<Page>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-90992
PROSPECTUS
VON HOFFMANN CORPORATION
10 1/4% SENIOR NOTES DUE 2009
AND
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
AND
VON HOFFMANN HOLDINGS INC.
13 1/2% SUBORDINATED EXCHANGE DEBENTURES DUE 2009
------------------------------
The Company:
- - We manufacture four-color case-bound and soft-cover educational textbooks
in the United States.
The 2009 notes and related guarantees:
- - Maturity: March 15, 2009.
- - Interest Payment: February 15 and August 15 of each year, beginning August
15, 2002.
- - Optional Redemption: Von Hoffmann may redeem the 2009 notes at any time
prior to March 15, 2005, in whole or in part, upon notice to the holders,
at a redemption price equal to the amount as calculated in accordance with
the first paragraph under "Description of the Registered Securities--l0
1/4% Senior Notes due 2009--Optional Redemption." Von Hoffmann may redeem
the 2009 notes at any time on or after March 15, 2005, in whole or in part,
in cash at the redemption prices described in this prospectus, plus accrued
and unpaid interest to the date of redemption.
In addition, on or before March 15, 2005, Von Hoffmann may redeem up to 35%
of the aggregate principal amount of 2009 notes issued under the 2009 notes
indenture with the proceeds of certain equity offerings. Von Hoffmann may
make that redemption only if, after the redemption, at least 65% of the
aggregate principal amount of notes issued under the 2009 notes indenture
remains outstanding.
- - Ranking: The registered 2009 notes and the related guarantees will rank:
<Page>
- equal in right of payment to all of Von Hoffmann's and the guarantors'
existing and future senior indebtedness;
- senior in right of payment to Von Hoffmann's and the guarantors'
existing and future subordinated indebtedness; and
- effectively junior to Von Hoffmann's and the guarantors' secured
indebtedness, including any borrowings under our senior credit
facility.
The 2007 notes and related guarantees:
- - Maturity: May 15, 2007.
- - Interest Payment: May 15 and November 15 each year.
- - Optional Redemption: Von Hoffmann may redeem the 2007 notes at any time, in
whole or in part, in cash at the redemption prices described in this
prospectus, plus accrued and unpaid interest to the date of redemption.
- - Ranking: The registered 2007 notes and the related guarantees will rank:
- - junior in right of payment to all of Von Hoffmann's and the guarantors'
existing and future senior indebtedness; and
- - equal in right of payment to Von Hoffmann's and the guarantors' existing
and future senior subordinated indebtedness.
The 2009 Holdings debentures:
- - Maturity: May 15, 2009.
- - Interest Payment: May 15 and November 15 each year.
- - Optional Redemption: Holdings may redeem the 2009 Holdings debentures at
any time, in whole or in part, in cash at the redemption prices described
in this prospectus, plus accrued and unpaid interest to the date of
redemption.
- - Ranking: The registered 2009 Holdings debentures will rank junior in right
of payment to all of Holdings' existing and future senior indebtedness.
CONSIDER CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS
PROSPECTUS.
--------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS
<Page>
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------------
This prospectus will be used by Credit Suisse First Boston Corporation in
connection with offers and sales in market-making transactions at negotiated
prices related to prevailing market prices. There is currently no public market
for the securities. We do not intend to list the securities on any securities
exchange. Credit Suisse First Boston Corporation has advised us that it is
currently making a market in the securities; however, it is not obligated to do
so and may stop at any time. Credit Suisse First Boston Corporation may act as
principal or agent in any such transaction. We will not receive the proceeds of
the sale of the securities but will bear the expenses of registration.
--------------------------------------------------------
Credit Suisse First Boston Corporation
--------------------------------------------------------
The date of this prospectus is June 24, 2003.
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
FORWARD-LOOKING STATEMENTS....................................................ii
PROSPECTUS SUMMARY.............................................................1
RISK FACTORS...................................................................7
CAPITALIZATION................................................................16
SELECTED CONSOLIDATED FINANCIAL DATA..........................................17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS......................................20
BUSINESS......................................................................33
MANAGEMENT....................................................................43
EXECUTIVE COMPENSATION........................................................46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................51
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................52
DESCRIPTION OF CERTAIN INDEBTEDNESS...........................................55
DESCRIPTION OF THE REGISTERED SECURITIES......................................57
PLAN OF DISTRIBUTION.........................................................146
INDEPENDENT ACCOUNTANTS......................................................146
WHERE YOU CAN FIND MORE INFORMATION..........................................147
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...................................F-1
</Table>
Von Hoffmann Corporation is a wholly-owned subsidiary of Von Hoffmann
Holdings Inc. Unless otherwise stated or the context otherwise requires, in
this prospectus, "Von Hoffmann" and "Company" refer to Von Hoffmann
Corporation and its subsidiaries. "Holdings" refers to Von Hoffmann Holdings
Inc. Unless otherwise stated or the context otherwise requires, "we," "us"
and "our" refer to Holdings and its subsidiaries. References to the
"securities" means the registered securities. Von Hoffmann formerly was named
"Von Hoffmann Press, Inc.," and Holdings formerly was named "Von Hoffmann
Corporation."
i
<Page>
FORWARD-LOOKING STATEMENTS
This prospectus contains statements about future events and expectations,
which are forward-looking statements. We have based these forward-looking
statements on our current expectations and projections about future results.
When we use words in this document, such as "anticipates," "intends," "plans,"
"believes," "estimates," "expects," and similar expressions, we do so to
identify forward-looking statements. Examples of forward-looking statements
include statements we make regarding future prospects of growth in the
educational textbook market, the level of future activity of the public school
textbook adoption process, demographic and other trends in the instructional
materials market, our ability to maintain or increase our market share and our
future capital expenditure levels.
You should keep in mind that any forward-looking statement made by us in
this prospectus or elsewhere speaks only as of the date on which we make it. New
risks and uncertainties come up from time to time, and it is impossible for us
to predict these events or how they may affect us. We have no duty to, and do
not intend to, update or revise the forward-looking statements in this
prospectus after the date of this prospectus, except as may be required by law.
In light of these risks and uncertainties, you should keep in mind that any
forward-looking statement made in this prospectus or elsewhere might not occur.
The forward-looking statements included in this prospectus are made only as of
the date of this prospectus and, except as required by law, we undertake no
obligation to publicly update these forward-looking statements to reflect
subsequent events or circumstances.
ii
<Page>
PROSPECTUS SUMMARY
THIS SUMMARY MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT
TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING THE FINANCIAL
STATEMENTS AND RELATED NOTES INCLUDED IN THIS PROSPECTUS BEFORE MAKING AN
INVESTMENT DECISION.
OUR COMPANY
We believe that we are the leading manufacturer of four-color case-bound
and soft-cover educational textbooks in the United States. Our products are sold
principally to educational publishers who, in turn, sell them into the
elementary and high school, or ELHI, and college instructional materials
markets. In addition to textbook manufacturing, we provide our customers with a
full range of value-added printing and design services from early design to
final distribution. We estimate that our market share in our core business, the
manufacture of four-color case-bound ELHI textbooks, was approximately 40% in
2002. Our net sales and net loss for the fiscal year ended December 31, 2002
were $379.4 million and $5.3 million, respectively.
Since 1998, we have diversified our product offerings and added new
services through selected strategic acquisitions in order to enhance our
position within the instructional materials market. In addition to solidifying
our position in the instructional materials market, our acquisitions have
enabled us to expand our presence in the commercial book-manufacturing market.
Over the past five years, we have also invested approximately $102 million in
high-quality, high-throughput machinery and plant expansions (excluding
equipment obtained in acquisitions), enhancing our competitive position and
providing capacity for future growth. These investments include additional
four-color web printing presses, additional one- and two-color presses,
sheet-fed presses, new digital pre-press equipment and additional manufacturing
space. We have also invested extensively in customized, high-efficiency
book-binding production lines.
INDUSTRY OVERVIEW
We primarily serve the instructional materials market, from which we
derived approximately 71% of our 2002 net sales. Within the overall
instructional materials market, we focus principally on the ELHI and college and
higher education areas, for which we manufacture textbooks, standardized test
materials and other educational materials. The market for ELHI and college and
higher education instructional materials is characterized by long-term growth
prospects, an ELHI textbook adoption process, a recurring revenue stream, great
emphasis on quality, service and delivery and barriers to entry.
COMPETITIVE STRENGTHS
We believe we are distinguished by the following competitive strengths:
- a leading market share in the manufacture of four-color case-bound ELHI
textbooks
- a reputation for superior quality and customer service
- a focus on instructional materials manufacture
<Page>
- the ability to be a single source supplier of a broad range of services
to educational textbook manufacturers, from early design to manufacture
to distribution
- state-of-the-art manufacturing facilities
- a skilled and experienced workforce and management team
BUSINESS STRATEGY
The principal features of our business strategy include the following:
- enhancing our position in the instructional materials market;
- leveraging our existing manufacturing capabilities and reputation; and
- considering selective acquisitions.
EXECUTIVE OFFICES
Holdings and Von Hoffmann are Delaware corporations. Their principal
executive offices are located at 1000 Camera Avenue, St. Louis, Missouri 63126,
and their telephone number at that address is (314) 966-0909.
2
<Page>
2009 NOTES
Issuer............................ Von Hoffmann Corporation.
Maturity.......................... March 15, 2009.
Interest Rate..................... 10.25% per year.
Interest Payment Dates............ February 15 and August 15 of each year,
beginning August 15, 2002.
Guarantees........................ The registered 2009 notes are fully and
unconditionally guaranteed, jointly and
severally, by all of Von Hoffmann's current
and future domestic subsidiaries, and so
long as Holdings guarantees any of the
Credit Facilities, by Holdings.
Optional Redemption............... Von Hoffmann may redeem the 2009 notes
at any time prior to March 15, 2005, in
whole or in part, upon notice to the
holders, at a redemption price equal to the
amount as calculated in accordance with
the first paragraph under "Description
of the Registered Securities--10 1/4%
Senior Notes due 2009--Optional Redemption."
Von Hoffmann may redeem the 2009 notes
at any time on or after March 15, 2005, in
whole or in part, in cash at the
redemption prices described in this
prospectus, plus accrued and unpaid
interest to the date of redemption.
In addition, on or before March 15, 2005,
Von Hoffmann may redeem up to 35% of the
aggregate principal amount of 2009 notes
issued under the indenture governing the
2009 notes with the proceeds of certain
equity offerings. Von Hoffmann may make that
redemption only if, after the redemption, at
least 65% of the aggregate principal amount
of notes issued under the indenture
governing the 2009 notes remains
outstanding.
Ranking........................... The registered 2009 notes and the related
guarantees rank:
- equal in right of payment to all of
Von Hoffmann's and the guarantors'
existing and future senior
indebtedness;
3
<Page>
- senior in right of payment to
Von Hoffmann's and the guarantors'
existing and future subordinated
indebtedness; and
- effectively junior to Von Hoffmann's
and the guarantors' secured
indebtedness, including any borrowings
under our senior credit facility.
Certain Covenants................. The indenture governing the 2009 notes
contains covenants limiting Von Hoffmann's
and its restricted subsidiaries' ability to:
- incur additional indebtedness;
- credit liens;
- pay dividends or make other equity
distributions;
- purchase or redeem capital stock;
- make investments;
- sell assets;
- incur restrictions on the ability of
restricted subsidiaries to make
dividends or engage in transactions
with affiliates; and
- effect a consolidation or merger. These
covenants are subject to important
exceptions and qualifications described
under "Description of the Registered
Securities--10 1/4% Senior Notes due
2009--Certain Covenants."
2007 NOTES
Issuer............................ Von Hoffmann Corporation.
Maturity.......................... March 15, 2007.
Interest Rate..................... 10.375% per year.
Interest Payment Dates............ May 15 and November 15 of each year.
Guarantees........................ The registered notes are fully and
unconditionally guaranteed, jointly and
severally, by all of Von Hoffmann's
restricted subsidiaries and so long as
Holdings guarantees any of the Credit
Facilities, by Holdings.
4
<Page>
Optional Redemption............... Von Hoffmann may redeem the 2007 notes at
any time on or after May 15, 2002, in whole
or in part, in cash at the redemption prices
described in this prospectus, plus accrued
and unpaid interest to the date of
redemption.
Ranking........................... The registered 2007 notes and the related
guarantees rank:
- junior in right of payment to all of
Von Hoffmann's and the guarantors'
existing and future senior
indebtedness; and
- equal in right of payment to Von
Hoffmann's and the guarantors' existing
and future senior subordinated
indebtedness.
Certain Covenants................. The indenture governing the 2007 notes
contains covenants limiting Von Hoffmann's
and its restricted subsidiaries' ability to:
- incur additional indebtedness;
- credit liens;
- pay dividends or make other equity
distributions;
- purchase or redeem capital stock;
- make investments;
- sell assets;
- incur restrictions on the ability of
restricted subsidiaries to make
dividends or engage in transactions
with affiliates; and
- effect a consolidation or merger.
These covenants are subject to important
exceptions and qualifications described
under "Description of the Registered
Securities--10 3/8% Senior Subordinated
Notes due 2007--Certain Covenants."
2009 HOLDINGS DEBENTURES
Issuer............................ Von Hoffmann Holdings Inc.
Maturity.......................... May 15, 2009.
5
<Page>
Interest Rate..................... 13.5% per year. Interest is not payable in
cash prior to the date on which interest
would be permitted to be paid in cash
pursuant to the terms of the
then-outstanding indebtedness of Holdings
and its subsidiaries and any other
contractual provisions limiting their
ability to declare or pay cash interest. Our
senior credit facility restricts such
payments. Until interest is payable in cash,
such interest will accrete to the principal
amount of the debentures on each interest
payment date.
Interest Payment Dates............ May 15 and November 15 each year.
Optional Redemption............... Holdings may redeem the 2009 Holdings
debentures at any time, in whole or in part,
in cash at the redemption prices described
in this prospectus, plus accrued and unpaid
interest to the date of redemption.
Ranking........................... The registered 2009 Holdings debentures will
rank junior in right of payment to all of
Holdings' existing and future senior
indebtedness.
Certain Covenants................. The indenture governing the 2009 Holdings
debentures contains covenants limiting
Holdings' and its subsidiaries' ability to
- pay dividends or make other equity
distributions; and
- purchase or redeem capital stock.
These covenants are subject to important
exceptions and qualifications described
under "Description of the Registered
Securities--13 1/2% Subordinated Exchange
Debentures Due 2009--Certain Covenants."
6
<Page>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS SET FORTH BELOW AS WELL AS
THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS. ANY OF THE FOLLOWING RISKS
COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
RISKS RELATING TO THE SECURITIES
THERE IS A LIMITED TRADING MARKET FOR THE REGISTERED SECURITIES.
There is a limited market for the registered securities. We cannot assure
you with respect to:
- the liquidity of any market for the registered securities;
- your ability to sell registered securities; or
- the price at which you will be able to sell the registered securities.
The registered securities could trade at prices that may be higher or lower
than their principal amount or purchase price, depending on many factors,
including prevailing interest rates, the market for similar securities, and our
financial performance. Although it is not obligated to do so, Credit Suisse
First Boston Corporation has advised us that it intends to continue to make a
market in the registered securities. Any such market-making activity may be
discontinued at any time, for any reason, without notice at the sole discretion
of Credit Suisse First Boston. No assurance can be given as to the liquidity of
or the trading market for the registered securities.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND
PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THE SECURITIES.
We have a significant amount of indebtedness. As of March 31, 2003, we had
total indebtedness of $356.1 million and had $80.0 million of additional
borrowings available under our senior credit facility, after excluding $1.6
million of letters of credit outstanding under that facility.
Our substantial indebtedness could have important consequences to you. For
example, it could:
- make it more difficult for us to satisfy our obligations with respect
to the securities;
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures and other general corporate needs;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
7
<Page>
- result in higher interest expense in the event of increases in
interest rates as some of our debt is, and will continue to be, at
variable rates of interest;
- place us at a competitive disadvantage compared to our competitors
that have less debt; and
- limit our ability to borrow additional funds.
In addition, the indentures governing the 2009 notes and the 2007 notes and
our senior credit facility contain restrictive covenants that limit our ability
to engage in activities that may be in our long-term best interests. These
covenants limit or restrict our ability to:
- incur additional indebtedness;
- create liens;
- pay dividends or make other equity distributions;
- purchase or redeem capital stock;
- make investments;
- sell assets;
- incur restrictions on the ability of subsidiaries to make dividends or
distributions;
- engage in transactions with affiliates; and
- effect a consolidation or merger.
The indenture governing the 2009 Holdings debentures limits or restricts
our ability to pay dividends or make other equity distributions or purchase or
redeem capital stock.
These limitations and restrictions may adversely affect our ability to
finance our future operations or capital needs or engage in other business
activities that may be in our best interests. In addition, our senior credit
facility requires us to comply with certain financial ratios and our ability to
borrow under it is subject to borrowing base requirements. Our ability to comply
with these ratios may be affected by events beyond our control. If we breach any
of the covenants in our senior credit facility or our indentures, or if we are
unable to comply with the required financial ratios, we may be in default under
our senior credit facility or our indentures. If we default, the holders of the
securities or lenders under our senior credit facility could declare all
borrowings owed to them, including accrued interest and other fees, to be due
and payable. If we were unable to repay the borrowings under our senior credit
facility when due, the lenders under the senior credit facility could also
proceed against the collateral granted to them, which could result in the
holders of the securities receiving less, ratably, than those lenders.
8
<Page>
WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR INDEBTEDNESS. OUR
ABILITY TO GENERATE CASH DEPENDS ON FACTORS BEYOND OUR CONTROL.
Our ability to make payments on our indebtedness, including our senior
credit facility and the securities, and to fund our business initiatives will
depend on our ability to generate cash in the future. This, to a certain extent,
is subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond our control.
We cannot assure you that our business will generate sufficient cash flow
from operations or that future borrowings will be available to us under our
senior credit facility in an amount sufficient to enable us to service our
indebtedness, including our senior credit facility and the securities, or to
fund our other liquidity needs. We may need to refinance all or a portion of our
indebtedness, including our senior credit facility and the securities, on or
before maturity. We cannot assure you that we will be able to refinance any of
our indebtedness, including our senior credit facility or the securities, on
commercially reasonable terms or at all.
AS HOLDERS OF THE 2007 NOTES AND 2009 NOTES, YOUR RIGHT TO RECEIVE PAYMENTS ON
THE SECURITIES IS EFFECTIVELY SUBORDINATED TO THE RIGHTS OF VON HOFFMANN'S
EXISTING AND FUTURE SECURED CREDITORS. FURTHERMORE, THE GUARANTEES OF THE NOTES
ARE EFFECTIVELY SUBORDINATED TO ALL OUR GUARANTORS' EXISTING AND FUTURE SECURED
INDEBTEDNESS.
Holders of our secured indebtedness will have claims that are prior to your
claims as holders of the 2007 notes and 2009 notes to the extent of the value of
the assets securing that other indebtedness. Holdings, Von Hoffmann and the
guarantors of the notes are parties to our senior credit facility, which is
secured by liens on our outstanding capital stock and substantially all of our
and our subsidiaries' property and assets. The securities, including our 2009
notes and our 2007 notes, are effectively subordinated to all that indebtedness
to the extent of the related security. In the event of any distribution or
payment of our assets in any foreclosure, dissolution, winding-up, liquidation,
reorganization or other bankruptcy proceeding, holders of secured indebtedness
will have a prior claim to those of our assets that constitute their collateral.
Holders of the 2007 notes and 2009 notes will participate ratably with all
holders of our unsecured indebtedness that is deemed to be of the same class as
those securities or which is not expressly subordinated to those securities, and
potentially with all of our other general creditors, based upon the respective
amounts owed to each holder or creditor, in our remaining assets. In any of the
foregoing events, we cannot assure you that there will be sufficient assets to
pay amounts due on the securities. As a result, holders of the securities may
receive less, ratably, than holders of secured indebtedness.
As of March 31, 2003, the aggregate amount of our secured indebtedness and
the secured indebtedness of our subsidiaries would have been approximately $4.1
million, and approximately $80.0 million would have been available for
additional borrowing under our senior credit facility, after excluding $1.6
million of letters of credit outstanding under that facility. See "Description
of Certain Indebtedness--Senior Credit Facility."
9
<Page>
YOUR RIGHT TO RECEIVE PAYMENT AS A HOLDER OF THE 2009 HOLDINGS DEBENTURES IS
EFFECTIVELY SUBORDINATED IN RIGHT OF PAYMENT TO ALL LIABILITIES OF THE
SUBSIDIARIES OF HOLDINGS.
The only asset of Holdings is the capital stock of Von Hoffmann. Generally
claims of creditors of a subsidiary of Holdings including trade creditors,
secured creditors and creditors holding indebtedness and guarantees issued by
such subsidiary, and claims of preferred stockholders, if any, of such
subsidiary will have priority with respect to the assets and earnings of such
subsidiary over the claims of the creditors of Holdings. The 2009 Holdings
debentures will be effectively subordinate in right of payment to all
liabilities including trade payables of all subsidiaries of Holdings.
THE ABILITY OF HOLDINGS TO PAY CASH INTEREST EXPENSE ON THE 2009 HOLDINGS
DEBENTURES IS RESTRICTED BY OUR DEBT INSTRUMENTS.
We conduct substantially all of our operations through the subsidiaries of
Holdings. Our ability to pay cash interest expense on the 2009 Holdings
debentures depends upon, other things, receipt of dividends or other
distributions by Holdings from its subsidiaries. Holdings' obligation to make
cash interest payments with respect to the 2009 Holdings debentures is subject
to the terms of the then-outstanding indebtedness of Holdings and its
subsidiaries and any other contractual provisions limiting the ability of
Holdings and its subsidiaries to declare or pay cash interest. Our senior credit
facility restricts such payments. Accordingly, Holdings does not currently make,
and in the foreseeable future does not intend to make, cash interest payments on
the 2009 Holdings debentures. Further, subject to restrictions contained in the
indenture future borrowings by our subsidiaries including Von Hoffmann could
contain restrictions or prohibitions on the payment of dividends and other
distributions by our subsidiaries to Holdings. In addition, applicable law may
limit the amount that our subsidiaries may pay us as dividends on their capital
stock.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
OF CONTROL OFFER REQUIRED BY THE SECURITIES INDENTURES.
Upon the occurrence of certain specific kinds of change of control events,
our indentures governing the 2007 notes, the 2009 notes and the 2009 Holdings
debentures require us to offer to repurchase all outstanding securities at 101%
of the principal amount thereof plus accrued and unpaid interest and liquidated
damages, if any, to the date of repurchase. However, it is possible that we will
not have sufficient funds at the time of the change of control to make the
required repurchase of securities. Moreover, our senior credit facility will
prohibit our repurchase of the 2007 notes and the 2009 Holdings debentures upon
a change of control and our 2009 notes will limit our ability to repurchase our
2007 notes upon a change of control. Additionally, the occurrence of a change of
control may require us to repay our senior credit facility.
YOUR RIGHT TO REQUIRE US TO REDEEM THE SECURITIES IS LIMITED.
The holders of securities have limited rights to require us to purchase or
redeem the securities in the event of a takeover, recapitalization or similar
restructuring, including an issuer recapitalization or similar transaction with
management. Consequently, the change of control provisions of the indentures for
the securities will not afford any protection in a highly leveraged transaction,
including such a transaction initiated by us, if such transaction does not
result in a
10
<Page>
change of control or otherwise result in an event of default under the
securities indentures. Accordingly, these change of control provisions are
likely to be of limited usefulness in such situations.
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
GUARANTEES AND REQUIRE NOTE HOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of a
guarantee could be subordinated to all other debts of the guarantor if, among
other things, the guarantor, at the time it incurred the indebtedness evidenced
by its guarantee:
- received less than reasonably equivalent value or fair consideration
for the incurrence of such guarantee; and
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could
be voided and required to be returned to the guarantor, or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
- the sum of its debts, including contingent liabilities, was greater
than the fair saleable value of all of its assets;
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
On the basis of historical financial information, we believe that each
guarantor, at the time it guaranteed the 2009 notes or 2007 notes, was not
insolvent, did not have unreasonably small capital for the business in which it
was engaged and had not incurred debts beyond its ability to pay such debts as
they mature. We cannot assure you, however, as to what standard a court would
apply in making these determinations or that a court would agree with our
conclusions in this regard.
11
<Page>
RISKS RELATING TO OUR BUSINESS
WE HAVE A NARROW PRODUCT RANGE AND OUR BUSINESS WOULD SUFFER IF OUR PRODUCTS
BECOME OBSOLETE OR CONSUMPTION OF THEM DECREASED.
We derive a significant portion of our net sales from customers in the
business of publishing textbooks intended for the ELHI and college markets.
Therefore, we are dependent upon the sale of books to these markets. Our
business would suffer if consumption of these products decreased or if these
products became obsolete. Our business could be adversely affected by factors
such as changes in the funding of large institutional users of books such as
elementary and high schools and colleges and universities.
OUR RESULTS OF OPERATIONS ARE DEPENDENT ON OUR PRINCIPAL PRODUCTION FACILITY FOR
FOUR-COLOR EDUCATIONAL TEXTBOOKS.
Approximately 50% of our net sales and 53% of our earnings before interest,
taxes, depreciation and amortization for 2002 were generated from our Jefferson
City, Missouri production facility where we manufacture, among other products,
our four-color educational textbooks. Any disruption of our production
capabilities at this facility for a significant term could adversely effect our
operating results. While we maintain levels of insurance we believe to be
adequate to protect against significant interruption in operations at our
Jefferson City facility, there is no assurance that any proceeds from insurance
would be sufficient to return such facility to operational status or that we
could relocate our operations from such facility without incurring significant
costs, including the possible loss of customers during any period during which
production is interrupted.
OUR BUSINESS IS SUBJECT TO SEASONAL AND CYCLICAL FLUCTUATIONS IN SALES.
We experience seasonal fluctuations in our sales. The seasonality of the
ELHI market is significantly influenced by state and local school book
purchasing schedules, which commence in the spring and peak in the summer months
preceding the start of the school year. The college textbook market is also
seasonal with the majority of textbook sales occurring during June through
August and November through January. Significant amounts of inventory are
acquired by publishers prior to those periods in order to meet customer delivery
requirements. This places significant pressure on publishers and textbook
manufacturers to monitor production and distribution accurately to satisfy these
delivery requirements.
We also experience cyclical fluctuations in our sales. The cyclicality of
the ELHI market is primarily attributable to the textbook adoption cycle.
Industry sales volume gains or losses in any year are principally due to shifts
in adoption schedules and the availability of state and local government
funding. Numerous states and localities are under budgetary constraints and are
currently addressing deficit positions, which could result in short term funding
reductions for these materials and may delay future adoptions. To a lesser
extent, the cyclicality of our business is also attributable to fluctuations in
paper prices. Actual or perceived changes in paper prices will result in
fluctuations in purchases by our customers and, accordingly, impact our sales in
a given year. Lower than expected sales by us during the adoption period or a
general economic downturn in our market or industry could have a material
adverse effect on the timing of our cash
12
<Page>
flows and, therefore, on our ability to service our obligations with respect to
the notes and our other indebtedness.
ANY PROBLEM OR INTERRUPTION IN OUR SUPPLY OF PAPER OR OTHER RAW MATERIALS COULD
DELAY PRODUCTION AND ADVERSELY AFFECT OUR SALES.
We rely on independent suppliers for key raw materials, principally paper,
ink, bindery materials and adhesives, which may be available only from limited
sources. Although supplies of our raw materials currently are adequate,
shortages could occur in the future due to interruption of supply or increased
industry demand.
In addition, we do not have long-term contracts with any of our suppliers.
We cannot assure you that these suppliers will continue to provide raw materials
to us at attractive prices, or at all, or that we will be able to obtain such
raw materials in the future from these or other providers on the scale and
within the time frames we require. Although we believe we can obtain paper and
other raw materials from alternate suppliers, any failure to obtain such raw
materials on a timely basis at an affordable cost, or any significant delays or
interruptions of supply could have a material adverse effect on our business,
financial condition and results of operations.
A SIGNIFICANT AMOUNT OF OUR BUSINESS COMES FROM A LIMITED NUMBER OF CUSTOMERS
AND OUR REVENUE AND PROFITS COULD DECREASE SIGNIFICANTLY IF WE LOSE ONE OR MORE
OF THEM AS CUSTOMERS.
Our business depends on a limited number of customers. Our customers
include, among others, approximately 50 autonomous divisions of the four major
educational textbook publishers. Each of these divisions maintains its own
manufacturing relationships and generally makes textbook manufacturing decisions
independently of other divisions. Combining division sales, these four
publishers accounted for approximately 42% of our net sales during 2002. We do
not have long-term contracts with any of these customers. Accordingly, our
ability to retain or increase our business often depends upon our relationships
with each customer's divisional managers and senior executives. One or more of
these customers may stop buying textbook manufacturing from us or may
substantially reduce the amount of textbooks we manufacture for it. Any
cancellation, deferral or significant reduction in manufacturing sold to these
principal customers or a significant number of smaller customers could seriously
harm our business, financial condition and results of operations.
WE OPERATE IN A VERY COMPETITIVE BUSINESS ENVIRONMENT.
Competition in our industry is intense. In particular, the educational
textbook manufacturing market is concentrated and is served by large national
printers and smaller regional printers. Because of greater resources, some of
our competitors may be able to adapt more quickly to new or emerging
technologies and changes in customer requirements or to devote greater resources
to the promotion and sale of their products than we can. Since the textbook
manufacturing process represents a small percentage of the total cost to publish
a textbook, providers of textbook manufacturing have traditionally competed on
the bases of quality of product, customer service, availability of printing time
on appropriate equipment, timeliness of delivery and, to a lesser extent, price.
We believe that maintaining a competitive
13
<Page>
advantage will require continued investment by us in product development,
manufacturing capabilities and sales and marketing. We cannot assure you that we
will have sufficient resources to make the necessary investments to do so, and
we cannot assure you that we will be able to compete successfully in our market
or against our competitors. Accordingly, new competitors may emerge and rapidly
acquire market share.
IF WE DO NOT RETAIN OUR KEY PERSONNEL AND ATTRACT AND RETAIN OTHER HIGHLY
SKILLED EMPLOYEES, OUR BUSINESS COULD SUFFER.
If we fail to retain and recruit the necessary personnel, our business and
our ability to obtain new customers, maintain the quality of our products and
provide acceptable levels of customer service could suffer. The success of our
business depends heavily on the leadership of our senior management personnel
and certain other key employees. If any of these persons were to leave our
company it could be difficult to replace them, and our business could be harmed.
See "Management."
Our success also depends on our ability to recruit, retain and motivate
highly skilled personnel. We believe that our success is attributable largely to
the experience and stability of our labor force and our experienced and
relatively stable workforce is one of our most significant assets. As our
workforce ages and retirements occur, we may need to replace a significant
portion of our skilled labor. Competition for these persons is intense, and we
may not be successful in recruiting, training or retaining qualified personnel.
Our productivity and growth depends on our ability to attract and retain
additional qualified employees, and our failure to replace or expand our
existing employee base could have a material adverse effect on our ability to
grow.
OUR ULTIMATE PRINCIPAL SHAREHOLDER'S INTERESTS MAY CONFLICT WITH YOURS.
DLJ Merchant Banking Partners II, L.P. and certain of its affiliates
(collectively, "DLJ Merchant Banking") beneficially own approximately 98.5% of
Holdings' outstanding common stock. Holdings owns 100% of Von Hoffmann's common
stock. As a result, DLJ Merchant Banking is in a position to control all matters
affecting us, and may authorize actions or have interests that could conflict
with your interests.
WE COULD FACE CONSIDERABLE BUSINESS AND FINANCIAL RISK IN IMPLEMENTING OUR
ACQUISITION STRATEGY.
As part of our growth strategy, we intend to consider acquiring
complementary businesses. We cannot assure you that future acquisition
opportunities will exist or, if they do, that we will be able to finance those
opportunities. The indentures governing the 2007 notes and 2009 Holdings
debentures and our senior credit facility contain covenants that limit our
ability to incur additional indebtedness which could limit our ability to
finance such acquisitions. Future acquisitions could result in us incurring debt
and contingent liabilities or incurring impairment charges with respect to
goodwill. Risks we could face with respect to acquisitions also include:
- difficulties in the integration of the operations, technologies,
products and personnel of the acquired company;
14
<Page>
- risks of entering markets in which we have no or limited prior
experience;
- potential loss of employees;
- diversion of management's attention away from other business concerns;
and
- expenses of any undisclosed or potential legal liabilities of the
acquired company.
The risks associated with acquisitions could have a material adverse effect
upon our business, financial condition and results of operations. We cannot
assure you that we will be successful in consummating future acquisitions on
favorable terms or at all.
WE MAY BE REQUIRED TO MAKE SIGNIFICANT CAPITAL EXPENDITURES IN ORDER TO REMAIN
TECHNOLOGICALLY AND ECONOMICALLY COMPETITIVE.
Production technology in the printing industry has evolved and continues to
evolve. Although we have invested approximately $102 million in equipment and
plant expansions (excluding equipment obtained in acquisitions) over the past
five years and do not currently forecast any further major expenditure, the
emergence of any significant technological advances utilized by competitors
could require us to invest significant capital in additional production
technology in order to remain competitive. We cannot assure you that we would be
able to fund any such investments. Our failure to invest in new technologies
could have a material adverse effect on our business, financial condition or
results of operations.
WE ARE SUBJECT TO SIGNIFICANT ENVIRONMENTAL REGULATION AND ENVIRONMENTAL
COMPLIANCE EXPENDITURES AND LIABILITIES.
Our businesses are subject to many environmental and health and safety laws
and regulations, particularly with respect to the generation, storage,
transportation, disposal, release and emission into the environment of various
substances. We believe we are in substantial compliance with these laws.
Compliance with these laws and regulations is a significant factor in our
business. Some or all of the environmental laws and regulations to which we are
subject could become more stringent or more stringently enforced in the future
and more stringent laws or regulations could be enacted. Our failure to comply
with applicable environmental laws and regulations and permit requirements could
result in civil or criminal fines or penalties or enforcement actions, including
regulatory or judicial orders enjoining or curtailing operations or requiring
corrective measures, installation of pollution control equipment or remedial
actions.
Some environmental laws and regulations impose liability and responsibility
on present and former owners, operators or users of facilities and sites for
contamination at such facilities and sites without regard to causation or
knowledge of contamination. In addition, we occasionally evaluate various
alternatives with respect to our facilities, including possible dispositions or
closures. Investigations undertaken in connection with these activities may lead
to discoveries of contamination that must be remediated, and closures of
facilities may trigger compliance requirements that are not applicable to
operating facilities. Consequently, we cannot assure you that existing or future
circumstances or developments with respect to contamination will not require
significant expenditures by us.
15
<Page>
CAPITALIZATION
The following table sets forth the cash and cash equivalents and
capitalization of Holdings as of March 31, 2003. The following table should be
read in conjunction with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements of Holdings, together with the related
notes thereto, included elsewhere in this prospectus.
<Table>
<Caption>
AS OF
MARCH 31, 2003
-------------------------
(UNAUDITED) (IN MILLIONS)
Cash and cash equivalents ............................ $ 2.0
Debt: ========
Senior credit facility(1) .......................... $ 4.1
10 1/4% Senior Notes due 2009 ...................... 215.0
10 3/8% Senior Subordinated Notes due 2007 ......... 100.0
--------
Total operating company debt ................... 319.1
13 1/2% Subordinated Exchange Debentures due 2009(2) 37.0
--------
Total debt ..................................... 356.1
Stockholders' Equity ................................. 22.6
--------
Total capitalization ........................... $ 378.7
========
</Table>
- ----------
(1) The senior credit facility provides for revolving loans of $90.0 million
and may be increased to provide for borrowings of up to $100.0 million if
we are able to find lenders willing to provide such increase. As of March
31, 2003 we had $4.1 million of outstanding indebtedness under our senior
credit facility and had $80 million of borrowings available under our
senior credit facility, after excluding $1.6 million of letters of credit
outstanding under that facility.
(2) Reflects redemption value of the 2009 Holdings debentures net of the fair
value of the warrants issued concurrently with the debentures. The
redemption value of the 2009 Holdings debentures at March 31, 2003 was
$39.1 million. Until such time as cash interest is payable on the 2009
Holdings debentures, interest on the 2009 Holdings debentures accretes to
principal at 13.5% per annum. Holdings' obligation to make cash interest
payments with respect to the 2009 Holdings debentures is subject to the
terms of the then-outstanding indebtedness of Holdings and its subsidiaries
and any other contractual provisions limiting the ability of Holdings and
its subsidiaries to declare or pay cash interest. Our senior credit
facility restricts such payments. Accordingly, Holdings does not currently
make, and in the foreseeable future does not intend to make, cash interest
payments on the debentures. See "Description of Certain
Indebtedness--Subordinated Exchange Debentures."
16
<Page>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data of Holdings for the
five years ended December 31, 2002 are derived from the audited consolidated
financial statements. The financial data for the quarter ended March 31, 2002
and 2003 are derived from unaudited financial statements. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, which Holdings considers necessary for a fair presentation of the
financial position and the results of operations for these periods.
Operating results for the quarter ended March 31, 2003 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 2003. The following table should be read in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements of
Holdings, including the related notes thereto, appearing elsewhere in this
prospectus.
<Table>
<Caption>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
----------------------------------------------------------------------------------------
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
FISCAL YEAR ENDED DECEMBER 31, 2002 2003
------------------------------------------------------------- ----------- -----------
1998(1) 1999(1) 2000(1) 2001 2002 (UNAUDITED) (UNAUDITED)
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales .............................. $ 310,608 $ 386,108 $ 443,423 $ 407,096 $ 379,437 $ 82,666 $ 93,751
Cost of products and services .......... 249,826 322,311 374,166 346,917 321,331 73,297 78,262
--------- --------- --------- --------- --------- --------- ---------
Gross profit ........................... 60,782 63,797 69,257 60,179 58,106 9,369 15,489
Operating expenses(2) .................. 49,482 34,143 35,747 33,317 28,630 7,094 5,742
--------- --------- --------- --------- --------- --------- ---------
Operating income ....................... 11,300 29,654 33,510 26,862 29,476 2,275 9,747
Interest expense - subsidiary .......... 28,625 32,111 36,855 32,144 33,557 6,394 8,846
Interest expense - subordinated
exchange debentures(3) ............... 541 4,694 5,296 5,983 5,530 1,613 1,308
Other income (expense) ................. (1,107) (89) (172) (247) 3,322 (3,571) (243)
--------- --------- --------- --------- --------- --------- ---------
Loss before income taxes ............... (18,973) (7,240) (8,813) (11,512) (6,289) (9,303) (650)
Income tax provision (benefit) ......... (4,195) 855 (702) (1,268) (993) (3,510) (272)
--------- --------- --------- --------- --------- --------- ---------
Net Loss ............................... $ (14,778) $ (8,095) $ (8,111) $ (10,244) $ (5,296) $ (5,793) $ (378)
========= ========= ========= ========= ========= ========= =========
</Table>
(continued on next page)
17
<Page>
<Table>
<Caption>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
---------------------------------------------------------------------------------------
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
FISCAL YEAR ENDED DECEMBER 31, 2002 2003
------------------------------------------------------------- ----------- -----------
1998(1) 1999(1) 2000(1) 2001 2002 (UNAUDITED) (UNAUDITED)
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents .............. $ 1,109 $ 2,454 $ 5,686 $ 18,320 $ 4,438 $ 28,802 $ 2,011
Accounts receivable .................... 45,402 59,969 57,899 46,751 49,141 47,435 61,154
Inventories ............................ 33,442 31,650 36,117 23,262 32,038 32,427 31,836
Working capital ........................ 34,264 40,001 66,916 36,600 55,678 81,418 63,577
Property, plant and equipment,
net .................................. 176,526 164,514 163,316 148,476 128,366 144,694 125,436
Total assets ........................... 463,796 453,493 466,418 430,704 420,121 455,235 424,723
Operating company debt(4) .............. 346,875 347,700 364,775 341,555 315,000 342,000 319,100
Total debt ............................. 373,919 379,437 401,808 384,571 350,681 386,629 356,089
Total stockholders' equity ............. 35,836 27,629 19,395 8,972 22,958 25,625 22,569
OTHER DATA:
Depreciation and amortization(5) ....... $ 34,792 $ 40,327 $ 43,459 $ 47,319 $ 29,484 $ 9,647 $ 5,600
LIFO pre-tax adjustment(6) ............. (808) 704 281 258 (102) -- --
Special consulting expenses(7) ......... 1,483 2,926 2,149 578 2,453 1,242 166
Restructuring charge(8) ................ -- -- -- 1,476 -- -- --
Impairment charge(9) ................... 18,500 -- -- -- -- -- --
Ratio of earnings to fixed charges
(10) ................................. 0.4x 0.8x 0.8x 0.7x 0.8x (0.2x) 0.9x
Capital expenditures ................... 14,860 22,639 28,132 23,876 12,657 6,396 3,072
Net cash provided by (used in) operating
activities ........................... 16,515 20,628 39,941 59,617 26,709 5,766 (3,593)
Net cash used in investing
activities ........................... (150,193) (20,109) (52,528) (23,703) (6,394) (6,305) (2,934)
Net cash provided by (used in) financing
activities ........................... 125,398 825 15,818 (23,279) (34,207) 11,021 4,100
EBITDA(11) ............................. 44,621 69,581 76,326 73,669 62,013 8,302 15,083
</Table>
- -----------
(1) We acquired Bawden Printing in January 1998 (which was subsequently
merged into Von Hoffmann Graphics, Inc.), H&S Graphics and Preface in
June 1998, Custom Printing Company, Inc. in July 1998 (which also was
subsequently merged into Von Hoffmann Graphics, Inc.) and Precision in
March 2000. In February 2002, Von Hoffmann Graphics, Inc. was merged
into Von Hoffmann Press, Inc. and the surviving entity was renamed
"Von Hoffmann Corporation". The results of operations of these
acquired businesses have been included in our consolidated financial
statements since their respective dates of acquisition. Our results of
operations for the periods prior to these acquisitions may not be
comparable to our results of operations for subsequent periods.
