LIMITED CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT
EXHIBIT 10.2
LIMITED CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT
This Limited Consent and Amendment No. 1 to Credit Agreement, dated as of October 3, 2005 (this Consent and Amendment), is entered into by and among Vertis, Inc. (Vertis), Vertis Limited (Vertis Limited) and Vertis Digital Services Limited (Digital Limited and, collectively with Vertis and Vertis Limited, the Borrowers and each, individually, a Borrower), as Borrowers, the other Credit Parties signatory hereto, General Electric Capital Corporation, as a Lender and as Agent for Lenders (Agent), and the other Lenders.
RECITALS
A. Borrowers, the other Credit Parties, Agent and Lenders are parties to that certain Credit Agreement, dated as of December 22, 2004 (as now or hereafter amended, restated or otherwise modified, the Credit Agreement).
B. Borrowers and the other Credit Parties have requested that Agent and Lenders consent to (i) the sale of all of the issued and outstanding shares of Stock of Vertis Limited pursuant to an Agreement to be entered into by and between Webcraft, LLC, as seller, and Overgoal Limited, as buyer (Buyer), substantially in the form of Exhibit A to this Consent and Amendment (the Stock Purchase Agreement), and (ii) certain related actions as further described in Section 2 herein. Upon consummation of the transactions contemplated by the Stock Purchase Agreement, Vertis Limited and each of its Subsidiaries listed on Schedule 1 attached hereto (each, a Departing Entity, and collectively, the Departing Entities) shall cease to be a Credit Party under the Credit Agreement and the other Loan Documents.
C. This Consent and Amendment shall constitute a Loan Document and these Recitals shall be construed as part of this Consent and Amendment.
NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and of the Loans and other extensions of credit heretofore, now or hereafter made to, or for the benefit of, Borrowers by Lenders, Borrowers, the other Credit Parties, Agent and Lenders hereby agree as follows:
1. Definitions. Except to the extent otherwise specified herein, capitalized terms used in this Consent and Amendment shall have the same meanings ascribed to them in the Credit Agreement and Annex A thereto.
2. Consents.
2.1. Notwithstanding any provision of the Credit Agreement or any other Loan Document to the contrary, Agent and Lenders hereby consent to the sale of all of the issued and outstanding shares of Stock of Vertis Limited to Buyer pursuant to the Stock Purchase Agreement; provided, that, any changes to the Stock Purchase Agreement from the version
thereof attached to this Consent and Amendment as Exhibit A shall be reasonably satisfactory to Agent.
2.2. Notwithstanding any provision of the Credit Agreement or any other Loan Document to the contrary, Agent and Lenders hereby consent to the release of Agents Liens on all shares of Stock of each Departing Entity upon the closing of the transactions contemplated by the Stock Purchase Agreement to the extent such shares of Stock have been pledged to Agent pursuant to the Credit Agreement or any other Loan Document.
2.3. Notwithstanding any provision of the Credit Agreement or any other Loan Document to the contrary, Agent and Lenders hereby consent to the release of Agents Liens on all properties and assets of each Departing Entity upon the closing of the transactions contemplated by the Stock Purchase Agreement to the extent such properties and assets have been pledged to Agent pursuant to the Credit Agreement or any other Loan Document.
2.4. As a result of the actions described above in Subsections 2.1, 2.2 and 2.3, upon the closing of the transactions contemplated by the Stock Purchase Agreement, Vertis Limited shall cease to be either a Borrower or a Credit Party under the Credit Agreement and the other Loan Documents. Notwithstanding any provision of the Credit Agreement or any other Loan Document to the contrary, Agent and Lenders hereby consent to such termination at, and only at, such time, of Vertis Limiteds status as a Borrower and a Credit Party under the Credit Agreement and the other Loan Documents.
2.5. As a result of the actions described above in Subsections 2.1, 2.2 and 2.3, upon the closing of the transactions contemplated by the Stock Purchase Agreement, each Departing Entity shall cease to be a Credit Party under the Credit Agreement and the other Loan Documents. Notwithstanding any provision of the Credit Agreement or any other Loan Document to the contrary, Agent and Lenders hereby consent to the such termination at, and only at, such time, of each Departing Entitys status as a Credit Party under the Credit Agreement and the other Loan Documents.
