Exhibit 10.4
PLEDGE
AGREEMENT
This PLEDGE AGREEMENT, dated as of
July 17, 2008 (together with all amendments, if any, from time
to time hereto, this “ Agreement ”) between
VERTIS, 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 Pledgor, as
Borrower, the 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) Except as disclosed on
Part A of Schedule 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 spe
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