Exhibit 10.7
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 WEBCRAFT CHEMICALS, LLC, a
Delaware limited liability company (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 in connection with collection actions hereunder or
otherwise (collectively, the “ Secured Obligations
”).
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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 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 benefit
of Agent and Lenders in the Pledged Collateral and the proceeds
thereof, securing the
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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 such
additional Stock, notes and instruments. Pledgor hereby
authorizes Agent to attach each
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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, be received
in trust for the benefit of Agent, be segregated from the other
property or funds of
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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 sp
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