Long-Term Debt

Long-term debt is as follows (in thousands):



	2016			2015
ABL Facility due 2021 ⁽¹⁾	$	81,700		$	148,200
4.0% senior secured notes due 2021 ($50.0 million outstanding principal amount as of the year ended 2016)	49,813			—
8.500% junior priority secured notes due 2022 ($241.0 million and $248.0 million outstanding principal amount as of the years ended 2016 and 2015, respectively)	234,742			240,533
6.000% senior priority secured notes due 2019 ($540.0 million outstanding principal amount as of the years ended 2016 and 2015)	530,166			526,533
6.000% senior unsecured notes due 2024 ($104.5 million outstanding principal amount as of the year ended 2016)	85,591			—
11.5% senior notes due 2017 ($20.5 million and $199.7 million outstanding principal amount as of the years ended 2016 and 2015, respectively)	20,371			195,846
7% senior exchangeable notes due 2017 ($5.5 million and $83.3 million outstanding principal amount as of the years ended 2016 and 2015, respectively)	5,468			82,430
Other debt including capital leases	10,815			15,081
	1,018,666			1,208,623
Less current maturities	(31,727		)	(5,373		)
Long-term debt	$	986,939		$	1,203,250

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⁽¹⁾ The weighted average interest rate outstanding for the ABL Facility was 3.4% and 2.8% as of the years ended 2016 and 2015, respectively.

The estimated fair value of the Company’s long-term debt was approximately $881.7 million and $895.7 million as of the years ended 2016 and 2015, respectively. The fair value was determined by the Company to be Level 2 under the fair value hierarchy and was based upon review of observable pricing in secondary markets for each debt instrument. Interest expense for the year ended 2016 reflected average outstanding debt of approximately $1.1 billion and a weighted average interest rate of 6.8%, compared to the average outstanding debt of approximately $1.2 billion and a weighted average interest rate of 7.2% for the year ended 2015.

Exchange Offer

On June 10, 2016, Cenveo, Inc.'s wholly-owned subsidiary, Cenveo Corporation (the "Subsidiary Issuer") closed its exchange offer (the "Exchange Offer") whereby $149.3 million, or approximately 80%, of its outstanding 11.5% senior notes due 2017 (the "11.5% Notes") were exchanged for $104.5 million of newly issued 6.000% senior unsecured notes due 2024 (the "6.000% Unsecured Notes") and warrants (the "Warrants") to purchase shares of Common Stock, representing in the aggregate 16.6% of the outstanding Common Stock as of June 10, 2016. Included in the total amount exchanged was $4.2 million of 11.5% Notes owned by affiliated noteholders, whose notes were exchanged for 6.000% Unsecured Notes and Warrants pursuant to a simultaneous and separately negotiated securities exchange agreement. In connection with the Exchange Offer, the Company capitalized debt issuance costs of $7.4 million, all of which will be amortized over the life of the 6.000% Unsecured Notes, and of which $7.1 million is unamortized as of the year ended 2016. Subsequent to the Exchange Offer, $40.5 million of 11.5% Notes remained outstanding.

For accounting purposes, the Exchange Offer was treated as an extinguishment of the 11.5% Notes and the issuance of the new 6.000% Unsecured Notes. Upon extinguishment, the net carrying amount of the 11.5% Notes was written off and the 6.000% Unsecured Notes were recorded at fair value based on market comparable transactions at the time of the Exchange Offer. The fair value of the 6.000% Unsecured Notes was based on market value pricing, using observable market-based data for similar issuances (Level 2). The Company estimates the fair value of the 6.000% Unsecured Notes on the date of issuance was $92.0 million. The discount of $12.5 million was recorded as a component of the gain on early extinguishment of debt, net, and will be amortized over the life of the 6.000% Unsecured Notes using the effective interest method.

