE WITH SECURITIES LAWS The Fund represents and warrants to, and covenants and agrees with, the Underwriters that the Fund has prepared and filed the Preliminary Prospectus and the Amended Preliminary Prospectus and has obtained pursuant to NP 43-201 a MRRS decision document evidencing the issuance by the Canadian Securities Regulators of receipts for each of the Preliminary Prospectus and the Amended Preliminary Prospectus. The Fund will promptly and, in any event no later than the Business Day after the execution and delivery of this Agreement, prepare and file a Final Prospectus and will obtain the Final MRRS Decision Document. The Fund will promptly fulfil and comply with, to the reasonable satisfaction of the Underwriters, the Canadian Securities Laws required to be fulfilled or complied with by the Fund to enable the Units to be lawfully distributed to the public in the Qualifying Provinces through the Underwriters or any other investment dealers or brokers registered as such in the Qualifying Provinces. 2. DUE DILIGENCE Prior to the filing of each of the Preliminary Prospectus and the Amended Preliminary Prospectus the Fund has, and prior to the filing of the Final Prospectus the Fund shall, permit the Underwriters to review each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus and shall allow each of the Underwriters to conduct any due diligence - 9 - investigations which any of them reasonably requires in order to fulfil its obligations as an underwriter under the Canadian Securities Laws and U.S. Securities Laws and in order to enable it to responsibly execute the certificate in the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus required to be executed by it. Following the filing of the Final Prospectus and up to the later of the Closing Date and the date of completion of the distribution of the Units, the Fund shall allow each of the Underwriters to conduct any due diligence investigations which any of them reasonably requires. 3. DISTRIBUTION AND CERTAIN OBLIGATIONS OF THE UNDERWRITERS (a) Each of the Underwriters shall, and shall require any investment dealer or broker, other than the Underwriters, with which it has a contractual relationship in respect of the distribution of the Units (a "Selling Firm"), to comply with the Canadian Securities Laws in connection with the distribution of the Units in Canada and shall offer the Units for sale to the public in Canada directly and through Selling Firms upon the terms and conditions set out in the Prospectus and this Agreement. Each of the Underwriters shall, and shall require any Selling Firm to, offer for sale to the public and sell the Units only in those jurisdictions where they may be lawfully offered for sale or sold. The Underwriters shall not, without the consent of the Fund, distribute the Units outside Canada and the United States. (b) Each of the Underwriters shall, and shall require any Selling Firm to agree to, distribute the Units in Canada and in the United States in a manner which complies with and observe all applicable laws and regulations (including Rule 144A and Regulation S) in each jurisdiction into and from which they may offer to sell the Units or distribute the Prospectus or any Prospectus Amendment in connection with the distribution of the Units and will not, directly or indirectly, offer, sell or deliver any Units or deliver the Prospectus or any Prospectus Amendment to any person in any jurisdiction other than in the Qualifying Provinces and the Qualifying States except in a manner which will not require the Fund to violate any law or comply with the registration, prospectus, filing or other similar requirements under the applicable securities laws of such other jurisdictions. (c) For the purposes of this section 3, each of the Underwriters shall be entitled to assume that the Units are qualified for distribution in any Qualifying Province where a receipt or similar document for the Prospectus shall have been obtained from the applicable securities commission following the filing of the Prospectus, and none of the Underwriters shall be liable in respect of or in relation to any of the other Underwriters' performance of their obligations pursuant to this section 3 or Schedule A. (d) The Fund and the Underwriters agree that Schedule A to this Agreement, entitled "Rule 144A Sales in the United States", is incorporated by reference in and shall form part of this Agreement. (e) The Underwriters shall cause the distribution of the Units to occur in such a manner that less than 49% of the units are purchased by Non-Residents (as defined in the Fund Declaration of Trust) and shall, upon the reasonable request - 10 - of the Fund, provide the Fund with a certificate specifying the number of Units purchased by Non-Residents pursuant to such distribution. 4. DELIVERY OF DOCUMENTS (a) DELIVERIES ON FILING On or prior to the day of the filing of the Final Prospectus, the Fund shall deliver to each of the Underwriters: (i) a copy of each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus in the English language signed and certified as required by the Canadian Securities Laws in the Qualifying Provinces other than Quebec; (ii) a copy of each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus in the French language signed and certified as required by the Canadian Securities Laws applicable in Quebec; (iii) a copy of any other document required to be filed along with the Prospectus by the Fund under the Canadian Securities Laws; (iv) a copy of the Preliminary U.S. Placement Memorandum and the U.S. Placement Memorandum; (v) opinions of Stikeman Elliott LLP, dated the date of each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus, respectively, in form and substance satisfactory to the Underwriters, Cenveo and Cenveo US and their counsel, acting reasonably, addressed to the Underwriters, their counsel, the Fund, the Trustees, Cenveo and Cenveo US to the effect that the French language version of each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus, except for the Financial Statements and Financial Information, as to which no opinion need be expressed by such counsel, is, in all material respects, a complete and proper translation of the English language version thereof; (vi) opinions of Ernst & Young LLP dated the date of each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus, respectively, in form and substance satisfactory to the Underwriters, Cenveo and Cenveo US and their counsel, acting reasonably, addressed to the Underwriters, their counsel, the Fund, the Trustees, Cenveo and Cenveo US to the effect that the French language version of the Financial Statements and the Financial Information contained in each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus is, in all material respects, a complete and proper translation of the English language version thereof; and - 11 - (vii) a "long-form" comfort letter of Ernst & Young LLP, dated the date of the Final Prospectus (with the requisite procedures to be completed by such auditors within two Business Days of the date of the Final Prospectus), addressed to the Underwriters, the Trustees, Cenveo and Cenveo US in form and substance satisfactory to the Underwriters, Cenveo and Cenveo US, acting reasonably, with respect to certain financial and accounting information relating to the Fund, Supremex and the Business in the Final Prospectus, which letter shall be in addition to the auditors' report contained in the Final Prospectus and the auditors' comfort letters addressed to the Canadian Securities Regulators. (b) PROSPECTUS AMENDMENTS In the event that the Fund is required by Canadian Securities Laws to prepare and file a Prospectus Amendment, the Fund shall prepare and deliver promptly to the Underwriters signed and certified copies of such Prospectus Amendment in the English and French language. Any Prospectus Amendments shall be in form and substance satisfactory to the Underwriters and their counsel. Concurrently with the delivery of any Prospectus Amendments, the Fund shall deliver to the Underwriters (and Cenveo and Cenveo US in the case of sections 4(a)(vi) and (vii)), with respect to such Prospectus Amendment, documents similar to those referred to in sections 4(a)(iii), (a)(iv), (a)(v), (a)(vi) and (a)(vii). Subject to their rights under Section 15, the Underwriters agree to deliver a copy of any Prospectus Amendment to each purchaser of Units from the Underwriters. In addition to the matters set forth above in this section 4 and in section 9, the Fund shall, in good faith, discuss with the Underwriters any change, event or fact contemplated in those sections that is of a nature that there may be reasonable doubt as to whether notice should be given to the Underwriters under section 9 and shall consult with the Underwriters with respect to the form and content of any Prospectus Amendment, it being understood and agreed that no such Prospectus Amendment shall be filed with any Canadian Securities Regulator prior to being reviewed by the Underwriters and their counsel. (c) COMMERCIAL COPIES The Fund shall cause commercial copies of the Final Prospectus in the English and French languages and the U.S. Placement Memorandum to be delivered to the Underwriters without charge, in such quantities and in such cities as the Underwriters may reasonably request to the printer of such documents. Such delivery of the Final Prospectus shall be effected as soon as possible after filing thereof with, and receipt of a MRRS decision document therefor from, the Canadian Securities Regulators but, in any event, on or before 5:00 p.m. (Eastern time) on the second Business Day following filing of the Final Prospectus. Such deliveries shall constitute the consent of the Fund to the Underwriters' use of the Final Prospectus and the U.S. Placement Memorandum for the distribution of the Units in the Qualifying Provinces and the Qualifying States in compliance with the provisions of this Agreement, Canadian Securities Laws and U.S. Securities Laws. The Fund shall similarly cause to be delivered commercial copies of any Prospectus Amendments. The commercial copies of the Final Prospectus shall be identical in content to the electronically transmitted versions thereof filed with Canadian Securities Regulators pursuant to the System for Electronic Document Analysis and Retrieval. - 12 - (d) PRESS RELEASES During the period commencing on the date hereof and until completion of the distribution of the Units, the Fund will promptly provide the Underwriters drafts of any press releases of the Fund for review by the Underwriters and their counsel prior to issuance; the Underwriters covenant to use best efforts to complete such review in a timely and reasonable manner. 5. REPRESENTATIONS AND WARRANTIES (a) REPRESENTATIONS AS TO PROSPECTUS AND PROSPECTUS AMENDMENTS Filing of each of the Preliminary Prospectus, the Amended Preliminary Prospectus, the Final Prospectus and any Prospectus Amendment shall constitute a representation and warranty by the Fund and Supremex solidarily to the Underwriters that as at their respective dates and as at the date of filing of each of the Preliminary Prospectus, Amended Preliminary Prospectus, Final Prospectus and any Prospectus Amendment, as applicable: (i) all information and statements (other than information and statements relating solely to the Underwriters which was provided by the Underwriters in writing specifically for use in the Preliminary Prospectus, Amended Preliminary Prospectus, Final Prospectus or any Prospectus Amendment) contained in the Preliminary Prospectus, Amended Preliminary Prospectus, Final Prospectus and any Prospectus Amendment are true and correct in all material respects and contain no misrepresentation and constitute full, true and plain disclosure of all material facts relating to the Fund, Supremex, the Business and the Units; (ii) no material fact (other than facts relating solely to the Underwriters) has been omitted from such disclosure that is required to be stated in such disclosure or is necessary to make the statements contained in such disclosure not misleading in light of the circumstances under which they were provided or made; and (iii) such documents, comply with the requirements of Canadian Securities Laws. Such filings shall also constitute the Fund's consent to the Underwriters' use of the Final Prospectus and any Prospectus Amendment in connection with the distribution of the Units in the Qualifying Provinces in compliance with this Agreement and Canadian Securities Laws. (b) REPRESENTATIONS AND WARRANTIES OF THE FUND AND SUPREMEX The Fund and Supremex solidarily represent and warrant to the Underwriters that, and acknowledge that the Underwriters are relying upon such representations and warranties in purchasing the Units, if any: (i) the Fund is an unincorporated open-ended trust established under the laws of the Province of Quebec pursuant to the Fund Declaration of Trust and the Trustees, acting in their capacity as trustees of the Fund, have all - 13 - necessary power and authority to administer, control and hold title to the Fund's assets and execute the Fund's undertaking, and to enter into and perform the Fund's obligations under this Agreement and each of the Related Agreements to which it is a party; (ii) Gilles Cyr is, as of the date hereof, the sole Trustee of the Fund and, upon Closing, the persons identified as Trustees in the Prospectus will have been duly appointed as trustees; (iii) (A) immediately prior to Closing and completion of the Closing Transactions, the Fund's authorized capital consists of an unlimited number of Units of which 10 Units are issued and outstanding as of the date hereof; (B) immediately following Closing, assuming the over-allotment option has not been exercised, there will be 31,311,667 Units issued and outstanding; (C) except for the over-allotment option, no person, firm or corporation has any agreement or option, or right or privilege (whether pre-emptive or contractual) capable of becoming an option or other agreement for the purchase from the Fund of any unissued Units or other securities of the Fund; and (D) immediately following Closing, the Fund will not hold interests in any other entity other than the Material Subsidiaries; (iv) each of the Material Subsidiaries (other than Amalco) is a corporation validly existing under the laws of its jurisdiction of incorporation and has all necessary corporate power and authority to own, lease and operate its assets and to carry on its business as described in the Prospectus (including the Business), and to enter into and perform its obligations under each of the Related Agreements to which it is a party; (v) immediately after Closing and completion of the Closing Transactions, Amalco will be a corporation validly existing under the CBCA and will have all necessary corporate power and authority to own, lease and operate its assets and to carry on its business as described in the Prospectus (including the Business), and to enter into and perform its obligations under each of the Related Agreements to which it is a party; (vi) (A) immediately after Closing and completion of the Closing Transactions, the Fund will be the registered owner, as the case may be, of all of the issued and outstanding shares of Amalco and Amalco will be the registered owner of all of the issued and outstanding shares of Buffalo Envelope Inc.; and (B) no person, firm or corporation has any agreement or option, or right or privilege (whether pre-emptive or contractual) capable of becoming an option or other agreement for the purchase from any of the Material Subsidiaries of any unissued share or other security of such Material Subsidiary; (vii) neither the Fund nor any of the Material Subsidiaries is in violation of, and the execution and delivery of this Agreement, the performance by each of the Fund and the Material Subsidiaries of its respective obligations under - 14 - this Agreement and each of the Related Agreements to which it is a party, and the consummation of the Closing Transactions by each of the Fund and the Material Subsidiaries (as applicable) will not result in any breach or violation of, or be in conflict with, or constitute a default under, or create a state of facts which after notice or lapse of time, or both, would constitute a default under, (A) any term or provision of its respective constating documents or by-laws, (B) any resolution of the Trustees or unitholders of the Fund or directors or securityholders of any of the Material Subsidiaries, or (C) except as would not have a material adverse effect on the business, results of operations or financial condition of the Fund and the Material Subsidiaries taken as a whole, any contract, hypothec, mortgage, note, indenture, joint venture or partnership arrangement, or other agreement (written or oral) to which any of the Fund or the Material Subsidiaries is a party, or any instrument, judgment, decree, order, statute, rule, licence or regulation applicable to any of the Fund or the Material Subsidiaries; (viii) no approval, authorization, consent or other order of, and no filing, registration or recording with any governmental authority is required of any of the Fund or the Material Subsidiaries in connection with the execution or with the performance of this Agreement by the Fund and Supremex, the consummation by the Fund and the Material Subsidiaries of the Closing Transactions (including in respect of the transfers of securities to be made in connection therewith) or to comply with Canadian Securities Laws with regard to the distribution of the Units in the Qualifying Provinces or with U.S. Securities Laws with regard to the distribution of the Units in the Qualifying States, except such as may be required by the securities or blue sky laws of the various states in connection with the offer and sale of the Units (as to which no representation or warranty is given); (ix) this Agreement has been duly authorized, executed and delivered by each of the Fund and Supremex and constitutes a legal, valid and binding obligation of the Fund and Supremex enforceable against the Fund and Supremex in accordance with its terms, except as enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought and subject to the fact that rights of indemnity and contribution may be limited by applicable law; (x) at, before or immediately after Closing, as applicable, each of the Related Agreements to which each of the Fund and/or any of the Material Subsidiaries is a party will have been duly authorized, executed and delivered by the Fund and/or such Material Subsidiaries, as applicable, and will constitute a legal, valid and binding obligation of the Fund and each such Material Subsidiary enforceable against the Fund and each such Material Subsidiary in accordance with its terms, except as enforcement - 15 - thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought and subject to the fact that rights of indemnity and contribution may be limited by applicable law; (xi) the description of each of the Related Agreements in the Prospectus is, in all material respects, a true, complete and accurate description of the material terms and conditions of each such Related Agreement; (xii) the description of the securities of the Fund, and Supremex in the Prospectus is, in all material respects, a true, complete and accurate description of the rights, privileges, restrictions, terms and conditions attaching to such securities; (xiii) no agreement is currently in force or effect which, in any manner, affects the voting or control of any of the securities of the Fund and, at the Closing Time, no such agreement will be in force or effect; (xiv) at the Closing Time, the Purchased Units will be validly created and be duly authorized and issued as fully-paid and non-assessable; (xv) if applicable, at the Option Closing Time, the Additional Units will be validly created and duly authorized and issued as fully-paid and non-assessable; (xvi) no securities commission, stock exchange or comparable authority has issued any order preventing or suspending the use or effectiveness of the Preliminary Prospectus, the Amended Preliminary Prospectus, the Final Prospectus, or any Prospectus Amendment or preventing the distribution of the Units, if any, in any Qualifying Province nor instituted proceedings for that purpose and, to the knowledge of the Fund, no such proceedings are pending or contemplated; (xvii) at the Closing Time, Computershare Investor Services Inc, at its offices in the cities of Montreal and Toronto, will have been duly appointed as registrar, transfer agent and distribution disbursing agent for the Units; (xviii) except as disclosed in the Prospectus, there is no litigation or governmental or other proceeding or investigation at law or in equity before any court or before or by any federal, provincial, state, municipal