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FORBEARANCE AGREEMENT

Default Notice Forbearance Agreement

FORBEARANCE AGREEMENT | Document Parties: BANK OF AMERICA, N.A. | ENTERON GROUP LLC | USA DIRECT, LLC | VERTIS DIGITAL SERVICES LIMITED | VERTIS HOLDINGS, INC | VERTIS MAILING, LLC | Vertis, Inc | WEBCRAFT CHEMICALS, LLC | WEBCRAFT, LLC You are currently viewing:
This Default Notice Forbearance Agreement involves

BANK OF AMERICA, N.A. | ENTERON GROUP LLC | USA DIRECT, LLC | VERTIS DIGITAL SERVICES LIMITED | VERTIS HOLDINGS, INC | VERTIS MAILING, LLC | Vertis, Inc | WEBCRAFT CHEMICALS, LLC | WEBCRAFT, LLC

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Title: FORBEARANCE AGREEMENT
Date: 8/14/2008

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Exhibit 4.1

 

FORBEARANCE AGREEMENT

 

This Forbearance Agreement (this “ Agreement ”) is dated April 3, 2008 and is entered into by and among Vertis, Inc. (“ Borrower ”), as Borrower, the other Credit Parties signatory hereto, General Electric Capital Corporation, as a Lender and as Agent for Lenders (“ Agent ”), and the Lenders party hereto.

 

W I T N E S S E T H :

 

WHEREAS, Borrower, the other Credit Parties, Agent and Lenders are parties to that certain Credit Agreement, dated as of December 22, 2004, including all annexes, exhibits and schedules thereto (as amended by: (i) that certain Limited Consent and Amendment No. 1 to Credit Agreement, dated as of October 3, 2005; (ii) that certain Amendment No. 2 to Credit Agreement, dated as of November 22, 2005; (iii) that certain Limited Consent and Amendment No. 3 to Credit Agreement, dated as of December 12, 2005; (iv) that certain Amendment No. 4 to Credit Agreement, dated as of May 30, 2006; (v) that certain Limited Consent and Amendment No. 5 to Credit Agreement, dated as of September 5, 2006; (vi) that certain Limited Consent and Amendment No. 6 to Credit Agreement, dated as of November 27, 2006; and (vii) that certain Limited Consent and Amendment No. 7 to Credit Agreement, dated as of March 30, 2007; as the same is amended hereby and as it may from time to time hereafter be further amended, restated, supplemented or otherwise modified, the “ Credit Agreement ”);

 

WHEREAS, on April 1, 2008, Borrower failed to make the interest payment due on such date under the 2003 Senior Secured Notes (such circumstances, excluding any further events or actions, the “ Missed Payment ”);

 

WHEREAS, Borrower acknowledges that the Missed Payment constitutes a Default (the “ Existing Default ”) under the Credit Agreement;

 

WHEREAS, Borrower acknowledges and agrees that the Existing Default has occurred and is continuing as of the date hereof, and has not been cured or waived;

 

WHEREAS, Agent and Lenders have not expressly or impliedly waived the Existing Default, and as a result of the occurrence of the Existing Default, Agent and Lenders have the right, among other things, to determine not to make any Advance or incur any Letter of Credit Obligations under Section 2.2(b) of the Credit Agreement;

 

WHEREAS, Borrower and the other Credit Parties have requested that Agent and Lenders forbear from the exercise of their rights and remedies under the Credit Agreement and the Loan Documents and agree to continue to make Revolving Credit Advances;

 

WHEREAS, subject to the terms and conditions hereof, Agent and Requisite Lenders have agreed to grant these requests; and

 

WHEREAS, this Agreement constitutes a Loan Document and these Recitals shall be construed as part of this Agreement;

 



 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                        Defined Terms .  Each capitalized term used herein and not otherwise defined herein shall have the meaning attributed to such term in the Credit Agreement.  Each of the following capitalized terms shall have the meaning set forth below:

 

(a)                                   Forbearance Default ” means (i) the occurrence of any Default or Event of Default, other than the Existing Default or an Event of Default under Section 7.1(b)(1) of the Credit Agreement on account of the Missed Payment (the “ 2003 Indenture Event of Default ”), (ii) the failure of Borrower to comply with any term, condition or covenant set forth in this Agreement, (iii) any representation made by Borrower under or in connection with this Agreement shall prove to be false in any material respect as of the date when made, (iv) any acceleration of the obligations under the 2003 Senior Secured Notes or the taking of any enforcement action or exercise of any right or remedy by the holders of the 2003 Senior Secured Notes or the 2003 Senior Secured Notes Indenture Trustee whether based upon the Missed Payment or otherwise, and/or (v) the commencement of any proceeding (whether judicial, extra-judicial, administrative or otherwise) or the taking of any other action to liquidate the businesses of Borrower or any of the other Credit Parties or the property of any such Person, or reorganize Borrower or any of the other Credit Parties, including, without limitation, the appointment of a receiver or other custodian or the making of an assignment to an assignee for the benefit of creditors or other custodians.

