EXHIBIT 10.3


 


AMENDMENT NO. 2 TO CREDIT AGREEMENT


 


This Amendment No. 2
to Credit Agreement, dated as of November 22, 2005 (this “Amendment”),
is entered into by and among Vertis, Inc. (“Vertis”) and Vertis
Digital Services Limited (“Digital Limited” and, collectively with
Vertis, the “Borrowers” and each, individually, a “Borrower”), as
Borrowers, the other Credit Parties signatory hereto, General Electric Capital
Corporation, as a Lender and as Agent for Lenders (“Agent”), and the
other Lenders.


 


RECITALS


 


A.            Borrowers, 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 that
certain Limited Consent and Amendment No. 1 to Credit Agreement, dated as
of October 3, 2005, and as from time to time further amended, restated,
supplemented or otherwise modified, the “Credit Agreement”).


 


B.            Borrowers have requested that Agent and Lenders consent
to certain amendments to the Credit Agreement as set forth herein in connection
with the formation of Vertis Receivables II, LLC (“Vertis Receivables II”),
a new wholly-owned Subsidiary of Vertis, to which Vertis and certain other
Credit Parties will sell or otherwise transfer accounts receivable pursuant to
that certain Receivables Sale and Servicing Agreement, dated as of November 25,
2005 (the “Receivables II Sale Agreement”), by and among the Originators
(as defined therein), Vertis Receivables II, as Buyer, and Vertis, as Servicer,
as well as certain other related transactions.


 


C.            Borrowers, Agent and Lenders are willing to consent to
the amendments set forth herein pursuant to, and subject to, the terms and
conditions set forth in this Amendment.


 


D.            This Amendment shall constitute a Loan Document and these
Recitals shall be construed as part of this Amendment.


 


NOW THEREFORE, in
consideration of the premises and the mutual covenants hereinafter contained,
and of the Loans and other extensions of credit heretofore, now or hereafter
made to, or for the benefit of, Borrowers by Lenders, Borrowers, the other
Credit Parties, Agent and Lenders hereby agree as follows:


 


1.             Definitions. 
Except to the extent otherwise specified herein, capitalized terms used
in this Amendment shall have the same meanings ascribed to them in the Credit
Agreement and Annex A thereto.


 

















 


2.             Amendments to Credit Agreement.


 


2.1.          Section 5.4 of the Credit
Agreement is hereby amended by deleting the word “and” which appears at the end
of clause (g), replacing the period at the end of clause (h) with “; and”,
and inserting the following new clause (i) at the end thereof:


 


“(i)          Holdings
and Borrowers may guarantee obligations of their Subsidiaries as sellers
pursuant to the Receivables Purchase Agreement and related documents, so long
as no such guaranty shall give rise to recourse liability (other than in
connection with standard securitization undertakings) for the payment of any
Receivables Purchase Agreement Assets.”


 


2.2.          Section 5.19 of the Credit
Agreement is hereby amended by deleting the words “in accordance with the
provisions of Section 5.7(c)” and replacing them with the words “in
accordance with the provisions of Section 5.7(d)”.


 


2.3.          The definition of “Permitted
Encumbrances” set forth in Annex A to the Credit Agreement is hereby amended by
replacing the word “Borrowers” in clause (n) of such definition with the words “Receivables
Sellers”.


 


2.4.          The definition of “Receivables
Indenture” set forth in Annex A to the Credit Agreement is hereby amended by
replacing the words “Amended and Restated Indenture and Servicing Agreement,
dated as of December 9, 2002, among Vertis Receivables, LLC, Vertis and
Manufacturers and Traders Trust Company, as Trustee” with the following:


 


“Receivables Funding and
Administration Agreement, dated as of November 25, 2005, by and among the
Receivables Subsidiary, as Borrower, the financial institutions signatory
thereto from time to time as Lenders, and General Electric Capital Corporation,
as a Lender, as Swing Line Lender and as Administrative Agent”.


 


2.5.          The definition of “Receivables
Purchase Agreement” set forth in Annex A to the Credit Agreement is hereby
amended by replacing the words “Amended and Restated Receivables Purchase
Agreement dated as of December 9 2002 among Vertis as Initial Servicer,
Vertis and certain of its Subsidiaries, as Sellers, and Vertis Receivables, LLC
as Buyer” with the following:


 


“Receivables
Sale and Servicing Agreement, dated as of November 25, 2005, by and among
each of the Receivables Sellers party thereto from time to time as Originators,
the Receivables Subsidiary, as Buyer, and Vertis, as Servicer”.


