Exhibit 10.3
HOLDINGS PLEDGE
AGREEMENT
This HOLDINGS
PLEDGE AGREEMENT, dated as of July 17, 2008 (together with all
amendments, if any, from time to time hereto, this “
Agreement ”) between VERTIS HOLDINGS, INC., a Delaware
corporation (the “ Pledgor ”) and GENERAL
ELECTRIC CAPITAL CORPORATION in its capacity as Agent for Lenders
(“ Agent ”).
W I T N E S S E T H
:
WHEREAS, pursuant
to that certain Senior Secured Priming and Superpriority
Debtor-In-Possession Credit Agreement, dated as of the date hereof,
by and among Vertis, Inc., as Borrower, Pledgor, the other
Persons named therein as Credit Parties, Agent and the Persons
signatory thereto from time to time as Lenders (including all
annexes, exhibits and schedules thereto, and as from time to time
amended, restated, supplemented or otherwise modified (the “
Credit Agreement ”) the Lenders have agreed to make
Loans to, and incur Letter of Credit Obligations for the benefit
of, Borrower;
WHEREAS, Pledgor
is the record and beneficial owner of the shares of Stock listed in
Part A of Schedule I hereto and the owner of the
promissory notes and Instruments listed in Part B of
Schedule I hereto;
WHEREAS, Pledgor
benefits from the credit facilities made available to Borrower
under the Credit Agreement; and
WHEREAS, in order
to induce Agent and Lenders to make the Loans and to incur the
Letter of Credit Obligations as provided for in the Credit
Agreement, Pledgor has agreed to pledge the Pledged Collateral to
Agent in accordance herewith.
NOW, THEREFORE, in
consideration of the premises and the covenants hereinafter
contained and to induce Lenders to make Loans and to incur Letter
of Credit Obligations under the Credit Agreement, it is agreed as
follows:
1.
Definitions . Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined,
and the following shall have (unless otherwise provided elsewhere
in this Agreement) the following respective meanings (such meanings
being equally applicable to both the singular and plural form of
the terms defined):
“
Bankruptcy Code ” means title 11, United States Code,
as amended from time to time, and any successor statute
thereto.
“
Instrument ” has the meaning assigned to such term in
the Credit Agreement.
“
Investment Property ” has the meaning assigned to such
term in the Credit Agreement.
“ Pledged
Collateral ” has the meaning assigned to such term in
Section 2 hereof.
“ Pledged
Entity ” means an issuer of Pledged Shares or Pledged
Indebtedness.
“ Pledged
Indebtedness ” means the Indebtedness evidenced by
promissory notes and Instruments listed on Part B of
Schedule I hereto;
“ Pledged
Shares ” means those shares listed on Part A of
Schedule I hereto.
“ Secured
Obligations ” has the meaning assigned to such term in
Section 3 hereof.
2.
Pledge . Pledgor hereby pledges to Agent, and grants
to Agent for itself and the benefit of Lenders, a first priority
security interest in all of the following (collectively, the
“ Pledged Collateral ”):
(a)
the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, distributions, cash, instruments and
other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or
all of the Pledged Shares; and
(b)
such portion, as determined by Agent as provided in
Section 6(d) below, of any additional shares of
stock of a Pledged Entity from time to time acquired by Pledgor in
any manner (which shares shall be deemed to be part of the Pledged
Shares), and the certificates representing such additional shares,
and all dividends, distributions, cash, instruments and other
property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of such Stock; and
(c)
the Pledged Indebtedness and the promissory notes or instruments
evidencing the Pledged Indebtedness, and all interest, cash,
instruments and other property and assets from time to time
received, receivable or otherwise distributed in respect of the
Pledged Indebtedness; and
(d)
all Investment Property and any instruments evidencing the
Investment Property, and all interest, cash, instruments and other
property and assets from time to time received, receivable or
otherwise distributed in respect of the Investment Property;
and
(e)
all additional Indebtedness arising after the date hereof and owing
to Pledgor and evidenced by promissory notes or other instruments,
together with such promissory notes and instruments, and all
interest, cash, instruments and other property and assets from time
to time received, receivable or otherwise distributed in respect of
that Pledged Indebtedness.
3.
Security for Obligations . This Agreement secures, and
the Pledged Collateral is security for, the prompt payment in full
when due, whether at stated maturity, by acceleration or otherwise,
and performance of all Obligations of any kind under or in
connection with the Credit Agreement and the other Loan Documents
and all obligations of Pledgor now or hereafter existing under this
Agreement including, without limitation, all fees, costs and
expenses whether
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in connection
with collection actions hereunder or otherwise (collectively, the
“ Secured Obligations ”).