2.6. In connection with the closing of the transactions contemplated by the Stock Purchase Agreement, Vertis and the other Credit Parties (other than the Departing Entities) intend to forgive and forever discharge intercompany loans and obligations owing by the Departing Entities to Vertis and such other Credit Parties in an aggregate principal amount of up to £40,000,000 (the Departing Entities Intercompany Debt Discharge) and to assign to the Buyer an intercompany loan in the principal amount of £7,000,000 owing to Vertis by Vertis Limited (the Assigned Vertis Limited Note). Notwithstanding any provision of the Credit Agreement or any other Loan Document to the contrary, Agent and Lenders hereby consent to the Departing Entities Intercompany Debt Discharge as a part of, and at the time of the closing of, the transactions contemplated by the Stock Purchase Agreement and, upon the closing of the transactions contemplated by the Stock Purchase Agreement, Agent and Lenders hereby consent to the release of any Liens which Agent may have on any intercompany notes issued by the Departing Entities to Vertis and the other Credit Parties (other than the Departing Entities) in respect of the Departing Entities Intercompany Debt Discharge, to the assignment by Vertis to the Buyer of the Assigned Vertis Limited Note and to the release of any Liens which Agent may
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have on any intercompany notes issued by Vertis Limited in respect of the Assigned Vertis Limited Note.
3. Further Assurances.
3.1. Each Credit Party shall, from time to time, execute and deliver such agreements, instruments, certificates, reports and other documents and take all such actions as Agent or Lenders at any time may reasonably request to evidence, further document, effectuate or otherwise implement the actions described above in Section 2, under the Credit Agreement and/or the other Loan Documents.
3.2. At the time of the closing of the transactions contemplated by the Stock Purchase Agreement and from time to time thereafter, Agent and Lenders shall execute and deliver such lien release instruments and documents and take such related actions as Vertis may reasonably request to evidence, further document, effectuate or otherwise implement the release of Agents Liens as described above in Section 2, under the Credit Agreement and the other Loan Documents.
4. Representations and Warranties. The Borrowers and Credit Parties, jointly and severally, hereby represent and warrant to Agent and Lenders that:
4.1. Aside from (v) the agreements to provide indemnification/warranties which are set forth in the Stock Purchase Agreement, under which the maximum aggregate exposure is £300,000, (w) the agreement set forth in clause 21.2 of the Stock Purchase Agreement by Webcraft, LLC pursuant to which the Credit Parties (other than the Departing Entities) have agreed to be responsible for any liabilities relating to an employee, Mr. Adriaan Roosen, (x) a guaranty provided to Readers Digest in relation to potential employee liabilities regarding the Swindon workforce, under which the maximum aggregate exposure is £250,000, (y) a guaranty in favor of Capital One, a customer of the Departing Entities, under which the aggregate maximum exposure is £2,000,000, and (z) other claims, obligations, liabilities and exposures in an aggregate amount not to exceed £5,000,000, (i) there are no post-closing obligations and liabilities, including, without limitation, contingent obligations and liabilities, under the Stock Purchase Agreement of Vertis and the other Credit Parties (other than the Departing Entities) to the Buyer or any other Person, (ii) from and after the closing of the transactions contemplated by the Stock Purchase Agreement, Vertis and the other Credit Parties (other than the Departing Entities) shall not have any obligations, direct or indirect, contingent or otherwise, for the benefit of any of the Departing Entities and (iii) there is no existing guaranty, credit support, indemnity or other similar arrangement, by Vertis or Digital Limited or any other Credit Party, or by any of their direct or indirect Subsidiaries, aside from the Departing Entities, in favor of any Departing Entity, the Buyer or any employee, customer or creditor relating to any Departing Entity or the Buyer.
4.2. The execution, delivery and performance by the Borrowers and each of the other Credit Parties of this Consent and Amendment have been duly authorized by all necessary corporate action, and this Consent and Amendment constitutes the legal, valid and binding obligation of the Borrowers and each of the other Credit Parties enforceable against each of them in accordance with its terms, except as the enforcement hereof may be subject to the effect of any
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applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally or to general principles of equity.
