**EXHIBIT 10.2**

 

LIMITED CONSENT AND AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

This Limited Consent andAmendment No. 1 to Credit Agreement, dated as of October 3, 2005(this “Consent and Amendment”), is entered into by and among Vertis, Inc.(“Vertis”), Vertis Limited (“Vertis Limited”) and Vertis DigitalServices Limited (“Digital Limited” and, collectively with Vertis andVertis Limited, the “Borrowers” and each, individually, a “Borrower”),as Borrowers, the other Credit Parties signatory hereto, General ElectricCapital Corporation, as a Lender and as Agent for Lenders (“Agent”), andthe 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 (as now or hereafter amended, restated or otherwise modified, the “CreditAgreement”).

 

B.            Borrowers and the other Credit Partieshave requested that Agent and Lenders consent to (i) the sale of all ofthe issued and outstanding shares of Stock of Vertis Limited pursuant to anAgreement to be entered into by and between Webcraft, LLC, as seller, andOvergoal Limited, as buyer (“Buyer”), substantially in the form of Exhibit Ato this Consent and Amendment (the “Stock Purchase Agreement”), and (ii) certainrelated actions as further described in Section 2 herein.  Upon consummation of the transactionscontemplated by the Stock Purchase Agreement, Vertis Limited and each of itsSubsidiaries listed on Schedule 1 attached hereto (each, a “DepartingEntity”, and collectively, the “Departing Entities”) shall cease tobe a Credit Party under the Credit Agreement and the other Loan Documents.

 

C.            This Consent and Amendment shallconstitute a Loan Document and these Recitals shall be construed as part ofthis Consent and 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 specifiedherein, capitalized terms used in this Consent and Amendment shall have thesame meanings ascribed to them in the Credit Agreement and Annex A thereto.

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# 2.             Consents.

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## 2.1.          Notwithstandingany provision of the Credit Agreement or any other Loan Document to thecontrary, Agent and Lenders hereby consent to the sale of all of the issued andoutstanding shares of Stock of Vertis Limited to Buyer pursuant to the StockPurchase Agreement; provided, that, any changes to the StockPurchase Agreement from the version 

 

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thereof attached to this Consent and Amendment as Exhibit Ashall be reasonably satisfactory to Agent.

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## 2.2.          Notwithstandingany provision of the Credit Agreement or any other Loan Document to thecontrary, Agent and Lenders hereby consent to the release of Agent’s Liens onall shares of Stock of each Departing Entity upon the closing of thetransactions contemplated by the Stock Purchase Agreement to the extent suchshares of Stock have been pledged to Agent pursuant to the Credit Agreement orany other Loan Document.

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## 2.3.          Notwithstandingany provision of the Credit Agreement or any other Loan Document to thecontrary, Agent and Lenders hereby consent to the release of Agent’s Liens onall properties and assets of each Departing Entity upon the closing of thetransactions contemplated by the Stock Purchase Agreement to the extent suchproperties and assets have been pledged to Agent pursuant to the CreditAgreement or any other Loan Document.

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## 2.4.          Asa result of the actions described above in Subsections 2.1, 2.2 and 2.3,upon the closing of the transactions contemplated by the Stock PurchaseAgreement, Vertis Limited shall cease to be either a Borrower or a Credit Partyunder the Credit Agreement and the other Loan Documents.  Notwithstanding any provision of the CreditAgreement or any other Loan Document to the contrary, Agent and Lenders herebyconsent to such termination at, and only at, such time, of Vertis Limited’sstatus as a Borrower and a Credit Party under the Credit Agreement and theother Loan Documents.

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## 2.5.          Asa result of the actions described above in Subsections 2.1, 2.2 and 2.3,upon the closing of the transactions contemplated by the Stock PurchaseAgreement, each Departing Entity shall cease to be a Credit Party under theCredit Agreement and the other Loan Documents. Notwithstanding any provision of the Credit Agreement or any other LoanDocument to the contrary, Agent and Lenders hereby consent to the suchtermination at, and only at, such time, of each Departing Entity’s status as aCredit Party under the Credit Agreement and the other Loan Documents.