The 6.000% Unsecured Notes were issued pursuant to an Indenture, dated as of June 10, 2016 (the "6.000% Unsecured Indenture"), among Cenveo, Inc., Subsidiary Issuer, the other guarantors party thereto and The Bank of New York Mellon, as trustee. The 6.000% Unsecured Notes will mature on May 15, 2024. Interest on the 6.000% Unsecured Notes is payable semi-annually in arrears on May 15 and November 15 of each year, commencing November 15, 2016. The 6.000% Unsecured Notes and the related guarantees are the Subsidiary Issuer's and the guarantors’ senior unsecured obligations. The 6.000% Unsecured Notes are fully and unconditionally guaranteed on a senior basis by Cenveo, Inc. and by certain of its existing and future U.S. subsidiaries (other than the Subsidiary Issuer) and, under certain circumstances, certain of its future Canadian subsidiaries. As such, the 6.000% Unsecured Notes rank pari passu with the Subsidiary Issuer's and the guarantors’ existing and future senior indebtedness, senior to the Subsidiary Issuer's and the guarantors’ future indebtedness that is expressly subordinated to the 6.000% Unsecured Notes, effectively junior to the Subsidiary Issuer's and the guarantors’ existing and future indebtedness that is secured by liens to the extent of the value of the collateral securing such indebtedness and structurally subordinated to all of the existing and future liabilities, including trade payables, of Cenveo, Inc.'s subsidiaries that do not guarantee the 6.000% Unsecured Notes. The 6.000% Unsecured Indenture contains a number of covenants which, among other things, restrict, subject to certain exceptions, Cenveo, Inc.'s ability and the ability of the Subsidiary Issuer and the other subsidiaries of Cenveo, Inc. to incur additional indebtedness; declare or pay dividends, redeem stock or make other distributions to shareholders; purchase or prepay subordinated indebtedness; make investments; create liens or use assets as security in other transactions; merge or consolidate, or sell, transfer, lease or dispose of assets; and engage in transactions with affiliates. The 6.000% Unsecured Indenture also contains certain customary affirmative covenants and events of default.

The Subsidiary Issuer issued 11,046,028 Warrants pursuant to a Warrant Agreement, dated as of June 10, 2016 (the "Warrant Agreement"), between Cenveo, Inc. and Computershare Trust Company, N.A., as warrant agent. Each Warrant is currently exercisable for 0.125 shares of Common Stock at $12.00 per share as adjusted as a result of Cenveo, Inc.’s recent Reverse Stock Split, subject to mandatory cashless exercise provisions. The number of shares for which a Warrant may be exercised and the exercise price are subject to adjustment in certain events. The Warrants will be exercisable at any time prior to their expiration on June 10, 2024. The Company used the Black-Scholes model, which resulted in a fair value of $6.3 million for the Warrants. The Company recorded the fair value in paid-in capital in the Company's consolidated balance sheet.

In connection with the issuance of the Warrants, Cenveo, Inc. and Allianz Global Investors U.S. LLC ("Allianz") entered into a Warrant Registration Rights Agreement, dated as of June 10, 2016 (the "Registration Rights Agreement"), pursuant to which Cenveo, Inc. initially filed a shelf registration statement on November 23, 2016, covering the resale of the Warrants and the shares of Common Stock to be issued upon exercise of the Warrants, which shelf registration statement was declared effective on December 16, 2016. Under the Registration Rights Agreement, Cenveo, Inc. is obligated to use its commercially reasonable efforts to keep such shelf registration statement effective until the earlier of: (i) the fifth anniversary of the effective date of the shelf registration statement; and (ii) the date all transfer restricted securities covered by the shelf registration statement have been sold as contemplated in the shelf registration statement. If Cenveo, Inc. fails to satisfy its obligations under the Registration Rights Agreement, it will be required to pay liquidated damages to the holders of the Warrants under certain circumstances.

ABL Amendment

Concurrent with the Exchange Offer, Cenveo, Inc. and Subsidiary Issuer entered into Amendment No. 4, dated as of June 10, 2016 (the "ABL Amendment No. 4"), to the Subsidiary Issuer's ABL Facility, which, among other things, extends the term of the ABL Facility to 2021 and reduces the commitments thereunder by $50 million to $190 million. The ABL Facility now matures in June 2021, with a springing maturity of May 2019 ahead of the Subsidiary Issuer's existing 6.000% senior priority secured notes due 2019 (the "6.000% Secured Notes") in the event that more than $10.0 million of the 6.000% Secured Notes remain outstanding at such time. In connection with this amendment, the Company capitalized debt issuance costs of $2.3 million. See below for further discussion related to the Company's ABL Facility.