or other governmental or public department, commission, board, agency or body, domestic or foreign, pending or, to the Fund's or Supremex's knowledge, threatened (and none of the Fund or Supremex knows of any basis therefor) against, or involving the assets, properties or business of, the Fund or any of the Material Subsidiaries nor are there any matters under discussion with any governmental authority relating to taxes, governmental charges or assessments asserted by any such authority which would have a material adverse effect on the business, results of - 16 - operations or financial condition of the Fund and the Material Subsidiaries, taken as a whole; (xix) the Units have been conditionally approved for trading on the TSX subject to satisfaction of the listing conditions set forth in the conditional approval letter of the TSX dated March 16, 2006; (xx) the Fund is not a non-resident of Canada under the Income Tax Act (Canada) and, subject to meeting the minimum distribution requirements with respect to the purchasers of the Units pursuant to paragraph 132(6)(c) of the Income Tax Act (Canada) and the filing of an election under sub-section 132(6.1) of the Income Tax Act (Canada), the Fund will, at the Closing Date, qualify as a "mutual fund trust" under the Income Tax Act (Canada); (xxi) the Financial Statements in the Prospectus and any Prospectus Amendment have been prepared in accordance with the applicable books and records of the Fund and Supremex and present fairly in all material respects (on a pro forma basis when applicable) the consolidated financial position of the Fund and Supremex, as applicable, as of the applicable dates, and the results of operations and cash flows of the Fund and Supremex, as applicable, for the applicable periods, except as otherwise indicated in the Financial Statements. (xxii) Except as reflected, reserved against or otherwise disclosed in the Financial Statements, as of December 31, 2005, Supremex did not have any liabilities or obligations of any nature (whether absolute, accrued, contingent or otherwise) that would have been required to be reflected by it in the balance sheet of Supremex dated as of such date included in the Financial Statement in accordance with GAAP, with such exceptions as are not, individually or in the aggregate, reasonably likely to result in a material adverse effect on the business, financial condition or results of operations of the Fund and the Material Subsidiaries, taken as a whole; (xxiii) none of the Fund or any of the Material Subsidiaries has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that continue to be outstanding, except as disclosed in the Financial Statements or the Prospectus, or incurred in the ordinary course of business, other than those liabilities and obligations that are not, individually or in the aggregate, reasonably likely to result in a material adverse effect on the business, financial condition or results of operations of the Fund and the Material Subsidiaries, taken as a whole; (xxiv) other than in connection with the Closing Transactions or as otherwise disclosed in the Final Prospectus, since December 31, 2005: (A) the Material Subsidiaries have operated their business (including the Business), taken as a whole, in the ordinary course; - 17 - (B) there has not been any material adverse change in the assets, liabilities, business, financial condition or results of operations of the Fund and the Material Subsidiaries, taken as a whole; (C) there has not been any acquisition of all or substantially all of the assets or properties or of the securities or business of any other person by the Fund or any of the Material Subsidiaries or any merger, consolidation or amalgamation involving the Fund or any Material Subsidiaries; (D) none of the Fund or any of the Material Subsidiaries has transferred, assigned, sold, distributed, dividended or otherwise disposed of any of the material assets shown or reflected in the Financial Statements or cancelled any material debts or entitlements; (E) through the date of this Agreement, there has not been any incurrence by the Fund or any Material Subsidiary of any indebtedness for borrowed money or incurrence, assumption or guarantee of, or any other act to become responsible for, any liabilities or obligations or indebtedness of any other person, or making of loans or advances by the Fund or any Material Subsidiary to any person, other than in the ordinary course of business; or (F) there has not been any change in the financial or accounting practices or policies of any Material Subsidiaries, except as required by applicable legislation or GAAP; (xxv) the Financial Information (other than the information described in items (b), (d), (g), (h) and (i) of such term) and the unaudited pro forma consolidated financial statements of the Fund included in the Prospectus has been properly compiled to give effect to the assumptions and adjustments described in respect thereof, which assumptions are reasonable; (xxvi) each of the Fund and Material Subsidiaries maintains or, at the Closing Date, will have established and will maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (A) transactions are executed in accordance with management's general or specific authorizations; (B) transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management's general or specific authorizations; and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; - 18 - (xxvii) the reports and statistical and market-related data included in the Prospectus are derived from sources which were provided to Supremex and which Supremex reasonably and in good faith believes to be accurate and reliable; (xxviii) other than as discussed in the Prospectus, no acquisitions or dispositions have been made by Supremex in the three most recently completed fiscal years that are "significant acquisitions" or "significant dispositions" and neither the Fund nor any of the Material Subsidiaries are a party to any contract with respect to any transaction that would constitute a "probable acquisition", in each case which would require disclosure in the Prospectus pursuant to Regulation Q-28 respecting General Prospectus Requirements or similar requirements of other Canadian Securities Laws; (xxix) Ernst & Young LLP are independent with respect to the Fund and the Material Subsidiaries within the meaning of the Canadian Securities Laws and of the Code of Ethics of Chartered Accountants of Quebec and there has not been any "reportable event" (within the meaning of Regulation 51-102 concerning Continuous Disclosure Obligations (Quebec)) with the auditors of the Fund or any of the Material Subsidiaries with respect to the last three years, as if each had been a public reporting issuer during that time; (xxx) no trustee, director or officer, former trustee, director or officer, unitholder, shareholder or employee of, or any other person not dealing at arm's length with, the Fund or any of the Material Subsidiaries, and their respective directors, officers or employees, will continue after the Closing Time to be engaged in any material transaction or arrangement with, to be a party to a material contract with, or to have any material indebtedness, liability or obligation to, the Fund or any of the Material Subsidiaries, except as disclosed in the Prospectus; (xxxi) the minute books and related records of Supremex, PNG Inc. and Innova Envelope Inc. made available to counsel for the Underwriters in connection with their due diligence investigation in respect of the offering of the Units constitute all of the minute books and related records of any Material Subsidiaries and, to the knowledge of Supremex, contain copies of all proceedings (or certified copies thereof) of the shareholders, the boards of directors and all committees of the boards of directors of any Material Subsidiaries to the date of review of such corporate records and minute books and, to the knowledge of Supremex, there have been no other meetings, resolutions or proceedings of the shareholders, board of directors or any committees of the board of directors of any Material Subsidiaries to the date of review of such corporate records and minute books not reflected in such minutes and other records, other than those which have been disclosed to the Underwriters; (xxxii) except as contemplated hereby, there is no person acting or purporting to act at the request of the Fund or any of the Material Subsidiaries who is - 19 - entitled to any brokerage or agency fee in connection with the sale of the Units; and (xxxiii) each of the representations and warranties made by Cenveo and Cenveo US in sections 3.6 to 3.26 inclusively of the Acquisition Agreement to the Fund and Supremex and each of the representations and warranties of Cenveo US in sections 3.4 to 3.14 inclusively of the Cenveo Depew Acquisition Agreement to Buffalo Envelope Inc. are true and correct as of the date hereof and are hereby incorporated by reference into this Agreement and shall apply mutatis mutandis as if they were representations and warranties made by the Fund and Supremex to the Underwriters in this Agreement. (c) REPRESENTATIONS AND WARRANTIES OF CENVEO AND CENVEO US Cenveo and Cenveo US hereby solidarily represent and warrant that, as of the date hereof and as at the Closing Time, the following to the Underwriters and acknowledges that the Underwriters are relying upon such representations and warranties in purchasing the Units: (i) it is a corporation validly existing under the laws of the State of Colorado or Delaware, as applicable, and has all necessary power and authority to own, lease and operate its assets, to carry on its business, and to enter into and perform its obligations under this Agreement and each of the Related Agreements to which it is a party; (ii) the execution of this Agreement and each of the Related Agreements to which it is a party, and the performance of its obligations hereunder and thereunder has been duly authorized by all necessary corporate action on its part; (iii) it is not in violation of, and the execution of each of this Agreement and the Related Agreements to which it is a party, the performance by it of its obligations under this Agreement and each of the Related Agreements to which it is a party and the consummation of the Closing Transactions by it will not result in any breach or violation of, or be in conflict with, or constitute a default under, or create a state of facts which after notice or lapse of time, or both, would constitute a default under, (A) any term or provision of its constating documents or by-laws, (B) any resolution of its directors or securityholders, or (C) with such exceptions as do not have a material adverse effect on the ability of Cenveo or Cenveo US to perform their respective obligations pursuant to this Agreement and except for such consents as may be required in relation to item (x) below which will have been obtained on or prior to the Closing Date, any contract, hypothec, mortgage, note, indenture, lease, joint venture or partnership arrangement or other agreement (written or oral) to which it is a party, or any instrument, judgment, decree, order, statute, rule, licence or regulation applicable to it, including without limitation (x) the US$300 million senior secured credit facility of Cenveo with a group of banks which matures in - 20 - June 2008, (y) the note indenture pursuant to which the US$320 million of 7-7/8% senior subordinated notes of Cenveo due 2013 were issued, and (z) the note indenture pursuant to which the US$350 million 9-5/8% senior notes of Cenveo due 2012 were issued; (iv) each of this Agreement and the Related Agreements to which it is a party constitutes a legal, valid and binding obligation of each of Cenveo and Cenveo US, enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought and subject to the fact that rights of indemnity and contribution may be limited by applicable law; (v) none of Cenveo, Cenveo US or any of their respective controlled affiliates (other than the Fund and Supremex and their respective subsidiaries), directors officers or employees, or any other person not dealing at arm's length with Cenveo, Cenveo US or any of their respective controlled affiliates (other than the Fund and Supremex and their respective subsidiaries) will continue after the Closing Time to be engaged in any transaction or arrangement with, to be a party to a contract with, or to have any indebtedness, liability or obligation to, the Fund or any of the Material Subsidiaries, except as disclosed in the Prospectus or contemplated by the Related Agreements; (vi) Cenveo Canada is a corporation validly existing under the laws of Nova Scotia and has all necessary corporate power and authority to enter into and perform its obligations under each of the Related Agreements to which it is a party; (vii) Immediately prior to the amalgamation of Supremex with Cenveo Canada to form Amalco, (A) Cenveo US will be the registered owner of all of the issued and outstanding shares of Cenveo Canada, and (B) other than pursuant to the Acquisition Agreement, no person, firm or corporation has any agreement or option, right or privilege (whether pre-emptive or contractual) capable of becoming an option or other agreement for the purchase of any unissued share or other security of Cenveo Canada; (viii) (w) Cenveo Canada is not in violation of, and its continuation under the CBCA and the consummation of its amalgamation with Supremex to form Amalco will not result in, and (x) the performance by Amalco of its obligations under the Related Agreements to which Amalco is a party and the consummation of the Closing Transactions by Amalco will not result in, any breach or violation of, or be in conflict with, or constitute a default under, or create a state of facts which after notice or lapse of time, or both, would constitute a default under: (A) any term or provision of the constating documents or by-laws of Cenveo Canada, (B) any resolution of the directors or securityholders of Cenveo Canada, or (C) with such exceptions as do not have a material adverse effect on (y) the ability of - 21 - Cenveo Canada to effect its continuation under the CBCA and consummate its amalgamation with Supremex to form Amalco, and (z) the ability of Amalco to perform its obligations under the Related Agreements to which Amalco is a party and to consummate the Closing Transactions, any contract, hypothec, mortgage, note, indenture, joint venture or partnership arrangement, or other agreement (written or oral) to which Cenveo Canada is a party, or any instrument, judgment, decree, order, statute, rule, licence or regulation applicable to Cenveo Canada; (ix) at, before or immediately after Closing, as applicable, each of the Related Agreements to which Cenveo Canada is a party will have been duly authorized, executed and delivered by Cenveo Canada and will constitute a legal, valid and binding obligation of Cenveo Canada enforceable against Cenveo Canada in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought and subject to the fact that rights of indemnity and contribution may be limited by applicable law; (x) except as disclosed in the Prospectus, there is no litigation or governmental or other proceeding or investigation at law or in equity before any court or before or by any federal, provincial, state, municipal or other governmental or public department, commission, board, agency or body, domestic or foreign, pending against, or involving the assets, properties or business of, Cenveo Canada nor are there any matters under discussion with any governmental authority relating to taxes, governmental charges or assessments asserted by any such authority which would have a material adverse effect on the business, results of operations or financial condition of Cenveo Canada, Supremex and its subsidiaries taken as a whole; and (xi) other than the sections of the Prospectus entitled "Canadian Income Tax Considerations" and "Eligibility for Investment" and the information and statements relating solely to the Underwriters as to which no representation is given, the Prospectus constitutes full, true and plain disclosure of all material facts relating to the Business and does not contain any misrepresentation. (d) SURVIVAL OF REPRESENTATIONS AND WARRANTIES (i) The representations, warranties, obligations and agreements of the Fund and Supremex contained in this Agreement and in any certificate delivered pursuant to this Agreement or in connection with the purchase and sale of the Units shall survive the purchase of the Units and shall continue in full force and effect for a period of 18 months from the Closing Date unaffected by any subsequent disposition of the Units by the Underwriters or the termination of the Underwriters' obligations and shall not be limited or prejudiced by any investigation made by or on behalf of the - 22 - Underwriters in connection with the preparation of the Prospectus, any Prospectus Amendments or the distribution of the Units, except that: (w) the representations and warranties set out in sections 5(a), 5(b)(xi) and 5(b)(xii) (and the related indemnity obligation with respect to the foregoing sections) shall survive for a period of 90 days following the date on which the Fund is no longer liable under Canadian Securities Laws for a misrepresentation under the Prospectus, (x) the representations and warranties set out in sections 5(b)(i) to 5(b)(vi) inclusively, 5(b)(vii)(A) and (B), 5(b)(ix), 5(b)(xiv) and 5(b)(xv) (and the related indemnity obligation with respect to the foregoing sections) shall survive the Closing and continue in full force and effect without limitation of time, (y) the representations and warranties set out in section 5(b)(xxxiii) (and the related indemnity obligation with respect to the foregoing section) shall be subject to the time limitations set forth in section 7.1 of the Acquisition Agreement, and (z) a claim for any breach of any of the representations and warranties of the Fund or Supremex contained in this Agreement involving fraud shall not be subject to any limitation of time. (ii) The representations, warranties, obligations and agreements of Cenveo and Cenveo US contained in this Agreement and in any certificate delivered pursuant to this Agreement or in connection with the purchase and sale of the Units shall survive the purchase of the Units and shall continue in full force and effect for a period of 18 months from the Closing Date unaffected by any subsequent disposition of the Units by the Underwriters or the termination of the Underwriters' obligations and shall not be limited or prejudiced by any investigation made by or on behalf of the Underwriters in connection with the preparation of the Prospectus, any Prospectus Amendments or the distribution of the Units, except that: (x) the representations and warranties set out in section 5(c)(i), 5(c)(ii), 5(c)(iii)(A), 5(c)(iii)(B), 5(c)(iv), 5(c)(vi), 5(c)(viii)(A), 5(c)(viii)(B) and 5(c)(ix) (and the related indemnity obligation with respect to the foregoing sections) shall survive the Closing and continue in full force and effect without limitation of time, and (y) the representations and warranties set out in and sections 5(c)(x) and 5(c)(xi) (and the related indemnity obligation with respect to the foregoing sections) inclusively shall survive until the date that is three years and 90 days following the Closing Date (i.e., the date on which the Fund is no longer liable under Canadian Securities Laws for a misrepresentation under the Prospectus). 