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## 2.6.          Inconnection with the closing of the transactions contemplated by the StockPurchase Agreement, Vertis and the other Credit Parties (other than theDeparting Entities) intend to forgive and forever discharge intercompany loansand obligations owing by the Departing Entities to Vertis and such other CreditParties in an aggregate principal amount of up to £40,000,000 (the “DepartingEntities Intercompany Debt Discharge”) and to assign to the Buyer anintercompany loan in the principal amount of £7,000,000 owing to Vertis byVertis Limited (the “Assigned Vertis Limited Note”).  Notwithstanding any provision of the CreditAgreement or any other Loan Document to the contrary, Agent and Lenders herebyconsent to the Departing Entities Intercompany Debt Discharge as a part of, andat the time of the closing of, the transactions contemplated by the StockPurchase Agreement and, upon the closing of the transactions contemplated bythe Stock Purchase Agreement, Agent and Lenders hereby consent to the releaseof any Liens which Agent may have on any intercompany notes issued by theDeparting Entities to Vertis and the other Credit Parties (other than theDeparting Entities) in respect of the Departing Entities Intercompany DebtDischarge, to the assignment by Vertis to the Buyer of the Assigned VertisLimited Note and to the release of any Liens which Agent may

 

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have on any intercompany notes issued by Vertis Limited in respect ofthe Assigned Vertis Limited Note.

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# 3.             Further Assurances.

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## 3.1.          EachCredit Party shall, from time to time, execute and deliver such agreements,instruments, certificates, reports and other documents and take all suchactions as Agent or Lenders at any time may reasonably request to evidence,further document, effectuate or otherwise implement the actions described abovein Section 2, under the Credit Agreement and/or the other LoanDocuments.

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## 3.2.          Atthe time of the closing of the transactions contemplated by the Stock PurchaseAgreement and from time to time thereafter, Agent and Lenders shall execute anddeliver such lien release instruments and documents and take such relatedactions as Vertis may reasonably request to evidence, further document,effectuate or otherwise implement the release of Agent’s Liens as describedabove in Section 2, under the Credit Agreement and the other LoanDocuments.

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# 4.             Representationsand Warranties.  The Borrowers andCredit Parties, jointly and severally, hereby represent and warrant to Agentand Lenders that:

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## 4.1.          Asidefrom (v) the agreements to provide indemnification/warranties which areset forth in the Stock Purchase Agreement, under which the maximum aggregateexposure is £300,000, (w) the agreement set forth in clause 21.2 of the StockPurchase Agreement by Webcraft, LLC pursuant to which the Credit Parties (otherthan the Departing Entities) have agreed to be responsible for any liabilitiesrelating to an employee, Mr. Adriaan Roosen, (x) a guaranty provided toReader’s Digest in relation to potential employee liabilities regarding theSwindon workforce, under which the maximum aggregate exposure is £250,000, (y)a guaranty in favor of Capital One, a customer of the Departing Entities, underwhich the aggregate maximum exposure is £2,000,000, and (z) other claims,obligations, liabilities and exposures in an aggregate amount not to exceed£5,000,000, (i) there are no post-closing obligations and liabilities,including, without limitation, contingent obligations and liabilities, underthe Stock Purchase Agreement of Vertis and the other Credit Parties (other thanthe Departing Entities) to the Buyer or any other Person, (ii) from andafter the closing of the transactions contemplated by the Stock PurchaseAgreement, Vertis and the other Credit Parties (other than the DepartingEntities) shall not have any obligations, direct or indirect, contingent orotherwise, for the benefit of any of the Departing Entities and (iii) thereis no existing guaranty, credit support, indemnity or other similararrangement, by Vertis or Digital Limited or any other Credit Party, or by anyof their direct or indirect Subsidiaries, aside from the Departing Entities, infavor of any Departing Entity, the Buyer or any employee, customer or creditorrelating to any Departing Entity or the Buyer.

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## 4.2.          Theexecution, delivery and performance by the Borrowers and each of the otherCredit Parties of this Consent and Amendment have been duly authorized by allnecessary corporate action, and this Consent and Amendment constitutes thelegal, valid and binding obligation of the Borrowers and each of the otherCredit Parties enforceable against each of them in accordance with its terms,except as the enforcement hereof may be subject to the effect of any 

 

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applicable bankruptcy, insolvency, reorganization, moratorium orsimilar law affecting creditors’ rights generally or to general principles ofequity.