Indenture and Note Purchase Agreement

Concurrent with the Exchange Offer, Cenveo, Inc. and Subsidiary Issuer also entered into a secured Indenture and Note Purchase Agreement, dated as of June 10, 2016 (the "Indenture and Note Purchase Agreement"), with certain affiliates of or funds managed by Allianz (collectively, the "Purchasers"), pursuant to which Subsidiary Issuer issued 4% senior secured notes to the Purchasers in an aggregate principal amount of $50.0 million (the "4% Secured Notes") at par, the proceeds of which were applied to reduce the outstanding principal amount under the ABL Facility. The 4% Secured Notes mature in December 2021, with a springing maturity of May 2019 ahead of the 6.000% Secured Notes. The 4% Secured Notes bear interest at 4% per annum, payable quarterly in arrears on the last day of March, June, September and December in each year, commencing September 30, 2016, and are secured by the same collateral that secures the ABL Facility, the 6.000% Secured Notes and the Subsidiary Issuer's existing 8.500% junior priority secured notes due 2022 (the "8.500% Notes"). The obligations under the 4% Secured Notes are guaranteed by the Company and each existing and future direct and indirect North American subsidiary of the Company. With respect to the ABL Facility, the 4% Secured Notes rank junior with respect to all collateral up to a certain maximum principal amount of the ABL Facility. With respect to the 6.000% Secured Notes, the 4% Secured Notes rank junior with respect to notes priority collateral and senior with respect to ABL Facility priority collateral. With respect to the 8.500% Notes, the 4% Secured Notes rank senior with respect to all collateral. Such ranking of the 4% Secured Notes with respect to the 6.000% Secured Notes and the 8.500% Notes is the same ranking that the ABL Facility has with such notes. The Indenture and Note Purchase Agreement contains a number of covenants which, among other things, restrict, subject to certain exceptions, Cenveo, Inc.’s ability and the ability of the Subsidiary Issuer and the other subsidiaries of Cenveo, Inc. to incur additional indebtedness; declare or pay dividends, redeem stock or make other distributions to shareholders; purchase or prepay certain specified indebtedness; dispose of assets; make investments; grant liens on assets; merge or consolidate or transfer certain assets; and engage in transactions with affiliates. The Indenture and Note Purchase Agreement also contains certain customary affirmative covenants. In connection with the issuance of the 4% Secured Notes, the Company capitalized debt issuance costs of $0.1 million.

7% Note Purchase Agreement

In addition, on July 18, 2016, Cenveo, Inc., Subsidiary Issuer and Allianz completed the last transactions contemplated by the Support Agreement, dated as of May 10, 2016, among Cenveo, Inc., the Subsidiary Issuer and Allianz, pursuant to which Allianz agreed to, among other things, tender and sell to Subsidiary Issuer all of its 7% Notes owned by Allianz in the aggregate principal amount of $37.5 million (the "Allianz 7% Note Purchase") in exchange for: (a) payment in cash in an amount equal to (i) the aggregate principal amount of such 7% Notes multiplied by 0.6 plus (ii) an amount of interest on the amount payable pursuant to the immediately preceding clause (i) at an annual interest rate of 7% per annum, such interest accruing from June 10, 2016 until (and including) the closings of the purchases and computed based on a year of 360 days; (b) payment in cash of interest that accrued in respect of such 7% Notes in accordance with the indenture relating to such 7% Notes but remained unpaid at the closings of the purchases; and (c) delivery to Allianz of Warrants to purchase Common Stock, representing in the aggregate 3.3% of the outstanding Common Stock as of June 10, 2016. In connection with such agreement, during 2016 the Subsidiary Issuer repurchased an aggregate of $37.5 million of its 7% Notes for $22.5 million and issued an aggregate of 2,239,827 Warrants.

6.000% Senior Priority Secured Notes

On June 26, 2014, the Subsidiary Issuer issued $540.0 million aggregate principal amount of 6.000% Secured Notes, which were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act of 1933. The 6.000% Secured Notes were issued at par, pursuant to an indenture (the "6.000% Secured Indenture") among the Subsidiary Issuer, Cenveo, Inc. and the other guarantors party thereto, and The Bank of New York Mellon, as trustee and collateral agent. The Subsidiary Issuer pays interest on the 6.000% Secured Notes semi-annually, in cash in arrears, on February 1 and August 1 of each year, commencing on August 1, 2014. The 6.000% Secured Notes have no required principal payments prior to their maturity on August 1, 2019. The 6.000% Secured Notes are guaranteed on a senior secured basis by Cenveo, Inc. and substantially all of its existing and future North American subsidiaries (other than the Subsidiary Issuer). As such, the 6.000% Secured Notes rank pari passu with all of the Subsidiary Issuer's existing and future senior debt, and senior to any of the Subsidiary Issuer's subordinated debt and effectively junior to the Subsidiary Issuer's obligations under the ABL Facility and the 4% Secured Notes, to the extent that the ABL Facility and the 4% Secured Notes have a first priority perfected security interest in certain of the Company's assets. The Subsidiary Issuer may redeem the 6.000% Secured Notes, in whole or in part, on or after February 1, 2019, at a redemption price of 100.0% plus accrued and unpaid interest. In addition, at any time between August 1, 2017, and February 1, 2019, the Subsidiary Issuer may redeem in whole or in part the remaining aggregate principal amount of the notes originally issued at a redemption price of 100% plus accrued and unpaid interest and a "make-whole" premium of not less than 1%. At any time prior to August 1, 2017, the Subsidiary Issuer may redeem up to 35% of the aggregate principal amount of the notes originally issued with the net cash proceeds of certain public equity offerings, at a redemption price of 106.0% plus accrued and unpaid interest. Each holder of the 6.000% Secured Notes has the right to require the Subsidiary Issuer to repurchase such holder's notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest thereon, upon the occurrence of certain events specified in the indenture that constitute a change of control. The 6.000% Secured Indenture contains a number of covenants which, among other things, restrict, subject to certain exceptions, Cenveo, Inc.'s ability and the ability of the Subsidiary Issuer and Cenveo, Inc.'s other subsidiaries, to incur or guarantee additional indebtedness, make restricted payments (including paying dividends on, redeeming or repurchasing the Company's capital stock), permit restricted subsidiaries to pay dividends or make other distributions or payments, dispose of assets, make investments, grant liens on assets, merge or consolidate or transfer certain assets, and enter into transactions with affiliates. With respect to a disposition of assets, the 6.000% Secured Indenture requires, within 360 days after the receipt of any net proceeds, that the Company apply all such net proceeds (i) to be reinvested in the business of the Company; (ii) to repay obligations under the ABL Facility and the 4% Secured Notes under certain circumstances; or (iii) to make an offer to purchase the 6.000% Secured Notes. The 6.000% Secured Indenture also contains certain customary affirmative covenants and events of default.