4.3. The execution, delivery and performance of this Consent and Amendment and the consummation of the transactions contemplated hereby by Borrowers and each Credit Party does not, and will not, contravene or conflict with any provision of (i) law, (ii) any judgment, decree or order, or (iii) the certificate or articles of incorporation or by-laws or other constituent documents of any Borrower or any Credit Party, and does not, and will not, contravene or conflict with, or cause any Lien to arise under, any provision of any indenture, agreement, mortgage, lease, instrument or other document, including, without limitation, the February 2003 Senior Subordinated Debt Documents, the 2002 Senior Debt Documents, the 2003 Senior Secured Debt Documents or the Mezzanine Debt Documents, binding upon or otherwise affecting any Borrower or any Credit Party or any property of any Borrower or any Credit Party.
4.4. No Default or Event of Default exists under the Credit Agreement or any other Loan Document or will exist after or be triggered by the execution, delivery and performance of this Consent and Amendment or the consummation of the transactions contemplated hereby and by the Stock Purchase Agreement. In addition, each Borrower and each other Credit Party hereby represents, warrants and reaffirms that the Credit Agreement and each of the other Loan Documents remains in full force and effect.
5. Covenants. Aside from (v) the agreements to provide indemnification/warranties which are set forth in the Stock Purchase Agreement, under which the maximum aggregate exposure is £300,000, (w) the agreement set forth in clause 21.2 of the Stock Purchase Agreement by Webcraft, LLC pursuant to which the Credit Parties (other than the Departing Entities) have agreed to be responsible for any liabilities relating to an employee, Mr. Adriaan Roosen, (x) a guaranty provided to Readers Digest in relation to potential employee liabilities regarding the Swindon workforce, under which the maximum aggregate exposure is £250,000, (y) a guaranty in favor of Capital One, a customer of the Departing Entities, under which the aggregate maximum exposure is £2,000,000, and (z) other claims, obligations, liabilities and exposures in an aggregate amount not to exceed £5,000,000, each Borrower and each other Credit Party executing this Consent and Amendment jointly and severally agrees as to all Credit Parties that from and after the date hereof, the Credit Parties shall not and shall not cause or permit their Subsidiaries directly or indirectly to create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any guaranty, credit support, indemnity or other similar arrangement, by Vertis or Digital Limited, or by any of their direct or indirect Subsidiaries (aside from the Departing Entities) in favor of any Departing Entity, the Buyer or any employee, customer or creditor relating to any Departing Entity or the Buyer.
6. Conditions Precedent to Effectiveness. The effectiveness of the consents set forth in Section 2 hereof are in each instance subject to the satisfaction of each of the following conditions precedent:
6.1. Consent and Amendment. This Consent and Amendment shall have been duly executed and delivered by the Borrowers, the Credit Parties, Agent and Lenders.
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6.2. No Default. No Default or Event of Default shall have occurred and be continuing or would result from the effectiveness of this Consent and Amendment or the consummation of any of the transactions contemplated hereby or by the Stock Purchase Agreement.
6.3. Opinion. Agent and Lenders shall have received an opinion of counsel to Borrowers, Sullivan & Cromwell LLP, with respect to this Consent and Amendment, including, without limitation, as to this Consent and Amendment, the Stock Purchase Agreement and the transactions contemplated hereby and thereby not conflicting with any provision of the February 2003 Senior Subordinated Debt Documents, the 2002 Senior Debt Documents, the 2003 Senior Secured Debt Documents or the Mezzanine Debt Documents, all in form and substance acceptable to Agent.
6.4. Miscellaneous. Agent and Lenders shall have received such other agreements, instruments and documents as Agent or Lenders may reasonably request.
7. Reference to and Effect Upon the Credit Agreement and other Loan Documents.
7.1. Full Force and Effect. Except as specifically provided herein, the Credit Agreement, the Notes and each other Loan Document shall remain in full force and effect and each is hereby ratified and confirmed by all Credit Parties, other than upon consummation of the transactions contemplated by the Stock Purchase Agreement, the Departing Entities.
7.2. No Waiver. The execution, delivery and effect of this Consent and Amendment shall be limited precisely as written and shall not be deemed to (i) be a consent to any waiver of any term or condition, or to any amendment or modification of any term or condition (except as specifically provided herein) of the Credit Agreement or any other Loan Document or (ii) prejudice any right, power or remedy which the Agent or any Lender now has or may have in the future under or in connection with the Credit Agreement, the Notes or any other Loan Document.
7.3. Certain Terms. Each reference in the Credit Agreement to this Agreement, hereunder, hereof, herein or any other word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference in any other Loan Document to the Credit Agreement or any word or words of similar import shall be and mean a reference to the Credit Agreement as amended hereby.
8. Counterparts. This Consent and Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Consent and Amendment by telecopier shall be as effective as delivery of a manually executed counterpart signature page to this Consent and Amendment.
9. Costs and Expenses. As provided in the Credit Agreement, Borrowers shall pay the fees, costs and expenses incurred by Agent in connection with the preparation, execution and delivery of this Consent and Amendment (including, without limitation, attorneys fees).
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10. GOVERNING LAW. THIS CONSENT AND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPALS.
11. Headings. Section headings in this Consent and Amendment are included herein for convenience of reference only and shall not constitute a part of this Consent and Amendment for any other purpose.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Consent and Amendment has been duly executed as of the date first written above.
| BORROWERS: | ||||||
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| VERTIS, INC. | ||||||
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| By: | /S/ Stephen E. Tremblay |
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| Name: | Stephen E. Tremblay | |||||
| Title: | Chief Financial Officer | |||||
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| VERTIS LIMITED | ||||||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | |||||
| Title: | Director | |||||
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| VERTIS DIGITAL SERVICES LIMITED | ||||||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | |||||
| Title: | Director | |||||
| GENERAL ELECTRIC CAPITAL | |||
| as Agent, an L/C Issuer and Lender | |||
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| By: | /S/ Daniel D. McCready |
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| Duly Authorized Signatory | ||
| BANK OF AMERICA, N.A. | ||||
| as a Lender | ||||
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| By: | /S/ Richard Levenson |
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| Name: | Richard Levenson | |||
| Title: | Senior Vice President | |||
The following Persons are signatory to this Amendment in their capacity as Credit Parties and not as Borrowers:
| VERTIS HOLDINGS, INC. | ||||||
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| By: | /S/ Stephen E. Tremblay |
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| Name: | Stephen E. Tremblay | |||||
| Title: | Chief Financial Officer | |||||
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| ENTERON GROUP LLC | ||||||
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| By: | /S/ Stephen E. Tremblay |
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| Name: | Stephen E. Tremblay | |||||
| Title: | Chief Financial Officer | |||||
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| WEBCRAFT, LLC | ||||||
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| By: | /S/ Stephen E. Tremblay |
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| Name: | Stephen E. Tremblay | |||||
| Title: | Chief Financial Officer | |||||
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| PRINTCO, INC. | ||||||
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| By: | /S/ Stephen E. Tremblay |
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| Name: | Stephen E. Tremblay | |||||
| Title: | Chief Financial Officer | |||||
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| WEBCRAFT CHEMICALS, LLC | ||||||
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| By: | /S/ Stephen E. Tremblay |
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| Name: | Stephen E. Tremblay | |||||
| Title: | Chief Financial Officer | |||||
| VERTIS PRS LIMITED | |||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | ||
| Title: | Director | ||
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| THE ADMAGIC GROUP LIMITED | |||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | ||
| Title: | Director | ||
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| VERTIS DIRECT MARKETING SERVICES (CROYDON) LIMITED | |||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | ||
| Title: | Director | ||
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| VERTIS DIRECT MARKETING SERVICES (LEICESTER) LIMITED | |||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | ||
| Title: | Director | ||
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| VERTIS FULFILMENT SERVICES LIMITED | |||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | ||
| Title: | Director | ||
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| ADMAGIC LIMITED | |||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | ||
| Title: | Director | ||
| VERTIS DIRECT RESPONSE LTD | ||||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | |||
| Title: | Director | |||
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| FUSION PREMEDIA GROUP LTD | ||||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | |||
| Title: | Director | |||
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| VERTIS HARVEY HUNTER LTD | ||||
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| By: | /S/ Dean D. Durbin |
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| Name: | Dean D. Durbin | |||
| Title: | Director | |||
EXHIBIT A
to
CONSENT AND AMENDMENT
Stock Purchase Agreement
SCHEDULE 1
to
CONSENT AND AMENDMENT
Departing Entities
Vertis Limited
Vertis Direct Marketing Services (Croydon) Limited
Vertis Direct Marketing Services (Leicester) Limited
Vertis Fulfilment Services Limited
Vertis Direct Response Ltd
Vertis Harvey Hunter Ltd