(2) Operating expenses include selling and administrative expenses,
special consulting expenses, restructuring charge, impairment charge
and recapitalization charge. Effective January 1, 2002, the Company
adopted Statement of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets. Accordingly, the Company no longer
amortizes goodwill. For the fiscal years ending December 31, 1998,
1999, 2000 and 2001, the Company amortized $8.3 million, $8.4 million,
$8.9 million, and $9.1 million, respectively, in goodwill, which was
reflected in operating expenses.
18
<Page>
(3) Holdings' obligation to make cash interest payments with respect to
its Subordinated Exchange Debentures (as defined herein) is subject to
its subsidiaries' ability to pay dividends under applicable law, the
terms of their outstanding indebtedness and any other applicable
contractual provisions limiting their ability to declare and pay cash
dividends. Our senior credit facility restricts such payments.
Accordingly, Holdings does not currently make, and in the foreseeable
future does not intend to make, cash interest payments on the
Subordinated Exchange Debentures.
(4) Operating company debt reflects the debt of the Company but excludes
Holdings' Subordinated Exchange Debentures in the amount of $27.0
million, $31.7 million, $37.0 million, $43.0 million, $35.7 million,
$44.6 million and $37.0 million for the periods presented,
respectively.
(5) Includes depreciation and amortization that is included within
operating income and excludes amortization of deferred financing
costs, which is classified in interest expense-subsidiary. Effective
January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. Accordingly,
the Company no longer amortizes goodwill. For the fiscal years ending
December 31, 1998, 1999, 2000 and 2001, the Company amortized $8.3
million, $8.4 million, $8.9 million, and $9.1 million, respectively,
in goodwill.
(6) The LIFO pre-tax adjustment, which is reflected in cost of products
and services, reflects an annual adjustment to record inventory on the
last-in, first-out method.
(7) Special consulting expenses relate to the fees paid under the
financial service agreement with Credit Suisse First Boston
Corporation ("CSFB") and costs incurred for consulting services used
in assisting in the acquisition integration process.
(8) Restructuring charge represents the cost for employee severance and
equipment relocation related to certain sheet-fed, plate-making and
book-binding operations of our company.
(9) Impairment charge relates to the goodwill impairment of the carrying
value of the H&S Graphics acquisition as a result of a material and
permanent reduction in forecasted cash flows for the operation.
(10) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as loss before income taxes plus fixed charges.
Fixed charges consist of interest expense (including amortization of
deferred financing costs). For the fiscal years ending December 31,
1998, 1999, 2000, 2001 and 2002, additional earnings of $19.0 million,
$7.2 million, $8.8 million, $11.5 million and $6.3 million would have
been required to cover fixed charges during the years, respectively.
For the periods ending March 31 2002 and 2003, additional earnings of
$9.3 million and $0.7 million would have been required to cover fixed
charges during the periods, respectively.
(11) EBITDA represents earnings before interest, taxes, depreciation and
amortization. EBITDA is not a measure of performance under accounting
principles generally accepted in the United States. EBITDA should not
be considered a substitute for cash flow from operations, net earnings
or other measures of performance as defined by accounting principles
generally accepted in the United States or as a measure of our
profitability or liquidity. EBITDA does not give effect to the cash we
must use to service our debt, if any, or pay our income taxes and thus
does not reflect the funds actually available for capital expenditures
or other discretionary uses. During the periods reflected, our EBITDA
was affected by LIFO pre-tax adjustments, special consulting expenses,
restructuring charge, impairment charge and recapitalization charge.
Our presentation of EBITDA may not be comparable to other similarly
titled captions of other companies due to differences in the method of
calculation. It is included herein to provide additional information
with respect to our ability to meet our consolidated debt service,
capital expenditure and working capital requirements. EBITDA is
calculated as follows:
<Table>
<Caption>
EBITDA RECONCILIATION
---------------------------------------------------------------------------------------
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------------------------------------- ----------------------
MARCH MARCH
31, 31,
1998 1999 2000 2001 2002 2002 2003
--------- --------- --------- --------- --------- --------- ---------
Net Loss $ (14,778) $ (8,095) $ (8,111) $ (10,244) $ (5,296) $ (5,793) $ (378)
Reconciliation to EBITDA
Income tax provision(benefit) (4,195) 855 (702) (1,268) (993) (3,509) (272)
Interest income (364) (311) (471) (265) (269) (50) (21)
Interest expense - subsidiary 28,625 32,111 36,855 32,144 33,557 6,394 8,846
Interest expense - subordinated
exchange debentures 541 4,694 5,296 5,983 5,530 1,613 1,308
Depreciation and amortization 34,792 40,327 43,459 47,319 29,484 9,647 5,600
--------- --------- --------- --------- --------- --------- ---------
EBITDA $ 44,621 $ 69,581 $ 76,326 $ 73,669 $ 62,013 $ 8,302 $ 15,083
========= ========= ========= ========= ========= ========= =========
</Table>
19
<Page>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of our financial condition and results of
operations should be read in conjunction with the consolidated financial
statements, including the notes thereto, included elsewhere in this quarterly
report. Certain statements in this section are forward-looking statements. See
"Forward-Looking Statements."
GENERAL
We manufacture case-bound and soft-cover instructional materials in the
United States. Our products are sold principally to educational publishers who,
in turn, sell them into the elementary and high school ("ELHI") and college
instructional materials markets. In addition to instructional materials
manufacturing, we provide our customers with a full range of value-added
printing and design services from early design processes to final manufacture
and distribution of our products. We additionally manufacture products sold to
the commercial market place where we target business-to-business catalog
manufacturers, the federal government printing office, trade publishers,
health-care catalog manufacturers, the financial services industry and numerous
other small niches.
Our sales of products and services are affected by a number of factors,
including the ELHI textbook adoption process, general economic conditions and
market seasonality. Our sales of instructional materials, from which we derived
71% of our net sales in 2002, are also affected over the long term by
demographic trends in ELHI and college enrollment.
The textbook adoption process, around which ELHI book publishers schedule
the timing of new textbook introductions, is typically limited to a small number
of disciplines in any state in any given year. Adoptions in core disciplines
such as reading, mathematics or science in larger states such as California,
Texas or Florida, however, can lead to significant increases in net sales in a
given year. Additionally, orders for reprints associated with a textbook awarded
through the adoption process can generate significant revenues during the
adoption cycle, which can range from four to eight years, depending on the
subject matter and the state. Non-adoption, or open
20
<Page>
territory states, tend to follow the lead provided by adoption states as many
new titles are brought to the market in specific response to the adoption
schedule.
Our net sales of products and services are also affected by general
economic conditions. In particular, net sales to the instructional materials
market are affected as the majority of public funding for education comes from
state and local tax revenues, which have a direct correlation with prevailing
economic activity levels. Product demand and our sales in the segments of the
commercial market we serve is also sensitive to economic conditions.
We experience seasonal market fluctuations in our net sales and production
for the educational textbook and commercial markets. State and local textbook
purchasing and delivery schedules significantly influence the seasonality of the
demand for our products in these areas. The purchasing schedule for the ELHI
markets usually starts in the spring and peaks in the summer months preceding
the start of the school year. The majority of college textbook sales occur from
June through August and November through January. Our net sales to the
commercial market tend to peak in the third and fourth quarters, with the fourth
quarter representing the strongest quarter. Net sales of our digital pre-press
and composition businesses tend to precede the peak production periods for
textbook manufacturing by a quarter with our business peaking in the first and
second quarters of our calendar fiscal year.
RECAPITALIZATION RESTATED TO A PURCHASE
We treated DLJ Merchant Banking's 1997 acquisition of a controlling
interest in Holdings as a recapitalization on the basis that ZS VH L.P.
(together with ZS VH II L.P. as the context requires "ZS"), and certain of its
affiliates, which collectively had owned a controlling interest in Holdings,
retained an ownership interest of approximately 10.0% in Holdings after the
acquisition transaction. As a result of treating the transaction as a
recapitalization, Holdings did not give purchase accounting treatment to the
transaction and did not record goodwill. On June 20, 2002, ZS sold their
remaining interest in Holdings to us. The purchase price paid for ZS's interest
came from cash on hand of Holdings, which cash came from proceeds from DLJ
Merchant Banking's equity contribution in March 2002. As a result of the sale,
there is no longer continuity in the share ownership of Holdings pre- and
post-acquisition. Accordingly, we have restated our financial statements on the
basis that there has been a retroactive change in reporting entity as of May 25,
1997, the date of DLJ Merchant Banking's original acquisition, and given the
transaction purchase accounting treatment from that date. As a result of the
change, our gross profit for 2000 and 2001 decreased by $12.3 million and $12.5
million, respectively. Our EBITDA for those periods remains consistent with
previously reported amounts. The selected financial information and consolidated
financial statements contained in this filing reflect the restatement of our
financial statements to apply purchase accounting from the acquisition date. See
"Note 2 to Notes to Consolidated Financial Statements."
RESULTS OF OPERATIONS
Our net sales represent our per-book charges for each book manufactured;
fees for pre-press, composition and creative work; set-up charges for each print
run; the sale of paper for use in the production of instructional materials; and
charges for fulfillment and distribution of books.
21
<Page>
Our cost of products and services consists primarily of the cost of paper,
ink and bindery materials, depreciation, manufacturing overhead and labor costs.
Paper costs are incurred both through our paper management programs, which
include special arrangements on payment, inventorying and billing among our
company, the paper company and the customer, as well as direct purchases of
paper by us for specific customer orders. In both cases, paper costs generally
flow through to the customer. Ink and bindery materials are direct material
inputs to our manufacturing process in the production of a book. We depreciate
our plant and equipment using straight-line or accelerated methods over their
estimated useful lives. This depreciation is included as a direct cost of
products and services. Manufacturing overhead includes a range of costs such as
electrical power, maintenance costs, supervisory salaries, insurance and real
estate taxes. Labor costs are divided into direct and indirect components.
Direct labor includes all crews working on the production of books and other
materials along with associated fringe-benefit costs. Indirect labor includes
all supervisory compensation and benefit costs along with the cost of other
employees not directly involved in the production process.
Our operating expenses represent selling and administrative expenses,
special consulting expenses and a restructuring charge incurred in 2001. Selling
and administrative expenses consist primarily of the compensation of, and cost
of benefits for, our administrative and sales personnel as well as amortization
of goodwill and certain amounts allocated in respect of non-competition
agreements made in connection with our acquisition of H&S Graphics, our digital
pre-press and composition business. Additionally, our selling and administrative
costs include corporate expenses such as legal, audit and other professional
fees and telephone and travel costs. Our special consulting expenses relate to
the costs incurred for fees paid under the financial services agreement with
CSFB and consulting services used in assisting in the acquisition integration
process. Restructuring charge includes the costs associated with the closure of
our bindery in Owensville, Missouri and our St. Louis sheet-fed operations.
Interest expense--subsidiary represents the consolidated interest expense
on the debt of Von Hoffmann and its subsidiaries, consisting of our senior
credit facility and 2009 notes and 2007 notes. Interest expense--subordinated
exchange debenture relates to interest on the 2009 Holdings debentures, which
Holdings issued in exchange for its then outstanding senior exchangeable
preferred stock in 1998. The 2009 Holdings debentures bear interest at 13.5% per
annum. At any time cash interest payments are prohibited, interest on the 2009
Holdings debentures accretes to principal. Holdings' obligation to make cash
interest payments with respect to the Subordinated Exchange Debentures is
subject to the terms of its and its subsidiaries' then-outstanding indebtedness
and any other applicable contractual provisions limiting their ability to
declare and pay cash interest. Our senior credit facility restricts such
payments. Accordingly, Holdings does not currently make, and in the foreseeable
future does not intend to make, cash interest payments on the 2009 Holdings
debentures.
YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001
NET SALES. Net sales decreased $27.7 million, or 6.8%, from $407.1 million
in 2001 to $379.4 million in 2002. The decrease was primarily attributable to
decreased volume in sales to the instructional materials market, particularly
during the first quarter of 2002. The overall decrease in sales throughout the
instructional materials industry was caused by a softening economy, reduced
budgets at the state and local levels as well as a reduction in textbook
adoption activity in the major adoption states in 2002. The decrease was
partially offset by
22
<Page>
growth within the one and two-color commercial market as well as the
introduction of four-color non-educational work in our largest facility,
Jefferson City, during the fourth quarter.
COST OF PRODUCTS AND SERVICES. Costs of products and services decreased
$25.6 million, or 7.4%, from $346.9 million for 2001 to $321.3 million for 2002.
As a percentage of net sales, costs of products and services decreased from
85.2% for 2001 to 84.7% for 2002. The decrease in costs of products and services
as a percentage of net sales represents the impact of reduced depreciation
expense, approximately $8.5 million, in 2002. A significant level of assets
within the Jefferson City facility became fully depreciated. If depreciation was
recorded at the same level as in 2001, costs of products and services in 2002
would be 87.0% of 2002 net sales reflecting the fixed nature of operations on
lower net sales. While initiatives continually are taken to improve our cost
position, the initiatives were not sufficient to fully offset the impact of
lower sales volumes.
GROSS PROFIT. Gross profit decreased $2.1 million, or 3.4%, from $60.2
million in 2001 to $58.1 million in 2002. As a percentage of net sales, gross
margins were 14.8% in 2001 as compared to 15.3% for the corresponding period in
2002. Assuming the same level of depreciation in 2002 as in 2001, gross profit
as percentage of net sales was 13.0%. The change in gross margin is the result
of the factors discussed above in net sales and costs of products and services.
OPERATING EXPENSES. Operating expenses decreased $4.7 million, or 14.1%,
from $33.3 million in 2001 to $28.6 million in 2002. The decrease was primarily
attributable to the reduction of amortization expense by $9.1 million related to
the adoption of SFAS No. 142, Goodwill and Other Intangibles, under which
goodwill related to business acquisitions is no longer amortized. In addition,
we recognized approximately $1.5 million in restructuring charges in 2001 as
discussed above. The overall decrease was offset by a $1.8 million payment made
to Robert Uhlenhop, our former president and chief executive officer, as part of
an amendment made to his employment agreement in June 2002. The overall decrease
was also offset by special consulting expenses of $1.0 million paid to CSFB, an
affiliate of DLJ Merchant Banking, our principal stockholder, in connection with
the formulation of financial strategies, including in connection with securing
our senior credit facility and the issuance of our 2009 notes. In addition, we
incurred $0.7 million in severance related to management changes involving our
chief executive officer and chief financial officer, as well as incremental
professional fees and special consulting expenses associated with the issuance
of the 2009 notes, our new senior credit facility and the exchange offers
involving the 2007 notes, the 2009 notes and the 2009 Holdings debentures, as
well as the integration of Von Hoffmann Press, Inc. and Von Hoffmann Graphics,
Inc.
GAIN (LOSS) ON DISPOSAL OF DEPRECIABLE ASSETS. During 2002, we reflected a
gain on disposal of depreciable assets of $2.8 million as compared to a loss on
disposal of $0.5 million during 2001. The 2002 gain reflected the disposition of
our corporate jet, which resulted in a gain of approximately $4.2 million, but
such gain was offset by losses on various sales of equipment.
GAIN ON DEBT EXTINGUISHMENT, NET. On March 26, 2002, Von Hoffmann entered
into the Senior Credit Facility which provides for loans of up to $90.0 million.
In addition, Von Hoffmann issued $215.0 million of the 2009 notes, which bear
interest at a rate of 10.25%. The proceeds from these transactions were used to
pay off all outstanding balances under our prior credit agreement. As a result
of these transactions, we incurred a loss from the write-off of
23
<Page>
deferred debt issuance costs of $3.1 million. During the third quarter of 2002,
Holdings, purchased approximately 28.3% of the outstanding 2009 Holdings
debentures for approximately $9.5 million, using proceeds from DLJ Merchant
Banking's $20 million investment in Holdings in March of 2002. Holdings was able
to purchase these debt instruments at a value less than their carrying value and
consequently we recognized a gain of $3.4 million.
INTEREST EXPENSE -- SUBSIDIARY. Interest expense -- subsidiary, increased
$1.5 million, or 4.4%, from $32.1 million in 2001 to $33.6 million in 2002. The
increase was primarily attributable to a higher average borrowing rate of 9.53%
in the 2002 period as compared to our average borrowing rate of 8.45% in the
2001 period. The higher average borrowing rate reflected the Von Hoffmann's
issuance in March 2002 of $215.0 million in 2009 notes at a fixed interest rate
of 10.25%. The proceeds from this debt were used to repay our prior credit
facility which was advanced principally on a floating LIBOR rate basis.
INTEREST EXPENSE -- SUBORDINATED EXCHANGE DEBENTURES. Interest expense --
subordinated exchange debentures decreased $0.5 million, or 7.6%, from $6.0
million for 2001 to $5.5 million in 2002. The decrease resulted from Holdings'
repurchase of approximately 28.3% of its outstanding 2009 Holdings debentures,
which was partially offset by a period to period increase arising from the
interest compounding effect on the accretion of the debenture. Such repurchase
was financed with proceeds from DLJ Merchant Banking's $20 million investment in
Holdings in March of 2002.
INCOME TAX BENEFIT. During 2002, we recorded a $1.0 million tax benefit,
representing a 15.8% effective tax rate, from a loss before income taxes. As
part of this benefit, we recognized approximately $1.3 million in additional tax
provision as a result of the determination that certain interest expense
associated with the 2009 Holdings debentures will not be deductible. In 2001, we
recorded a $1.3 million tax benefit, representing an 11.0% effective tax rate,
from a loss before income taxes. The 2001 results were impacted by certain
amortization of goodwill related to acquisitions which are non-deductible for
tax purposes. With the adoption of SFAS No. 142, Goodwill and Other Intangibles
in 2002, we no longer amortize goodwill for accounting purposes.
NET LOSS. Net loss for 2002 was $5.3 million in 2002 compared to net loss
of $10.2 million in 2001. The reduction in net loss was primarily attributable
to reduction in depreciation and amortization expense as discussed above within
costs of products and services sold and operating expenses and the current year
gain on disposal of depreciable assets.
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000
NET SALES. Net sales decreased by $36.3 million, or 8.2%, from $443.4
million in 2000 to $407.1 million in 2001. This decrease was attributable
primarily to a decrease in sales to the instructional materials market due, in
part, to a general decline in sales throughout the instructional materials
manufacturing industry caused by a softening economy and smaller budgets at the
state and local levels. Additionally, educational publishers were holding excess
inventories at the end of 2000, which significantly impacted their order levels
in 2001, particularly in the second half of the year as the economy continued to
slow.
24
<Page>
As a result of the decrease in sales, we conducted a thorough review of our
manufacturing capacity against our anticipated demand levels. This process
resulted in the closure of our Mid-Missouri Graphics bindery operation in
Owensville, Missouri in September, 2001, which was consolidated into our
Jefferson City, Missouri operations. Other selective cost reductions were
implemented throughout the last half of 2001, including manning reductions,
overhead eliminations and hiring freezes.
COST OF PRODUCTS AND SERVICES. Cost of products and services decreased by
$27.3 million, or 7.3%, from $374.2 million in 2000 to $346.9 million in 2001.
The primary reason for the decrease in our cost of products and services was the
impact of the decline in sales volume on our variable costs. Also, sale of scrap
items, including waste paper and consumed aluminum printing plates, which are
offset against cost of products and services, decreased by 50% in dollar value
due to lower prices in these markets and lower volumes generated in our plants
due to lower sales levels. As a percentage of net sales, cost of products and
services increased from 84.4% during 2000 to 85.2% during 2001. This increase
was a result of lower sales volumes and the semi-fixed nature of the labor
component in our cost structure. While initiatives were taken to address our
cost position in 2001, they were not sufficient to fully offset the impact of
the lower sales volumes on our operations.
GROSS PROFIT. Gross profit for 2001 decreased by $9.1 million, or 13.1%,
from $69.3 million in 2000 to $60.2 million for 2001. Gross profit, expressed as
a percentage of net sales, was 15.6% for 2000, compared to 14.8% for 2001. This
reduction in gross profit was attributable to higher headcount within our
four-color textbook manufacturing operations in the first half of 2001 and lower
scrap volume, price and lower activity levels in our operations in the second
half of 2001.
OPERATING EXPENSES. Operating expenses decreased by $2.4 million, or 6.8%,
from $35.7 million for 2000 to $33.3 million in 2001. This decrease was
primarily attributable to reductions in incentive compensation payouts in 2001
based on the deteriorated performance in comparison to 2000.
INTEREST EXPENSE--SUBSIDIARY. Interest expense--subsidiary, decreased $4.8
million, or 12.8%, from $36.9 million in 2000 to $32.1 million in 2001. This
decrease was a result of lower interest rates reducing our borrowing costs on
the variable interest component of our debt, along with lower average borrowings
under the revolving component of our then existing senior credit facility.
During 2001, the average annual interest rate, excluding amortization of debt
issuance costs, was 8.45% for the senior and subordinated debt compared to a
9.39% rate for 2000. Our interest rate hedge of $63.0 million expired in
December 2000 and has not been replaced, allowing us to benefit from the lower
interest rates that prevailed in 2001.
INTEREST EXPENSE--SUBORDINATED EXCHANGE DEBENTURES. Interest
expense--subordinated exchange debentures increased $0.7 million, or 13.0%, from
$5.3 million in 2000 to $6.0 million in 2001. This increase resulted from the
interest compounding effect on the accretion of this debenture.
INCOME TAX BENEFIT. Income tax benefit increased $0.6 million, from $0.7
million in 2000 to $1.3 million in 2001, due to a higher level of pre-tax losses
in 2001, partially offset by the
25
<Page>
impact of non-deductible goodwill and taxable income allocations among the
states in which we do business changing our effective tax rate.
NET LOSS. Net loss increased $2.1 million, or 26.3%, from $8.1 million in
2000 to $10.2 million in 2001. The increased net loss in 2001 primarily resulted
from the impact of lower sales described above.
QUARTER ENDED MARCH 31, 2003 COMPARED TO QUARTER ENDED MARCH 31, 2002
NET SALES. Net sales increased $11.1 million, or 13.4%, to $93.8 million
for the quarter ended March 31, 2003, from $82.7 million for the quarter ended
March 31, 2002. The increase in net sales was driven primarily by significant
growth in both the supplementary education and the four-color non-education
markets. Net sales levels were supported further by stable performance in our
four-color elementary and college markets.
COST OF PRODUCTS AND SERVICES. Costs of products and services increased
$5.0 million from $73.3 million for the quarter ended March 31, 2002, to $78.3
million for the quarter ended March 31, 2003. As a percentage of net sales,
costs of products and services decreased from 88.7% for the quarter ended March
31, 2002, to 83.5% for the quarter ended March 31, 2003. The decrease in costs
of products and services as a percentage of net sales primarily represents the
impact of a reduction in depreciation expense of approximately $3.8 million in
the first quarter of 2003 over the first quarter of 2002. The reduction reflects
the significant amount of assets within the Jefferson City facility that became
fully depreciated in the third quarter of 2002. After taking into account the
above depreciation change, costs of products and services as a percentage of net
sales would be 86.8%. The remaining decrease reflects the impact of various cost
initiatives put in place over the past year as well as the increased production
activity between the two periods. Cost initiatives resulted in the reduction of
headcount by approximately 5% from March 2002 to March 2003. Productivity
improved as a result of the benefit of capital expenditures incurred in 2002 as
well as better operating performance within all of our operating divisions.
GROSS PROFIT. Gross profit increased $6.1 million, or 65.3%, from $9.4
million for the quarter ended March 31, 2002, to $15.5 million for the quarter
ended March 31, 2003. As a percentage of net sales, gross margin was 11.3% for
the first quarter of 2002 as compared to 16.5% for the corresponding period in
2003. The increase in gross margin is the result of the factors discussed above
in net sales and costs of products and services.
OPERATING EXPENSES. Operating expenses decreased $1.4 million, or 19.1%,
from $7.1 million for the quarter ended March 31, 2002, to $5.7 million for the
quarter ended March 31, 2003. The decrease was primarily attributable to a $1.0
million payment to Credit Suisse in 2002 for consulting fees in connection with
the formation of financial strategies.
LOSS ON DEBT EXTINGUISHMENT. The proceeds from the issuance of the 2009
notes and the senior credit facility were used to pay off all outstanding
balances under our prior credit agreement. As a result of these transactions, we
incurred a loss from the write-off of deferred debt issuance costs of $3.1
million in the first quarter of 2002.
26
<Page>
INTEREST EXPENSE - SUBSIDIARY. Interest expense - subsidiary, which
reflects interest incurred by Von Hoffmann and its consolidated subsidiaries,
increased $2.4 million, or 37.5%, from $6.4 million for the quarter ended March
31, 2002, to $8.8 million for the quarter ended March 31, 2003. The increase was
primarily attributable to a higher average borrowing rate of 10.44% in the 2003
period as compared to an average borrowing rate of 6.63% in the 2002 period. The
higher average borrowing rate reflected Von Hoffmann's issuance in March 2002 of
the 2009 notes. The proceeds of this debt were used to repay our prior credit
facility which was advanced principally on a floating LIBOR rate basis.
INTEREST EXPENSE - SUBORDINATED EXCHANGE DEBENTURES. Interest expense
- -subordinated exchange debentures relates to interest on the 2009 Holdings
debentures which bear interest at 13.5% per annum. Interest expense -
subordinated exchange debentures decreased $0.3 million, or 18.9%, from $1.6
million for the quarter ended March 31, 2002, to $1.3 million for the quarter
ended March 31, 2003. The decrease resulted from Holdings' repurchase of
approximately 28.3% of its 2009 Holdings debentures in the third quarter of
2002, which was partially offset by a period to period increase arising from the
interest compounding effect on the accretion of the remaining outstanding 2009
Holdings debentures.
INCOME TAX BENEFIT. During the first quarter of 2003, the Company recorded
a $0.3 million tax benefit, compared to a $3.5 million benefit for 2002. The
effective tax rate for the first quarter of 2003 was 41.9% as compared to 37.8%
in 2002. The higher effective rate is driven by the proportional impact of
certain interest expense relating to the 2009 Holdings debentures not being
deductible.
NET LOSS. Net loss for the quarter ended March 31 2003, was $0.4 million
compared to net loss of $5.8 million for the quarter ended March 31, 2002. The
reduction in net loss was primarily attributable to improved operating results,
a reduction in special consulting expenses and the negative impact in 2002 of
the loss on debt extinguishment.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
During the past three years, our principal sources of funds were cash
generated from our operating activities and long-term borrowings. We used cash
mainly for capital expenditures, working capital and debt service. In the
future, we expect that we will use cash principally to fund working capital, our
debt service and repayment obligations and capital expenditures.
HISTORICAL CASH FLOWS
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.
Cash provided by operations for 2002 was $26.7 million compared to $59.6
million for 2001, a decrease of 55.2%. In 2001, we reduced our net investment in
working capital to lower levels as a result of reduced activity levels. The 2002
reduced cash flow reflects additional cash requirements to increase net
investment in working capital to produce at more typical levels in 2002.
27
<Page>
Cash provided by operations for 2001 was $59.6 million, compared to $39.9
million for 2000, an increase of 49.3%. The increased level of cash provided by
operating activities primarily resulted from $24.0 million in reductions of
accounts receivable and inventory. These reductions were attributable to
aggressive efforts to reduce investments in working capital and a reduction in
business levels in the second half of the year.
Cash used in operations for the three-month period ended March 31, 2003,
was $3.6 million compared to $5.8 million provided for the three-month period
ended March 31, 2002, a decrease of $9.4 million. The reduction in operating
cash flow primarily relates to level of accounts receivable at the end of the
first quarter in 2003. The increased level of receivables corresponds to the
timing of sales recognition later in the quarter as compared to the prior year
as well as the later timing of cash receipts on certain key customers. We
believe that no material collectibility issues are present with the March 31,
2003 accounts receivable balance.
CASH USED IN INVESTING ACTIVITIES.
Net cash used in investing activities for 2002 was $6.4 million, compared
to $23.7 million for 2001. The reduction was primarily driven by reduced capital
expenditures as we shifted our focus to achieving manufacturing efficiencies as
opposed to capacity enhancement. In addition, our 2002 results included net
proceeds primarily from the sale of certain non-core assets, our corporate jet
aircraft and a condominium we owned in New York, New York, for an aggregate of
approximately $5.4 million in 2002.
Net cash used in investing activities for 2001 was $23.7 million, compared
to $52.5 million for 2000, a decrease of 54.9%. The decrease in cash used in
investing activities was primarily due to the Precision acquisition for
approximately $25.3 million, which occurred in 2000.
Net cash used in investing activities for the three-month period ended
March 31, 2003, was $2.9 million compared to $6.3 million for the three-month
period of 2002. The reduction was primarily driven by reduced capital
expenditures.
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.
Net cash used in financing activities for 2002 was $34.2 million compared
to $23.3 million in 2001. The cash used in financing activities during 2002
primarily resulted from certain debt and equity transactions (as discussed
below) while cash used in financing activities in 2001 was restricted
principally to revolver borrowings and senior debt amortization (as discussed
below).
On March 26, 2002, we entered into the senior credit facility, which
incorporates a revolving loan commitment of $90.0 million. At our one-time
option, the available borrowings may be increased to provide for borrowings of
up to $100.0 million, subject to finding lenders to provide such increase and
available borrowing base. On March 26, 2002, we also issued the 2009 notes
raising gross proceeds of $215.0 million. The proceeds from the senior credit
facility and the 2009 notes were used to pay off all outstanding balances under
our prior senior credit facility and pay related fees. Holdings also issued
20,000,000 shares of common stock to its majority stockholder for $20.0 million
on March 26, 2002, and approximately $9.5 million of
28
<Page>
those proceeds was used to purchase approximately 28.3% of the 2009 Holdings
debentures on the open market. During the last seven months of 2002, Holdings
purchased approximately 8.4 million shares from ZS, Robert Uhlenhop, our former
chief executive officer, and other former employees for $8.4 million.
Net cash used in financing activities was $23.3 million for 2001, compared
to net cash provided by financing activities of $15.8 million for 2000. The
difference is primarily due to the repayment of $14.0 million of debt under the
prior senior credit facility in 2001, compared with drawing $23.5 million under
our prior credit facility in 2000.
Net cash provided in financing activities for the three-month period ended
March 31, 2003, was $4.1 million compared to $11.0 million for the three-month
period of 2002. Activity during the first quarter of 2002 was driven by the debt
and equity transactions described above. In 2003, activity was restricted to
revolver borrowings for working capital requirements.
CAPITAL EXPENDITURE REQUIREMENTS
Capital expenditures for 2002 were $12.7 million compared to $23.9 million
for 2001. These capital expenditures focused on manufacturing efficiencies in
order to improve operating performance. We expect our capital expenditures for
2003 to be approximately $12.0 million to $15.0 million, based on a capital
expenditure program directed at productivity within the press and binding
operations. We believe that current capacity is adequate in the near term based
on anticipated utilization rates. Accordingly, our focus is directed at capital
expenditures that will improve our cost position.
Capital expenditures for the three months ended March 31, 2003, were $3.1
million compared to $6.4 million for the three months ended March 31, 2002.
These capital expenditures focused on manufacturing efficiencies in order to
improve operating performance. We expect our capital expenditures for 2003 to be
approximately $12.0 to $15.0 million, based on a capital expenditure program
directed at productivity throughout the entirety of our operations. We believe
that current capacity is adequate in the near term based on anticipated
utilization rates. Accordingly, our focus is directed at capital expenditures
that will improve our cost position.
DEBT SERVICE REQUIREMENTS
Our senior credit facility provides for revolving loans of up to $90.0
million. The facility is secured by accounts receivable, inventory and property,
plant and equipment and at our option, may be increased to provide for
borrowings of up to $100.0 million, subject to finding lenders to provide such
increase. The facility is subject to borrowing base availability and includes
covenants restricting the incurrence of additional indebtedness, liens, certain
payments and the sale of assets. We also have $215.0 million aggregate principal
amount of 2009 notes and $100.0 million aggregate principal amount of the 2007
notes outstanding. The 2009 Holdings debentures bear interest at 13.5% per
annum, and while cash interest payments are prohibited, interest on the 2009
Holdings debentures accretes to principal. Holdings' obligation to make cash
interest payments with respect to the 2009 Holdings debentures is subject to the
terms of its and its subsidiaries' then-outstanding indebtedness and any other
applicable contractual provisions limiting their ability to declare and pay cash
interest. Our senior credit facility
29
<Page>
prohibits the payment of such cash interest. The principal amount outstanding on
the 2009 Holdings debentures as of March 31, 2003 was $39.1 million (on an
accreted basis). As of March 31, 2003, we had total indebtedness of $356.1
million and had $80.0 million of additional borrowings available under our
senior credit facility, after excluding $1.6 million of letters of credit
outstanding under that facility.
Based on our current level of operations, we believe our cash flows from
operations, available cash and available borrowings under the senior credit
facility will be adequate to meet our liquidity needs for the foreseeable
future, including scheduled payments of interest on the 2009 notes and 2007
notes and payments of interest on the borrowings under the senior credit
facility. Our ability to make payments on and to refinance our indebtedness,
including our senior credit facility, the 2009 notes and 2007 notes, and to fund
our business initiatives, however, will depend on our ability to generate cash
in the future. This, to a certain extent, is subject to general economic,
financial, competitive, legislative, and other factors that are beyond our
control. We cannot assure you that our business will generate sufficient cash
flow from operations or that future borrowings will be available to us under our
senior credit facility or under any future financings on satisfactory terms in
an amount sufficient to enable us to pay our indebtedness, including our senior
credit facility, the 2009 notes and 2007 notes, or to fund our other liquidity
needs.
In the future, we may use proceeds from our indebtedness, excess cash,
borrowings under our senior credit facility or proceeds from issuances of equity
securities to repurchase some of our outstanding debt through open market
purchases, privately negotiated transactions or otherwise. Such repurchases, if
any, will depend on prevailing market conditions, our liquidity, contractual
restrictions and other factors. The amounts involved may be material.
MARKET AND CREDIT RISK
We are exposed to market risk from changes in interest rates. At December
31, 2002, we did not have outstanding borrowings under our Senior Credit
Facility at variable rates. Substantially all of our outstanding long term debt
is at fixed interest rates. Therefore, our exposure to interest rate
fluctuations is immaterial.
Two customers and their affiliates accounted approximately 27.9% of our
2002 net sales, and approximately 15.6% of December 31, 2002 accounts
receivable, respectively. The loss of either of these customers or a significant
reduction in order volumes from them would have a material adverse effect on us.
We manage credit risk by continually reviewing creditworthiness of our customer
base as well as by thoroughly analyzing new accounts to effectively manage our
exposure.
INFLATION
The impact of inflation on our operations has not been significant to
date. We cannot predict what effect future inflation rates will have on our
operating results.
RECENT ACCOUNTING PRONOUNCEMENTS
30
<Page>
No recent accounting pronouncements have been issued that we believe
will have a material impact to our operations.
CRITICAL ACCOUNTING POLICIES
Our consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. On an ongoing basis, management evaluates its estimates and
judgments, including those related to the recovery of inventories, property,
plant and equipment and goodwill. Management bases its estimates and judgments
on historical experience, current and expected economic conditions and other
factors believed to be reasonable under the circumstances, the results of which
form the basis of making judgments about the carrying value of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the periods presented. Actual results may differ
from these estimates. The significant accounting policies which management
believes are most critical to aid in fully understanding and evaluating our
reported financial results include the following:
INVENTORIES
We value substantially all of our inventory at the lower of cost, as
determined using the last-in, first-out (LIFO) method, or market. The remainder
of inventory is valued at the lower of cost, as determined using the first-in,
first-out (FIFO) method, or market. Inventories include material, labor and
manufacturing overhead. We record a reserve for excess and obsolete inventory
based primarily upon historical and forecasted demand. If actual market
conditions are less favorable than those projected by management, additional
inventory write-downs may be required.
REVENUE RECOGNITION
The Securities and Exchange Commission's Staff Accounting Bulletin (SAB)
No. 101, "Revenue Recognition," provides guidance on the application of
accounting principles generally accepted in the United States to selected
revenue recognition issues. In accordance with SAB No. 101, we recognize revenue
when the specific project is complete as determined by the contractual agreement
and collectibility is reasonably assured.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. We capitalize all repair
and maintenance costs which result in significant increases in the useful life
of the underlying asset. All other repair and maintenance costs are expensed.
Depreciation is computed using straight-line or accelerated methods over various
lives, dependent on the asset. Management assesses long-lived assets for
impairment under Statement of Financial Accounting Standards (SFAS) No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets." Changes in
market conditions or poor operating results could result in a decline in value
thereby potentially requiring an impairment charge in the future.
31
<Page>
GOODWILL
Effective January 1, 2002, we adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." Under this
new rule, goodwill is no longer amortized, but is subject to annual reviews for
impairment. Other intangible assets continue to be amortized over their useful
lives. In addition to the annual impairment reviews, goodwill is reviewed for
impairment whenever events and changes in market conditions or poor operating
results indicate a decline in value thereby potentially requiring an impairment
charge. If we determine the carrying value of goodwill may not be recoverable, a
permanent impairment charge is recorded for the amount by which the carrying
value of goodwill exceeds its fair value. Fair value is measured based on an
earnings multiple method using current industry standards and current internal
operating performance. We believe that the estimates used in determining fair
values are reasonable, however, changes in these current factors used to
determine fair values could materially effect the evaluations.
In 2002, we performed a transitional test upon adoption as well as its
annual test during the fourth quarter. We did not recognize any impairment of
goodwill in connection with these tests. As a result of positive operating
performance for the first quarter of 2003, management believes no impairment is
present.
32
<Page>
BUSINESS
THE COMPANY
We believe we are a leading manufacturer of elementary and high school
four-color case-bound and soft-cover educational textbooks in the United States.
Our products are sold principally to educational publishers who, in turn, sell
them into the elementary and high school and college instructional materials
markets. In addition to textbook manufacturing, we also manufacture products for
the commercial printing marketplace where we target business-to-business catalog
manufacturers, the federal government printing office, trade publishers,
health-care catalog manufacturers, the financial services industry and numerous
other small niches. We provide our customers with a full range of value-added
printing and design services from early design to final distribution. We believe
we have an established reputation for superior quality, reliability and customer
service, allowing us to build strong relationships with our customers, which
include the major publishers of educational textbooks in the United States,
including Houghton Mifflin, Pearson, McGraw-Hill and Harcourt. We estimate that
our market share in our core business, the manufacture of four-color case-bound
ELHI textbooks, was approximately 40% in 2002.
Since 1998, we have diversified our product offerings and added new
services through selected strategic acquisitions in order to enhance our
position within the instructional materials market. In 1998, we added services
such as design, art procurement, color separation and image setting and expanded
our product offerings with one- and two-color printing capabilities, workbooks
and test kits. In 2000, we further diversified our product offerings with the
addition of plastic inserts and overhead transparencies. We believe that these
acquisitions position us to offer the broadest range of products and services
available to the instructional materials market, from early design to
manufacture to distribution. In addition to solidifying our position in the
instructional materials market, our acquisitions have enabled us to expand our
presence in the commercial book-manufacturing market.
Over the past five years, we have also invested approximately $102 million
in high-quality, high-throughput machinery and plant expansions (excluding
equipment obtained in acquisitions), enhancing our competitive position and
providing capacity for future growth. These investments include additional
four-color web printing presses, additional one- and two-color presses,
sheet-fed presses, new digital pre-press equipment and additional manufacturing
space. We have also invested extensively in customized, high-efficiency
bookbinding production lines. As a result of our capital investments, we believe
we have created an opportunity to gain greater market share as well as a barrier
to entry for potential competitors.
THE INSTRUCTIONAL MATERIALS INDUSTRY
We primarily serve the instructional materials market, from which we
derived approximately 71% of our 2002 net sales. Within the overall
instructional materials market, we focus principally on the ELHI and college and
higher education areas, for which we manufacture textbooks, standardized test
materials and other educational materials.
33
<Page>
ELHI MARKET
The ELHI instructional materials market is driven by the textbook adoption
cycle, student enrollment, an increased focus on accountability and testing
standards and state and federal funding for education.
The textbook adoption process is a key factor affecting annual fluctuations
in ELHI textbook sales. This process drives new content, and thus new product,
into the textbook market. The ELHI textbook market is divided between states
where publishers can market their books directly to school districts, known as
"open territory" states, and states where districts must first get state
approval to purchase textbooks, known as "adoption" states. In open territory
states, textbooks are purchased independently by local school districts or by
individual schools themselves. These states do not issue statewide schedules for
purchasing or lists of state-selected instructional materials. By contrast, in
an adoption state, a committee screens textbooks for approval for purchase
within the state. Once they are on an approved list, these textbooks can be
purchased by the individual districts within the state. These initial purchases
tend to take place over a one- to three-year timeframe with reprints extending
over an additional four to five years.