8.500% Junior Priority Secured Notes

Concurrently with the issuance of the 6.000% Secured Notes on June 26, 2014, the Subsidiary Issuer issued $250.0 million aggregate principal amount of 8.500% Notes, which were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933. The 8.500% Notes were issued at par, pursuant to an indenture (the "8.500% Indenture") among the Subsidiary Issuer, Cenveo, Inc. and the other guarantors party thereto, and The Bank of New York Mellon, as trustee and collateral agent. The Subsidiary Issuer pays interest on the 8.500% Notes semi-annually, in cash in arrears, on March 15 and September 15 of each year, commencing on September 15, 2014. The 8.500% Notes have no required principal payments prior to their maturity on September 15, 2022. The 8.500% Notes are guaranteed on a junior secured basis by Cenveo, Inc. and substantially all of its existing and future North American subsidiaries (other than the Subsidiary Issuer). As such, the 8.500% Notes rank junior to any senior secured obligations of the Subsidiary Issuer, senior to any existing and future unsecured obligations of the Subsidiary Issuer, and senior to all existing and future obligations of the Subsidiary Issuer that are expressly subordinated to the 8.500% Notes. The Subsidiary Issuer may redeem the 8.500% Notes, in whole or in part, on or after September 15, 2017, September 15, 2018, September 15, 2019, or September 15, 2020, at redemption prices of 106.375%, 104.250%, 102.125% and 100.00%, respectively, plus accrued and unpaid interest. At any time prior to September 15, 2017, the Subsidiary Issuer may redeem up to 35% of the aggregate principal amount of the notes originally issued with the net cash proceeds of certain public equity offerings, at a redemption price of 108.5% plus accrued and unpaid interest. Each holder of the 8.500% Notes has the right to require the Subsidiary Issuer to repurchase such holder's notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest thereon, upon the occurrence of certain events specified in the indenture that constitute a change of control. The 8.500% Indenture contains a number of covenants which, among other things, restrict, subject to certain exceptions, Cenveo, Inc.'s ability and the ability of the Subsidiary Issuer and Cenveo, Inc.'s other subsidiaries, to incur or guarantee additional indebtedness, make restricted payments (including paying dividends on, redeeming or repurchasing the Company's capital stock), permit restricted subsidiaries to pay dividends or make other distributions or payments, dispose of assets, make investments, grant liens on assets, merge or consolidate or transfer certain assets, and enter into transactions with affiliates. With respect to a disposition of assets, the 8.500% Indenture requires, within 360 days after the receipt of any net proceeds, that the Company apply all such net proceeds (i) to be reinvested in the business of the Company; (ii) to repay indebtedness constituting senior priority obligations; or (iii) to make an offer to purchase the 8.500% Notes. The 8.500% Indenture also contains certain customary affirmative covenants and events of default.

Net proceeds of the 6.000% Secured Notes and 8.500% Notes were used to: (i) refinance the $360 million secured term loan facility (the "Term Loan Facility"), which at the time had a remaining principal balance of $327.3 million; (ii) refinance the 8.875% senior second lien notes due 2018 (the "8.875% Notes"), which at the time had a remaining principal balance of $400.0 million; and (iii) pay related fees, expenses and accrued interest. In connection with the issuance of the 6.000% Secured Notes and the 8.500% Notes, the Company capitalized debt issuance costs of $14.7 million and $7.1 million, respectively, all of which will be amortized over the life of the 6.000% Secured Notes and the 8.500% Notes, of which $6.5 million and $4.2 million, respectively, remain unamortized as of the year ended 2016.

A portion of the refinancing was accounted for as a modification of debt. As a result, the Company will continue to amortize a portion of the unamortized debt issuance costs on the 8.875% Notes and Term Loan Facility. The modification resulted in the recording of a discount of $5.9 million on the 6.000% Secured Notes and $2.8 million on the 8.500% Notes, of which $3.3 million and $2.0 million, respectively, remain unamortized as of the year ended 2016.

