**EXHIBIT 10.3**

 

AMENDMENT NO. 2 TO CREDIT AGREEMENT

 

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

 

RECITALS

 

A.            Borrowers, the other Credit Parties, Agent and Lendersare parties to that certain Credit Agreement, dated as of December 22,2004, including all annexes, exhibits and schedules thereto (as amended by thatcertain Limited Consent and Amendment No. 1 to Credit Agreement, dated asof 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 consentto certain amendments to the Credit Agreement as set forth herein in connectionwith the formation of Vertis Receivables II, LLC (“Vertis Receivables II”),a new wholly-owned Subsidiary of Vertis, to which Vertis and certain otherCredit Parties will sell or otherwise transfer accounts receivable pursuant tothat 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 tothe amendments set forth herein pursuant to, and subject to, the terms andconditions set forth in this Amendment.

 

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

 

NOW THEREFORE, inconsideration of the premises and the mutual covenants hereinafter contained,and of the Loans and other extensions of credit heretofore, now or hereaftermade to, or for the benefit of, Borrowers by Lenders, Borrowers, the otherCredit Parties, Agent and Lenders hereby agree as follows:

 

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

 

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# 2.             Amendments to Credit Agreement.

 

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

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“(i)          Holdingsand Borrowers may guarantee obligations of their Subsidiaries as sellerspursuant to the Receivables Purchase Agreement and related documents, so longas no such guaranty shall give rise to recourse liability (other than inconnection with standard securitization undertakings) for the payment of anyReceivables Purchase Agreement Assets.”

 

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

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## 2.3.          The definition of “PermittedEncumbrances” set forth in Annex A to the Credit Agreement is hereby amended byreplacing the word “Borrowers” in clause (n) of such definition with the words “ReceivablesSellers”.

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

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“Receivables Funding andAdministration Agreement, dated as of November 25, 2005, by and among theReceivables Subsidiary, as Borrower, the financial institutions signatorythereto 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 “ReceivablesPurchase Agreement” set forth in Annex A to the Credit Agreement is herebyamended by replacing the words “Amended and Restated Receivables PurchaseAgreement dated as of December 9 2002 among Vertis as Initial Servicer,Vertis and certain of its Subsidiaries, as Sellers, and Vertis Receivables, LLCas Buyer” with the following:

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“ReceivablesSale and Servicing Agreement, dated as of November 25, 2005, by and amongeach 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 “ReceivablesPurchase Agreement Assets” set forth in Annex A to the Credit Agreement ishereby amended by replacing the words “Collateral (as defined in Section 2.1of the Receivables Indenture)” with the words “Borrower Collateral (as definedin the Receivables Indenture)”.

 

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## 2.7.          The definition of “ReceivablesSubsidiary” set forth in Annex A to the Credit Agreement is hereby amended byreplacing the words “Vertis Receivables, LLC” with the words “VertisReceivables II, LLC”.

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## 2.8.          The definition of “Subsidiary” setforth in Annex A to the Credit Agreement is hereby amended and restated in itsentirety to read as follows:

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“Subsidiarymeans, with respect to any Person, (a) any corporation of which anaggregate of more than 50% of the outstanding Stock having ordinary votingpower 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 ofsuch corporation shall have or might have voting power by reason of thehappening of any contingency) is at the time, directly or indirectly, ownedlegally or beneficially by such Person or one or more Subsidiaries of suchPerson, or with respect to which any such Person has the right to vote ordesignate the vote of 50% or more of such Stock whether by proxy, agreement,operation of law or otherwise, and (b) any partnership or limitedliability company in which such Person and/or one or more Subsidiaries of suchPerson shall have an interest (whether in the form of voting or participationin profits or capital contribution) of more than 50% or of which any suchPerson is a general partner or may exercise the powers of a generalpartner.  Notwithstanding the foregoing(and except for purposes of Sections 3.7(c), 3.9 and 3.15, and the definitionsof Unrestricted Subsidiary and Receivables Subsidiary contained herein), anUnrestricted Subsidiary shall be deemed not to be a Subsidiary of Holdings orany of its other Subsidiaries for purposes of this Agreement.  Unless the context otherwise requires, eachreference to a Subsidiary shall be a reference to a Subsidiary of a Borrower.”