Adoptions can represent a significant revenue stream for publishers and can
be particularly lucrative when large adoption states such as California, Texas
or Florida adopt materials in key subject areas such as reading, mathematics or
science. The 21 adoption states typically represent 50% of the K-12 publishers'
annual textbook sales, with the balance coming from the open territories. While
the two groups are roughly equal in the number of schools that each represents,
adoption states drive product development, which drives sales in non-adoption
states as well.
According to U.S. Department of Education statistics, a record number of
approximately 53 million students was expected to enter K-12 classrooms for the
2002-2003 school year. This number is expected to remain at historically high
levels through 2005.
Standards, accountability and testing have also impacted the ELHI market.
The mounting importance of standardized test scores and, in many cases,
performance-based pay for teachers, have given rise to strong sales of
standardized tests in the past decade and publisher's acquisitions of testing
companies. In January 2002, Congress re-authorized the Elementary and Secondary
Education Act, which was initially enacted in 1965, to raise student achievement
levels through a combination of higher standards, stronger accountability,
improved teacher quality and increased resources. It also provided for a 20%
increase in overall funding for federal elementary and secondary education
programs.
Funds allocated to instructional materials at the ELHI levels increased
from 1999 to 2001 as a consequence of higher enrollments, more robust state tax
revenues and increased state and local spending as a result of an increased
emphasis on improving the quality of public education. The five largest textbook
markets, ranked by total textbook spending--California, Florida, Texas, New York
and Illinois, which account for approximately one third of all spending--saw a
combined state funding increase of 15.2% from 1999 to 2001, reaching $1.1
billion for the 2001-2002 school year.
34
<Page>
According to the 2002 Veronis Suhler Communications Industry Forecast, or
the Veronis Forecast, projected total spending on ELHI instructional materials
is expected to increase at a compound annual growth rate of 5.6% from 2001 to
2006, reaching an estimated $5.0 billion in 2006. Increased state funding,
anticipated adoptions and moderate enrollment growth are expected to generate
revenue growth in the ELHI market in the forecasted period. While the funding
allocated to the instructional materials market within the ELHI levels is
anticipated to increase in the next five years, funding is dependent upon
federal, state and local tax revenue and numerous states and localities are
under budgetary constraints and are currently addressing deficit positions,
which could result in short-term funding reductions for these materials and may
delay future adoptions.
COLLEGE MARKET
The college instructional materials market is driven primarily by student
enrollment. College enrollment is projected to rise to 16.5 million by the year
2006, an increase of approximately 8.0% from 2001. Full time enrollments
increased five years in a row from 1997 to 2001. This trend is expected to
continue as the population of college age students continues to grow, laid-off
workers go back to college, and nontraditional students return to college to
expand their skill sets in a tighter job market.
According to the Veronis Forecast, end-user spending on college
instructional materials is projected to rise at a compound annual growth rate of
5.9% from 2001 to 2006, reaching an estimated $5.4 billion in 2006.
THE COMMERCIAL PRINTING MARKET
We compete in a $7 billion subset of the $100 billion commercial printing
market, supplying a wide variety of end users with one-, two- and four-color
case-bound and soft-cover printing with varied binding styles. The areas in
which we compete include business-to-business catalogs, trade, healthcare
manuals, computer hardware and software manuals and documentation and government
(state and federal) manuals. This market does not experience the same
seasonality as the instructional materials market, with increased volume usually
occurring in the second half of the year.
OPERATING DIVISIONS
We provide our products and services to the instructional materials and
commercial printing markets through our four operating divisions as follows:
<Table>
<Caption>
OPERATING DIVISION PRODUCT AND SERVICE OFFERINGS
- ------------------ -----------------------------
Von Hoffmann, or VH - Four-color hard- and soft-cover educational textbooks
- One- and two-color educational textbooks
- Standardized, secure educational testing materials
</Table>
35
<Page>
<Table>
- Commercial one-, two- and four-color books-Fulfillment
Precision - Plastic printing: overhead transparency products and plastic inserts for
scholastic textbooks
H&S Graphics - Digital pre-press
- Composition
Preface - Design and creative services
- Editorial development
- Composition
</Table>
VH. VH is our largest operating division and includes the businesses of Von
Hoffmann Press, Inc. and Von Hoffmann Graphics, Inc. (which was comprised of the
businesses of Custom Printing Company, Inc. and Bawden Printing), which were
merged together in February 2002. VH produces one-, two- and four-color
textbooks and testing materials for the instructional materials market and one-,
two- and four-color books for the commercial printing market. Its educational
customers include virtually all of the major domestic publishers of ELHI and
college textbooks, including the educational publishing divisions of Houghton
Mifflin, Pearson, McGraw-Hill and Harcourt. Its commercial customers include the
U.S. Government Printing Office, General Motors Corporation, Modus Media, Adobe
Systems, Inc. and Bowne Business Communication.
VH's Jefferson City, Missouri facility focuses almost exclusively on the
manufacture of four-color products including textbooks for the ELHI and college
markets and commercial products. We employ specially modified machinery to meet
the demanding service, quality and delivery requirements of these markets and
believe that we are better able than our competitors to accommodate the
relatively short lead-times and highly variable run lengths that typify the
four-color product industries. These factors distinguish us from other book
manufacturers who focus on multiple products and for whom four-color products
represent only a small portion of overall product mix. VH also operates our
Owensville, Missouri and Eldridge, Iowa facilities, which focus on the one- and
two-color book manufacturing market. These facilities also feature binding
operations, including adhesive and saddle-stitch styles, and provide fulfillment
and distribution services. In addition, VH operates our Frederick, Maryland
facility, which is strategically located near our customer base in the
Northeast, and which produces products for the specialty trade and ancillary
education workbook market.
Over the past five years, we have invested in state-of-the-art,
integrated digital pre-press equipment that streamlines and enhances the
traditional pre-press process, which historically involved a publisher sending
artwork out for color separation and the production of film, which is then sent
to a printer to create printing plates. Through the purchase of this equipment
and the acquisitions of H&S Graphics and Preface, we now have the ability to
perform all the necessary
36
<Page>
pre-press work from digital media provided by our customers. This system gives
us the capability to make plates in a computer-to-plate environment, saving time
and reducing the opportunities for error. This is particularly significant in
the textbook adoption process, which entails repeated changes to a book and
multiple short-run print jobs.
PRECISION. Founded in 1951, Precision is a sheet-fed print and bindery
operation that sells primarily to the educational textbook market. Precision was
acquired in March 2000 in order to provide our customers with a more complete
and balanced product offering. Precision derives approximately 80% of its
revenues from plastic printing, which consists of overhead transparency products
and plastic inserts for educational textbooks, with the remaining 20% of
revenues derived from paper printing. Precision's customer base includes the
same major educational publishing houses with whom we have long-standing
relationships, including McGraw-Hill, Houghton Mifflin, Pearson and Harcourt.
The acquisition of Precision strategically advances our goal of providing our
customers with a more complete and balanced product offering. Precision also has
a presence in the commercial printing market and is implementing an extensive
plan to significantly grow its presence further in that market.
H&S GRAPHICS AND PREFACE. In June 1998, we acquired H&S Graphics and
Preface, which added to our ability to serve publishers in the design, creative
editorial development, digital pre-press and composition areas of book
production. Offering these services, which represent the early production
processes in the manufacturing of a book, position us to manage production more
efficiently and more fully serve the needs of the educational publishe
SALES AND MARKETING
INSTRUCTIONAL MATERIALS MARKET. Our educational textbook sales team,
consisting of approximately 15 employees, works to develop, support, and enhance
our relationships with publishers in both the college and ELHI markets, as well
as with smaller independent publishers. The cost of printing a textbook
typically represents a small percentage of a publisher's total cost for a
textbook, but the failure to meet a production deadline could result in a
significant loss to the publisher. As a result, competition in the textbook
manufacturing industry is equally service- and quality-driven. Accordingly, a
significant element of our marketing efforts consists of maintaining close
relationships with our customers to ensure proper production and scheduling and
timely delivery. Our senior management team and sales support staff maintain
close contact with key customers in order to identify relevant issues affecting
these customers as well as to identify competitive advantages. In addition, the
sales force and planners are in daily contact with the manufacturing personnel
of our customers with pending indications or firm orders in order to deal with
changes or production issues that arise throughout the process.
We have concentrated on maintaining long-standing relationships with the
major educational publishers. These publishers have consolidated significantly
over the past several years, reducing the major educational publishers to four.
These publishers accounted for approximately 42% of our net sales during 2002.
COMMERCIAL PRINTING MARKET. Our sales and marketing organization has
developed and is pursuing a focused sales strategy across the identified
commercial market segments. With 25 dedicated sales people, we address this
market on a national level. Customer needs are matched to one of our eight
manufacturing facilities and our array of production capabilities.
37
<Page>
OPERATIONS AND PRODUCTION
As a contract print manufacturer, we principally manufacture products
pursuant to firm customer orders. Our key manufacturing and distribution
functions include:
- creating page designs and digital files;
- producing printing plates from film or directly from digital files
provided by customers or created from our extensive library;
- purchasing paper and other components supplied by other
manufacturers;
- printing and binding;
- packaging, storing and shipping finished products;
- archiving, preserving and reformatting film and digital files for
reprints; and
- fulfillment of customer orders, inserting CDs and packaging.
Our typical production run size ranges from less than 5,000 units to over
100,000 units, with the capability to produce profitable runs under 5,000 units.
We can cost-effectively produce these short runs due to our unique ability to
shift work rapidly among printing presses. Customers generally seek to lower
costs by maintaining low inventory levels and ordering small quantities for
just-in-time delivery. Our management believes that our ability to produce short
runs effectively is a significant competitive advantage.
We have configured our physical plant and trained our workforce to print
both short-run and long-run quantities. The length of a run of a given title is
highly variable over its life span. We believe our "make ready" time per
changeover is significantly less than that of our major competitors. This
capability lowers unit costs, making it economically feasible to print fewer
copies. This is important as it allows our customers to minimize their inventory
levels while maintaining the ability to adjust subsequent production orders in
response to unforeseen sales patterns and unexpected stock shortages. As the
trend towards more customized products becomes more apparent, we believe we are
well-positioned to produce shorter runs efficiently and thereby accommodate our
customers' needs.
PRICING AND SCHEDULING. In order to meet the demands of the highly
competitive, time-sensitive printing markets, we manage estimating and pricing
centrally from our St. Louis headquarters. We have implemented a master
scheduling program for print and bind business that will optimize plant
utilization on a company-wide basis. Work may move from plant to plant based on
specific capabilities or capacity demands. We have dedicated customer service
representatives at each facility in an effort to meet the needs of our
customers.
PRE-PRESS. We have invested in state-of-the-art, integrated digital
pre-press equipment that streamlines and enhances the traditional pre-press
process. Rather than outsourcing this service, all of our printing facilities
have the ability to perform the complete digital pre-press workflow directly
from digital media provided by our customers. This system gives us the
38
<Page>
capability to make plates using the single-burn process, saving time and
expense, while reducing the chance of error. This is particularly significant in
products which entail repeated changes and multiple short-run print jobs. We
provide direct-to-plate capabilities, which eliminate the film-output step of
the pre-press process. We now have complete redundancy in the digital pre-press
process throughout our plants, which gives us increased flexibility in the
manufacturing process.
PRINTING AND BINDING. We have a variety of web printing presses configured
to maximize our manufacturing flexibility. Although a certain number of our
presses are dedicated to 9", 10" or 11" products, these presses are highly
specialized and have been modified to have the flexibility to print any of these
sizes on the next-larger press size. Specifically, we have developed equipment
adaptations and proprietary production methods for our printing and binding
operations that significantly reduce the make-ready time per changeover of
plates as compared to that of our competitors. In addition, our state-of-the-art
modified web presses are capable of running at speeds of up to 50,000
impressions per hour.
Over the past five years, we have invested approximately $102 million in
high-quality, high-throughput machinery and plant expansions (excluding
equipment obtained in acquisitions), enhancing our competitive position and
significantly expanding our production capacity for future growth. Our
investments have been made in additional one through four-color web printing
presses, additional sheet-fed presses, new digital pre-press equipment and
additional manufacturing space. We have also invested extensively in customized,
highly efficient bookbinding production lines.
We currently maintain multiple binding lines in each of the manufacturing
plants, providing several different binding methods to accommodate various
customer preferences. We offer virtually all the binding options used in the
industry, including McCain, Smyth Case, Spiral Wire Hardbound, Spiral Wire,
Adhesive Case, Side Wire, Saddle Stitch, Adhesive Paper, Plastic Comb,
Wire-O-Hardback, Wire-O, Spiral Plastic and the proprietary "Von-Bind" Case.
Approximately 50% of ELHI textbooks are shipped to states that require
publishers to keep a particular title in print and supply orders for reprints
for periods generally ranging from five to eight years. Other ELHI and college
textbooks are kept in print for approximately four to six years. The reprint
business is also necessitated by partial corrections or copyright edition
changes that must be made in order to incorporate new information or to comply
with editorial changes demanded by school committees in various states. In 2002,
approximately 80% of our four-color ELHI net sales were generated from reprints,
and we retained over 98% of our ELHI reprint business while losing less than 2%
to competitors.
When a textbook is first published, digital files or a set of film are
created for producing reprints. It is both time-consuming and costly to move
film or digital files from one printer to another with different presses, as the
film or digital files would likely require reformatting. Therefore, publishers
have a disincentive to switch manufacturers for the reprints of a title, which
creates a backlog of future business for the original manufacturer. While the
new digital workflows make this less of an obstacle to transfer work, reprints
from films and digital files in our archives still generally account for an
estimated 60% to 65% of our total annual revenues.
FACILITIES. Our facilities consist of our corporate headquarters located in
St. Louis, Missouri and eight separate production facilities located in
Jefferson City and Owensville,
39
<Page>
Missouri; Eldridge, Iowa; Frederick, Maryland; Schaumburg and Rolling Meadows,
Illinois; and Leesport and Dauberville, Pennsylvania. The Jefferson City
facility is our principal production facility for our four-color web presses and
binding capabilities. Certain information regarding our facilities is set forth
in the table below.
<Table>
<Caption>
FACILITY LOCATION PRINCIPAL PURPOSE SQUARE FOOTAGE STATUS
- ----------------- ----------------- -------------- ------
St. Louis, Missouri...................... Corporate headquarters 170,000 Owned
Jefferson City, Missouri................. Four-color book manufacturing 636,000 Owned
Owensville, Missouri..................... One- and two-color book manufacturing, 450,000 Owned
distribution and fulfillment
Eldridge, Iowa........................... One- and two-color book manufacturing 225,000 Owned
Frederick, Maryland...................... One-and two-color book manufacturing 200,000 Owned
Schaumburg, Illinois..................... Book design 9,100 Leased
Rolling Meadows, Illinois................ Digital pre-press and book design 23,000 Owned
Leesport, Pennsylvania................... Printing inserts and overheads 29,000 Owned
Dauberville, Pennsylvania................ Precision bindery and manufacturing 24,000 Owned
</Table>
RAW MATERIALS
Paper costs represent approximately 37% of our net sales and over 81% of
raw material costs in the manufacturing process. Paper costs generally flow
through to the customer as we generally order paper for specific orders and do
not take significant commodity risk on paper.
We have implemented a paper management program with several customers,
which is designed to allow us to: (i) standardize the type of paper we use on
presses and greatly reduces production and start-up costs; and (ii) avoid the
cost of additional storage space and production inefficiencies required by
separating each publisher's consigned paper. In 2002, approximately 55% of our
paper usage was procured through this program.
We operate our paper programs with three major paper suppliers, the largest
and most significant of which is The Mead Corporation, now known as MeadWestvaco
Corporation, which provides approximately 90% of the paper for this program. The
benefits to us, our customers and paper producers have allowed our paper
management program to grow consistently.
EMPLOYEES
As of December 31, 2002, we had 1,883 employees, approximately 315 of whom
are represented by affiliates of the Graphic Communications International Union
under collective
40
<Page>
bargaining agreements that expire between August and November of 2005. We
believe that relations with our employees are generally good.
COMPETITION
The educational textbook market is highly competitive. The factors by which
textbook manufacturers are chosen include the ability to maintain and adhere to
a strict manufacturing schedule, the quality of product and service, competitive
pricing and capability to provide "one-stop shopping" to the publisher. The
commercial book manufacturing market is also very competitive. Competitive
advantages include pricing, quality, service and rapid turnaround as well as
other non-print, value-added services including fulfillment and distribution. We
compete in the educational textbook market by leveraging our reputation for
quality and full-service and by providing competitive pricing and rapid
turnaround. By directing a highly-focused sales effort, opportunities for us are
often identified in niches where value-added services are required and
commodity-like price competition is less prevalent. Our major competitors in the
one- and two-color educational and commercial book manufacturing markets are the
Banta Corporation and The Hess Companies. Our major competitors in the
four-color educational textbook manufacturing market are R.R. Donnelley & Sons
Company and Quebecor World Inc.
We believe that there are significant barriers to entry in the
instructional materials market due to the significant initial investment in
people, equipment and facilities that is required to compete. In addition, we
believe it would take several years for a new entrant to develop the reputation
for quality, service and delivery necessary to develop the significant base of
titles needed to establish the recurring reprint volume required to achieve
sufficient capacity utilization.
Our competition in the commercial printing market is comprised of a more
extensive array of smaller and more diversified printing companies that range in
size and scope. The costs of entry are not as significant as the instructional
materials market for people, equipment and facilities. However, no single
competitor encompasses a market position that would prevent our growth in this
market sector.
LEGAL AND ENVIRONMENTAL MATTERS
We do not believe that there are any pending legal proceedings which, if
adversely determined, would have a material adverse effect on our financial
condition or results of operations.
We are subject to regulations under various and changing federal, state and
local laws relating to the environment and to employee safety and health. These
environmental regulations include those relating to the generation, storage,
transportation, disposal, release and emission into the environment of various
substances. Permits are required for operation of our business (particularly air
emission permits), and these permits are subject to renewal, modification and,
in certain circumstances, revocation. We are also subject to regulation under
various and changing federal, state and local laws that allow regulatory
authorities to compel (or to seek reimbursement for) the clean-up of
environmental contamination at our own sites and at facilities where our waste
products are or have been disposed.
41
<Page>
We have internal controls dedicated to compliance with all applicable
environmental laws. Management believes that our capital expenditures to comply
with federal, state and local provisions for environmental controls, as well as
expenditures for our share of costs for environmental clean-up, if any, will not
be material and will not have a material effect upon our earnings or our
competitive position.
42
<Page>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The names of our directors and executive officers and their respective ages
and positions are as follows:
VON HOFFMANN CORPORATION
<Table>
<Caption>
Name Age Position
- ---- --- --------
Robert S. Christie(1)............... 49 Chairman of the Board and Director
Robert S. Mathews(1)*............... 51 Chief Executive Officer, President, Chief Operating Officer and Director
Gary C. Wetzel...................... 38 Senior Vice President, Chief Financial Officer and Treasurer
Ron M. Garrison..................... 52 Senior Vice President of Manufacturing
Jack R. Field....................... 45 Senior Vice President of Sales and Marketing
Craig A. Nelson..................... 56 Senior Vice President of Human Resources
Andrew D. Ortstadt.................. 44 Chief Information Officer
David F. Burgstahler................ 34 Director
James A. Quella(1).................. 53 Director
Harold E. Layman.................... 56 Director
</Table>
HOLDINGS
<Table>
<Caption>
Name Age Position
- ---- --- --------
Robert S. Christie(2)............... 49 Chairman of the Board and Director
Robert S. Mathews(2)(3)*............ 51 Chief Executive Officer, President and Director
Gary C. Wetzel...................... 38 Senior Vice President, Chief Financial Officer and Treasurer
David F. Burgstahler(2)(3).......... 34 Vice Chairman of the Board and Director
Nicole S. Arnaboldi................. 44 Director
James A. Quella(3).................. 53 Director
Robert A. Uhlenhop.................. 59 Director
Harold E. Layman(2) ................ 56 Director
</Table>
- -----------
* Chairman, Chief Executive Officer, President and Director of H&S Graphics,
Preface, and Precision.
(1) Member of the Operations Review Committee of Von Hoffmann.
(2) Member of the Audit Committee of Holdings.
(3) Member of the Compensation Committee of Holdings.
NICOLE S. ARNABOLDI was appointed as a director of Holdings in January of
2003. She is the Managing Director and Chief Operating Officer of Funds
Management at CSFB's Private Equity Group. Ms. Arnaboldi joined Donaldson,
Lufkin & Jenrette in 1993 after six years with The Sprout Group, Donaldson,
Lufkin & Jenrette's venture capital affiliate, and was named a Managing Director
in 1996. Ms. Arnaboldi serves on the investment committee of several of CSFB
Private Equity's funds. Ms. Arnaboldi received a B.A. magna cum laude from
Harvard College in 1980, and in 1985 received a J.D. cum laude from Harvard Law
School and an
43
<Page>
M.B.A. with high distinction from Harvard Business School, where she was a Baker
Scholar. Ms. Arnaboldi previously served on the board of directors of Duane
Reade Inc. (NYSE:DRD), Horizon G.P., Inc. and several other companies. She also
serves on the boards of the Gillen Brewer School and New Yorkers for Children.
DAVID F. BURGSTAHLER has been a director of Von Hoffmann since 2000 and
Holdings since 1998. He is a Director of CSFB and Principal of DLJ Merchant
Banking Partners. Mr. Burgstahler joined CSFB in 2000 when it merged with
Donaldson, Lufkin & Jenrette, where he was a Vice President of DLJ Merchant
Banking Partners from 1999 to 2001 and an associate from 1997 to 1999. Mr.
Burgstahler received a B.S. in Aerospace Engineering from the University of
Kansas in 1991 and in 1995 received a M.B.A. from Harvard Business School. Mr.
Burgstahler also serves as a director of Haights Cross Communications, Inc., WRC
Media Inc., Focus Technologies Inc. and McCulloch Corporation. He also serves on
the Board of the Diller-Quaile School of Music in New York City.
ROBERT S. CHRISTIE was appointed as a director of Von Hoffmann and Holdings
in February 2002 and was appointed as the Chairman of the Board of Holdings and
Von Hoffmann in January of 2003. He was the President and Chief Executive
Officer for Thomson Learning Corporation from 1998 to 2001, and from 1996 to
1998, he was President and Chief Executive Officer of Thomson Learnings'
subsidiary Thomson & Thomson.
HAROLD E. LAYMAN was appointed as a director of Holdings and Von Hoffmann
in December 2002. Mr. Layman was the President, CEO and COO of Blount
International, Inc. (NYSE:BLT), a diversified industrial company with revenues
of $800 million, from 2000 to 2002. Mr. Layman has served as a director of
Blount International Inc. since 2000. Prior to his employment with Blount, Mr.
Layman served as a Senior Vice President of VME Group/Volvo AB.
ROBERT S. MATHEWS was appointed as Chief Operating Officer of Von Hoffmann
in January 2002 and as President, Chief Executive Officer and a director of Von
Hoffmann in February 2002. Mr. Mathews also was appointed as Chief Executive
Officer, President and a director of Holdings in February 2002. From 2000 to
2002, Mr. Mathews was President of our Von Hoffmann Graphics operating division,
which was merged into Von Hoffmann in February 2002. From 1997 to 2000, he
served as Senior Vice President of Quebecor World, which is a competitor of ours
in the book manufacturing industry, and from 1996 to 1997, Mr. Mathews was
Executive Vice President of Graphic Industries Inc. From 1994 to 1996, he was
President of R.R. Donnelley, which is a competitor of ours in the book
manufacturing industry.
JAMES A. QUELLA has been a director of Von Hoffmann and Holdings since
2000. He holds the position of Managing Director of DLJ Merchant Banking
Partners. Mr. Quella joined CSFB in 2000 when it merged with DLJ, where he was a
Managing Director and Senior Operating Partner in DLJ Merchant Banking Partners.
Mr. Quella was a Managing Director for GH Venture Partners LLC from January 2000
to July 2000. From 1997 to 2000, Mr. Quella served as Vice Chairman of Mercer
Management Consulting, Inc. He was a senior consultant with Mercer from 1990 to
1997. Mr. Quella currently serves as a director of Advanstar Communications
Inc., DeCrane Aircraft Holdings, Inc. and Merrill Corporation.
ROBERT A. UHLENHOP served as Chairman of the Board of Holdings from
February 2002 until November of 2002 and he has served as a director of Holdings
since 1996. He served as
44
<Page>
Chairman of the Board, President and Chief Executive Officer of Von Hoffmann
from 1995 to February 2002 and as the Chief Executive Officer and President of
Holdings from 1996 to February 2002. From 1977 to 1997, he was Chief Financial
Officer and Treasurer of Von Hoffmann.
JACK R. FIELD was appointed as Senior Vice President of Sales and Marketing
of Von Hoffmann in January 2002. From 2000 to 2002, he was Senior Vice President
of Sales for our Von Hoffmann Graphics division, which was merged into Von
Hoffmann in February 2002. From 1998 to 2000, he was Vice President of Sales for
Graphic Communications, Inc., which is a company that provides printing and
binding services, and from 1980 to 1998 he was a Senior Account Executive for
R.R. Donnelley.
RON M. GARRISON was appointed as Senior Vice President of Manufacturing of
Von Hoffmann in January 2002. From 2000 to 2001, Mr. Garrison served as Vice
President of Manufacturing. From 1997 to 1999 he served as a Vice President and
Division Director of R.R. Donnelley.
CRAIG A. NELSON has been Senior Vice President of Human Resources of Von
Hoffmann since 1990 and joined us in 1973.
ANDREW D. ORTSTADT was appointed as Chief Information Officer in April
2002. From 1998 to 2002, he served as Vice President - Demand Management Systems
for Moore Corporation, Ltd., known as Moore Business Forms.
GARY C. WETZEL was appointed as Senior Vice President, Chief Financial
Officer and Treasurer in October 2002. From 1998 to 2002, he served as Group
Vice President - Finance and Administration for Quebecor World Printing, which
is a competitor of ours in the book manufacturing industry.
Each director serves for a term of one year.
45
<Page>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by each person who served
Chief Executive Officer of Von Hoffmann or Holdings in 2002 and the four other
most highly compensated executive officers serving as executive officers at
December 31, 2002.
<Table>
<Caption>
ANNUAL COMPENSATION
-------------------------------------
OTHER
ANNUAL
COMPEN-
SALARY BONUS SATION(1)
NAME AND PRINCIPAL POSITION* YEAR ($) ($) ($)
- --------------------------- --------- ------------ ------------- ----------
Robert Uhlenhop, 2002 $ 250,000 $ 2,153,284 --
Former Chairman of the Board 2001 $ 250,000 $ 322,335 --
President and Chief Executive Officer(2) 2000 $ 233,400 $ 766,942 --
Robert Mathews 2002 $ 231,731 $ 175,000 $ 59,567
President, Chief Executive Officer, 2001 $ 200,000 $ 70,635 --
Chief Operating Officer (3) 2000 $ 123,750 $ 60,000 --
Peter Mitchell, 2002 $ 225,000 $ 187,500 --
Former Vice-Chairman of the Board, 2001 $ 208,400 $ 75,000 --
Executive Vice President, Chief Financial Officer 2000 $ 208,400 $ 182,553 --
and Treasurer(4)
Gary Wetzel 2002 $ 42,708 $ 12,500 $ 25,000
Senior Vice President, Chief 2001 -- -- --
Financial Officer and Treasurer 2000 -- -- --
Jack Field, 2002 $ 183,808 $ 25,000 --
Senior Vice President of Sales and Marketing 2001 $ 171,000 $ 19,549 --
2000 $ 44,292 $ 13,124 --
Ron Garrison, 2002 $ 186,630 $ 7,500 --
Senior Vice President of Manufacturing 2001 $ 165,226 $ 20,000 --
2000 $ 143,750 $ 96,582 --
<Caption>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
------------------------ -------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
STOCK OPTIONS/ LTIP COMPEN-
AWARDS SARS PAYOUTS SATION
($) (#) ($) ($)(5)
---------- ----------- ------- ---------
NAME AND PRINCIPAL POSITION*
Robert Uhlenhop, -- -- -- $ 66,731
Former Chairman of the Board -- -- -- $ 45,078
President and Chief Executive Officer(2) -- -- -- $ 43,177
Robert Mathews -- -- -- $ 19,717
President, Chief Executive Officer, -- -- -- $ 4,575
Chief Operating Officer (3) -- 100,000 -- $ 146
Peter Mitchell, -- -- -- $ 35,787
Former Vice-Chairman of the Board, -- -- -- $ 18,540
Executive Vice President, Chief Financial Officer -- -- -- $ 18,500
and Treasurer(4)
Gary Wetzel -- -- -- --
Senior Vice President, Chief -- -- -- --
Financial Officer and Treasurer -- -- -- --
Jack Field, -- -- -- $ 10,396
Senior Vice President of Sales and Marketing -- -- -- $ 248
-- -- -- $ 20
Ron Garrison, -- -- -- $ 19,425
Senior Vice President of -- 100,000 -- $ 8,147
Manufacturing -- -- -- $ 483
</Table>
* Reflects principal position at December 31, 2002
- -----------
(1) Excludes perquisites where the aggregate amount of such compensation is the
lesser of either $50,000 or 10% of the total annual salary and bonus
reported. Amounts for Mr. Mathews and Mr. Wetzel represent reimbursement of
relocation costs.
(2) Mr. Uhlenhop served as Chairman of the Board, President and Chief Executive
Officer of Von Hoffmann from 1995 to February 2002. Mr. Uhlenhop served as
Chairman of the Board of Holdings from February 2002 to November 2002.
(3) Mr. Mathews served as President of our Von Hoffmann Graphics operating
division, which was merged into Von Hoffmann in February 2002, from 2000 to
2001. Mr. Mathews was appointed as Chief Operating Officer of Von Hoffmann
in January 2002 and as President, Chief Executive Officer and a director of
Von Hoffmann and Holdings in February 2002.
(4) Mr. Mitchell served as our Chief Financial Officer and Treasurer from 1997
through October 2002. Mr. Mitchell had also served as Vice Chairman of the
Board of Von Hoffmann since 2001 and had served as an Executive Vice
President of Von Hoffmann and Holdings since 2000.
46
<Page>
(5) Includes in 2002 for Mr. Uhlenhop, $18,500 in matching and profit sharing
contributions to our profit sharing plan and $48,231 in premiums on
disability and life insurance policies; for Mr. Mathews, $18,500 in
matching and profit sharing contributions to our profit sharing plan and
$1,217 in premiums on life insurance policy; for Mr. Mitchell, $18,500 in
matching and profit sharing contributions to our profit sharing plan,
$13,846 in vacation accrual payout and $3,441 in premiums on disability and
life insurance policies; for Mr. Field, $10,000 in matching and profit
sharing contributions to our profit sharing plan and $396 in premiums on
life insurance policy; and for Mr. Garrison, $18,500 in matching and profit
sharing contributions to our profit sharing plan and $925 in premiums on
life insurance policy.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
No stock options were granted to or exercised by the named executive
officers during 2002. However, in August 2002, we offered a voluntary option
cancellation and replacement program to certain employees. Under this program,
the employees were given the opportunity, if they chose, to cancel certain
outstanding stock options previously granted to them with an exercise price
greater than $1.00 per share for a number of replacement options, approximately
their December 31, 2002 vested position, to be granted at a future date, six
months and five days from the cancellation date. Under the exchange program,
options for 850,000 shares of the Company's common stock were tendered and
canceled, of which 616,695 were eligible for replacement option grants. The
exercise price of each replacement option will be the fair value of the
Company's common stock on the date of grant. The replacement options will have
terms and conditions that are substantially the same as those canceled options.
Robert S. Mathews and Ron M. Garrison participated in this program.
AGGREGATED OPTION/SAR EXERCISES DURING LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth certain information with respect to the
exercise of options to purchase our common stock during 2002, and the
unexercised options held and the value thereof at that date, for each of the
named executive officers.
<Table>
<Caption>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTION
NAME EXERCISE (#) REALIZED ($) AT FISCAL YEAR END AT FISCAL YEAR END
---- ------------ ------------ ------------------------------ --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Robert Uhlenhop -- -- 1,601,600 -- -- --
Robert Mathews -- -- -- -- -- --
Peter Mitchell -- -- 100,000 -- -- --
Jack Field -- -- -- -- -- --
Ron Garrison -- -- -- -- -- --
Gary Wetzel -- -- -- -- -- --
</Table>
All underlying unexercised options shown in the table have an exercise price of
$1.00 per share, which represents current market value.
LONG TERM INCENTIVE PLAN
We have no Long Term Incentive Plan in place.
47
<Page>
EMPLOYMENT AGREEMENTS
MATHEWS EMPLOYMENT AGREEMENT
We entered into an employment agreement with Mr. Mathews effective as of
January 1, 2002. Pursuant to that agreement, Mr. Mathews will serve in an
executive position for us until December 31, 2004. Currently, Mr. Mathews serves
as President and Chief Executive Officer of both Von Hoffmann and Holdings. In
exchange for his services, Mr. Mathews is compensated with a base salary of
$225,000, an annual non-discretionary bonus in the amount of $75,000 and an
additional annual bonus in an amount equal to 1.4% of EBITDA in excess of
certain EBITDA targets for each calendar year. This additional bonus may not
exceed $210,000 for any calendar year. In the event that Mr. Mathews is
terminated for cause, he will be entitled to his base salary through the date of
his termination, but will not be entitled to any additional compensation. If Mr.
Mathews is terminated without cause he is entitled to receive an amount in cash
equal to $337,500, but will not be entitled to any other compensation. The
employment agreement also includes a non-competition provision prohibiting Mr.
Mathews from competing with us for one year from the termination of his
employment agreement.
WETZEL EMPLOYMENT AGREEMENT
We entered into an employment agreement with Mr. Wetzel effective as of
October 16, 2002. Pursuant to that agreement, Mr. Wetzel will serve in an
executive position for us until December 31, 2004. Currently, Mr. Wetzel serves
as Chief Financial Officer, Treasurer, Senior Vice President and Assistant
Secretary of both Holdings and Von Hoffmann. In exchange for his services, Mr.
Wetzel is compensated with a base salary of $205,000, an annual
non-discretionary bonus in the amount of $50,000 and an additional annual bonus
in an amount equal to 1.4% of EBITDA in excess of certain EBITDA targets for
each calendar year. This additional bonus may not exceed $205,000 for any
calendar year. In the event that Mr. Wetzel is terminated for cause, he will be
entitled to his base salary through the date of his termination, but will not be
entitled to any additional compensation. If Mr. Wetzel is terminated without
cause he is entitled to receive an amount in cash equal to $205,000, but will
not be entitled to any other compensation. The employment agreement also
includes a non-competition provision prohibiting Mr. Wetzel from competing with
us for one year from the termination of his employment agreement.
UHLENHOP SEPARATION AGREEMENT
We entered into a separation agreement with Mr. Uhlenhop dated as of
December 6, 2002 (the "Uhlenhop Separation Agreement"). Pursuant to that
agreement, Mr. Uhlenhop's employment with us ended effective as of November 26,
2002. Under the terms of the separation agreement, Mr. Uhlenhop is entitled to
(a) all accrued but unpaid salary through November 26, 2002, (b) $250,000,
payable in 24 equal semi-monthly payments of $10,416.67 in accordance with
normal payroll practices, (c) a lump-sum payment of $300,000, payable by the
Company on the eighth day after the date of the execution of the agreement, and
(d) certain continued benefits under his employment agreement, such as payment
of life insurance premiums and coverage under the Company's health plan, to the
extent provided for therein.
UHLENHOP EMPLOYMENT AGREEMENT
We entered into an employment agreement with Mr. Uhlenhop effective as of
January 1, 2002 and amended and restated as of June 21, 2002. This agreement was
superceded by the Uhlenhop Separation Agreement described above. Pursuant to the
amended and restated employment agreement, Mr. Uhlenhop was to be employed as
Chief Executive Emeritus and
48
<Page>
Special Advisor to the Chief Executive Officer of Von Hoffmann. In addition, Mr.
Uhlenhop was to serve as Chairman of Holdings' Board of Directors until January
21, 2004. Pursuant to the old employment agreement, Mr. Uhlenhop had served as
the President and Chief Executive Officer of Holdings and the Chief Executive
Officer of Von Hoffmann until Mr. Mathews' appointment to those positions in
February 2002. To the extent requested by Holdings and Von Hoffmann, Mr.
Uhlenhop was to provide guidance and assistance to members of Von Hoffman's
senior management and to Mr. Mathews in his capacity as Von Hoffman's new Chief
Executive Officer and President. In exchange for his services, Mr. Uhlenhop was
to be compensated with a base salary of $250,000 per year subject to
discretionary increases and an annual non-discretionary bonus of $300,000. In
the event that Mr. Uhlenhop was terminated for cause, he would have been
entitled to his base salary through the date of his termination but would not
have been entitled to any additional compensation from Von Hoffmann or Holdings.
If Mr. Uhlenhop was terminated without cause prior to December 31, 2002, he
would have been entitled to receive $550,000 (I.E., his base salary and bonus
for one calendar year) plus continuation of certain benefits. If Mr. Uhlenhop
was terminated without cause on or after January 1, 2003 and prior to January
21, 2004, he would have been entitled to receive his base salary for the
remainder of such period following his termination and $300,000 (I.E., his bonus
for one calendar year) plus continuation of certain benefits. Additionally, in
recognition of Mr. Uhlenhop's past and continued service to Von Hoffmann, he
received a cash payment equal to $1,000,000 on an after tax basis upon the
execution of the amended and restated employment agreement. The amended and
restated Von Hoffmann employment agreement also included a non-competition
provision prohibiting Mr. Uhlenhop from competing with Von Hoffmann for two
years after the last severance payment is made to Mr. Uhlenhop, which provisions
continue in effect under the Uhlenhop Separation Agreement.
MITCHELL SEPARATION AGREEMENT
We entered into a separation agreement with Mr. Mitchell, dated as of
November 7, 2002 (the "Mitchell Separation Agreement"). Pursuant to that
agreement, Mr. Mitchell's employment with Von Hoffmann and its affiliates ended
as of October 31, 2002. Under the terms of the separation agreement, Mr.
Mitchell is entitled to (a) all his accrued but unpaid salary through October
31, 2002, including $13,846.15, which represents fifteen (15) days of accrued
but unused vacation time, (b) a lump sum payment of $112,500 payable by Von
Hoffmann seven days from the execution of the separation agreement, (c) twelve
(12) equal monthly payments of $18,750 payable in accordance with the Company's
normal payroll practices, (d) a one time payment of $75,000 in respect of the
non-discretionary bonus of Mr. Mitchell's employment agreement, payable on
December 1, 2002, provided he provide any and all transition services reasonably
requested by the Company through December 1, 2002, and (e) pursuant to that
certain Amendment No. 1 to the Standard Stock Option Agreement, dated November
20, 1997, between Mr. Mitchell and Holdings, 100,000 of the standard options
granted pursuant to the November 1997 Standard Stock Option Grant Letter shall
remain outstanding and fully-exercisable pursuant to the terms thereunder.
MITCHELL EMPLOYMENT AGREEMENT
We entered into an employment agreement with Mr. Mitchell, effective as of
January 1, 2002. This agreement was superceded by the Mitchell Separation
Agreement described above. Pursuant to that agreement, Mr. Mitchell was to serve
in an executive position with us until December 31, 2004. At the time of the
signing of the agreement, Mr. Mitchell had served as
49
<Page>
Chief Financial Officer, Treasurer and Executive Vice President of Holdings and
as Vice Chairman, Chief Financial Officer, Treasurer and Executive Vice
President of Von Hoffmann. In exchange for his services, Mr. Mitchell was
compensated with a base salary of $225,000 subject to discretionary increases,
an annual non-discretionary bonus in the amount of $75,000, and an additional
bonus per calendar year in an amount equal to 1.4% of EBITDA in excess of
certain EBITDA targets for each calendar year. This additional bonus was not to
exceed $210,000 for any calendar year. In the event that Mr. Mitchell was
terminated for cause, he was entitled to his base salary through the date of his
termination, but would not have been entitled to any additional compensation. If
Mr. Mitchell was terminated without cause, he would have been entitled to
receive an amount in cash equal to $337,500, but would not have been entitled to
any other compensation. In the event that Mr. Mitchell's employment was
terminated without cause prior to December 31, 2002 after a change in control of
our company, he would have been entitled to receive an amount in cash equal to
$30,000. The employment agreement also included a non-competition provision
prohibiting Mr. Mitchell from competing with us for one year following the
termination of his employment agreement, which provisions continue in effect
under the Mitchell Separation Agreement.
DIRECTORS' ARRANGEMENTS
In connection with Robert S. Christie serving as director of Von Hoffmann
and Holdings, Mr. Christie is reimbursed for reasonable out-of-pocket expenses
that he incurs in the performance of his duties. We also pay him an annual
retainer fee equal to $50,000, payable in equal quarterly installments.