ABL Facility

On April 16, 2013, the Subsidiary Issuer completed the refinancing of its $170 million revolving credit facility due 2014 (the "Revolving Credit Facility") and its existing term loan B due 2016 (collectively with the Revolving Credit Facility, the "Refinanced Facility") by entering into: (i) a Second Amended and Restated Credit Agreement providing for the Term Loan Facility, with a syndicate of lenders arranged by Bank of America, N.A., Macquarie Capital (USA) Inc. and Barclays Bank PLC, with Bank of America, N.A. serving as administrative agent, syndication agent and documentation agent; and (ii) a Credit Agreement providing for a $200 million ABL Facility (together with the Term Loan Facility, the "2013 Credit Facilities"), with a syndicate of lenders arranged by Bank of America, N.A., Barclays Bank PLC, General Electric Capital Corporation and Wells Fargo Bank, National Association, with Bank of America, N.A. serving as administrative agent, issuing bank and swingline lender. In connection with the 2013 Credit Facilities, the Company capitalized debt issuance costs of $7.2 million. Proceeds from the 2013 Credit Facilities, together with available cash on hand, were used to refinance the outstanding term loans and revolving loans, and accrued interest thereon, under the Refinanced Facility, and to pay certain fees and expenses incurred in connection with the transactions. The Company extinguished the Term Loan Facility during 2014.

Borrowing rates under the ABL Facility are selected at the Subsidiary Issuer's option at the time of each borrowing and are generally based on London Interbank Offered Rate ("LIBOR") or the prime rate publicly announced by Bank of America, N.A. from time to time, in each case plus a specified interest rate margin. LIBOR-based borrowings have an interest rate margin ranging from 2.00% to 2.50% per annum, and prime rate borrowings have an interest rate margin ranging from 1.00% to 1.50% per annum, in each case depending on average availability under the ABL Facility for the most recent fiscal quarter. Under the ABL Facility, the Subsidiary Issuer pays a commitment fee on unused revolving loan commitments of 0.375% per annum or 0.50% per annum, depending on average usage under the ABL Facility for the most recent fiscal quarter.

The ABL Facility contains a minimum consolidated fixed charge coverage ratio covenant that applies if availability thereunder falls below a certain level. In addition, the ABL Facility contains customary covenants that, among other things, place limits on the Company’s ability to incur debt, create liens, make investments and acquisitions, sell assets, pay dividends, prepay subordinated debt, merge with other entities, engage in transactions with affiliates and make capital expenditures. The ABL Facility also contains customary events of default.

The obligations under the ABL Facility are guaranteed by Cenveo, Inc. and each existing and future direct and indirect North American subsidiary (other than the Subsidiary Issuer). The ABL Facility is secured by a first priority perfected security interest in substantially all assets of Cenveo, Inc. and its North American subsidiaries, including: (i) all capital stock of each present and future subsidiary (with certain exclusions of foreign subsidiaries); (ii) all present and future inter-company debt; (iii) all intellectual property rights, including patents, trademarks and copyrights; and (iv) substantially all of the present and future other property and assets, including material real property.

On December 11, 2013, Cenveo, Inc. and Subsidiary Issuer entered into an Amendment No. 1 to the ABL Facility ("ABL Amendment No. 1"), pursuant to which the revolving commitments under the original agreement were increased by $30.0 million. Capitalized fees and expenses associated with the ABL Amendment No. 1 were approximately $0.3 million. A portion of the additional $30.0 million borrowing capacity under the ABL Facility, together with cash on hand, were used to repay $28.2 million of its Term Loan Facility.

On June 10, 2014, Cenveo, Inc. and Subsidiary Issuer entered into Amendment No. 2 to the ABL Facility, which amended the ABL Facility in order to allow the issuance of the 6.000% Secured Notes and 8.500% Notes and the related refinancing transactions.

On January 30, 2015, Cenveo, Inc. and Subsidiary Issuer entered into Amendment No. 3 to the ABL Facility ("ABL Amendment No. 3"), and an accompanying Increasing Lender Agreement on February 4, 2015, pursuant to which the revolving commitments were increased by $10.0 million to a total capacity of $240.0 million. Among other things, ABL Amendment No. 3 increased the Subsidiary Issuer's flexibility to use the proceeds of any future asset sales to prepay its other indebtedness. The amendment also generally increased the Subsidiary Issuer's flexibility to prepay outstanding indebtedness, make acquisitions and other investments, and pay dividends, subject to the satisfaction of certain conditions. In connection with this amendment, the Company capitalized debt issuance costs of $1.3 million.