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## 4.3.          Theexecution, delivery and performance of this Consent and Amendment and theconsummation of the transactions contemplated hereby by Borrowers and eachCredit Party does not, and will not, contravene or conflict with any provisionof (i) law, (ii) any judgment, decree or order, or (iii) thecertificate or articles of incorporation or by-laws or other constituentdocuments 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 ofany indenture, agreement, mortgage, lease, instrument or other document,including, without limitation, the February 2003 Senior Subordinated DebtDocuments, the 2002 Senior Debt Documents, the 2003 Senior Secured DebtDocuments or the Mezzanine Debt Documents, binding upon or otherwise affectingany Borrower or any Credit Party or any property of any Borrower or any CreditParty.

##  

## 4.4.          NoDefault or Event of Default exists under the Credit Agreement or any other LoanDocument or will exist after or be triggered by the execution, delivery andperformance of this Consent and Amendment or the consummation of thetransactions contemplated hereby and by the Stock Purchase Agreement.  In addition, each Borrower and each otherCredit Party hereby represents, warrants and reaffirms that the CreditAgreement and each of the other Loan Documents remains in full force andeffect.

##  

# 5.             Covenants.  Aside from (v) the agreements to provideindemnification/warranties which are set forth in the Stock Purchase Agreement,under which the maximum aggregate exposure is £300,000, (w) the agreement setforth in clause 21.2 of the Stock Purchase Agreement by Webcraft, LLC pursuantto which the Credit Parties (other than the Departing Entities) have agreed tobe responsible for any liabilities relating to an employee, Mr. AdriaanRoosen, (x) a guaranty provided to Reader’s Digest in relation to potentialemployee liabilities regarding the Swindon workforce, under which the maximumaggregate exposure is £250,000, (y) a guaranty in favor of Capital One, acustomer of the Departing Entities, under which the aggregate maximum exposureis £2,000,000, and (z) other claims, obligations, liabilities and exposures inan aggregate amount not to exceed £5,000,000, each Borrower and each otherCredit Party executing this Consent and Amendment jointly and severally agreesas to all Credit Parties that from and after the date hereof, the CreditParties shall not and shall not cause or permit their Subsidiaries directly orindirectly to create, incur, assume or otherwise become or remain directly orindirectly liable with respect to any guaranty, credit support, indemnity orother similar arrangement, by Vertis or Digital Limited, or by any of theirdirect or indirect Subsidiaries (aside from the Departing Entities) in favor ofany Departing Entity, the Buyer or any employee, customer or creditor relatingto any Departing Entity or the Buyer.

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# 6.             ConditionsPrecedent to Effectiveness.  Theeffectiveness of the consents set forth in Section 2 hereof are ineach instance subject to the satisfaction of each of the following conditionsprecedent:

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## 6.1.          Consentand Amendment.  This Consent andAmendment shall have been duly executed and delivered by the Borrowers, theCredit Parties, Agent and Lenders.

 

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## 6.2.          NoDefault.  No Default or Event ofDefault shall have occurred and be continuing or would result from theeffectiveness of this Consent and Amendment or the consummation of any of thetransactions contemplated hereby or by the Stock Purchase Agreement.

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## 6.3.          Opinion.  Agent and Lenders shall have received anopinion of counsel to Borrowers, Sullivan & Cromwell LLP, with respectto this Consent and Amendment, including, without limitation, as to thisConsent and Amendment, the Stock Purchase Agreement and the transactionscontemplated hereby and thereby not conflicting with any provision of the February 2003Senior Subordinated Debt Documents, the 2002 Senior Debt Documents, the 2003Senior Secured Debt Documents or the Mezzanine Debt Documents, all in form andsubstance acceptable to Agent.

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

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# 7.             Referenceto and Effect Upon the Credit Agreement and other Loan Documents.  

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## 7.1.          FullForce and Effect.  Except asspecifically provided herein, the Credit Agreement, the Notes and each otherLoan Document shall remain in full force and effect and each is hereby ratifiedand confirmed by all Credit Parties, other than upon consummation of thetransactions contemplated by the Stock Purchase Agreement, the DepartingEntities.

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## 7.2.          NoWaiver.  The execution, delivery andeffect of this Consent and Amendment shall be limited precisely as written andshall not be deemed to (i) be a consent to any waiver of any term orcondition, or to any amendment or modification of any term or condition (exceptas specifically provided herein) of the Credit Agreement or any other LoanDocument or (ii) prejudice any right, power or remedy which the Agent orany Lender now has or may have in the future under or in connection with theCredit Agreement, the Notes or any other Loan Document.

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## 7.3.          CertainTerms.  Each reference in the CreditAgreement to “this Agreement”, “hereunder”, “hereof”, “herein” or any otherword or words of similar import shall mean and be a reference to the CreditAgreement as amended hereby, and each reference in any other Loan Document tothe Credit Agreement or any word or words of similar import shall be and mean areference to the Credit Agreement as amended hereby.

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# 8.             Counterparts.  This Consent and Amendment may be executed inany number of counterparts, each of which when so executed shall be deemed anoriginal but all such counterparts shall constitute one and the sameinstrument.  Delivery of an executedcounterpart of a signature page to this Consent and Amendment bytelecopier shall be as effective as delivery of a manually executed counterpartsignature page to this Consent and Amendment.

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# 9.             Costsand Expenses.  As provided in theCredit Agreement, Borrowers shall pay the fees, costs and expenses incurred byAgent in connection with the preparation, execution and delivery of thisConsent and Amendment (including, without limitation, attorneys’ fees).

 

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# 10.           GOVERNINGLAW.  THIS CONSENT AND AMENDMENTSHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNALLAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPALS.

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# 11.           Headings.  Section headings in this Consent andAmendment are included herein for convenience of reference only and shall notconstitute a part of this Consent and Amendment for any other purpose.

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[Signature Pages Follow]

 

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IN WITNESS WHEREOF, thisConsent and Amendment has been duly executed as of the date first writtenabove.

 
|       | BORROWERS:                           |
|------------|--------------------------------------|
|       |                                 |   |
| ** ** | **VERTIS,  INC.**                    |
|       |                                 |   |
|       |                                 |   |
|       | By:                                  | /S/ Stephen E.  Tremblay |   |
|       | Name:                                | Stephen E. Tremblay |
|       | Title:                               | Chief Financial Officer |
|       |                                 |   |
|       |                                 |   |
| ** ** | **VERTIS  LIMITED**                  |
|       |                                 |   |
|       |                                 |   |
|       | By:                                  | /S/ Dean D.  Durbin |   |
|       | Name:                                | Dean D. Durbin |
|       | Title:                               | Director |
|       |                                 |   |
|       |                                 |   |
| ** ** | **VERTIS  DIGITAL SERVICES LIMITED** |
|       |                                 |   |
|       |                                 |   |
|       | By:                                  | /S/ Dean D.  Durbin |   |
|       | Name:                                | Dean D. Durbin |
|       | Title:                               | Director |
|            |                                      |  |  |  |  |  |  |

 

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| ** ** | **GENERAL  ELECTRIC CAPITAL   CORPORATION** |
|------------|---------------------------------------------|
|       | as Agent, an L/C  Issuer and Lender         |
|       |                                        |
|       |                                        |
|       | By:                                         | /S/ Daniel D.  McCready |   |
|       |                                        | 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/ Stephen E.  Tremblay |   |
|       | Name:                        | Stephen E. Tremblay |
|       | Title:                       | Chief Financial Officer |
|       |                         |   |
|       |                         |   |
| ** ** | **ENTERON  GROUP LLC**       |
|       |                         |   |
|       |                         |   |
|       | By:                          | /S/ Stephen E.  Tremblay |   |
|       | Name:                        | Stephen E. Tremblay |
|       | Title:                       | Chief Financial Officer |
|       |                         |   |
|       |                         |   |
| ** ** | **WEBCRAFT,  LLC**           |
|       |                         |   |
|       |                         |   |
|       | By:                          | /S/ Stephen E.  Tremblay |   |
|       | Name:                        | Stephen E. Tremblay |
|       | Title:                       | Chief Financial Officer |
|       |                         |   |
|       |                         |   |
| ** ** | **PRINTCO,  INC.**           |
|       |                         |   |
|       |                         |   |
|       | By:                          | /S/ Stephen E.  Tremblay |   |
|       | Name:                        | Stephen E. Tremblay |
|       | Title:                       | Chief Financial Officer |
|       |                         |   |
|       |                         |   |
| ** ** | **WEBCRAFT  CHEMICALS, LLC** |
|       |                         |   |
|       |                         |   |
|       | By:                          | /S/ Stephen E.  Tremblay |   |
|       | Name:                        | Stephen E. Tremblay |
|       | Title:                       | Chief Financial Officer |
|            |                              |  |  |  |  |  |  |

 

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| ** ** | **VERTIS  PRS LIMITED**                                   |
|------------|-----------------------------------------------------------|
|       |                                                      |
|       |                                                      |
|       | By:                                                       | /S/ Dean D.  Durbin |   |
|       | Name:                                                     | Dean D. Durbin |
|       | Title:                                                    | Director |
|       |                                                      |   |
|       |                                                      |   |
| ** ** | **THE  ADMAGIC GROUP LIMITED**                            |
|       |                                                      |   |
|       |                                                      |   |
|       | By:                                                       | /S/ Dean D.  Durbin |   |
|       | Name:                                                     | Dean D. Durbin |
|       | Title:                                                    | Director |
|       |                                                      |   |
|       |                                                      |   |
| ** ** | **VERTIS  DIRECT MARKETING SERVICES (CROYDON) LIMITED**   |
|       |                                                      |   |
|       |                                                      |   |
|       | By:                                                       | /S/ Dean D.  Durbin |   |
|       | Name:                                                     | Dean D. Durbin |
|       | Title:                                                    | Director |
|       |                                                      |   |
|       |                                                      |   |
| ** ** | **VERTIS  DIRECT MARKETING SERVICES (LEICESTER) LIMITED** |
|       |                                                      |   |
|       |                                                      |   |
|       | By:                                                       | /S/ Dean D.  Durbin |   |
|       | Name:                                                     | Dean D. Durbin |
|       | Title:                                                    | Director |
|       |                                                      |   |
|       |                                                      |   |
| ** ** | **VERTIS  FULFILMENT SERVICES LIMITED**                   |
|       |                                                      |   |
|       |                                                      |   |
|       | By:                                                       | /S/ Dean D.  Durbin |   |
|       | Name:                                                     | Dean D. Durbin |
|       | Title:                                                    | Director |
|       |                                                      |   |
|       |                                                      |   |
| ** ** | **ADMAGIC  LIMITED**                                      |
|       |                                                      |   |
|       |                                                      |   |
|       | By:                                                       | /S/ Dean D.  Durbin |   |
|       | Name:                                                     | Dean D. Durbin |
|       | Title:                                                    | Director |
|            |                                                           |  |  |  |

 

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| ** ** | **VERTIS  DIRECT RESPONSE LTD** |
|------------|---------------------------------|
|       |                            |   |
|       |                            |   |
|       | By:                             | /S/ Dean D.  Durbin |   |
|       | Name:                           | Dean D. Durbin |
|       | Title:                          | Director |
|       |                            |   |
|       |                            |   |
| ** ** | **FUSION  PREMEDIA GROUP LTD**  |
|       |                            |   |
|       |                            |   |
|       | By:                             | /S/ Dean D.  Durbin |   |
|       | Name:                           | Dean D. Durbin |
|       | Title:                          | Director |
|       |                            |   |
| ** ** | **VERTIS  HARVEY HUNTER LTD**   |
| ** ** | ** **                      |
|       |                            |   |
|       | By:                             | /S/ Dean D.  Durbin |   |
|       | Name:                           | Dean D. Durbin |
|       | Title:                          | Director |
|            |                                 |  |  |  |  |

 

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EXHIBIT A

to

CONSENT AND AMENDMENT

 

 

**Stock Purchase Agreement**

 

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SCHEDULE 1

to

CONSENT AND AMENDMENT

 

 

**Departing Entities**

 

Vertis Limited

Vertis Direct MarketingServices (Croydon) Limited

Vertis Direct MarketingServices (Leicester) Limited

Vertis FulfilmentServices Limited

Vertis Direct ResponseLtd

Vertis Harvey Hunter Ltd

 

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