Additionally, we will grant him options to purchase 50,000 shares of Holdings'
common stock at an exercise price of $1.00 per share. Mr. Christie is also the
Chairman of the Operations Review Committee of the board of directors of Von
Hoffmann and a member of Holdings' Audit Committee. Mr. Christie is party to a
consulting agreement with Credit Suisse First Boston LLC, an affiliate of DLJ
Merchant Banking, our principal stockholder. Pursuant to this agreement, Mr.
Christie provides consulting and advisory services to DLJ Merchant Banking.
Under the terms of this consulting agreement, Mr. Christie receives an annual
retainer in cash.
In connection with Harold E. Layman serving as director of Von Hoffmann and
Holdings, Mr. Layman is reimbursed for reasonable out-of-pocket expenses that he
incurs in the performance of his duties. We also pay him an annual retainer fee
equal to $50,000, payable in equal quarterly installments. Additionally, we will
grant him options to purchase 50,000 shares of Holdings' common stock at an
exercise price of $1.00 per share. Mr. Layman is also the Chairman of the Audit
Committees of the board of directors of Von Hoffmann and Holdings.
Other than Mr. Christie and Mr. Layman, none of our other directors receive
any fees or other compensation for serving as a director. All directors are
entitled to reimbursement for travel expenses associated with board activities.
50
<Page>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
of Holdings' common stock as of March 28, 2003 by (i) each person we believe
owns beneficially more than five percent of Holdings outstanding common stock;
(ii) each of Holdings' directors and named executive officers and (iii) each of
Holdings' directors and executive officers as a group.
<Table>
<Caption>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENTAGE
- ------------------------------------ ------------------ ----------
DLJ Merchant Banking(1)...................................... 67,134,000 98.5
Robert A. Uhlenhop(2)....................................... 1,601,600 2.4
Robert S. Mathews........................................... --
Peter C. Mitchell(3)........................................ 100,000 *
Nicole S. Arnaboldi (4)...................................... --
David F. Burgstahler(4)..................................... --
Robert S. Christie.......................................... --
Harold E. Layman............................................. --
James A. Quella(4).......................................... --
All directors and executive officers as a group (8 2,143,640 3.2
persons)(5)................................................
</Table>
* Indicates less than one percent.
- ----------
(1) Consists of (a) 62,134,000 shares and (b) warrants that are presently
exercisable or exercisable, at an exercise price of $0.01 per share, within
60 days to purchase 5,000,000 shares held by the following entities: DLJ
Merchant Banking Partners II, L.P., DLJ Offshore Partners II, C.V. (DLJOP),
DLJMB Funding II, Inc. (DLJ Funding), DLJ Diversified Partners, L.P.
(Diversified), DLJ Diversified Partners-A, L.P. (Diversified-A), DLJ EAB
Partners, L.P. (EAB), DLJ First ESC L.P. (First ESC), DLJ Merchant Banking
Partners II-A, L.P. (Partners II-A), DLJ Millennium Partners, L.P.
(Millennium L.P.), DLJ Millennium Partners-A, L.P. (Millennium-A) and UK
Investment Plan 1997 Partners (UK Investment). The address of each of DLJ
Merchant Banking Partners II, L.P., DLJ Funding, Diversified,
Diversified-A, EAB, First ESC, Partners II-A, Millennium L.P. and
Millennium-A is 11 Madison Avenue, 16th Floor, New York, New York, 10010.
The address of DLJOP is John B. Gorsiraweg 14, Willenstad, Curacao,
Netherlands Antilles. The address of UK Investment is 2121 Avenue of the
Stars, Fox Plaza, Suite 3000, Los Angeles, California 90067.
(2) Includes options that are presently exercisable or exercisable within 60
days to purchase 1,601,600 shares.
(3) Includes options that are presently exercisable or exercisable within 60
days to purchase 100,000 shares.
(4) Ms. Arnaboldi and Mr. Quella are managing directors and Mr. Burgstahler is
a director in the Private Equity Group of Credit Suisse First Boston, which
contains DLJ Merchant Banking Partners. Ms. Arnaboldi and Messrs.
Burgstahler and Quella do not have sole or shared voting or dispositive
power over the shares held by DLJ Merchant Banking and as such do not have
beneficial ownership of such shares.
(5) Includes options and warrants that are presently exercisable or exercisable
within 60 days to purchase 1,943,640 shares.
51
<Page>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SHAREHOLDERS' AGREEMENT
On May 22, 1997, Holdings, DLJ Merchant Banking, ZS VH II L.P., and
management and other employees who own shares of Holdings entered into a
shareholders' agreement that sets forth certain rights and restrictions relating
to the ownership of Holdings' common stock and agreements among those parties as
to the governance of Holdings and, indirectly, of Von Hoffmann. The agreement
was amended on November 30, 2000, and subsequently amended on June 20, 2002.
The shareholders' agreement contains provisions which, among other things
and subject to certain exceptions: (i) restrict the ability of the management
and employee stockholders to transfer their respective ownership interests,
subject to certain rights of first refusal and tag-along rights held by the
other stockholders; (ii) grant certain drag-along rights to DLJ Merchant Banking
to require the remaining stockholders to sell their shares if DLJ Merchant
Banking sells more than 50% of the then-outstanding shares of Holdings' common
stock of Holdings and grant to the remaining stockholders, under certain
circumstances, tag-along rights with respect to sales by DLJ Merchant Banking;
(iii) grant to stockholders certain registration rights; and (iv) grant Mr.
Uhlenhop the right to require Holdings to sell shares to him on the same basis
and in a proportional amount as any sold by Holdings to DLJ Merchant Banking.
Holdings or its designee has the right to repurchase all shares owned by
any management stockholder upon the termination of such management stockholder's
employment with us. Additionally, DLJ Merchant Banking was granted demand
registration and piggyback registration rights. This agreement was negotiated on
an arm's length basis.
STOCK PURCHASE AGREEMENT WITH DLJ MERCHANT BANKING
On March 26, 2002, Holdings and DLJ Merchant Banking Partners II, L.P.
entered into a stock purchase agreement pursuant to which DLJ Merchant Banking
purchased from Holdings 20,000,000 shares of Holdings' common stock for a
purchase price of $1.00 per share. The proceeds of that investment can be used
by Holdings for general corporate purposes, which may include the purchase of
debt and/or equity securities. Holdings used $5.0 million of the proceeds to
repurchase shares of ZS and $1.0 million to repurchase shares of Robert
Uhlenhop. The stock purchase agreement further provides that DLJ Merchant
Banking may, in its discretion, purchase up to an additional 5,000,000 shares of
Holdings' Common Stock at any time prior to December 31, 2002. We believe the
terms of this agreement were no less favorable to us than could have been
obtained from independent third parties.
STOCK REPURCHASE AGREEMENT WITH ZS VH II L.P.
On June 21, 2002, ZS VH II L.P., Holdings and DLJ Merchant Banking Partners
II, L.P. entered into a stock purchase agreement pursuant to which ZS VH II L.P.
sold 5,000,000 shares of common stock of Holdings for a purchase price of $1.00
per share to Holdings.
The stock purchase agreement provides that each of the parties, along with
ZS VH L.P., agree to release each other from any and all claims, liabilities and
other legal actions which may
52
<Page>
have arisen or may later arise between the parties under: (i) the Agreement and
Plan of Merger, dated as of May 22, 1997, by and among VH Acquisition Corp.,
Holdings, DLJ Merchant Banking Partners II, L.P. and certain of its affiliates,
and certain shareholders, and the ancillary documents delivered in connection
with the execution of the Agreement and Plan of Merger, (ii) the Shareholders'
Agreement, (iii) and the stock purchase agreement. Robert Horne, the board
designee of ZS, resigned concurrently with the sale of the shares. Under the
agreement, Holdings releases Mr. Horne from any liability for any claims in
connection with Mr. Horne serving as a director of Holdings.
The purchase price paid for ZS VH II L.P.'s shares came from cash on hand
of Holdings, which cash was proceeds from DLJ Merchant Banking's equity
contribution in March, 2002. We believe the terms of this transaction were no
less favorable to us than could have been obtained from independent third
parties.
STOCK REPURCHASE AGREEMENT WITH ROBERT UHLENHOP
On June 21, 2002, Holdings and Von Hoffmann entered into a stock purchase
agreement with Robert Uhlenhop, the Chairman of the Board of Directors of
Holdings, and the Robert A. Uhlenhop 1998 Irrevocable Trust Dated January 27,
1998. Each of Mr. Uhlenhop and the trust sold 1,000,000 shares of Holdings'
outstanding common stock to Holdings in exchange for $1,000,000. Of the
$1,000,000 received by Mr. Uhlenhop, approximately $797,000 was paid to Von
Hoffmann as settlement of the outstanding principal amount of, and the unpaid
and accrued interest through June 19, 2002 on, the non-recourse secured
promissory note, dated as of May 22, 1997, from Mr. Uhlenhop to Von Hoffmann.
The payment from Mr. Uhlenhop to Von Hoffmann fully discharged and satisfied all
of Mr. Uhlenhop's obligations to Von Hoffmann under the promissory note. The
purchase price paid for Mr. Uhlenhop's shares came from cash on hand of
Holdings, which cash was proceeds from DLJ Merchant Banking's equity
contribution in March, 2002. We believe the terms of this transaction were no
less favorable to us than could have been obtained from independent third
parties.
FINANCIAL SERVICES AGREEMENT
On March 26, 2002 we entered into a financial advisory agreement with CSFB.
Pursuant to this agreement, CSFB has been retained to act as our financial
advisor for a five-year period, unless terminated earlier. Under this agreement
CSFB, among other things, assists us in analyzing our operations and performance
and future prospects. In addition, CSFB advises us on our continued evaluation
of our capital structure, potential acquisitions and strategic plan and
alternatives. For its services, CSFB is entitled to receive up to $3.5 million,
payable at certain times and in certain amounts, depending upon the services
performed. As contemplated by the agreement, we have agreed to indemnify CSFB
against specified losses or liability arising out of, or in connection with,
advice and services rendered under the agreement. This agreement is terminable
by either us or CSFB at any time upon written notice. We believe the terms of
this agreement are no less favorable to us than could have been obtained from
independent third parties.
53
<Page>
NELSON LOAN
On May 22, 1997, pursuant to a non-recourse secured promissory note, DLJ
loaned Craig Nelson, the Vice President of Human Resources of Von Hoffmann,
$100,000 at an interest rate of 9.4% per annum for the purchase of 100,000
shares of Holdings' common stock. DLJ subsequently sold this promissory note to
us. As of December 31, 2002, the balance was $167,404. This agreement was
negotiated on an arm's length basis.
OTHER
CSFB and certain of its affiliates have performed investment banking,
financial advisory and/or lending services for us from time to time, for which
they have received customary compensation and may do so in the future. CSFB is
the syndication agent under our senior credit facility and received customary
compensation in connection with acting in that role. CSFB was also an initial
purchaser for the 2009 notes. CSFB helped facilitate Holdings' open market
repurchases of Holdings' Subordinated Exchange Debentures, for which it received
a fee. We believe the compensation received by CSFB in these transactions was no
less favorable to us than could have been obtained from independent third
parties.
54
<Page>
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITY
We entered into a senior credit facility on March 26, 2002, which provides
for revolving loans of $90.0 million, and which includes a $10.0 million
sublimit for the issuance of stand by and commercial letters of credit and a
$10.0 million sublimit for swingline loans. As of March 31, 2003, we had $4.1
million of outstanding indebtedness under the senior credit facility and had $80
million of additional borrowings available under our senior credit facility,
after excluding $1.6 million of letters of credit outstanding under that
facility. The facility will terminate November 15, 2006, although in certain
circumstances it can be extended to March 26, 2007. At any time prior to that
date, we have the right, subject to finding lenders willing to provide such
increase, to effectuate an one-time increase to provide for borrowings of up to
$100.0 million under the senior credit facility. Von Hoffmann is the borrower
under the facility and Holdings and all of Von Hoffmann subsidiaries
unconditionally guarantee Von Hoffman's obligations under the facility.
All borrowings, except for swingline loans, bear interest, at our option,
at either the administrative agent's alternate base rate plus 1.75% per annum or
reserve-adjusted LIBOR plus 3.0% per annum. Swingline loans bear interest as
base rate loans. The applicable margins may be adjusted beginning approximately
two quarters after the closing of the facility based on our ratio of debt to
EBITDA. We pay customary administration fees and expenses and pay commitment
fees of 0.625% per annum on the unused portion of the senior credit facility.
We may prepay outstanding revolving loans without penalty, PROVIDED,
HOWEVER, that LIBOR breakage costs, if any, will be for our account. Subject to
certain exceptions, we are required to make certain mandatory prepayments (and
concurrently to reduce the commitments under the facility), including with: (i)
100% of the net proceeds from certain asset sales; (ii) 100% of the net proceeds
from the sale or issuance of certain debt securities other than the notes; (iii)
50% of the net proceeds from the sale or issuance of certain equity securities;
and (iv) certain proceeds of casualty or condemnation events. We are also
required to paydown our revolving facility from time to time with excess cash.
Borrowings and letters of credit under the senior credit facility are
limited to an amount not in excess of a borrowing base equal to specified
percentages of our eligible inventory and receivables and, subject to a limit,
our eligible property, plant and equipment.
Our obligations under the senior credit facility are secured by a
first-priority perfected lien on our outstanding capital stock and substantially
all of our and our subsidiaries' property and assets.
The senior credit facility contains customary covenants and restrictions on
our ability to engage in certain activities, including incurring debt or liens,
paying dividends or repurchasing our equity securities, voluntarily prepaying
certain indebtedness (including the 2009 notes and the 2007 notes), selling
assets, making acquisitions, entering into mergers or similar transactions or
engaging in transactions with affiliates. The senior credit facility restricts
us from repurchasing the 2009 notes and the 2007 notes prior to their maturity,
except under certain circumstances. In addition, the senior credit facility
requires that we meet or exceed certain
55
<Page>
fixed charge coverage ratios and not exceed specified leverage ratios. It also
includes customary events of default.
56
<Page>
DESCRIPTION OF THE REGISTERED SECURITIES
THE FOLLOWING DESCRIPTION IS ONLY A SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURES AND THE REGISTERED SECURITIES THAT WE CONSIDER MATERIAL. YOU CAN
RECEIVE A COPY OF THE INDENTURES UPON REQUEST TO US AT THE ADDRESS SET FORTH
UNDER "WHERE YOU CAN FIND MORE INFORMATION."
10 1/4% SENIOR NOTES DUE 2009
You can find the definitions of certain terms used in this description of
the 2009 notes under the subheading "Certain Definitions." In this description,
the term "Von Hoffmann" refers only to Von Hoffmann Corporation and not to any
of its subsidiaries.
Von Hoffmann issued the old 2009 notes under an indenture among itself, the
Guarantors and U.S. Bank National Association, as trustee, in a private
transaction that was not subject to the registration requirements of the
Securities Act. The terms of the 2009 notes include those stated in the
indenture governing them and those made part of that indenture by reference to
the Trust Indenture Act of 1939, as amended.
The following description is a summary of the material provisions of the
indenture governing the 2009 notes and the registration rights agreement
relating to the 2009 notes. It does not restate those agreements in their
entirety. We urge you to read the indenture and the registration rights
agreement governing the 2009 notes because they define your rights as holders of
the notes. Copies of the indenture and the registration rights agreement
governing the 2009 notes are available as set forth below under "Additional
Information."
BRIEF DESCRIPTION OF THE 2009 NOTES AND THE NOTE GUARANTEES
The 2009 notes:
- will be general unsecured obligations of Von Hoffmann;
- will be PARI PASSU in right of payment with all existing and future
senior indebtedness of Von Hoffmann;
- will be senior in right of payment to all existing and future
subordinated indebtedness of Von Hoffmann; and
- will be unconditionally guaranteed by the Guarantors.
However, the 2009 notes will be effectively subordinated to all borrowings
under our senior credit facility, which will be secured by substantially all of
the assets of Von Hoffmann and the Guarantors. See "Risk Factors" Your right to
receive payments on the securities is effectively subordinated to the rights of
our existing and future secured creditors."
THE NOTE GUARANTEES
The 2009 notes will be guaranteed by all of Von Hoffmann's current and
future Domestic Subsidiaries and, for so long as Holdings guarantees any of the
Credit Facilities, by Holdings.
57
<Page>
Each guarantee of the 2009 notes:
- will be a general unsecured obligation of the Guarantor;
- will be PARI PASSU in right of payment to all existing and future
unsecured senior indebtedness of that Guarantor; and
- will be senior in right of payment to all existing and future
subordinated indebtedness of that Guarantor.
As of the date of this prospectus, all of Von Hoffmann's subsidiaries will
be "Restricted Subsidiaries." However, under the circumstances described below
under the subheading "Certain Covenants Designation of Restricted and
Unrestricted Subsidiaries," Von Hoffmann will be permitted to designate certain
of its subsidiaries as "Unrestricted Subsidiaries." Von Hoffmann's Unrestricted
Subsidiaries will generally not be subject to the restrictive covenants in the
indenture governing the 2009 notes and will not guarantee the 2009 notes.
PRINCIPAL, MATURITY AND INTEREST
The indenture governing the 2009 notes does not limit the maximum aggregate
principal amount of the 2009 notes that Von Hoffmann may issue thereunder. Von
Hoffmann issued the old 2009 notes in an aggregate principal amount of $215
million. Von Hoffmann may issue additional 2009 notes from time to time, subject
to the covenant described below under the caption "Certain Covenants Incurrence
of Indebtedness and Issuance of Preferred Stock." The outstanding 2009 notes and
any additional notes subsequently issued under the indenture governing the 2009
notes will be treated as a single class for all purposes under the indenture
governing the 2009 notes, including, without limitation, waivers, amendments,
redemptions and offers to purchase. Von Hoffmann will issue the 2009 notes in
denominations of $1,000 and integral multiples of $1,000. The 2009 notes will
mature on March 15, 2009. Interest on the 2009 notes will accrue at the rate of
10 1/4% per annum and will be payable semi-annually in arrears on February 15
and August 15, commencing on August 15, 2002. Von Hoffmann will make each
interest payment to the holders of record on the immediately preceding February
1 and August 1. Interest on the 2009 notes will accrue from the date of original
issuance or, if interest has already been paid, from the date it was most
recently paid. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
All payments on 2009 notes will be made at the office or agency of the
paying agent unless Von Hoffmann elects to make interest payments by check
mailed to the holders at their address set forth in the register of holders.
PAYING AGENT AND REGISTRAR FOR THE 2009 NOTES
The trustee currently acts as paying agent and registrar. Von Hoffmann may
change the paying agent or registrar without prior notice to the holders of the
2009 notes, and Von Hoffmann or any of its subsidiaries may act as paying agent
or registrar.
58
<Page>
NOTE GUARANTEES
The 2009 notes will be guaranteed by all of Von Hoffmann's current and
future Domestic Subsidiaries and, so long as Holdings guarantees any of the
Credit Facilities, by Holdings. The note guarantees will be joint and several
obligations of the Guarantors. The obligations of each Guarantor under its note
guarantee will be limited as necessary to prevent that note guarantee from
constituting a fraudulent conveyance under applicable law. See "Risk Factors"
Federal and State statutes allow courts, under specific circumstances, to void
guarantees and require note holders to return payments received from
guarantors."
No Guarantor may consolidate with or merge with or into (whether or not
such Guarantor is the surviving Person) or sell or otherwise dispose of all or
substantially all of its assets to, another corporation, Person or entity,
whether or not affiliated with such Guarantor, unless:
(1) subject to the provisions below, the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) assumes
all the obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to the
trustee, under the indenture governing the 2009 notes;
(2) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(3) Von Hoffmann would be permitted, immediately after giving effect to
such transaction, to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the
covenant described under the caption "Certain Covenants" Incurrence of
Indebtedness and Issuance of Preferred Stock."
Notwithstanding the provisions of this paragraph, the indenture governing the
2009 notes will not prohibit the merger of two of Von Hoffmann's Restricted
Subsidiaries or the merger of a Restricted Subsidiary into Von Hoffmann.
The note guarantee of a Guarantor will be released:
(1) in connection with any sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise; or
(2) in connection with any sale or other disposition of all of the Capital
Stock of a Guarantor; or
(3) the designation of a Guarantor as an Unrestricted Subsidiary;
PROVIDED, that, in the case of a sale or other disposition of all of the assets
or Capital Stock of a Guarantor or the designation of a Guarantor as an
Unrestricted Subsidiary, the Net Proceeds of such sale or other disposition are
applied, or such designation is made, in accordance with the applicable
provisions of the indenture governing the 2009 notes. See "Repurchase at the
Option of Holders--Asset Sales" and "Certain Covenants--Restricted Payments."
The indenture
59
<Page>
governing the 2009 notes will also provide that if all of the Guarantees of
Holdings issued pursuant to Credit Facilities are released, Holdings' note
guarantee will also be released. Except as set forth above, the limitations and
restrictions in the indenture governing the 2009 notes will not apply to, limit
or restrict the operations of Holdings.
OPTIONAL REDEMPTION
The 2009 notes may be redeemed, in whole or in part, at any time prior to
March 15, 2005 at the option of Von Hoffmann upon not less than 30 nor more than
60 days prior notice mailed by first-class mail to each holder's registered
address, at a redemption price equal to, as determined by the Reference Treasury
Dealer, the sum of the present values of the Remaining Scheduled Payments
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus accrued
and unpaid interest and Liquidated Damages, if any, to the applicable date of
redemption.
At any time on or prior to March 15, 2005, Von Hoffmann may redeem up to
35% of the aggregate principal amount of the 2009 notes issued under the
indenture governing the 2009 notes at a redemption price of 110.25% of the
principal amount, plus accrued and unpaid interest and Liquidated Damages, if
any, to the redemption date, with the net proceeds of a sale of Equity Interests
(other than Disqualified Stock) of Von Hoffmann or a capital contribution to Von
Hoffmann's common equity from Holdings; PROVIDED that:
(1) at least 65% of the aggregate principal amount of the 2009 notes
issued under the indenture governing the 2009 notes remains
outstanding immediately after the occurrence of such redemption
(excluding the 2009 notes held by Von Hoffmann and its Subsidiaries);
and
(2) the redemption occurs within 90 days of the date of the closing of
such sale or contribution.
The indenture governing the 2009 notes will not restrict Von Hoffmann's
ability to separately make open market, privately negotiated or other purchases
of the 2009 notes from time to time.
Except pursuant to the first two paragraphs of this section, the 2009 notes
will not be redeemable at Von Hoffmann's option prior to March 15, 2005.
On or after March 15, 2005, Von Hoffmann may redeem all or a part of the
2009 notes upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, on the 2009
notes redeemed, to the applicable redemption date, if redeemed during the
twelve-month period beginning on March 15 of the years indicated below:
<Table>
<Caption>
YEAR PERCENTAGE
- ---- ----------
2005.................................................. 107.688%
2006.................................................. 105.125%
2007.................................................. 102.563%
2008 and thereafter................................... 100.000%
</Table>
60
<Page>
Unless Von Hoffmann defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the 2009 notes or
portions thereof called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," Von
Hoffmann is not required to make mandatory redemption or sinking fund payments
with respect to the 2009 notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of the 2009 notes will have the
right to require Von Hoffmann to repurchase all or any part (equal to $1,000 or
an integral multiple of $1,000) of that holder's 2009 notes pursuant to a Change
of Control Offer on the terms set forth in the indenture governing the 2009
notes. In the Change of Control Offer, Von Hoffmann will offer at an offer price
in cash equal to 101% of the aggregate principal amount of the 2009 notes
repurchased plus accrued and unpaid interest and Liquidated Damages, if any, on
the 2009 notes repurchased, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, Von Hoffmann will
mail a notice to each holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase the 2009 notes on
the date specified in the notice, which date will be no earlier than 30 days and
no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"), pursuant to the procedures required by the indenture
governing the 2009 notes and described in such notice. Von Hoffmann will comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent those laws and
regulations are applicable in connection with the repurchase of the 2009 notes
as a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions of
the indenture governing the 2009 notes, Von Hoffmann will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under the Change of Control provisions of the indenture
governing the 2009 notes by virtue of such conflict.
On the Change of Control Payment Date, Von Hoffmann will, to the extent
lawful:
(1) accept for payment all the 2009 notes or portions of the 2009 notes
properly tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all the 2009 notes or portions of the 2009 notes
properly tendered; and
(3) deliver or cause to be delivered to the trustee the 2009 notes
properly accepted together with an Officers' Certificate stating the
aggregate principal amount of the 2009 notes or portions of the 2009
notes being purchased by Von Hoffmann.
61
<Page>
The paying agent will promptly mail to each holder of the 2009 notes
properly tendered the Change of Control Payment for such 2009 notes, and the
trustee will promptly authenticate and mail (or cause to be transferred by book
entry) to each holder a new 2009 note equal in principal amount to any
unpurchased portion of the 2009 notes surrendered, if any; PROVIDED that each
new 2009 note will be in a principal amount of $1,000 or an integral multiple of
$1,000.
Von Hoffmann will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The provisions described above that require Von Hoffmann to make a Change
of Control Offer following a Change of Control will be applicable whether or not
any other provisions of the indenture governing the 2009 notes are applicable.
Except as described above with respect to a Change of Control, the indenture
governing the 2009 notes does not contain provisions that permit the holders of
the 2009 notes to require that Von Hoffmann repurchase or redeem the 2009 notes
in the event of a takeover, recapitalization or similar transaction.
The senior credit facility limits Von Hoffmann from purchasing or redeeming
any 2009 notes, and also provides that certain change of control events with
respect to Von Hoffmann would constitute a default thereunder. Any future credit
agreements or other agreements to which Von Hoffmann becomes a party may contain
similar restrictions and provisions. In the event a Change of Control occurs at
a time when Von Hoffmann is prohibited from purchasing or redeeming the 2009
notes, it could seek the consent of its lenders to the purchase of the 2009
notes or could attempt to refinance the borrowings that contain such
prohibition. If Von Hoffmann does not obtain such a consent or repay such
borrowings, it will remain prohibited from purchasing the 2009 notes. In such
case, Von Hoffmann's failure to purchase tendered 2009 notes would constitute an
Event of Default under the indenture governing the 2009 notes, which would, in
turn, constitute a default under the senior credit facility. In addition, Von
Hoffmann's ability to pay cash to the holders of the 2009 notes upon a
repurchase may be limited by its then existing financial resources.
Von Hoffmann will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture governing the 2009 notes applicable to a Change of Control
Offer made by Holdings and purchases all the 2009 notes validly tendered and not
withdrawn under the Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Von Hoffmann and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a holder of the 2009 notes to require Von
Hoffmann to repurchase the 2009 notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of Von Hoffmann
and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
Von Hoffmann's ability to pay cash to the holders of the 2009 notes upon a
repurchase may be limited by Von Hoffmann then existing financial resources. See
"Risk Factors" We may
62
<Page>
not have the ability to raise the funds necessary to finance the change of
control offer required by the securities indentures."
ASSET SALES
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) Von Hoffmann (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of the Asset Sale at least equal to
the fair market value (evidenced by a resolution of the board of
directors of Von Hoffmann set forth in an Officers' Certificate
delivered to the trustee) of the assets or Equity Interests issued or
sold or otherwise disposed of; and
(2) at least 75% of the consideration received in the Asset Sale by Von
Hoffmann or such Restricted Subsidiary is in the form of cash. For
purposes of this provision, each of the following will be deemed to be
cash:
(a) any liabilities, as shown on Von Hoffmann's or such
Restricted Subsidiary's most recent consolidated balance sheet, of Von
Hoffmann or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to
the 2009 notes or any note guarantee) that are assumed by the
transferee of any such assets; and
(b) any securities, notes or other obligations received by Von
Hoffmann or any such Restricted Subsidiary from such transferee that
are immediately converted by Von Hoffmann or such Restricted
Subsidiary into cash (to the extent of the cash received in that
conversion).
The 75% limitation referred to in clause (2) above will not apply to any
Asset Sale in which the cash portion of the consideration received therefrom,
determined in accordance with the foregoing proviso, is equal to or greater than
what the after-tax proceeds would have been had such Asset Sale complied with
the aforementioned 75% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Von Hoffmann or any Restricted Subsidiary may apply those Net Proceeds at its
option:
(1) to repay Indebtedness (other than Indebtedness that by its terms is
subordinated in right of payment to the 2009 notes or any note
guarantee) and, if the Indebtedness repaid is revolving credit
Indebtedness, to correspondingly reduce commitments with respect
thereto;
(2) to acquire a controlling interest in another business;
(3) to make a capital expenditure; or
(4) to acquire other long-term assets,
63
<Page>
in each case in accordance with the terms of the indenture governing the 2009
notes. Pending the final application of any Net Proceeds, Von Hoffmann may
temporarily reduce revolving credit borrowings or otherwise invest the Net
Proceeds in any manner that is not prohibited by the indenture governing the
2009 notes.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $5.0 million or, if no Senior
Subordinated Notes are outstanding, $10.0 million, Von Hoffmann will make an
offer (an "Asset Sale Offer") to all holders of the 2009 notes and, at its
option, an offer to all holders of other Indebtedness that ranks equally with
the 2009 notes containing similar provisions to those in the indenture governing
the 2009 notes with respect to offers to purchase or redeem with the proceeds of
asset sales to purchase the maximum principal amount of the 2009 notes that may
be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer
for the 2009 notes will be equal to 100% of principal amount plus accrued and
unpaid interest and Liquidated Damages, if any, to the date of purchase, and
will be payable in cash. If any Excess Proceeds remain after consummation of an
Asset Sale Offer and such offer for PARI PASSU Indebtedness, Von Hoffmann may
use those Excess Proceeds for general corporate purposes, including to make a
similar offer for the Senior Subordinated Notes pursuant to the indenture for
such notes. If the aggregate principal amount of notes tendered into such Asset
Sale Offer and such other offer exceeds the amount of Excess Proceeds, the
trustee will select the 2009 notes to be purchased on a pro rata basis. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset
at zero.
Notwithstanding the foregoing, Von Hoffmann and its Restricted Subsidiaries
will be permitted to consummate an Asset Sale without complying with the
preceding paragraphs if (i) Von Hoffmann or the applicable Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets or other property
sold, issued or otherwise disposed of (as evidenced by a resolution of Von
Hoffmann's board of directors set forth in an Officers' Certificate delivered to
the trustee), and (ii) at least 75% of the consideration for such Asset Sale
constitutes assets or other property of a kind usable by Von Hoffmann and its
Restricted Subsidiaries in the business of Von Hoffmann and its Restricted
Subsidiaries as conducted by Von Hoffmann and its Restricted Subsidiaries on the
date of the indenture governing the 2009 notes; PROVIDED that any cash
consideration received by Von Hoffmann or any of its Restricted Subsidiaries in
connection with any Asset Sale permitted to be consummated under this paragraph
shall constitute Net Proceeds subject to the provisions of the two preceding
paragraphs.
Von Hoffmann will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with each
repurchase of the 2009 notes pursuant to an Asset Sale Offer. To the extent that
the provisions of any securities laws or regulations conflict with the Asset
Sale provisions of the indenture governing the 2009 notes, Von Hoffmann will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Asset Sale provisions of the
indenture governing the 2009 notes by virtue of such conflict.
64
<Page>
SELECTION AND NOTICE
Except as otherwise provided in the indenture governing the 2009 notes, if
less than all of the 2009 notes are to be redeemed at any time, the trustee will
select notes for redemption as follows:
(1) if the 2009 notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange on which the 2009 notes are listed; or
(2) if the 2009 notes are not listed on any national securities exchange,
on a pro rata basis, by lot or by such method as the trustee deems
fair and appropriate.
No 2009 notes of $1,000 or less can be redeemed in part. Notices of
redemption will be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of the 2009 notes to be redeemed
at its registered address, except that redemption notices may be mailed more
than 60 days prior to a redemption date if the notice is issued in connection
with a defeasance of the 2009 notes or a satisfaction and discharge of the
indenture governing the 2009 notes. Notices of redemption may not be
conditional.
If any 2009 note is to be redeemed in part only, the notice of redemption
that relates to that 2009 note will state the portion of the principal amount of
that 2009 note that is to be redeemed. A new 2009 note in principal amount equal
to the unredeemed portion of the original 2009 note will be issued in the name
of the holder of the 2009 notes upon cancellation of the original 2009 note. The
2009 notes called for redemption become due on the date fixed for redemption. On
and after the redemption date, interest ceases to accrue on the 2009 notes or
portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of Von Hoffmann's Equity Interests (other than dividends or
distributions payable in Equity Interests (other than Disqualified
Stock) of Von Hoffmann);
(2) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of Von Hoffmann;
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated in right of payment to the 2009 notes ("subordinated
Indebtedness"), except a payment of interest or a payment of principal
at Stated Maturity; or
65
<Page>
(4) make any Restricted Investment (all such payments and other actions
set forth in clauses (1) through (4) above being collectively referred
to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(2) Von Hoffmann would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described under the caption "Incurrence of
Indebtedness and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Von Hoffmann and its Restricted
Subsidiaries since May 22, 1997 (excluding Restricted Payments
permitted by clause (2) of the next succeeding paragraph), is less
than the sum of:
(a) 50% of the Consolidated Net Income of Von Hoffmann for the period
(taken as one accounting period) commencing July 1, 1997 to the
end of Von Hoffmann's most recently ended fiscal quarter for
which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit), PLUS
(b) 100% of the aggregate net cash proceeds received by Von Hoffmann
from the issue or sale since May 22, 1997 of (A) Equity Interests
of Von Hoffmann (other than Disqualified Stock), (B) any
Restricted Subsidiaries or (C) Disqualified Stock or debt
securities of Von Hoffmann that have been converted into Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of Von Hoffmann
and other than Disqualified Stock or convertible debt securities
that have been converted into Disqualified Stock), PLUS
(c) 100% of the aggregate amount of capital contributions to Von
Hoffmann's common equity since May 22, 1997, PLUS
(d) 100% of the net proceeds received by Von Hoffmann or any of its
Restricted Subsidiaries since May 22, 1997 from (A) the sale or
other disposition of any Restricted Investment or (B) dividends
on or the sale of stock of Unrestricted Subsidiaries.
66
<Page>
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the indenture governing the 2009
notes;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of
Von Hoffmann in exchange for, or out of the net proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary
of Von Hoffmann) of, other Equity Interests of Von Hoffmann (other
than any Disqualified Stock) or from the net proceeds of a capital
contribution by Holdings to Von Hoffmann; PROVIDED that the amount of
any such net proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition since May 22,
1997 shall be excluded from clause (3)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness (a) with the net proceeds from an incurrence
of Permitted Refinancing Indebtedness or (b) in an amount not to
exceed the net proceeds received by Von Hoffmann since May 22, 1997
from Subordinated Shareholder Loans (other than Subordinated
Shareholder Loans that have constituted Permitted Refinancing
Indebtedness);
(4) the repurchase, redemption or other acquisition or retirement for
value of any Management Equity Interests or the repurchase, redemption
or other acquisition or retirement for value of Indebtedness incurred
pursuant to clause (12) of the second paragraph of the covenant
described below under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock" (including, in each case, any dividend or
distribution to Holdings used for such purpose); PROVIDED that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Management Equity Interests shall not exceed the sum of (a)
$3.0 million in any twelve-month period but not more than $15.0
million in the aggregate plus (b) cash proceeds from the sale of
Management Equity Interests to management, directors or consultants of
Von Hoffmann (or any of its Restricted Subsidiaries) since May 22,
1997;
(5) repurchases of Equity Interests deemed to occur upon exercise of stock
options if such Equity Interests represent a portion of the exercise
price of such options;
(6) other Restricted Investments not to exceed $15.0 million;
(7) Restricted Investments made or received by Von Hoffmann and its
Restricted Subsidiaries as non-cash consideration from Asset Sales to
the extent permitted by the covenant described under "Repurchase at
the Option of Holders--Asset Sales" or received by a person in
exchange for trade or other claims against such person in connection
with a financial reorganization or restructuring or such person;
67
<Page>
(8) any loans, advances, distributions or payments between Von Hoffmann
and its Restricted Subsidiaries;
(9) the payment of dividends or distributions to Holdings in an amount not
to exceed $2.0 million per calendar year to allow Holdings to pay
reasonable legal, accounting, investment banking, financial advisory,
outside director or other professional and administrative fees and
expenses incurred by it related to its business;
(10) payments pursuant to the Tax Sharing Agreement;
(11) payments to CSFB or dividends to Holdings to allow Holdings to pay
CSFB in respect of fees for advisory services in accordance with the
Financial Advisory Agreement;
(12) upon the occurrence of a Change of Control, during the 60-day period
commencing after the completion of the offer to repurchase the notes
pursuant to the covenant described under "Repurchase at the Option of
Holders--Change of Control" above (including the purchase of the 2009
notes tendered), any purchase or redemption of subordinated
Indebtedness or any Capital Stock of Von Hoffmann required pursuant to
the terms thereof as a result of such Change of Control at a purchase
or redemption price not to exceed 101% of the outstanding principal
amount or liquidation amount thereof, plus accrued and unpaid interest
or dividends (if any); PROVIDED, HOWEVER, that at the time of such
purchase or redemption no Default shall have occurred and be
continuing (or would result therefrom);
(13) upon the occurrence of an Asset Sale, during the 60-day period
commencing after the completion of an Asset Sale Offer to repurchase
the 2009 notes pursuant to the covenant described under "Repurchase at
the Option of Holders--Asset Sales" above (including the purchase of
the 2009 notes tendered), any purchase or redemption of subordinated
Indebtedness or any Capital Stock of Von Hoffmann required pursuant to
the terms thereof as a result of such Asset Sale at a purchase or
redemption price not to exceed 100% of the outstanding principal
amount or liquidation amount thereof, plus accrued and unpaid interest
or dividends (if any); PROVIDED, HOWEVER, that at the time of such
purchase or redemption no Default shall have occurred and be
continuing (or would result therefrom); and
(14) dividends or distributions in an amount not to exceed the aggregate
amount of capital contributions received by Von Hoffmann since the
date of the indenture governing the 2009 notes, less any amount used
from capital contributions to redeem, repurchase, retire, defease or
acquire subordinated Indebtedness or Equity Interests of Von Hoffmann
pursuant to clause (2) of this paragraph; PROVIDED that the amount of
such capital contributions that are utilized for such dividends or
distributions shall be excluded from clause (3)(c) of the preceding
paragraph.
68
<Page>
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Von Hoffmann or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the board
of directors whose resolution with respect thereto shall be delivered to the
trustee. Not later than the date of making any Restricted Payment, Von Hoffmann
shall deliver to the trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; PROVIDED, HOWEVER, that Von Hoffmann or any Guarantor may
incur Indebtedness (including Acquired Debt) and Von Hoffmann's Restricted
Subsidiaries may issue shares of preferred stock if the Fixed Charge Coverage
Ratio for Von Hoffmann's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such preferred stock is issued
would have been at least 2.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the preferred stock had been issued, as the
case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following:
(1) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness under the Credit Facilities pursuant to this clause (1)
in an aggregate principal amount not to exceed $115.0 million at any
one time outstanding;
(2) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Existing Indebtedness;
(3) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness represented by the 2009 notes and the related note
guarantees, the registered 2009 notes and any new notes issued in
exchange for the 2007 notes or additional notes issued under the
indenture governing the 2009 notes provided any new notes are issued
pursuant to arrangements similar to those provided for in the exchange
offer provisions of the registration rights agreement for the 2009
notes;
(4) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations in an aggregate principal
amount not to exceed $50.0 million at any time outstanding;
69
<Page>
(5) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of Acquired Debt in an amount not to exceed $25.0 million; PROVIDED
that such Indebtedness was incurred by the prior owner of such assets
or such Restricted Subsidiary prior to such acquisition by Von
Hoffmann or one of its Restricted Subsidiaries and was not incurred in
connection with, or in contemplation of, such acquisition by Von
Hoffmann or one of its Restricted Subsidiaries;
(6) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace
Indebtedness that was permitted by the indenture governing the 2009
notes to be incurred;
(7) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among Von Hoffmann and any of
its Restricted Subsidiaries;
(8) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the indenture governing
the 2009 notes to be outstanding;
(9) the guarantee by Von Hoffmann or any of the Guarantors of Indebtedness
of Von Hoffmann or a Restricted Subsidiary of Von Hoffmann that was
permitted to be incurred by the indenture governing the 2009 notes;
(10) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness arising from the issuance of Subordinated Shareholder
Loans in an aggregate principal amount not to exceed $50.0 million
outstanding at any one time;
(11) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of Indebtedness to repurchase, redeem or otherwise acquire or retire
for value Management Equity Interests as permitted by clause (4) of
the second paragraph of the covenant described above under the caption
"Restricted Payments"; PROVIDED that such Indebtedness is subordinated
to the 2009 notes to at least the same extent as Von Hoffmann's Senior
Subordinated Notes are subordinated to the 2009 notes; and
(12) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (12), not to
exceed $30.0 million.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (12) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, Von
Hoffmann will be permitted to classify such item of Indebtedness on the date of
its incurrence
70
<Page>
under one or more of such clauses and such paragraph, or later reclassify all or
a portion of such item of Indebtedness as having been incurred, in any manner
that complies with this covenant. Indebtedness under the Credit Facilities
outstanding on the date on which the 2009 notes are first issued and
authenticated under the indenture governing the 2009 notes will be deemed to
have been incurred on such date in reliance on the exception provided by clause
(1) above.