6. COVENANTS OF THE FUND The Fund covenants and agrees with the Underwriters, Cenveo and Cenveo US that: (a) it will advise the Underwriters, promptly after receiving notice thereof, of the time when the Final Prospectus has been filed and when the Final MRRS Decision Document in respect thereof and any other receipts have been obtained and will provide evidence satisfactory to the Underwriters of each filing and the issuance of the Final MRRS Decision Document and any other receipts; - 23- (b) it will advise the Underwriters, promptly after receiving notice or obtaining knowledge, of: (i) the issuance by any Canadian Securities Regulator of any order suspending or preventing the use of the Preliminary Prospectus, the Amended Preliminary Prospectus, the Final Prospectus or any Prospectus Amendment; (ii) the suspension of the qualification of the Units for distribution or sale in any of the Qualifying Provinces; (iii) the institution or threatening of any proceeding for any of those purposes; or (iv) any requests made by any Canadian Securities Regulator for amending or supplementing the Prospectus, or for additional information, and will use its commercially reasonable efforts to prevent the issuance of any such order and, if any such order is issued, to obtain the withdrawal of the order promptly; (c) it will, and will cause each of the Material Subsidiaries to, apply the proceeds from the issue and sale of the Units in accordance with the disclosure set out under the heading "Use of Proceeds" in the Prospectus; (d) except for the Initial Notes and the Over-Allotment Note, it will not issue any third party indebtedness until the 31st day following the Closing Date; (e) it will, and will cause each of the Material Subsidiaries to, execute and deliver the Related Agreements to which it is a party; (f) after the Closing Date, the Fund will file the election contemplated by subsection 132(6.1) of the Income Tax Act (Canada) and any corresponding provision of provincial tax legislation to ensure its status as a "mutual fund trust" thereunder; (g) the Fund and the Material Subsidiaries will refund to the Underwriters the purchase price paid by them for the Purchased Units under this Agreement if the transactions contemplated by the Prospectus to occur at or immediately prior to Closing are not completed provided that, in such event, the Underwriters will return to the Fund the fees paid to them by the Fund, less any expenses as contemplated by section 18, and will return to investors any amounts paid by them for the Purchased Units; and (h) (A) if the over-allotment option is exercised in full by the Underwriters, the Fund will irrevocably direct payment at the Option Closing Time by the Underwriters of the aggregate of the Purchase Price of the Additional Units net of the applicable Underwriting Fee to Cenveo US as payment in full of the Over-Allotment Note; (B) if the over-allotment option is exercised in part by the Underwriters, the Fund will (x) irrevocably direct payment at the Option Closing Time by the Underwriters of the aggregate of the Purchase Price of such Additional Units net of the applicable Underwriting Fee to be purchased by the Underwriters on the Option Closing Date to Cenveo US as partial payment of the Over-Allotment Note, and (y) issue at the Option Closing Time to Cenveo US that number of units of the Fund prescribed by the Over-Allotment Note, and (C) if the over-allotment option is not exercised by the Underwriters, the Fund will issue that number of units of the Fund prescribed by the Over-Allotment Note to Cenveo US as payment in full of the Over-Allotment Note. AcquisiCo shall pay to the Underwriters the Underwriting Fee with respect to any Additional Units - 24 - purchased pursuant to the exercise in whole or in part by the Underwriters of the over-allotment option concurrently with any payment to be made by the Underwriters to Cenveo US at the direction of the Fund pursuant to this paragraph (nothing in this sentence shall release the Fund from the obligation to make the foregoing payment). 7. CHANGE OF CLOSING DATE Subject to the termination provisions contained in section 14, if a material change or a change in a material fact occurs or is discovered prior to the Closing Date, the Closing Date shall be, unless the Fund and the Underwriters otherwise agree in writing or unless otherwise required under Canadian Securities Laws, the sixth Business Day following the later of: (i) the date on which all applicable filings or other requirements of Canadian Securities Laws with respect to such material change or change in a material fact have been complied with in all Qualifying Provinces and any appropriate MRRS decision documents obtained for such filings and notice of such filings from the Fund or its counsel have been received by the Underwriters; and (ii) the date upon which the commercial copies of any Prospectus Amendments have been delivered in accordance with section 4(c). 8. COMPLETION OF DISTRIBUTION The Underwriters shall after the Closing Time and, if applicable, the Option Closing Time, give prompt written notice to the Fund when, in the opinion of the Underwriters, they have completed distribution of the Purchased Units or the Additional Units as the case may be, including the total proceeds realized in each of the Qualifying Provinces, the Qualifying States and any other jurisdiction from such distribution. 9. CHANGES (a) MATERIAL CHANGE OR CHANGE IN MATERIAL FACT DURING DISTRIBUTION During the period from the date of this Agreement to the later of the Closing Date and the date of completion of distribution of the Units, the Fund shall promptly notify the Underwriters in writing of: (i) any material change (actual, anticipated, contemplated or threatened, financial or otherwise) in the business, affairs, operations, assets, liabilities (contingent or otherwise) or capital of the Fund or any Material Subsidiaries taken as a whole; (ii) any material fact which has arisen or has been discovered and would have been required to have been stated in the Final Prospectus had the fact arisen or been discovered on, or prior to, the date of such document; and (iii) any change in any material fact (which for the purposes of this Agreement shall be deemed to include the disclosure of any previously undisclosed - 25 - material fact) contained in the Final Prospectus or any Prospectus Amendment, which fact or change is, or may be, of such a nature as to render any statement in the Final Prospectus or any Prospectus Amendment misleading or untrue in any material respect or which would result in a misrepresentation in the Final Prospectus or any Prospectus Amendment or which would result in the Final Prospectus or any Prospectus Amendment not complying (to the extent that such compliance is required) with Canadian Securities Laws, in each case, as at any time up to and including the later of the Closing Date and the date of completion of the distribution of the Units. The Fund shall promptly, and in any event within any applicable time limitation, comply, to the satisfaction of the Underwriters, acting reasonably, with all applicable filings and other requirements under the Canadian Securities Laws as a result of such fact or change; provided that the Fund shall not file any Prospectus Amendment or other document without first obtaining from the Underwriters their approval, after consultation with the Underwriters with respect to the form and content thereof, which approval will not be unreasonably withheld or delayed. The Fund shall in good faith discuss with the Underwriters any fact or change in circumstances (actual, anticipated, contemplated or threatened, financial or otherwise) which is of such a nature that there is reasonable doubt whether written notice need be given under this section 9(a). (b) CHANGE IN CANADIAN SECURITIES LAWS If during the period of distribution of the Units there shall be any change in Canadian Securities Laws that, in the opinion of the Underwriters, acting reasonably, requires the filing of a Prospectus Amendment, the Fund shall, to the satisfaction of the Underwriters, acting reasonably, promptly prepare and file such Prospectus Amendment with the appropriate securities regulatory authority in each of the Qualifying Provinces where such filing is required. 10. SERVICES PROVIDED BY UNDERWRITERS AND UNDERWRITING FEE In return for the Underwriters' services in acting as financial advisors to the Fund, assisting in the preparation of the Prospectus (and any Prospectus Amendments), advising on the final terms and conditions of the Units, performing and managing banking, selling or other groups for the sale of the Units, distributing the Units, both directly and to other registered dealers as brokers, and performing administrative work in connection with the distribution of the Units, the Fund agrees to cause AcquisiCo to pay the Underwriting Fee at the Closing Time and, if applicable, the Option Closing Time against delivery of the Units and, if applicable, the Additional Units. The Underwriting Fee shall be payable as provided for in section 11. 11. DELIVERY OF PURCHASE PRICE, UNDERWRITERS' FEE AND CERTIFICATES The purchase and sale of the Purchased Units and, if applicable, the Additional Units shall be completed at the Closing Time and the Option Closing Time, as the case may be, at the offices of Stikeman Elliott LLP, 1155 Rene-Levesque Boulevard West, Suite 4000, Montreal, Quebec, or at such other place as the Underwriters and the Fund may agree upon. At the Closing Time or the Option Closing Time, as the case may be, the Fund shall duly and validly deliver to the Underwriters one or more definitive global unit certificate(s) representing - 26 - the Purchased Units or the Additional Units, as the case may be registered in the name of CDS & Co. or in such other nominee name or names for CDS as the Lead Underwriters may notify the Fund in writing not less than 24 hours prior to the Closing Time or the Option Closing Time, as the case may be, against payment by the Underwriters, as directed by the Fund, of the Purchase Price for the Purchased Units or the Additional Units, as the case may be, by wire transfer in each case together with a receipt signed by the Lead Underwriters for such definitive global certificate(s) and for receipt of the Underwriting Fee. In order to facilitate an efficient and timely closing at the Closing Time and the Option Closing Time, the Underwriters may choose to initiate a wire transfer of funds to the Fund or its counsel prior to the Closing Time or the Option Closing Time, as the case may be. If the Underwriters do so, the Fund agrees that such transfer of funds to the Fund prior to the Closing Time or the Option Closing Time does not constitute a waiver by the Underwriters of any of the conditions of the Closing or the Option Closing set out in this Agreement. Furthermore, the Fund agrees that any such funds received from the Underwriters prior to the Closing Time or the Option Closing Time, as the case may be, will be held in trust solely for the benefit of the Underwriters until the Closing Time or the Option Closing Time, as the case may be, and if the Closing or the Option Closing, as the case may be, does not occur at the scheduled Closing Time or the Option Closing Time, as the case may be, such funds shall be immediately returned by wire transfer to either of the Lead Underwriters, on behalf of the Underwriters, without interest. Upon the satisfaction of the conditions of the Closing or the Option Closing, as the case may be, and the delivery to the Underwriters of the items set out in section 13, the funds held in trust for the Underwriters shall be deemed to be delivered by the Underwriters to the Fund in satisfaction of the obligation of the Underwriters under this section 11 and upon such delivery the trust constituted by this section 11 shall be terminated without further formality. 12. DELIVERY OF CERTIFICATES TO TRANSFER AGENT The Fund shall, prior to the Closing Date or the Option Closing Date, as the case may be, make all necessary arrangements for the exchange of the definitive certificate(s) representing the Purchased Units or the Additional Units, as the case may be, on the Closing Date or the Option Closing Date, as the case may be, with CDS. The Fund shall cause AcquisiCo to pay all fees and expenses payable to CDS and/or the Transfer Agent in connection with the preparation, delivery, certification and exchange of the certificates representing the Purchased Units and the Additional Units contemplated by this section 12 and the fees and expenses payable to CDS in connection with the initial or additional transfers as may be required in the course of the distribution of the Units. 13. UNDERWRITERS' OBLIGATION TO PURCHASE The Underwriters' obligation to purchase the Purchased Units at the Closing Time shall be subject to the accuracy of the representations and warranties of each of the Fund, Supremex, Cenveo and Cenveo US contained in this Agreement as of the date of this Agreement and in all material respects as of the Closing Date (except, in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects), the performance by each of the Fund, Supremex, Cenveo and Cenveo US of their respective obligations under this Agreement and the following conditions: - 27 - (a) DELIVERY OF OPINIONS (i) the Underwriters, Cenveo and Cenveo US shall have received at the Closing Time a favourable legal opinion dated the Closing Date, in form and substance satisfactory to counsel to the Underwriters, Cenveo and Cenveo US addressed to the Underwriters and counsel to the Underwriters, Cenveo and Cenveo US from Stikeman Elliott LLP, counsel to the Fund and Supremex, as to the laws of Canada and the Qualifying Provinces, which counsel in turn may rely upon the opinions of local counsel where they deem such reliance proper as to the laws other than those of Canada and Quebec, British Columbia, Alberta and Ontario and as to matters of fact, on certificates of the auditors of the Fund and Supremex, public and stock exchange officials and officers of the Fund and Supremex, with respect to the following matters, assuming completion of the Closing and the Closing Transactions: (A) as to the valid existence of each of the Fund and the Material Subsidiaries under the laws of their respective jurisdiction of organization or incorporation, as applicable; (B) as to the authorized and issued capital of each of the Fund and the Material Subsidiaries; (C) that the Fund or a Material Subsidiary, as applicable, is the registered owner of all of the issued and outstanding shares of each of the Material Subsidiaries; (D) that each of the Fund and the Material Subsidiaries has all requisite power, capacity and authority under the laws of its respective jurisdiction of incorporation or organization, as applicable, and each is qualified to: (I) carry on its businesses (including the Business) as presently carried on; (II) own its property; (III) in the case of the Fund, to issue the Units; (IV) in the case of the Fund and Supremex, to enter into this Agreement; and (V) in the case of the Fund and each of the Material Subsidiaries, to enter, into each of the Related Agreements to which it is a party, and to carry out the transactions contemplated thereby, including the Closing Transactions; (E) that all necessary action has been taken by each of the Fund and the Material Subsidiaries to authorize, as applicable: (I) the - 28 - execution and delivery of this Agreement, (II) the execution and delivery of each of the Preliminary Prospectus, Amended Preliminary Prospectus and Final Prospectus and, if applicable, any Prospectus Amendments, (III) the filing of each of the Preliminary Prospectus, the Amended Preliminary Prospectus and the Final Prospectus and, if applicable, any Prospectus Amendments under the Canadian Securities Laws in each of the Qualifying Provinces, and (IV) the execution and delivery of each of the Related Agreements to which it is a party and the performance of its obligations thereunder; (F) that the Units and the Management Units have been duly authorized and, when issued and delivered, will be validly issued by the Fund and outstanding as fully paid and non-assessable Units; (G) that the description of the Units in the Prospectus is, in all material respects, a true, complete and accurate description of the rights, privileges, restrictions and conditions attaching to the Units; (H) that the execution and delivery of this Agreement by the Fund and Supremex, the fulfilment of the terms of this Agreement, the issue and sale of the Units and, the consummation of the transactions contemplated by this Agreement, do not and will not result in a breach (whether after notice or lapse of time or both) of any statute, by-law regulation, or of the terms, conditions or provisions of the constating documents of such parties or resolutions of trustees, directors or security holders of the Fund or Supremex or the Related Agreements to which the Fund or Supremex are bound; (I) that this Agreement has been duly authorized and executed by each of the Fund and Supremex and constitutes a legal, valid and binding obligation of the Fund and Supremex and is enforceable in accordance with its terms, except as enforcement of this Agreement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought; provided that such counsel may express no opinion as to the enforceability of the indemnity provisions of section 15, the contribution provisions of section 16 and the severability provisions as set forth in section 17; (J) that the execution and delivery by each of the Fund and the Material Subsidiaries of each of the Related Agreements to which it is a party, the fulfilment of the terms and the performance of the obligations of such party thereunder, and consummation of the transactions contemplated thereby do not and will not result in a breach (whether after notice or lapse of time or both) of any - 29 - statute, law, by-law, regulation, decree, judgement or order, or the terms of any of the constating documents of such party or any resolutions of trustees, directors or security holders of such party; (K) that each of the Related Agreements governed by Canadian laws to which each of the Fund and the Material Subsidiaries is a party has been duly authorized and executed by each of the Fund and the Material Subsidiaries and constitutes a legal, valid and binding obligation of such party and is enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought; provided that such counsel may express no opinion as to the enforceability of non-compete or severability provisions of the Related Agreements, as applicable; (L) that the form and terms of the certificates representing the Units meet all legal requirements under the rules of TSX and have been duly approved by the Fund; (M) that Computershare Investor Services Inc. at its principal offices in the cities of Montreal and Toronto has been duly appointed as the transfer agent and registrar for the Units of the Fund; (N) that all documents have been filed, all requisite proceedings have been taken and all legal requirements have been fulfilled by the Fund to qualify the Units for distribution and sale to the public in each of the Qualifying Provinces through investment dealers or brokers registered under the applicable laws of the Qualifying Provinces who have complied with the relevant provisions of such applicable laws; (O) that, subject only to the filing of documents in accordance with the requirements of the TSX, the Units have been conditionally approved for listing by the TSX on or before the Closing Date; (P) that, subject to the assumptions, qualifications, limitations and restrictions set out therein, the statements contained in the Prospectus under the heading "Canadian Federal Income Tax Considerations" are an accurate summary of the principal Canadian federal income tax considerations generally applicable under the Income Tax Act (Canada) to a holder of Units described therein who acquires such Units pursuant to the Prospectus; (Q) that the statements under the heading in the Prospectus "Eligibility for Investment" are accurate, subject to the assumptions, qualifications, limitations and restrictions set out therein; - 30 - (R) regarding compliance with the laws of Quebec relating to the use of the French language in connection with the documents (including the Preliminary Prospectus, the Amended Preliminary Prospectus, the Final Prospectus, Prospectus Amendments and certificates representing the Units) to be delivered to purchasers in Quebec; and (S) as to all other legal matters reasonably requested by counsel to the Underwriters relating to the distribution of the Units. (ii) the Underwriters shall have received at the Closing Time a favourable legal opinion dated the Closing Date, in form and substance satisfactory to counsel to the Underwriters, addressed to the Underwriters and counsel to the Underwriters from Timothy Davis, general counsel to Cenveo, with respect to the following matters, assuming completion of the Closing and the Closing Transactions, provided that Timothy Davis shall be entitled to rely on the opinion of Stikeman Elliott LLP as to matters governed by the laws of Quebec and the laws of Canada applicable therein: (A) as to the valid existence of each of Cenveo and Cenveo US under the laws of the State of Colorado or Delaware, as applicable; (B) that each of Cenveo and Cenveo US has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, including the Closing Transactions; (C) that all necessary corporate action has been taken by each of Cenveo and Cenveo US to authorize, as applicable, the execution and delivery of this Agreement and the performance of its obligations hereunder; (D) that this Agreement has been duly authorized, executed and delivered by each of Cenveo and Cenveo US; (E) that the execution and delivery by each of Cenveo ad Cenveo US of this Agreement, the fulfilment of the terms and the performance of the obligations of such party hereunder, and consummation of the transactions contemplated hereby do not and will not result in a breach (whether after notice