Exhibit 4.6
FORBEARANCE
AGREEMENT
This Forbearance Agreement (this
“ Agreement ”), dated as of April 30, 2008,
by and among Vertis, Inc. (the “ Issuer ”),
each of the undersigned entities listed as guarantors
(collectively, the “ Guarantors ”), and each of
the undersigned holders of the Notes (as defined below)
(collectively, the “ Holders ”).
W I T N E S S E T
H:
WHEREAS, the Issuer, the Guarantors and the Bank of New
York, as Trustee (the “ Trustee ”) have entered
into that certain Indenture (as amended, modified or supplemented
prior to the date hereof, the “ Indenture ”),
dated as of June 6, 2003, in respect of the Issuer’s
$350,000,000 principal amount of 9.75% Senior Secured Second Lien
Notes due 2009 (the “ Notes ”);
WHEREAS, on April 1, 2008, the Issuer failed to make
the interest payment due on the Notes pursuant to the Indenture and
the Notes (the “ Missed Payment ”), and such
failure constitutes a Default under the Indenture (the “
Existing Default ”);
WHEREAS, the Issuer 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 , the Issuer’s failure to pay the Missed
Payment on or before May 1, 2008, together with interest on
such defaulted interest pursuant to Section 2.12 of the
Indenture, shall constitute an Event of Default under the Indenture
(the “ Payment Default ”);
WHEREAS, the Issuer is currently negotiating the terms of
a restructuring and lock-up agreement by and among the Issuer,
Vertis Holdings, Inc., ACG Holdings, Inc. American Color
Graphics, Inc., the Holders, certain other holders of notes
issued by the Issuer or by American Color Graphics, Inc, and other
parties thereto (as may be amended, the “ Restructuring
Agreement ”);
WHEREAS, the Issuer and the Guarantors have requested
that the Holders temporarily forbear from exercising their rights
and remedies under the Indenture and from directing the Trustee to
exercise any such rights and remedies on the Holders’ behalf
resulting from the Existing Default and the Payment Default;
and
WHEREAS, the Holders are willing to grant the Issuer and
the Guarantors’ request for forbearance described in the
preceding paragraph on the terms and subject to the conditions
contained herein.
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:
SECTION 1.
Defined Terms. Each
capitalized term used herein and not otherwise defined herein shall
have the meaning attributed to such term in the Indenture.
Each of the following capitalized terms shall have the meaning set
forth below:
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“ Forbearance Period ” means
the period beginning on the date hereof and ending on the
Forbearance Termination Date.
“ Forbearance Termination Date
” means the date of occurrence of a Forbearance Termination
Event.
“ Forbearance Termination Event
” means any of the following events: (a) the failure of
the Restructuring Agreement Execution to occur on or before
5:00 p.m. (New York time) on May 13, 2008; (b) the
termination of the Restructuring Agreement in accordance with its
terms; (c) the occurrence of the “Forbearance
Termination Date” under and as defined in the Forbearance
Agreement, dated as of April 3, 2008, as may be amended,
relating to the Senior Credit Facility (the “ Senior
Credit Forbearance Agreement ”); (d) the occurrence
of the “Forbearance Termination Date” under and as
defined in the Forbearance Agreement, dated as of April 2,
2008, by and among Vertis Receivables II, LLC, Webcraft, LLC,
Webcraft Chemicals, LLC, Enteron Group, LLC, Vertis Mailing, LLC,
the Issuer and General Electric Capital Corporation, as may be
amended (together with the Senior Credit Forbearance Agreement, the
“ Forbearance Agreements ”); (e) the
occurrence of a Default or Event of Default under the Indenture
other than the Existing Default or the Payment Default; or
(f) the failure of the Issuer and/or the Guarantors to comply
with any term, condition, representation or covenant contained in
this Agreement.
“ Remedial Action ” means any
action to direct enforcement of any of the rights and remedies
available to the Holders or the Trustee under the Indenture, the
Notes, the Security Documents and any amendments or supplements to
the foregoing, including, without limitation, any action to
accelerate, or join in any request for acceleration of, the
Notes.
“ Restructuring Agreement Execution
” means that the Restructuring Agreement shall have been duly
executed and delivered by at least 66- 2 / 3
% of the outstanding principal amount of each of the Vertis Second
Lien Notes, the Vertis Senior Notes and the ACG Second Lien Notes
(each as defined in the proposed Restructuring Agreement) and each
other party thereto, and such agreement and all related exhibits,
schedules and attachments shall in each case be in form and
substance satisfactory to the Holders and shall be in full force
and effect.
SECTION 2. Forbearance.
(a) Each
Holder hereby agrees that during the Forbearance Period it will not
(x) take any Remedial Action with respect to the Notes in
connection with the Existing Default or the Payment Default or
(y) sell, pledge, hypothecate or otherwise transfer any Notes,
except to a purchaser or other entity who agrees in writing with
the Issuer prior to such transfer to be bound by all of the terms
of this Agreement with respect to the relevant Notes being
transferred to such purchaser. The foregoing limited
forbearance shall not be construed to impair the ability of the
Holders or the Trustee to take any Remedial Action after the
Forbearance Period regardless of whether or not such Remedial
Action relates to actions taken or payments received during the
Forbearance Period, or during the Forbearance Period for Defaults
or Events of Default other than the Existing Default and the
Payment Default.
(b) Unless earlier terminated
in accordance with the terms of this Agreement, the Holders’
forbearance, as provided herein, shall immediately cease without
notice on the Forbearance Termination Date, and the Issuer and
Guarantors at that time shall be obligated to
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comply with and perform all terms, conditions
and provisions of the Indenture and the Notes without giving effect
to the forbearance set forth herein.
(c) The Holders’
forbearance is further expressly subject to and conditioned upon
the Issuer and Guarantors’ strict compliance with each and
every term and provision of this Agreement, and, except with
respect to the Existing Default and the Payment Default, the Issuer
and Guarantors’ strict compliance with each and every term
and provision of the Indenture and Notes, except as such terms and
provisions are modified by this Agreement.
(d) The Holders hereby request
that the Trustee not take any Remedial Action, including without
limitation, any action to accelerate the Notes during the
Forbearance Period. In the event that the Trustee takes any
action to declare all of the Notes immediately due and payable
pursuant to Section 6.2(a) of the Indenture during the
Forbearance Period solely due to the Existing Default or the
Payment Default, the Holders agree, pursuant to
Section 6.2(b) of the Indenture, to promptly rescind
and cancel such acceleration; provided , however ,
that if the Holders rescind and cancel such acceleration by the
Trustee in accordance with Section 6.2(b) of the
Indenture, each Holder shall defer its right to receive any cure of
the Payment Default until such time as set forth in
the proposed Restructuring Agreement or otherwise; provided
further , however , that such rescission and deferral
shall be of no further force and effect to the extent that the
“Forbearance Period” with respect to either of the
Forbearance Agreements (and as defined therein) has
ended.
SECTION 3. Conditions to
Effectiveness. The
effectiveness of this Agreement shall be subject to the
satisfaction of each of the following conditions:
(a)
Holders representing in the aggregate more than 75% of the
outstanding principal amount of the Notes shall have executed this
Agreement;
(b)
the Holders shall have received from the Issuer a duly executed
counterpart of this Agreement from each Holder, the Issuer and each
Guarantor listed on the signature pages hereto; and
(c)
(i) all representations and warranties made by the Issuer and
the Guarantors in the Indenture, the Note and the Security
Documents shall be true and correct in all material respects on and
as of the effective date of this Agreement as though made on and as
of