LIENS
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (the "Initial Lien") securing Indebtedness or trade payables on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens
unless the 2009 notes are equally and ratably secured (except that Liens
securing subordinated Indebtedness shall be expressly subordinate to Liens
securing the notes to the same extent such subordinated Indebtedness is
subordinate to the 2009 notes). Any Lien created for the benefit of the holders
of the 2009 notes pursuant to the preceding sentence shall provide by its terms
that such Lien shall automatically and unconditionally be released and
discharged upon the release and discharge of the Initial Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions to Von Hoffmann or any
of its Restricted Subsidiaries on its Capital Stock or with respect to
any other interest or participation in, or measured by, its profits,
or pay any indebtedness owed to Von Hoffmann or any of its Restricted
Subsidiaries;
(2) make loans or advances to or guarantee any Indebtedness of Von
Hoffmann or any of its Restricted Subsidiaries; or
(3) transfer any of its properties or assets to Von Hoffmann or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the indenture
governing the 2009 notes;
(2) the Credit Facilities as in effect as of the date of the indenture
governing the 2009 notes, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, PROVIDED that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are not materially more
restrictive with respect to such dividend and other payment
restrictions than those contained in
71
<Page>
the Credit Facilities as in effect on the date of the indenture
governing the 2009 notes;
(3) the indenture governing the 2009 notes, the 2009 notes and the note
guarantees;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of a Person
acquired by, merged into or consolidated with Von Hoffmann or any of
its Restricted Subsidiaries as in effect at the time of such
acquisition, merger or consolidation (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired,
PROVIDED that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the indenture governing the 2009 notes to be
incurred;
(6) customary non-assignment provisions in leases entered into in the
ordinary course of business;
(7) purchase money obligations for property acquired in the ordinary
course of business or Indebtedness incurred pursuant to clause (4) of
the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock" that impose restrictions
of the nature described in clause (3) of the preceding paragraph on
the property so acquired;
(8) Permitted Refinancing Indebtedness, PROVIDED that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are not materially more restrictive than those contained
in the agreements governing the Indebtedness being refinanced;
(9) restrictions with respect to sales of assets or dispositions of stock
of Von Hoffmann or any Restricted Subsidiary imposed pursuant to
agreements relating to the sale of such assets or stock; or
(10) any instrument governing Acquired Debt, or any Lien in respect of
Acquired Debt, assumed in connection with assets acquired by Von
Hoffmann or any of its Restricted Subsidiaries, as in effect at the
time of such acquisition, which encumbrance or restriction does not
extend to any other assets of Von Hoffmann or any of its Restricted
Subsidiaries, PROVIDED such Acquired Debt was permitted by the terms
of the indenture governing the 2009 notes to be incurred.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Von Hoffmann may not (1) consolidate or merge with or into (whether or not
Von Hoffmann is the surviving corporation) or (2) sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless:
72
<Page>
(1) Von Hoffmann is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than
Von Hoffmann) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation or
merger (if other than Von Hoffmann) or the entity or Person to which
such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of Von
Hoffmann under the 2009 notes and the indenture governing the 2009
notes pursuant to a supplemental indenture in a form reasonably
satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) except in the case of a merger of Von Hoffmann with or into a Wholly
Owned Subsidiary of Von Hoffmann, Von Hoffmann or the entity or Person
formed by or surviving any such consolidation or merger (if other than
Von Hoffmann), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made will, at the time
of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described above
under the caption "Incurrence of Indebtedness and Issuance of
Preferred Stock."
TRANSACTIONS WITH AFFILIATES
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
Von Hoffmann or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction by Von Hoffmann
or such Restricted Subsidiary with an unrelated Person; and
(2) Von Hoffmann delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the board of directors of
Von Hoffmann set forth in an Officers' Certificate certifying
that such Affiliate Transaction complies with clause (1) above
and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the board of directors
of Von Hoffmann, if any; and
73
<Page>
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, other than transactions between Von
Hoffmann or any of its Restricted Subsidiaries on the one hand,
and CSFB on the other hand, an opinion as to the fairness to the
holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking
firm of national standing.
The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by Von Hoffmann or any of its
Restricted Subsidiaries in the ordinary course of business of Von
Hoffmann or such Restricted Subsidiary and ordinary course loans to
employees;
(2) transactions between or among Von Hoffmann and/or its Restricted
Subsidiaries;
(3) Restricted Payments or Permitted Investments that are not prohibited
by the provisions of the indenture governing the 2009 notes described
above under the caption "Restricted Payments";
(4) payments and transactions in connection with the Refinancing; and
(5) any agreement as in effect on the date of the indenture governing the
2009 notes (including, without limitation, the senior credit facility)
or any amendment or replacement of such agreement or any transactions
contemplated thereby (including pursuant to any amendment or
replacement of such agreement) so long as any such amendment or
replacement agreement is not more disadvantageous to the holders of
the 2009 notes in any material respect than the original agreement as
in effect on the date of the indenture governing the 2009 notes.
ADDITIONAL SUBSIDIARY GUARANTEES
If Von Hoffmann or any of its Restricted Subsidiaries shall acquire or
create another Domestic Subsidiary after the date of the indenture governing the
2009 notes, then such newly acquired or created Domestic Subsidiary, except for
a Domestic Subsidiary that has properly been designated as an Unrestricted
Subsidiary in accordance with the indenture governing the 2009 notes for so long
as it continues to constitute an Unrestricted Subsidiary, shall execute a note
guarantee and deliver an opinion of counsel, in accordance with the terms of the
indenture governing the 2009 notes.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The board of directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by Von Hoffmann and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
properly designated will be deemed to be an Investment made as of the time of
74
<Page>
the designation and will reduce the amount available for Restricted Payments
under the first paragraph or clause (6) of the second paragraph of the covenant
described above under the caption "Restricted Payments" or Permitted
Investments, as determined by Von Hoffmann. That designation will only be
permitted if the Investment would be permitted at that time and if the
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
REPORTS
So long as any 2009 notes are outstanding, Von Hoffmann will furnish to the
holders of the 2009 notes all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if Von Hoffmann were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
Von Hoffmann and its Restricted Subsidiaries and, with respect to the annual
information only, a report thereon by Von Hoffmann's certified independent
accountants.
In addition, whether or not required by the Commission, Von Hoffmann will
file a copy of all of the foregoing information with the Commission for public
availability (unless the Commission will not accept such a filing) concurrently
with furnishing such information to holders of the 2009 notes.
Von Hoffmann and the Guarantors have also agreed that, for so long as any
2009 notes remain outstanding, they will furnish to the holders, upon their
request, the information required to be delivered pursuant to Rule 144A(d) (4)
under the Securities Act. However, to the extent not required by the Trust
Indenture Act, the indenture governing the 2009 notes will not require Von
Hoffmann to make any information available pursuant to the foregoing sentence or
the first paragraph of this covenant to any holder of the 2009 notes that Von
Hoffmann reasonably believes to be a competitor of Von Hoffmann.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the 2009 notes;
(2) default in payment when due of the principal of, or premium, if any,
on the 2009 notes;
(3) failure by Von Hoffmann to comply with the provisions described under
the captions "Repurchase at the Option of Holders--Change of Control,"
"Repurchase at the Option of Holders--Asset Sales," "Certain
Covenants--Restricted Payments," or "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock";
(4) failure by Von Hoffmann or any of its Subsidiaries for 60 days after
notice to comply with any of the other agreements in the indenture
governing the 2009 notes or in the 2009 notes;
75
<Page>
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Von Hoffmann or any of its
Subsidiaries (or the payment of which is guaranteed by Von Hoffmann or
any of its Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture governing the
2009 notes, if that default:
(a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of
such default and the aggregate amount of such principal, premium
and interest that has not been paid exceeds $5.0 million (a
"Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity, and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates $5.0 million or more;
(6) failure by Von Hoffmann or any of its Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(7) any note guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect or any Guarantor, or any Person acting on behalf of
any Guarantor, shall deny or disaffirm its obligations under its note
guarantee; and
(8) certain events of bankruptcy or insolvency with respect to Von
Hoffmann or any of its Restricted Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Von Hoffmann, any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding 2009 notes will become due
and payable immediately without further action or notice. Holders of the 2009
notes may not enforce the indenture governing the 2009 notes or the 2009 notes
except as provided in the indenture governing the 2009 notes. If any other Event
of Default occurs and is continuing, the trustee or the holders of at least 25%
in principal amount of the then outstanding 2009 notes may declare all the 2009
notes to be due and payable immediately.
In the event of a declaration of acceleration of the 2009 notes because an
Event of Default has occurred and is continuing as a result of the acceleration
of any Indebtedness described in clause (5) of the preceding paragraph, the
declaration of acceleration of the 2009 notes shall be automatically annulled if
the holders of any Indebtedness described in clause (5) have rescinded the
declaration of acceleration in respect of such Indebtedness within 30 days of
the date of such declaration and if (a) the annulment of the acceleration of the
2009 notes would not conflict with any judgment or decree of a court of
competent jurisdiction, and (b) all existing
76
<Page>
Events of Default, except nonpayment of principal or interest on the 2009 notes
that became due solely because of the acceleration of the 2009 notes, have been
cured or waived.
Subject to certain limitations, holders of a majority in principal amount
of the then outstanding 2009 notes may direct the trustee in its exercise of any
trust or power. The trustee may withhold from holders of the 2009 notes notice
of any continuing Default or Event of Default if it determines that withholding
the 2009 notes is in their interest, except a Default or Event of Default
relating to the payment of principal or interest or Liquidated Damages.
The holders of a majority in aggregate principal amount of the 2009 notes
then outstanding by notice to the trustee may on behalf of the holders of all of
the 2009 notes waive any existing Default or Event of Default and its
consequences under the indenture governing the 2009 notes except a continuing
Default or Event of Default in the payment of interest or Liquidated Damages on,
or the principal of, the 2009 notes.
Von Hoffmann is required to deliver to the trustee annually a statement
regarding compliance with the indenture governing the 2009 notes. Upon becoming
aware of any Default or Event of Default, Von Hoffmann is required to deliver to
the trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Von Hoffmann
or any Guarantor, as such, will have any liability for any obligations of Von
Hoffmann or the Guarantors under the 2009 notes, the indenture governing the
2009 notes, the note guarantees, or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of the 2009 notes by
accepting a note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the 2009 notes. The waiver may not
be effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Von Hoffmann may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding 2009 notes and all
obligations of the Guarantors discharged with respect to their note guarantees
("Legal Defeasance") except for:
(1) the rights of holders of outstanding 2009 notes to receive payments in
respect of the principal of, or interest or premium and Liquidated
Damages, if any, on such notes when such payments are due from the
trust referred to below;
(2) Von Hoffmann's obligations with respect to the 2009 notes concerning
issuing temporary notes, registration of notes, mutilated, destroyed,
lost or stolen notes and the maintenance of an office or agency for
payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Von Hoffmann's and the Guarantor's obligations in connection
therewith; and
77
<Page>
(4) the Legal Defeasance provisions of the indenture governing the 2009
notes.
In addition, Von Hoffmann may, at its option and at any time, elect to have
the obligations of Von Hoffmann and the Guarantors released with respect to
certain covenants that are described in the indenture governing the 2009 notes
("Covenant Defeasance") and thereafter any omission to comply with those
covenants will not constitute a Default or Event of Default with respect to the
2009 notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default and Remedies" will no longer
constitute an Event of Default with respect to the 2009 notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Von Hoffmann must irrevocably deposit with the trustee, in trust, for
the benefit of the holders of the 2009 notes, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, in amounts as will be
sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest
and premium and Liquidated Damages, if any, on the outstanding 2009
notes on the stated maturity or on the applicable redemption date, as
the case may be, and Von Hoffmann must specify whether the 2009 notes
are being defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, Von Hoffmann has delivered to the
trustee an opinion of counsel in the United States reasonably
acceptable to the trustee confirming that (a) Von Hoffmann has
received from, or there has been published by, the Internal Revenue
Service a ruling or (b) since the date of the indenture governing the
2009 notes, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
opinion of counsel will confirm that, the holders of the outstanding
2009 notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance
had not occurred;
(3) in the case of Covenant Defeasance, Von Hoffmann has delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that the holders of the outstanding 2009 notes will not
recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default has occurred and is continuing on the
date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit);
78
<Page>
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture governing the 2009
notes) to which Von Hoffmann or any of its Subsidiaries is a party or
by which Von Hoffmann or any of its Subsidiaries is bound;
(6) Von Hoffmann must deliver to the trustee an Officers' Certificate
stating that the deposit was not made by Von Hoffmann with the intent
of preferring the holders of notes over the other creditors of Von
Hoffmann with the intent of defeating, hindering, delaying or
defrauding creditors of Von Hoffmann or others;
(7) Von Hoffmann must deliver to the trustee an Officers' Certificate and
an opinion of counsel, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with; and
(8) Von Hoffmann must have delivered to the trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture
governing the 2009 notes, the 2009 notes or the note guarantees may be amended
or supplemented with the consent of the holders of at least a majority in
principal amount of the 2009 notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the 2009 notes), and any existing default or compliance
with any provision of the indenture governing the 2009 notes or the 2009 notes
may be waived with the consent of the holders of a majority in principal amount
of the then outstanding 2009 notes (including consents obtained in connection
with a tender offer or exchange offer for, the 2009 notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any 2009 notes held by a non-consenting holder):
(1) reduce the principal amount of the 2009 notes whose holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the 2009 notes
(other than provisions relating to the covenants described above under
the caption "Repurchase at the Option of Holders") in a manner adverse
to the holders of the 2009 notes;
(3) reduce the rate of or change the time for payment of interest, or
Liquidated Damages, if any, on any 2009 note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, or Liquidated Damages, if any, on the 2009 notes
(except a rescission of
79
<Page>
acceleration of the 2009 notes by the holders of at least a majority
in aggregate principal amount of the 2009 notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any 2009 note payable in money other than that stated in the 2009
notes;
(6) make any change in the provisions of the indenture governing the 2009
notes relating to waivers of past Defaults or the rights of holders of
the 2009 notes to receive payments of principal of, or interest or
premium or Liquidated Damages, if any, on the 2009 notes;
(7) waive a redemption payment with respect to any 2009 note (other than a
payment required by one of the covenants described above under the
caption "Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under its note
guarantee or the indenture governing the 2009 notes, except in
accordance with the terms of the indenture governing the 2009 notes;
or
(9) make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any holder of the
2009 notes, Von Hoffmann, the Guarantors and the trustee may amend or supplement
the indenture governing the 2009 notes or the 2009 notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated 2009 notes in addition to or in place of
certificated 2009 notes;
(3) to provide for the assumption of Von Hoffmann's or a Guarantor's
obligations to holders of the 2009 notes in the case of a merger or
consolidation;
(4) to make any change that would provide any additional rights or
benefits to the holders of the 2009 notes or that does not adversely
affect the legal rights under the indenture governing the 2009 notes
of any such holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the indenture governing the 2009 notes
under the Trust Indenture Act or to allow any Guarantor to guarantee
the 2009 notes.
SATISFACTION AND DISCHARGE
The indenture governing the 2009 notes will be discharged and will cease to
be of further effect as to all 2009 notes issued thereunder, when:
(1) either:
80
<Page>
(a) all 2009 notes that have been authenticated, except lost, stolen or
destroyed notes that have been replaced or paid and 2009 notes for
whose payment money has been deposited in trust and thereafter repaid
to Von Hoffmann, have been delivered to the trustee for cancellation;
or
(b) all 2009 notes that have not been delivered to the trustee for
cancellation have become due and payable by reason of the mailing of a
notice of redemption or otherwise or will become due and payable
within one year and Von Hoffmann or any Guarantor has irrevocably
deposited or caused to be deposited with the trustee as trust funds in
trust solely for the benefit of the holders, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, in amounts as will be
sufficient without consideration of any reinvestment of interest, to
pay and discharge the entire indebtedness on the 2009 notes not
delivered to the trustee for cancellation for principal, premium and
Liquidated Damages, if any, and accrued interest to the date of
maturity or redemption;
(2) no Default or Event of Default has occurred and is continuing on the
date of the deposit or will occur as a result of the deposit and the
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which Von Hoffmann or any
Guarantor is a party or by which Von Hoffmann or any Guarantor is
bound;
(3) Von Hoffmann or any Guarantor has paid or caused to be paid all sums
payable by it under the indenture governing the 2009 notes; and
(4) Von Hoffmann has delivered irrevocable instructions to the trustee
under the indenture governing the 2009 notes to apply the deposited
money toward the payment of the 2009 notes at maturity or the
redemption date, as the case may be.
In addition, Von Hoffmann must deliver an Officers' Certificate and an opinion
of counsel to the trustee stating that all conditions precedent to satisfaction
and discharge have been satisfied.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Von Hoffmann or any Guarantor, the
indenture governing the 2009 notes limits its right to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The holders of a majority in principal amount of the then outstanding 2009
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture governing the 2009 notes provides that in case
an Event of Default occurs and is continuing, the trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the trustee will be
under no obligation to exercise
81
<Page>
any of its rights or powers under the indenture governing the 2009 notes at the
request of any holder of the 2009 notes, unless such holder has offered to the
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement governing the 2009 notes without charge by writing
to: Von Hoffmann Corporation, 1000 Camera Avenue, St. Louis, Missouri, 63126,
Attention: Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture governing
the 2009 notes. Reference is made to the indenture governing the 2009 notes for
a full disclosure of all such terms, as well as any other capitalized terms used
herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging
with or into or becoming a Subsidiary of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"ADJUSTED TREASURY RATE" means, with respect to any redemption date, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 50 basis points.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"ASSET SALE" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback)
other than sales of inventory or obsolete or unused equipment or
assets in the ordinary course of business (PROVIDED that the sale,
lease, conveyance or other disposition of all or
82
<Page>
substantially all of the assets of Von Hoffmann and its Subsidiaries
taken as a whole will be governed by the provisions of the indenture
governing the 2009 notes described above under the caption "Change of
Control" and/or the provisions described above under the caption
"Merger, Consolidation or Sale of Assets" and not by the provisions of
the Asset Sale covenant); and
(2) the issue or sale by Von Hoffmann or any of its Restricted
Subsidiaries of Equity Interests of any of Von Hoffmann's Restricted
Subsidiaries,
in the case of either clause (1) or (2), whether in a single transaction or a
series of related transactions for Net Proceeds in excess of $2.0 million.
Notwithstanding the preceding, none of the following items will be deemed
to be an Asset Sale:
(1) a transfer of assets by Von Hoffmann to a Restricted Subsidiary or by
a Restricted Subsidiary to Von Hoffmann or to another Restricted
Subsidiary;
(2) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to Von Hoffmann or to another Wholly Owned Restricted
Subsidiary; and
(3) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption "Restricted Payments."
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessee, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or other business entity, any and all
shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
83
<Page>
"CASH EQUIVALENTS" means:
(1) United States dollars;
(2) any evidence of Indebtedness, maturing not more than one year after
the date of their acquisition, issued directly by the United States of
America or any agency thereof or guaranteed by the United States of
America or any agency thereof;
(3) commercial paper, maturing not more than nine months from the date of
issue, which is issued by (i) a corporation (other than an Affiliate
of any obligor) organized under the laws of any state of the United
States or of the District of Columbia and rated at least A-1 by S&P or
P-1 by Moody's, or (ii) any lender party to the Credit Facilities (or
its holding company);
(4) any time deposit, certificate of deposit or bankers acceptance,
maturing not more than one year after the date of their acquisition,
maintained with or issued by either (i) a commercial banking
institution (including U.S. branches of foreign banking institutions)
that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than
$500,000,000, or (ii) any lender party to the Credit Facilities;
(5) short-term tax-exempt securities rated not lower than MIG-1/1 + by
either Moody's or S&P with provisions for liquidity or maturity
accommodations of 183 days or less;
(6) repurchase agreements with respect to any securities referred to in
clause (2) above entered into with any entity referred to in clause
(3) or (4) above or any other financial institution whose unsecured
long-term debt (or the unsecured long-term debt of whose holding
company) is rated at least A+ or better by S&P or Baal or better by
Moody's and maturing not more than one year after the date of their
acquisition; and
(7) any money market or similar fund the assets of which are comprised
exclusively of any of the items specified in clauses (1) through (5)
above and as to which withdrawals are permitted at least every 90
days.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Von
Hoffmann and its Restricted Subsidiaries taken as a whole to any
"person" (as such term is used in Section 13(d) (3) of the Exchange
Act) other than DLJMB;
(2) the adoption of a plan relating to the liquidation or dissolution of
Von Hoffmann;
(3) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person"
(as defined above), other
84
<Page>
than the Existing Shareholders and an entity that is the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition), directly or
indirectly, of 100% of the common stock of Von Hoffmann, becomes the
"beneficial owner" (as defined above) of more than 50% of the Voting
Stock of Von Hoffmann or Holdings (measured by voting power rather
than number of shares); or
(4) the first day on which a majority of the members of the board of
directors of Von Hoffmann are not Continuing Directors.
"COMPARABLE TREASURY ISSUE" means the United States Treasury Security
selected by the Reference Treasury Dealer as having a maturity comparable to the
remaining term of the 2009 notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the 2009 notes.
"COMPARABLE TREASURY PRICE" means, with respect to any redemption date:
(1) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such redemption date, as set forth
in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities;" or
(2) if such release (or any successor release) is not published or does
not contain such prices on such Business Day, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest of such Reference Treasury Dealer
Quotations or (B) if the trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such
Quotations.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period PLUS:
(1) an amount equal to any extraordinary loss plus any net loss realized
in connection with an Asset Sale (to the extent such losses were
deducted in computing such Consolidated Net Income); PLUS
(2) provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for
taxes was included in computing such Consolidated Net Income; PLUS
(3) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized
(including, without
85
<Page>
limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations commissions, discounts and
other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to
Hedging Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income; PLUS
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; PLUS
(5) any non-capitalized transaction costs incurred in connection with
actual or proposed financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing fees and
costs incurred in connection with the Refinancing), in each case, on a
consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash charges
of, a Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent (and in the same proportion)
that the Net Income of such Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount would
be permitted at the date of determination to be dividended to Von Hoffmann by
such Subsidiary without prior approval (that has not been obtained), pursuant to
the terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that:
(1) the Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned
Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that
86
<Page>
Restricted Subsidiary or its stockholders (other than Credit
Facilities, the indebtedness of which is permitted to be incurred
under the indenture governing the 2009 notes);
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded;
(4) the cumulative effect of a change in accounting principles shall be
excluded; and
(5) the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to Von Hoffmann or one of its Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the board of directors of Von Hoffmann who:
(1) was a member of such board of directors on the date of the indenture
governing the 2009 notes; or
(2) was nominated for election or elected to such board of directors with
the approval of a majority of the Continuing Directors who were
members of such board at the time of such nomination or election.
"CREDIT FACILITIES" means, one or more debt facilities or commercial paper
facilities or other agreements, in each case with banks or other institutional
lenders or agents providing for revolving credit loans, term loans, financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables), letters
of credit, Hedging Obligations or the issuance of securities, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time whether with the same or different banks or lenders
or agents and whether represented by one or more facilities or agreements.
"CSFB" means Credit Suisse First Boston Corporation and its successors and
their Affiliates.
"DEFAULT" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the notes mature.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its Affiliates.
"DOMESTIC SUBSIDIARY" means any Restricted Subsidiary of Von Hoffmann that
was formed under the laws of the United States or any state of the United States
or the District of Columbia or that guarantees or otherwise provides direct
credit support (other than through a Lien on its Capital Stock) for any
Indebtedness of Von Hoffmann.
87
<Page>
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means Indebtedness of Von Hoffmann and its
Restricted Subsidiaries (other than Indebtedness under the Credit Facilities) in
existence on the date of the indenture governing the 2009 notes, until such
amounts are repaid.
"EXISTING SHAREHOLDERS" means DLJMB, ZS and the Management Holders.
"FINANCIAL ADVISORY AGREEMENT" means the letter agreement dated the date of
the indenture governing the 2009 notes between Von Hoffmann and CSFB.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of:
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of letter of
credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations);
(2) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period;
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such Guarantee or Lien is called upon);
and
(4) the product of (a) all dividend payments, whether or not in cash, on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable
solely in Equity Interests of Von Hoffmann and other than any dividend
payment that may be deemed to have been made as a result of an
increase in the liquidation preference of any preferred stock, times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that Von
Hoffmann or any of its Restricted Subsidiaries incurs, assumes, guarantees or
redeems any Indebtedness (other than revolving credit borrowings unless
permanently reduced) or issues or redeems preferred stock subsequent to the
88
<Page>
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above:
(1) acquisitions that have been made by Von Hoffmann or any of its
Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated
to include the Consolidated Cash Flow of the acquired entities
(adjusted to exclude (a) the cost of any compensation, remuneration or
other benefit paid or provided to any employee, consultant, Affiliate
or equity owner of the acquired entities to the extent such costs are
eliminated and not replaced and (b) the amount of any reduction in
general, administrative or overhead costs or other non-recurring items
of the acquired entities, in each case, as determined in good faith by
an officer of Von Hoffmann) and without giving effect to clause (3) of
the proviso set forth in the definition of Consolidated Net Income;
(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are applicable as of the date of determination.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"GUARANTORS" means all Domestic Subsidiaries and, so long as it guarantees
any Obligations under the Credit Facilities, Holdings.
89
<Page>
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"HOLDINGS" means Von Hoffmann Holdings Inc., a Delaware corporation, and
its successors.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or
banker's acceptances;
(3) representing Capital Lease Obligations or the balance deferred and
unpaid of the purchase price of any property; or
(4) representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date will be:
(1) the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest; and
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Von Hoffmann or any Subsidiary of Von Hoffmann sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of Von Hoffmann such
that, after giving effect to any such sale or disposition, such Person is no
longer a
90
<Page>
Subsidiary of Von Hoffmann, Von Hoffmann shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "Certain Covenants--Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MANAGEMENT EQUITY INTERESTS" means Equity Interests of Holdings held by
any employee of Von Hoffmann or Holdings (or any of their Restricted
Subsidiaries).
"MANAGEMENT HOLDERS" means holders of Management Equity Interests on the
date of the indenture governing the 2009 notes.
"MOODY'S" means Moody's Investors Service, Inc.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however:
(1) gain (but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, dispositions pursuant to sale and
leaseback transactions) or (b) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries; and
(2) any extraordinary or nonrecurring gain (but not loss), together with
any related provision for taxes on such extraordinary or nonrecurring
gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Von Hoffmann
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to repay Indebtedness secured by
such assets (other than pursuant to the Credit Facilities) and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness:
91
<Page>
(1) as to which neither Von Hoffmann nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Indebtedness of Von Hoffmann or any of
its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of Von Hoffmann or any of
its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness, including any Guarantees of such
Indebtedness.
"PERMITTED INVESTMENTS" means
(1) any Investment in Von Hoffmann or in a Restricted Subsidiary of Von
Hoffmann;
(2) any Investment in Cash Equivalents;
(3) any Investment by Von Hoffmann or any Restricted Subsidiary of Von
Hoffmann in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of Von Hoffmann; or
(b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, Von Hoffmann or a Restricted Subsidiary of Von
Hoffmann;
(4) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"Repurchase at the Option of Holders--Asset Sales;"
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Von Hoffmann;
(6) any loan made to management in order to enable management to purchase
equity in Holdings, or any refinancing of any loan made to management,
which loan was made to enable management to purchase equity in
Holdings;
(7) other Investments in any Person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to
92
<Page>
subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (7) that are at the time
outstanding, not to exceed $2.0 million; and
(8) Investments received solely in exchange for Equity Interests of Von
Hoffmann.
"PERMITTED LIENS" means
(1) Liens securing Credit Facilities, other than Liens securing
Indebtedness incurred under Credit Facilities that is issued in
exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace or refund, the principal of the Senior
Subordinated Notes at its Stated Maturity;
(2) Liens in favor of Von Hoffmann or any of their Restricted
Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
acquired by, merged into or consolidated with Von Hoffmann or any
Subsidiary of Von Hoffmann; PROVIDED that such Liens were in existence
prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or
consolidated with Von Hoffmann;
(4) Liens on property existing at the time of acquisition thereof by Von
Hoffmann or any Subsidiary of Von Hoffmann, PROVIDED that such Liens
were in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant
entitled "Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock" covering only the assets acquired with, or the
subject of the lease or mortgage pertaining to, such Indebtedness;
(7) Liens existing on the date of the indenture governing the 2009 notes;
(8) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens to secure any Permitted Refinancing Indebtedness, PROVIDED that
such Liens are not materially more restrictive than the Liens that
secured the Indebtedness being refinanced;
(10) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's, or other like
Liens arising in the ordinary
93
<Page>
course of business and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings, if a reserve
or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor;
(11) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount, and which do not in any case materially
detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of Von Hoffmann and its
Subsidiaries taken as a whole; and
(12) Liens incurred in the ordinary course of business of Von Hoffmann or
any Subsidiary of Von Hoffmann with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the
value of the property or materially impair the use thereof in the
operation of business by Von Hoffmann or such Subsidiary.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Von Hoffmann
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Von Hoffmann or any of its Restricted Subsidiaries;
PROVIDED that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal
amount of (or accreted value, if applicable), plus accrued interest,
premium and prepayment penalties, if any, on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus
the amount of reasonable expenses incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life
to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the 2009
notes, such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and is subordinated in
right of payment to, the 2009 notes on terms at least as favorable to
the holders of the 2009 notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Von Hoffmann or by the
Restricted Subsidiary that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
94
<Page>
"REFERENCE TREASURY DEALER" means Credit Suisse First Boston Corporation
and its successors; PROVIDED, HOWEVER, that if Credit Suisse First Boston
Corporation shall cease to be a primary U.S. government securities dealer in New
York City (a "Primary Treasury Dealer"), Von Hoffmann shall substitute therefor
another primary U.S. government securities dealer to be the Primary Treasury
Dealer.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to any
redemption date, the average as determined by the trustee, of the bid and asked
prices of the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the trustee by the Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.
"REMAINING SCHEDULED PAYMENTS" means, with respect to each 2009 note to be
redeemed, (a) the redemption price of such note on March 15, 2005 and (b) the
remaining scheduled payments of interest thereon that would be due on or prior
to March 15, 2005 but after the related redemption date but for such redemption;
PROVIDED, HOWEVER, that, if such redemption date is not an interest payment date
on the 2009 notes, the amount of the next succeeding scheduled interest payment
on the 2009 notes to be redeemed will be reduced by the amount of interest
accrued on those 2009 notes to such redemption date.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the relevant
Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group.
"SENIOR SUBORDINATED NOTES" means the 10 3/8% Senior Subordinated Notes due
2007 of Von Hoffmann.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBORDINATED SHAREHOLDER LOAN" means one or more loans from Holdings to
Von Hoffmann, each of which shall: (1) have a Stated Maturity in respect of
principal no earlier than 91 days following the maturity of the 2009 notes; (2)
be subordinated in right of payment to the 2009 notes to the same or a greater
extent than the Senior Subordinated Notes are subordinated to the 2009 notes;
(3) have covenants no more restrictive to Von Hoffmann or its Restricted
Subsidiaries than those relating to the 2009 notes; and (4) provide that the
lender thereunder will not be entitled to any cash interest payments so long as
any of the 2009 notes are outstanding.
95
<Page>
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TAX SHARING AGREEMENT" means that certain tax sharing agreement between
Holdings and Von Hoffmann, dated as of May 22, 1997, as amended from time to
time; PROVIDED such amendment or amendments do not materially adversely effect
Von Hoffmann.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary that is designated by the
board of directors of Von Hoffmann as an Unrestricted Subsidiary pursuant to a
board resolution; but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with Von Hoffmann or any Restricted Subsidiary of Von Hoffmann unless
the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Von Hoffmann or such Restricted
Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of Von Hoffmann;
(3) is a Person with respect to which neither Von Hoffmann nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Von Hoffmann or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Von Hoffmann or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of Von Hoffmann or any of its Restricted
Subsidiaries.
Any such designation by the Board of Directors of Von Hoffmann shall be
evidenced to the trustee by filing with the trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the covenant described above under the caption "Certain
Covenants--Restricted Payments." If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of the
indenture governing the 2009 notes and any Indebtedness of such Subsidiary shall
be deemed to be incurred by a Restricted Subsidiary of Von Hoffmann as of such
date (and, if such Indebtedness is not permitted to be incurred as of such date
under the covenant described under the caption "Incurrence of Indebtedness and
96
<Page>
Issuance of Preferred Stock," Von Hoffmann shall be in default of such
covenant). The Board of Directors of Von Hoffmann may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Von Hoffmann of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under the caption "Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, (ii) such Subsidiary shall
execute a note guarantee and deliver an opinion of counsel, in accordance with
the terms of the indenture governing the 2009 notes and (iii) no Default or
Event of Default would be in existence following such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the board of
directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing: (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
"ZS" means ZS VH L.P., together with ZS VH II L.P., as the context
requires.
FORMS OF SECURITIES
The certificates representing the registered securities will be issued in
fully registered form, without coupons. Except as described in the next
paragraph, the registered securities will be deposited with, or on behalf of,
DTC, and registered in the name of Cede & Co., as DTC's nominee, in the form of
a global security. Holders of the registered notes will own book-entry interests
in the global note evidenced by records maintained by DTC.
Book-entry interests may be exchanged for certificated securities of like
tenor and equal aggregate principal amount, if
(1) DTC notifies us that it is unwilling or unable to continue as
depositary or we determine that DTC is unable to continue as
depositary and we fail to appoint a successor depositary within 90
days,
(2) we provide for the exchange pursuant to the terms of the indenture
governing the 2009 notes, or
97
<Page>
(3) we determine that the book-entry interests will no longer be
represented by global notes and we execute and deliver to the Trustee
instructions to that effect.
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
You can find the definitions of certain terms used in this description of
the 2007 notes under the subheading "Certain Definitions." In this description,
the term "Von Hoffmann" refers only to Von Hoffmann Corporation and not to any
of its subsidiaries.
Von Hoffmann issued the old 2007 notes under an indenture among itself, the
Guarantors and Marine Midland Bank (now HSBC Bank USA), as trustee, in a private
transaction that was not subject to the registration requirements of the
Securities Act. The terms of the 2007 notes include those stated in the
indenture governing the 2007 notes and those made part of that indenture by
reference to the Trust Indenture Act of 1939, as amended.
The following description is a summary of the material provisions of the
indenture governing the 2007 notes and the registration rights agreement
relating to the 2007 notes. It does not restate those agreements in their
entirety. We urge you to read the indenture and the registration rights
agreement governing the 2007 notes because they define your rights as holders of
the notes. Copies of the indenture and the registration rights agreement
governing the 2007 notes are available as set forth below under "Additional
Information."
BRIEF DESCRIPTION OF THE 2007 NOTES AND THE NOTE GUARANTEES
The 2007 notes:
- will be general unsecured obligations of Von Hoffmann;
- will be junior in right of payment with all existing and future senior
indebtedness of Von Hoffmann;
- will be PARI PASSU in right of payment with all existing and future
senior subordinated indebtedness of Von Hoffmann;
- will be senior in right of payment to all existing and future
subordinated indebtedness of Von Hoffmann; and
- will be unconditionally guaranteed by the Guarantors.
THE NOTE GUARANTEES
The 2007 notes will be guaranteed by all of Von Hoffmann's current and
future Restricted Subsidiaries and for so long as it guarantees any obligations
under the New Credit Agreement, Holdings.
Each guarantee of the 2007 notes:
- will be a general unsecured obligation of that Guarantor;
98
<Page>
- will be junior in right of payment with all existing and future senior
indebtedness of that Guarantor;
- will be PARI PASSU in right of payment to all existing and future
senior indebtedness of that Guarantor; and
- will be senior in right of payment to all existing and future
subordinated indebtedness of that Guarantor.
As of the date of this prospectus, all of Von Hoffmann's subsidiaries will
be "Restricted Subsidiaries." However, under the circumstances described below
under the subheading "Certain Covenants--Designation of Restricted and
Unrestricted Subsidiaries," Von Hoffmann will be permitted to designate certain
of its subsidiaries as "Unrestricted Subsidiaries." Von Hoffmann's Unrestricted
Subsidiaries will generally not be subject to the restrictive covenants in the
indenture governing the 2007 notes and will not guarantee the 2007 notes.
PRINCIPAL, MATURITY AND INTEREST
The 2007 notes will be limited in aggregate principal amount to $100.0
million and mature on May 15, 2007. Interest on the 2007 notes accrues at the
rate of 10.375% per annum and is payable semi-annually in arrears on May 15 and
November 15 to holders of record on the immediately preceding May 1 and November
1. Interest on the 2007 notes accrues from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest is computed on the basis of a 360-day year comprised
of twelve 30-day months. Principal of and premium, if any, and interest and
Liquidated Damages, if any, on the 2007 notes will be payable at the office or
agency of Von Hoffmann maintained for such purpose or, at its option, payment of
interest and Liquidated Damages, if any, may be made by check mailed to the
Holders of the 2007 notes at their respective addresses set forth in the
register of Holders of the 2007 notes; PROVIDED that all payments of principal,
premium, interest and Liquidated Damages, if any, with respect to the 2007 notes
the Holders of which have given wire transfer instructions to Von Hoffmann will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by Von
Hoffmann, its office for the payment of principal of and premium, if any, and
interest on the 2007 notes will be the office of the Trustee maintained for such
purpose. The 2007 notes will be issued in denominations of $1,000 and integral
multiples thereof.
SUBORDINATION
The payment of Subordinated Note Obligations are subordinated in right of
payment, as set forth in the indenture governing the 2007 notes, to the prior
payment in full in cash or cash equivalents of all Senior Debt, whether
outstanding on the date of the indenture governing the 2007 notes or thereafter
incurred.
Upon any distribution to creditors of Von Hoffmann in a liquidation or
dissolution of it or in a bankruptcy, reorganization, insolvency, receivership
or similar proceeding relating to Von Hoffmann or its property, an assignment
for the benefit of creditors or any marshalling of its assets and liabilities,
the holders of Senior Debt will be entitled to receive payment in full in cash
or cash equivalents of all Obligations due in respect of such Senior Debt
(including interest after
99
<Page>
the commencement of any such proceeding at the rate specified in the applicable
Senior Debt) before the Holders of the 2007 notes will be entitled to receive
any payment with respect to the Debenture Obligations, and until all Obligations
with respect to Senior Debt are paid in full in cash or cash equivalents, any
distribution to which the Holders of the 2007 notes would be entitled shall be
made to the holders of Senior Debt (except that Holders of the 2007 notes may
receive Permitted Junior Securities and payments made from the trust described
under "Legal Defeasance and Covenant Defeasance").
Von Hoffmann also may not make any payment upon or in respect of the
Subordinated Note Obligations (except in Permitted Junior Securities or payments
made from the trust described under "Legal Defeasance and Covenant Defeasance")
if (i) a default in the payment of the principal of or premium, if any, or
interest on, or commitment fees relating to, any Designated Senior Debt occurs
and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to any Designated Senior Debt that
permits holders of the Designated Senior Debt as to which such default relates
to accelerate its maturity and the Trustee receives a written notice of such
default (a "Payment Blockage Notice") from Von Hoffmann or the holders of such
Designated Senior Debt (or its representative). Payments on the 2007 notes may
and shall be resumed (a) in the case of a payment default, upon the date on
which such default is cured or waived and (b) in case of a nonpayment default,
the earlier of the date on which such nonpayment default is cured or waived or
179 days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Senior Debt has been
accelerated. No new period of payment blockage may be commenced unless and until
360 days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been cured or waived for a period of not less than 90 days.
The indenture governing the 2007 notes further requires that Von Hoffmann
promptly notifies holders of Senior Debt if payment of the 2007 notes is
accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of the 2007 notes may recover less
ratably than creditors of Von Hoffmann who are holders of Senior Debt. The
indenture limits, subject to certain conditions, the amount of additional
Indebtedness, including Senior Debt, that Von Hoffmann and its subsidiaries can
incur. See "Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock."
PAYING AGENT AND REGISTRAR FOR THE 2007 NOTES
The trustee currently acts as paying agent and registrar. Von Hoffmann may
change the paying agent or registrar without prior notice to the holders of the
2007 notes, and Von Hoffmann or any of its Subsidiary may act as paying agent or
registrar.
100
<Page>
NOTES GUARANTEES
Von Hoffmann's payment obligations under the 2007 notes are jointly and
severally guaranteed (the "Notes Guarantees") by the Guarantors. The Notes
Guarantee of each Guarantor will be subordinated to the prior payment in full in
cash or cash equivalents of all Senior Debt of such Guarantor, including such
Guarantors Guarantee of Obligations under the New Credit Agreement, to the same
extent as the 2007 notes are subordinated to Senior Debt of Von Hoffmann. The
indenture governing the 2007 notes provides that if the Guarantee of Holdings
issued pursuant to the New Credit Agreement is released, Holdings' Notes
Guarantee will also be released.
The indenture governing the 2007 notes provides that no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) or sell all or substantially all of its assets to, another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the Obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the indenture governing the 2007 notes; (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists; and
(iii) Von Hoffmann would be permitted, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the covenant described under the
caption "Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock." Notwithstanding the provisions of this paragraph, the indenture
governing the 2007 notes will not prohibit the merger of two of Von Hoffmann's
Restricted Subsidiaries or the merger of a Restricted Subsidiary into Von
Hoffmann.