or lapse of time or both) of the certificate of incorporation or by-laws of such party, of any statute, law or regulation or, to such counsel's knowledge, of any decree, judgement or order; and (F) that each of the Acquisition Agreement and the Cenveo Depew Acquisition Agreement constitutes a legal, valid and binding obligation of each of the Fund, Supremex, Cenveo and Cenveo US and is enforceable against each of such party in accordance with its terms, except as enforcement thereof may be limited by - 31 - bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought and by public policy; provided that such counsel may express no opinion as to the enforceability of severability provisions of the foregoing, as applicable. (iii) the Underwriters, Cenveo and Cenveo US shall have received at the Closing Time a favourable legal opinion dated the Closing Date, in form and substance satisfactory to counsel to the Underwriters, Cenveo and Cenveo US, addressed to the Underwriters and counsel to the Underwriters from Stikeman Elliott LLP, special Canadian counsel to Cenveo and Cenveo US, to the effect that this Agreement constitutes a legal, valid and binding obligation of each such party and is enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought; provided that such counsel may express no opinion as to the enforceability of the indemnity provisions of section 15, the contribution provisions of section 16 and the severability provisions as set forth in section 17. (iv) If any of the Units are distributed in the United States, the Underwriters shall have received at the Closing Time a legal opinion, in form and substance satisfactory to the Underwriters, addressed to the Underwriters, Cenveo and Cenveo US from Stikeman Elliott LLP to the effect that no registration of the Purchased Units is required under the 1933 Act in connection with the offer and sale of the Purchased Units to the Underwriters under this Agreement, or in connection with the initial resale of the Purchased Units by the Underwriters in the manner contemplated by this Agreement, provided that in each case the offer and sale in the United States is made in accordance with Schedule A hereto and all other offers and sales of Purchased Units are made in accordance with the provisions of this Agreement; provided that such legal opinion shall not be required if the fees and expenses to be incurred by the Fund in order for such legal opinion to be delivered exceed the value of the Purchase Price received for the Units sold in the United States. (v) The Underwriters shall have received at the Closing Time a favourable legal opinion of Osler, Hoskin & Harcourt LLP, dated the Closing Date, addressed to the Underwriters with respect to certain of the matters in sections 13(a)(i)(N), 13(a)(i)(P) and 13(a)(i)(Q); provided that counsel to the Underwriters shall be entitled to rely on the opinions of local counsel as to matters governed by the laws of jurisdictions other than the laws of Canada, Ontario, Quebec and Alberta and as to matters of fact, on certificates of the auditors of the Fund, the Underwriters, public officials and officers of the Fund and Supremex. - 32- (b) DELIVERY OF COMFORT LETTER The Underwriters, Cenveo and Cenveo US shall have received at the Closing Time a letter dated the Closing Date, in form and substance satisfactory to the Underwriters, addressed to the Underwriters, the Trustees, Cenveo and Cenveo US from Ernst & Young LLP, confirming the continued accuracy of the comfort letter to be delivered to the Underwriters pursuant to section 4(a)(vii) with such changes as may be necessary to bring the information in such letter forward to a date not more than two Business Days prior to the Closing Date, which changes shall be acceptable to the Underwriters, Cenveo and Cenveo US. (c) DELIVERY OF CERTIFICATES (i) The Underwriters shall have received at the Closing Time a certificate dated the Closing Date, addressed to the Underwriters and counsel to the Underwriters and signed by appropriate officers of the Fund, with respect to the constating documents of the Fund, all resolutions of Trustees or their delegates relating to this Agreement, the Prospectus and Related Agreements to which the Fund is a party, the incumbency and specimen signatures of signing officers of the Fund and such other matters as the Underwriters may reasonably request. (ii) The Underwriters shall have received at the Closing Time a certificate dated the Closing Date, addressed to the Underwriters and counsel to the Underwriters and signed by the appropriate officers of each of the Material Subsidiaries, with respect to the constating documents of such party, all resolutions of the directors of such party relating to this Agreement, the Prospectus and the Related Agreements to which such party is a party, the incumbency and specimen signatures of signing officers of such party and such other matters as the Underwriters may reasonably request. (iii) The Underwriters shall have received at the Closing Time certificates of each of the Fund and Supremex dated the Closing Date, addressed to the Underwriters and counsel to the Underwriters and signed on behalf of such parties by the President and Chief Executive Officer and the Vice President and Chief Financial Officer of the administrator of the Fund or other officers of the Fund or Supremex acceptable to the Underwriters, certifying for and on behalf of such parties, after having made due enquiry and after having carefully examined the Prospectus and any Prospectus Amendments, that: (A) since the respective dates as of which information is given in the Final Prospectus as amended by any Prospectus Amendments that (A) there has been no material change (actual, anticipated, contemplated or threatened, whether financial or otherwise) in the business, operations, financial condition, results of operations or capital of the Fund and each Material Subsidiary taken as a whole, and (B) no transaction has been entered into by any of the Fund or any of the Material Subsidiaries which is material to the Fund and - 33 - the Material Subsidiaries on a consolidated basis, other than as disclosed in the Final Prospectus or the Prospectus Amendments, as the case may be; (B) that the Final Prospectus, as amended by any Prospectus Amendment, does not contain, as of the Closing Date, any untrue statement of material fact or omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made (other than any statement relating solely to the Underwriters, which has been provided by the Underwriters in writing specifically for use in the Final Prospectus or any Prospectus Amendment); (C) no order, ruling or determination having the effect of suspending the sale or ceasing the trading of the Units or any other securities of the Fund has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or are pending or, to the knowledge of such officers, contemplated or threatened under any of the Canadian Securities Laws or by any other regulatory authority; (D) each of the Fund and Supremex, as applicable, has complied with the terms and conditions of this Agreement on its part to be complied with up to the Closing Time; (E) the representations and warranties of the Fund and Supremex contained in this Agreement and in any certificate or other document delivered pursuant to or in connection with this Agreement are true and correct in all material respects as of the Closing Time with the same force and effect as if made at and as of the Closing Time after giving effect to the transactions contemplated by this Agreement (except, in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects); and (F) such other matters as the Underwriters may reasonably request; and each such statement shall be true in fact and the Underwriters shall not have knowledge of any fact to the contrary. (iv) The Underwriters shall have received at the Closing Time a certificate dated the Closing Date addressed to the Underwriters and counsel to the Underwriters and signed by and on behalf of each of Cenveo and Cenveo US by an officer thereof acceptable to the Underwriters, certifying for and on behalf of each of Cenveo and Cenveo US to its knowledge after having carefully examined the Prospectus and any Prospectus Amendments: - 34 - (A) that each of Cenveo and Cenveo US, as applicable, has complied in all material respects with the terms and conditions of this Agreement on its part to be complied with up to the Closing Time; and (B) that the representations and warranties of each of Cenveo and Cenveo US, as applicable, contained in this Agreement and in any certificate or other document delivered pursuant to or in connection with this Agreement (except in respect of the certificate delivered pursuant to Section 13(d)(ii)(B)) are true and correct in all material respects as of the Closing Time (except for any representations and warranties with respect to Cenveo Canada, which shall be true and correct in all material respects as of immediately prior to the amalgamation of Cenveo Canada and Supremex) with the same force and effect as if made at and as of the Closing Time (or as of immediately prior to the amalgamation of Cenveo Canada and Supremex, in the case of any representations and warranties with respect to Cenveo Canada) after giving effect to the transactions contemplated by this Agreement (except, in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects), and each such statement shall be true in fact and the Underwriters shall not have knowledge of any fact to the contrary. (d) COMPLETION OF THE CLOSING TRANSACTIONS, EXECUTION OF THE RELATED AGREEMENTS (i) The Fund, each of the Material Subsidiaries, Cenveo and Cenveo US shall have executed prior to, contemporaneously with or immediately after the sale of the Purchased Units, as applicable, each of the Related Agreements to which they are party, none of the Related Agreements shall have been terminated in accordance with their respective terms and the transactions contemplated by each of the Related Agreements shall have been completed as described in the Prospectus prior to, contemporaneous with, or immediately after the sale of the Purchased Units, as applicable. (ii) The Underwriters shall have received at the Closing Time a certificate dated the Closing Date addressed to the Underwriters and counsel to the Underwriters and signed by and on behalf of each of Cenveo and Cenveo US by an officer thereof acceptable to the Underwriters, certifying for and on behalf of each of Cenveo and Cenveo US that: (A) the representations and warranties of each of Cenveo and Cenveo US, as applicable, contained in Articles 2 and 3 of the Acquisition Agreement are true and correct in all material respects as of the Closing Time (except, in each case, for those - 35 - representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects); and (B) the following affirmations are true and correct in all material respects as of immediately prior to the amalgamation of Cenveo Canada and Supremex (except, in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects): (x) the unaudited balance sheet of Cenveo Canada dated December 31, 2005 presents fairly, in all material respects, the consolidated financial position of Cenveo Canada as of December 31, 2005 in conformity with GAAP, except as otherwise indicated in such balance sheet, (y) except as reflected, reserved against or otherwise disclosed in the Cenveo Canada Financial Statements as of December 31, 2005, Cenveo Canada did not have any liabilities or obligations that would have been required to be reflected by it in the Cenveo Canada Financial Statements in accordance with GAAP and that would be reasonably likely to result in a material adverse effect on the business, financial condition or results of operations of Supremex, Cenveo Canada and its subsidiaries, taken as a whole, (z) other than in connection with the Closing Transactions or as otherwise disclosed in the Final Prospectus, since December 31, 2005: (1) there has not been any material adverse change in the assets, liabilities, business, financial condition or results of operations of Cenveo Canada or Supremex, Cenveo Canada and its subsidiaries taken as a whole, and (2) there has not been any acquisition of all or substantially all of the assets or properties or of the securities or business of any other person by Cenveo Canada or any merger, consolidation or amalgamation involving Cenveo Canada. For greater clarity, the representations and warranties of Cenveo and Cenveo US in favour of the Fund referred to in the certificate to be delivered to the Underwriters in accordance with this paragraph 13(d)(ii) shall not be deemed representations and warranties of Cenveo or Cenveo US under this Agreement in favour of the Underwriters and shall not form the basis of a Claim giving rise to the application of the indemnity obligations of Cenveo or Cenveo US set forth in section 15(b) or to an obligation of Cenveo or Cenveo US to contribute pursuant to section 16. Cenveo and Cenveo US shall have no liability or obligation under this Agreement or under the Acquisition Agreement for any statement made in such certificate. (e) RELEASE OF GUARANTEES AND NEW CREDIT FACILITIES The Guarantees shall have been released and discharged and the New Credit Facilities, the terms of which shall be as described in the Prospectus, shall have been made available to AcquisiCo before, contemporaneously with or immediately after the sale of the Purchased Units. - 36 - (f) LISTING APPROVAL The Units will have been approved for listing and posted for trading on the TSX prior to issuance, subject only to the filing of documents in accordance with the requirements of the TSX. (g) NECESSARY ACTIONS TAKEN All actions required to be taken by or on behalf of the Fund, including, without limitation, the passing of all requisite resolutions of the Trustees and the unitholders of the Fund, and all requisite filings with any securities regulatory authority will have occurred at or prior to the Closing Time so as to validly authorize the execution and filing of the Prospectus and any Prospectus Amendment and to create and issue the Units having the attributes contemplated by the Prospectus. (h) RECEIPT OF ADDITIONAL DOCUMENTS The Underwriters will have received such other certificates, opinions, agreements, materials or documents as they may reasonably request. (i) UNDERWRITERS' OBLIGATION TO PURCHASE OF ADDITIONAL UNITS The Underwriters' joint (not solidary) obligation to purchase the Additional Units at the Option Closing Time shall be subject to: (i) The accuracy of the representations and warranties of each of the Fund, Supremex, Cenveo and Cenveo US contained in this Agreement as of the date of this Agreement and in all material respects as of the Option Closing Date, or in the case of any representations and warranties with respect of Cenveo Canada, as of immediately prior to the amalgamation of Cenveo Canada and Supremex, (except, in each case, for those representations and warranties that are subject to a materiality qualification, which will be true and correct in all respects) and the delivery of certificates dated the Option Closing Date substantially similar to the certificates referred to in section 13(c); (ii) the performance by each of the Fund, Supremex, Cenveo and Cenveo US of their respective obligations under this Agreement; and (iii) the delivery by the Fund, Supremex, Cenveo and Cenveo US or their professional advisors of such opinions consistent with those delivered on the Closing Date, comfort letters and other certificates as the Underwriters may reasonably require in respect of the purchase of the Additional Units. 14. RIGHTS OF TERMINATION (a) LITIGATION If any enquiry, action, suit, investigation or other proceeding whether formal or informal is instituted, threatened or announced or any order is made by any federal, provincial or other - 37 - governmental authority in relation to the Fund, which, in the opinion of any of the Underwriters, acting reasonably, operates to prevent or restrict the distribution or trading of the Units, any of the Underwriters shall be entitled, at their option and in accordance with section 14(e), to terminate their obligations under this Agreement by notice to that effect given to the Fund and the Lead Underwriters any time prior to the Closing Time. (b) MARKET OUT CLAUSE If prior to the Closing Time: (i) there should develop, occur or come into effect or existence any event, action, state, condition or major financial occurrence of national or international consequence or any law or regulation which in the opinion of any of the Underwriters seriously adversely affects, or involves, or will seriously adversely affect, or involve, the financial markets or the business, operations or affairs of the Fund and the Material Subsidiaries taken as a whole; (ii) the state of financial markets in Canada or the United States is such that, in the reasonable opinion of the Underwriters (or any of them), the Units cannot be marketed profitably; or (iii) if trading in any securities of the Fund has been suspended or materially limited by any of the Canadian Securities Regulators or the TSX or if trading generally on the TSX has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by the TSX or by order of any of the Canadian Securities Regulators or any other governmental authority, any Underwriter shall be entitled, at its option, in accordance with section 14(e), to terminate its obligations under this Agreement by written notice to that effect given to the Fund at or prior to the Closing Time. (c) MATERIAL CHANGE OR CHANGE IN MATERIAL FACT If prior to the Closing Time, there should occur any material change or a change in, or discovery of, any material fact as contemplated by section 9 which results or, in the opinion of the Underwriters (or any one of them), is reasonably expected to result, in the purchasers of a material number of Units exercising their right under applicable legislation to withdraw from their purchase of Units or, in the reasonable opinion of the Underwriters (or any one of them), would be expected to have a significant adverse effect on the market price or value of the Units, any Underwriter shall be entitled, at its option, in accordance with section 14(e), to terminate its obligations under this Agreement by written notice to that effect given to the Fund prior to the Closing Time If, prior to the Closing Time, there are announced any changes or proposed changes in the taxation legislation of Canada or of any provinces or territories of Canada or any changes or proposed changes in the administration or application of such legislation by any relevant taxing authority which, in the opinion of the Underwriters after consultation with the Fund, might - 38 - reasonably be expected to have a significant adverse effect on the marketability of the Units, any of the Underwriters shall be entitled, at its option and in accordance with section 14(e), to terminate its obligations under this Agreement by written notice to that effect given to the Fund prior to the Closing Time. (d) NON-COMPLIANCE WITH CONDITIONS Each of the Fund, Supremex, Cenveo and Cenveo US, jointly and not solidarily between the Fund and Supremex, on the one hand, and Cenveo and Cenveo US, on the other hand, and solidarily between the Fund and Supremex and solidarily between Cenveo and Cenveo US, agree that all terms and conditions in section 13 shall be construed as conditions and complied with so far as they relate to acts to be performed or caused to be performed by it, that it will use its commercially reasonable efforts to cause such conditions to be complied with, and that any breach or failure by the Fund, Supremex, Cenveo or Cenveo US, as the case may be, to comply with any such conditions shall entitle any of the Underwriters to terminate obligations to purchase the Units by notice to that effect given to the Fund at or prior to the Closing Time, unless otherwise expressly provided in this Agreement. Each Underwriter may waive, in whole or in part, or extend the time for compliance with, any terms and conditions without prejudice to its rights in respect of any other terms and conditions or any other or subsequent breach or non-compliance, provided that any such waiver or extension shall be binding upon an Underwriter only if such waiver or extension is in writing and signed by the Underwriter. (e) EXERCISE OF TERMINATION RIGHTS The rights of termination contained in sections 14(a), (b), (c) and (d), may be exercised by any of the Underwriters and are in addition to any other rights or remedies any of the Underwriters may have in respect of any default, act or failure to act or non-compliance by the Fund, Supremex, Cenveo or Cenveo US in respect of any of the matters contemplated by this Agreement or otherwise. In the event of any such termination, there shall be no further liability on the part of the Underwriters to the Fund or on the part of the Fund to the Underwriters except in respect of any liability which may have arisen prior to or arise after such termination under sections 15, 16 and 18. A notice of termination given by an Underwriter under sections 14(a), (b), (c) and (d) shall not be binding upon any other Underwriter. 