 


2.6.          The definition of “Receivables
Purchase Agreement Assets” set forth in Annex A to the Credit Agreement is
hereby amended by replacing the words “Collateral (as defined in Section 2.1
of the Receivables Indenture)” with the words “Borrower Collateral (as defined
in the Receivables Indenture)”.


 


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2.7.          The definition of “Receivables
Subsidiary” set forth in Annex A to the Credit Agreement is hereby amended by
replacing the words “Vertis Receivables, LLC” with the words “Vertis
Receivables II, LLC”.


 


2.8.          The definition of “Subsidiary” set
forth in Annex A to the Credit Agreement is hereby amended and restated in its
entirety to read as follows:


 


“Subsidiary
means, with respect to any Person, (a) any corporation of which an
aggregate of more than 50% of the outstanding Stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited
liability company in which such Person and/or one or more Subsidiaries of such
Person shall have an interest (whether in the form of voting or participation
in profits or capital contribution) of more than 50% or of which any such
Person is a general partner or may exercise the powers of a general
partner.  Notwithstanding the foregoing
(and except for purposes of Sections 3.7(c), 3.9 and 3.15, and the definitions
of Unrestricted Subsidiary and Receivables Subsidiary contained herein), an
Unrestricted Subsidiary shall be deemed not to be a Subsidiary of Holdings or
any of its other Subsidiaries for purposes of this Agreement.  Unless the context otherwise requires, each
reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower.”


 


2.9.          The last paragraph in the definition
of “Unrestricted Subsidiary” set forth in Annex A to the Credit Agreement is
hereby amended and restated in its entirety to read as follows:


 


“Vertis
may designate by written notice to the Agent any Subsidiary (including any
newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Stock of, or owns any property of, Holdings or
any Subsidiary thereof that is not a Subsidiary of the Subsidiary to be so
designated; provided that each Subsidiary to be so designated and each
of its Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to
which Agent or any Lender has recourse to any of the assets of Vertis or any of
its Restricted Subsidiaries.”


 


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2.10.        The Agent and Lenders hereby consent to
the prior formation of Vertis Receivables II, LLC.


 


3.             Representations and Warranties.  The Borrowers and Credit Parties, jointly and
severally, hereby represent and warrant to Agent and Lenders that:


 


3.1.          The execution, delivery and
performance by the Borrowers and each of the other Credit Parties of this
Amendment have been duly authorized by all necessary corporate action, and this
Amendment constitutes the legal, valid and binding obligation of the Borrowers
and each of the other Credit Parties enforceable against each of them in
accordance with its terms, except as the enforcement hereof may be subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors’ rights generally or to general principles
of equity.


 


3.2.          The execution, delivery and
performance of this Amendment and the consummation of the transactions
contemplated hereby by Borrowers and each Credit Party does not, and will not,
contravene or conflict with any provision of (i) law, (ii) any judgment,
decree or order, or (iii) the certificate or articles of incorporation or
by-laws or other constituent documents of any Borrower or any Credit Party, and
does not, and will not, contravene or conflict with, or cause any Lien to arise
under, any provision of any indenture, agreement, mortgage, lease, instrument
or other document, including, without limitation, the Loan Documents, the February 2003
Senior Subordinated Debt Documents, the 2002 Senior Debt Documents, the 2003
Senior Secured Debt Documents or the Mezzanine Debt Documents, binding upon or
otherwise affecting any Borrower or any Credit Party or any property of any
Borrower or any Credit Party.


 


3.3.          No Default or Event of Default exists
under the Credit Agreement or any other Loan Document or will be triggered by
the execution, delivery and performance of this Amendment or the consummation
of the transactions contemplated hereby and by the Receivables II Sale
Agreement.  In addition, each Borrower and
each other Credit Party hereby represents, warrants and reaffirms that the
Credit Agreement and each of the other Loan Documents remains in full force and
effect.


 


4.             Conditions Precedent to Effectiveness.  The effectiveness of the amendments set forth
in Section 2 hereof are in each instance subject to the
satisfaction of each of the following conditions precedent:


 


4.1.          Amendment.  This Amendment shall have been duly executed
and delivered by the Borrowers, the Credit Parties, Agent and Lenders.


 


4.2.          No Default.  No Default or Event of Default shall have
occurred and be continuing or would result from the effectiveness of this
Amendment or the consummation of any of the transactions contemplated hereby or
by the Receivables II Sale Agreement.