The indenture governing the 2007 notes provides that in the event of (i) a
sale or other disposition of all of the assets of any Guarantor, by way of
merger, consolidation or otherwise, (ii) a sale or other disposition of all of
the capital stock of any Guarantor or (iii) the designation of a Guarantor as an
Unrestricted Subsidiary, then such Guarantor will be released and relieved of
any obligations under its Notes Guarantee; PROVIDED that the Net Proceeds of
such sale or other disposition are applied or such designation is made in
accordance with the applicable provisions of the indenture governing the 2007
notes. See "Redemption or Repurchase at Option of Holders--Asset Sales" and
"Certain Covenants--Restricted Payments." Except as set forth above, the
limitations and restrictions in the indenture governing the 2007 notes will not
apply to, limit or restrict the operations of Holdings.
OPTIONAL REDEMPTION
The 2007 notes will be subject to redemption at any time at Von Hoffmann's
option, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 15 of the years indicated below:
<Table>
<Caption>
YEAR PERCENTAGE
---- ----------
2003......................................................... 103.458%
2004......................................................... 101.729%
</Table>
101
<Page>
<Table>
2005 and thereafter............................................... 100.000%
</Table>
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," Von
Hoffmann is not required to make mandatory redemption or sinking fund payments
with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of the 2007 notes
will have the right to require Von Hoffmann to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's 2007 notes pursuant
to the offer described below (the "Change of Control Offer") at an offer price
in cash equal to 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
Von Hoffmann will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
indenture governing the 2007 notes and described in such notice. Von Hoffmann
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the 2007 notes
as a result of a Change of Control.
On the Change of Control Payment Date, Von Hoffmann will, to the extent
lawful, (1) accept for payment all the 2007 notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all the
2007 notes or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the 2007 notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of 2007 notes or portions
thereof being purchased by Von Hoffmann. The Paying Agent will promptly mail to
each Holder of the 2007 notes so tendered the Change of Control Payment for such
notes, and the Trustee will promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new 2007 note equal in principal
amount to any unpurchased portion of the 2007 notes surrendered, if any,
PROVIDED that each such new 2007 note will be in a principal amount of $1,000 or
an integral multiple thereof. The indenture governing the 2007 notes provides
that, prior to complying with the provisions of this covenant, but in any event
within 90 days following a Change of Control, Von Hoffmann will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of the
2007 notes required by this covenant. Von Hoffmann will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the indenture governing the 2007 notes are
applicable. Except as described above with respect to a Change of Control, the
indenture governing the 2007 notes does not contain provisions that permit the
Holders of the 2007 notes to require that Von Hoffmann
102
<Page>
repurchase or redeem the 2007 notes in the event of a takeover, recapitalization
or similar transaction.
The provisions of the indenture governing the 2007 notes do not necessarily
afford Holders of the 2007 notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving Von Hoffmann that may adversely affect Holders of the 2007 notes.
The senior credit facility currently prohibits Von Hoffmann from purchasing
or redeeming any notes, and also provides that certain change of control events
with respect to it would constitute a default thereunder. Any future credit
agreements or other agreements relating to Senior Debt to which Von Hoffmann
becomes a party may contain similar restrictions and provisions. In the event a
Change of Control occurs at a time when Von Hoffmann is prohibited from
purchasing or redeeming the 2007 notes, Von Hoffmann could seek the consent of
its lenders to the purchase of the 2007 notes or could attempt to refinance the
borrowings that contain such prohibition. If Von Hoffmann does not obtain such a
consent or repay such borrowings, Von Hoffmann will remain prohibited from
purchasing the 2007 notes. In such case, Von Hoffmann's failure to purchase
tendered 2007 notes would constitute an Event of Default under the indenture
governing the 2007 notes which would, in turn, constitute a default under the
New Credit Agreement. In such circumstances, the subordination provisions in the
indenture governing the 2007 notes would likely restrict payments to the Holders
of the 2007 notes. In addition, Von Hoffmann's ability to pay cash to the
Holders of the 2007 notes upon a repurchase may be limited by its then existing
financial resources.
Von Hoffmann will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture governing the 2007 notes applicable to a Change of Control
Offer made by Von Hoffmann and purchases all the 2007 notes validly tendered and
not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Von Hoffmann and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of 2007 Notes to require Von Hoffmann
to repurchase such notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of its assets and its Subsidiaries taken as a
whole to another Person or group may be uncertain.
ASSET SALES
The indenture governing the 2007 notes provides that Von Hoffmann will not,
and will not permit any of its Restricted Subsidiaries to, consummate an Asset
Sale unless (i) Von Hoffmann (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by Von Hoffmann or such Restricted
103
<Page>
Subsidiary is in the form of cash; PROVIDED that the amount of (a) any
liabilities (as shown on Von Hoffmann's or such Restricted Subsidiary's most
recent balance sheet), of us or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the 2007
notes or any guarantee thereof) that are assumed by the transferee of any such
assets and (b) any securities, notes or other obligations received by Von
Hoffmann or any such Restricted Subsidiary from such transferee that are
immediately converted by Von Hoffmann or such Restricted Subsidiary into cash
(to the extent of the cash received), shall be deemed to be cash for purposes of
this provision and, PROVIDED FURTHER, that the 75% limitation referred to in
clause (ii) will not apply to any Asset Sale in which the cash portion of the
consideration received therefrom, determined in accordance with the foregoing
proviso, is equal to or greater than what the after-tax proceeds would have been
had such Asset Sale complied with the aforementioned 75% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Von Hoffmann may apply such Net Proceeds, at its option, (a) to repay Senior
Debt (and to correspondingly reduce commitments with respect thereto in the case
of revolving borrowings) or (b) to the acquisition of a controlling interest in
another business, the making of a capital expenditure or the acquisition of
other long-term assets, in each case, by Von Hoffmann or any Restricted
Subsidiary and in accordance with the terms of the indenture governing the 2007
notes. Pending the final application of any such Net Proceeds, Von Hoffmann may
temporarily reduce Senior Debt or otherwise invest such Net Proceeds in any
manner that is not prohibited by the indenture governing the 2007 notes. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $5.0 million, Von Hoffmann
will be required to make an offer to all Holders of Notes (an "Asset Sale
Offer") to purchase the maximum principal amount of the 2007 notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
thereon to the date of purchase, in accordance with the procedures set forth in
the indenture governing the 2007 notes. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, Von Hoffmann may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of the 2007 notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the 2007 notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
reset at zero.
Notwithstanding the immediately preceding paragraph, Von Hoffmann and its
Restricted Subsidiaries will be permitted to consummate an Asset Sale without
complying with such paragraph if (i) Von Hoffmann or the applicable Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets or other property
sold, issued or otherwise disposed of (as evidenced by a resolution of its Board
of Directors set forth in an Officers' Certificate delivered to the Trustee),
and (ii) at least 75% of the consideration for such Asset Sale constitutes
assets or other property of a kind usable by Von Hoffmann and its Restricted
Subsidiaries in its business and its Restricted Subsidiaries as conducted by Von
Hoffmann and its Restricted Subsidiaries on the date of the indenture governing
the 2007 notes; PROVIDED that any cash consideration received by Von Hoffmann or
any of its Restricted Subsidiaries in connection with any Asset Sale permitted
to be consummated under this paragraph shall constitute Net Proceeds subject to
the provisions of the two succeeding paragraphs.
104
<Page>
SELECTION AND NOTICE
Except as otherwise provided in the indenture, if less than all of the 2007
notes are to be redeemed at any time, the trustee will select notes for
redemption as follows:
(1) if the 2007 notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange on which the 2009 notes are listed; or
(2) if the 2007 notes are not listed on any national securities exchange,
on a pro rata basis, by lot or by such method as the trustee deems
fair and appropriate.
No 2007 notes of $1,000 or less can be redeemed in part. Notices of
redemption will be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of the 2007 notes to be redeemed
at its registered address. Notices of redemption may not be conditional.
If any 2007 note is to be redeemed in part only, the notice of redemption
that relates to that 2007 note will state the portion of the principal amount of
that 2007 note that is to be redeemed. A new 2007 note in principal amount equal
to the unredeemed portion of the original 2007 note will be issued in the name
of the holder of the 2007 notes upon cancellation of the original 2007 note. The
2007 notes called for redemption become due on the date fixed for redemption. On
and after the redemption date, interest ceases to accrue on the 2007 notes or
portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of its Equity Interests (other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of Von Hoffmann); (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interests of Von Hoffmann; (iii) make any payment on or
with respect to, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is subordinated to the 2007 notes, except a payment
of interest or a payment of principal at Stated Maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) Von Hoffmann would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set
105
<Page>
forth in the first paragraph of the covenant described under the
caption "Incurrence of Indebtedness and Issuance of Preferred Stock;"
and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Von Hoffmann and its Restricted
Subsidiaries after the date of the indenture governing the 2007 notes
(excluding Restricted Payments permitted by clause (ii) of the next
succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of us for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing
after the date of the indenture governing the 2007 notes to the end of
Von Hoffmann's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
net cash proceeds received by us from the issue or sale since the date
of the indenture governing the 2007 notes of (A) Equity Interests of
Von Hoffmann (other than Disqualified Stock), (B) any Restricted
Subsidiaries or (C) Disqualified Stock or debt securities of Von
Hoffmann that have been convened into Equity Interests (other than
Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of Von Hoffmann and other than
Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) 100% of the aggregate
amount of capital contributions to its common equity or repayments
from Holdings of amounts in respect of the Intercompany Note, plus
(iv) 100% of the net proceeds received by Von Hoffmann or any of its
Restricted Subsidiaries from (A) the sale or other disposition since
the date of the indenture governing the 2007 notes of any Restricted
Investment or (B) dividends on or the sale of stock of Unrestricted
Subsidiaries.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
indenture governing the 2007 notes; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness or Equity
Interests of Von Hoffmann's company in exchange for, or out of the net proceeds
of the substantially concurrent sale (other than to a Restricted Subsidiary of
Von Hoffmann) of, other Equity Interests of Von Hoffmann (other than any
Disqualified Stock) or from the net proceeds of a capital contribution by
Holdings to us or repayments from Holdings of amounts in respect of the
Intercompany Note; PROVIDED that the amount of any such net proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c)(ii) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) the repurchase, redemption or other acquisition
or retirement for value of any Management Equity Interests or the repurchase,
redemption or other acquisition or retirement for value of Indebtedness incurred
pursuant to clause (xi) of the second paragraph of the covenant described above
under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock"
(including, in each case, any dividend or distribution to Holdings used for such
purpose); PROVIDED that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Management Equity Interests shall not exceed the
sum of
106
<Page>
(a) $2.0 million in any twelve-month period but not more than $10.0 million in
the aggregate plus (b) cash proceeds from the sale of Management Equity
Interests to management, directors or consultants of Von Hoffmann (or any of its
Restricted Subsidiaries); (v) repurchases of Equity Interests deemed to occur
upon exercise of stock options if such Equity Interests represent a portion of
the exercise price of such options; (vi) other Restricted Investments not to
exceed $10.0 million; (vii) Restricted Investments made or received by Von
Hoffmann and its Restricted Subsidiaries as non-cash consideration from Asset
Sales to the extent permitted by the covenant described under "Repurchase at the
Option of Holders--Asset Sales" or received by a person in exchange for trade or
other claims against such person in connection with a financial reorganization
or restructuring or such person; (viii) the payment of dividends or
distributions to Holdings which are used solely to repay any Indebtedness
(including any accrued interest thereon) due from Holdings to Von Hoffmann
pursuant to the Intercompany Note or any cancellation or forgiving of such
Indebtedness (including any accrued interest thereon); (ix) any loans, advances,
distributions or payments between Von Hoffmann and its Restricted Subsidiaries;
(x) the payment of dividends or distributions to Holdings in an amount not to
exceed $1.0 million per calendar year to allow Holdings to pay reasonable legal,
accounting, investment banking, financial advisory, outside director or other
professional and administrative fees and expenses incurred by it related to its
business; (xi) payments pursuant to the Tax Sharing Agreement; (xii) payments to
DLJSC, or dividends to Holdings to allow Holdings to pay DLJSC, in respect of a
retainer for advisory services in an amount not to exceed $250,000 per year; and
(xiii) payments pursuant to the indemnity provisions of the Merger Agreement.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by Von
Hoffmann and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation will only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by us or such Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee. Not later
than the date of making any Restricted Payment, Von Hoffmann shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; PROVIDED, HOWEVER, that Von Hoffmann and its Restricted
Subsidiaries
107
<Page>
may incur Indebtedness (including Acquired Debt) and its Restricted Subsidiaries
may issue shares of preferred stock if the Fixed Charge Coverage Ratio for Von
Hoffmann's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such preferred stock is issued would have
been at least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the preferred stock had been issued, as the case may be,
at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following:
(i) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness under the New Credit Agreement in an aggregate principal
amount not to exceed $200.0 million at any one time outstanding;
(ii) the incurrence by Von Hoffmann and its Restricted Subsidiaries of the
Existing Indebtedness;
(iii) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness represented by the 2007 notes and the notes Guarantees;
(iv) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations in an aggregate principal
amount not to exceed $10.0 million at any time outstanding;
(v) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of Acquired Debt in an amount not to exceed $15.0 million; PROVIDED
that such Indebtedness was incurred by the prior owner of such assets
or such Restricted Subsidiary prior to such acquisition by Von
Hoffmann or its Restricted Subsidiaries and was not incurred in
connection with, or in contemplation of, such acquisition by Von
Hoffmann or its Restricted Subsidiaries;
(vi) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace
Indebtedness that was permitted by the indenture governing the 2007
notes to be incurred;
(vii) the incurrence by Von Hoffmann or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among Von Hoffmann and any of
its Wholly Owned Restricted Subsidiaries;
(viii) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this indenture
governing the 2007 notes to be outstanding;
108
<Page>
(ix) the guarantee by Von Hoffmann or any of the Guarantors of
Indebtedness of Von Hoffmann or its Restricted Subsidiary that was
permitted to be incurred by the indenture governing the 2007 notes;
(x) the incurrence by Von Hoffmann or its Restricted Subsidiaries of
Indebtedness to repurchase, redeem or otherwise acquire or retire for
value Management Equity Interests as permitted by clause (iv) of the
second paragraph of the covenant described above under the caption
"Restricted Payments"; PROVIDED that such Indebtedness is
subordinated to the 2007 notes to at least the same extent as the
2007 notes are subordinated to Senior Debt; and
(xi) the incurrence by Von Hoffmann and its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness incurred pursuant to this clause (xi),
not to exceed $20.0 million.
LIENS
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
DIVIDEND AND OTHER PAYMENTS RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
Von Hoffmann or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to Von Hoffmann or any of its
Restricted Subsidiaries, (ii) make loans or advances to or guarantee any
Indebtedness of Von Hoffmann or any of its Restricted Subsidiaries or (iii)
transfer any of its properties or assets to Von Hoffmann or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of the
indenture governing the 2007 notes, (b) the New Credit Agreement as in effect as
of the date of the indenture governing the 2007 notes, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, PROVIDED that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the New Credit
Agreement as in effect on the date of the indenture governing the 2007 notes,
(c) the indenture governing the 2007 notes and the 2007 notes, (d) applicable
law, (e) any instrument governing Indebtedness or Capital Stock of a Person
acquired by Von Hoffmann or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so
109
<Page>
acquired, PROVIDED that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the indenture governing the 2007 notes to be incurred,
(f) by reason of customary non-assignment provisions in leases entered into in
the ordinary course of business, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h)
Permitted Refinancing Indebtedness, PROVIDED that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, or (i) restrictions with respect to sales of assets or
dispositions of stock of Von Hoffmann or any Restricted Subsidiary imposed
pursuant to agreements relating to the sale of such assets or stock.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
Von Hoffmann may not consolidate or merge with or into (whether or not it
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another corporation, Person or entity unless
(i) Von Hoffmann is the surviving corporation or the entity or the Person formed
by or surviving any such consolidation or merger (if other than Von Hoffmann) or
to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than Von Hoffmann) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of us under the notes and the indenture governing the 2007
notes pursuant to a supplemental indenture in a form reasonably satisfactory to
the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of Von Hoffmann with or
into a Wholly Owned Subsidiary of it, Von Hoffmann or the entity or Person
formed by or surviving any such consolidation or merger (if other than Von
Hoffmann), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described above under the
caption "Incurrence of Indebtedness and Issuance of Preferred Stock."
TRANSACTIONS WITH AFFILIATES
Von Hoffmann will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to Von
Hoffmann or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by us or such Restricted Subsidiary with an
unrelated Person and (ii) Von Hoffmann delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such
110
<Page>
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $5.0 million, other than transactions between Von
Hoffmann and any of its Restricted Subsidiaries on the one hand, and DLJSC and
its Affiliates on the other hand, an opinion as to the fairness to the Holders
of such Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing; PROVIDED
that (1) any employment agreement entered into by Von Hoffmann or any of its
Restricted Subsidiaries in the ordinary course of business of Von Hoffmann or
such Restricted Subsidiary and ordinary course loans to employees, (2)
transactions between or among Von Hoffmann and/or its Restricted Subsidiaries,
(3) Restricted Payments that are permitted by the provisions of the indenture
governing the 2007 notes described above under the caption "Restricted
Payments," and (4) payments and transactions in connection with the
Recapitalization and the application of the net proceeds from this Offering,
including the payment of any fees and expenses with respect thereto, in each
case, shall not be deemed Affiliate Transactions."
ADDITIONAL NOTES GUARANTEES
If Von Hoffmann or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of the indenture governing the 2007
notes, then such newly acquired or created Subsidiary, except for all
Subsidiaries that have properly been designated as Unrestricted Subsidiaries in
accordance with the indenture governing the 2007 notes for so long as they
continue to constitute Unrestricted Subsidiaries, shall execute a Notes
Guarantee and deliver an opinion of counsel, in accordance with the terms of the
indenture governing the 2007 notes.
NO SENIOR SUBORDINATED DEBT
Von Hoffmann will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
2007 notes.
REPORTS
So long as any 2007 notes are outstanding, Von Hoffmann will furnish to the
Holders of the 2007 notes all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if Von Hoffmann were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
Von Hoffmann and its Restricted Subsidiaries and, with respect to the annual
information only, a report thereon by its certified independent accountants. In
addition, Von Hoffmann and the Guarantors have agreed that, for so long as any
notes remain outstanding, they will furnish to the Holders, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act. However, to the extent not required by the Trust Indenture Act,
the indenture governing the 2007 notes will not require Von Hoffmann to make any
reports pursuant to the foregoing two sentences to any Holder of the 2007 notes
that it reasonably believes to be a competitor of Von Hoffmann.
111
<Page>
EVENTS OF DEFAULT AND REMEDIES
The indenture governing the 2007 notes provides that each of the following
constitutes an Event of Default: (i) default for 30 days in the payment when due
of interest on, or Liquidated Damages with respect to, the 2007 notes (whether
or not prohibited by the subordination provisions of the indenture governing the
2007 notes); (ii) default in payment when due of the principal of or premium, if
any, on the 2007 Notes (whether or not prohibited by the subordination
provisions of the indenture governing the 2007 notes); (iii) failure by Von
Hoffmann to comply with the provisions described under the captions "Change of
Control," "Asset Sales," "Restricted Payments" or "Incurrence of Indebtedness
and Issuance of Preferred Stock"; (iv) failure by Von Hoffmann for 60 days after
notice to comply with any of its other agreements in the indenture governing the
2007 notes or the 2007 notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by Von Hoffmann or any of its
Subsidiaries (or the payment of which is guaranteed by Von Hoffmann or any of
its Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the indenture governing the 2007 notes, which default
(a) is caused by a failure to pay principal of or premium, if any, or interest
on such Indebtedness prior to the expiration of the grace period provided in
such Indebtedness on the date of such default and the aggregate amount of such
principal, premium and interest that has not been paid exceeds $5.0 million (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (vi) failure by Von Hoffmann or
any of its Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) certain events of bankruptcy or insolvency with respect to Von
Hoffmann or any of its Restricted Subsidiaries; or (viii) any Notes Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Notes Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding 2007 notes
may declare all the 2007 notes to be due and payable immediately; PROVIDED,
HOWEVER, that, so long as any Indebtedness permitted to be incurred pursuant to
the New Credit Agreement shall be outstanding, no such acceleration shall be
effective until the earlier of (i) acceleration of any such Indebtedness under
the New Credit Agreement or (ii) five business days after the giving of written
notice to Von Hoffmann and the representative under the New Credit Agreement of
such acceleration. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
Von Hoffmann, any Significant Subsidiary or any group of Subsidiaries that,
taken together, would constitute a Significant Subsidiary, all outstanding 2007
notes will become due and payable without further action or notice. Holders of
the 2007 notes may not enforce the indenture governing the 2007 notes or the
2007 notes except as provided in the indenture governing the 2007 notes. In the
event of a declaration of acceleration of the 2007 notes because an Event of
Default has occurred and is continuing as a result of the acceleration of any
Indebtedness described in clause (v) of the preceding paragraph, the declaration
of acceleration of the 2007 notes shall be automatically annulled if the holders
of any Indebtedness
112
<Page>
described in clause (v) have rescinded the declaration of acceleration in
respect of such Indebtedness within 30 days of the date of such declaration and
if (a) the annulment of the acceleration of the 2007 notes would not conflict
with any judgment or decree of a court of competent jurisdiction, and (b) all
existing Events of Default, except nonpayment of principal or interest on the
2007 notes that became due solely because of the acceleration of the 2007 notes,
have been cured or waived.
Subject to certain limitations, Holders of a majority in principal amount
of the then outstanding 2007 notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the 2007 notes notice
of any continuing Default or Event of Default (except a Default or Event of
Default relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
The Holders of a majority in aggregate principal amount of the 2007 notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the 2007 notes waive any existing Default or Event of Default and its
consequences under the indenture governing the 2007 notes except a continuing
Default or Event of Default in the payment of interest on, or the principal of,
the 2007 notes.
Von Hoffmann is required to deliver to the Trustee annually a statement
regarding compliance with the indenture governing the 2007 notes, and Von
Hoffmann is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Von
Hoffmann, as such, shall have any liability for any of its obligations under the
2007 notes, the indenture governing the 2007 notes or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
the 2007 notes by accepting a note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the 2007 notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Von Hoffmann may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding 2007 notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding 2007 notes to
receive payments in respect of the principal of, premium, if any, and interest
on such 2007 notes when such payments are due from the trust referred to below,
(ii) its obligations with respect to the 2007 notes concerning issuing temporary
notes, registration of notes, mutilated, destroyed, lost or stolen notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and its obligations in connection therewith and (iv) the Legal
Defeasance provisions of the indenture governing the 2007 notes. In addition,
Von Hoffmann may, at its option and at any time, elect to have its obligations
released with respect to certain covenants that are described in the indenture
governing the 2007 notes ("Covenant Defeasance") and thereafter any omission to
comply with such obligations shall not
113
<Page>
constitute a Default or Event of Default with respect to the 2007 notes. In
the event Covenant Defeasance occurs, certain events (not including bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the 2007
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
Von Hoffmann must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders of the 2007 notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on the
outstanding 2007 notes on the Stated Maturity or on the applicable redemption
date, as the case may be, and it must specify whether the 2007 notes are being
defeased to maturity or to a particular redemption date; (ii) in the case of
Legal Defeasance, Von Hoffmann shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that (A) it has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of the indenture governing the
2007 notes, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders of the outstanding 2007 notes will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred; (iii) in the case of Covenant Defeasance, Von
Hoffmann shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding 2007 notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit (other than a Default or Event of Default resulting from
the borrowing of funds to be applied to such deposit); (v) such Legal Defeasance
or Covenant Defeasance will not result in a breach or violation of, or
constitute a default under any material agreement or instrument (other than the
indenture governing the 2007 notes) to which Von Hoffmann or any of its
Subsidiaries is a party or by which Von Hoffmann or any of its Subsidiaries is
bound; (vi) Von Hoffmann must have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) Von Hoffmann must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by Von Hoffmann with the
intent of preferring the Holders of 2007 notes over the other creditors of Von
Hoffmann with the intent of defeating, hindering, delaying or defrauding
creditors of Von Hoffmann or others; and (viii) Von Hoffmann must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the 2007 notes in accordance with the
indenture governing the 2007 notes. The Registrar and the Trustee may require a
Holder, among other
114
<Page>
things, to furnish appropriate endorsements and transfer documents and Von
Hoffmann may require a Holder to pay any taxes and fees required by law or
permitted by the indenture governing the 2007 notes. Von Hoffmann is not
required to transfer or exchange any 2007 note selected for redemption. Also,
Von Hoffmann is not required to transfer or exchange any 2007 note for a period
of 15 days before a selection of the 2007 notes to be redeemed.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture
governing the 2007 notes, the 2007 notes or the notes Guarantees may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the 2007 notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, the 2007 notes), and any existing default or compliance
with any provision of the indenture governing the 2007 notes or the 2007 notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding 2007 notes (including consents obtained in connection
with a tender offer or exchange offer for the 2007 notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting Holder): (i) reduce the
principal amount of the 2007 notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any 2007 note or alter the provisions with respect to the redemption of the
2007 notes (other than provisions relating to the covenants described above
under the caption "Repurchase at the Option of Holders") in a manner adverse to
the Holders of the 2007 notes, (iii) reduce the rate of or change the time for
payment of interest or Liquidated Damages, if any, on any 2007 note, (iv) waive
a Default or Event of Default in the payment of principal of or premium, if any,
or interest or Liquidated Damages, if any, on the 2007 notes (except a
rescission of acceleration of the 2007 notes by the Holders of at least a
majority in aggregate principal amount of the 2007 notes and a waiver of the
payment default that resulted from such acceleration), (v) make any 2007 note
payable in money other than that stated in the 2007 notes, (vi) make any change
in the provisions of the indenture governing the 2007 notes relating to waivers
of past Defaults or the rights of Holders of the 2007 notes to receive payments
of principal of or premium, if any, or interest on the 2007 notes, (vii) waive a
redemption payment with respect to any 2007 note (other than a payment required
by one of the covenants described above under the caption "Repurchase at the
Option of Holders") or (viii) make any change in the foregoing amendment and
waiver provisions. In addition, any amendment to the provisions of the indenture
governing the 2007 notes (which relate to subordination) will require the
consent of the Holders of at least 75% in aggregate principal amount of the 2007
notes then outstanding if such amendment would adversely affect the rights of
Holders of the 2007 notes.
Notwithstanding the foregoing, without the consent of any Holder of the
2007 notes, Von Hoffmann and the Trustee may amend or supplement the indenture
governing the 2007 notes or the 2007 notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated notes in addition to or in place of
certificated notes, to provide for the assumption of Von Hoffmann's or a
Guarantor's obligations to Holders of the 2007 notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the 2007 notes or that does not adversely affect the
legal rights under the indenture
115
<Page>
governing the 2007 notes of any such Holder, or to comply with requirements of
the Commission in order to effect or maintain the qualification of the indenture
governing the 2007 notes under the Trust Indenture Act or to allow any Guarantor
to Guarantee the 2007 notes.
CONCERNING THE TRUSTEE
The indenture governing the 2007 notes contains certain limitations on the
rights of the Trustee, should it become a creditor of us, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding 2007
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The indenture governing the 2007 notes provides that in case
an Event of Default shall occur (which shall not be cured), the Trustee will be
required, in the exercise of its power, to use the degree of care of a prudent
man in the conduct of his own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
indenture governing the 2007 notes at the request of any Holder of the 2007
notes, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights governing the 2007 notes without charge by writing to: Von
Hoffmann Corporation, 1000 Camera Avenue, St. Louis, Missouri, 63126, Attention:
Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture governing
the 2007 notes. Reference is made to the indenture governing the 2007 notes for
a full disclosure of all such terms, as well as any other capitalized terms used
herein for which no definition is provided.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting
116
<Page>
securities, by agreement or otherwise; PROVIDED that beneficial ownership of 10%
or more of the voting securities of a Person shall be deemed to be control.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory or obsolete or unused equipment or
assets in the ordinary course of business (PROVIDED that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of Von
Hoffmann and its Subsidiaries taken as a whole will be governed by the
provisions of the indenture governing the 2007 notes described above under the
caption "Change of Control" and/or the provisions described above under the
caption "Merger, Consolidation or Sale of Assets" and not by the provisions of
the Asset Sale covenant), and (ii) the issue or sale by Von Hoffmann or any of
its Restricted Subsidiaries of Equity Interests of its Restricted Subsidiaries,
in the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions for Net Proceeds in excess of $2.0 million.
Notwithstanding the foregoing: (i) a transfer of assets by Von Hoffmann to a
Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to
Von Hoffmann or to another Wholly Owned Restricted Subsidiary, (ii) an issuance
of Equity Interests by a Wholly Owned Restricted Subsidiary to Von Hoffmann or
to another Wholly Owned Restricted Subsidiary, (iii) a Restricted Payment that
is permitted by the covenant described above under the caption "Restricted
Payments," (iv) the sale of its aircraft, (v) the sale of its owned apartments
and (vi) the sale of its real property in Arizona will not be deemed to be Asset
Sales.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year after
such time, issued directly by the United States of America or any
agency thereof or guaranteed by the United States of America or any
agency thereof;
(b) commercial paper, maturing not more than nine months from the date of
issue, which is issued by (i) a corporation (other than an Affiliate
of any Obligor) organized under the laws of any state of the United
States or of the District of Columbia and rated at least A-1 by S&P or
P-1 by Moody's, or (ii) any lender party to the New Credit Agreement
(or its holding company);
(c) any time deposit, certificate of deposit or bankers acceptance,
maturing not more than one year after such time, maintained with or
issued by either (i) a commercial banking institution (including U.S.
branches of foreign banking
117
<Page>
institutions) that is a member of the Federal Reserve System and has a
combined capital and surplus and undivided profits of not less than
$500,000,000, or (ii) any lender party to the New Credit Agreement;
(d) short-term tax-exempt securities rated not lower than MIG-1/1 + by
either Moody's or S&P with provisions for liquidity or maturity
accommodations of 183 days or less;
(e) repurchase agreements with respect to any securities referred to in
clause (a) above entered into with any entity referred to in clause
(b) or (c) above or any other financial institution whose unsecured
long-term debt (or the unsecured long-term debt of whose holding
company) is rated at least A- or better by S&P or Baa1 or better by
Moody's and maturing not more than one year after such time; or
(f) any money market or similar fund the assets of which are comprised
exclusively of any of the items specified in clauses (a) through (d)
above and as to which withdrawals are permitted at least every 90
days.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of Von Hoffmann's assets and its Restricted Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than DLJMB, (ii) the adoption of a plan relating to the
liquidation or dissolution of Von Hoffmann, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the Existing
Shareholders and an entity that is the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of 100% of its common stock, becomes the
"beneficial owner" (as defined above) of more than 50% of the Voting Stock of us
or Holdings (measured by voting power rather than number of shares), or (iv) the
first day on which a majority of the members of the Board of Directors of Von
Hoffmann are not Continuing Directors.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments
118
<Page>
associated with Capital Lease Obligations commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve for
cash expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income, plus (v) any
non-capitalized transaction costs incurred in connection with actual or proposed
financings, acquisitions or divestitures (including, but not limited to,
financing and refinancing fees and costs incurred in connection with the
Recapitalization), in each case, on a consolidated basis and determined in
accordance with GAAP. Notwithstanding the foregoing, the provision for taxes
based on the income or profits of, and the depreciation and amortization and
other non-cash charges of, a Subsidiary of a Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in the same proportion) that the Net Income of such Subsidiary was included
in calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to us by such Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iv) the cumulative effect of a change in accounting principles
shall be excluded and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to Von Hoffmann or one of its Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of Von Hoffmann's Board of Directors who (i) was a member of such Board of
Directors on the date of the indenture governing the 2007 notes or (ii) was
nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.
119
<Page>
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DESIGNATED SENIOR DEBT," with respect to any Person, means (i) any
Indebtedness of such Person outstanding under the New Credit Agreement and (ii)
in the event no Indebtedness is outstanding under the New Credit Agreement, any
other Senior Debt of such Person permitted under the indenture governing the
2007 notes the principal amount of which is $25.0 million or more and that has
been designated by such Person as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its Affiliates.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING INDEBTEDNESS" means Indebtedness of Von Hoffmann and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Agreement)
in existence on the date of the indenture governing the 2007 notes, until such
amounts are repaid.
"EXISTING SHAREHOLDERS" means DLJMB, ZS and the Management Holders.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon)
and (iv) the product of (a) all dividend payments, whether or not in cash, on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of Von Hoffmann and other than any dividend payment that may be
deemed to have been made as a result of an increase in the liquidation
preference of any preferred stock, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
120
<Page>
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person for such period. In the event that Von Hoffmann or any of
its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by Von Hoffmann or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to have
occurred on the first day of the four-quarter reference period and Consolidated
Cash Flow for such reference period shall be calculated to include the
Consolidated Cash Flow of the acquired entities (adjusted to exclude (a) the
cost of any compensation, remuneration or other benefit paid or provided to any
employee, consultant, Affiliate or equity owner of the acquired entities to the
extent such costs are eliminated and not replaced and (b) the amount of any
reduction in general, administrative or overhead costs or other non-recurring
items of the acquired entities, in each case, as determined in good faith by an
officer of us) and without giving effect to clause (iii) of the proviso set
forth in the definition of Consolidated Net Income, and (ii) the Consolidated
Cash Flow attributable to discontinued operations, as determined in accordance
with GAAP, and operations or businesses disposed of prior to the Calculation
Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are applicable as of the date of determination.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"GUARANTORS" means all Restricted Subsidiaries and, so long as it
Guarantees any Obligations under the New Credit Agreement, Holdings.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar
121
<Page>
agreements and (ii) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"INTERCOMPANY NOTE" means the note issued on the date of the indenture
governing the 2007 notes by Holdings in favor of Von Hoffmann in an initial
principal amount of $288.8 million.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If Von Hoffmann or any Subsidiary of it sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of Von Hoffmann such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of Von Hoffmann, it shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of the covenant described above
under the caption "Certain Covenants--Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MANAGEMENT EQUITY INTERESTS" means Equity Interests of Holdings held by
any employee of Von Hoffmann (or any of its Restricted Subsidiaries').
122
<Page>
"MANAGEMENT HOLDERS" means holders of Management Equity Interests on the
date of the indenture governing the 2007 notes.
"MERGER AGREEMENT" means that certain agreement and plan of merger among
the DLJ Entities, VH Acquisition Corp., ZS and Robert A. Uhlenhop, dated April
3, 1997.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by Von Hoffmann
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to repay Indebtedness secured by
such assets (other than pursuant to the New Credit Agreement) and any reserve
for adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"NEW CREDIT AGREEMENT" means that certain credit agreement, dated as of May
22, 1997, by and among Von Hoffmann and DLJ Capital Funding, Inc., including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time, including any
agreement (i) extending or shortening the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (ii) adding or deleting borrowers or
guarantors thereunder, (iii) increasing the amount of Indebtedness incurred
thereunder or available to be borrowed thereunder, PROVIDED that on the date
such Indebtedness is incurred it would not be prohibited by clause (i) of the
covenant set forth under "Incurrence of Indebtedness and Issuance of Preferred
Stock" or (iv) otherwise altering the terms and conditions thereof.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither Von Hoffmann
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender, and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Von
Hoffmann or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders have been
notified in writing that they will not have any recourse to the stock or assets
of Von Hoffmann or any of its Restricted Subsidiaries.
123
<Page>
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness, including any Guarantees of such
Indebtedness.
"PERMITTED INVESTMENTS" means (a) any Investment in Von Hoffmann or in a
Restricted Subsidiary of Von Hoffmann; (b) any Investment in Cash Equivalents;
(c) any Investment by Von Hoffmann or any Restricted Subsidiary of Von Hoffmann
in a Person, if as a result of such Investment (i) such Person becomes a Wholly
Owned Restricted Subsidiary of Von Hoffmann and a Guarantor or (ii) such Person
is merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, Von Hoffmann or a
Wholly Owned Restricted Subsidiary of Von Hoffmann that is a Guarantor; (d) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with the covenant
described above under the caption "Repurchase at the Option of Holders--Asset
Sales"; (e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Von Hoffmann; (f) any
Investment represented by the Intercompany Note; (g) any loan made to management
in order to enable management to purchase equity in Holdings, or any refinancing
of any loan made to management, which loan was made to enable management to
purchase equity in Holdings; and (h) other Investments in any Person having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (h) that are at the time
outstanding, not to exceed $2.0 million.
"PERMITTED JUNIOR SECURITIES" means Equity Interests in us or a Guarantor
or debt securities of us or a Guarantor that are subordinated to all Senior Debt
(and any debt securities issued in exchange for Senior Debt) to substantially
the same extent as, or to a greater extent than, the 2007 notes are subordinated
to Senior Debt.
"PERMITTED LIENS" means (i) Liens securing Senior Debt that was permitted
by the terms of the indenture governing the 2007 notes to be incurred; (ii)
Liens in favor of Von Hoffmann or any of its Restricted Subsidiaries; (iii)
Liens on property of a Person existing at the time such Person is merged into or
consolidated with Von Hoffmann or any of its Subsidiaries; PROVIDED that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with Von Hoffmann; (iv) Liens on property existing
at the time of acquisition thereof by Von Hoffmann or any Subsidiary, PROVIDED
that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (v) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (iv) of the second
paragraph of the covenant entitled "Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock" covering only the assets acquired
with such Indebtedness; (vi) Liens existing on the date of the indenture
governing the 2007 notes; (vii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, PROVIDED that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor, (viii) Liens in
connection with any Permitted Refinancing Indebtedness, PROVIDED that such Liens
do not exceed the Liens
124
<Page>
replaced in connection with the Permitted Refinancing Indebtedness; (ix)
statutory Liens of landlords and carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's, or other like Liens arising in the
ordinary course of business and with respect to amounts not yet delinquent or
being contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor, (x) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business which, in
the aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of Von Hoffmann and its Subsidiaries
taken as a whole; and (xi) Liens incurred in the ordinary course of business of
Von Hoffmann or any Subsidiary of Von Hoffmann with respect to obligations that
do not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by Von Hoffmann
or such Subsidiary.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Von Hoffmann
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Von Hoffmann or any of its Restricted Subsidiaries;
PROVIDED that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest, premium and
prepayment penalties, if any, on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the 2007 notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the 2007 notes on terms at least as favorable to the
Holders of the 2007 notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by Von Hoffmann or by
the Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the relevant
Person that is not an Unrestricted Subsidiary.
"SENIOR DEBT," with respect to any Person, means (i) all Obligations of
such Person outstanding under the New Credit Agreement and all Hedging
Obligations payable to a lender under the New Credit Agreement or any of its
affiliates, including, without limitation, interest accruing subsequent to the
filing of, or which would have accrued but for the filing of, a petition for
bankruptcy, whether or not such interest is an allowable claim in such
bankruptcy proceeding, (ii) any other Indebtedness of such Person unless the
instrument under which such Indebtedness is incurred expressly provides that it
is subordinated in right of payment to any other Senior Debt
125
<Page>
of such Person and (iii) all Obligations with respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will not
include (a) any liability for federal, state, local or other taxes, (b) any
Indebtedness of such Person to any of its Subsidiaries, (c) any trade payables
or (d) any Indebtedness that is incurred in violation of the indenture governing
the 2007 notes.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBORDINATED NOTE OBLIGATIONS" means all Obligations with respect to the
Notes, including, without limitation, principal, premium, if any, interest and
Liquidated Damages, if any, payable pursuant to the terms of the Notes
(including upon acceleration or redemption thereof), together with and including
any amounts received or receivable upon the exercise of rights of rescission or
other rights of action (including claims for damages) or otherwise.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TAX SHARING AGREEMENT" means that certain tax sharing agreement between
Holdings and Von Hoffmann, dated as of the Closing Date, as amended from time to
time; PROVIDED such amendment or amendments do not materially adversely effect
us.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with Von Hoffmann or any of its Restricted
Subsidiaries unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Von Hoffmann or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of Von Hoffmann, (c) is a Person with respect to which neither
Von Hoffmann nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of Von
Hoffmann or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of Von Hoffmann or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of
126
<Page>
Von Hoffmann or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "Certain Covenants--Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture governing the 2007 notes and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of Von Hoffmann as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described under the
caption "Incurrence of Indebtedness and Issuance of Preferred Stock," Von
Hoffmann shall be in default of such covenant). Von Hoffmann's Board of
Directors may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of Von Hoffmann of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under the covenant
described under the caption "Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
(ii) such Subsidiary shall execute a Subsidiary Guarantee and deliver an opinion
of counsel, in accordance with the terms of the indenture governing the 2007
notes and (iii) no Default or Event of Default would be in existence following
such designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
"ZS" means ZS VH L.P., together with ZS VH II L.P., as the context
requires.
FORMS OF REGISTERED SECURITIES
The certificates representing the registered securities will be issued in
fully registered form, without coupons. Except as described in the next
paragraph, the registered securities will be deposited with, or on behalf of,
DTC, and registered in the name of Cede & Co., as DTC's
127
<Page>
nominee, in the form of a global security. Holders of the registered notes will
own book-entry interests in the global note evidenced by records maintained by
DTC.