15. INDEMNITY (a) RIGHTS OF INDEMNITY BY THE FUND AND SUPREMEX The Fund and Supremex solidarily agree to indemnify and save harmless each of the Underwriters and each of their affiliates and each of their respective directors, officers, employees and agents (collectively, the "Indemnified Parties" and, individually, an "Indemnified Party") from and against any and all losses, expenses, claims, actions, damages and liabilities, joint or solidary, including the aggregate amount paid in settlement of any actions, suits, proceedings, investigations, inquiries or claims and the reasonable fees and expenses of their counsel that may be incurred in advising with respect to and/or defending any action, suit, proceeding, investigation, inquiry or claim that may be made or threatened against any Indemnified Party or in enforcing this indemnity to which any Indemnified Party may become subject or otherwise involved, in any capacity (collectively, "Claims" and each, individually, a - 39 - "Claim"), insofar as the Claims relate to, are caused by, result from, arise out of or are based upon, directly or indirectly: (i) any information or statement (except any statement relating solely to the Underwriters which has been provided by the Underwriters in writing specifically for use in the Prospectus or any Prospectus Amendment) contained in the Prospectus or any Prospectus Amendment or in any certificate of the Fund or Supremex delivered pursuant to this Agreement which at the time and in light of the circumstances under which it was made contains or is alleged to contain a misrepresentation; (ii) any omission or alleged omission to state in the Prospectus, any Prospectus Amendment or any certificate of the Fund or Supremex delivered pursuant to this Agreement any material fact (except any fact relating solely to the Underwriters) required to be stated in such document or necessary to make any statement in such document not misleading in light of the circumstances under which it was made; (iii) any order made or enquiry, investigation or proceedings commenced or threatened by any securities commission or other competent authority based upon any untrue statement or omission or alleged untrue statement or alleged omission or any misrepresentation or alleged misrepresentation (except a statement which has been provided by the Underwriters in writing specifically for use in the Prospectus or any Prospectus Amendment or omission relating solely to the Underwriters or alleged untrue statement which has been provided by the Underwriters in writing specifically for use in the Prospectus or any Prospectus Amendment or alleged omission relating solely to the Underwriters) contained in the Prospectus or any Prospectus Amendments or based upon any failure to comply with Canadian Securities Laws (other than any failure or alleged failure to comply by the Underwriters), preventing or restricting the trading in or the sale or distribution of the Units in any of the Qualifying Provinces; (iv) the non-compliance or alleged non-compliance by the Fund with any of the Canadian Securities Laws or the 1933 Act including the Fund's non-compliance with any statutory requirement to make any document available for inspection; or (v) any breach by the Fund or Supremex of its representations, warranties, covenants or obligations to be complied with under this Agreement. (b) RIGHTS OF INDEMNITY BY CENVEO US AND CENVEO Each of Cenveo and Cenveo US (collectively with the Fund and Supremex, the "Indemnifiers") agrees to solidarily indemnify and save harmless each of the Indemnified Parties from and against any and all Claims, insofar as the Claims relate to, are caused by, result from, arise out of or are based upon, directly or indirectly, any breach by Cenveo or Cenveo US of any of their representations, warranties, covenants or obligations to be complied with under this Agreement. - 40 - Notwithstanding anything set forth in this section 15, the liability of each of Cenveo and Cenveo US in respect of any indemnification obligation pursuant to this section 15(b) shall be limited as follows: (i) the obligations of indemnification of any of Cenveo and Cenveo US as an Indemnifier will, with respect to an individual matter or series of related matters, be subject to an initial aggregate threshold of $50,000; (ii) the obligations of indemnification of any of Cenveo and Cenveo US as an Indemnifier will be subject to an initial aggregate threshold of $1,500,000 whereupon an initial deductible of $1,000,000 shall apply; and (iii) the aggregate liability of any of Cenveo and Cenveo US as an Indemnifier pursuant to section 15(b) shall not exceed the amount to which the aggregate liability of any of Cenveo and Cenveo US under section 7.2(a) of the Acquisition Agreement is limited pursuant to item (x) of paragraph 7.2(a) in fine of the Acquisition Agreement as if the reference to one-half of the sum described therein was changed to 100% of such sum. Neither Cenveo and Cenveo US shall be liable pursuant to such indemnity as it relates to a breach of the representations and warranties set forth in Section 5(c)(xi) if in a public offering of securities they would be able to establish a due diligence defence (of the nature provided under Canadian law) to a similar obligation. (c) NOTIFICATION OF CLAIMS If any Claim is asserted against any Indemnified Party in respect of which indemnification is or might reasonably be considered to be provided, such Indemnified Party will promptly after the date of the receipt by the Indemnified Party or any of its Affiliate of notice of, or of the Indemnified Party or any of its Affiliates otherwise becoming aware of, any such Claim (whether such Claim is asserted or indemnification might be reasonably be considered to be provided) notify the Indemnifiers of the nature of such Claim (the omission so to notify the Indemnifiers of any potential Claim shall relieve the Indemnifiers from any liability which it may have to any Indemnified Party and any omission so to notify the Indemnifiers of any actual Claim shall affect the Indemnifiers' liability only to the extent that the Indemnifiers are prejudiced by that failure). The Indemnifiers shall assume the defence of any suit brought to enforce such Claim (in the event Cenveo and/or Cenveo US, on the one hand, and the Fund and/or Supremex, on the other hand, are Indemnifiers with respect to the defence of any Claim pursuant to which indemnification is provided hereunder, it is understood that Cenveo and Cenveo US shall have sole control over any suit brought to enforce such Claim, provided that in each case Cenveo and Cenveo US shall allow the Fund and/or Supremex to provide input to such suit and shall keep the Fund and/or Supremex informed regarding its progress); provided, however, that: (i) the defence shall be conducted through legal counsel reasonably acceptable to the Indemnified Party, and (ii) no settlement of any such Claim or admission of liability may be made by the Indemnifiers without the prior written consent (such consent not to be unreasonably withheld or delayed) of the Indemnified Party, acting - 41 - reasonably, unless such settlement includes an unconditional release of the Indemnified Party from all liability arising out of such action or claim and does not include a statement as to or an admission of fault, culpability or failure to act, by or on behalf of any Indemnified Party. After written notice by the Indemnifier to the Indemnified Party of its election to assume the defence of any such suit, the Indemnifier shall not be liable hereunder to indemnify any person for any legal costs or expenses subsequently incurred in connection therewith. The Indemnified Party and the Indemnifier shall each cooperate fully (and shall each cause its Affiliates to cooperate fully) with the other in the defence of any Claim pursuant to which indemnification is provided hereunder. Without limiting the generality of the foregoing, each such person shall furnish to the other person (at the expense of the Indemnifier) such documentary or other evidence as is then in its or any of its Affiliates' possession as may reasonably be requested by the other person for the purpose of defending against any such Claim. (d) RIGHT OF INDEMNITY IN FAVOUR OF OTHERS With respect to any Indemnified Party who is not a party to this Agreement, the Underwriters shall obtain and hold the rights and benefits of this section in trust for and on behalf of such Indemnified Party. (e) RETAINING COUNSEL In any such Claim, the Indemnified Party shall have the right to retain other counsel to act on his or its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless: (i) the Fund, Cenveo and the Indemnified Party shall have mutually agreed to the retention of the other counsel; (ii) the named parties to any such Claim (including any added third or impleaded party) include both the Indemnified Party and an Indemnifier and the representation of both parties by the same counsel would be inappropriate due to the actual or potential differing interests between them; or (iii) the Indemnifiers shall not have retained counsel within seven (7) Business Days following receipt by the Fund of notice of any such Claim from the Indemnified Party. (f) NO DOUBLE RECOVERY Notwithstanding anything set forth in this Agreement, the obligations of the Indemnifiers pursuant to this section 15 or section 16 will be limited such that no double recovery by any person shall be permitted under this Agreement, the Acquisition Agreement or the Cenveo Depew Acquisition Agreement as a result of any action that gives rise to a claim under more than one of these agreements. 16. CONTRIBUTION (a) RIGHTS OF CONTRIBUTION In order to provide for a just and equitable contribution in circumstances in which the indemnity provided in section 15 would otherwise be available in accordance with its terms but is, for any reason, held to be unavailable to or unenforceable by the Underwriters or enforceable otherwise - 42 - than in accordance with its terms, the Fund, Supremex, Cenveo, Cenveo US and the Underwriters, jointly and not solidarily (but solidarily between the Fund and Supremex and solidarily between Cenveo and Cenveo US), shall contribute to the aggregate of all claims, expenses, costs and liabilities and all losses of a nature contemplated by section 15 in such proportions as is appropriate to reflect: (i) as between the Fund and Supremex, on the one hand, and the Underwriters, on the other hand, the relative fault of the Fund and Supremex, on the one hand, and the Underwriters, on the other hand; and (ii) as between Cenveo and Cenveo US, on the one hand, and the Underwriters, on the other hand, the cash proceeds ultimately received by Cenveo and Cenveo US from this Agreement and the Related Agreements, on the one hand, and the underwriting fees received by the Underwriters from the offering of the Units, on the other hand. Relative fault shall be determined by reference to, among other things, the intent of such parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Fund, Supremex, Cenveo, Cenveo US and the Underwriters agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this section 16(a), (A) the Underwriters shall not in any event be liable to contribute, in the aggregate, any amounts in excess of the aggregate Underwriting Fee or any portion of the Underwriting Fee actually received; (B) Cenveo and Cenveo US shall not in any event be liable to contribute any amounts in excess of the limits set forth in section 15(b); and (C) no party who has been determined by a court of competent jurisdiction, in a final non-appealable judgment, to have engaged in any fraud, fraudulent misrepresentation, wilful misconduct, reckless disregard or intentional fault shall be entitled to claim contribution from any person who has not also been determined by a court of competent jurisdiction, in a final non-appealable judgment, to have engaged in such fraud, fraudulent misrepresentation wilful misconduct, reckless disregard or intentional fault. For purposes of this section 16, each person who controls an Underwriter within the meaning of Canadian Securities Laws and each director, officer, employee and agent of an Underwriter shall have the same rights to contribution as such Underwriter; each officer of the Fund and Supremex, as applicable, who shall have signed the Prospectus and each trustee of the Fund and each director of Supremex shall have the same rights to contribution as the Fund or Supremex, as applicable; and each officer of Cenveo who shall have signed the Prospectus and each director of Cenveo and Cenveo US shall have the same rights to contribution as Cenveo or Cenveo US, as applicable, subject in each case to the applicable terms and conditions of this section 16. (b) RIGHTS OF CONTRIBUTION IN ADDITION TO OTHER RIGHTS The rights to contribution provided in this section 16 shall be in addition to and not in derogation of any other right to contribution which the Underwriters, Cenveo or Cenveo US may have by statute or otherwise at law. (c) CALCULATION OF CONTRIBUTION In the event that an Indemnifier may be held to be entitled to contribution from the Underwriters under the provisions of any statute or at law, the Indemnifier shall be limited to contribution in an amount not exceeding the lesser of: (i) the portion of the full amount of the loss or liability giving rise to such contribution for which the Underwriters are responsible, as determined in section 16(a) or (b), as the case may be, and - 43 - (ii) the amount of the Underwriting Fee actually received by the Underwriters under this Agreement, and an Underwriter shall in no event be liable to contribute any amount in excess of such Underwriter's portion of the Underwriting Fee actually received under this Agreement. (d) NOTICE If the Underwriters have reason to believe that a claim for contribution may arise, they shall give the Indemnifier notice of such claim in writing, as soon as reasonably possible, but failure to notify the Indemnifier shall not relieve the Indemnifier of any obligation which he or it may have to the Underwriters under this section. (e) RIGHT OF CONTRIBUTION IN FAVOUR OF OTHERS With respect to this section, the Indemnifiers acknowledge and agree that the Underwriters are contracting on their own behalf and as agents for their affiliates, directors, officers, employees and agents. (f) LIMITATION ON CONTRIBUTION (i) Notwithstanding anything in this Agreement to the contrary: (i) the Fund and Supremex acknowledge and agree that they do not have any right of indemnification, contribution or reimbursement from or remedy against Cenveo or Cenveo US as a result of any indemnification they are required to make under or arising out of the breach or inaccuracy by the Fund or Supremex of any representation, warranty, covenant or other obligation under this Agreement, and (ii) the Fund and Supremex hereby release, waive and forever discharge any right to indemnification, contribution or reimbursement that they may have at any time against Cenveo or Cenveo US under or arising out of the breach or inaccuracy of any representation, warranty, covenant or other obligation under this Agreement. The Fund and Supremex acknowledge and agree that they will be fully responsible for their own indemnification obligations hereunder. (ii) Notwithstanding anything in this Agreement to the contrary: (i) Cenveo and Cenveo US acknowledge and agree that they do not have any right of indemnification, contribution or reimbursement from or remedy against the Fund or Supremex as a result of any indemnification they are required to make under or arising out of the breach or inaccuracy by Cenveo or Cenveo US of its representations and warranties pursuant to Sections 5(c)(i) to (x) inclusively, and (ii) Cenveo or Cenveo US hereby release, waive and forever discharge any right to indemnification, contribution or reimbursement that they may have at any time against the Fund or Supremex under or arising out of the breach or inaccuracy of such representations and warranties under this Agreement. Cenveo and Cenveo US acknowledge and agree that they will be fully responsible for their own indemnification obligations with respect to the above-mentioned representations and warranties hereunder. - 44 - 17. SEVERABILITY If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall be deemed not to affect or impair the validity of any other provision of this Agreement and such void or unenforceable provision shall be severable from this Agreement. 18. EXPENSES Whether or not the transactions contemplated by this Agreement shall be completed, all expenses of or incidental to the issue, sale and delivery of the Units and all expenses of or incidental to all other matters in connection with the transaction set out in this Agreement shall be caused by the Fund to be borne by AcquisiCo directly including, without limitation, fees and expenses payable in connection with the qualification of the Units for distribution, the fees relating to listing the Units on any exchanges, the fees and expenses of counsel to the Fund, all fees and expenses of local counsel, all fees and expenses of the Fund's auditors and all costs incurred in connection with the preparation and printing of the Prospectus, Prospectus Amendments and certificates representing the Units. The fees, taxes and disbursements of counsel to the Underwriters and all reasonable out-of-pocket expenses of the Underwriters incurred by the Underwriters in connection with the transactions contemplated by this Agreement, up to a maximum of $800,000, shall be caused by the Fund to be borne by AcquisiCo, provided that if the sale of the Units is not completed in accordance with the terms of this Agreement, all such fees and expenses shall be borne by Cenveo. If the transactions contemplated by this Agreement are completed, the amount of expenses for which the Fund shall cause AcquisiCo to be responsible to the Underwriters pursuant to the immediately preceding sentence will be reduced by 10% and the Underwriters will pay such expenses. 