FORBEARANCE AGREEMENTDefault Notice Forbearance Agreement |
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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. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Search Default Notice Forbearance Agreement by:
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(d) of the Credit
Agreement to charge the Borrower the Default Rate with respect to interest
rates applicable to the Loans and the Letter of Credit and Unused Line
Fees. Borrower and the other Credit Parties dispute the statements
contained in clauses (X) and (Y) of the first sentence of this
Section 2(d) and maintain that (I) the Missed Payment does not,
as of the date hereof, constitute an Event of Default; and
(II) accordingly, the Agent does not have the right, as of April 1,
2008 or otherwise until the occurrence (if any) of the 2003 Indenture Event of
Default, to charge the Default Rate. Each party hereto acknowledges each
of the other parties position on these issues. Notwithstanding any
provision of this Agreement to the contrary, each party hereto reserves all
rights and defenses with respect to these issues. Borrower and the other
Credit Parties further acknowledge and agree that (A) Agents reservation
set forth in the preceding sentence includes a reservation of its right to
assert at any time (and notwithstanding its agreement to otherwise forbear as
set forth herein) that Agent is permitted under the Credit Agreement to charge
the Default Rate as of April 1, 2008; (B) the Agent and Requisite
Lenders
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entry into this Agreement shall not impair or diminish in
any way the right of Agent described in the preceding clause (A); and
(C) if Borrower shall fail to make the interest payment due on
April 1, 2008 under the 2003 Senior Secured Notes on or before May 1,
2008 unless waived by the holders of the 2003 Senior Secured Notes, such
failure shall constitute an Event of Default under
Section 7.1(b)(1) of the Credit Agreement.
(e)
Each Notice of
Revolving Credit Advance and each request for the issuance of a Letter of Credit
shall be accompanied by a certificate, in form and substance satisfactory to
Agent, setting forth Borrowing Availability both before and after giving effect
to the requested Advance or incurrence of Letter of Credit Obligation (using
the Borrowing Base Certificate then required to be delivered to Agent under the
Credit Agreement).
(f)
No later than
April 7, 2008 (or earlier if available), Borrower shall deliver to Agent a
schedule (in form and substance acceptable to Agent) of expenditures on a
category-by-category basis that Borrower anticipates it or the other Credit
Parties will fund during the Forbearance Period (the Budget).
(g)
During the Forbearance
Period and commencing on April 4, 2008, Borrower shall deliver to Agent on
Friday at the end of each week a rolling 13-week cash flow forecast.
3.
Conditions to
Effectiveness.
The effectiveness of this Agreement is expressly conditioned upon Agents
receipt (on behalf of itself and each of the Lenders party hereto) from
Borrower of the following, all of which shall be in form and substance
satisfactory to Agent:
(a)
Agreement. A duly executed counterpart
of this Agreement from Requisite Lenders, Borrower and the other Credit Parties
listed on the signature pages hereto.
(b)
Other Documents. Such other documents,
instruments and agreements as Agent may reasonably request.
4.
Representations and
Warranties of Borrower. In order to induce Agent and Lenders to enter into this Agreement,
Borrower hereby represents and warrants to Agent and Lenders that:
(a)
Representations and
Warranties.
(i) No Default or Event of Default (other than the Existing Default) has
occurred or is continuing and (ii) no representation or warranty of any
Credit Party contained in the Credit Agreement or any of the other Loan
Documents, including this Agreement, is untrue or incorrect in any material
respect as of the date hereof, except to the extent that such representation or
warranty expressly relates to an earlier date, in which case it shall be true
and correct in all material respects as of such earlier date.
(b)
Authorization, etc. Each of Borrower and the
other Credit Parties has the power and authority to execute, deliver and
perform this Agreement. Each of Borrower and the other Credit Parties has
taken all necessary action (including, without limitation, obtaining approval
of its members, if necessary) to authorize its execution, delivery and
performance of this Agreement. No consent, approval or authorization of,
or declaration or filing with, any Governmental Authority, and no consent of
any other Person, is required in connection with
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Borrowers or any other Credit Partys execution, delivery
and performance of this Agreement, except for those already duly
obtained. This Agreement has been duly executed and delivered by each of
Borrower and the other Credit Parties and constitutes the legal, valid and
binding obligation of each of Borrower and the other Credit Parties,
enforceable against them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally and by general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or law). Each of Borrowers and the other
Credit Parties execution, delivery or performance of this Agreement does not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the property of
Borrower or any of the other Credit Parties by reason of the terms of
(i) any contract, mortgage, lease, agreement, indenture or instrument to
which Borrower or any of the other Credit Parties is a party or which is
binding upon them or any one of them, (ii) the February 2003 Senior Subordinated
Debt Documents, the 2002 Senior Debt Documents, the 2003 Senior Secured Debt
Documents or the Mezzanine Debt Documents (iii) any law or regulation or
order or decree of any court applicable to Borrower or any of the other Credit
Parties, or (iv) the certificate of formation or operating agreement of
Borrower or any of the other Credit Parties.
5. &