Book-entry interests may be exchanged for certificated securities of like
tenor and equal aggregate principal amount, if
(1) DTC notifies us that it is unwilling or unable to continue as
depositary or we determine that DTC is unable to continue as
depositary and we fail to appoint a successor depositary within 120
days,
(2) we provide for the exchange pursuant to the terms of the indenture
governing the 2007 notes, or
(3) we determine that the book-entry interests will no longer be
represented by global notes and we execute and deliver to the Trustee
instructions to that effect.
128
<Page>
13 1/2% SUBORDINATED EXCHANGE DEBENTURES DUE 2009
You can find the definitions of certain terms used in this description of
the 2009 Holdings debentures under the subheading "Certain Definitions." In this
description, the term "Holdings" refers only to Von Hoffmann Holdings Inc. and
not to any of its subsidiaries.
Holdings issued the old 2009 Holdings debentures under an indenture among
itself, and Marine Midland Bank (now HSBC Bank USA), as trustee. The terms of
the 2009 Holdings debentures include those stated in the indenture governing
them and those made part of that indenture by reference to the Trust Indenture
Act of 1939, as amended.
The following description is a summary of the material provisions of the
indenture and the registration rights agreement governing the 2009 Holdings
debentures. It does not restate those agreements in their entirety. We urge you
to read the indenture and the registration rights agreement governing the 2009
Holdings debentures because they define your rights as holders of the notes.
Copies of the indenture and the registration rights agreement governing the 2009
Holdings debentures are available as set forth below under "Additional
Information."
BRIEF DESCRIPTION OF THE 2009 HOLDINGS DEBENTURES
The 2009 Holdings debentures:
- will be general unsecured obligations of Holdings; and
- will be expressly subordinate in right of payment with all existing
and future senior indebtedness of Holdings.
PRINCIPAL, MATURITY AND INTEREST
Holdings issued the old 2009 Holdings debentures in an aggregate principal
amount of $30.4 million, which has accreted to $48.1 million in principal
amount. The 2009 Holdings debentures will mature on May 15, 2009.
Interest on the 2009 Holdings debentures accrues at the rate of 13.5% per
annum and is payable semi-annually in arrears on May 15 and November 15.
Interest shall be payable in cash PROVIDED, HOWEVER, that prior to the first
date on which interest would be permitted to be paid in cash pursuant to the
terms of the then-outstanding indebtedness of Holdings and its Subsidiaries and
any other contractual provisions limiting the ability of Holdings and its
Subsidiaries to declare or pay cash interest, interest shall not be paid in cash
but shall accrete to, and increase, the principal amount of each Debenture.
Interest on the Debentures shall accrue from the most recent date to which
interest has been paid or accreted to principal amount or, if no interest has
been so paid or accreted, from the date of issuance. Holdings will make each
interest payment to the holders of record on the immediately preceding May 1 and
November 1. All payments on the 2009 Holdings debentures will be made at the
office or agency of the paying agent unless Holdings elects to make interest
payments by check mailed to holders at their address set forth in the register
of holders.
129
<Page>
Interest will be calculated on the basis of a 360-day year comprised of
twelve 30-day months.
PAYING AGENT AND REGISTRAR FOR THE 2009 HOLDINGS DEBENTURES
The trustee currently acts as paying agent and registrar. Holdings may
change the paying agent or registrar without prior notice to the holders of the
2009 Holdings Debentures, and Holdings or any of its subsidiaries may act as
paying agent or registrar.
SUBORDINATION
The payment of the Debenture Obligations is subordinated in right of
payment to the prior payment in full in cash or cash equivalents of all Senior
Debt, whether outstanding on the date of the indenture governing the 2009
Holdings debentures.
Upon any distribution to creditors of Holdings in a liquidation or
dissolution of it or in a bankruptcy, reorganization, insolvency, receivership
or similar proceeding relating to Holdings or its property, an assignment for
the benefit of creditors or any marshalling of its assets and liabilities, the
holders of Senior Debt will be entitled to receive payment in full in cash or
cash equivalents of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before the holders of the 2009 Holdings
debentures will be entitled to receive any payment with respect to the Debenture
Obligations, and until all Obligations with respect to Senior Debt are paid in
full in cash or cash equivalents, any distribution to which the holders of the
2009 debentures would be entitled shall be made to the holders of Senior Debt
(except that holders of the 2009 Holdings debentures may receive Permitted
Junior Securities and payments made from the trust described under "Legal
Defeasance and Covenant Defeasance").
Holdings also may not make any payment upon or in respect of the
Subordinated Note Obligations (except in Permitted Junior Securities or payments
made from the trust described under "Legal Defeasance and Covenant Defeasance")
if (i) a default in the payment of the principal of or premium, if any, or
interest on, or commitment fees relating to, any Designated Senior Debt occurs
and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to any Designated Senior Debt that
permits holders of the Designated Senior Debt as to which such default relates
to accelerate its maturity and the Trustee receives a written notice of such
default (a "Payment Blockage Notice") from Holdings or the representatives of
such Designated Senior Debt. Payments on the 2009 Holdings debentures may and
shall be resumed (a) in the case of a payment default, upon the date on which
such default is cured or waived and (b) in case of a nonpayment default, the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated. No new
period of payment blockage may be commenced unless and until 360 days have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 90 days.
130
<Page>
The indenture governing the 2009 Holdings debentures further requires that
Holdings promptly notifies holders of Senior Debt if payment of the 2009
Holdings debentures is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of the 2009 Holdings debentures may
recover less ratably than creditors of Holdings who are holders of Senior Debt.
OPTIONAL REDEMPTION
The 2009 Holdings debentures shall be subject to redemption at any time at
the option of Holdings, in whole or in part, at the redemption prices (expressed
as percentages of principal amount) set forth below, PLUS any accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on May 15 of the years indicated below:
<Table>
<Caption>
YEAR PERCENTAGE
---- ----------
2003.................................................................. 105.40%
2004.................................................................. 104.05%
2005.................................................................. 102.70%
2006.................................................................. 101.35%
2007 and thereafter................................................... 100.00%
</Table>
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders,"
Holdings is not required to make mandatory redemption or sinking fund payments
with respect to the 2009 Holdings debentures.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of the 2009 Holdings debentures
will have the right to require Holdings to repurchase all or any part (equal to
$1,000 or an integral multiple of $1,000) of that holder's 2009 Holdings
debentures pursuant to a Change of Control Offer on the terms set forth in the
indenture governing the 2009 Holdings debentures. In the Change of Control
Offer, Holdings will offer at an offer price in cash equal to 101% of the
aggregate principal amount of the 2009 Holdings debentures repurchased plus
accrued and unpaid interest, on the 2009 Holdings debentures repurchased, to the
date of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, Holdings will mail a notice to each holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase the 2009 Holdings debentures on the date specified in the notice,
which date will be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the indenture governing the 2009 Holdings debentures
and described in such notice. Holdings will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
131
<Page>
regulations thereunder to the extent those laws and regulations are applicable
in connection with the repurchase of the 2009 Holdings debentures as a result of
a Change of Control.
On the Change of Control Payment Date, Holdings will, to the extent lawful:
(1) accept for payment all the 2009 Holdings debentures or portions of the
2009 Holdings debentures properly tendered pursuant to the Change of
Control Offer;
(2) deposit with the paying agent an amount equal to the Change of Control
Payment in respect of all the 2009 Holdings debentures or portions of
the 2009 Holdings debentures properly tendered; and
(3) deliver or cause to be delivered to the trustee the 2009 Holdings
debentures properly accepted together with an Officers' Certificate
stating the aggregate principal amount of the 2009 Holdings debentures
or portions of the 2009 Holdings debentures being purchased by
Holdings.
The paying agent will promptly mail to each holder of the 2009 Holdings
debentures properly tendered the Change of Control Payment for such 2009
Holdings debentures, and the trustee will promptly authenticate and mail (or
cause to be transferred by book entry) to each holder a new 2009 debenture equal
in principal amount to any unpurchased portion of the 2009 Holdings debentures
surrendered, if any; PROVIDED that each new 2009 debenture will be in a
principal amount of $1,000 or an integral multiple of $1,000.
Holdings will publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.
The provisions described above that require Holdings to make a Change of
Control Offer following a Change of Control will be applicable whether or not
any other provisions of the indenture governing the 2009 Holdings debentures are
applicable. Except as described above with respect to a Change of Control, the
indenture governing the 2009 Holdings debentures does not contain provisions
that permit the holders of the 2009 Holdings debentures to require that Holdings
repurchase or redeem the 2009 Holdings debentures in the event of a takeover,
recapitalization or similar transaction.
The senior credit facility limits Holdings from purchasing or redeeming any
2009 Holdings debentures, and also provides that certain change of control
events with respect to Holdings would constitute a default thereunder. Any
future credit agreements or other agreements to which Holdings becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control occurs at a time when Holdings is prohibited from purchasing or
redeeming the 2009 Holdings debentures, it could seek the consent of its lenders
to the purchase of the 2009 Holdings debentures or could attempt to refinance
the borrowings that contain such prohibition. If Holdings does not obtain such a
consent or repay such borrowings, it will remain prohibited from purchasing the
2009 Holdings debentures. In such case, Holdings' failure to purchase tendered
2009 Holdings debentures would constitute an Event of Default under the
indenture governing the 2009 Holdings debentures, which would, in turn,
constitute a default under the senior credit facility. In addition, Holdings'
ability to pay cash to the holders of
132
<Page>
the 2009 Holdings debentures upon a repurchase may be limited by its then
existing financial resources.
Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture governing the 2009 Holdings debentures applicable to a Change
of Control Offer made by Holdings and purchases all the 2009 Holdings debentures
validly tendered and not withdrawn under the Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Holdings and its Subsidiaries taken as a whole. Although there
is a developing body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of the 2009 Holdings debentures to require
Holdings to repurchase the 2009 Holdings debentures as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of Holdings and its Subsidiaries taken as a whole to another Person or group may
be uncertain.
Holdings' ability to pay cash to the holders of the 2009 Holdings
debentures upon a repurchase may be limited by Holdings' then existing financial
resources. See "Risk Factors" We may not have the ability to raise the funds
necessary to finance the change of control offer required by the indenture
governing the 2009 Holdings debentures."
SELECTION AND NOTICE
Except as otherwise provided in the indenture governing the 2009 Holdings
debentures, if less than all of the 2009 Holdings debentures are to be redeemed
at any time, the trustee will select debentures for redemption as follows:
(1) if the 2009 Holdings debentures are listed on any national securities
exchange, in compliance with the requirements of the principal
national securities exchange on which the 2009 Holdings debentures are
listed; or
(2) if the 2009 Holdings debentures are not listed on any national
securities exchange, on a pro rata basis, by lot or by such method as
the trustee deems fair and appropriate.
No 2009 Holdings debentures of $1,000 or less can be redeemed in part.
Notices of redemption will be mailed by first class mail at least 30 but not
more than 60 days before the redemption date to each holder of the 2009 Holdings
debentures to be redeemed at its registered address. Notices of redemption may
not be conditional.
If any 2009 debenture is to be redeemed in part only, the notice of
redemption that relates to that 2009 debenture will state the portion of the
principal amount of that 2009 debenture that is to be redeemed. A new 2009
debenture in principal amount equal to the unredeemed portion of the original
2009 debenture will be issued in the name of the holder of the 2009 Holdings
debentures upon cancellation of the original 2009 debenture. The 2009 Holdings
debentures
133
<Page>
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest ceases to accrue on the 2009 Holdings debentures
or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Holdings will not, and will not permit any of its Subsidiaries to, directly
or indirectly, (i) declare or pay any dividend or make any other payment or
distribution on account of Holdings' Equity Interests (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
Holdings); (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of Holdings; or (iii) make any payment on or with respect to,
or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Debentures, except a payment of
interest or a payment of principal at Stated Maturity (all such payments and
other actions set forth in clauses (i) through (iii) above being collectively
referred to as "RESTRICTED PAYMENTS"), unless, at the time of and after giving
effect to such Restricted Payment, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof.
MERGER, CONSOLIDATION OR SALE OF ASSETS
MERGER, CONSOLIDATION OR SALE OF ASSETS
Holdings may not consolidate or merge with or into (whether or not Holdings
is the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another corporation, Person or entity unless
(i) Holdings is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than Holdings) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger (if
other than Holdings) or the entity or Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of Holdings under the 2009 Holdings debentures and the
indenture governing the 2009 Holdings debentures pursuant to a supplemental
indenture in a form reasonably satisfactory to the trustee; and (iii)
immediately after such transaction no Default or Event of Default exists.
REPORTS
So long as any 2009 Holdings debentures are outstanding, Holdings will
furnish to the holders of the 2009 Holdings debentures all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if Holdings were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of Holdings and its Subsidiaries and, with respect to the annual
information only, a report thereon by Holdings' certified independent
accountants.
134
<Page>
The financial information to be distributed to holders of 2009 Holdings
debentures shall be filed with the trustee and mailed to the holders at their
addresses appearing in the register of 2009 Holdings debentures maintained by
the Registrar within 120 days after the end of Holdings' fiscal years and within
60 days after the end of each of the first three quarters of each such fiscal
year.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default:
(i) default for 30 days in the payment when due of interest on the 2009
Holdings debentures (whether or not prohibited by the subordination
provisions of the indenture governing the 2009 Holdings debentures);
(ii) default in payment when due of principal of or premium, if any,
on the 2009 Holdings debentures (whether or not prohibited by
Subordination of the indenture governing the 2009 Holdings
debentures); (iii) failure by Holdings or any Subsidiary to comply
with the provisions described under the captions "Change of Control
Offer" and "Restricted Payments" of the indenture governing the 2009
Holdings debentures; (iv) failure by Holdings for 60 days after notice
to comply with its other agreements in the indenture governing the
2009 Holdings debentures or the 2009 Holdings debentures; or (v)
certain events of bankruptcy or insolvency with respect to Holdings or
any of its Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Holdings, any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding 2009 Holdings debentures
will become due and payable immediately without further action or notice.
Holders of the 2009 Holdings debentures may not enforce the indenture governing
the 2009 Holdings debentures or the 2009 Holdings debentures except as provided
in the indenture governing the 2009 Holdings debentures. If any other Event of
Default occurs and is continuing, the trustee or the holders of at least 25% in
principal amount of the then outstanding 2009 Holdings debentures may declare
all the 2009 Holdings debentures to be due and payable immediately provided,
however, that, so long as any Indebtedness permitted to be incurred pursuant to
the New Credit Agreement shall be outstanding, no such acceleration shall be
effective until the earlier of (i) acceleration of any such Indebtedness under
the New Credit Agreement or (ii) five business days after the giving of written
notice to Holdings and the representative under the New Credit Agreement of such
acceleration.
Subject to certain limitations, holders of a majority in principal amount
of the then outstanding 2009 Holdings debentures may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders of the
2009 Holdings debentures notice of any continuing Default or Event of Default if
it determines that withholding the 2009 Holdings debentures is in their
interest, except a Default or Event of Default relating to the payment of
principal or interest.
The holders of a majority in aggregate principal amount of the 2009
Holdings debentures then outstanding by notice to the trustee may on behalf of
the holders of all of the 2009 Holdings debentures waive any existing Default or
Event of Default and its consequences under the indenture governing the 2009
Holdings debentures except a continuing Default or Event of
135
<Page>
Default in the payment of interest or Liquidated Damages on, or the principal
of, the 2009 Holdings debentures.
Holdings is required to deliver to the trustee annually a statement
regarding compliance with the indenture governing the 2009 Holdings debentures.
Upon becoming aware of any Default or Event of Default, Holdings is required to
deliver to the trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Holdings or
any Guarantor, as such, will have any liability for any obligations of Holdings
or the Guarantors under the 2009 Holdings debentures, the indenture governing
the 2009 Holdings debentures or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of the 2009 Holdings
debentures by accepting a debenture waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the 2009
Holdings debentures. The waiver may not be effective to waive liabilities under
the federal securities laws and it is the view of the Commission that such a
waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Holdings may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding 2009 Holdings debentures
("Legal Defeasance") except for:
(1) the rights of holders of outstanding 2009 Holdings debentures to
receive payments in respect of the principal of, or interest or
premium on such notes when such payments are due from the trust
referred to below;
(2) Holdings' obligations with respect to the 2009 Holdings debentures
concerning issuing temporary notes, registration of notes, mutilated,
destroyed, lost or stolen notes and the maintenance of an office or
agency for payment and money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Holdings' obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture governing the 2009
Holdings debentures.
In addition, Holdings may, at its option and at any time, elect to have the
obligations of Holdings released with respect to certain covenants that are
described in the indenture governing the 2009 Holdings debentures ("Covenant
Defeasance") and thereafter any omission to comply with those covenants will not
constitute a Default or Event of Default with respect to the 2009 Holdings
debentures. In the event Covenant Defeasance occurs, certain events (not
including bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default and Remedies" will no longer constitute an
Event of Default with respect to the 2009 Holdings debentures.
136
<Page>
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Holdings must irrevocably deposit with the trustee, in trust, for the
benefit of the holders of the 2009 Holdings debentures, cash in U.S.
dollars, non-callable Government Securities, or a combination of cash
in U.S. dollars and non-callable Government Securities, in amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest
and premium, on the outstanding 2009 Holdings debentures on the stated
maturity or on the applicable redemption date, as the case may be, and
Holdings must specify whether the 2009 Holdings debentures are being
defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, Holdings has delivered to the trustee
an opinion of counsel in the United States reasonably acceptable to
the trustee confirming that (a) Holdings has received from, or there
has been published by, the Internal Revenue Service a ruling or (b)
since the date of the indenture governing the 2009 Holdings
debentures, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
opinion of counsel will confirm that, the holders of the outstanding
2009 Holdings debentures will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, Holdings has delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that the holders of the outstanding 2009 Holdings
debentures will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(4) no Default or Event of Default has occurred and is continuing on the
date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit);
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture governing the 2009
Holdings debentures) to which Holdings or any of its Subsidiaries is a
party or by which Holdings or any of its Subsidiaries is bound;
(6) Holdings must deliver to the trustee an Officers' Certificate stating
that the deposit was not made by Holdings with the intent of
preferring the holders of notes over the other creditors of Holdings
with the intent of defeating, hindering, delaying or defrauding
creditors of Holdings or others;
137
<Page>
(7) Holdings must deliver to the trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with; and
(8) Holdings must have delivered to the trustee an opinion of counsel to
the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture
governing the 2009 Holdings debentures, the 2009 Holdings debentures or the note
guarantees may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the 2009 Holdings debentures then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, the 2009 Holdings
debentures), and any existing default or compliance with any provision of the
indenture governing the 2009 Holdings debentures or the 2009 Holdings debentures
may be waived with the consent of the holders of a majority in principal amount
of the then outstanding 2009 Holdings debentures (including consents obtained in
connection with a tender offer or exchange offer for, the 2009 Holdings
debentures).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any 2009 Holdings debentures held by a non-consenting holder):
(1) reduce the principal amount of the 2009 Holdings debentures whose
holders must consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the 2009
Holdings debentures (other than provisions relating to the covenants
described above under the caption "Repurchase at the Option of
Holders") in a manner adverse to the holders of the 2009 Holdings
debentures;
(3) reduce the rate of or change the time for payment of interest on any
2009 debenture;
(4) waive a Default or Event of Default in the payment of principal of, or
interest or premium, on the 2009 Holdings debentures (except a
rescission of acceleration of the 2009 Holdings debentures by the
holders of at least a majority in aggregate principal amount of the
2009 Holdings debentures and a waiver of the payment default that
resulted from such acceleration);
(5) make any 2009 debenture payable in money other than that stated in the
2009 Holdings debentures;
(6) make any change in the provisions of the indenture governing the 2009
Holdings debentures relating to waivers of past Defaults or the rights
of holders of the 2009
138
<Page>
Holdings debentures to receive payments of principal of, or interest
or premium if any, on the 2009 Holdings debentures;
(7) waive a redemption payment with respect to any 2009 debenture (other
than a payment required by one of the covenants described above under
the caption "Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to the provision relating to Subordination shall
require the consent of the holders of at least 75% in aggregate amount of the
2009 Holdings debentures then outstanding (including consents obtained in
connection with a tender offer or exchange offer) if such amendment would
adversely affect the rights of holders of the 2009 Holdings debentures.
Notwithstanding the preceding, without the consent of any holder of the
2009 Holdings debentures, Holdings and the trustee may amend or supplement the
indenture governing the 2009 Holdings debentures or the 2009 Holdings
debentures:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated 2009 Holdings debentures in addition to
or in place of certificated 2009 Holdings debentures;
(3) to provide for the assumption of Holdings' obligations to holders of
the 2009 Holdings debentures in the case of a merger or consolidation;
(4) to make any change that would provide any additional rights or
benefits to the holders of the 2009 Holdings debentures or that does
not adversely affect the legal rights under the indenture governing
the 2009 Holdings debentures of any such holder; or
(5) to comply with requirements of the Commission in order to effect or
maintain the qualification of the indenture governing the 2009
Holdings debentures under the Trust Indenture Act.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Holdings, the indenture governing the
2009 Holdings debentures limits its right to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of the then outstanding 2009
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture governing the 2009 Holdings debentures
provides that in case an Event of Default occurs and is continuing, the trustee
will be required, in the exercise of its power, to use the degree of care of a
prudent man in
139
<Page>
the conduct of his own affairs. Subject to such provisions, the trustee will be
under no obligation to exercise any of its rights or powers under the indenture
governing the 2009 Holdings debentures at the request of any holder of the 2009
notes, unless such holder has offered to the trustee security and indemnity
satisfactory to it against any loss, liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement governing the 2009 Holdings debentures without
charge by writing to: Von Hoffmann Corporation, 1000 Camera Avenue, St. Louis,
Missouri, 63126, Attention: Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture governing
the 2009 Holdings debentures. Reference is made to the indenture governing the
2009 Holdings debentures for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"BOARD OF DIRECTORS" means the board of directors of Holdings or (except in
the case of the definition of Change of Control) any authorized committee of
such board of directors.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CERTIFICATE OF DESIGNATIONS" means the Amended and Restated Certificate of
Designations, Preferences and Rights relating to the Preferred Stock.
140
<Page>
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d)(2) of
the Exchange Act), other than any person or group comprised solely of the
Initial Investors, becomes the "beneficial owner" (as such term is defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition), by way of merger,
consolidation or otherwise, of 50% or more of the voting power of all classes of
voting securities of the Holdings and such person or group beneficially owns a
greater percentage of the voting power of all classes of voting securities of
Holdings than that beneficially owned by the Initial Investors; (ii) the
consummation of a sale or transfer of all or substantially all of the assets of
the Holdings or the Company to any person or group (as defined above), other
than any person or group comprised solely of the Initial Investors or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Holdings, together with any
new directors whose election was approved by a vote of a majority of directors
then still in office who either were directors at the beginning of such period
or whose election or nomination for the election was previously so approved,
cease for any reason to constitute a majority of the directors of Holdings then
in office, other than as a result of election of removal of directors, or a
reduction of the number of directors comprising the Board of Directors of
Holdings, pursuant to the provisions governing the election and removal of
directors of the Certificate of Designations or the Shareholders Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" means Von Hoffmann Corporation, a Delaware corporation.
"DEBENTURE OBLIGATIONS" means all Obligations with respect to the
Debentures, including, without limitation, principal, premium, if any, and
interest payable pursuant to the terms of the Debentures (including upon
acceleration or redemption thereof), together with and including any amounts
received or receivable upon the exercise of rights of rescission or other rights
of action (including claims for damages) or otherwise.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"DESIGNATED SENIOR DEBT," means (i) any Obligations of Holdings under the
New Credit Agreement and (ii) in the event no Indebtedness is outstanding under
the New Credit Agreement, any other Senior Debt the principal amount of which is
$25.0 million or more and that has been designated by Holdings as "Designated
Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Debentures mature.
"DLJMB" means DLJ Merchant Banking Partners II, L.P. and its Affiliates.
141
<Page>
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are applicable as of the date of determination.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"HOLDINGS" means Von Hoffmann Holdings, Inc.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person.
"INITIAL INVESTORS" means DLJMB, ZS and the Management Holders and, in each
case, their respective permitted assigns under the Shareholders Agreement.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
142
<Page>
"MANAGEMENT EQUITY INTERESTS" means Equity Interests of Holdings held by
any employee of the Company or any of its Subsidiaries.
"MANAGEMENT HOLDERS" means holders of Management Equity Interests on the
date that the Preferred Stock was originally issued by Holdings.
"MERGER AGREEMENT" means that certain agreement and plan of merger, dated
April 3, 1997, among DLJMB, VH Acquisition, Inc., ZS and Robert A. Uhlenhop.
"MOODY'S" means Moody's Investors Service, Inc.
"NEW CREDIT AGREEMENT" means that certain credit agreement, dated as of May
22, 1997, by and among Holdings, DLJ Capital Funding, Inc. and the lenders party
thereto, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time,
including any agreement (i) extending or shortening the maturity of any
Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder, (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder or (iv)
otherwise altering the terms and conditions thereof.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness, including any guarantees of such
Indebtedness.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"PERMITTED JUNIOR SECURITIES" means Equity Interests in Holdings or debt
securities of Holdings that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Debentures are subordinated to Senior Debt.
"PERSON" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PREFERRED STOCK" means the Holdings 13.5% Senior Exchangeable Preferred
Stock due 2009 and the Holdings' Series B 13.5% Senior Exchangeable Preferred
Stock due 2009.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means (i) all Obligations of the Company under the New Credit
Agreement and under all Hedging Obligations payable to a lender under the New
Credit Agreement or any of its affiliates, including, without limitation,
interest accruing subsequent to the filing of, or which would have accrued but
for the filing of, a petition for bankruptcy, whether
143
<Page>
or not such interest is an allowable claim in such bankruptcy proceeding, (ii)
all Obligations of the Company in respect of the 2007 notes and the indenture
related thereto, (iii) any other Indebtedness of the Company unless the
instrument under which such Indebtedness is incurred expressly provides that it
is PARI PASSU or subordinated in right of payment to the Debentures and (iv) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (a) any liability for
federal, state, local or other taxes, (b) any Indebtedness of the Company to any
of its Subsidiaries or (c) any trade payables.
"SHAREHOLDERS AGREEMENT" means the Shareholders Agreement, dated as of May
22, 1997, among the Company and the shareholders of the Company named therein.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"2007 NOTES" means the 10 3/8% Senior Subordinated Notes due 2007 of the
Company.
"VHP" means Von Hoffmann Press, Inc., a Delaware corporation.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
"ZS" means ZS VH, L.P. together with ZS VH II L.P., as the context
requires.
FORMS OF REGISTERED SECURITIES
The certificates representing the registered securities will be issued in
fully registered form, without coupons. Except as described in the next
paragraph, the registered securities will be deposited with, or on behalf of,
DTC, and registered in the name of Cede & Co., as DTC's nominee, in the form of
a global security. Holders of the registered notes will own book-entry interests
in the global note evidenced by records maintained by DTC.
Book-entry interests may be exchanged for certificated securities of like
tenor and equal aggregate principal amount, if
144
<Page>
(1) DTC notifies us that it is unwilling or unable to continue as
depositary or we determine that DTC is unable to continue as
depositary and we fail to appoint a successor depositary within 120
days,
(2) we provide for the exchange pursuant to the terms of the indenture
governing the 2009 Holdings debentures, or
(3) we determine that the book-entry interests will no longer be
represented by global notes and we execute and deliver to the Trustee
instructions to that effect.
As of the date of this prospectus, no certificated securities are issued
and outstanding.
145
<Page>
PLAN OF DISTRIBUTION
This prospectus is to be used by Credit Suisse First Boston Corporation in
connection with the offers and sales of the registered securities in
market-making transactions effected from time to time. Credit Suisse First
Boston Corporation may act as a principal or agent in such transactions,
including as agent for the counterparty when acting as principal or as agent for
both counterparties, and may receive compensation in the form of discounts and
commissions, including from both counterparties when it acts as agent for both.
Such sales will be made at prevailing market prices at the time of sale, at
prices related thereto or at negotiated prices.
DLJ Merchant Banking Partners, an affiliate of Credit Suisse First Boston
Corporation, beneficially own approximately 98.5% of the common stock of
Holdings. Nicole S. Arnaboli, James A. Quella and David F. Burgstahler, who are
the Managing Partner, a Managing Director and a principal of DLJ Merchant
Banking, respectively, are members of the boards of directors of Holdings and
Von Hoffman. Further, Credit Suisse First Boston Corporation acted as
syndication agent in connection with the senior credit facility for which it
received certain customary fees and expenses. Credit Suisse First Boston
Corporation has, from time to time, provided investment banking and other
financial advisory services to Holdings in the past for which it has received
customary compensation, and will provide such services and financial advisory
services to Holdings in the future. In addition, Credit Suisse First Boston
Corporation acted as initial purchaser in connection with the initial sale of
the 2009 notes and the 2007 notes. See "Certain Relationships and Related
Transactions."
Credit Suisse First Boston Corporation has informed us that it does not
intend to confirm sales of the securities to any accounts over which it
exercises discretionary authority without the prior specific written approval of
such transactions by the customer.
We have been advised by Credit Suisse First Boston Corporation that,
subject to applicable laws and regulations, Credit Suisse First Boston
Corporation has been and intends to continue to make a market in the securities.
However, Credit Suisse First Boston Corporation is not obligated to do so and
any such market-making may be interrupted or discontinued at any time without
notice. In addition, such market-making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act. There can be no assurance
that an active trading market will be sustained. See "Risk Factors--There is a
limited trading market for the securities."
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Von Hoffmann Holdings Inc. at
December 31, 2002 and 2001, and for each of the three years in the period ended
December 31, 2002, appearing in this prospectus and registration statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
146
<Page>
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the registered
securities. This prospectus, which is a part of the registration statement,
omits certain information included in the registration statement and the
exhibits thereto. For further information with respect to us and the registered
securities, we refer you to the registration statement and its exhibits. The
descriptions of each contract and document contained in this prospectus are
summaries and qualified in their entirety by reference to the copy of each such
contract or document filed as an exhibit to the registration statement. You may
read and copy the registration statement, including exhibits thereto, at the
Commission's Public Reading Room located at 450 Fifth Street, N.W., Washington
D.C. 20549. You may obtain information on the operation of the Public Reading
Room by calling the Commission at 1-800-SEC-0300. The Commission also maintains
an Internet site (www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants such as us who file
electronically with the Commission.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith, will file reports, proxy
and information statements with the Commission. You may inspect and copy these
reports, proxy and information statements and other information at the addresses
set forth above. You may request copies of these documents by contacting us at:
Von Hoffmann Corporation, 1000 Camera Avenue, St. Louis, Missouri 63126, Attn:
Chief Financial Officer.
147
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<Table>
<Caption>
Page
----
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors............................................................................ F-2
Consolidated Balance Sheets as of December 31, 2002 and 2001.............................................. F-3
Consolidated Statements of Operations for the years ended December 31, 2002, 2001
and 2000................................................................................................ F-5
Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2002, 2001
and 2000................................................................................................ F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001 and 2000........................................................................ F-7
Notes to Consolidated Financial Statements................................................................ F-9
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of March 31, 2003, March 31, 2002 and December 31, 2002.................... F-21
Consolidated Statements of Operations for the three months ended March 31, 2003
and 2002................................................................................................ F-23
Consolidated Statements of Cash Flows for the three months ended March 31, 2003
and 2002................................................................................................ F-24
Notes to Unaudited Consolidated Financial Statements...................................................... F-26
</Table>
F-1
<Page>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Von Hoffmann Holdings Inc.
We have audited the accompanying consolidated balance sheets of Von
Hoffmann Holdings Inc. and Subsidiaries at December 31, 2002 and 2001, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Von Hoffmann
Holdings Inc. and Subsidiaries at December 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States.
As discussed in Note 1 to the consolidated financial statements, in the
year ended December 31, 2002, the Company changed its method for amortizing
goodwill.
/s/ Ernst & Young LLP
St. Louis, Missouri
January 24, 2003
F-2
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
DECEMBER 31
2002 2001
--------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 4,437,814 $ 18,319,923
Trade accounts receivable, less allowance for doubtful
accounts of $475,085 in 2002 and $563,957 in 2001 49,140,939 46,750,791
Inventories 32,037,590 23,261,846
Income taxes refundable 1,610,764 2,456,573
Deferred income taxes 2,492,145 1,955,392
Prepaid expenses 1,057,038 595,951
--------------------------------
Total current assets 90,776,290 93,340,476
Deferred debt issuance cost, net of accumulated amortization
of $3,362,918 in 2002 and $7,441,351 in 2001 11,123,569 5,467,105
Property, plant, and equipment:
Buildings and improvements 45,907,423 46,467,711
Machinery and equipment 225,624,848 221,004,588
Transportation equipment 841,600 2,815,781
Furniture and fixtures 6,633,872 9,853,461
--------------------------------
279,007,743 280,141,541
Allowance for depreciation and amortization (158,552,832) (138,471,747)
--------------------------------
120,454,911 141,669,794
Installation in process 3,016,871 1,912,618
Land 4,894,397 4,894,397
--------------------------------
128,366,179 148,476,809
Goodwill, net of accumulated amortization of $38,805,103 in
2002 and 2001 189,854,557 183,200,984
Covenant not to compete, net of accumulated amortization of
$781,819 in 2001 - 218,181
--------------------------------
$ 420,120,595 $ 430,703,555
================================
</Table>
F-3
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<Table>
<Caption>
DECEMBER 31
2002 2001
--------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 14,807,732 $ 10,360,658
Other accrued expenses 13,189,475 4,088,933
Salaries and wages 6,357,618 9,257,062
Taxes, other than income taxes 743,057 681,215
Current portion of long-term debt - 29,235,592
--------------------------------
Total current liabilities 35,097,882 53,623,460
Long-term liabilities and reserves:
Deferred income taxes 11,383,698 12,773,067
Senior secured credit agreement - revolving loan - 23,000,000
Senior secured credit agreement - term loans - 189,319,331
Senior debt 215,000,000 -
Senior subordinated notes 100,000,000 100,000,000
Subordinated exchange debentures 35,681,157 43,016,132
--------------------------------
362,064,855 368,108,530
Stockholders' equity:
Common stock; $0.01 par value per share; 150,000,000
shares authorized 715,944 515,944
Additional paid-in capital 86,434,271 59,980,698
Accumulated deficit (55,240,233) (49,943,911)
Treasury stock, at cost (8,470,000) (90,000)
Notes receivable from the sale of stock and accrued interest (482,124) (1,491,166)
--------------------------------
22,957,858 8,971,565
--------------------------------
$ 420,120,595 $ 430,703,555
================================
</Table>
See accompanying notes.
F-4
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS
<Table>
<Caption>
YEAR ENDED DECEMBER 31
2002 2001 2000
--------------------------------------------------
Net sales $ 379,437,512 $ 407,096,402 $ 443,422,931
Cost of products and services 321,331,238 346,917,560 374,165,599
--------------------------------------------------
Gross profit 58,106,274 60,178,842 69,257,332
Operating expenses:
Selling and administrative expenses 26,176,654 31,263,254 33,597,323
Special consulting expenses 2,453,268 577,959 2,149,239
Restructuring charges - 1,475,579 -
--------------------------------------------------
28,629,922 33,316,792 35,746,562
--------------------------------------------------
Income from operations 29,476,352 26,862,050 33,510,770
Interest income 269,409 264,849 471,070
Gain (loss) on disposal of depreciable
assets 2,771,316 (512,467) (642,880)
Gain on debt extinguishment, net 279,818 - -
Interest expense - subsidiary (33,556,883) (32,143,823) (36,855,491)
Interest expense - subordinate
exchange debentures (5,529,701) (5,982,802) (5,295,989)
--------------------------------------------------
(35,766,041) (38,374,243) (42,323,290)
--------------------------------------------------
Loss before income taxes (6,289,689) (11,512,193) (8,812,520)
Income tax provision (benefit):
Current 932,755 5,433,088 6,550,710
Deferred (1,926,122) (6,701,302) (7,252,096)
--------------------------------------------------
(993,367) (1,268,214) (701,386)
--------------------------------------------------
Net loss $ (5,296,322) $ (10,243,979) $ (8,111,134)
==================================================
Basic and diluted loss per common
share $ (0.08) $ (0.20) $ (0.16)
==================================================
</Table>
See accompanying notes.
F-5
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
<Table>
<Caption>
NUMBER OF SHARES AMOUNTS
------------------------------- ----------------------------------------------------------------
ADDITIONAL
COMMON TREASURY COMMON PAID-IN ACCUMULATED TREASURY
STOCK STOCK STOCK CAPITAL DEFICIT STOCK
-------------- -------------- -------------- -------------- -------------- --------------
Balance at December 31, 1999 51,594,444 - $ 515,944 $ 59,980,698 $ (31,588,79) $ -
Net loss - - - - (8,111,134) -
Accrued interest - - - - - -
-------------- -------------- -------------- -------------- -------------- --------------
Balance at December 31, 2000 51,594,444 - 515,944 59,980,698 (39,699,932) -
Net loss - - - - (10,243,979) -
Accrued interest - - - - - -
Purchase of treasury stock - 60,000 - - - (90,000)
-------------- -------------- -------------- -------------- -------------- --------------
Balance at December 31, 2001 51,594,444 60,000 515,944 59,980,698 (49,943,911) (90,000)
Net loss - - - - (5,296,322) -
Accrued interest - - - - - -
Purchase of treasury stock - 8,380,000 - - - (8,380,000)
Issuance of common stock 20,000,000 - 200,000 19,800,000 - -
Pushdown of goodwill created by
equity transactions - - - 6,653,573 - -
-------------- -------------- -------------- -------------- -------------- --------------
Balance at December 31, 2002 71,594,444 8,440,000 $ 715,944 $ 86,434,271 $ (55,240,23) $ (8,470,000)
============== ============== ============== ============== ============== ==============
<Caption>
AMOUNTS
-------------------------------
NOTES
RECEIVABLE
FROM THE
SALE OF STOCK
AND ACCRUED
INTEREST TOTAL
-------------- --------------
Balance at December 31, 1999 $ (1,279,031) $ 27,628,813
Net loss - (8,111,134)
Accrued interest (123,055) (123,055)
-------------- --------------
Balance at December 31, 2000 (1,402,086) 19,394,624
Net loss - (10,243,979)
Accrued interest (133,517) (133,517)
Purchase of treasury stock 44,437 (45,563)
-------------- --------------
Balance at December 31, 2001 (1,491,166) 8,971,565
Net loss - (5,296,322)
Accrued interest (93,306) (93,306)
Purchase of treasury stock 1,102,348 (7,277,652)
Issuance of common stock - 20,000,000
Pushdown of goodwill created by
equity transactions - 6,653,573
-------------- --------------
Balance at December 31, 2002 $ (482,124) $ 22,957,858
============== ==============
</Table>
See accompanying notes.
F-6
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CASH FLOWS
<Table>
<Caption>
YEAR ENDED DECEMBER 31
2002 2001 2000
--------------------------------------------------
OPERATING ACTIVITIES
Net loss $ (5,296,322) $ (10,243,979) $ (8,111,134)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation 29,266,268 38,030,255 34,339,578
Amortization of intangibles 218,181 9,289,234 9,118,237
Accretion of discount on
subordinated exchange debentures 308,271 374,583 374,583
Amortization of debt issuance
costs 2,133,080 1,987,084 1,783,674
(Gain) loss on disposal of
depreciable assets (2,771,316) 512,467 642,880
Gain on debt extinguishment, net (279,818) - -
Provision for deferred income
taxes (1,926,122) (6,701,302) (7,252,096)
Accrued interest on subordinated
exchange debentures 5,221,430 5,608,218 4,921,406
Accrued interest on notes from
the sale of stock (93,306) (133,517) (123,055)
Changes in operating assets and
liabilities:
Trade accounts receivable (2,390,148) 11,148,443 6,500,147
Inventories (8,775,744) 12,855,273 (3,475,863)
Income taxes refundable 845,809 (250,818) (2,341,278)
Prepaid expenses (461,087) 448,315 858,358
Trade accounts payable 4,447,074 (4,322,835) 1,335,750
Other accrued expenses 9,100,542 443,987 243,405
Salaries and wages (2,899,444) 728,460 1,185,337
Taxes, other than income taxes 61,842 (157,360) (58,467)
--------------------------------------------------
Net cash provided by operating
activities $ 26,709,190 $ 59,616,508 $ 39,941,462
</Table>
F-7
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CASH FLOWS (CONTINUED)
<Table>
<Caption>
YEAR ENDED DECEMBER 31
2002 2001 2000
--------------------------------------------------
INVESTING ACTIVITIES
Purchases of property, plant, and
equipment (12,656,960) (23,875,500) (28,131,550)
Proceeds from sale of equipment 6,272,638 172,463 930,851
Purchases of subsidiaries, net of
acquired cash:
Precision Offset Printing
Company, Inc. - - (25,326,992)
--------------------------------------------------
Net cash used in investing activities (6,384,322) (23,703,037) (52,527,691)
FINANCING ACTIVITIES
Payments of debt issuance costs (10,914,191) (13,563) (1,256,705)
Net payments - revolving loan (23,000,000) (10,000,000) 7,000,000
Net (payments) borrowings - acquisition
loan (21,000,000) (4,000,000) 16,500,000
Payments on senior secured debt -
term loans (197,554,923) (9,220,077) (6,425,000)
Proceeds from issuance of senior notes 215,000,000 - -
Payments on subordinated exchange
debentures (9,460,211) - -
Receipt on notes receivable from sale
of stock 1,102,348 44,437 -
Purchase of treasury stock (8,380,000) (90,000) -
Issuance of common stock 20,000,000 - -
--------------------------------------------------
Net cash (used in) provided by
financing activities (34,206,977) (23,279,203) 15,818,295
--------------------------------------------------
Net (decrease) increase in cash and (13,882,109) 12,634,268 3,232,066
cash equivalents
Cash and cash equivalents at beginning
of year 18,319,923 5,685,655 2,453,589
--------------------------------------------------
Cash and cash equivalents at end of year $ 4,437,814 $ 18,319,923 $ 5,685,655
==================================================
</Table>
See accompanying notes.