19. RIGHTS TO PURCHASE (a) OBLIGATION OF UNDERWRITERS TO PURCHASE The obligation of the Underwriters to purchase the Purchased Units or the Additional Units, as the case may be at the Closing Time or on the Option Closing Date, as the case may be, shall be joint and not solidary and shall be limited to the percentage of the Purchased Units or the Additional Units, as the case may be, set out opposite the name of the Underwriters respectively below: TD SECURITIES INC. 28% CIBC WORLD MARKETS INC. 22% BMO NESBITT BURNS INC. 11% DESJARDINS SECURITIES INC. 11% NATIONAL BANK FINANCIAL INC. 11% SCOTIA CAPITAL INC. 11% CANACCORD CAPITAL CORPORATION 3% GENUITY CAPITAL MARKETS G.P. 3% - 45 - Subject to section 19(c), in the event that any of the Underwriters shall fail to purchase its applicable percentage of the Purchased Units or the Additional Units, as the case may be, at the Closing Time or on the Option Closing Date, as the case may be, the others shall be obligated, jointly (not solidarily), to purchase on a pro rata basis all of the percentage of the Purchased Units or the Additional Units, as the case may be, that would otherwise have been purchased by the defaulting Underwriter(s); provided, however, that in the event that the percentage of the total number of Purchased Units or Additional Units, as the case may be, which the defaulting Underwriter(s) has failed to purchase exceeds 12% of the total number of Purchased Units or Additional Units, as the case may be, which the Underwriters have agreed to purchase, the other Underwriters shall have the right, but shall not be obligated, to purchase on a pro rata basis all of the percentage of the total number of Purchased Units or Additional Units, as the case may be, that would otherwise have been purchased by the defaulting Underwriter(s). In the event that such right is not exercised, the other Underwriters which are not in default shall be relieved of all obligations to the Fund. Nothing in this section 19(a) shall oblige the Fund to sell to the Underwriters less than all of the Purchased Units or the Additional Units, as the case may be, or relieve from liability to the Fund any Underwriter which shall be so in default. In the event of a termination by the Fund of its obligations under this Agreement, there shall be no further liability on the part of the Fund to the Underwriters except in respect of any liability which may have arisen or may arise under sections 15, 16 and 18. (b) PURCHASES BY OTHER UNDERWRITERS If the amount of the Purchased Units or the Additional Units, as the case may be, which the remaining Underwriters wish to purchase exceeds the amount of the Purchased Units or the Additional Units, as the case may be, which would otherwise have been purchased by an Underwriter which is in default, such Purchased Units or the Additional Units, as the case may be, shall be divided pro rata among the Underwriters desiring to purchase such Purchased Units or the Additional Units, as the case may be, in proportion to the percentage of Purchased Units or the Additional Units, as the case may be, which such Underwriters have agreed to purchase as set out in section 19(a). (c) RIGHTS TO PURCHASE OF OTHER UNDERWRITERS In the event that one or more but not all of the Underwriters shall exercise their right of termination under section 14 the others shall have the right, but shall not be obligated, to purchase all of the percentage of the Purchased Units or the Additional Units, as the case may be, which would otherwise have been purchased by such Underwriters which have so exercised their right of termination. If the amount of such Purchased Units or the Additional Units, as the case may be, which the remaining Underwriters wish, but are not obliged, to purchase exceeds the amount of such Purchased Units or the Additional Units, as the case may be, which remain available for purchase, such Purchased Units or the Additional Units, as the case may be, shall be divided pro rata among the Underwriters desiring to purchase such Purchased Units or the Additional Units, as the case may be, in proportion to the percentage of Purchased Units or the Additional Units, as the case may be, which such Underwriters have agreed to purchase as set out in section 19. - 46 - (d) RIGHT OF FUND TO TERMINATE Nothing in this section or section 14 shall oblige the Fund to sell to the Underwriters less than all of the Purchased Units or the Additional Units, as the case may be. 20. CONCURRENT OFFERINGS Subject to the exercise of the over-allotment option, the Fund shall not, without the prior written consent of the Lead Underwriters, which consent shall not be unreasonably withheld, directly or indirectly, issue, sell, grant any option for the sale of, or otherwise dispose of or monetize, in a public offering, by way of private placement or otherwise, any units of the Fund or any securities convertible or exchangeable into units of the Fund or offer to or announce any intention to do any of the foregoing, during the period commencing on the date hereof and ending 180 days after the Closing Date, other than the issuance of securities of the Fund pursuant to employee or executive incentive compensation arrangements or in connection with an acquisition transaction. Notwithstanding anything to the contrary in this Agreement, the Fund shall not issue any units of the Fund or any securities convertible or exchangeable into units of the Fund until the Over-Allotment Note has been repaid in accordance with its terms (other than any units of the Fund issued to Cenveo US in repayment of such Over-Allotment Note). For a period of 225 days after the Closing Date, Cenveo US shall not, without the prior written consent of the Lead Underwriters, in their sole discretion, offer, sell transfer, contract to sell or otherwise dispose of, directly or indirectly, any units of the Fund or any securities convertible or exchangeable into units of the Fund (including any units of the Fund issued to Cenveo US should the over-allotment option not be exercised) or make any short sale, engage in any hedging transaction or enter into any swap or other arrangement that has the effect of transferring, in whole or in part, any of the economic consequences of ownership of any of those securities, whether such transaction is to be settled by the delivery of units of the Fund, other securities, cash or otherwise, or agree to do so. Notwithstanding anything to the contrary in this Agreement, (a) Cenveo US may pledge its units of the Fund as security in favour of the lenders under the secured credit facility described in section 5(c)(iii)(x) and such lenders will be permitted to foreclose on such units, provided that such lenders acknowledge that such pledged units shall be subject to the restrictions on disposition contained in this paragraph, and (b) Cenveo US may transfer any units of the Fund to an Affiliate, provided that the transferee shall first undertake to the Co-Lead Underwriters by means of a duly executed contract to comply with the obligations set out in this section 20 as if that transferee were an original party to the undertakings and agreements of Cenveo US contained in this section 20. 21. STABILIZATION In connection with the distribution of the Units, the Underwriters and members of their selling group (if any) may over-allot or effect transactions which stabilize or maintain the market price of the Units at levels other than those which might otherwise prevail in the open market, in compliance with applicable securities laws and the rules and regulations of applicable stock exchanges. Those stabilizing transactions, if any, may be discontinued at any time. - 47 - 22. TIME Time is of the essence in the performance of the parties' respective obligations under this Agreement and the mere lapse of time shall have the effects contemplated hereunder and by law. 23. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the Province of Quebec and the laws of Canada applicable in the Province of Quebec. Any judicial proceeding brought against any of the parties to this Agreement with respect to any dispute arising out of this Agreement or any matter related hereto may be brought only in the courts of Quebec, district of Montreal, and by execution and delivery of this Agreement, each of the parties to this Agreement accepts for itself the exclusive jurisdiction in the aforesaid courts and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each of Cenveo and Cenveo US has appointed Stikeman Elliott LLP, 1155 Rene-Levesque Blvd. West, 40th Floor, Montreal, Quebec, H3B 3V2, as its authorized agent (the "Authorized Agent") upon whom process may be served in any action arising out of or based on this Agreement or the transactions contemplated thereby. Such appointment shall be irrevocable. Each of Cenveo and Cenveo US represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to each of Cenveo and Cenveo US shall be deemed, in every respect, effective service of process upon the Cenveo or Cenveo US, as applicable. 24. NOTICE Unless otherwise expressly provided in this Agreement, any notice or other communication to be given under this Agreement (a "notice") shall be in writing addressed as follows: If to the Fund or Supremex, addressed and sent to: Supremex Inc. 7213 Cordner Lasalle, Quebec Canada H8N 2J7 Attention: Gilles Cyr Facsimile: (514) 595-3092 with a copy to: Stikeman Elliott LLP 1155 Rene-Levesque Blvd. West Suite 4000 Montreal, Quebec H3B 3V2 Attention: Franziska Ruf Facsimile: (514) 397-3222 - 48 - If to Cenveo or Cenveo US, addressed and sent to: Cenveo, Inc. One Canterbury Green 201 Broad Street, 6th Floor Stamford, Connecticut United States of America 06901 Attention: General Counsel Facsimile: (203) 595-3071 with a copy to: Hughes Hubbard & Reed LLP One Battery Park Plaza New York, New York United States of America 10004-1482 Attention: Kenneth A. Lefkowitz Facsimile: (212) 422-4726 If to the Lead Underwriters, addressed and sent to: TD Securities Inc. 66 Wellington Street West 8th Floor Toronto, Ontario M5K 1A2 Attention: Andrew Muirhead Facsimile: (416) 983-3176 and to: CIBC World Markets Inc. 600 de Maisonneuve Blvd. West Suite 3050 Montreal, Quebec H3A 3J2 Attention: Eric Morisset Facsimile: (514) 847-6430 - 49 - with a copy to: Osler, Hoskin & Harcourt LLP 1000 de la Gauchetiere Street West Suite 2100 Montreal, Quebec H3B 4W5 Attntion: Ward Sellers Facsimile: (514) 904-8101 or to such other address as any of the parties may designate by giving notice to the others in accordance with this section 24. Each notice shall be personally delivered to the addressee or sent by fax to the addressee and: (a) a notice which is personally delivered shall, if delivered on a Business Day, be deemed to be given and received on that day and, in any other case, be deemed to be given and received on the first Business Day following the day on which it is delivered; and (b) a notice which is sent by fax shall be deemed to be given and received on the first Business Day following the day on which it is sent. 25. AUTHORITY OF LEAD UNDERWRITERS The Lead Underwriters are hereby authorized by each of the other Underwriters to act on its behalf and the Fund shall be entitled to and shall act on any notice given in accordance with section 24 or agreement entered into by or on behalf of the Underwriters by the Lead Underwriters which represents and warrants that they have irrevocable authority to bind the Underwriters, except in respect of any consent to a settlement pursuant to section 15(c) which consent shall be given by the Indemnified Party, a notice of termination pursuant to section 14 which notice may be given by any of the Underwriters, or any waiver pursuant to section 14(d), which waiver must be signed by all of the Underwriters. The Lead Underwriters shall consult where practical with the other Underwriters concerning any matter in respect of which it acts as representative of the Underwriters. 26. ENUREMENT This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors (including any successor by reason of amalgamation of any party). 27. COUNTERPARTS This Agreement may be executed by the parties to this Agreement in counterpart and may be executed and delivered by facsimile and all such counterparts and facsimiles shall together constitute one and the same agreement. - 50 - If the foregoing is in accordance with your understanding and is agreed to by you, please signify your acceptance by executing the enclosed copies of this letter where indicated below and returning the same to the Lead Underwriters upon which this letter as so accepted shall constitute an Agreement among us. Yours very truly, TD SECURITIES INC. CIBC WORLD MARKET INC. By: /s/ Andrew Muirhead By: /s/ Eric Morisset ----------------------------------- -------------------------------------- Name: Andrew Muirhead Name: Eric Morisset Title: Vice-President and Director Title: Managing Director BMO NESBITT BURNS INC. DESJARDINS SECURITIES INC. By: /s/ Pierre-Olivier Perras By: /s/ Jean-Philippe Morin ----------------------------------- -------------------------------------- Name: Pierre-Olivier Perras Name: Jean-Philippe Morin Title: Vice-President Title: Vice-President and Director NATIONAL BANK FINANCIAL INC. SCOTIA CAPITAL INC. By: /s/ Paul St-Michel By: /s/ Eric Michaud ----------------------------------- -------------------------------------- Name: Paul St-Michel Name: Eric Michaud Title: Managing Director Title: Director CANACCORD CAPITAL CORPORATION GENUITY CAPITAL MARKETS G.P. By: /s/ Jean-Marc Bourgeois By: /s/ Marc Fredette ----------------------------------- -------------------------------------- Name: Jean-Marc Bourgeois Name: Marc Fredette Title: Managing Director Title: Principal
- 51 - The foregoing offer is accepted and agreed to as of the date first above written. SUPREMEX INCOME FUND SUPREMEX INC. By: /s/ Gilles Cyr By: /s/ Gilles Cyr ----------------------------------- -------------------------------------- Name: Gilles Cyr Name: Gilles Cyr Title: Trustee Title: President CENVEO, INC. CENVEO CORPORATION By: /s/ Sean S. Sullivan By: /s/ Sean S. Sullivan ----------------------------------- -------------------------------------- Name: Sean S. Sullivan Name: Sean S. Sullivan Title: Chief Financial Officer Title: Chief Financial Officer
SCHEDULE A RULE 144A SALES IN THE UNITED STATES 1. In this Schedule, "Units" means the Purchased Units. 2. The Fund hereby represents, warrants, covenants and agrees to and with the Underwriters that: (a) The Fund is a "foreign issuer" and reasonably believes that there is no "substantial U.S. market interest" with respect to the Units as such terms are defined in Regulation S. (b) None of the Fund, its subsidiaries or its affiliates or any person acting on its or their behalf (other than the Underwriters, their subsidiaries or affiliates or any of the Selling Firms, in respect of whose activities the Fund makes no representation) has engaged or will engage in any directed selling efforts in the United States (within the meaning of Regulation S) or has engaged or will engage in any form of general solicitation or general advertising in the United States (as those terms are defined in Regulation D under the 1933 Act ("Regulation D")) with respect to the Units or has sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the 1933 Act) which is or will be integrated with the sale of the Units in a manner that would require the registration thereof under the 1933 Act. (c) the Units are not, and as of the Closing Date the Units will not be, and no securities of the same class as the Units are, or as of the Closing Date will be, (i) listed on a national securities exchange registered under Section 6 of the 1934 Act, or (ii) quoted in an "automated interdealer quotation system", as such term is used in the 1934 Act, or (iii) convertible or exchangeable at an effective conversion premium (calculated as specified in paragraph (a)(6) of Rule 144A) of less than ten percent for securities so listed or quoted. (d) so long as any Units are outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the 1933 Act, and the Fund is neither exempt from reporting pursuant to Rule 12g3-2(b) under the 1934 Act, nor subject to and in compliance with Section 13 or 15(d) of the 1934 Act, to furnish U.S. holders of the Units and prospective U.S. purchasers of Units designated by such U.S. holders, upon the request of such U.S. holder, the information required to be delivered pursuant to Rule 144A(d)(4) under the 1933 Act to permit compliance with Rule 144A in connection with the resale of Units in the United States. - 2 - (e) the Fund is not and, as a result of the sale of the Units will not be, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940, as amended. (f) The Units satisfy the requirements set out in Rule 144A(d)(3) under the 1933 Act. 3. Each of the Underwriters represents and warrants to and with the Fund that: (a) it acknowledges that the Units have not been and will not be registered under the 1933 Act and may not be offered or sold within the United States except pursuant to the exemption from the registration requirements of the 1933 Act. It has not offered or sold, and will not offer or sell, any of the Units constituting part of its allotment except in accordance with Regulation S or Rule 144A as provided in paragraphs 5 and 6 below. (b) it has not entered and will not enter into any contractual arrangement with respect to the distribution of the Units, except with its affiliates, any Selling Firm or with the prior written consent of the Fund. 4. The Underwriters shall require each Selling Firm to agree, for the benefit of the Fund to comply with, and shall use their best efforts to ensure that each Selling Firm complies with, the provisions of clauses 5 and 6 hereof above as if such provisions applied to such Selling Firm. 5. Each of the Underwriters agrees with the Fund that: (a) all offers and sales of the Units in the United States will be effected through its U.S. affiliate in accordance with all applicable U.S. broker-dealer requirements. (b) it and any U.S. affiliate selling Units in the United States is a Qualified Institutional Buyer. (c) it will not, either directly or through its U.S. affiliate, solicit offers for, or offer to sell, the Units in the United States by means of any form of general solicitation or general advertising (as those terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the 1933 Act and neither it nor its U.S. affiliate(s) nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts (within the meaning of Regulation S) in the United States with respect to the Units. (d) it will solicit, and will cause its U.S. affiliate to solicit, offers for the Units in the United States only from, and will offer the Units only to, persons it reasonably believes to be Qualified Institutional Buyers in accordance with Rule 144A. It also agrees that it will solicit offers for the Units only from, and will offer the Units only to, persons that in purchasing such Units will be deemed to have represented and agreed as provided in clauses (f)(i) through (iv) below (to the extent such representations are applicable to the purchaser concerned). - 3 - (e) It will inform, and cause its U.S. affiliate to inform, all purchasers of the Units in the United States that the Units have not been and will not be registered under the 1933 Act and are being sold to them without registration under the 1933 Act in reliance on Rule 144A. (f) The U.S. Placement Memorandum for the offering of the Units in the United States shall contain disclosure substantially in the form set out below: "The Units have not been and will not be registered under the Securities Act or under any state securities laws of the United States and may not be offered or sold within the United States except to persons reasonably believed by the Underwriters (and the U.S. Dealers) to be Qualified Institutional Buyers in transactions exempt from the registration requirements of the Securities Act pursuant to Rule 144A and in compliance with applicable state securities laws. In addition, until 40 days after the commencement of the offering of the Units, an offer or sale of the Units within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such an offer or sale is made otherwise than in accordance with the applicable provisions of Rule 144A. Each U.S. purchaser of Units offered hereby will, by its purchase of such Units, be deemed to have represented and agreed for the benefit of the Fund, the Underwriters and the U.S. Dealers as follows: It is authorized to consummate the purchase of the Units. It is a Qualified Institutional Buyer and acknowledges that the sale of the Units to it is being made in reliance on Rule 144A and exemptions from applicable state securities laws, and it is acquiring the Units for its own account or for the account of one or more Qualified Institutional Buyers with respect to which it exercises sole investment discretion, and not with a view to any resale, distribution, or other disposition of the Units in violation of U.S. federal or state securities laws. It acknowledges that it has not purchased the Units as a result of any general solicitation or general advertising (as defined in Regulation D under the Securities Act), including, without limitation, advertisements, articles, notices, or other communications published in any newspaper, magazine or similar media, or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising. It understands and acknowledges that the Units have not been and will not be registered under the Securities Act or the securities laws of any state of the United States, and are therefore "restricted securities" as defined in Rule 144 under the Securities Act and that if it decides to offer, sell, pledge or otherwise transfer such securities, such securities may be offered, sold, pledged or otherwise transferred only (A) to the Fund, (B) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (C) inside the United States in accordance with (i) Rule 144A to a person who it reasonably believes is a Qualified Institutional Buyer that is purchasing for its own account or for the account of a Qualified Institutional Buyer and to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A, or (ii) the exemption from registration under the Securities Act provided by Rule 144 thereunder, if available, or (D) under another exemption from registration under the Securities Act, and in each case in accordance with any applicable state securities laws in the United States or securities laws of any other applicable jurisdiction and in the case of (C)(ii) or (D) upon provision - 4 - of a legal opinion from U.S. legal counsel reasonably satisfactory to the Fund that such exemption from registration is available. It understands and acknowledges that upon the original issuance thereof, and until such time as the same is no longer required under applicable requirements of the Securities Act or applicable state securities laws, that all certificates representing the Units sold in the U.S. Placement will bear the following legend: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE SUPREMEX INCOME FUND (THE "FUND") THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE FUND, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES IN ACCORDANCE WITH (1) RULE 144A UNDER THE SECURITIES ACT TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT, A "QIB") THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB AND TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE OR TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (2) THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, OR (D) UNDER ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS IN THE UNITED STATES OR SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION AND IN THE CASE OF (C)(2) OR (D) UPON PROVISION OF A LEGAL OPINION FROM U.S. LEGAL COUNSEL REASONABLY SATISFACTORY TO THE FUND THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. A NEW CERTIFICATE BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE "GOOD DELIVERY" MAY BE OBTAINED FROM THE REGISTRAR AND/OR TRANSFER AGENT OF THE FUND (THE "TRANSFER AGENT") UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE TRANSFER AGENT AND THE COMPANY, TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; provided, that, if any such securities are being -------- sold under outside of the United States in accordance with Rule 904 of Regulation S, at a time when the Fund is a "foreign issuer" as defined in Rule 902 of Regulation S, the legend may be removed by providing a declaration to the transfer agent for the securities, or such other organization or entity performing such function for the Fund (the "Transfer Agent") to the following effect (or as the Fund may from time to time prescribe): "The undersigned seller (i) acknowledges that the sale of the securities of Supremex Income Fund to which this declaration relates is being made in reliance on Rule 904 of Regulation S ("Regulation S") under the United States Securities Act of 1933, as amended (the "Securities Act") and (ii) certifies that: (A) it is not an affiliate of Supremex Income Fund (as defined in Rule 405 under the Securities Act); (B) the offer - 5 - of the securities was not made to a person in the United States and either (1) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States, or (2) the transaction was executed on or through the facilities of the TSX Venture Exchange or the Toronto Stock Exchange, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States; (C) neither the seller nor any affiliate of the seller nor any person acting on any of their behalf has engaged or will engage in any "directed selling efforts" (as such term is defined in Regulation S) in the United States in connection with the offer and sale of the securities; (D) the sale is bona fide and not for the purpose of "washing off" the resale restrictions imposed because the securities are "restricted securities" (as that term is defined in Rule 144(a)(3) under the Securities Act); (E) the seller does not intend to replace the securities sold in reliance on Rule 904 of Regulation S, with fungible unrestricted securities; and (F) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the Securities Act." provided, further, that, if any such Units are -------- ------- being sold inside the United States in accordance with Rule 144 under the Securities Act and in compliance with applicable state securities laws, the legend may be removed by delivery to the transfer agent and the Fund of an opinion of counsel reasonably satisfactory to the Fund, to the effect that such legend is no longer required under applicable requirements of the Securities Act or state securities laws. It consents to the Fund making a notation in its records or giving instructions to any transfer agent of the Units in order to implement the restrictions on transfer set out and described in this Memorandum. It understands and acknowledges that the Fund is not obligated to file and has no present intention of filing with the United States Securities and Exchange Commission or with any state securities administrator any registration statement in respect of resales of the Units in the United States. It understands and acknowledges that the Fund (i) is not obligated to remain a foreign issuer (as defined in Regulation S under the U.S. Securities Act), (ii) may not, at the time the Units are resold by it or at any other time, be a foreign issuer, and (iii) may engage in one or more transactions which could cause the Fund not to be a foreign issuer. It understands and acknowledges that it is making the representations and warranties and agreements contained herein with the intent that they may be relied upon by the Fund and the Underwriters in determining its eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to purchase the Units." - 6 - 6. Each Underwriter agrees that: (a) It will deliver, through its U.S. affiliate, a copy of each of the Preliminary U.S. Placement Memorandum and U.S. Placement Memorandum (including the Amended Preliminary Prospectus or Final Prospectus, as the case may be, relating to the Units) for the U.S. offering to each person in the United States purchasing Units from it; (b) It shall cause its U.S. affiliate to agree, for the benefit of the Fund, to the same provisions as are contained in paragraphs 5 and 6; and (c) At the Closing Time, it, together with its U.S. affiliate selling Units in the United States, will provide a certificate, substantially in the form of Exhibit I to this Schedule, relating to the manner of the offer and sale of the Units in the United States or to U.S. persons. EXHIBIT I TO SCHEDULE A UNDERWRITERS' CERTIFICATE In connection with the private placement in the United States of the trust units (the "Units") of Supremex Income Fund (the "Fund") pursuant to the Underwriting Agreement dated o between, among others, the Fund and the Underwriters named therein, in the United States, (the "Underwriting Agreement"), each of the undersigned does hereby certify as follows: (i) [U.S. AFFILIATE] is a duly registered broker or dealer with the United States Securities and Exchange Commission (the "SEC") and the National Association of Securities Dealers, Inc. ("NASD") and is in good standing with the NASD and the SEC on the date hereof; (ii) each offeree of the Units in the United States was provided with a copy of the Preliminary U.S. Placement Memorandum and each purchaser of the Units in the United States, was provided with a copy of the U.S. Placement Memorandum, including the Final Prospectus dated o, for the offering of the Units in the United States; (iii) immediately prior to transmitting any such private placement memorandum to any offeree or purchaser, we had reasonable grounds to believe and did believe that each offeree and purchaser was a Qualified Institutional Buyer (as defined in Rule 144A) and, on the date hereof, we continue to believe that each such person is a Qualified Institutional Buyer; (iv) no form of general solicitation or general advertising (as those terms are used in Regulation D under the 1933 Act) was used by us, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Units in the United States or to U.S. persons; and (v) the offering of the Units in the United States has been conducted by us in accordance with the terms of the Underwriting Agreement. Capitalized terms used in this certificate have the meanings given to them in the Underwriting Agreement unless otherwise defined herein. IN WITNESS OF WHICH the parties have duly executed this Agreement. [Remainder of page intentionally left blank] - 2 - NAME OF UNDERWRITER By: --------------------------------- Name: o Title: o By: --------------------------------- Name: o Title: o NAME OF U.S. AFFILIATE By: --------------------------------- Name: o Title: o By: --------------------------------- Name:o Title:o EX-10.31 4 ex10p31.txt Exhibit 10.31 CONSENT, WAIVER AND AMENDMENT NO. 4 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT This Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement (this "Consent, Waiver and Amendment"), dated as ----------------------------- of March 24, 2006, amends that certain Second Amended and Restated Credit Agreement, dated as of March 25, 2004, as amended by Amendment No. 1 to Second Amended and Restated Credit Agreement, dated as of February 8, 2005, Amendment No. 2 to Second Amended and Restated Credit Agreement, dated as of December 23, 2005 and Amendment No. 3 to Second Amended and Restated Credit Agreement, dated as of January 20, 2006 (as so amended, the "Agreement"), --------- among the financial institutions from time to time parties hereto (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a "Lender" and ------ collectively as the "Lenders"), Bank of America, N.A., with an office at 55 ------- South Lake Avenue, Suite 900, Pasadena, California 91101, as administrative agent for the Lenders (in its capacity as agent, the "Agent"), Cenveo, Inc. ----- (f/k/a Mail-Well, Inc.), a Colorado corporation ("Parent"), Cenveo ------ Corporation (f/k/a Mail-Well I Corporation), a Delaware corporation ("Cenveo"), and certain subsidiaries of Cenveo (Cenveo and each such ------ subsidiary, individually, a "Borrower", and, collectively, the "Borrowers"). -------- --------- Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. R E C I T A L S WHEREAS, Parent, the Borrowers, the Lenders and the Agent have entered into the Agreement; WHEREAS, the parties are concurrently herewith entering into that certain Amendment No. 2 to Amended and Restated Security Agreement, dated of even date herewith (the "Security Agreement Amendment"); ---------------------------- WHEREAS, Parent and the Borrowers desire to amend the Agreement in order to amend and waive certain provisions of the Agreement in connection with the Lenders' consent to the Supremex Sale (as defined herein) and related transactions; and WHEREAS, the Agent and the Lenders are willing to do so, subject to the terms and conditions stated herein. NOW, THEREFORE, in consideration of the premises herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Agent, the Lenders, Parent and the Borrowers hereby agree as follows. 1 A G R E E M E N T Section 1. Amendments to the Agreement. The Agent, the Lenders, --------------------------- Parent and the Borrowers agree that the Agreement shall be amended as follows: A. The defined term "Affiliate" contained in Annex A of the ------- Agreement is hereby amended by deleting the phrase "5% or more of the outstanding equity interest" in its entirety and substituting therefor the new phrase "10% or more of the outstanding equity interest". B. The defined term "Permitted Strategic Investment" contained in Annex A of the Agreement is hereby amended and restated in its entirety to - ------- read as follows: "Permitted Strategic Investment" means any investment (including ------------------------------ loans and advances) by Parent or any of its Subsidiaries that conforms to the following requirements: (i) the Person in whom such investment is made is in a substantially similar or ancillary line of business as one or more of the Borrowers, (ii) all transactions related to such investment shall be consummated in accordance with applicable Requirements of Law, (iii) such investment shall be non-hostile in nature, (iv) such investment does not constitute an Acquisition, (v) the aggregate amount of consideration (other than Capital Stock of Parent) paid by Parent or any of its subsidiaries for all such investments since the Closing Date shall not exceed $20,000,000, and (vi) immediately after giving effect to such investment: (A) no Default or Event of Default exists or would result therefrom, and, for purposes of this clause, Parent shall deliver a certificate, signed by a Responsible Officer of Parent, demonstrating that Parent will continue to be in compliance with its financial covenants hereunder on a pro forma basis, taking such investment into account, (B) any investment securities resulting from such investment shall be owned directly by the Parent or a Loan Party, and such Person shall have taken all actions required by the Agent with respect to perfecting the Agent's Liens in any such investment securities resulting from such investment, and (C) with respect to any investment where some or all of the consideration paid by Parent or any of its Subsidiaries is other than Capital Stock of Parent, Borrowers would have Availability of not less than $50,000,000 (with all obligations of Borrowers and their Subsidiaries being current) after giving effect to such investment. C. Annex A of the Agreement is hereby amended by adding a new ------- definition thereto which shall read as follows: "Supremex Income Fund" means Supremex Income Fund, an -------------------- unincorporated open-ended trust established under the laws of the Province of Quebec. D. Sections 5.3(j) and (k) of the Agreement and hereby amended and restated in their entirety to read as follows: 2 (j) (1) At least 10 Business Days prior written notice of any change in any Loan Party's name as it appears in the state of its incorporation or other organization, state of incorporation or organization, type of entity, organizational identification number, or form of organization, trade names under which it will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, and (2) concurrent written notice of the disposition (including any Permitted Disposition) of any Eligible Equipment with an orderly liquidation value of $1,000,000 or more, in the aggregate, and (3) written notice within one month after (y) any disposition (including any Permitted Disposition) of Eligible Equipment with an orderly liquidation value of less than $1,000,000, in the aggregate, or other Equipment with a Fair Market Value of $1,000,000 or more, in the aggregate, or (z) the change in location of any Collateral with a Fair Market Value of $1,000,000 or more, in the aggregate; (k) Within 10 Business Days after Parent or any of its ERISA Affiliates knows or has reason to know, that an ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code), which could reasonably be expected to result in liability of one or more Loan Parties in excess of $500,000, has occurred, and, when known, any action taken or threatened by the IRS, the DOL or the PBGC with respect thereto; E. Section 6.19(c) of the Agreement is hereby amended and restated --------------- in its entirety to read as follows: (i) No ERISA Event has occurred or is reasonably expected to occur which would reasonably be expected to have a Material Adverse Effect; (ii) no Pension Plan has any Unfunded Pension Liability in an amount in excess of $10,000,000; (iii) neither Parent, nor any of its Subsidiaries, nor any of their ERISA Affiliates has incurred, or reasonably expects to incur, any liability (A) under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA), (B) under Section 4201or 4243 of ERISA with respect to a Multi-employer Plan (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability), or (C) as a result of a transaction that could be subject to Section 4069 or 4212(c) of ERISA, which liability described in the foregoing clauses (A) through (C), individually or in the aggregate, could reasonably be expected to exceed $10,000,000. F. Section 7.15 of the Agreement is hereby amended and restated in ------------ its entirety to read as follows: 7.15 Transactions with Affiliates. Except as set forth ---------------------------- below in this Section 7.15, or as explicitly permitted in another ------------ Section of this Credit Agreement, neither Parent nor any Loan Party shall, sell, transfer, distribute, or pay any money or property, including, but not limited to, any fees or expenses of 3 any nature (including, but not limited to, any fees or expenses for management services), to any Affiliate, or lend or advance money or property to any Affiliate, or invest in (by capital contribution or otherwise) or purchase or repurchase any stock or indebtedness, or any property, of any Affiliate, or become liable on any Guaranty of the indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding the foregoing, but subject to the limitations set forth in Sections 7.9, 7.10, 7.12, 7.13, or 7.18, while no Default ------------ ---- ---- ---- ---- or Event of Default has occurred and is continuing Parent and the Loan Parties may engage in (i) ordinary course cash management transactions among themselves and with other Affiliates notwithstanding the failure to charge interest in connection with such transactions, (ii) Permitted Intercompany Transfers, and (iii) transactions with Affiliates in the ordinary course of business, consistent with past practices (if any), and to the extent the aggregate consideration for such transaction(s), individually or in the aggregate with respect to a series of related transactions, exceeds $1,000,000, then in amounts and upon terms fully disclosed to the Agent, and no less favorable to Parent and such Loan Parties than would be obtained in a comparable arm's-length transaction with a third party who is not an Affiliate. G. Section 7.21 of the Agreement is hereby amended and restated in ------------ its entirety to read as follows: 7.21 Fiscal Year. Parent shall not (i) except upon 30 days ----------- prior written notice to the Agent, change its Fiscal Year, and (ii) permit any of its Subsidiaries to have a fiscal year different from Parent's. H. The second sentence of Section 12.11(a) of the Agreement is hereby amended and restated in its entirety to read as follows: Except as provided above, the Agent will not release any of the Agent's Liens without the prior written authorization of all of the Lenders; provided that the Agent may, in its discretion, -------- release the Agent's Liens on Collateral valued in the aggregate not in excess of $2,000,000 during each Fiscal Year without the prior written authorization of the Lenders and the Agent may release the Agent's Liens on Collateral valued in the aggregate not in excess of $3,000,000 during each Fiscal Year with the prior written authorization of Required Lenders. Section 2. Waiver and Consent to Prepayment of Fleet Lease. ----------------------------------------------- Pursuant to Section 7.14 of the Agreement, neither Parent nor any of its ------------ Subsidiaries shall voluntarily prepay any Debt. Parent and Borrowers have informed the Agent that they desire to prepay in full and terminate the Debt under the Fleet Lease (the "Fleet Lease Prepayment"), and have requested the ---------------------- consent of Agent and the Lenders to such prepayment. Agent and the Lenders hereby consent to the Fleet Lease Prepayment and waive any Defaults in connection with the Fleet Lease Prepayment, so long as the amount of the Fleet Lease Prepayment does not exceed US$12,000,000 and so long as the prepayment is made from proceeds of the Supremex Inc. sale and related transactions referred to in Section 3 below. The foregoing waiver shall be limited 4 precisely as written and shall not be deemed to be a waiver or modification of any other term or condition of the Agreement, or prejudice any right or remedy which Agent and the Lenders may now or in the future have under or in connection with the Agreement. Section 3. Consent to Sale of Supremex Inc. and Related -------------------------------------------- Transactions. Subject to the conditions precedent contained in this Consent, - ------------ Waiver and Amendment and notwithstanding Sections 7.2, 7.9, 7.13(i), 7.15 or ------------ --- ------- ---- 7.26 of the Agreement or any other provision contained therein or in any - ---- other Loan Document, the Lenders hereby consent to each of the transactions set forth in Schedule 1 attached hereto. In order to facilitate the ---------- consummation of the transactions enumerated in Schedule 1 hereto, the ---------- Lenders hereby irrevocably authorize the Agent to release any Agent's Liens upon (i) Cenveo Canada's and Supremex's (as such terms are defined in Schedule 1 hereto) right, title and interest in the Portland Facility, the - ---------- Omemee Facility and the St. Louis Facility (it being understood and agreed that the Agent shall, upon the sale of the Portland Facility and the St. Louis Facility to Cenveo, have a Lien upon Cenveo's right, title and interest therein pursuant to the Security Agreement), (ii) the Buffalo Assets (as defined in Schedule 1 hereto), and (iii) the outstanding capital ---------- stock of Amalco (as defined in the Acquisition Agreement referenced below), PNG, Innova, Supremex, Cenveo Canada, Cenveo International, Texas LP and Cenveo West (as such terms are defined in Schedule 1 hereto) that has been ---------- pledged to Agent for the ratable benefit of the Lenders pursuant to the Pledge Agreement and/or the Security Agreement, which release shall be effective immediately and automatically upon the closing of the sale and purchase of the Shares (as defined in the Acquisition Agreement referenced below) pursuant to the Acquisition Agreement. The Lenders also hereby consent to the release