4.
Delivery of Pledged Collateral . All certificates and
all promissory notes and instruments evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of Agent,
for itself and the benefit of Lenders, pursuant hereto. All
Pledged Shares shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance
satisfactory to Agent and all promissory notes or other instruments
evidencing the Pledged Indebtedness shall be endorsed by
Pledgor.
5.
Representations and Warranties . Pledgor represents
and warrants to Agent that:
(a)
Pledgor is, and at the time of delivery of the Pledged Shares to
Agent will be, the sole holder of record and the sole beneficial
owner of such Pledged Collateral pledged by Pledgor free and clear
of any Lien thereon or affecting the title thereto, except for any
Lien created by this Agreement and any Liens permitted under the
Credit Agreement; Pledgor is and at the time of delivery of the
Pledged Indebtedness to Agent will be, the sole owner of such
Pledged Collateral free and clear of any Lien thereon or affecting
title thereto, except for any Lien created by this Agreement and
any Liens permitted under the Credit Agreement;
(b)
All of the Pledged Shares have been duly authorized, validly issued
and are fully paid and non-assessable; the Pledged Indebtedness has
been duly authorized, authenticated or issued and delivered by, and
is the legal, valid and binding obligations of, the Pledged
Entities, and no such Pledged Entity is in default thereunder;
(c)
Pledgor has the right and requisite authority to pledge, assign,
transfer, deliver, deposit and set over the Pledged Collateral
pledged by Pledgor to Agent as provided herein;
(d)
None of the Pledged Shares or Pledged Indebtedness has been issued
or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which
such issuance or transfer may be subject;
(e)
All of the Pledged Shares are presently owned by Pledgor, and,
other than as described on Schedule I hereto, are presently
represented by the certificates listed on Part A of
Schedule I hereto. As of the date hereof, there are no
existing options, warrants, calls or commitments of any character
whatsoever relating to the Pledged Shares;
(f)
No consent, approval, authorization or other order or other action
by, and no notice to or filing with, any Governmental Authority or
any other Person is required (i) for the pledge by Pledgor of
the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by Pledgor, or
(ii) for the exercise by Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement, except as may be
required in connection with such disposition by laws affecting the
offering and sale of securities generally;
(g)
The entry of the Interim Order and/or the Final Order, as
applicable, or the pledge, assignment and delivery of the Pledged
Collateral pursuant to this Agreement will create a valid first
priority Lien on and a first priority perfected security interest
in favor of the Agent for the
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benefit of
Agent and Lenders in the Pledged Collateral and the proceeds
thereof, securing the payment of the Secured Obligations, subject
to no other Lien other than Liens permitted under the Credit
Agreement;
(h)
This Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of
Pledgor enforceable against Pledgor in accordance with its terms
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights
generally and the effects of general principles of equity;
(i)
The Pledged Shares constitute 100% of the issued and outstanding
shares of Stock of each Pledged Entity; and
(j)
Except as disclosed on Part B of Schedule I , none of
the Pledged Indebtedness is subordinated in right of payment to
other Indebtedness (except for the Secured Obligations) or subject
to the terms of an indenture.
The
representations and warranties set forth in this
Section 5 shall survive the execution and delivery of
this Agreement.
6.
Covenants . Pledgor covenants and agrees that until
the Termination Date:
(a)
Without the prior written consent of Agent, Pledgor will not sell,
assign, transfer, pledge, or otherwise encumber any of its rights
in or to the Pledged Collateral, or any unpaid dividends, interest
or other distributions or payments with respect to the Pledged
Collateral or grant a Lien in the Pledged Collateral, unless
otherwise expressly permitted by the Credit Agreement;
(b)
Pledgor will, at its expense, promptly execute, acknowledge and
deliver all such instruments and take all such actions as Agent
from time to time may reasonably request in order to ensure to
Agent and Lenders the benefits of the Liens in and to the Pledged
Collateral intended to be created by this Agreement, including the
filing of any necessary Code financing statements, which may be
filed by Agent with or (to the extent permitted by law) without the
signature of Pledgor, and will cooperate with Agent, at
Pledgor’s expense, in obtaining all necessary approvals and
making all necessary filings under federal, state, local or foreign
law in connection with such Liens or any sale or transfer of the
Pledged Collateral;
(c)
Pledgor has and will defend the title to the Pledged Collateral and
the Liens of Agent in the Pledged Collateral against the claim of
any Person and will maintain and preserve such Liens; and
(d)
Pledgor will, upon obtaining ownership of any additional Stock or
promissory notes or instruments of a Pledged Entity or Stock or
promissory notes or instruments otherwise required to be pledged to
Agent pursuant to any of the Loan Documents, which Stock, notes or
instruments are not already Pledged Collateral, promptly (and in
any event within three (3) Business Days) deliver to Agent a
Pledge Amendment, duly executed by Pledgor, in substantially the
form of Schedule II hereto (a “ Pledge
Amendment ”) in respect of any such additional Stock,
notes or instruments, pursuant to which Pledgor shall pledge to
Agent all of
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such
additional Stock, notes and instruments. Pledgor hereby
authorizes Agent to attach each Pledge Amendment to this Agreement
and agrees that all Pledged Shares and Pledged Indebtedness listed
on any Pledge Amendment delivered to Agent shall for all purposes
hereunder be considered Pledged Collateral.