F-8
<Page>
1. SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Von Hoffmann
Holdings Inc. (formerly known as Von Hoffmann Corporation) (the Company) and its
wholly owned subsidiary, Von Hoffmann Corporation (formerly known as Von
Hoffmann Press, Inc.) (the Subsidiary) and its wholly owned subsidiaries:
Mid-Missouri Graphics, Inc., Von Hoffmann Graphics, Inc., H&S Graphics, Inc.,
Preface, Inc., One Thousand Realty and Investment Company, and Precision Offset
Printing Company, Inc. Effective February 29, 2002, Von Hoffmann Graphics, Inc.
was merged with the Subsidiary. Effective December 20, 2002, One Thousand Realty
and Investment Company was merged into the Subsidiary. Effective July 1, 2001,
Mid-Missouri Graphics, Inc. was merged into the Subsidiary. Intercompany
accounts and transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results will differ from these estimates.
BUSINESS SEGMENT AND CONCENTRATION OF CREDIT RISK
Substantially all of the Company's assets, sales, and operating earnings
are derived from the performance of book manufacturing services to educational
publishers, commercial entities, and governmental institutions throughout the
United States. At December 31, 2002, approximately 16.7 percent of the Company's
workforce is subject to collective bargaining agreements. Two customers and
their affiliates accounted for 27.9 percent of 2002 net sales, 32.0 percent of
2001 net sales, and 28.8 percent of 2000 net sales, respectively. Additionally,
these two customers and their affiliates accounted for 15.6 percent of accounts
receivable, respectively, at December 31, 2002. The Company performs periodic
credit evaluations of its customers' financial condition and generally does not
require collateral.
REVENUE RECOGNITION
Revenues are recognized when the products are shipped FOB shipping point,
risk of loss transfers or as services are performed as determined by the
contractual arrangement.
CASH AND CASH EQUIVALENTS
The Company considers cash and cash equivalents to include demand deposits
and repurchase agreements with maturities of three months or less when
purchased. Cash and cash equivalents are carried at cost, which approximates
market value.
INVENTORIES
The Company values substantially all of its inventory at the lower of cost,
as determined using the last-in, first-out (LIFO) method, or market. The
remainder of inventory is valued at the lower of cost, as determined using the
first-in, first-out (FIFO) method, or market. Effective
F-9
<Page>
January 1, 2000, the Company made changes in its LIFO calculations consisting of
consolidation of LIFO pools, applying LIFO to additional portions of inventory,
and changing certain computational techniques. The impact of these changes in
methods was not material, individually or in the aggregate, to the operating
results in 2000.
Inventories are comprised of the following amounts at December 31:
<Table>
<Caption>
2002 2001
---- ----
Raw materials $ 14,602,196 $ 18,504,261
Work-in-process 19,125,388 6,549,530
--------------------------------
33,727,584 25,053,791
Less LIFO reserve 1,689,994 1,791,945
--------------------------------
$ 32,037,590 $ 23,261,846
================================
</Table>
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. The Company capitalizes
all repair and maintenance costs which result in significant increases in the
useful life of the underlying asset. All other repair and maintenance costs are
expensed. Depreciation is computed using straight-line or accelerated methods
over the following estimated useful lives:
<Table>
<Caption>
DESCRIPTION YEARS
----------- -----
Buildings and improvements...................................................... 11-40
Machinery and equipment......................................................... 5-12
Transportation equipment........................................................ 4-10
Furniture and fixtures.......................................................... 4-7
</Table>
In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS, which addressed financial accounting and
reporting for the impairment or disposal of long-lived assets and superceded
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and the accounting and reporting
provisions of Accounting Principles Board (APB) Opinion No. 30, REPORTING THE
RESULTS OF OPERATIONS, for a disposal of a segment of a business. SFAS No. 144
became effective for fiscal years beginning after December 15, 2001. The Company
adopted SFAS No. 144 as of January 1, 2002, and the adoption of the statement
did not have an effect on our financial position or our results of operations.
GOODWILL
Effective January 1, 2002, the Company adopted SFAS No. 141, BUSINESS
COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS. SFAS No.
141 requires business combinations initiated after June 30, 2001 to be accounted
for using the purchase method. SFAS No. 141 further clarifies the criteria for
recognition of intangible assets separately from goodwill. The adoption of this
standard did not have any effect on the Company's accounting for prior business
acquisitions.
F-10
<Page>
Under SFAS No. 142, goodwill is no longer amortized, but is subject to
annual impairment tests. Accordingly, as of January 1, 2002, the Company no
longer amortizes goodwill. The Company performed a transitional impairment test
of its existing goodwill during the second quarter of 2002. The Company did not
recognize any impairment of goodwill in connection with the initial transitional
impairment test. In subsequent years, the Company will perform a formal
impairment test of goodwill on an annual basis and between annual tests if an
event occurs or circumstances change that would more likely than not reduce the
fair value of a reporting unit below its carrying value.
If goodwill amortization was not recorded in 2001 and 2000, the Company
would have reported net loss of $1.3 million or $0.03 basic and diluted loss per
share and net income of $0.7 million or $0.01 basic and diluted earnings per
share, respectively.
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the financial and tax basis of assets and liabilities. Deferred income
taxes are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered
or settled.
EMPLOYEE STOCK OPTIONS
As permitted by SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, the
Company follows APB Opinion No. 25 and related interpretations in accounting for
its stock compensation awards.
SHIPPING AND HANDLING COSTS
The Company records all revenues related to shipping and handling fees in
net sales and the related costs in cost of products and services.
RECLASSIFICATIONS
Certain reclassifications have been made to prior years' balances to
conform with the current year presentation.
2. RECAPITALIZATION RESTATED TO A PURCHASE
Effective May 22, 1997, a leveraged recapitalization of the Company took
place (Recapitalization) pursuant to which:
(1) The Company executed a credit agreement with a syndicate of financial
institutions representing the senior secured credit facility (the
Credit Agreement) in an aggregate amount of $200 million. Initial
proceeds under the senior secured credit facility were $125 million.
The terms of the senior secured credit facility are described in Note
5.
(2) The Company issued $100 million of senior subordinated notes (Note 5).
(3) In exchange for $67.1 million, DLJ Merchant Banking Partners II and
its affiliates acquired approximately 84 percent of the new common
stock of the Company,
F-11
<Page>
redeemable preferred stock, and warrants to purchase additional shares
of new common stock in the Company. On November 16, 1998, the
preferred stock was converted into 13.5 percent subordinated exchange
debentures at the then accreted value of $30.4 million. The terms of
the 13.5 percent subordinated exchange debentures are described in
Note 5.
(4) The Company redeemed/exchanged the former common stock of the Company
owned by ZS VH L.P. (ZS) for (a) cash of $288.8 million and (b) 10
percent of the new common stock of the Company.
(5) The Company exchanged the former common stock of the Company owned by
Robert A. Uhlenhop (Uhlenhop), the Company's former president and
chief executive officer, for approximately 2.5 percent of the new
common stock of the Company. In exchange for $0.3 million in cash and
$0.5 million of notes receivable, Uhlenhop acquired an additional 1.5
percent of the new common stock in the Company.
(6) In exchange for $0.4 million in cash and $0.4 million of notes
receivable, certain other management personnel acquired the remaining
2.0 percent of the new common stock in the Company.
(7) Costs incurred by the Company related to the Recapitalization were
approximately $5.9 million and were expensed in the predecessor
financial statements.
Through June 20, 2002, the Company accounted for the May 22, 1997
Recapitalization transaction using the historical basis of the Company's
existing assets and liabilities (i.e., "recapitalization accounting") because
there was substantive continuing voting ownership by ZS. Because of the events
described below and the rules in SEC Staff Accounting Bulletin (SAB) No. 54, the
Company was required to retroactively push down the new owners' basis to the
Company's separate financial statements - as if it were a new entity as of May
22, 1997.
During 2002, the Company had the following equity transactions:
- On March 26, 2002, the Company issued 20 million shares of its common
stock to its majority shareholder for $20.0 million in cash.
- On June 21, 2002, the Company purchased all 5 million shares of common
stock owned by ZS for $5.0 million in cash.
- On June 21, 2002, the Company purchased all 2 million shares of common
stock owned by Uhlenhop for $2.0 million, consisting of approximately
$1.2 million in cash and settlement of a note receivable of
approximately $0.8 million.
As a result of these transactions, the majority owners of the Company owned
approximately 96 percent of the Company's common stock. In accordance with SAB
No. 54, recapitalization accounting could no longer be used, and the new owners'
"purchase accounting" basis had to be pushed down to the Company's financial
statements as if it had occurred May 22, 1997. The accompanying financial
statements reflect this retroactive application, and
F-12
<Page>
accordingly, the 2001 and 2000 balances have been restated from their
recapitalization accounting presentation in past financial statements issued by
the Company.
The application of purchase accounting for the May 22, 1997 partial
purchase by the new owners and the March 26, 2002 purchase by the majority
stockholder resulted in the following adjustments as of December 31, 2001 and
for the years ended December 31, 2001 and 2000:
<Table>
<Caption>
DECEMBER 31, 2001
PREVIOUSLY RESTATED
REPORTED BALANCE
-------------------------------
BALANCE SHEETS
Inventories............................ $ 15,789,157 $ 23,261,846
Property, plant, and equipment, net.... 137,709,574 148,476,809
Goodwill, net.......................... 39,267,433 183,200,984
Net deferred income tax liability...... 4,116,548 10,817,675
Total stockholders' equity (deficit)... (146,550,783) 8,971,565
</Table>
<Table>
<Caption>
YEAR ENDED DECEMBER 31
2001 2000
------------------------------------------------------------------
PREVIOUSLY RESTATED PREVIOUSLY RESTATED
REPORTED BALANCE REPORTED BALANCE
------------------------------------------------------------------
Cost of products and services $ 334,372,403 $ 346,917,560 $ 361,911,162 $ 374,165,599
Selling and administrative expenses 23,404,166 31,263,254 25,776,350 33,597,323
Loss on disposal of depreciable assets (394,375) (512,467) (704,875) (642,880)
Income tax provision (benefit) 3,716,620 (1,268,214) 4,095,143 (701,386)
Net income (loss) 5,293,524 (10,243,979) 7,105,751 (8,111,134)
Earnings (loss) per share:
Basic $ 0.10 $ (0.20) $ 0.14 $ (0.16)
Diluted $ 0.09 $ (0.20) $ 0.12 $ (0.16)
</Table>
During the third and fourth quarters of 2002, the Company purchased
approximately 1.4 million shares of common stock, owned by former employees, for
approximately $1.4 million in cash.
The March 26, 2002 acquisition by the majority stockholder of the newly
issued shares, the June 21, 2002 acquisitions by the Company of all shares of
common stock held by ZS and Uhlenhop, and the third and fourth quarter common
stock repurchases resulted in additional purchase accounting basis being pushed
down to the Company. Such pushdown resulted in additional goodwill of
approximately $6.7 million being recorded by the Company in 2002.
3. BUSINESS COMBINATIONS
PRECISION OFFSET PRINTING COMPANY, INC.
On March 30, 2000, the Company completed the acquisition of all of the
outstanding shares of Precision Offset Printing Company, Inc. and Precision
Ollan Seal, Inc. (collectively, Precision). The acquisition price, net of cash
received and including capitalized transaction costs, was approximately $25.3
million and was principally financed with a $25 million increase in the Senior
Secured Credit Agreement (the Credit Agreement).
F-13
<Page>
The acquisition was accounted for as a purchase, and the consolidated
financial statements include the results of operations of Precision from the
acquisition date. The excess purchase price over estimated fair value of net
assets acquired was approximately $17.1 million and was accounted for as
goodwill.
Precision operates plants in Leesport, Pennsylvania, and Dauberville,
Pennsylvania. Precision manufactures overhead transparencies and plastic inserts
for use primarily in the education market. The 2000 pro forma results of
operations as if the Precision acquisition had occurred at the beginning of the
respective period would not have been materially different from the reported
results.
4. RESTRUCTURING CHARGE
During 2001, the Company closed the sheet-fed printing, stripping, and
platemaking operations of its St. Louis, Missouri, manufacturing location. The
majority of these operations were transferred to the Owensville, Missouri,
manufacturing location of Von Hoffmann Graphics, Inc. Additionally, the Company
reduced the workforce within the St. Louis, Missouri, manufacturing location of
the Subsidiary. Lastly, the Company closed the Owensville, Missouri,
manufacturing location of the Subsidiary. These operations and certain related
assets were consolidated into the Jefferson City, Missouri, manufacturing
locations of the Subsidiary. As a result of these restructurings, the Company
recorded total restructuring expenses of approximately $1,476,000 consisting
mainly of employee severance and equipment relocation costs. The Company
utilized approximately $1,370,000 in 2001 and $106,000 in 2002. The Company has
no remaining liability associated with the restructuring.
5. LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
<Table>
<Caption>
2002 2001
---------------------------------
Von Hoffmann Corporation:
Senior secured credit agreement - revolving loan $ - $ 23,000,000
Senior secured credit agreement - term loans - 197,554,923
Senior notes 215,000,000 -
Senior subordinated notes 100,000,000 100,000,000
Senior secured credit agreement - acquisition loan - 21,000,000
---------------------------------
315,000,000 341,554,923
Von Hoffmann Holdings Inc.:
Subordinated exchange debentures 35,681,157 43,016,132
---------------------------------
35,681,157 43,016,132
---------------------------------
350,681,157 384,571,055
Less current portion - 29,235,592
---------------------------------
$ 350,681,157 $ 355,335,463
=================================
</Table>
SENIOR SECURED CREDIT AGREEMENT (NEW CREDIT AGREEMENT)
On March 26, 2002, the Subsidiary entered into a Senior Secured Credit
Agreement (New Credit Agreement), which provides $90.0 million on a revolving
basis. At the Subsidiary's one-time option, the available borrowings may be
increased to $100.0 million, subject to finding lenders to provide such
increase. The New Credit Agreement expires November 15, 2006.
F-14
<Page>
Borrowings under the New Credit Agreement bear interest at variable rates
tied to, at the Subsidiary's option, LIBOR or base rates of interest, and such
interest is payable quarterly. Additionally, performance-based reductions of
interest are available subject to measures of leverage. At December 31, 2002,
the Subsidiary had no outstanding borrowings and approximately $73 million
available for future borrowings under the New Credit Agreement, net of $1.35
million in an outstanding letter of credit.
The indebtedness outstanding on the New Credit Agreement is guaranteed by
the Company and the Subsidiary's subsidiaries and secured by the capital stock
of the Subsidiary. Since the Company has no independent operations and no
subsidiaries other than the Subsidiary, these financial statements do not
include condensed consolidating financial information. Additionally, the
indebtedness is secured by substantially all existing and after-acquired
property and assets of the Subsidiary.
SENIOR SECURED CREDIT AGREEMENT (OLD CREDIT AGREEMENT)
The Credit Agreement, originally entered into on May 22, 1997 as amended
therefrom, was comprised of three term loan tranches with maturities ranging
from six to eight years. Amortization of these term loans commenced on September
30, 1997. Amounts outstanding at December 31, 2001 under the three term loan
tranches were $197,554,923.
In addition, the Old Credit Agreement included a revolving loan and an
acquisition loan commitment of $75 million and $25 million, respectively.
Amounts outstanding at December 31, 2001 under the revolving loan and
acquisition loan were $23 million and $21 million, respectively.
As a result of the Company extinguishing the Old Credit Agreement and
entering into the New Credit Agreement, the Company recognized a loss of $3.1
million, which is reflected within the gain on debt extinguishment. The loss
represents the write-off of deferred debt issuance costs associated with the Old
Credit Agreement.
SENIOR NOTES
On March 26, 2002, the Subsidiary issued $215 million of 10.25 percent
senior notes (2009 Senior Notes) due at maturity in 2009.
The notes pay interest semiannually in arrears on February 15 and August 15
and are a general unsecured obligation of the Subsidiary, fully and
unconditionally guaranteed by the Company and the subsidiaries of the
Subsidiary. The notes are subordinated to all current and future secured debt,
including borrowings under the Senior Secured Credit Agreement. Under the senior
notes indenture, the Subsidiary is subject to certain covenants that, among
other things, limit the ability of the Subsidiary to pay dividends, incur
additional indebtedness, and sell assets.
Proceeds from the New Credit Agreement and the 2009 Senior Notes were used
to pay off all outstanding balances under the Subsidiary's prior Senior Secured
Credit Agreement.
SENIOR SUBORDINATED NOTES
On May 22, 1997, the Subsidiary issued $100 million of 10.375 percent
senior subordinated notes due at maturity in 2007.
F-15
<Page>
The notes pay interest semiannually in arrears on May 15 and November 15
and are a general unsecured obligation of the Subsidiary, fully and
unconditionally guaranteed by the Company and the subsidiaries of the
Subsidiary, and subordinated to all current and future senior debt, including
borrowings under the New Credit Agreement and the Senior Notes.
Under the senior subordinated notes indenture, the Subsidiary is subject to
certain covenants that, among other things, limit the ability of the Subsidiary
to pay dividends, incur additional indebtedness, and sell assets.
The subordinated notes indenture required the Company to file a
registration statement with the Securities and Exchange Commission within 365
days of the issuance date or pay liquidated damages. The Company did not file a
registration statement and complete an exchange offer for the private notes
until September 27, 2002. As a result, the Company paid liquidated damages at an
annual rate of 0.5 percent from May 22, 1998 until that date.
SUBORDINATED EXCHANGE DEBENTURES/REDEEMABLE PREFERRED STOCK/WARRANTS
On May 22, 1997, the Company issued redeemable preferred stock due in 2009
and detachable warrants for $25 million. The total proceeds received were
allocated between the preferred stock and the warrants based on an estimate of
each security's fair value at the date of issuance. The preferred stock accreted
dividends at an annual rate of 13.5 percent until it was exchanged on November
16, 1998 for subordinated exchange debentures due in 2009. After the exchange,
the preferred stock owners sold the subordinated exchange debentures in the open
market. The subordinated exchange debentures accrue interest at a rate of 13.5
percent. Interest is currently not paid in cash but accretes to and increases
the principal amount of each debenture. Beginning on May 22, 2002, interest will
be required to be paid in cash, subject to restrictions defined in the New
Credit Agreement and conditions provided in the subordinated exchange debentures
indenture. The debentures cannot be redeemed by the Company until May 15, 2002
unless they are redeemed in conjunction with an initial public offering of the
Company's stock or redemption is requested by the debenture holders upon the
occurrence of a change in control of the ownership of the Company.
During 2002, the Company purchased approximately 28.3 percent of its
outstanding subordinated exchange debentures for approximately $9.5 million. The
purchase price of these debt instruments was less than the carrying value,
resulting in a gain on the transaction of approximately $3.4 million, which is
reflected within the gain on debt extinguishment.
A total of 5,000,000 detachable warrants was issued in conjunction with the
issuance of the preferred shares. The warrants entitle the holder to purchase
common shares of the Company at a price of $0.01 per share. The warrants expire
after ten years and can be exercised at any time. The fair value assigned to
warrants of $4,495,000 is reflected in the stockholders' equity section of the
consolidated balance sheets.
At December 31, 2002, the fair value of the senior notes and senior
subordinated notes was approximately $197.8 million and $78.0 million,
respectively, based on quoted market prices. The redemption value of the
subordinated exchange debentures at December 31, 2002 was $37.4 million. Total
interest paid on all debt was $27,997,528 in 2002, $30,346,820 in 2001, and
$35,089,553 in 2000.
F-16
<Page>
6. INCOME TAXES
The reconciliation of income tax expense at the U.S. federal statutory tax
rates to the effective income tax rates is as follows:
<Table>
<Caption>
YEAR ENDED DECEMBER 31
2002 2001 2000
----------------------------------------------
Expected statutory rate 35.00% 35.00% 35.00%
Nondeductible goodwill - (28.00)% (35.87)%
Accretion on subordinated exchange debentures (1.81%) (1.20)% (1.57)%
Interest and gain on subordinated exchange
debentures (26.47%) - -
State income tax and other 9.07% 5.22% 10.40%
----------------------------------------------
Effective tax rate 15.79% 11.02% 7.96%
==============================================
</Table>
The components of the income tax provision (benefit) are as follows:
<Table>
<Caption>
2002 2001 2000
------------------------------------------------
Current:
U.S. federal $ 883,221 $ 4,878,105 $ 6,050,239
State and other 49,534 554,983 500,471
------------------------------------------------
$ 932,755 $ 5,433,088 $ 6,550,710
================================================
Deferred:
U.S. federal $ (1,784,674) $ (6,016,771) $ (6,698,040)
State and other (141,448) (684,531) (554,056)
------------------------------------------------
$ (1,926,122) $ (6,701,302) $ (7,252,096)
================================================
</Table>
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<Table>
<Caption>
DECEMBER 31
2002 2001
--------------------------------
Deferred tax assets:
Goodwill/impairment charge $ 4,972,674 $ 5,491,560
Interest on subordinated exchange debentures 4,717,717 5,684,407
Vacation accrual 1,178,435 1,149,718
Other 1,570,657 805,674
--------------------------------
Total deferred tax assets 12,439,483 13,131,359
Deferred tax liabilities:
Property, plant, and equipment 17,721,254 20,774,125
Inventory 3,053,553 3,116,974
Other 556,229 57,935
--------------------------------
Total deferred tax liabilities 21,331,036 23,949,034
--------------------------------
Net deferred tax liabilities $ (8,891,553) $ (10,817,675)
================================
</Table>
Income taxes of $2,331,889, $9,433,947, and $8,489,766 were paid in 2002,
2001, and 2000, respectively.
F-17
<Page>
7. PENSION AND PROFIT SHARING PLAN
The Company has one defined contribution pension and profit sharing plan.
The Company contributed a total of $4,680,999 in 2002, $4,343,222 in 2001, and
$4,385,292 in 2000.
8. EMPLOYEE STOCK OPTION PLAN
During 1997, the Company authorized a stock option plan to grant options to
management personnel for up to 6,000,000 shares of the Company's common stock.
Certain options granted under the plan vest ratably over a five-year period,
while other options have an accelerated vesting feature in which vesting occurs
ratably over a five-year period only if certain performance targets are met. If
performance targets are not met, those options automatically vest nine years and
11 months from the date of grant. Vested options may be exercised up to ten
years from the date of grant.
Information related to the Company's stock option plan is presented below.
<Table>
<Caption>
2002 2001 2000
------------------------ --------------------------- ---------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------------------------ --------------------------- ---------------------------
Outstanding at beginning of year 5,275,000 $ 1.20 5,525,000 $ 1.19 5,600,000 $ 1.18
Forfeited 2,048,400 1.52 400,000 1.27 375,000 2.12
Granted - - 150,000 2.25 300,000 2.25
--------- ------------ ------------
Outstanding at end of year 3,226,600 $ 1.00 5,275,000 $ 1.20 5,525,000 $ 1.19
======================== =========================== ===========================
Exercisable at end of year 2,931,970 $ 1.00 3,887,685 $ 1.12 3,378,815 $ 1.10
======================== =========================== ===========================
Reserved for future option grants 2,773,400 725,000 475,000
========= ============ ============
</Table>
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123 and has been determined as if the Company had accounted
for its employee stock options under the fair value method of SFAS No. 123. The
fair value for these options was estimated at the date of grant using the
minimum value method. Under this method, the expected volatility of the
Company's common stock is not estimated, as there is no market for the Company's
common stock in which to monitor stock price volatility. The calculation of the
fair value of the options granted in 2001 and 2000 assumes a risk-free interest
rate of 5.00 and 5.50 percent, respectively, an assumed dividend yield of zero,
and an expected life of the options of five years. The weighted average fair
value of options granted during 2001 and 2000 was $0.50 and $0.54 per share,
respectively. The weighted average remaining contractual life of options is 4.42
years. For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' estimated vesting period.
Option valuation models require the input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of
F-18
<Page>
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options. Based on the above assumptions, the Company's pro
forma net income and earnings per share incorporating this amortization would
not have been materially different from reported amounts during 2002, 2001, and
2000.
In August 2002, the Company offered a voluntary option cancellation and
replacement program to certain of its employees. Under this program, the
employees were given the opportunity, if they chose, to cancel certain
outstanding stock options previously granted to them with an exercise price
greater than $1.00 per share for a number of replacement options, approximately
their December 31, 2002 vested position, to be granted at a future date, six
months and five days from the cancellation date. Under the exchange program,
options for 850,000 shares of the Company's common stock were tendered and
canceled, of which 616,695 were eligible for replacement option grants. The
exercise price of each replacement option will be the fair value of the
Company's common stock on the date of grant. The replacement options will have
terms and conditions that are substantially the same as those canceled options.
The exchange program is not expected to result in any compensation charges or
variable plan accounting.
9. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted loss
per share:
<Table>
<Caption>
YEAR ENDED DECEMBER 31
2002 2001 2000
---------------------------------------------
Numerator for basic and diluted
earnings per share - loss allocable
to common stockholders $ (5,296,322) $ (10,243,979) $ (8,111,134)
=============================================
Denominator for basic and diluted loss
per share - weighted average shares 62,609,786 51,579,444 51,594,444
=============================================
Basic and diluted loss per share $ (0.08) $ (0.20) $ (0.16)
=============================================
</Table>
10. RELATED PARTY TRANSACTIONS
The Company paid consulting fees to Credit Suisse First Boston Corporation
(Credit Suisse) (or its predecessor), an affiliate of a stockholder in the
Company, of approximately $0.4 million in 2002 and $0.3 million in 2001 and
2000. As part of the financing activity disclosed in Note 5, the Company paid
consulting fees associated with formulation of financial strategies to Credit
Suisse of approximately $1.0 million. In addition, the Company paid underwriting
fees in 2002 associated with the 2009 Senior Notes and New Credit Agreement to
Credit Suisse of approximately $8.2 million. Credit Suisse also received fees
for their work assisting the Company on the open market repurchases of its
Subordinated Exchange Debentures. The Company believes the amount paid to Credit
Suisse in these transactions was no more favorable than an amount it would have
paid to independent third parties for the same service.
11. UHLENHOP AGREEMENT
On June 21, 2002, the Company and Uhlenhop amended his employment
agreement, and at that time, the Company paid Uhlenhop a one-time cash payment
on an after-tax basis of $1.0
F-19
<Page>
million. The Company recorded an expense, as reflected in selling and
administrative expense in 2002, of approximately $1.8 million.
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<Table>
<Caption>
QUARTER
2002 FIRST SECOND THIRD FOURTH YEAR
Net sales $ 82,666,127 $ 112,025,340 $ 108,054,283 $ 76,691,762 $ 379,437,512
Gross profit 9,368,587 19,871,872 16,310,841 12,554,974 58,106,274
Net income (loss) (5,793,228) 2,268,221 249,446 (2,020,761) (5,296,322)
Basic earnings (loss) per share (0.11) 0.03 - (0.03) (0.08)
Diluted earnings (loss) per share (loss)
per share (0.11) 0.03 - (0.03) (0.08)
</Table>
<Table>
<Caption>
QUARTER
2001 FIRST SECOND THIRD FOURTH YEAR
Net sales $ 112,852,034 $ 113,889,206 $ 107,451,937 $ 72,903,225 $ 407,096,402
Gross profit 16,677,865 20,496,269 15,844,935 7,159,773 60,178,842
Net income (loss) (2,757,608) 1,158,592 (1,784,851) (6,860,112) (10,243,979)
Basic earnings (loss) per share (0.05) 0.02 (0.03) (0.13) (0.20)
Diluted earnings (loss) per share share (0.05) 0.02 (0.03) (0.13) (0.20)
</Table>
(1) During the quarter ended December 31, 2002, the Company recorded a
$1,000,000 increase to earnings ($842,000 net of tax) related to a
book-to-physical inventory adjustment on paper inventory. The impact
of the adjustment on a basic and diluted basis was $0.01 per share.
F-20
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
March 31, March 31, December 31,
2003 2002 2002
(Unaudited) (Unaudited)
----------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,010,609 $ 28,801,958 $ 4,437,814
Trade accounts receivable, less allowance for doubtful
accounts of $475,085 at March 31, 2003, March 31, 2002
and December 31, 2002 61,154,319 47,434,762 49,140,939
Inventories 31,835,624 32,426,860 32,037,590
Income taxes refundable -- 2,056,632 1,610,764
Deferred income taxes 2,509,104 1,955,392 2,492,145
Prepaid expenses 1,344,130 749,987 1,057,038
----------------------------------------------------
98,853,786 113,425,591 90,776,290
Deferred debt issuance cost, net of accumulated
amortization of $3,908,354 at March 31, 2003,
$1,726,611 at March 31, 2002, and $3,362,918 at
December 31, 2002 10,578,133 11,269,877 11,123,569
Property, plant, and equipment:
Buildings and improvements 45,907,423 46,841,215 45,907,423
Machinery and equipment 224,315,574 221,093,232 225,624,848
Transportation equipment 811,600 3,141,347 841,600
Furniture and fixtures 7,005,762 9,969,824 6,633,872
----------------------------------------------------
278,040,359 281,045,618 279,007,743
Allowance for depreciation and amortization (163,177,861) (146,869,963) (158,552,832)
----------------------------------------------------
114,862,498 134,175,655 120,454,911
Installation in process 5,679,457 5,623,509 3,016,871
Land 4,894,397 4,894,397 4,894,397
----------------------------------------------------
125,436,352 144,693,561 128,366,179
Goodwill 189,854,557 185,682,749 189,854,557
Covenant not to compete, net of accumulated amortization
of $836,364 at March 31, 2002 -- 163,636 --
----------------------------------------------------
$ 424,722,828 $ 455,235,414 $ 420,120,595
====================================================
</Table>
SEE NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTs.
F-21
<Page>
<Table>
<Caption>
March 31, March 31, December 31,
2003 2002 2002
(Unaudited) (Unaudited)
----------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 16,889,635 $16,252,889 $14,807,732
Other accrued expenses 11,799,521 9,207,378 13,189,475
Salaries and wages 5,806,297 5,846,411 6,357,618
Taxes, other than income taxes 695,242 701,061 743,057
Income taxes payable 85,821 -- --
----------------------------------------------------
35,276,516 32,007,739 35,097,882
Long-term liabilities and reserves:
Deferred income taxes 10,788,410 10,973,211 11,383,698
Senior secured credit agreement - revolving loan 4,100,000 27,000,000 --
Senior notes 215,000,000 215,000,000 215,000,000
Senior subordinated notes 100,000,000 100,000,000 100,000,000
Subordinated exchange debentures 36,989,252 44,629,127 35,681,157
----------------------------------------------------
366,877,662 397,602,338 362,064,855
Stockholders' equity:
Common stock; $0.01 par value per share; 150,000,000
shares authorized; 71,594,444 shares issued at
March 31, 2003, March 30, 2002 and December 31, 2002
715,944 715,944 715,944
Additional paid-in capital 86,434,271 82,262,463 86,434,271
Accumulated deficit (55,618,199) (55,737,134) (55,240,233)
Treasury stock; at cost, 8,440,000 shares at
March 31, 2003, 60,000 shares at March 31, 2002 and
8,440,000 shares at December 31, 2002 (8,470,000) (90,000) (8,470,000)
Notes receivable from the sale of stock and accrued
interest (493,366) (1,525,936) (482,124)
----------------------------------------------------
22,568,650 25,625,337 22,957,858
----------------------------------------------------
$ 424,722,828 $ 455,235,414 $ 420,120,595
====================================================
</Table>
SEE NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS.
F-22
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
2003 2002
------------------------------------
Net sales $ 93,750,655 $ 82,666,127
Cost of products and services 78,261,869 73,297,540
------------------------------------
Gross profit 15,488,786 9,368,587
Operating expenses:
Selling and administrative expenses 5,576,231 5,852,006
Special consulting expenses 166,000 1,241,675
------------------------------------
5,742,231 7,093,681
------------------------------------
Income from operations 9,746,555 2,274,906
Interest income 20,979 50,246
Loss on disposal of depreciable assets (264,029) (495,837)
Loss on debt extinguishment -- (3,124,648)
Interest expense - subsidiary (8,845,540) (6,394,281)
Interest expense - subordinated exchange debentures (1,308,095) (1,612,995)
------------------------------------
(10,396,685) (11,577,515)
------------------------------------
Loss before income taxes (650,130) (9,302,609)
Income tax benefit (272,164) (3,509,382)
------------------------------------
Net loss $ (377,966) $ (5,793,227)
====================================
Net loss per common share:
Basic $ (0.01) $ (0.11)
====================================
Diluted $ (0.01) $ (0.11)
====================================
Average number of shares outstanding:
Basic 63,154,444 52,633,245
====================================
Diluted 63,154,444 52,633,245
====================================
</Table>
SEE NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS.
F-23
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31,
2003 2002
--------------------------------------
OPERATING ACTIVITIES
Net loss $ (377,966) $ (5,793,227)
Adjustments to reconcile net loss
to net cash provided by (used in) operating
activities:
Depreciation 5,599,579 9,592,329
Amortization of intangibles -- 54,545
Amortization of debt issuance costs 545,436 496,771
Loss on disposal of depreciable assets 264,029 495,837
Loss on debt extinguishment -- 3,124,648
Provision for deferred income taxes (612,247) (1,787,899)
Accrued interest on subordinated exchange
debentures 1,240,974 1,519,349
Accretion of discount on subordinated exchange
debentures 67,121 93,646
Accrued interest on notes from the sale of stock (11,242) (34,770)
Changes in operating assets and liabilities:
Trade accounts receivable (12,013,380) (1,268,903)
Inventories 201,966 (9,004,261)
Income taxes refundable/payable 1,696,585 399,941
Prepaid expenses (287,092) 258,191
Trade accounts payable 2,081,904 6,475,518
Other accrued expenses (1,389,954) 1,025,316
Salaries and wages (551,321) (198,577)
Taxes, other than income taxes (47,815) 317,616
--------------------------------------
Net cash provided by (used in) operating activities (3,593,423) 5,766,070
INVESTING ACTIVITIES
Purchases of property, plant, and equipment (3,071,782) (6,395,881)
Proceeds from sale of equipment 138,000 90,960
--------------------------------------
Net cash used in investing activities (2,933,782) (6,304,921)
</Table>
F-24
<Page>
VON HOFFMANN HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31,
2003 2002
--------------------------------------
FINANCING ACTIVITIES
Payments of debt issuance costs -- (9,424,191)
Net (payments) borrowings - revolving loan 4,100,000 4,000,000
Net (payments) borrowings - acquisition loan -- (21,000,000)
Payments on senior secured debt - term loans -- (197,554,923)
Proceeds from issuance of senior notes -- 215,000,000
Issuance of common stock -- 20,000,000
--------------------------------------
Net cash provided by financing activities 4,100,000 11,020,886
--------------------------------------
Net (decrease) increase in cash and cash equivalents (2,427,205) 10,482,035
Cash and cash equivalents at beginning
of period 4,437,814 18,319,923
--------------------------------------
Cash and cash equivalents at end of period $ 2,010,609 $ 28,801,958
======================================
</Table>
SEE NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS.
F-25
<Page>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements of Von Hoffmann Holdings
Inc. (formerly known as Von Hoffmann Corporation) and its wholly owned
subsidiaries (the "Company") have been prepared in accordance with instructions
to Form 10-Q and reflect all adjustments which management believes necessary
(which include only normal recurring accruals and the effect on LIFO inventory
valuations of estimated inflationary cost increases and year-end inventory
levels) to present fairly the results of operations. These statements, however,
do not include all information and footnotes necessary for a complete
presentation of the Company's financial position, results of operations and cash
flows in conformity with accounting principles generally accepted in the United
States. The consolidated unaudited financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002.
Diluted earnings per share for the three-month periods ended March 31, 2003
and March 31, 2002 do not include 4,950,000 common stock equivalents because
they were anti-dilutive.
The Company's business is subject to seasonal influences, therefore,
interim results may not necessarily be indicative of results which may be
expected for any other interim period or for the year as a whole.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Von Hoffmann Corporation (formerly known as Von
Hoffmann Press, Inc.) (the "Subsidiary"), and its wholly owned subsidiaries: Von
Hoffmann Graphics, Inc., H&S Graphics, Inc., Preface, Inc., One Thousand Realty
and Investment Company, and Precision Offset Printing Company, Inc. Effective
February 25, 2002, Von Hoffmann Graphics, Inc. was merged into the Subsidiary.
Effective December 20, 2002, One Thousand Realty and Investment Company was
merged into the Subsidiary. Intercompany accounts and transactions have been
eliminated.
INCOME TAXES
The provision for income taxes is computed using the liability method.
Differences between the actual tax rate and statutory tax rate results primarily
from the nondeductible portion of interest expense-subordinated exchange
debentures.
F-26
<Page>
EMPLOYEE STOCK OPTIONS
As permitted by SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, the
Company follows APB Opinion No. 25 and related interpretations in accounting for
its stock compensation awards. No stock-based employee compensation cost is
reflected in net income, as all options granted had an exercise price equal to
the market value of the underlying common stock on the date of grant. Pro forma
information regarding net income and earnings per share is required by SFAS No.
123 and has been determined as if the Company had accounted for its employee
stock options under the fair value method of SFAS No. 123. Based on the
Company's calculations, pro forma net income and earnings per share under the
fair value method of SFAS No. 123 would not have been materially different from
reported amounts for the three months ended March 31, 2003 and 2002.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior period's financial
statements to conform with current period presentation.
2. INVENTORIES
Inventories are priced at cost using the last-in, first-out (LIFO) method
that does not exceed market, for the period reported. The Company does not
anticipate a material adjustment to the year-end LIFO reserve and thus, no
quarterly LIFO adjustment has been made.
Inventories are comprised of the following amounts:
<Table>
<Caption>
MARCH 31, 2003 MARCH 31, 2002 DECEMBER 31, 2002
Raw Materials $ 20,598,110 $ 21,782,966 $ 14,602,196
Work In Process 12,927,508 12,435,839 19,125,388
----------- ----------- -----------
33,525,618 34,218,805 33,727,584
Less: LIFO Reserve 1,689,994 1,791,945 1,689,994
----------- ----------- -----------
$ 31,835,624 $ 32,426,860 $ 32,037,590
=========== =========== ===========
</Table>
3. LONG TERM DEBT
On March 26, 2002, the Subsidiary entered into a Senior Secured Credit
Agreement (the "New Credit Agreement") that includes a revolving loan commitment
of $90,000,000. The New Credit Agreement is secured by accounts receivable and
inventory as well as by property, plant and equipment. At the Company's one-time
option, the available borrowing base may be increased to provide borrowings of
up to $100,000,000, subject to finding lenders to provide such increase. The New
Credit Agreement expires November 15, 2006. In addition, on March 26, 2002, the
Subsidiary issued $215 million Senior Notes, due March 15, 2009 (the "2009
Senior Notes") at an interest rate of 10.25 percent. The proceeds from the New
Credit Agreement and the 2009 Senior Notes were used to pay off all outstanding
balances under the
F-27
<Page>
Company's prior credit agreement.
As a result of the extinguishment of the prior credit agreement in the
first quarter of 2002, the Company recognized a loss of $3.1 million, reflected
within the loss on debt extinguishment. The loss represents the write-off of
deferred debt issuance costs associated with the prior credit agreement.
4. ACCOUNTING CHANGES
In April 2002, the FASB issued Statement of Financial Accounting Standards
No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
statement No. 13, and Technical Corrections" ("SFAS 145"). Under SFAS 145, gains
and losses on extinguishments of debt are to be classified as income or loss
from continuing operations rather than extraordinary items. Adoption of this
Statement is required for fiscal years beginning after May 15, 2002. We adopted
SFAS 145 effective for interim periods subsequent to June 30, 2002, which
required restatement of all comparative periods presented. The Statement of
Operations for the three-months ended March 31, 2002 reflects the restatement of
previously recorded extraordinary loss of approximately $3.1 million, classified
as loss on debt extinguishment.
5. RELATED PARTY TRANSACTION
As part of the financing activity in 2002 discussed in Note 3, the Company
paid consulting fees associated with formulation of financial strategies, as
reflected in special consulting expenses for the three-month period ended March
31, 2002, to Credit Suisse First Boston Corporation ("Credit Suisse"), an
affiliate of the majority stockholder in the Company, of approximately $1.0
million. In addition, the Company paid fees associated with the 2009 Senior
Notes and New Credit Agreement, as reflected in deferred debt issuance cost at
March 31, 2002, to Credit Suisse of approximately $8.2 million. The Company
believes the amount paid to Credit Suisse in these transactions was no more
favorable than an amount it would have paid to independent third parties for the
same service.
F-28