of (i) PNG, Innova, Supremex and Cenveo Canada as Canadian Guarantors (and as "Grantors" under the Canadian Security Documents), (ii) Cenveo International, Texas LP and Cenveo West as Guarantors (and as "Grantors" under the Security Agreement), and (iii) all Liens granted by PNG, Innova, Supremex, Cenveo Canada, Cenveo International, Texas LP and Cenveo West in favor of the Agent pursuant to the Loan Documents, which release shall be effective immediately and automatically upon the closing of the sale and purchase of the Shares (as defined in the Acquisition Agreement referenced below) pursuant to the Acquisition Agreement. The Agent is hereby authorized to execute, deliver and/or file such lien releases, mortgage releases, discharges of security interests, termination statements and other similar discharge or release documents (in recordable form if applicable) as are necessary to effectuate such releases. Cenveo, the Agent and the Lenders acknowledge and agree that Cenveo's right, title and interest in and to the Vendor Units (as defined in the Acquisition Agreement) issued to Cenveo by Supremex Income Fund will all be subject to the pledge and security interest granted to the Agent under the Security Agreement and the Pledge Agreement, subject to the restrictions on disposition set forth in Section 20 of the Underwriting Agreement (as defined in the Acquisition Agreement). Notwithstanding anything to the contrary in the Agreement, the Pledge Agreement or the Security Agreement, the Collateral shall not include any shares of any "unlimited liability company" organized under the laws of the Province of Nova Scotia, Canada, including, without limitation, the shares of Cenveo McLaren Morris and Todd Company that are being transferred by Amalco to Cenveo. Section 4. Consent to Sale of Assets in Armstrong White Facility ----------------------------------------------------- and Related Loan. Subject to the conditions precedent contained in this - ---------------- Consent, Waiver and Amendment and 5 notwithstanding any provision contained in the Agreement or any other Loan Document, the Lenders hereby consent to (i) a sale by Cenveo of all of the assets used in its Armstrong White facility located in Bloomfield Hills, MI, for a purchase price consisting of $250,000 in cash and certain other consideration, and (ii) a one-year, interest-bearing, $1,000,000 loan from Cenveo to the purchasers of such assets. Section 5. Consent to Sale of Assets in Chestertown, Maryland and ------------------------------------------------------ Business and Assets in Somerville, Massachusetts. Subject to the conditions - ------------------------------------------------ precedent contained in this Consent, Waiver and Amendment and notwithstanding any provision contained in the Agreement or any other Loan Document, the Lenders hereby consent to (i) a sale by Cenveo of the fixtures and building in its facility located in Chestertown, Maryland for a purchase price of not less than $1,500,000 in cash, and (ii) a sale by Cenveo of the business and all assets in its facility located in Somerville, Massachusetts (and, until the sale thereof, the leasing of the building located at such facility) for a purchase price of not less than $6,500,000 in cash. Section 6. Consent to Security Agreement Amendment. Subject to the --------------------------------------- conditions precedent contained in this Consent, Waiver and Amendment, the Lenders hereby consent to the Security Agreement Amendment. Section 7. Conditions. The effectiveness of this Consent, Waiver ---------- and Amendment is subject to the satisfaction of the following conditions precedent: A. Consent, Waiver and Amendment. A fully executed copy of ----------------------------- this Consent, Waiver and Amendment signed by Parent, the Borrowers, and the Lenders shall be delivered to the Agent, together with a consent hereto from the Guarantors; B. Security Agreement Amendment. A fully executed copy of the ---------------------------- Security Agreement Amendment signed by the Grantors shall be delivered to the Agent; C. Acquisition Documents. A fully executed copy of (i) the --------------------- Acquisition Agreement among Supremex Income Fund, Cenveo and Parent (the "Acquisition Agreement") and (ii) the Asset Purchase Agreement (as defined --------------------- in the Acquisition Agreement), each in form and substance satisfactory to the Agent and signed by all of the parties thereto shall be delivered to the Agent, together with all schedules, exhibits related thereto and other related documents. D. Other Documents. Parent and the Borrowers shall have --------------- executed and delivered to the Agent such other documents and instruments as the Agent may reasonably require in furtherance of this Consent, Waiver and Amendment. Section 8. Miscellaneous. ------------- A. Survival of Representations and Warranties. All ------------------------------------------ representations and warranties made in the Agreement or any other document or documents relating thereto, including, without limitation, any Loan Document furnished in connection with this Consent, Waiver and Amendment, shall survive the execution and delivery of this Consent, Waiver and Amendment and the other Loan Documents, and no investigation by Agent or Lenders or any 6 closing shall affect the representations and warranties or the right of Agent or Lenders to rely thereon. B. Reference to Agreement. The Agreement, each of the Loan ---------------------- Documents, and any and all other agreements, documents or instruments now or hereafter executed and delivered pursuant to the terms hereof, or pursuant to the terms of the Agreement as amended hereby, are hereby amended so that any reference therein to the Agreement shall mean a reference to the Agreement as amended hereby. C. Agreement Remains in Effect. The Agreement and the Loan --------------------------- Documents, as amended hereby, remain in full force and effect and the Borrowers ratify and confirm their agreements and covenants contained therein. Parent and the Borrowers hereby confirm that, after giving effect to this Consent, Waiver and Amendment, no Event of Default or Default exists as of the effective date thereof. D. Severability. Any provision of this Consent, Waiver and ------------ Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Consent, Waiver and Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. E. APPLICABLE LAW. THIS CONSENT, WAIVER AND AMENDMENT SHALL -------------- BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT ISSUES WITH RESPECT TO THE CREATION, PERFECTION, AND ENFORCEMENT OF LIENS UNDER DIVISION 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF CALIFORNIA; PROVIDED, THAT, -------- ---- THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. F. Successors and Assigns. This Consent, Waiver and ---------------------- Amendment is binding upon and shall inure to the benefit of Agent, the Lenders, Parent and the Borrowers and their respective successors and assigns; provided, however, that Parent and the Borrowers may not assign or -------- ------- transfer any of their rights or obligations hereunder without the prior written consent of the Lenders. G. Counterparts. This Consent, Waiver and Amendment may be ------------ executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument. H. Headings. The headings, captions and arrangements used -------- in this Consent, Waiver and Amendment are for convenience only and shall not affect the interpretation of this Consent, Waiver and Amendment. I. NO ORAL AGREEMENTS. THIS CONSENT, WAIVER AND AMENDMENT, ------------------ TOGETHER WITH THE OTHER LOAN DOCUMENTS AS WRITTEN, REPRESENTS THE FINAL AGREEMENT AMONG THE AGENT, THE LENDERS, 7 PARENT AND THE BORROWERS AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE AGENT, THE LENDERS, PARENT AND THE BORROWERS. ***** 8 IN WITNESS WHEREOF, the parties have executed this Consent, Waiver and Amendment on the date first above written. "PARENT" CENVEO, INC., a Colorado corporation By:___________________________ Name:_________________________ Title:________________________ "BORROWERS" CENVEO CORPORATION, a Delaware corporation By:___________________________ Name:_________________________ Title:________________________ CENVEO SERVICES, LLC, a Colorado limited liability company By:___________________________ Name:_________________________ Title:________________________ DISCOUNT LABELS, INC., an Indiana corporation By:___________________________ Name:_________________________ Title:________________________ S-1 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement CENVEO WEST, INC., a Delaware corporation By:___________________________ Name:_________________________ Title:________________________ CENVEO GOVERNMENT PRINTING, INC., a Colorado corporation By:___________________________ Name:_________________________ Title:________________________ S-2 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement The undersigned (the "U.S. Guarantors"), (i) consent to and approve --------------- the execution and delivery of this Consent, Waiver and Amendment by the parties hereto, (ii) agree that this Consent, Waiver and Amendment does not and shall not limit or diminish in any manner the obligations of each of the U.S. Guarantors pursuant to the guarantees delivered in connection with the Agreement (the "U.S. Guarantees") by each of the undersigned and that such --------------- obligations would not be limited or diminished in any manner even if the U.S. Guarantors had not executed this Consent, Waiver and Amendment, (iii) agree that this Consent, Waiver and Amendment shall not be construed as requiring the consent of the U.S. Guarantors in any other circumstance, (iv) reaffirm each of their obligations under the U.S. Guarantees, and (v) agree that the U.S. Guarantees remains in full force and effect and each is hereby ratified and confirmed. "U.S. GUARANTORS" CENVEO, INC., a Colorado corporation By:___________________________ Name:_________________________ Title:________________________ CENVEO INTERNATIONAL HOLDINGS, INC., a Colorado corporation By:___________________________ Name:_________________________ Title:________________________ CENVEO TEXAS FINANCE, LP, a Texas limited partnership By: Cenveo Corporation, a Delaware corporation Its: General Partner By:___________________________ Name:_________________________ Title:________________________ S-3 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement MMTP HOLDINGS, INC., a Colorado corporation By:___________________________ Name:_________________________ Title:________________________ COLORHOUSE CHINA, INC., a Colorado corporation By:___________________________ Name:_________________________ Title:________________________ CENVEO COMMERCIAL OHIO, LLC, a Colorado limited liability company By:___________________________ Name:_________________________ Title:________________________ CENVEO RESALE OHIO, LLC, a Colorado limited liability company By:___________________________ Name:_________________________ Title:________________________ S-4 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement The undersigned (the "Canadian Guarantors"), (i) consent to and ------------------- approve the execution and delivery of this Consent, Waiver and Amendment by the parties hereto, (ii) agree that this Consent, Waiver and Amendment does not and shall not limit or diminish in any manner the obligations of each of the Canadian Guarantors pursuant to the guarantees delivered in connection with the Agreement (the "Canadian Guarantees") by each of the undersigned ------------------- and that such obligations would not be limited or diminished in any manner even if the Canadian Guarantors had not executed this Consent, Waiver and Amendment, (iii) agree that this Consent, Waiver and Amendment shall not be construed as requiring the consent of the Canadian Guarantors in any other circumstance, (iv) reaffirm each of their obligations under the Canadian Guarantees, and (v) agree that the Canadian Guarantees remains in full force and effect and each is hereby ratified and confirmed. "CANADIAN GUARANTORS" CENVEO ALBERTA FINANCE, LIMITED PARTNERSHIP, a limited partnership organized under the laws of the Province of Alberta By:___________________________ Name:_________________________ Title:________________________ CENVEO MCLAREN MORRIS AND TODD COMPANY, a company organized under the laws of the Province of Nova Scotia By:___________________________ Name:_________________________ Title:________________________ CENVEO MM&T PACKAGING COMPANY, a company organized under the laws of the Province of Nova Scotia By:___________________________ Name:_________________________ Title:________________________ S-5 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement SUPREMEX INC., a company organized under the laws of Canada By:___________________________ Name:_________________________ Title:________________________ CENVEO CANADA LEASING COMPANY INC., a company organized under the laws of the Province of Nova Scotia By:___________________________ Name:_________________________ Title:________________________ PNG INC., a company organized under the laws of the Province of Ontario By:___________________________ Name:_________________________ Title:________________________ INNOVA ENVELOPE INC. - ENVELOPPE INNOVA INC., a company organized under the laws of the Province of Ontario By:___________________________ Name:_________________________ Title:________________________ S-6 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "AGENT" BANK OF AMERICA, N.A., as the Agent By:___________________________ Name:_________________________ Title:________________________ S-7 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" BANK OF AMERICA, N.A., as a Lender By:___________________________ Name:_________________________ Title:________________________ S-8 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender By:___________________________ Name:_________________________ Title:________________________ S-9 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender By:___________________________ Name:_________________________ Title:________________________ S-10 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" JPMORGAN CHASE BANK, N.A., as a Lender By:___________________________ Name:_________________________ Title:________________________ S-11 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" WELLS FARGO FOOTHILL, INC., as a Lender By:___________________________ Name:_________________________ Title:________________________ S-12 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" PNC BANK, NATIONAL ASSOCIATION, as a Lender By:___________________________ Name:_________________________ Title:________________________ S-13 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender By:___________________________ Name:_________________________ Title:________________________ S-14 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" U.S. BANK, NATIONAL ASSOCIATION, as a Lender By:___________________________ Name:_________________________ Title:________________________ S-15 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement "LENDERS" MERRILL LYNCH CAPITAL, a division of Merrill Lynch Business Financial Services Inc., as a Lender By:___________________________ Name:_________________________ Title:________________________ S-16 Consent, Waiver and Amendment No. 4 to Second Amended and Restated Credit Agreement SCHEDULE 1 Reference is made to the Acquisition Agreement dated as of March 17, 2006 (the "ACQUISITION AGREEMENT") among Cenveo, Inc., a Colorado corporation ("PARENT"), Cenveo Corporation, a Delaware corporation ("CENVEO"), and Supremex Income Fund, an unincorporated open-ended trust established under the laws of the Province of Quebec ("SUPREMEX INCOME FUND"). Capitalized terms used but not defined in this Schedule 1 have the meanings assigned to them in the Acquisition Agreement. o Parent will make a CDN$10,000,000 contribution to the Supremex employee pension plan in the manner described in Section 5.7 of the Acquisition Agreement. o Cenveo and Parent shall cause Supremex Inc., a company organized under the laws of Canada ("SUPREMEX"), to transfer its loan receivable from Cenveo McLaren Morris and Todd Company ("MM&T") (currently in the approximate amount of CDN$18 million) to Cenveo Alberta Finance LP ("CENVEO ALBERTA") in partial satisfaction of a loan payable (the "SUPREMEX LOAN PAYABLE") by Supremex to Cenveo Alberta. o Cenveo and Parent shall cause the continuation of Cenveo Canada Leasing Company Inc. ("CENVEO CANADA") under the Canada Business Corporations Act ("CBCA"). o Cenveo and Parent shall cause the Amalgamation (the amalgamation of Supremex with Cenveo Canada, to form Amalco) to occur. o Parent will make a CDN$3,757,000 contribution to the Supremex employee pension plan in the manner described in Section 5.7 of the Acquisition Agreement. o Cenveo and Parent shall cause Cenveo West, Inc. ("CENVEO WEST"), a wholly-owned subsidiary of Cenveo and the limited partner of Cenveo Texas Finance LP ("TEXAS LP"), to be merged into Cenveo. o Cenveo and Parent shall cause Cenveo International Holdings, Inc., a wholly-owned subsidiary of Cenveo ("CENVEO INTERNATIONAL"), to be merged into Cenveo. o Cenveo and Parent shall cause PNG Inc., a company organized under the laws of the Province of Ontario ("PNG"), and Innova Envelope Inc. - Enveloppe Innova Inc., a company organized under the laws of the Province of Ontario ("INNOVA"), each wholly-owned subsidiaries of Amalco, to be liquidated. 1 o Cenveo and Parent shall cause Amalco to sell its shares of MM&T to Cenveo for US$6.5 million in cash. o Cenveo and Parent shall cause Amalco to sell to Cenveo certain real property and improvements located in Portland, Oregon (the "PORTLAND FACILITY") and St. Louis, Missouri (the "ST. LOUIS FACILITY") for US$11 million in the aggregate. o Amalco shall transfer a facility it owns in Omemee, Ontario to an affiliate of Parent for nominal consideration. o Amalco will repay all its loans and advances payable other than the loan payable to Alberta Finance LC as of the date of the Acquisition Agreement. o Supremex Income Fund shall cause AcquisiCo (4273681 Canada Inc., a corporation organized under the CBCA) to be organized and shall subscribe for 100 shares of AcquisiCo for nominal consideration. o Supremex Income Fund shall cause AcquisiCo to cause a new Delaware corporation ("BUFFALO ENVELOPE INC.") to be organized and shall cause AcquisiCo to subscribe for the common stock of Buffalo Envelope Inc. (the capital stock so acquired by AcquisiCo shall constitute all of the outstanding capital stock of Buffalo Envelope Inc.) for nominal consideration. o Supremex Income Fund shall enter into a cost support agreement with AcquisiCo, in form and substance satisfactory to Cenveo and Parent, pursuant to which AcquisiCo shall agree to pay all expenses incurred in connection with the public offering of Units pursuant to the Underwriting Agreement (including, without limitation, the transactions contemplated by the Acquisition Agreement and the fees of the underwriters under the Underwriting Agreement). o Supremex Income Fund, Cenveo and Parent shall cause the closing under the Asset Purchase Agreement to occur (the assets sold pursuant thereto being the "BUFFALO ASSETS"). o Cenveo shall sell to Supremex Income Fund all the shares of Amalco. 2 EX-31.1 5 ex31p1.txt EXHIBIT 31.1 CERTIFICATIONS I, Robert G. Burton, Sr. the Chairman and Chief Executive Officer of Cenveo, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Cenveo, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 10, 2006 /s/ ROBERT G. BURTON, SR. ------------------------------------ Robert G. Burton, Sr. Chairman and Chief Executive Officer EX-31.2 6 ex31p2.txt EXHIBIT 31.2 CERTIFICATIONS I, Sean S. Sullivan the Chief Financial Officer of Cenveo, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Cenveo, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: May 10, 2006 /s/ SEAN S. SULLIVAN -------------------------------- Sean S. Sullivan Chief Financial Officer EX-32.1 7 ex32p1.txt EXHIBIT 32.1 Certification Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Cenveo, Inc., a Colorado corporation (the "Company"), does hereby certify, to the best of such officer's knowledge, that: The Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 (the "Form 10-Q") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 10, 2006 /s/ ROBERT G. BURTON, SR. ------------------------------------ Robert G. Burton, Sr. Chairman and Chief Executive Officer Date: May 10, 2006 /s/ SEAN S. SULLIVAN ------------------------------------ Sean S. Sullivan Chief Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Cenveo, Inc. and will be retained by Cenveo, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----