7.
Pledgor’s Rights . As long as no Default or
Event of Default shall have occurred and be continuing and until
written notice shall be given to Pledgor in accordance with
Section 8(a) hereof:
(a)
Pledgor shall have the right, from time to time, to vote and give
consents with respect to the Pledged Collateral, or any part
thereof for all purposes not inconsistent with the provisions of
this Agreement, the Credit Agreement or any other Loan Document;
provided , however , that no vote shall be cast, and
no consent shall be given or action taken, which would have the
effect of impairing the position or interest of Agent in respect of
the Pledged Collateral or which would authorize, effect or consent
to (unless and to the extent expressly permitted by the Credit
Agreement):
(i)
the dissolution or liquidation, in whole or in part, of a Pledged
Entity;
(ii)
the consolidation or merger of a Pledged Entity with any other
Person;
(iii)
the sale, disposition or encumbrance of all or substantially all of
the assets of a Pledged Entity, except for Liens in favor of
Agent;
(iv)
any change in the authorized number of shares, the stated capital
or the authorized share capital of a Pledged Entity or the issuance
of any additional shares of its Stock; or
(v)
the alteration of the voting rights with respect to the Stock of a
Pledged Entity; and
(b)
(i)
Pledgor shall be entitled, from time to time, to collect and
receive for its own use all cash dividends and interest paid in
respect of the Pledged Shares and Pledged Indebtedness to the
extent not in violation of the Credit Agreement other than
any and all: (A) dividends and interest paid or payable other
than in cash in respect of any Pledged Collateral, and instruments
and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable in cash
in respect of any Pledged Shares in connection with a partial or
total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in capital of a Pledged Entity;
and (C) cash paid, payable or otherwise distributed, in
respect of principal of, or in redemption of, or in exchange for,
any Pledged Collateral; provided , however , that
until actually paid all rights to such distributions shall remain
subject to the Lien created by this Agreement; and
(ii)
all dividends and interest (other than such cash dividends and
interest as are permitted to be paid to Pledgor in accordance with
clause (i) above) and all other distributions
in respect of any of the Pledged Shares or Pledged Indebtedness,
whenever paid or made, shall be delivered to Agent to hold as
Pledged Collateral and shall, if received by Pledgor,
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be received in
trust for the benefit of Agent, be segregated from the other
property or funds of Pledgor, and be forthwith delivered to Agent
as Pledged Collateral in the same form as so received (with any
necessary endorsement).
8.
Defaults and Remedies; Proxy .
(a)
Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, and concurrently with
written notice to Pledgor, Agent (personally or through an agent)
is hereby authorized and empowered to transfer and register in its
name or in the name of its nominee the whole or any part of the
Pledged Collateral, to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the
voting and all other rights as a holder with respect thereto, to
collect and receive all cash dividends, interest, principal and
other distributions made thereon, to sell in one or more sales
after ten (10) days’ notice of the time and place of any
public sale or of the time at which a private sale is to take place
(which notice Pledgor agrees is commercially reasonable) the whole
or any part of the Pledged Collateral and to otherwise act with
respect to the Pledged Collateral as though Agent was the outright
owner thereof. Any sale shall be made at a public or private
sale at Agent’s place of business, or at any place to be
named in the notice of sale, either for cash or upon credit or for
future delivery at such price as Agent may deem fair, and Agent may
be the purchaser of the whole or any part of the Pledged Collateral
so sold and hold the same thereafter in its own right free from any
claim of Pledgor or any right of redemption. Each sale shall
be made to the highest bidder, but Agent reserves the right to
reject any and all bids at such sale which, in its discretion, it
shall deem inadequate. Demands of performance, except as
otherwise herein specifically provided for, notices of sa
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