 

(b)                                  Forbearance Period ” means the period beginning on the date hereof and ending on the Forbearance Termination Date.

 

(c)                                   Forbearance Termination Date ” means the earliest to occur of (i) 5:00 p.m. (New York time) on May 27, 2008, (ii) the fifth calendar day following the first day, if any, on which Borrowing Availability is $7,500,000 or less, or (iii) the date upon which a Forbearance Default occurs.

 

2.                                        Agreement to Forbear .

 

(a)                                   Solely during the Forbearance Period, Agent and Requisite Lenders hereby agree to forbear from exercising their right to determine not to make any Advance or incur any Letter of Credit Obligations (e.g. under Section 2.2(b)) based on the Existing Default and/or the 2003 Indenture Event of Default or from exercising (except as set forth in Section 2(d) hereof) any of their other rights and remedies against Borrower and the other Credit Parties that may exist by virtue of the Existing Default or the 2003 Indenture Event of Default under the Credit Agreement ( e.g. , under Section 7.2 or Section 7.3 thereof) or any of the other Loan Documents.

 

(b)                                  Nothing in this Agreement shall be construed as a waiver of or acquiescence to the Existing Default or the 2003 Indenture Event of Default, and the Existing Default shall continue in existence notwithstanding the agreement of Agent and Requisite Lenders, as set forth herein, to forbear in the exercise of rights and remedies against Borrower and the other Credit Parties on the terms and for the period set forth herein.  Except as expressly

 

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provided herein, the execution and delivery of this Agreement shall not: (i) constitute an extension, modification, or waiver of any term or aspect of the Credit Agreement or the other Loan Documents; (ii) extend the terms of the Credit Agreement or the due date of any of the Obligations; (iii) give rise to any obligation on the part of Agent or Lenders to extend, amend, waive or otherwise modify any term or condition of the Credit Agreement or any of the other Loan Documents; or (iv) give rise to any defenses or counterclaims to the right of Agent or Lenders to compel payment of the Obligations or to otherwise enforce their rights and remedies under the Credit Agreement and the other Loan Documents.  Except as expressly limited herein, Agent and Lenders hereby expressly reserve all of their rights and remedies under the Loan Documents and under applicable law with respect to the Existing Default and the 2003 Indenture Event of Default.  From and after the Forbearance Termination Date, Agent and Lenders shall be entitled to enforce the Loan Documents according to the terms of the Loan Documents.  Each of Borrower and the other Credit Parties acknowledge and agree that nothing herein gives rise, or shall be deemed to give rise, to any commitment, obligation or agreement of Agent or any Lender to provide debtor-in-possession financing.

 

(c)                                   During the Forbearance Period, notwithstanding the occurrence and continued existence of the Existing Default or the existence and occurrence of the 2003 Indenture Event of Default, Agent and Requisite Lenders (including all Revolving Lenders) agree that Agent and Revolving Lenders will continue to make Revolving Credit Advances under the Credit Agreement in accordance with the terms and conditions thereof and beginning no later than April 7, 2008 generally in accordance with the Budget (as such term is defined below); provided , further , that , Borrower shall notify Agent regarding (i) any individual expenditure in respect of ordinary course operating expenses that is to be made in an amount equal to or greater than $1,000,000 or (ii) any individual expenditure in respect of non-operating expenses or non-ordinary course operating expenses that is to be made in an amount equal to or greater than $500,000.  Furthermore, during the Forbearance Period, beginning no later than April 7, 2008, all proceeds of the Permitted Receivables Financing remitted or otherwise available to Borrower or Guarantors shall be used generally in accordance with the Budget.

 

(d)                                  Notwithstanding any provision hereof to the contrary, Agent and Lenders maintain that (X) the Missed Payment constitutes, as of the day hereof, an Event of Default under Section 7.1(b)(1) of the Credit Agreement; and (Y) accordingly, Agent has the right, effective as of April 1, 2008 (the date on which such Event of Default first occurred), under Section 1.2(


 
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