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
2
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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