On June 10, 2016, Cenveo, Inc. and Subsidiary Issuer entered into Amendment No. 4 to the ABL Facility (the "ABL Amendment No. 4"), which, among other things, extends the term of the ABL Facility through 2021 and reduces the commitments thereunder by $50 million to $190 million. The ABL Facility now matures in June 2021, with a springing maturity of May 2019 ahead of the Subsidiary Issuer's existing 6.000% Secured Notes in the event that more than $10.0 million of the 6.000% Secured Notes remain outstanding at such time. In connection with this amendment, the Company capitalized debt issuance costs of $2.3 million.

In connection with the ABL Facility, $3.6 million of debt issuance costs remained unamortized as of the year ended 2016 and is recorded in other assets, net.

Other Debt

On September 30, 2015, the Subsidiary Issuer entered into an equipment loan in the aggregate amount of $12.5 million, secured by certain machinery and equipment of the Subsidiary Issuer. Interest on the equipment loan accrues at 8.25% per year and is payable monthly in arrears beginning on November 1, 2015, through February 1, 2019. If the Subsidiary Issuer elects to prepay the loan in full before the maturity date, a prepayment fee of 3% will apply if such payment is made during the first year following closing of the equipment loan, 2% if such prepayment is made during the second year following such closing, and 1% if such prepayment is made during the third year following such closing or thereafter. Net proceeds from the equipment loan were used to repay in full the equipment loan entered into in connection with the acquisition of certain assets of National Envelope Corporation ("National") on September 16, 2013.

11.5% Senior Notes

On March 28, 2012, the Subsidiary Issuer issued $225 million aggregate principal amount of 11.5% Notes that were sold with registration rights to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act of 1933. The 11.5% Notes were issued at a discount of approximately $8.3 million, of which less than $0.1 million remains unamortized as of December 31, 2016. The 11.5% Notes were issued pursuant to an indenture (the "11.5% Indenture") among the Subsidiary Issuer, Cenveo, Inc., certain subsidiary guarantors and U.S. Bank N.A., as trustee. The Subsidiary Issuer has paid interest on the 11.5% Notes, semi-annually, in cash in arrears, on May 15 and November 15 of each year, commencing on May 15, 2012, with the final interest payment occurring on the maturity date of May 15, 2017. The 11.5% Notes have no required principal payments prior to their maturity on May 15, 2017. The 11.5% Notes are guaranteed on a senior unsecured basis by Cenveo, Inc. and substantially all of its existing and future North American subsidiaries (other than the Subsidiary Issuer). As such, the 11.5% Notes rank pari passu with all of the Subsidiary Issuer's existing and future senior debt and senior to any of the Subsidiary Issuer's subordinated debt. The Subsidiary Issuer has the right to redeem the 11.5% Notes, in whole or in part, on or after May 15, 2015, at redemption prices ranging from 100% to 105.75%, plus accrued and unpaid interest. Each holder of the 11.5% Notes has the right to require the Subsidiary Issuer to repurchase such holder's notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest thereon, upon the occurrence of certain events specified in the indenture that constitute a change of control. The 11.5% Indenture contains a number of covenants that, among other things, restrict, subject to certain exceptions, Cenveo, Inc.'s ability and the ability of the Subsidiary Issuer and Cenveo, Inc.'s other subsidiaries to incur or guarantee additional indebtedness, make restricted payments (including paying dividends on, redeeming or repurchasing the Company's capital stock), permit restricted subsidiaries to pay dividends or make other distributions or payments, dispose of assets, make investments, grant liens on assets, merge or consolidate or transfer certain assets, and enter into transactions with affiliates. With respect to a disposition of assets, the 11.5% Indenture requires, within 360 days after the receipt of any net proceeds from an asset sale, that the Company apply all such net proceeds: (i) to be reinvested in the business of the Company; (ii) to repay or retire any senior debt; or (iii) to make an offer to purchase the 11.5% Notes. The 11.5% Indenture also contains certain customary affirmative covenants.

Subsequent Event

On January 13, 2017, the Subsidiary Issuer filed a notice of redemption calling the $20.5 million remaining principal balance of its 11.5% Notes at par. The Company intends to redeem the full outstanding principal balance during the first quarter of 2017.