 

## 2.9.          The last paragraph in the definitionof “Unrestricted Subsidiary” set forth in Annex A to the Credit Agreement ishereby amended and restated in its entirety to read as follows:

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

 

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

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

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## 3.1.          The execution, delivery andperformance by the Borrowers and each of the other Credit Parties of thisAmendment have been duly authorized by all necessary corporate action, and thisAmendment constitutes the legal, valid and binding obligation of the Borrowersand each of the other Credit Parties enforceable against each of them inaccordance with its terms, except as the enforcement hereof may be subject tothe effect of any applicable bankruptcy, insolvency, reorganization, moratoriumor similar law affecting creditors’ rights generally or to general principlesof equity.

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## 3.2.          The execution, delivery andperformance of this Amendment and the consummation of the transactionscontemplated 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 orby-laws or other constituent documents of any Borrower or any Credit Party, anddoes not, and will not, contravene or conflict with, or cause any Lien to ariseunder, any provision of any indenture, agreement, mortgage, lease, instrumentor other document, including, without limitation, the Loan Documents, the February 2003Senior Subordinated Debt Documents, the 2002 Senior Debt Documents, the 2003Senior Secured Debt Documents or the Mezzanine Debt Documents, binding upon orotherwise affecting any Borrower or any Credit Party or any property of anyBorrower or any Credit Party.

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## 3.3.          No Default or Event of Default existsunder the Credit Agreement or any other Loan Document or will be triggered bythe execution, delivery and performance of this Amendment or the consummationof the transactions contemplated hereby and by the Receivables II SaleAgreement.  In addition, each Borrower andeach other Credit Party hereby represents, warrants and reaffirms that theCredit Agreement and each of the other Loan Documents remains in full force andeffect.

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

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

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## 4.2.          No Default.  No Default or Event of Default shall haveoccurred and be continuing or would result from the effectiveness of thisAmendment or the consummation of any of the transactions contemplated hereby orby the Receivables II Sale Agreement.

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## 4.3.          Opinion.  Agent and Lenders shall have received anopinion of counsel to Borrowers, Sullivan & Cromwell LLP, with respectto this Amendment, including, without limitation, as to this Amendment, theReceivables II Sale Agreement and the transactions contemplated hereby andthereby not conflicting with any provision of the Loan Documents, the 

 

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

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

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

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## 4.6.          Miscellaneous.  Agent and Lenders shall have received suchother agreements, instruments and documents as Agent or Lenders may reasonablyrequest.

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

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## 5.1.          Full Force and Effect.  Except as specifically provided herein, theCredit Agreement, the Notes and each other Loan Document shall remain in fullforce and effect and each is hereby ratified and confirmed by all CreditParties.

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

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

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

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# 7.             Costs and Expenses.  As provided in the Credit Agreement, Borrowersshall pay the reasonable fees, costs and expenses incurred by Agent inconnection 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 INACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TOCONFLICTS OF LAW PRINCIPLES.

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# 9.             Headings.  Section headingsin this Amendment are included herein for convenience of reference only andshall not constitute a part of this Amendment for any other purpose.

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[Signature Pages Follow]

 

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IN WITNESS WHEREOF, thisAmendment 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 |
|            |                                      |  |  |  |

 

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| ** ** | **GENERAL  ELECTRIC CAPITAL   CORPORATION** |
|------------|---------------------------------------------|
|       | as Agent, an L/C  Issuer and Lender         |
|       |                                        |
|       |                                        |
|       | By:                                         | Sandra Claghorn |
|       | Duly Authorized  Signatory                  |

 

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| ** ** | **BANK  OF AMERICA, N.A.** |
|------------|----------------------------|
|       | as a Lender                |
|       |                       |   |
|       |                       |   |
|       | By:                        | /S/ Richard  Levenson |   |
|       | Name:                      | Richard Levenson |
|       | Title:                     | Senior Vice President |
|            |                            |  |  |  |

 

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The following Persons aresignatory to this Amendment in their capacity as Credit Parties and not asBorrowers:

 
| ** ** | **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 |
|            |                            |  |  |  |  |

 

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| ** ** | **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 |
|            |                                |  |  |  |

 

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