 


4.3.          Opinion.  Agent and Lenders shall have received an
opinion of counsel to Borrowers, Sullivan & Cromwell LLP, with respect
to this Amendment, including, without limitation, as to this Amendment, the
Receivables II Sale Agreement and the transactions contemplated hereby and
thereby not conflicting with any provision of the Loan Documents, the 


 


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February 2003 Senior Subordinated Debt Documents, the 2002 Senior
Debt Documents, the 2003 Senior Secured Debt Documents or the Mezzanine Debt
Documents, all in form and substance acceptable to Agent.


 


4.4.          Pledge of Equity in Vertis
Receivables II.  As required by Section 4.7
of the Credit Agreement, 100% of the capital Stock of Vertis Receivables II
shall have been pledged by Vertis pursuant to an amendment or supplement, in
form and substance satisfactory to Agent, to the Pledge Agreement, dated as of December 22,
2004, between Vertis, as Pledgor, and General Electric Capital Corporation, as
Agent, and in connection therewith, Vertis shall have delivered to Agent the
original stock certificate(s) evidencing 100% of the capital Stock of Vertis
Receivables II, together with a stock power(s) duly endorsed in blank by
Vertis.


 


4.5.          Unrestricted Subsidiary Designation.  The Credit Parties shall have delivered to
the Agent evidence, in form and substance satisfactory to it, that Vertis
Receivables II has been designated, and constitutes, an Unrestricted
Subsidiary.


 


4.6.          Miscellaneous.  Agent and Lenders shall have received such
other agreements, instruments and documents as Agent or Lenders may reasonably
request.


 


5.             Reference to and Effect Upon the Credit Agreement and
other Loan Documents.  


 


5.1.          Full Force and Effect.  Except as specifically provided herein, the
Credit Agreement, the Notes and each other Loan Document shall remain in full
force and effect and each is hereby ratified and confirmed by all Credit
Parties.


 


5.2.          No Waiver.  The execution, delivery and effect of this
Amendment shall be limited precisely as written and shall not be deemed to (i) be
a consent to any waiver of any term or condition, or to any amendment or
modification of any term or condition (except as specifically provided herein)
of the Credit Agreement or any other Loan Document or (ii) prejudice any
right, power or remedy which the Agent or any Lender now has or may have in the
future under or in connection with the Credit Agreement, the Notes or any other
Loan Document.


 


5.3.          Certain Terms.  Each reference in the Credit Agreement to “this
Agreement”, “hereunder”, “hereof”, “herein” or any other word or words of
similar import shall mean and be a reference to the Credit Agreement as amended
hereby, and each reference in any other Loan Document to the Credit Agreement
or any word or words of similar import shall be and mean a reference to the
Credit Agreement as amended hereby.


 


6.             Counterparts. 
This Amendment may be executed in any number of counterparts, each of
which when so executed shall be deemed an original but all such counterparts
shall constitute one and the same instrument. 
Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be as effective as delivery of a manually
executed counterpart signature page to this Amendment.


 


7.             Costs and Expenses.  As provided in the Credit Agreement, Borrowers
shall pay the reasonable fees, costs and expenses incurred by Agent in
connection with the preparation, execution and delivery of this Amendment
(including, without limitation, attorneys’ fees).


 


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8.             GOVERNING LAW. 
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.


 


9.             Headings.  Section headings
in this Amendment are included herein for convenience of reference only and
shall not constitute a part of this Amendment for any other purpose.


 


[Signature Pages Follow]


 


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IN WITNESS WHEREOF, this
Amendment has been duly executed as of the date first written above.


 


 


	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS
  DIGITAL SERVICES LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
					



 

















 


	
   

  	
  GENERAL
  ELECTRIC CAPITAL 

  CORPORATION

  
	
   

  	
  as Agent, an L/C
  Issuer and Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Sandra Claghorn

  
	
   

  	
  Duly Authorized
  Signatory

  



 

















 


	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Richard
  Levenson

  	
   

  
	
   

  	
  Name:

  	
  Richard Levenson

  
	
   

  	
  Title:

  	
  Senior Vice President

  
					



 

















 


The following Persons are
signatory to this Amendment in their capacity as Credit Parties and not as
Borrowers:


 


	
   

  	
  VERTIS
  HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTERON
  GROUP LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WEBCRAFT,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PRINTCO,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS
  MAILING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
						



 

















 


	
   

  	
  WEBCRAFT
  CHEMICALS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS
  PRS LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  ADMAGIC GROUP LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADMAGIC
  LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E.
  Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FUSION
  PREMEDIA GROUP LTD

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Donald E. Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E. Roland

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer