**EXHIBIT 10.4**

 

LIMITED CONSENT ANDAMENDMENT NO. 3 TO CREDIT AGREEMENT

 

This Limited Consent andAmendment No. 3 to Credit Agreement, dated as of December 12, 2005 (this “Consentand Amendment”), is entered into by and among Vertis, Inc. (“Vertis”)and Vertis Digital Services Limited (“Digital Limited” and, togetherwith Vertis, 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 ofDecember 22, 2004, including all annexes, exhibits and schedule thereto (asamended by that certain Limited Consent and Amendment No. 1 to CreditAgreement, dated as of October 3, 2005, that certain Amendment No. 2 to CreditAgreement, dated as of November 22, 2005, and as from time to time furtheramended, restated, supplemented or otherwise modified, the “Credit Agreement”).

 

B.    Borrowers and the other Credit Partieshave requested that Agent and Lenders consent to (i) the sale of all of theissued and outstanding shares of Stock of Fusion Premedia Group Limited andPismo Limited pursuant to an Agreement to be entered into by and betweenDigital Limited, as seller, and Adplates Group Limited, as buyer (“Buyer”),substantially in the form of Exhibit A to this Consent and Amendment(the “Stock Purchase Agreement”), and (ii) certain related actions asfurther described in Section 2 herein. Upon consummation of the transactions contemplated by the Stock PurchaseAgreement, (i) Fusion Premedia Group Limited and each of its Subsidiarieslisted on Schedule 1 attached hereto (each, a “Departing Entity”,and collectively, the “Departing Entities”) shall cease to be a CreditParty under the Credit Agreement and the other Loan Documents and (ii) DigitalLimited shall cease to be a Borrower under the Credit Agreement but will remaina Credit Party under, and for all purposes of, the Credit Agreement and all ofthe 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, in consideration of the premises andthe mutual covenants hereinafter contained, and of the Loans and otherextensions of credit heretofore, now or hereafter made to, or for the benefitof, Borrowers by Lenders, Borrowers, the other Credit Parties, Agent andLenders hereby agree as follows:

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# 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 Fusion Premedia Group Limited and Pismo Limitedto Buyer pursuant to the Stock Purchase Agreement; provided, that,any changes to the Stock Purchase Agreement from the version thereof attachedto this Consent and Amendment as Exhibit A shall be reasonablysatisfactory 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.          As a resultof 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 such terminationat, and only at, such time, of each Departing Entity’s status as a Credit Partyunder the Credit Agreement and the other Loan Documents.

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## 2.5.          Uponclosing of the sale of the Stock of the Departing Entities as contemplated bythe Stock Purchase Agreement, Digital Limited shall cease to be a Borrowerunder the Credit Agreement but will remain a Credit Party under, and for allpurposes of, the Credit Agreement and all of the other Loan Documents.  Notwithstanding any provision of the CreditAgreement or any other Loan Document to the contrary, Agent and Lenders herebyconsent to Digital Limited ceasing to be a Borrower under the Credit Agreementupon, and only upon, closing of such sale; provided, that,Digital Limited shall remain a Credit Party under, and for all purposes of, theCredit Agreement and all of the other Loan Documents.  From and after the closing of the sale of theStock of the Departing Entities as contemplated by the Stock PurchaseAgreement, Digital Limited shall not (i) own the capital Stock of any Person,(ii) conduct any business, (iii) hold any material assets other than debts duefrom Vertis, Inc. and proceeds from the transactions contemplated by the StockPurchase Agreement, or (iv) have any material liabilities other than certainintercompany receivables due to Vertis or Vertis Holdings, Inc. (“Holdings”)or pursuant to the Stock Purchase Agreement.

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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/or capitalize intercompany loans andobligations owing by the Departing

 

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## Entitiesto Vertis and such other Credit Parties in an aggregate principal amount of upto £11,600,000 (the “Departing Entities Intercompany Debt Discharge”)and to assign to certain parties certain intercompany loans as set forth in ExhibitB hereto and set off original and assigned receivables against payables asset forth in Exhibit B hereto (the “Assigned Receivables Transactions”).  Notwithstanding any provision of the CreditAgreement or any other Loan Document to the contrary, Agent and Lenders herebyconsent to: (i) the Departing Entities Intercompany Debt Discharge as a partof, and at the time of the closing of, the transactions contemplated by theStock Purchase Agreement and, upon the closing of the transactions contemplatedby the Stock Purchase Agreement, Agent and Lenders hereby consent to therelease of any Liens which Agent may have on any intercompany receivables ornotes issued by the Departing Entities to Vertis and the other Credit Parties(other than the Departing Entities) in respect of the Departing EntitiesIntercompany Debt Discharge; (ii) the Assigned Receivables Transactions and therelease of any Liens which Agent may have on any intercompany receivablesissued by Digital Limited in respect of the Assigned Receivables Transactions;and (iii) the release of any guaranties given by the Credit Parties (other thanthe Departing Entities) of obligations of the Departing Entities.

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# 3.             Further Assurances.

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## 3.1.          Each CreditParty 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.          At the timeof the closing of the transactions contemplated by the Stock Purchase Agreementand from time to time thereafter, at Borrowers’ expense, Agent and Lendersshall execute and deliver such lien release instruments and documents and takesuch related actions as Vertis may reasonably request to evidence, furtherdocument, effectuate or otherwise implement the release of Agent’s Liens asdescribed above in Section 2, under the Credit Agreement and the otherLoan Documents.

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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.          Aside from(a) the agreements to provide indemnification/warranties and other clauseswhich are set forth in the Stock Purchase Agreement and the related tax deed,under which the maximum aggregate exposure is £2,000,000, (b) other claims,obligations, liabilities and exposures in an aggregate amount not to exceed£1,000,000, and (c) a guaranty by Holdings of the obligations of Vertis PRSLimited under the Agreement Relating to the Provision of Services forMagazines, dated as of July 10, 2003, by and among Fusion Premedia GroupLimited, Holdings and Express Newspapers (the “Magazines Agreement”) andthe Agreement Relating to the Provision of Auditing and Reprographic Servicesand Certain Display Advertising Services for Newspaper Titles, dated as of July10, 2003, by and among Fusion Premedia Group Limited, Holdings and ExpressNewspapers (the “Newspaper Titles Agreement” and, together with theMagazine Agreement, the “Express Newspapers Agreements”), (i) there areno post-closing obligations and liabilities, including, without

 

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## limitation,contingent obligations and liabilities, under the Stock Purchase Agreement ofVertis and the other Credit Parties (other than the Departing Entities) to theBuyer or any other Person, (ii) from and after the closing of the transactionscontemplated by the Stock Purchase Agreement, Vertis and the other CreditParties (other than the Departing Entities) shall not have any obligations,direct or indirect, contingent or otherwise, for the benefit of any of theDeparting Entities and (iii) there is no existing guaranty, credit support,indemnity or other similar arrangement, by Vertis or Digital Limited or anyother Credit Party, or by any of their direct or indirect Subsidiaries, asidefrom the Departing Entities, in favor of any Departing Entity, the Buyer or anyemployee, customer or creditor relating 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 applicablebankruptcy, insolvency, reorganization, moratorium or similar law affectingcreditors’ rights generally or to general principles of equity.

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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) the certificate orarticles of incorporation or by-laws or other constituent documents of anyBorrower or any Credit Party, and does not, and will not, contravene orconflict with, or cause any Lien to arise under, any provision of anyindenture, agreement, mortgage, lease, instrument or other document, including,without limitation, the February 2003 Senior Subordinated Debt Documents, the2002 Senior Debt Documents, the 2003 Senior Secured Debt Documents or theMezzanine Debt Documents, binding upon or otherwise affecting any Borrower orany Credit Party or any property of any Borrower or any Credit Party.

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## 4.4.          No Defaultor 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 and effect.

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# 5.             Covenants.  Aside from (a) the agreements to provideindemnification/warranties and other clauses which are set forth in the StockPurchase Agreement and the related tax deed, under which the maximum aggregateexposure is £2,000,000, (b) other claims, obligations, liabilities and exposuresin an aggregate amount not to exceed £1,000,000, and (c) a guaranty by Holdingsof the obligations of Vertis PRS Limited under the Express NewspapersAgreements, each Borrower and each other Credit Party (other than the DepartingEntities) executing this Consent and Amendment jointly and severally agrees asto all Credit Parties that from and after the date hereof, the Credit Partiesshall 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

 

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# arrangement,by Vertis or Digital Limited, or by any of their direct or indirect Subsidiaries(aside from the Departing Entities) in favor of any Departing Entity, the Buyeror any employee, customer or creditor relating to any Departing Entity or theBuyer.

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# 6.             ConditionsPrecedent to Effectiveness.  Theeffectiveness of the consents set forth in Section 2 hereof are in eachinstance 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 respect tothis Consent and Amendment, including, without limitation, as to this Consentand Amendment, the Stock Purchase Agreement and the transactions contemplatedhereby 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 (including in its capacity as a CreditParty, Digital Limited), other than upon consummation of the transactionscontemplated by the Stock Purchase Agreement, the Departing Entities.

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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 or condition,or to any amendment or modification of any term or condition (except asspecifically provided herein) of the Credit Agreement or any other LoanDocument or (ii) prejudice any right, power or remedy which the Agent or anyLender now has or may have in the future under or in connection with the CreditAgreement, 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 by telecopiershall be as effective as delivery of a manually executed counterpart signaturepage 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.

 

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, this Amendment has been dulyexecuted 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 are signatory to this Amendmentin 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 |

 

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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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EXHIBIT A

to

CONSENT AND AMENDMENT

 

 

**StockPurchase Agreement**

 

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EXHIBIT B

to

CONSENT AND AMENDMENT

 

 

**AssignedReceivables Transactions**

 

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SCHEDULE 1

to

CONSENT AND AMENDMENT

 

 

**DepartingEntities**

 

 

Fusion Premedia Group Limited

Vertis PRS Limited

The Admagic Group Limited

Admagic Limited

 

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