7% Senior Exchangeable Notes

Concurrently with the issuance of the 11.5% Notes on March 28, 2012, the Subsidiary Issuer issued $86.3 million aggregate principal amount of the 7% Notes that were sold to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933. The 7% Notes were issued pursuant to an indenture (the "7% Indenture") among the Subsidiary Issuer, Cenveo, Inc., certain subsidiary guarantors and U.S. Bank N.A., as trustee. The Subsidiary Issuer has paid interest on the 7% Notes semi-annually, in cash in arrears, on May 15 and November 15 of each year, commencing on November 15, 2012, with the final interest payment occurring on the maturity date of May 15, 2017. The 7% Notes have no required principal payments prior to their maturity on May 15, 2017. The 7% Notes are guaranteed on a senior unsecured basis by Cenveo, Inc. and substantially all of its existing and future North American subsidiaries (other than the Subsidiary Issuer). As such, the 7% Notes rank pari passu with all of the Subsidiary Issuer's existing and future senior debt and senior to any of Subsidiary Issuer's subordinated debt. The Subsidiary Issuer may not redeem the notes at its option. Upon a fundamental change, as defined in the 7% Indenture, each holder of 7% Notes may require the Subsidiary Issuer to repurchase all or a portion of such holder's notes for cash at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date, as defined in the 7% Indenture. The 7% Indenture does not contain any financial covenants or any restrictions, among other things, on the payment of dividends, the incurrence of other indebtedness, or the issuance or repurchase of securities by the Subsidiary Issuer. The 7% Indenture does not contain any covenants or other provisions to protect holders of the notes in the event of a highly leveraged transaction or a change of control, except to the extent described in the 7% Indenture.

The 7% Notes are exchangeable at any time prior to the close of business on the business day immediately preceding the maturity date, for shares of Cenveo, Inc.'s common stock at an exchange rate of 30.1896 shares per $1,000 principal amount of 7% Notes (as adjusted as a result of Cenveo, Inc.’s recent Reverse Stock Split), which is equal to an exchange price of approximately $33.12 per share (as adjusted as a result of Cenveo, Inc.'s recent Reverse Stock Split), subject to adjustment under certain specified circumstances. This represents a premium of 373.8% above the last reported sale price of Cenveo, Inc.'s common stock on the New York Stock Exchange on Friday, December 30, 2016, which was $6.99 per share. If a holder elects to exchange notes in connection with a make-whole fundamental change, as described in the 7% Indenture, such holder may also be entitled to receive a make-whole premium upon exchange in certain circumstances.

In connection with the issuance of the 11.5% Notes and the 7% Notes, the Company capitalized debt issuance costs of $6.0 million and $3.0 million, respectively, all of which will be amortized over the life of the 11.5% Notes and the 7% Notes, each of which have less than $0.1 million unamortized as of the year ended 2016.

2016 Extinguishments

For the year ended 2016, the Company recorded a total gain on early extinguishment of debt of $82.5 million comprised of the following transactions:

Subsequent to the completion of the Exchange Offer and the Allianz 7% Note Purchase, the Company recorded a gain on early extinguishment of debt of $2.3 million related to the repurchase of $7.0 million of its 8.500% Notes, of which $2.5 million related to a discount on the purchase price, partially offset by a write-off of unamortized debt issuance costs of $0.1 million and a write-off of original issuance discount of $0.1 million. The Company also recorded a loss on early extinguishment of debt of $0.1 million related to the repurchase of $20.0 million of its 11.5% Notes, all of which related to the write-off of unamortized debt issuance costs and original issuance discount. Additionally, the Company recorded a loss on early extinguishment of debt of less than $0.1 million related to the repurchase of $5.7 million of its 7% Notes, all of which related to the write-off of unamortized debt issuance costs.

In connection with the Allianz 7% Note Purchase, the Company recorded a gain on early extinguishment of debt of $12.8 million related to the repurchase of $37.5 million of its 7% Notes, of which $15.0 million related to a discount on the purchase price, partially offset by the fair value of the Warrants issued of $1.3 million, $0.6 million of transaction fees and expenses and a write-off of unamortized debt issuance costs of $0.3 million. The fair value of the Warrants was determined using the Black-Scholes model.

In connection with the Exchange Offer, the Company recorded a gain on early extinguishment of debt of $46.1 million, of which $49.6 million related to a discount on the difference of the net carrying value of the extinguished 11.5% Notes and the fair value of the new 6.000% Unsecured Notes, partially offset by a write-off of unamortized debt issuance costs of $0.8 million, a write-off of original issuance discount of $1.2 million, and $1.5 million of transaction fees and expenses. Additionally, $1.4 million of gain on early extinguishment of debt related to the $4.2 million exchange by affiliated noteholders was recorded as a component of paid-in capital, all of which related to a discount on the Exchange Offer.

In connection with ABL Amendment No. 4, the Company recorded a loss on early extinguishment of debt of $0.2 million related to the write off of unamortized debt issuance costs.

Prior to the Exchange Offer, the Company recorded a gain on early extinguishment of debt of $16.5 million related to the repurchase of $34.5 million of its 7% Notes, of which $16.8 million related to a discount on the purchase price, partially offset by a write-off of unamortized debt issuance costs of $0.3 million. Additionally, the Company recorded a gain on early extinguishment of debt of $5.1 million related to the repurchase of $10.0 million of its 11.5% Notes, of which $5.3 million related to a discount on the purchase, partially offset by a write-off of unamortized debt issuance costs of $0.1 million and a write-off of original issuance discount of $0.1 million.

2015 Extinguishments

For the year ended 2015, the Company recorded a total loss on early extinguishment of debt of $1.3 million. The Subsidiary Issuer paid in full an existing equipment loan, which had a remaining principal balance at the time of $12.3 million. In connection with this extinguishment, the Company recorded a loss on early extinguishment of debt of $0.7 million, of which $0.5 million related to the write-off of unamortized debt issuance costs and $0.2 million related to prepayment fees. Additionally, the Company recorded a loss on early extinguishment of debt of $0.6 million related to the repurchase of $22.6 million of its 11.5% Notes, of which $0.2 million related to the write-off of unamortized debt issuance costs, $0.2 million related to the write-off of original issuance discount, and $0.2 million related to a premium paid over the principal amount upon repurchase.

Debt Restrictions and Compliance

The agreements governing the Subsidiary Issuer's outstanding indebtedness contain a number of significant restrictions and covenants which limit the Company's ability (subject in each case to limited exceptions) to, among other things: (i) incur or guarantee additional indebtedness; (ii) make restricted payments, including dividends and prepaying indebtedness; (iii) create or permit certain liens; (iv) enter into business combinations and asset sale transactions; (v) make investments, including capital expenditures; (vi) amend organizational documents and change accounting methods; (vii) enter into transactions with affiliates; and (viii) enter into new businesses.

The ABL Facility also contains a negative covenant restricting dispositions, including dispositions the aggregate book value of which exceeds $35.0 million. Such dispositions are permitted, however, if within 360 days after the receipt of any net proceeds from such dispositions, the Company applies all of the net proceeds thereof: (i) to be reinvested in the business of the Company; (ii) to repay obligations under the ABL Facility under certain circumstances; or (iii) to make an offer to purchase the 6.000% Secured Notes. Each of the indentures governing the 6.000% Secured Notes, 8.500% Notes, 11.5% Notes, and 6.000% Unsecured Notes and the Indenture and Note Purchase Agreement governing the 4% Secured Notes also contains a negative covenant requiring the Company to apply any net proceeds from an asset sale: (i) to be reinvested in the business of the Company; (ii) to repay certain of the Company's indebtedness; or (iii) to make an offer to purchase the 6.000% Secured Notes, 8.500% Notes, 11.5% Notes, 6.000% Unsecured Notes or 4% Secured Notes, respectively. On January 19, 2016, the Company completed the sale of the Packaging Business, realizing total cash proceeds of approximately $89.6 million, net of transaction costs. The Company has satisfied the reinvestment requirements set forth in the debt agreements with respect to such net cash proceeds.

In addition, the ABL Facility contains a minimum consolidated fixed charge coverage ratio with which, under certain circumstances, the Company must comply on a quarterly basis. The Company's ability to meet such fixed charge coverage ratio may be affected by events beyond the Company's control, such as further deterioration in general economic conditions. The Company is also required to provide certain financial information on a quarterly basis. Failure to maintain the fixed charge coverage ratio or effective internal controls could, in certain circumstances, prevent the Subsidiary Issuer from borrowing additional amounts, and could result in a default under the ABL Facility. Such a default could cause the indebtedness outstanding under the ABL Facility, and, by reason of cross-acceleration or cross-default provisions, the 6.000% Secured Notes, the 8.500% Notes, the 11.5% Notes, the 6.000% Unsecured Notes, the 4% Secured Notes and the 7% Notes, and any other indebtedness the Subsidiary Issuer may then have, to become immediately due and payable.

If any such defaults occur and if the Subsidiary Issuer is unable to repay those amounts, the lenders under the ABL Facility, the indentures governing the 6.000% Secured Notes and 8.500% Notes and the Indenture and Note Purchase Agreement governing the 4% Secured Notes could initiate a bankruptcy or liquidation proceeding, or proceed against the collateral granted to them which secures that indebtedness.

The obligations under the ABL Facility are guaranteed by Cenveo, Inc. and each existing and future direct and indirect North American subsidiary of Cenveo, Inc. (other than the Subsidiary Issuer). The ABL Facility is secured by a first priority perfected security interest in substantially all accounts receivable and inventory, and a junior priority perfected security interest in substantially all other assets, of Cenveo, Inc. and its North American subsidiaries. Provided the Company is in compliance with the covenants contained in the ABL Facility, the Company would also be in compliance, in most circumstances, with the Company’s incurrence tests within all of the Company’s debt indentures.

As of the year ended 2016, the Company was in compliance with all debt agreement covenants.

The aggregate annual maturities for long-term debt, including the original issuance discount, are as follows (in thousands):



2017	$	31,847
2018	3,881
2019	540,736
2020	205
2021	131,796
Thereafter	345,516
	$	1,053,981

The Subsidiary Issuer may from time to time seek to purchase its outstanding notes in open market purchases, privately negotiated transactions or other means. Such repurchases, if any, will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors.