Exhibit 10.6


 


EXECUTION COPY


 


RECEIVABLES SALE AND SERVICING AGREEMENT


 


Dated as of November 25, 2005


 


by and among


 


EACH OF THE ENTITIES PARTY HERETO FROM TIME TO TIME

AS ORIGINATORS,


 


VERTIS RECEIVABLES II, LLC,


 


as Buyer,


 


and


 


VERTIS, INC.,


 


as Servicer


 


 


Receivables Sale and Servicing
Agreement

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND
  INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 1.01. Definitions

  	
  1

  
	
   

  	
  Section 1.02. Rules of
  Construction

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II TRANSFERS OF
  RECEIVABLES

  	
  2

  
	
   

  	
   

  
	
   

  	
  Section 2.01. Agreement to
  Transfer

  	
  2

  
	
   

  	
  Section 2.02. Grant of
  Security Interest

  	
  3

  
	
   

  	
  Section 2.03. Originator
  Support Agreement

  	
  3

  
	
   

  	
  Section 2.04. Originators
  Remain Liable

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS
  PRECEDENT

  	
  4

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.01. Conditions
  Precedent to Initial Transfer

  	
  4

  
	
   

  	
  Section 3.02. Termination of
  Transfers

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.01. Representations
  and Warranties of the Transaction Parties

  	
  5

  
	
   

  	
  Section 4.02. Affirmative
  Covenants of the Originators

  	
  13

  
	
   

  	
  Section 4.03. Negative
  Covenants of the Originators

  	
  19

  
	
   

  	
  Section 4.04. Breach of
  Representations, Warranties or Covenants

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE V INDEMNIFICATION

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.01. Indemnification

  	
  22

  
	
   

  	
  Section 5.02. Indemnities by
  the Servicer

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI MISCELLANEOUS

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.01. Notices

  	
  25

  
	
   

  	
  Section 6.02. No Waiver;
  Remedies

  	
  26

  
	
   

  	
  Section 6.03. Successors and
  Assigns

  	
  27

  
	
   

  	
  Section 6.04. Termination;
  Survival of Obligations.

  	
  27

  
	
   

  	
  Section 6.05. Complete
  Agreement; Modification of Agreement

  	
  28

  
	
   

  	
  Section 6.06. Amendments and
  Waivers

  	
  28

  
	
   

  	
  Section 6.07. Governing Law;
  Consent to Jurisdiction; Waiver of Jury Trial

  	
  28

  
	
   

  	
  Section 6.08. Counterparts

  	
  29

  
	
   

  	
  Section 6.09. Severability

  	
  29

  
	
   

  	
  Section 6.10. Section Titles

  	
  30

  
	
   

  	
  Section 6.11. No Setoff

  	
  30

  
	
   

  	
  Section 6.12. Confidentiality

  	
  30

  
	
   

  	
  Section 6.13. Further
  Assurances

  	
  31

  



 

















 


	
   

  	
  Section 6.14. Fees and
  Expenses

  	
  32

  
	
   

  	
  Section 6.15. Nonrecourse
  Obligations

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII SERVICER
  PROVISIONS

  	
  32

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.01. Appointment of
  the Servicer

  	
  32

  
	
   

  	
  Section 7.02. Duties and
  Responsibilities of the Servicer

  	
  32

  
	
   

  	
  Section 7.03. Collections on
  Receivables

  	
  33

  
	
   

  	
  Section 7.04. Covenants of the
  Servicer

  	
  35

  
	
   

  	
  Section 7.05. Reporting
  Requirements of the Servicer

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII EVENTS OF
  SERVICER TERMINATION

  	
  39

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.01. Events of
  Servicer Termination

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX SUCCESSOR SERVICER
  PROVISIONS

  	
  42

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.01. Servicer Not to
  Resign

  	
  42

  
	
   

  	
  Section 9.02. Appointment of
  the Successor Servicer

  	
  43

  
	
   

  	
  Section 9.03. Duties of the
  Servicer

  	
  43

  
	
   

  	
  Section 9.04. Effect of
  Termination or Resignation

  	
  44

  
	
   

  	
  Section 9.05. Power of
  Attorney

  	
  44

  



 


INDEX OF APPENDICES


 


	
  Exhibit 2.01(a)

  	
  Form of Receivables Assignment

  	
   

  
	
  Exhibit 2.01(c)(ii)

  	
  Form of Subordinated Note

  	
   

  
	
  Exhibit 2.03

  	
  Form of Originator Support Agreement

  	
   

  
	
  Exhibit 9.05

  	
  Form of Power of Attorney

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 4.01(b) 

  	
  Jurisdiction of Organization; Executive
  Offices; Collateral Locations; Corporate, Legal and Other Names;
  Identification Numbers

  	
   

  
	
  Schedule 4.01(j)

  	
  Intellectual Property

  	
   

  
	
  Schedule 4.01(k)

  	
  Investigations, Audits, Etc.

  	
   

  
	
  Schedule 4.01(l)

  	
  Litigation

  	
   

  
	
  Schedule 4.01(n)

  	
  ERISA

  	
   

  
	
  Schedule 4.01(o)

  	
  Deposit and Disbursement Accounts

  	
   

  
	
  Schedule 4.01(z)

  	
  Supplementary Representations

  	
   

  
	
  Schedule 4.02(g)

  	
  Conduct of Business

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex X

  	
  Definitions and Interpretations

  	
   

  
	
  Annex Y

  	
  Schedule of Documents

  	
   

  
	
  Annex Z

  	
  Financial Test

  	
   

  



 

















 


THIS RECEIVABLES SALE AND SERVICING AGREEMENT
(as amended, restated, supplemented or otherwise modified and in effect from
time to time, this “Agreement”) is entered into as of November 25,
2005 by and among each of the persons signatory hereto from time to time as
Originators, each an “Originator” and, collectively, the “Originators”),
VERTIS, INC. (“Parent”), a Delaware corporation, in its capacity as
servicer hereunder (in such capacity, the “Servicer”) and VERTIS
RECEIVABLES II, LLC, a Delaware limited liability company (“Buyer”).


 


RECITALS


 


A.                                   Buyer is a special
purpose limited liability company the sole member of which is the Parent.


 


B.                                     Buyer has been
formed for the sole purpose of purchasing all Receivables originated by each
Originator and to finance such Receivables under the Funding Agreement.


 


C.                                     Each Originator
intends to sell, and Buyer intends to purchase, such Receivables, from time to
time, as described herein.


 


D.                                    In addition, the
Member may, from time to time, contribute capital to Buyer in the form of
Contributed Receivables or cash.


 


E.                                      In order to
effectuate the purposes of this Agreement and the Funding Agreement, Buyer
desires to appoint Parent to service, administer and collect the Receivables
securing the Advances pursuant to this Agreement and Parent is willing to act
in such capacity as Servicer hereunder on the terms and conditions set forth
herein.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the
premises and the mutual covenants hereinafter contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


ARTICLE I

DEFINITIONS AND INTERPRETATION


 


Section 1.01.  Definitions.  Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in Annex X.


 


Section 1.02.  Rules of
Construction.  For purposes of this
Agreement, the rules of construction set forth in Annex X shall
govern.  All Appendices hereto, or
expressly identified to this Agreement, are incorporated herein by reference
and, taken together with this Agreement, shall constitute but a single
agreement.


 

















 


ARTICLE II

TRANSFERS OF RECEIVABLES


 


Section 2.01.  Agreement
to Transfer.


 


(a)                                  Receivables
Transfers.  Subject to the terms and
conditions hereof, each Originator agrees to sell (without recourse except to
the limited extent specifically provided herein) or, in the case of the Member,
sell or contribute, to Buyer on the Effective Date and on each Business Day
thereafter until the Commitment Termination Date (each such date, a “Transfer
Date”) all Receivables owned by it on each such Transfer Date, and Buyer
agrees to purchase or acquire as a capital contribution all such Receivables on
each such Transfer Date.  All such
Transfers by an Originator to Buyer shall collectively be evidenced by a
certificate of assignment substantially in the form of Exhibit 2.01(a) (each,
a “Receivables Assignment,” and collectively, the “Receivables Assignments”),
and each Originator and Buyer shall execute and deliver a Receivables
Assignment on or before the Effective Date.


 


(b)                                 Determination
of Sold Receivables.  On and as of
each Transfer Date, (i) all Receivables then owned by each Originator
(other than the Member) and not previously acquired by Buyer shall be sold
immediately upon its creation, and (ii) to the extent Receivables then
owned by the Member have not been contributed to Buyer in accordance with Section 2.01(d),
such Receivables shall be sold to Buyer (each such Receivable sold immediately
upon its creation pursuant to clauses (i) and (ii) above,
individually, a “Sold Receivable” and, collectively, the “Sold
Receivables”).


 


(c)                                  Payment
of Sale Price.  (i)  In
consideration for each Sale of Sold Receivables hereunder, Buyer shall pay to
the Originator thereof on the Transfer Date therefor the applicable Sale Price
therefor in Dollars in immediately available funds.  All cash payments by Buyer under this Section 2.01(c)(i) shall
be effected by means of a wire transfer on the day when due to such account or
accounts as the Originators may designate from time to time.


 


(ii)                                  To
the extent that the Sale Price of Sold Receivables exceeds the amount of cash
then available to Buyer, the applicable Originator hereby agrees to make a
subordinated loan (each, a “Subordinated Loan”) to Buyer in an amount
not to exceed the lesser of (i) the amount of such excess in satisfaction
of the equivalent portion of the Sale Price not paid in cash and (ii) the
maximum Subordinated Loan that could be borrowed without rendering Buyer’s Net
Worth less than the Required Capital Amount. 
The Subordinated Loans of an Originator shall be evidenced by a
subordinated promissory note substantially in the form of Exhibit 2.01(c)(ii) hereto
(a “Subordinated Note”) executed by Buyer and payable to such
Originator.  The Subordinated Loans shall
bear interest and be payable as provided in the Subordinated Note.


 


(d)                                 Determination
of Contributed Receivables.  Prior to
the delivery of an Election Notice pursuant to this Section 2.01(d) on
any Transfer Date the Member (i) may, by written notice to the Buyer,
elect to treat the Receivables transferred by it on such date as a capital
contribution to the Buyer, and (ii) hereby elects, on any Transfer Date on
which the Buyer cannot pay the Sale Price therefore in cash or with
Subordinated Loans, to treat the Receivables transferred by it on such date as
a capital contribution to the Buyer (each Receivable that is the


 


2

















 


subject of an election under clause (i) or (ii) hereof
shall be a “Contributed Receivable”). 
Notwithstanding the foregoing, the Member shall not be obligated or
required at any time to make any capital contributions to Buyer and may by
written notice to the Buyer, revoke its election under clause (ii) above.  On any Transfer Date on which the Buyer
cannot pay the Sale Price for Receivables in cash or with Subordinated Loans to
an Originator, and if such Originator is the Member, Member does not elect to
make a capital contribution of such Receivable Originator shall elect to
terminate sales and transfers of Receivables hereunder by sending a written
notice to Buyer and, at any time the Funding Agreement remains outstanding, to
the Administrative Agent (any such notice an “Election Notice”).


 


(e)                                  Ownership
of Transferred Receivables.  On and
after each Transfer Date and after giving effect to the Transfers to be made on
each such date, Buyer shall own the Transferred Receivables and no Originator
shall take any action inconsistent with such ownership nor shall any Originator
claim any ownership interest in such Transferred Receivables.


 


(f)                                    Servicing
of Receivables.  So long as no Event
of Servicer Termination shall have occurred and be continuing and no Successor
Servicer has assumed the responsibilities and obligations of the Servicer
pursuant to Section 9.02, the Servicer shall (i) conduct the
servicing, administration and collection of the Transferred Receivables and
shall take, or cause to be taken, all such actions as may be necessary or
advisable to service, administer and collect the Transferred Receivables, all
in accordance with (A) the terms of this Agreement, (B) customary and
prudent servicing procedures for trade receivables of a similar type and (C) all
applicable laws, rules and regulations, and (ii) hold all Contracts
and other documents and incidents relating to the Transferred Receivables in
trust for the benefit of Buyer, as the owner thereof, and for the sole purpose
of facilitating the servicing of the Transferred Receivables in accordance with
the terms of this Agreement.  Buyer
hereby instructs the Servicer, and the Servicer hereby acknowledges, that the
Servicer shall hold all Contracts and other documents relating to such
Transferred Receivables in trust for the benefit of the Buyer and the Servicer’s
retention and possession of such Contracts and documents shall at all times be
solely in a custodial capacity for the benefit of the Buyer and its assigns and
pledgees.


 


Section 2.02.  Grant of
Security Interest.  The parties
hereto intend that each Transfer shall be absolute and shall constitute a
purchase and sale or capital contribution, as applicable, and not a loan.  Notwithstanding the foregoing, in addition to
and not in derogation of any rights now or hereafter acquired by Buyer under Section 2.01
hereof, the parties hereto intend that this Agreement shall constitute a
security agreement under applicable law and if a court of competent
jurisdiction determines that any transaction provided for herein constitutes a
loan and not a sale or capital contribution, as applicable, that each
Originator shall be deemed to have granted, and each Originator does hereby
grant, to Buyer a continuing security interest in all of such Originator’s
right, title and interest in, to and under the Receivables whether now owned or
hereafter acquired by such Originator to secure the obligations of such
Originator to Buyer hereunder (including, if and to the extent that any
Transfer is recharacterized as a transfer for security under applicable law,
the obligation to transfer ownership of the Receivables hereunder).


 


Section 2.03.  Originator
Support Agreement.  The Parent hereby
agrees that in the event that any of its Affiliates become parties to this
Agreement as Originators, the Parent shall undertake and agree, to and for the
benefit of Buyer, to cause the due and punctual performance


 


3

















 


and observance
by each such Originator of all of the terms, conditions, agreements and
undertakings on the part of such Originator to be performed or observed by it
hereunder or under any other Related Document and, in connection therewith,
shall execute and deliver to Buyer an Originator Support Agreement in the form
attached hereto as Exhibit 2.03, to more fully evidence such
undertaking.


 


Section 2.04.  Originators
Remain Liable.  It is expressly
agreed by the Originators that, anything herein to the contrary
notwithstanding, each Originator shall remain liable to the Obligor (and any
other party to the related Contract) under any and all of the Receivables
originated by it and under the Contracts therefor to observe and perform all
the conditions and obligations to be observed and performed by it
thereunder.  Buyer shall not have any
obligation or liability to the Obligor or any other party to the related
Contract under any such Receivables or Contracts by reason of or arising out of
this Agreement or the granting herein of a Lien thereon or the receipt by Buyer
of any payment relating thereto pursuant hereto.  The exercise by Buyer of any of its rights
under this Agreement shall not release any Originator from any of its
respective duties or obligations under any such Receivables or Contracts.  Buyer shall not be required or obligated in
any manner to perform or fulfill any of the obligations of any Originator under
or pursuant to any such Receivable or Contract, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received by
it or the sufficiency of any performance by any party under any such Receivable
or Contract, or to present or file any claims, or to take any action to collect
or enforce any performance or the payment of any amounts that may have been
assigned to it or to which it may be entitled at any time or times.


 


ARTICLE III

CONDITIONS PRECEDENT


 


Section 3.01.  Conditions
Precedent to Initial Transfer.  The
initial Transfer hereunder shall be subject to satisfaction of each of the
following conditions precedent:


 


(a)                                  Sale
Agreement; Other Documents.  This
Agreement or counterparts hereof shall have been duly executed by, and
delivered to, each Originator, the Servicer and Buyer, and Buyer shall have
received such information, documents, instruments, agreements and legal
opinions as Buyer shall request in connection with the transactions contemplated
by this Agreement, including all those identified in the Schedule of
Documents, each in form and substance satisfactory to Buyer.


 


(b)                                 Governmental
Approvals.  Buyer shall have received
(i) satisfactory evidence that the Originators and the Servicer have
obtained all required consents and approvals of all Persons, including all
requisite Governmental Authorities, to the execution, delivery and performance
of this Agreement and the other Related Documents and the consummation of the
transactions contemplated hereby and thereby or (ii) an Officer’s
Certificate from each Originator and the Servicer in form and substance
satisfactory to Buyer affirming that no such consents or approvals are
required.


 


(c)                                  Compliance
with Laws.  Each Originator shall be
in compliance with all applicable foreign, federal, state, provincial and local
laws and regulations, including, without limitation, those specifically
referenced in Section 4.02(f).


 


4

















 


(d)                                 Funding
Agreement Conditions.  Each of those
conditions precedent set forth in Section 3.01 of the Funding
Agreement shall have been satisfied or waived in writing as provided therein.


 


The acceptance by any Originator of the Sale
Price for any Sold Receivables and the contribution to Buyer by the Member of
any Contributed Receivables on any Transfer Date shall be deemed to constitute,
as of any such Transfer Date, a representation and warranty by such Originator
that the conditions precedent set forth in this Section 3.01 have
been satisfied.  Upon any such acceptance
or contribution, title to the Transferred Receivables sold or contributed on
such Transfer Date shall be vested absolutely in Buyer, whether or not such
conditions were in fact so satisfied.


 


Section 3.02.  Termination
of Transfers.  Transfers of Receivables
hereunder shall terminate on the Commitment Termination Date.


 


ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS


 


Section 4.01.  Representations
and Warranties of the Transaction Parties. 
To induce Buyer to purchase the Sold Receivables and to acquire the
Contributed Receivables, each Transaction Party, as applicable, makes the
following representations and warranties to Buyer as to itself only as of the
Closing Date and, except to the extent otherwise expressly provided below, as
of each Transfer Date, each of which shall survive the execution and delivery
of this Agreement.


 


(a)                                  Organization,
Powers and Good Standing.


 


(i)                                     Organization.  Each of the Transaction Parties is (i) duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization; (ii) is duly qualified to do business in all
states where such qualification is required except where failure to be so
qualified would not reasonably be expected to have a Material Adverse Effect
within the meaning of clauses (b) through (e) of the definition
thereof; (iii) has the requisite corporate or company power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease, and to conduct
its business, in each case, as now, heretofore and proposed to be conducted; (iv) has
all licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct,
except where the failure to do any of the foregoing could not reasonably be
expected to result in a Material Adverse Effect within the meaning of clauses (b) through
(e) of the definition thereof; (v) is in compliance with its articles
or certificate of incorporation and by-laws or operating agreement, as
applicable; and (vi) subject to specific representations set forth herein
regarding ERISA, Environmental Laws, tax laws and other laws, is in compliance
with all applicable provisions of law,


 


5

















 


except where the failure to so
comply, individually or in the 
aggregate, could not reasonably be expected to result in a Material
Adverse Effect.


 


(ii)                                  Corporate
Powers.  The execution, delivery and
performance by each Transaction Party of this Agreement and the other Related
Documents to which it is a party and the creation and perfection of all
Transfers and Liens provided for herein and therein and, solely with respect to
clause (iv) below, the exercise by Buyer, or its assigns of any of
its rights and remedies under any Related Document to which it is a party: (i) are
within such Person’s corporate or company power; (ii) have been duly
authorized by all necessary or proper corporate and shareholder or company and
member action; (iii) do not result in the creation or imposition of any
Adverse Claim upon any of the property of such Person; and (iv) do not
require the consent or approval of any Governmental Authority or any other
Person, except those referred to in Section 3.01(b), all of which
have been duly obtained, made or complied with prior to the Effective
Date.  On or prior to the Effective Date,
each of the Related Documents has been duly executed and delivered by each
Transaction Party that is a party thereto and on the Closing Date each such
Related Document shall then constitute a legal, valid and binding obligation of
such Transaction Party, enforceable against it in accordance with its terms.


 


(iii)                               Binding
Obligation.  This Agreement is, and
the other Related Documents are the legally valid and binding obligations of
the applicable parties thereto, each enforceable against each of such parties,
as applicable, in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting, creditors’ rights generally and the effects of general principles of
equity.


 


(b)                                 Jurisdiction
of Organization; Executive Offices; Collateral Locations; Corporate or Other
Names; FEIN.  As of the Effective
Date, each Originator is a registered organization of the type set forth on Schedule 4.01(b) and
is organized under the laws of the State of Delaware (which is its only
jurisdiction of organization) and each such Originator’s organizational
identification number (if any), the current location of such Originator’s chief
executive office, principal place of business, other offices, the warehouses
and premises within which any records relating to the Receivables is stored or
located, and the locations of its records concerning the Receivables are set
forth in Schedule 4.01(b) or such other locations identified
by such Originator in writing to the Borrower from and after the Closing
Date.  During the five years prior to the
Closing Date, except as set forth in Schedule 4.01(b), no
Originator has been known as or used any corporate, legal, fictitious or trade
name.  In addition, Schedule 4.01(b) lists
the federal employer identification number of each Originator.


 


(c)                                  Disclosure.  No representation or warranty of any
Transaction Party contained in this Agreement, any of the other Related
Documents or any other document, certificate or written statement furnished by
on behalf of any Transaction Party to Buyer (or, in the case of the Servicer,
to the Administrative Agent or any Lender) relating to this Agreement, the
Transferred Receivables or any of the other Related Documents contains any
untrue statement of a material fact or omitted, omits or will omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in any material respect in light of the circumstances in
which the same were made.


 


6

















 


(d)                                 No
Material Adverse Effect.  Since December 31,
2004 there have been no events or changes in facts or circumstances affecting
any Transaction Party which have had or would reasonably be expected within the
next twelve (12) months to have a Material Adverse Effect.


 


(e)                                  No
Conflict.  The execution, delivery
and performance by each Transaction Party of this Agreement and the other
Related Documents to which it is a party and the creation and perfection of all
Transfers and Liens provided for herein and therein (i) does not and will
not violate or conflict in any material respect with any laws, rules,
regulations or orders of any Governmental Authority or violate, conflict with,
result in a breach of, or constitute a default (with due notice or lapse of
time or both) under any Contractual Obligation or organizational documents of
any Transaction Party and (ii) does not result in the creation or
imposition of any Adverse Claim upon any of the property of any Transaction
Party other than the Adverse Claims created pursuant hereto.


 


(f)                                    Solvency.  After giving effect to (i) the
transactions contemplated by this Agreement and the other Related Documents and
(ii) the payment and accrual of all transaction costs in connection with
the foregoing, each Transaction Party is and will be Solvent.  After giving effect to the sale and
contribution of Receivables and other payments and transactions contemplated on
such Transfer Date, each Transaction Party is and will be Solvent.
Notwithstanding the foregoing, the Buyer and its assigns agree that no
Transaction Party shall be in breach of the representation and warranty set
forth in this Section 4.01(f) solely because of the fact that
the balance sheet of Holdings and its consolidated Subsidiaries, calculated in
accordance with GAAP, reflects a negative net worth.


 


(g)                                 Margin
Regulations.


 


(i)                                     No
part of the proceeds of any Sale will be used for “buying” or “carrying” “margin
stock” within the respective meanings of such terms under Regulation U of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect or for any other purpose that violates the provisions
of the regulations of the Board of Governors of the Federal Reserve
System.  If requested by Buyer, each
Transaction Party will furnish to Buyer a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form 0-1, as
applicable, referred to in Regulation U.


 


(ii)                                  None
of the Transaction Parties is required to register as (i) an “investment
company” as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (ii) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935.


 


(h)                                 Brokers.  As of the Effective Date, no broker or finder
acting on behalf of any Transaction Party was employed or utilized in connection
with this Agreement or the other Related Documents or the transactions
contemplated hereby or thereby and no Transaction Party has any obligation to
any Person in respect of any finder’s or brokerage fees in connection
therewith.


 


7

















 


(i)                                     Compliance
with Laws.  Each Transaction Party
represents and warrants that it (i) is in compliance with the requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority (including, without limitation, Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, and the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56) and the obligations, covenants and
conditions contained in all Contractual Obligations other than those laws,
rules, regulations, orders and provisions of such Contractual Obligations the
noncompliance with which could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect, and (ii) maintains
all licenses, qualifications and permits referred to above.


 


(j)                                     Intellectual
Property.  As of the Effective Date,
each Originator owns, is licensed to use or otherwise has the right to use, all
material Intellectual Property used in or necessary for the conduct of its
business as currently conducted that is material to (i) the ability of
such Originator to perform its obligations under the Related Documents, (ii) the
validity or enforceability of any Related Document or the rights and remedies
of the Borrower, the Lenders or the Administrative Agent under any Related
Document, (iii) the federal income tax attributes of the sale,
contribution or pledge of the Transferred Receivables pursuant to any Related
Document or (iv) the Transferred Receivables (or the collectibility
thereof), the Contracts therefore, the Borrower Collateral (in each case, taken
as a whole) or the ownership interests or Liens of the Borrower or the Lenders
or the Administrative Agent thereon or the priority of such interests or Liens,
and all such material Intellectual Property is identified on Schedule 4.01(j).
As of the Effective Date, except as disclosed in Schedule 4.01(j),
the use of such Intellectual Property by the Originators and the conduct of
their businesses does not and has not been alleged by any Person to infringe on
the rights of any Person.


 


(k)                                  Investigations, Audits, Etc.  As
of the Effective Date, except as set forth on Schedule 4.01(k), no
Transaction Party or any of their Subsidiaries is the subject of any review or
audit by the IRS or any governmental investigation concerning the violation or
possible violation of any law that would reasonably be expected to result in
any Material Adverse Effect within the meaning of clauses (b) through (e) of
the definition thereof.


 


(l)                                     Litigation;
Adverse Facts.  Except as set forth
on Schedule 4.01(l), there are no judgments outstanding against any
Transaction Party or affecting any property of any Transaction Party as of the
Effective Date, nor is there any Litigation pending, or to the best knowledge
of any Transaction Party threatened, against any Transaction Party that would
reasonably be expected to result in any Material Adverse Effect within the
meaning of clauses (b) through (e) of the definition thereof.


 


(m)                               Taxes.


 


(i)                                     As
of the Effective Date, (i) all Tax Returns required to be filed by any
Transaction Party or any other member of the Parent Group have been timely and
properly filed and (ii) all taxes that are due (other than taxes being or
about to be contested in good faith by appropriate proceedings and for which
adequate reserves have been provided for in accordance with GAAP) have been
paid, except where the failure to file Tax Returns or pay Taxes would not have
a Material Adverse Effect.  No


 


8

















 


Governmental Authority has
asserted any claim for taxes, or to any Transaction Party’s knowledge, has
threatened to assert any claim for taxes that would, if not paid by a
Transaction Party, have a Material Adverse Effect.  All taxes required by law to be withheld or
collected and remitted (including, without limitation, income tax, unemployment
insurance and workmen’s compensation premiums) with respect to the Transaction
Parties have been withheld or collected and paid to the appropriate Governmental
Authorities (or are properly being held for such payment), except for amounts
the nonpayment of which would not be reasonably likely to have a Material
Adverse Effect.


 


(ii)                                  None
of the Transaction Parties has been notified that either the IRS, or any other
Governmental Authority, has raised, or intends to raise, any adjustments with
respect to Taxes of the Transaction Parties, which adjustments would be
reasonably likely to have a Material Adverse Effect.


 


(iii)                               It
is not necessary that this Agreement or any other Related Document be filed,
registered, recorded or enrolled in connection with any Taxes with any court,
public office or other authority in any jurisdiction or that any ad valorem
stamp duty, stamp duty, documentary, registration or similar tax or duty be
paid on the execution or delivery of this Agreement or any other Related
Document.


 


(n)                                 ERISA.


 


(i)                                     Schedule 4.01(n)
lists all Plans and separately identifies all Pension Plans, including Title IV
Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans as of the Effective Date. 
As of the Effective Date, copies of all such listed Plans other than
Multiemployer Plans as defined in ERISA Section 3(37)(A), together with a
copy of the latest form IRS/DOL 5500-series for each such Plan (other than such
Multiemployer Plans) have been provided or made available to Buyer.  Except with respect to Multiemployer Plans,
each Qualified Plan has been determined by the IRS to qualify under Section 401
of the IRC, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the IRC, and nothing has
occurred that would cause the loss of such qualification or tax-exempt
status.  Each Plan (other than any
Multiemployer Plan) is in material compliance with the applicable provisions of
ERISA and the IRC, including the timely filing of all reports required under
the IRC or ERISA.  With respect to each
Multiemployer Plan, no Originator is aware of any material noncompliance with the
applicable provisions of ERISA and the IRC, including the timely filing of all
reports required under the IRC or ERISA. 
Neither any Transaction Party nor ERISA Affiliate has failed to make any
material contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA or the terms of any such Plan.  Neither any Transaction Party nor ERISA
Affiliate has engaged in a “prohibited transaction,” as defined in Section 406
of ERISA and Section 4975 of the IRC, 


in connection with any Plan,
that would subject any Transaction Party to a material tax on prohibited
transactions imposed by Section 502(i) of ERISA or Section 4975
of the IRC.


 


9

















 


(ii)                                  As
of the Effective Date, except as set forth in Schedule 4.01(n): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or
event described in Section 4062(e) of ERISA with respect to any Title
IV Plan has occurred within the last five years or is reasonably expected to
occur; (iii) there are no pending, or to the knowledge of any Borrower,
threatened claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan that would reasonably be expected to
result in liabilities to the Transaction Parties and their ERISA Affiliates in
excess of $500,000; (iv) no Transaction Party or ERISA Affiliate has
incurred or reasonably expects to incur any liability in excess of $500,000 as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v) within
the last five years no Title IV Plan of any Transaction Party or ERISA
Affiliate has been terminated, except in a “standard termination” as that term
is used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of
any Transaction Party or ERISA Affiliate (determined at any time within the
past five years) with Unfunded Pension Liabilities been transferred outside of
the “controlled group” (within the meaning of Section 4001(a)(14) of
ERISA) of any Transaction Party or ERISA Affiliate; (vi) except in the
case of any ESOP, Stock of all Transaction Parties and their ERISA Affiliates
makes up, in the aggregate, no more than 10% of fair market value of the assets
of any Plan measured on the basis of fair market value as of the latest
valuation date of any Plan; and (vii) no liability under any Title IV Plan
has been satisfied with the purchase of a contract from an insurance company
that is not rated AAA by S&P or an equivalent rating by another nationally
recognized rating agency.


 


(o)                                 Deposit
and Disbursement Accounts.  Schedule 4.01(o)
lists all banks and other financial institutions at which any Originator or the
Servicer maintains deposit accounts established for the receipt of collections
on Receivables, including any Collection Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.


 


(p)                                 Nonapplicability
of Bulk Sales Laws.  No transaction
contemplated by this Agreement or any of the other Related Documents requires
compliance with any bulk sales act or similar law.


 


(q)                                 Investment
Company Act Exemptions.  Each
purchase of Transferred Receivables under this Agreement constitutes a purchase
or other acquisition of notes, drafts, acceptances, open accounts receivable or
other obligations representing part or all of the sales price of merchandise,
insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act.


 


(r)                                    Government
Regulation.  No Transaction Party is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any other federal or state statute that restricts or
limits its ability to incur Debt or to perform its obligations hereunder or
under any other Related Document.  The
purchase or acquisition of the Transferred Receivables by Buyer hereunder, the
application of the Sale Price therefor and the consummation of the transactions
contemplated by this Agreement and the other Related Documents will not


 


10

















 


violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission.


 


(s)                                  Notices
to Obligors.  Each Transaction Party
has directed all Obligors of Transferred Receivables originated by it to remit
all payments with respect to such Receivables for deposit in a Lockbox or
Collection Account.


 


(t)                                    Books
and Records; Minutes.  The by-laws or
the certificate or articles of incorporation of each Originator require it to
maintain (i) books and records of account and (ii) minutes of the
meetings and other proceedings of its Stockholders and board of directors (or
an analogous governing body).


 


(u)                                 Ownership
of Receivables; Liens.  Immediately
prior to its transfer hereunder, each Originator owned each Receivable
originated or acquired by it free and clear of any Adverse Claim and, from and
pursuant to such transfer, Buyer will acquire valid and properly perfected
title to and the sole record and beneficial ownership interest in each
Transferred Receivable, free and clear of any Adverse Claim or restrictions on
transferability.  Each Originator has
received all assignments, bills of sale and other documents, and has duly
effected all recordings, filings and other actions necessary to establish,
protect and perfect such Originator’s right, title and interest in and to the
Receivables originated or acquired by it and its other properties and
assets.  Each Originator has rights in
and full power to transfer its Receivables hereunder.  No effective financing statements or other
similar instruments are of record in any filing office listing any Originator
as debtor and purporting to cover the Transferred Receivables except those
terminated on the Closing Date and financing statements filed in accordance
with the Related Documents.


 


(v)                                 [RESERVED].


 


(w)                               Representations
and Warranties in Other Related Documents. 
Each of the representations and warranties of each Transaction Party
contained in the Related Documents (other than this Agreement) is true and
correct and such Transaction Party hereby makes each such representation and
warranty to, and for the benefit of, the Buyer as if the same were set forth in
full herein.  Each Transaction Party
consents to the assignment of Buyer’s rights with respect to all such
representations and warranties to the Administrative Agent and the Lenders (and
their respective successors and assigns) pursuant to the Funding Agreement as
more fully described in Section 6.03 below.


 


(x)                                   Receivables.  With respect to each Transferred Receivable
acquired by the Buyer hereunder:


 


(i)                                     Each
Receivable included in any Borrower Base Certificate as an Eligible Receivable,
as of the applicable Transfer Date therefor, satisfied the criteria for an
Eligible Receivable on such Transfer Date;


 


(ii)                                  immediately
prior to its transfer to Buyer, such Receivable was owned by the Originator
thereof free and clear of any Adverse Claim, and such Originator had the full
right, power and authority to sell, contribute, assign, transfer and pledge its
interest therein as contemplated under this Agreement and the other Related
Documents and,


 


11

















 


upon such Transfer, Buyer will
acquire valid and properly perfected title to and the sole record and
beneficial ownership interest in such Receivable, free and clear of any Adverse
Claim and, following such Transfer, such Receivable will not be subject to any
Adverse Claim as a result of any action or inaction on the part of such
Originator;


 


(iii)                               the
Transfer of each such Receivable pursuant to this Agreement and the Receivables
Assignment executed by the Originator thereof constitutes, as applicable, a
valid sale, contribution, transfer, assignment, setover and conveyance to Buyer
of all right, title and interest of such Originator in and to such Receivable;
and


 


(iv)                              such
Transferred Receivable was originated in compliance with the Credit and
Collection Policies.


 


(y)                                 Fair
Value.  With respect to each
Transferred Receivable acquired by the Buyer hereunder, (i) the
consideration (taking into account any increase in the outstanding balance of
the Subordinated Note) received from the Buyer in respect of such Transferred
Receivable represents adequate consideration and fair and reasonably equivalent
value for such Transferred Receivable as of the applicable Transfer Date and (ii) such
consideration is not less than the fair market value of such Transferred
Receivables, in each case, as of the applicable Transfer Date.


 


(z)                                   Supplementary Representations.  Each of the representations and warranties of
the Borrower set forth on Schedule 4.01(z)
is true and correct in all respects.


 


(aa)                            Access
to the Accounts.  None of the
Transaction Parties has access to any of the Accounts.


 


(bb)                          Intent.  None of the Transaction Parties has entered
into this Agreement or any of the other Related Documents with the intent of
hindering, delaying or defrauding present or future creditors of any
Transaction Party.  None of the
Transaction Parties has removed or concealed any assets from its creditors or
participated in the removal or concealing of assets of any Transaction Party or
any Person entity, nor will any of them do so in the future.   The transfers contemplated by this Agreement
are being undertaken in good faith by each Transaction Party for bona fide
business purposes.


 


(cc)                            Conditions.  Upon any acceptance or contribution, title to
the Transferred Receivables sold or contributed hereunder, the following are
statements are true:


 


(i)                                     the
representations and warranties of each Originator contained herein or in any
other Related Document are true and correct in all material respects unless
previously cured pursuant to Section 4.04 hereof (without
duplication of any materiality qualifier contained therein) as of such Transfer
Date, both before and after giving effect to such Transfer and to the
application of the Sale Price therefor, except to the extent that any such
representation or warranty expressly relates to an earlier date and except for
changes therein expressly permitted by this Agreement;


 


(ii)                                  each
Originator is in compliance with each of its covenants and other agreements set
forth herein or in any other Related Document; and


 


12

















 


(iii)                               each
Originator has such other action, including delivery of approvals, consents,
opinions, documents and instruments to Buyer as Buyer has reasonably requested.


 


The representations and warranties described in this Section 4.01
shall survive the Transfer of the Transferred Receivables to Buyer, any
subsequent assignment of the Transferred Receivables by Buyer, and the
termination of this Agreement and the other Related Documents and shall
continue until the indefeasible payment in full of all Transferred Receivables.


 


Section 4.02.  Affirmative
Covenants of the Originators.  Each
Originator covenants and agrees that, unless otherwise consented to by Buyer
and the Administrative Agent, from and after the Effective Date and until the
Termination Date:


 


(a)                                  Offices
and Records.  Each Originator shall maintain
its jurisdiction of organization, principal place of business and chief
executive office and the office at which it keeps its Records at the respective
locations specified in Schedule 4.01(b) or, upon 30 days’
prior written notice to Buyer and the Administrative Agent, at such other
location in a jurisdiction where all action requested by Buyer, any Lender or
the Administrative Agent pursuant to Section 6.13 shall have been
taken with respect to the Transferred Receivables.  Each Originator shall at its own cost and
expense, for not less than three years from the date on which each Transferred
Receivable was originated, or for such longer period as may be required by law,
maintain adequate Records with respect to such Transferred Receivable, including
records of all payments received, credits granted and merchandise returned with
respect thereto.  Upon the request of
Buyer, each Originator shall (i) mark each Contract (other than invoices)
which constitutes “chattel paper” under the UCC and evidences a Transferred
Receivable with a legend, acceptable to Buyer, evidencing that Buyer has
purchased such Transferred Receivable and that the Administrative Agent, for
the benefit of the Lenders, has a security interest in and lien thereon, and (ii) mark
its computer records pertaining to the Transferred Receivables with such a
legend.


 


(b)                                 Access.  Each Originator shall, at its own expense,
during normal business hours, from time to time upon ten (10) Business
Days’ prior notice (or, if a Termination Event has occurred and in continuing,
one (1) Business Day’s prior notice) and as frequently as Buyer or the
Servicer determines to be appropriate: (i) provide Buyer, the Servicer and
any of their respective officers, employees, agents and representatives access
to its properties (including properties of such Originator utilized in
connection with the collection, processing or servicing of the Transferred
Receivables), facilities, advisors and employees (including officers) of each
Originator, (ii) permit Buyer and the Servicer and any of their respective
officers, employees, agents and representatives to inspect, audit and make
extracts from such Originator’s books and records, including all Records
maintained by such Originator, (iii) permit Buyer, the Servicer and their
respective officers, employees, agents and representatives, to inspect, review
and evaluate the Transferred Receivables of such Originator, and (iv) permit
Buyer, the Servicer and their respective officers, employees, agents and
representatives to discuss matters relating to the Transferred Receivables or
such Originator’s performance under this Agreement or the affairs, finances and
accounts of such Originator with any of its officers, directors, employees,
representatives or agents (in each case, with those Persons having knowledge of
such matters) and with its independent certified public accountants as
specified in Section 4.02(c) below;


 


13

















 


provided, however, that, so
long as no Termination Event or Incipient Termination Event has occurred and is
continuing, (i) the Buyer shall be limited to two (2) audits pursuant
to this Section 4.02(b) during each calendar year  and (ii) Originators’ obligation to
reimburse out-of-pocket expenses in respect of each such audit shall not exceed
$50,000.  If an Incipient Termination
Event or a Termination Event shall have occurred and be continuing, or the
Buyer, in good faith, notifies any Originator that an Incipient Termination
Event or a Termination Event may have occurred, is imminent or deems its rights
or interests in the Transferred Receivables insecure, each such Originator
shall provide such access at all times and without advance notice and shall
provide Buyer and the Servicer with access to its suppliers and customers; provided,
that, such Originator shall have the opportunity to be present at the time of
any such access to its such Originator’s suppliers or customers.  Each Originator shall make available to Buyer
and the Servicer and their respective counsel, as quickly as is possible under
the circumstances, originals or copies of all books and records, including
Records maintained by such Originator, as Buyer or the Servicer may
request.  Each Originator shall deliver
any document or instrument necessary for Buyer or the Servicer, as they may
from time to time request, to obtain records from any service bureau or other
Person that maintains records for such Originator, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and
discs owned by such Originator.


 


(c)                                  Communication
with Accountants.  Each Originator
authorizes Buyer and the Servicer and their designated representatives to
communicate directly with its independent certified public accountants, and
authorizes and, if requested by Buyer or Servicer, shall instruct those
accountants to disclose and make available to Buyer, the Servicer and their
designated representatives, any and all financial statements and other
supporting financial documents, schedules and information relating to such
Originator (including copies of any issued management letters) with respect to
the business, financial condition and other affairs of such Originator; provided,
that the Buyer or Servicer shall notify such Originator prior to any contact
with such accountants and advisors and shall give such Originator the
opportunity to participate in such discussions. 
Each Originator agrees to render to Buyer and the Servicer at such
Originator’s own cost and expense, such clerical and other assistance as may be
reasonably requested with regard to the foregoing.  If any Termination Event shall have occurred
and be continuing, each Originator shall, promptly upon request therefor,
deliver to Buyer or its designee all Records reflecting activity through the
close of business on the Business Day immediately preceding the date of such
request.


 


(d)                                 Compliance
With Credit and Collection Policies. 
Each Originator shall comply with the Credit and Collection Policies
applicable to each Transferred Receivable and the Contracts therefor, and with
the terms of such Receivables and Contracts.


 


(e)                                  Assignment.  Each Originator hereby acknowledges that on
the date hereof Buyer has collaterally assigned for security purposes all of
its right, title and interest in, to and under this Agreement to the
Administrative Agent for the benefit of the Administrative Agent, the Lenders,
the Indemnified Persons and the Affected Parties and that the Administrative
Agent, the Lenders, the Indemnified Persons and the Affected Parties are third
party beneficiaries hereof.  Each
Originator hereby further acknowledges that after the occurrence and during the
continuation of a Termination Event all provisions of this Agreement shall
inure to the benefit of the Administrative Agent and the Lenders, including the
enforcement of any provision hereof,


 


14

















 


but that the Administrative Agent, the Lenders, the
Indemnified Person and the Affected Parties shall have no obligations or duties
under this Agreement. Each Originator hereby further acknowledges that the
execution and performance of this Agreement are conditions precedent for the
Administrative Agent and the Lenders to enter into the Funding Agreement and
that the agreement of the Administrative Agent and Lenders to enter into the
Funding Agreement will directly or indirectly benefit such Originator and
constitutes good and valuable consideration for the rights and remedies of the
Administrative Agent and each Lender with respect hereto.


 


(f)                                    Compliance
with Agreements and Applicable Laws. 
Each Originator shall perform each of its obligations under this
Agreement and the other Related Documents and comply with all federal, state,
provincial and local laws and regulations applicable to it and the Receivables,
including those relating to truth in lending, retail installment sales, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices, privacy, licensing, securities laws, margin regulations,
taxation, ERISA and labor matters and environmental laws and environmental
permits, except where the failure to so comply could not reasonably be expected
to result in a Material Adverse Effect. 
Each Originator shall pay all Charges, including any stamp duties, which
may be imposed as a result of the transactions contemplated by this Agreement
and the other Related Documents, except to the extent such Charges are being
contested in accordance with Section 4.01(m) or constitute an obligation solely of the Borrower.


 


(g)                                 Maintenance
of Existence and Conduct of Business. 
Each Originator shall:  (i) do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises; (ii) only
engage in business of the types described on Schedule 4.02(g) and
reasonable extensions thereof and in accordance with the terms of its
certificate or articles of incorporation and by-laws; (iii) at all times
maintain, preserve and protect all of its assets and properties which are
necessary in the conduct of its business, including all licenses, permits,
charters and registrations, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices in each case, to the extent the failure to do so could
reasonably be expected to (i) materially impair the ability of such
Originator to perform its obligations under the Related Documents, (ii) adversely
affect the validity or enforceability of any Related Document or the rights and
remedies of the Borrower, the Lenders or the Administrative Agent under any
Related Document, (iii) adversely affect the federal income tax attributes
of the sale, contribution or pledge of the Transferred Receivables pursuant to
any Related Document or (iv) affect the enforceability or value of the
Transferred Receivables (or the collectibility thereof), the Contracts
therefore, the Borrower Collateral (in each case, taken as a whole) or the
ownership interests or Liens of the Borrower or the Lenders or the
Administrative Agent thereon or the priority of such interests or Liens; and (iv) transact
business only in trade names and its legal name as of the Effective Date or,
upon 30 days’ prior written notice to Buyer, in any other legal name with
respect to which all action requested by Buyer pursuant to Section 6.13
shall have been taken with respect to the Transferred Receivables.


 


(h)                                 Notice
of Material Events.  Each Originator
shall promptly inform Buyer in writing of the occurrence of any of the
following, in each case setting forth the details thereof,


 


15

















 


any notices or other correspondence relating thereto,
and what action, if any, such Originator proposes to take with respect thereto:


 


(i)                                     (A) any
Litigation commenced or threatened against Holdings, any Originator or any
other Subsidiary of Holdings that (1) is asserted or instituted against
any Plan, its fiduciaries (in their capacity as a fiduciary of any such Plan)
or its assets or against Holdings, any Originator or any other Subsidiary of
Holdings or any of their respective ERISA Affiliates in connection with any
Plan that individually or in the aggregate could reasonably be expected to result
in liabilities of any Originator or its ERISA Affiliates in excess of $500,000,
(2) alleges criminal misconduct by Holdings, any Originator or any other
Subsidiary of Holdings, or (3) if determined adversely, could reasonably
be expected to have a Material Adverse Effect or  (B) any Litigation commenced or
threatened against Holdings, any Originator or any other Subsidiary of Holdings
with respect to or in connection with all or any portion of the Transferred
Receivables that (A) seeks damages or penalties in an uninsured amount in
excess of $250,000 in the aggregate or (B) seeks injunctive relief;


 


(ii)                                  the
commencement of a case or proceeding by or against Holdings, any Originator or
any other Subsidiary of Holdings seeking a decree or order in respect of
Holdings, any Originator or such Subsidiary (A) under the Bankruptcy Code
or any other applicable federal, state, provincial or foreign bankruptcy or
other similar law, (B) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for Holdings, any
Originator or such Subsidiary or for any substantial part of such Person’s
assets, or (C) ordering the winding-up or liquidation of the affairs of
Holdings, any Originator or any other Subsidiary of Holdings;


 


(iii)                               (A) any
Adverse Claim made or asserted against any of the Transferred Receivables of
which it becomes aware or (B) any determination that a Transferred
Receivable was not an Eligible Receivable at the time sale to Buyer or has
ceased to be an Eligible Receivable on account of any matter giving rise to
indemnification under Section 5.01;


 


(iv)                              the
execution or filing with the IRS or any other Governmental Authority of any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges that could reasonably be
expected to become a Lien on the Receivables; or


 


(v)                                 any
other event, circumstance or condition that has had or could reasonably be
expected to have a Material Adverse Effect.


 


(i)                                     Separate
Identity.


 


(i)                                     Each
Originator shall, and shall cause each other member of the Parent Group to,
maintain records and books of account separate from those of Buyer.


 


(ii)                                  The
financial statements of Holdings and its consolidated Subsidiaries shall disclose
the effects of each Originator’s transactions in accordance with GAAP and, in
addition, disclose that (A) Buyer’s sole business consists of the purchase
or acceptance


 


16

















 


through capital contribution
(in the case of the Member) and ownership of the Receivables from the
Originators and the subsequent financing of such Receivables pursuant to the
Funding Agreement, (B) Buyer is a separate legal entity with its own
separate creditors who will be entitled, upon its liquidation, to be satisfied
out of Buyer’s assets prior to any value in Buyer becoming available to Buyer’s
equity holders and (C) the assets of Buyer are not available to pay
creditors of any Originator or any other Affiliate of such Originator.


 


(iii)                               The
resolutions, agreements and other instruments underlying the transactions
described in this Agreement shall be continuously maintained by each Originator
as official records.


 


(iv)                              Each
Originator shall, and shall cause each other member of the Parent Group to,
maintain an arm’s-length relationship with Buyer and shall not hold itself out
as being liable for the Debts or liabilities of Buyer.


 


(v)                                 Each
Originator shall, and shall cause each other member of the Parent Group to,
keep its assets and its liabilities wholly separate from those of Buyer and
shall not commingle the Buyer’s assets with the assets of any other Person.


 


(vi)                              No
Originator shall or shall permit any other member of the Parent Group to,
conduct its business in the name of the Buyer or in a manner designed to
mislead third parties as to the separate identity of Buyer.


 


(vii)                           No
Originator shall (and each Originator shall cause each other member of the
Parent Group not to) mislead third parties by conducting or appearing to
conduct business on behalf of Buyer or expressly or impliedly representing or
suggesting that such Originator or any other member of the Parent Group is
liable or responsible for the Debts of Buyer or that the assets of such
Originator or any other member of the Parent Group are available to pay the
creditors of Buyer.


 


(viii)                        The
operating expenses and liabilities of Buyer shall be paid from Buyer’s own
funds and not from any funds of any Originator or other member of the Parent
Group.


 


(ix)                                Each
Originator shall, and shall cause each other member of the Parent Group to, at
all times have stationery and other business forms and a mailing address and
telephone number separate from those of Buyer.


 


(x)                                   Each
Originator shall, and shall cause each other member of the Parent Group to, at
all times limit its transactions with Buyer only to those expressly permitted
hereunder or under any other Related Document.


 


(j)                                     ERISA.  Each Originator shall give Buyer prompt
written notice of (i) any event that could reasonably be expected to
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA and (ii) any event that could reasonably be expected to
result in the incurrence by any Originator of any liabilities under Title IV of
ERISA (other than premium payments arising in the ordinary course of business)
in excess of $500,000.


 


17

















 


(k)                                  Payment,
Performance and Discharge of Obligations.


 


(i)                                     Subject
to Section 4.02(k)(ii), each Originator shall (and shall cause each
other member of the Parent Group to) pay, perform and discharge or cause to be
paid, performed and discharged all of its obligations and liabilities,
including all Charges upon its income and properties and all lawful claims for
labor, materials, supplies and services, promptly when due in each case, to the
extent the failure to do so could reasonably be expected to (i) materially
impair the ability of such Originator to perform its obligations under the
Related Documents, (ii) adversely affect the validity or enforceability of
any Related Document or the rights and remedies of the Borrower, the Lenders or
the Administrative Agent under any Related Document, (iii) adversely
affect the federal income tax attributes of the sale, contribution or pledge of
the Transferred Receivables pursuant to any Related Document or (iv) affect
the enforceability or value of the Transferred Receivables (or the
collectibility thereof), the Contracts therefore, the Borrower Collateral (in
each case, taken as a whole) or the ownership interests or Liens of the
Borrower or the Lenders or the Administrative Agent thereon or the priority of
such interests or Liens..


 


(ii)                                  Each
Originator and each other member of the Parent Group may in good faith contest,
by appropriate proceedings, the validity or amount of any Charges or claims
described in Section 4.02(k)(i); provided, that (A) adequate
reserves with respect to such contest are maintained on the books of such
Originator or such member, as applicable, in accordance with GAAP, (B) such
contest is maintained and prosecuted continuously and with diligence, (C) none
of the Receivables may become subject to forfeiture or loss as a result of such
contest, (D) no Lien may be imposed to secure payment of such Charges or
claims (excepting only Liens as to which foreclosure is not imminent and the
use and value of the property to which the Lien attaches is not impaired during
the pendency of such proceeding), and (E) Buyer has advised such
Originator in writing that Buyer reasonably believes that nonpayment or
nondischarge thereof could not reasonably be expected to have or result in a
Material Adverse Effect within the meaning of clauses (b) through (e) thereof.


 


(l)                                     Deposit
of Collections.  Each Originator
shall (and shall cause each of its Affiliates to) (i) instruct all
Obligors to remit all payments with respect to any Receivables directly into a
Collection Account, and (ii) deposit or cause to be deposited promptly
into a Collection Account, and in any event no later than the first Business
Day after receipt thereof, all Collections it may receive in respect of
Transferred Receivables (and until so deposited, all such Collections shall be
held in trust for the benefit of Buyer and its assigns (including the
Administrative Agent and the Lenders)). 
No Originator shall make or permit to be made deposits into a Lockbox or
a Collection Account other than in accordance with this Agreement and the other
Related Documents.  Without limiting the
generality of the foregoing, each Originator shall take reasonable steps to
assure that no Collections or other proceeds with respect to a Receivable
reconveyed to it pursuant to Section 4.04 hereof are paid or
deposited into any Lockbox or Collection Account.


 


(m)                               Accounting
Changes.  If any Accounting Changes
occur and such changes result in a change in the standards or terms used
herein, then the parties hereto agree to enter into good


 


18

















 


faith negotiations in order to amend such provisions
so as to equitably reflect such Accounting Changes with the desired result that
the criteria for evaluating the financial condition of such Persons and their
Subsidiaries shall be the same after such Accounting Changes as if such
Accounting Changes had not been made.  If
the parties hereto agree upon the required amendments to this Agreement, then
after appropriate amendments have been executed and the underlying Accounting
Change with respect thereto has been implemented, any reference to GAAP
contained herein shall, only to the extent of such Accounting Change, refer to
GAAP consistently applied after giving effect to the implementation of such
Accounting Change.  If such parties
cannot agree upon the required amendments within 30 days following the date of
implementation of any Accounting Change, then all financial statements
delivered and all standards and terms used herein shall be prepared, delivered
and used without regard to the underlying Accounting Change.


 


(n)                                 General
Trial Balance.  Each Originator shall
generate its General Trial Balance on each day that such Originator transfers
Receivables pursuant to this Agreement. 
If at any time any Originator fails to generate its General Trial
Balance, Buyer shall have the right to reconstruct such General Trial Balance
so that a determination of the Sold Receivables and Contributed Receivables can
be made.  Each Originator agrees to cooperate
with such reconstruction, including by delivery to Buyer, upon Buyer’s request,
of copies of all Records.


 


Section 4.03.  Negative
Covenants of the Originators.  Each
Originator covenants and agrees that, without the prior written consent of
Buyer, from and after the Closing Date and until the Termination Date:


 


(a)                                  Sale
of Receivables and Related Assets. 
No Originator shall sell, transfer, convey, assign (by operation of law
or otherwise) or otherwise dispose of, or assign any right to receive income in
respect of, any of its Receivables or Contracts therefor, or any of its rights
with respect to any Lockbox or Collection Account, except for the sales,
transfers, conveyances, assignments or dispositions expressly contemplated
hereunder.


 


(b)                                 Liens.  No Originator shall create, incur, assume or
permit to exist any Adverse Claim on or with respect to its Receivables
(whether now owned or hereafter acquired) except for Permitted Encumbrances
that do not attach to Transferred Receivables.


 


(c)                                  Modifications
of Receivables or Contracts.  Except
to the extent the Servicer is permitted to do so by the Credit and Collection
Policies, no Originator shall extend, amend, forgive, discharge, compromise,
cancel or otherwise modify the terms of any Transferred Receivable, or amend,
modify or waive any term or condition of any Contract therefor in a manner that
would have the effect of creating such a modification of a Receivable.


 


(d)                                 Sale
Characterization.  No Originator
shall (and each Originator shall cause each other member of the Parent Group
not to) make statements or disclosures or prepare any financial statements for
any purpose, including for federal income tax, reporting or accounting
purposes, that shall account for the transactions contemplated by this Agreement
in any manner other than with respect to the Sale of each Sold Receivable
originated or acquired by it, as a true sale or absolute assignment of its full
right, title and ownership interest in such Transferred


 


19

















 


Receivable to Buyer and with respect to the Transfer
of each Contributed Receivable originated or acquired by it, as a contribution
to the capital of Buyer.


 


(e)                                  Capital
Structure and Business.  No
Originator shall (and each Originator shall cause each other member of the
Parent Group not to) (i) make any changes in any of its business
objectives, purposes or operations that could reasonably be expected to have or
result in a Material Adverse Effect or (ii) amend, supplement or otherwise
modify its certificate or articles of incorporation, bylaws, limited liability
company agreement and other organizational documents except where such
amendment, supplement or other modification could not reasonably be expect to
have or result in a Material Adverse Effect within the meaning of clause (b) through
(e) of the definition thereof.  No
Originator shall change the type of entity it is, its jurisdiction of
organization or its organizational identification number, if any, issued by its
state of organization, except upon 30 days’ prior written notice to Buyer and
with respect to which jurisdiction all action requested by Buyer pursuant to Section 6.13
shall have been taken with respect to the Transferred Receivables.


 


(f)                                    Actions
Affecting Rights.  No Originator
shall (i) take any action, or fail to take any action, if such action or
failure to take action may interfere with the enforcement of any rights given
to the Buyer or its assignees hereunder or under the other Related Documents,
including rights with respect to the Transferred Receivables; or (ii) fail
to pay any Charge, fee or other obligation of such Originator with respect to
the Transferred Receivables, or fail to defend any action, if such failure to
pay or defend may adversely affect the priority or enforceability of the
perfected title of Buyer to and the sole record and beneficial ownership
interest of Buyer in the Transferred Receivables or, prior to their Transfer
hereunder, such Originator’s right, title or interest therein.


 


(g)                                 ERISA.  No Originator shall, or shall cause or permit
any ERISA Affiliate to, cause or permit to occur an event that could reasonably
be expected to result in the imposition of a Lien under Section 412 of the
IRC or Section 302 or 4068 of ERISA or cause or permit to occur an ERISA
Event.


 


(h)                                 Change
to Credit and Collection Policies. 
No Originator shall fail to comply in any material respect with, and no
material change, amendment, modification or waiver shall be made to, the Credit
and Collection Policies without the prior written consent of Buyer.


 


(i)                                     Adverse
Tax Consequences.  No Originator
shall take or permit to be taken any action (other than with respect to actions
taken or to be taken solely by a Governmental Authority), or fail or neglect to
perform, keep or observe any of its obligations hereunder or under the other
Related Documents, that would have the effect directly or indirectly of
subjecting any payment to Buyer, or to any assignee who is a resident of the
United States of America, to withholding taxation.


 


(j)                                     No
Proceedings.  From and after the
Effective Date and until the date one year plus one day following the
Termination Date, no Originator shall, directly or indirectly, institute or
cause to be instituted against Buyer any proceeding of the type referred to in Sections
8.01(d) and 8.01(e) of the Funding Agreement.


 


20

















 


(k)                                  Mergers,
Acquisitions, Sales, etc.  Other than
as permitted pursuant to Section 5.6 of the Existing Credit Agreement, no
Transaction Party shall (i) be a party to any merger or consolidation, or
directly or indirectly purchase or otherwise acquire all or substantially all
of the assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or (ii) directly or indirectly sell,
transfer, assign, convey or lease whether in one or a series of transactions,
all or substantially all of its assets other than pursuant hereto, except for
any such merger or consolidation, sale, transfer, conveyance, lease or
assignment of or by any majority-owned Subsidiary into such Person or into,
with or to any other majority-owned Subsidiary and any such purchase or other
acquisition by such Person or any majority-owned Subsidiary of the assets or
stock of any majority-owned Subsidiary. Notwithstanding the foregoing, other
than the Parent in its capacity as the sole member of the Buyer, no member of
the Parent Group shall be a party to any merger or consolidation, or directly
or indirectly purchase or otherwise acquire all or substantially all of the
assets or any Stock of the Buyer. In connection with any merger or
consolidation that is permitted pursuant to Section 5.6 of the Existing
Credit Agreement, each Originator will (i) provide written notice thereof
to the Buyer, and (ii) take all such actions and deliver, or cause to be
delivered, such opinion letters of counsel, certificates and other agreements
that the Buyer deems reasonably necessary or desirable under the UCC to
maintain the perfection and priority of the Buyer’s ownership interest in the
Receivables.


 


(l)                                     [RESERVED].


 


(m)                               Modification
to the Credit Agreement.  Without the
prior written consent of the Administrative Agent, the Parent will not agree to
any amendment, modification or waiver to any provision of the Credit Agreement
(other than the Existing Credit Agreement so long as the administrative agent
thereunder is GE Capital or an Affiliate thereof) which impairs the rights of
the Buyer, the Administrative Agent, the Indemnified Persons or the Affected
Parties under any Related Document or with respect to the Transferred
Receivables, the Collections thereon or the Borrower Collateral.


 


(n)                                 Commingling.  No Originator shall (and each Originator
shall cause each other member of the Parent Group not to) deposit or permit the
deposit of any funds that do not constitute Collections of Transferred
Receivables into any Lockbox or Collection Account, provided that after the
Commitment Termination Date, so long as any Transferred Receivables of an
Obligor remain unpaid, no Originator shall instruct such Obligor to remit
Collections of any Receivables to any Person or account other than to a Lockbox
or Collection Account.  If any funds not
constituting collections of Transferred Receivables are nonetheless deposited
into a Lockbox or Collection Account and such Originator so notifies Buyer,
Buyer shall notify the Administrative Agent to promptly remit any such amounts
to the applicable Originator.


 


(o)                                 Excluded
Receivables.  The definition of “Excluded
Receivable” in Annex X makes specific reference to (i) response
management facility located in Rochester, New York, (ii) sheet fed
printing facility located in Chicago, Illinois and (iii) media placement
business formerly known as The Newspaper Network located in Atlanta, Georgia,
Greenville, South Carolina and Sacramento, California (each an “Excluded Unit”).  In the event any Originator elects to combine
the operations of any other divisions or joint ventures of such Originator with
an Excluded Unit or rename any such division or joint venture with the name of
an Excluded


 


21

















 


Unit, the Originator will provide the Buyer not less
than thirty (30) days written notice prior to the date of implementation of
such action.  After giving such notice,
such Originator shall (i) provide such information to the Buyer relating
to such action as the Buyer may reasonably request and (ii) execute and
deliver such amendments to this Agreement and other agreements and documents
related hereto as the Buyer may reasonably request to maintain perfected in the
Receivables intended to be conveyed hereunder.


 


Section 4.04.  Breach of
Representations, Warranties or Covenants. 
Upon discovery by any Originator or Buyer of any breach with respect to
any Receivable of any (a) representation, warranty or covenant relating to
the absence of Dilution Factors, or (b) representation, warranty or
covenant described in Sections 4.01(s), 4.01(u), 4.01(x),
4.01(y), 4.02(l), 4.03(a), 4.03(b), 4.03(c),
4.03(n) or 4.03(o), the party discovering the same shall give
prompt written notice thereof to the other parties hereto.  The Originator that breached such
representation, warranty or covenant shall, if requested by notice from Buyer,
on the first Business Day following receipt of such notice, either (a) repurchase
the affected Transferred Receivable from Buyer for cash remitted to the
applicable Collection Account or (b) transfer ownership of a new Eligible
Receivable or new Eligible Receivables to Buyer on such Business Day without
payment of the Sale Price therefor, in each case in an amount (the “Rejected
Amount”) equal to the Billed Amount of such Transferred Receivable minus
the sum of (i) Collections received in respect thereof plus (ii) the
amount of any Dilution Factors taken into account in the calculation of the
Original Sale Price thereof.  Each
Originator shall take reasonable steps to assure that no Collections or other
proceeds with respect to a Transferred Receivable so reconveyed to it are paid
or deposited into any Collection Account.


 


ARTICLE V

INDEMNIFICATION


 


Section 5.01.  Indemnification.  Without limiting any other rights that Buyer
or any of its Stockholders, any of its assignees including the Lenders and the
Administrative Agent, or any of their respective officers, directors,
employees, attorneys, agents or representatives and transferees, successors and
assigns (each, a “Buyer Indemnified Person”) may have hereunder or under
applicable law, each Originator hereby agrees to indemnify and hold harmless
each Buyer Indemnified Person from and against any and all Indemnified Amounts
that may be claimed or asserted against or incurred by any such Buyer
Indemnified Person in connection with or arising out of the transactions
contemplated under this Agreement or with respect to such Originator’s
obligations under any other Related Document, any actions or failures to act in
connection therewith, including any and all legal costs and expenses arising
out of or incurred in connection with disputes between or among any parties to
any of the Related Documents, or in respect of any Transferred Receivable or
any Contract therefor or the use by such Originator of the Sale Price therefor;
provided, that no Originator shall be liable for any indemnification to
a Buyer Indemnified Person to the extent that any such Indemnified Amounts (x)
result from such Buyer Indemnified Person’s gross negligence or willful
misconduct, as determined by a court of competent jurisdiction, (y) constitute
 recourse for uncollectible or uncollected Transferred Receivables due to
the credit risk, financial inability to pay or other failure (without cause or
justification) or inability on the part of the related Obligor to perform its
obligations thereunder or the occurrence of any event of bankruptcy with
respect to such Obligor or (z) includes any tax imposed on or measured by the
net income or profits or any franchise or other tax in lieu thereof


 


22

















 


(including
branch profits or similar taxes) of any Indemnified Person by (i) the
jurisdiction under the laws of which such Indemnified Person is organized or
any political subdivision thereof or (ii) the jurisdiction of such
Indemnified Person’s applicable lending office or any political subdivision
thereof.  Subject to clauses (x), (y)
and (z) of the proviso in the immediately preceding sentence, but
otherwise without limiting the generality of the foregoing, each Originator
shall pay on demand to each Buyer Indemnified Person any and all Indemnified
Amounts relating to or resulting from:


 


(i)                                     reliance
on any representation or warranty made or deemed made by such Originator (or
any of its officers) under or in connection with this Agreement or any other
Related Document (without regard to any qualifications concerning the
occurrence or non-occurrence of a Material Adverse Effect (other than a
qualifier with respect to the financial condition of an Originator) or similar
concepts of materiality) or on any other information delivered by such
Originator pursuant hereto or thereto that shall have been incorrect when made
or deemed made or delivered;


 


(ii)                                  the
failure by such Originator to comply with any term, provision or covenant
contained in this Agreement, any other Related Document or any agreement
executed in connection herewith or therewith (without regard to any
qualifications concerning the occurrence or non-occurrence of a Material
Adverse Effect (other than a qualifier with respect to the financial condition
of an Originator) or similar concepts of materiality), any applicable law, rule or
regulation with respect to any Transferred Receivable or the Contract therefor,
or the nonconformity of any Transferred Receivable or the Contract therefor
with any such applicable law, rule or regulation;


 


(iii)                               the
failure to vest and maintain vested in Buyer, or to Transfer to Buyer, valid
and properly perfected title to and sole record and beneficial ownership of the
Receivables that constitute Transferred Receivables, together with all
Collections in respect thereof, free and clear of any Adverse Claim;


 


(iv)                              any
dispute, claim, offset or defense of any Obligor (other than its discharge in
bankruptcy) to the payment of any Receivable that is the subject of a Transfer
hereunder (including a defense based on such Receivable or the Contract
therefor not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms (other than as a result of
a discharge in bankruptcy), or any other claim resulting from the sale of the
merchandise or services giving rise to such Receivable or the furnishing or
failure to furnish such merchandise or services or relating to collection
activities with respect to such Receivable (if such collection activities were
performed by any Originator or any Affiliate thereof acting as the Servicer or
a Sub-Servicer);


 


(v)                                 any
products liability claim or other claim arising out of or in connection with
merchandise, insurance or services that is the subject of any Contract;


 


(vi)                              the
commingling of Collections with respect to Transferred Receivables by any
Originator at any time with its other funds or the funds of any other Person
except as required pursuant to Section 7.03 hereof;


 


23






 













 


(vii)         any failure by such Originator to cause
the filing of, or any delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or any
other applicable laws with respect to any Receivable that is the subject of a
Transfer hereunder to the extent that such filing is necessary to maintain the
perfection and priority of the Buyer in such Receivable, whether at the time of
any such Transfer or at any subsequent time;


 


(viii)        any investigation, Litigation or
proceeding related to this Agreement or the use of the Sale Price obtained in
connection with any Sale or the ownership of Receivables or Collections with
respect thereto or in respect of any Receivable or Contract;


 


(ix)           any claim brought by any Person other
than a Buyer Indemnified Person arising from any activity by such Originator or
any of its Affiliates in servicing, administering or collecting any Transferred
Receivables;


 


(x)            any failure of (x) a Collection
Account Bank to comply with the terms of the applicable Collection Account
Agreement, (y) the Concentration Account Bank to comply with the terms of the
Concentration Account Agreement, or (z) the Borrower Account Bank to comply
with the terms of the Borrower Account Agreement;


 


(xi)           any withholding, deduction or Charge
imposed upon any payments with respect to any Transferred Receivable, any
Borrower Assigned Agreement or any other Borrower Collateral;


 


provided, that, the above provisions for
indemnity shall not be interpreted to eliminate principles of causation in
determining whether an indemnified loss has occurred.


 


If and to the extent that this Section 5.01 may be
unenforceable for any reason, each Originator agrees to make the maximum
contribution to the payment and satisfaction thereof which is permissible under
applicable law.


 


Section 5.02.  Indemnities
by the Servicer.


 


(a)           Without limiting any other rights
that a Buyer Indemnified Person may have hereunder or under applicable law, the
Servicer hereby agrees to indemnify and hold harmless each Buyer Indemnified
Person from and against any and all Indemnified Amounts that may be claimed or
asserted against or incurred by any such Buyer Indemnified Person in connection
with or arising out of the collection activities of the Servicer hereunder or
out of any breach by the Servicer of its obligations hereunder or under any
other Related Document; provided, that the Servicer shall not be liable
for any indemnification to a Buyer Indemnified Person to the extent that any
such Indemnified Amount (x) results from such Buyer Indemnified Person’s gross
negligence or willful misconduct, in each case as determined by a court of
competent jurisdiction, or (y) constitutes recourse for uncollectible or
uncollected Transferred Receivables due to the credit risk, financial inability
to pay or other failure (without cause or justification) or inability on the
part of the related Obligor to perform its obligations thereunder or the
occurrence of any event of bankruptcy with respect to such Obligor.  Without limiting the generality of the


 


24

















 


foregoing, the Servicer shall
pay on demand to each Buyer Indemnified Person any and all Indemnified Amounts
relating to or resulting from:


 


(i)            reliance on any representation or
warranty made or deemed made by the Servicer (or any of its officers) under or
in connection with this Agreement or any other Related Document (without regard
to any qualifications concerning the occurrence or non-occurrence of a Material
Adverse Effect or similar concepts of materiality) or on any other information
delivered by the Servicer pursuant hereto or thereto that shall have been
incorrect when made or deemed made or delivered;


 


(ii)           the failure by the Servicer to comply
with any term, provision or covenant contained in this Agreement, any other
Related Document or any agreement executed in connection herewith or therewith
(without regard to any qualifications concerning the occurrence or
non-occurrence of a Material Adverse Effect or similar concepts of
materiality), any applicable law, rule or regulation with respect to any
Transferred Receivable or the Contract therefor, or the nonconformity of any
Transferred Receivable or the Contract therefor with any such applicable law, rule or
regulation;


 


(iii)          the imposition of any Adverse Claim
with respect to any Transferred Receivable or the Borrower Collateral as a
result of any action taken by the Servicer;


 


(iv)          the commingling of Collections with
respect to Transferred Receivables by the Servicer at any time with its other
funds or the funds of any other Person except as required pursuant to Section 7.03
hereof;


 


provided, that, the above provisions for
indemnity shall not be interpreted to eliminate principles of causation in determining
whether an indemnified loss has occurred.


 


If and to the extent that this Section 5.02 may be
unenforceable for any reason, each Servicer agrees to make the maximum
contribution to the payment and satisfaction thereof which is permissible under
applicable law.


 


(b)           Any Indemnified Amounts subject to
the indemnification provisions of this Section 5.02  shall be paid by the Servicer to the Buyer
Indemnified Person entitled thereto within five Business Days following demand
therefor.


 


ARTICLE VI

MISCELLANEOUS


 


Section 6.01.  Notices.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been
validly served, given or delivered (a) upon the earlier of actual receipt
and three Business Days after deposit in the


 


25

















 


United States Mail, registered
or certified mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by email of the signed notice in PDF form or facsimile
transmission (with such email or facsimile promptly confirmed by delivery of a
copy by personal delivery or United States Mail as otherwise provided in this Section 6.01),
(c) one Business Day after deposit with a reputable overnight courier with
all charges prepaid or (d) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the
address or facsimile number set forth below in this Section 6.01 or
to such other address (or facsimile number) as may be substituted by
notice given as herein provided:


 


	
  Each
  Originator:

  	
   

  	
  c/o Vertis, Inc.

  
	
   

  	
   

  	
  250 West Pratt Street

  
	
   

  	
   

  	
  Baltimore, MD 21201

  
	
   

  	
   

  	
  Attention: Chief Financial Officer and Chief Legal
  Officer

  
	
   

  	
   

  	
  Facsimile No.: (410) 454-0887

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
   

  	
  Vertis Receivables II, LLC

  
	
   

  	
   

  	
  250 West Pratt Street

  
	
   

  	
   

  	
  Baltimore, MD 21201

  
	
   

  	
   

  	
  Attention: Chief Financial Officer and Chief Legal
  Officer

  
	
   

  	
   

  	
  Facsimile No.: (410) 454-0887

  
	
   

  	
   

  	
   

  
	
  Parent:

  	
   

  	
  Vertis, Inc.

  
	
   

  	
   

  	
  250 West Pratt Street

  
	
   

  	
   

  	
  Baltimore, MD 21201

  
	
   

  	
   

  	
  Attention: Chief Financial Officer and Chief Legal
  Officer

  
	
   

  	
   

  	
  Facsimile No.: (410) 454-0887.

  



 


Without limiting the
generality of the foregoing, all notices to be provided to the Buyer hereunder
shall be delivered to both the Buyer and the Administrative Agent under the
Funding Agreement, and shall be effective only upon such delivery to the
Administrative Agent in accordance with the terms of the Funding
Agreement.  The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice.  Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Buyer) designated
in any written communication provided hereunder to receive copies shall in no
way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.  Notwithstanding the foregoing, whenever it is
provided herein that a notice is to be given to any other party hereto by a
specific time, such notice shall only be effective if actually received by such
party prior to such time, and if such notice is received after such time or on
a day other than a Business Day, such notice shall only be effective on the
immediately succeeding Business Day.


 


Section 6.02.  No Waiver;
Remedies.  Buyer’s failure, at any
time or times, to require strict performance by the Originators of any
provision of this Agreement or any Receivables Assignment shall not waive,
affect or diminish any right of Buyer thereafter to demand strict compliance
and performance herewith or therewith. 
Any suspension or waiver of any breach or default hereunder shall not
suspend, waive or affect any other breach or default whether the same is prior
or subsequent thereto and whether the same or of a different type.  None of the 


 


26

















 


undertakings, agreements,
warranties, covenants and representations of any Originator contained in this
Agreement or any Receivables Assignment, and no breach or default by any
Originator hereunder or thereunder, shall be deemed to have been suspended or
waived by Buyer unless such waiver or suspension is by an instrument in writing
signed by an officer of or other duly authorized signatory of Buyer and
directed to such Originator specifying such suspension or waiver.  Buyer’s rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Buyer may have under any other agreement, including the other Related
Documents, by operation of law or otherwise. 
Recourse to the Receivables shall not be required.


 


Section 6.03.  Successors
and Assigns.  This Agreement shall be
binding upon and shall inure to the benefit of each Originator, Servicer and
Buyer and their respective successors and permitted assigns, except as
otherwise provided herein.  No Originator
nor the Servicer may assign, transfer, hypothecate or otherwise convey its
obligations or duties hereunder without the prior express written consent of
Buyer.  Any such purported assignment,
transfer, hypothecation or other conveyance by any Originator without the prior
express written consent of Buyer, shall be void.  Each Originator and the Servicer acknowledges
that Buyer may assign its rights granted hereunder, including the benefit of
any indemnities under Article V, and upon such assignment, such
assignee shall have, to the extent of such assignment, all rights of Buyer
hereunder and, to the extent permitted under the Funding Agreement, may in turn
assign such rights.  Each Originator and
the Servicer agrees that, upon any such assignment, such assignee may enforce
directly, without joinder of Buyer, the rights set forth in this
Agreement.  All such assignees, including
parties to the Funding Agreement in the case of any assignment to such parties,
shall be third party beneficiaries of, and shall be entitled to enforce Buyer’s
rights and remedies under, this Agreement to the same extent as Buyer or any of
its designated representatives may do. 
The terms and provisions of this Agreement are for the purpose of
defining the relative rights and obligations of each Originator, the Servicer
and Buyer with respect to the transactions contemplated hereby and, except for
the Lenders and the Administrative Agent, no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement.


 


Section 6.04.  Termination;
Survival of Obligations.


 


(a)           This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until the later of (i) the
Termination Date and (ii) the date on which Buyer and Originators enter
into a written agreement providing for the termination of their rights and
obligations hereunder..


 


(b)           Except as otherwise expressly
provided herein or in any other Related Document, no termination or cancellation
(regardless of cause or procedure) of any commitment made by Buyer under this
Agreement shall in any way affect or impair the obligations, duties and
liabilities of any Originator or the rights of Buyer relating to any unpaid
portion of any and all recourse and indemnity obligations of such Originator to
Buyer, including those set forth in Sections 4.04, 5.01, 6.12,
6.14 and 6.15, due or not due, liquidated, contingent or
unliquidated or any transaction or event occurring prior to such termination,
or any transaction or event, the performance of which is required after the
Commitment Termination Date.  Except as
otherwise expressly provided herein or in any other Related Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon each Originator, and all rights of


 


27

















 


Buyer hereunder, all as
contained in the Related Documents, shall not terminate or expire, but rather
shall survive any such termination or cancellation and shall continue in full
force and effect until the Termination Date; provided, that the rights
and remedies pursuant to Sections 4.04, the indemnification and
payment provisions of Article V, and the provisions of Sections
4.03(j), 6.03, 6.12, 6.14 and 6.15 shall be
continuing and shall survive any termination of this Agreement.


 


Section 6.05.  Complete
Agreement; Modification of Agreement. 
This Agreement and the other Related Documents constitute the complete
agreement between the parties with respect to the subject matter hereof and
thereof, supersede all prior agreements and understandings relating to the
subject matter hereof and thereof, and may not be modified, altered or amended
except as set forth in Section 6.06.


 


Section 6.06.  Amendments
and Waivers.  No amendment,
modification, termination or waiver of any provision of this Agreement or any
of the other Related Documents, or any consent to any departure by any
Originator therefrom, shall in any event be effective unless the same shall be
in writing and signed by each of the parties hereto; provided, that,
prior to the Termination Date, no amendment, modification, termination or
waiver of any provision of this Agreement or any of the other Related
Documents, or any consent to any departure by any Originator therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent.  No consent or
demand in any case shall, in itself, entitle any party to any other consent or
further notice or demand in similar or other circumstances.


 


Section 6.07.  Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.


 


(a)           THIS AGREEMENT AND EACH
RELATED DOCUMENT (EXCEPT TO THE EXTENT THAT ANY RELATED DOCUMENT EXPRESSLY
PROVIDES TO THE CONTRARY) AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER
SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402
OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES), EXCEPT TO THE EXTENT THAT THE PERFECTION, EFFECT OF PERFECTION
OR PRIORITY OF THE INTERESTS OF THE BUYER IN THE RECEIVABLES OR REMEDIES
HEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.


 


(b)           EACH PARTY HERETO HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THEM PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT; PROVIDED,
THAT EACH PARTY HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS


 


28

















 


MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK
CITY; PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE BUYER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE RECEIVABLES OR ANY OTHER
SECURITY FOR THE OBLIGATIONS OF THE ORIGINATORS ARISING HEREUNDER, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF BUYER.  EACH PARTY HERETO SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM  NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH PARTY HERETO HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET
FORTH IN SECTION 6.01 HEREOF AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S
ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL,
PROPER POSTAGE PREPAID.  NOTHING IN THIS SECTION SHALL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.


 


(c)           BECAUSE DISPUTES ARISING
IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.


 


Section 6.08.  Counterparts.  This Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately constitute
one agreement.


 


Section 6.09.  Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such


 


29

















 


provision shall be ineffective
only to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.


 


Section 6.10.  Section Titles.  The section titles and table of contents
contained in this Agreement are provided for ease of reference only and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.


 


Section 6.11.  No Setoff.  Each Originator’s obligations under this
Agreement shall not be affected by any right of setoff, counterclaim,
recoupment, defense or other right such Originator might have against Buyer,
all of which rights are hereby expressly waived by such Originator.


 


Section 6.12.  Confidentiality.


 


(a)           Except to the extent otherwise
required by applicable law, as reasonably believed to be appropriate to be
filed publicly with the Securities and Exchange Commission, or unless each
Affected Party shall otherwise consent in writing, each Originator, the
Servicer and Buyer agree to maintain the confidentiality of this Agreement (and
all drafts hereof and documents ancillary hereto) in its communications with
third parties other than any Affected Party or any Buyer Indemnified Person and
otherwise not to disclose, deliver or otherwise make available to any third
party (other than its directors, officers, employees, accountants or counsel)
the original or any copy of all or any part of this Agreement (or any draft
hereof and documents ancillary hereto) except to an Affected Party, a Buyer
Indemnified Person.


 


(b)           Each Originator and the Servicer
agrees that it shall not (and shall not permit any of its Subsidiaries to)
issue any news release or make any public announcement pertaining to the
transactions contemplated by this Agreement and the Related Documents without
the prior written consent of Buyer (which consent shall not be unreasonably
withheld) unless such news release or public announcement is required by law,
in which case such Originator or the Servicer shall consult with Buyer prior to
the issuance of such news release or public announcement.  Any Originator or the Servicer may, however,
disclose the general terms of the transactions contemplated by this Agreement
and the Related Documents to trade creditors, suppliers and other
similarly-situated Persons so long as such disclosure is not in the form of a
news release or public announcement.


 


(c)           Except to the extent otherwise
required by applicable law, or in connection with any judicial or
administrative proceedings, reasonably believed to be appropriate to be filed
publicly with the Securities Exchange Commission, or unless the Originators and
the Servicer otherwise consent in writing, the Buyer agrees (i) to
maintain the confidentiality of (A) this Agreement (and all drafts hereof
and documents ancillary hereto) and (B) all other confidential proprietary
information with respect to the Originators, the Servicer and their respective
Affiliates and each of their respective businesses obtained by the Buyer in
connection with the structuring, negotiation and execution of the transactions
contemplated herein and in the other documents ancillary hereto, in each case,
in its communications with third parties other than any Originator or the
Servicer, and (ii) not to disclose, deliver, or otherwise make available
to any third party (other than its directors, officers, employees, accountants
or counsel) the original or any copy of all or any part of this Agreement (or
any draft hereof and documents ancillary


 


30

















 


hereto) except to any
Originator. Notwithstanding the foregoing, Buyer shall be permitted to disclose
copies of this Agreement and the confidential proprietary information described
above to (1) each Affected Party and each Affected Party’s and their
respective Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential
and to not disclose or use such Information in violation of Regulation FD (17
C.F.R. § 243.100-243.103));  (2) any
regulatory authority (it being understood that it will to the extent reasonably
practicable provide the Originators and/or the Servicer with an opportunity to
request confidential treatment from such regulatory authority), (3) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (4) to any other party to the Funding Agreement, (5) to
the extent required in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other
Related Document or the enforcement of rights hereunder or thereunder, (6) subject
to an agreement containing provisions substantially the same as those of this
Section, to any assignee or pledgee of (or participant in), or any prospective
assignee or pledgee of (or participant in), any of its rights or obligations
under this Agreement, (7) with the consent of the applicable Originator or
Servicer or (8) to the extent such Agreement or other information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes
available to the Buyer or Affected Party on a nonconfidential basis from a
source other than Holdings or any Subsidiary thereof.


 


Section 6.13.  Further
Assurances.


 


(a)           Each Originator shall, at its sole
cost and expense, upon request of Buyer, promptly and duly execute and deliver
any and all further instruments and documents and take such further actions
that may be necessary or desirable or that Buyer may request to carry out more
effectively the provisions and purposes of this Agreement or any other Related
Document or to obtain the full benefits of this Agreement and of the rights and
powers herein granted, including (i) using its best efforts to secure all
consents and approvals necessary or appropriate for the assignment to or for
the benefit of Buyer of any Transferred Receivable held by such Originator or
in which such Originator has any rights not heretofore assigned, and (ii) filing
any financing or continuation statements under the UCC with respect to the
ownership interests or Liens granted hereunder or under any other Related
Document.  Each Originator hereby
authorizes Buyer, to file any such financing or continuation statements without
the signature of such Originator to the extent permitted by applicable
law.  A carbon, photographic or other
reproduction of this Agreement or of any notice or financing statement covering
the Transferred Receivables or any part thereof shall be sufficient as a notice
or financing statement where permitted by law. 
If any amount payable under or in connection with any of the Transferred
Receivables is or shall become evidenced by any instrument, such instrument,
other than checks and notes received in the ordinary course of business, shall
be duly endorsed in a manner satisfactory to Buyer immediately upon such
Originator’s receipt thereof and promptly delivered to Buyer.


 


(b)           If any Originator fails to perform
any agreement or obligation under this Section 6.13, Buyer may (but
shall not be required to) itself perform, or cause performance of, such


 


31

















 


agreement or obligation, and
the expenses of Buyer incurred in connection therewith shall be payable by such
Originator upon demand of Buyer.


 


Section 6.14.  Fees and
Expenses.  In addition to its
indemnification obligations pursuant to Article V, each Originator
agrees, jointly and severally, to pay on demand all Rating Agency fees and all
costs and expenses incurred by Buyer in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other Related
Documents, including the fees and out-of-pocket expenses incurred by Buyer,
(including any such amounts owed by Buyer in connection with its financing of
the Transfers hereunder), for counsel, advisors, consultants and auditors
retained in connection with the transactions contemplated hereby and advice in
connection therewith, and each Originator agrees, jointly and severally, to pay
all costs and expenses, if any (including reasonable attorneys’ fees and
expenses but excluding any costs of enforcement or collection of the
Transferred Receivables), in connection with the enforcement of this Agreement
and the other Related Documents.


 


Section 6.15.  Nonrecourse
Obligations.  Notwithstanding any
provision in any other Section of this Agreement to the contrary, any
obligation of Buyer to pay any amounts payable to the Originators pursuant to
this Agreement shall be paid pursuant hereto only if the Buyer has Excess
Funds.  In the event that the Buyer does
not have Excess Funds, the excess of the amounts due hereunder (and subject to
this Section 6.15) over the amounts paid shall not constitute a “claim”
under Section 101(5) of the Bankruptcy Code against Buyer until such
time as the Buyer has Excess Funds.


 


ARTICLE VII

SERVICER PROVISIONS


 


Section 7.01.  Appointment
of the Servicer.  Buyer hereby
appoints the Servicer as its agent to service the Transferred Receivables and,
in accordance with the Related Documents, to enforce Buyer’s rights and
interests in and under each Transferred Receivable and Contract therefor and to
serve in such capacity until the termination of its responsibilities pursuant
to Sections 8.01 or 9.01. 
In connection therewith, the Servicer hereby accepts such appointment
and agrees to perform the duties and obligations set forth herein.  The Servicer may, with the prior written
consent of the Buyer, subcontract with a Sub-Servicer for the collection,
servicing or administration of the Transferred Receivables; provided,
that (a) the Servicer shall remain liable for the performance of the
duties and obligations of such Sub-Servicer pursuant to the terms hereof, (b) any
Sub-Servicing Agreement that may be entered into and any other transactions or
services relating to the Transferred Receivables involving a Sub-Servicer shall
be deemed to be between the Sub-Servicer and the Servicer alone, and Buyer
shall not be deemed a party thereto and shall have no obligations, duties or
liabilities with respect to the Sub-Servicer and (c) each Sub-Servicing
Agreement shall expressly provide that it shall automatically terminate upon
the termination of the Servicer’s responsibilities hereunder in accordance with
the terms hereof.


 


Section 7.02.  Duties and
Responsibilities of the Servicer.


 


(a)           Subject to the provisions of this
Agreement, the Servicer shall conduct the servicing, administration and
collection of the Transferred Receivables and shall take, or cause to


 


32

















 


be taken, all actions that (i) may
be necessary or advisable to service, administer and collect each Transferred
Receivable from time to time, (ii) the Servicer would take if the
Transferred Receivables were owned by the Servicer, and (iii) are
consistent with the Credit and Collection Policies.


 


(b)           In addition to the foregoing, in
order to ensure that the Buyer has adequate funding for the purchase of
Receivables hereunder, the Servicer shall be responsible for the following:


 


(i)            preparation and delivery on behalf
of Buyer all Borrowing Requests, Repayment Notices, Borrowing Base
Certificates, Monthly Reports, Weekly Reports and Daily Reports required to be
delivered under the Funding Agreement;


 


(ii)           calculation and monitoring of the
Borrowing Base and the components thereof, and whether the Receivables included
in the calculation of the Net Receivables Balance are in fact Eligible
Receivables; and


 


(iii)          establishment, maintenance and
administration of the Collection Accounts, the Concentration Account, and the
Borrower Account in accordance with Article VIII of the Funding Agreement.


 


Section 7.03.  Collections
on Receivables.


 


(a)           In the event that the Servicer is
unable to determine the specific Transferred Receivables on which Collections
have been received from the Obligor thereunder, the parties agree that such
Collections shall be deemed to have been received on such Receivables in the
order in which they were originated with respect to such Obligor.  In addition, if an Obligor is an obligor on
Transferred Receivables and any other Receivables or indebtedness owed to any
Originator, then, unless (i) otherwise required by applicable law or (ii) specified
by the applicable Obligor in good faith and without direction of the Servicer,
the Borrower or any member of the Parent Group with respect to the application
of payments in respect of multiple Transferred Receivables owing by such
Obligor, Collections on such Transferred Receivables or other Receivables or
indebtedness shall be treated first, as a Collection of any Transferred
Receivables of such Obligor, in the order in which they were originated, before
being applied to any other Receivables or other indebtedness of such Obligor.  In the event that the Servicer is unable to
determine the specific Transferred Receivables on which discounts, offsets or
other non-cash reductions have been granted or made with respect to the Obligor
thereunder, the parties agree for purposes of this Agreement only that such
reductions shall be deemed to have been granted or made (i) prior to a
Termination Event, on such Receivables as determined by the Servicer, and (ii) from
and after the occurrence of a Termination Event, in the reverse order in which
they were originated with respect to such Obligor.


 


(b)           If the Servicer determines that
amounts unrelated to the Transferred Receivables (the “Unrelated Amounts”)
have been deposited in any Account, then the Servicer shall provide written
evidence thereof to the Buyer no later than the first Business Day following
the day on which the Servicer had actual knowledge thereof, which evidence
shall be provided in writing and shall be otherwise satisfactory to Buyer.


 


33

















 


(c)           Authorization of the Servicer.  Buyer hereby authorizes the Servicer to take,
solely in accordance with the Credit and Collection Policies, any and all
reasonable steps in its name and on its behalf necessary or desirable and not
inconsistent with the rights of the Buyer hereunder, in the determination of
the Servicer, to (a) collect all amounts due under any Transferred
Receivable, including endorsing the applicable name on checks and other
instruments representing Collections on such Receivable, and execute and
deliver any and all instruments of satisfaction or cancellation or of partial
or full release or discharge and all other comparable instruments with respect
to any such Receivable and (b) after any Transferred Receivable becomes a
Delinquent Receivable or a Defaulted Receivable and to the extent permitted
under and in compliance with applicable law and regulations, commence
proceedings with respect to the enforcement of payment of any such Receivable
and the Contract therefor and adjust, settle or compromise any payments due
thereunder, in each case to the same extent as the applicable Originator could
have done if it had continued to own such Receivable.  The Borrower shall furnish the Servicer with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties
hereunder.  Notwithstanding anything to
the contrary contained herein, at any time at which the Administrative Agent
succeeds to, or upon the exercise of remedies with respect to, Buyer’s rights
under this Agreement (in each case in accordance with the provisions of the
Funding Agreement), the Administrative Agent shall also have the absolute and
unlimited right to direct the Servicer (at the Servicer’s expense) (i) to
commence or settle any legal action to enforce collection of any Transferred
Receivable or (ii) to foreclose upon, repossess or take any other action
that the Buyer deems necessary or advisable with respect thereto.  In no event shall the Servicer be entitled to
make Buyer or any Affected Party a party to any Litigation without such
Affected Party’s express prior written consent.


 


(d)           Servicing Fees.  As compensation for its servicing activities
and as reimbursement for its reasonable expenses in connection therewith, the
Servicer shall be entitled to receive the Servicing Fees monthly on each
Settlement Date.  Such Servicing Fees
shall be payable from available funds in accordance with Section 2.07 and
2.08 of the Funding Agreement.  The
Servicer shall be required to pay for all expenses incurred by it in connection
with its activities hereunder (including any payments to accountants, counsel
or any other Person) and shall not be entitled to any payment therefor other
than the Servicing Fees.


 


(e)           Sales of Receivables.  The Buyer agrees that the Servicer, on behalf
of the Buyer, may from time to time sell or otherwise transfer Transferred
Receivables for which the applicable Obligor is a BK Obligor to a third party
that is not an Affiliate of Holdings; provided, that, (i) until the
Termination Date, no such transfers shall be permitted under this Section 7.03(e) if
either a Termination Event or an Incipient Termination Event shall have
occurred and be continuing prior to or after the consummation of any such
transfer, (ii) the Outstanding Balance of any Transferred Receivables sold
or otherwise transferred pursuant to this Section 7.03(e) in
any transaction shall not exceed $3,000,000, (iii) the aggregate
Outstanding Balance of all Transferred Receivables sold or otherwise
transferred pursuant to this Section 7.03(e) from and after
the Closing Date shall not exceed $10,000,000, (iv) each sale or transfer
of Transferred Receivables pursuant to this Section 7.03(e) shall
be made without any recourse to the Buyer and (v) any buyer of any
Transferred Receivables sold or otherwise transferred pursuant to this Section 7.03(e) shall
agree in writing that, until the date that is one year plus one day following
the date on which all Borrower Obligations have been indefeasibly paid in full
in cash, such


 


34

















 


Person shall not, directly or
indirectly, institute or cause to be instituted against Buyer any proceeding of
the type referred to in Sections 8.01(c) or 8.01(d) of
this Agreement.


 


(f)            Computer Records.  The Servicer shall maintain, consistent with
the requirements of Section 2.01(f)(i), computer records of all
invoices that are (or evidence) Contracts and from which duplicate copies of
such invoices can be produced.


 


Section 7.04.  Covenants
of the Servicer.  The Servicer
covenants and agrees that from and after the Effective Date and until the
Termination Date:


 


(a)           Compliance with Agreements and
Applicable Laws.  The Servicer shall
perform each of its obligations under this Agreement and the other Related
Documents and comply with all federal, state, provincial and local laws and
regulations applicable to it and the Receivables, including those relating to
truth in lending, retail installment sales, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices, privacy,
licensing, securities laws, margin regulations, taxation, ERISA and labor
matters and environmental laws and environmental permits, except where the
failure to so comply could not reasonably be expected to result in a Material
Adverse Effect.


 


(b)           Maintenance of Existence and
Conduct of Business.  The Servicer
shall:  (i) do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and its rights and franchises; (ii) continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder and
in accordance with the terms of its certificate or articles of incorporation
and by-laws; and (iii) at all times maintain, preserve and protect all of
its assets and properties used or useful in the conduct of its business,
including all licenses, permits, charters and registrations, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear) and from time to time make, or cause
to be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices, except to the extent that the
failure to comply with this clauses (ii) and (iii) could
not reasonably be expected to have a Material Adverse Effect within the meaning
of clauses (b) through (e) of the definition thereof.


 


(c)           Deposit of Collections.  The Servicer shall deposit or cause to be
deposited promptly into a Collection Account, and in any event no later than
the first Business Day after receipt thereof, all Collections it may receive
with respect to any Transferred Receivable.


 


(d)           ERISA.  The Servicer shall give the Administrative
Agent prompt written notice of any event that (i) could reasonably be
expected to result in the imposition of a Lien under Section 412 of the
IRC or Section 302 or 4068 of ERISA, or (ii) could reasonably be
expected to result in the incurrence by Servicer of any liabilities under Title
IV of ERISA (other than premium payments arising in the ordinary course of
business) in excess of $500,000.


 


(e)           Compliance with Credit and
Collection Policies.  The Servicer
shall comply with the Credit and Collection Policies with respect to each
Transferred Receivable and the Contract therefor.  The Servicer shall not extend, amend,
forgive, discharge, compromise, waive, cancel or otherwise modify the terms of
any Transferred Receivable or amend, modify or waive any term or condition of
any Contract related thereto in a manner that would have the effect of creating


 


35

















 


such a modification of a
Receivable, except that the Servicer may (i) reduce the Outstanding
Balance of a Receivable as required to reflect any Dilution Factors and (ii) take
such actions, to the extent permitted by the Credit and Collection Policies, as
the Servicer may deem reasonably necessary or desirable in order to maximize
Collections with respect to any past-due Receivable so long as, after giving
effect to any such action, no Receivables which constituted Eligible
Receivables prior to such action would no longer constitute Eligible
Receivables as a result of such action. 
The Servicer shall not without the prior written consent of the Buyer
amend, modify or waive any term or provision of the Credit and Collection
Policies.


 


(f)            Ownership of Transferred
Receivables; Servicing Records.  The
Servicer shall (i) identify the Transferred Receivables clearly and
unambiguously in its Servicing Records to reflect that such Transferred
Receivables are the property of the Borrower and that a Lien on such
Transferred Receivables has been granted to the Administrative Agent for the
benefit of the Lenders; (ii) maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing such Receivables in the event of the destruction of any
originals thereof) as are necessary or advisable in accordance with industry
practice (1) to reflect promptly (a) all payments received and all
credits and extensions granted with respect to such Receivables, (b) the
return, rejection, repossessions, or stoppage in transit of any
merchandise the sale of which has given rise to any such Receivable and (c) any
other reductions in the Outstanding Balance of the Receivables on account of
Dilution Factors; and (2) to determine no less frequently than the date
each Daily Report, Weekly Report or Monthly Report is due, whether each
Transferred Receivable then outstanding qualifies as an Eligible Receivable; (iii) by
no later than the Effective Date, mark conspicuously with a legend, in form and
substance satisfactory to the Buyer, its computer records pertaining to
Substantial Contracts that constitute Borrower Collateral, and its file
cabinets or other storage facilities where it maintains information pertaining
to the Borrower Collateral, to evidence the assignment of the Receivables under
this Agreement and the assignment and Liens granted pursuant to the Funding
Agreement.  Upon the occurrence and
during the continuance of a Termination Event, the Servicer shall deliver and
turn over such books and records to the Buyer or its representatives at any
time on demand.  The Servicer shall
permit any representative of the Buyer to inspect such books and records and
shall provide photocopies thereof to Buyer as more specifically set forth in Section 7.04(i).


 


(g)           Payment and Performance of Charges
and other Obligations.


 


(i)            Subject to Section 7.04(g)(ii),
the Servicer shall pay, perform and discharge or cause to be paid, performed
and discharged promptly all charges and claims payable by it, including (A) Charges
imposed upon it, its income and profits, or any of its property (real, personal
or mixed) and all Charges with respect to tax, social security and unemployment
withholding with respect to its employees, and (B) lawful claims for
labor, materials, supplies and services or otherwise before any amount thereof
shall become past due in each case, to the extent the failure to do so could
reasonably be expected to (i) materially impair the ability of such
Servicer to perform its obligations under the Related Documents, (ii) adversely
affect the validity or enforceability of any Related Document or the rights and
remedies of the Borrower, the Lenders or the Administrative Agent under any
Related Document, (iii) adversely affect the federal income tax attributes
of the sale, contribution or pledge of the Transferred Receivables


 


36

















 


pursuant to
any Related Document or (iv) affect the enforceability or value of the
Transferred Receivables (or the collectibility thereof), the Contracts
therefore, the Borrower Collateral (in each case, taken as a whole) or the
ownership interests or Liens of the Borrower or the Lenders or the
Administrative Agent thereon or the priority of such interests or Liens.


 


(ii)           The Servicer may in good faith
contest, by appropriate proceedings, the validity or amount of any charges or
claims described in Section 7.04(g)(i); provided that (A) adequate
reserves with respect to such contest are maintained on the books of the
Servicer, in accordance with GAAP, (B) such contest is maintained and
prosecuted continuously and with diligence, (C) none of the Borrower
Collateral becomes subject to forfeiture or loss as a result of such contest, (D) no
Lien shall be imposed to secure payment of such charges or claims (excepting
only Liens as to which foreclosure is not imminent and the use and value of the
property to which the Lien attaches is not impaired during the pendency of such
proceeding), and (E) the Administrative Agent has not advised the Servicer
in writing that it reasonably believes that failure to pay or to discharge such
claims or charges could have or result in a Material Adverse Effect.


 


(h)           Access.  Subject to the requirements of Section 4.02(b),
the Servicer agrees to provide Buyer, the Buyer’s officers, employees,
directors, agents and representatives with all access that the Originators have
covenanted and agreed to provide to the Buyer in Section 4.02(b).


 


(i)            Communication with Accountants.  The Servicer authorizes Buyer to communicate
directly with its independent certified public accountants, and authorizes and,
shall upon Buyer’s request, instruct those accountants to disclose and make
available to Buyer, its officers, employees, agents and representatives any and
all financial statements and other supporting financial documents, schedules
and information relating to the Servicer (including copies of any issued
management letters) with respect to the business, financial condition and other
affairs of the Servicer; provided, that the Buyer shall notify the
Servicer prior to any contact with such accountants and advisors and shall give
the Servicer the opportunity to participate in such discussions.  The Servicer agrees to render to Buyer, at
the Servicer’s own cost and expense, such clerical and other assistance as may
be reasonably requested with regard to the foregoing.


 


(j)            Collection of Transferred
Receivables.  In connection with the
collection of amounts due or to become due under the Transferred Receivables,
the Borrower Assigned Agreements and any other Borrower Collateral, the
Servicer shall take such action as it, and from and after the occurrence and
during the continuance of a Termination Event, the Buyer may deem necessary or
desirable to enforce collection of the Transferred Receivables, the Borrower
Assigned Agreements and the other Borrower Collateral.  If (i) an Incipient Termination Event or
a Termination Event shall have occurred and be continuing or (ii) the
Buyer in good faith believes that an Incipient Termination Event or a
Termination Event is imminent, then the Buyer may, without prior notice to any
Originator or the Servicer, (x) exercise its right to take exclusive ownership
and control of (1) the Lockboxes and the Collection Accounts in accordance
with the terms of the applicable Collection Account Agreements and (2) the
Concentration Account(in which case the Servicer shall be required to deposit
any Collections it then has in its possession


 


37

















 


or at any time thereafter
receives, immediately in the Agent Account) and (y) notify any Obligor under
any Transferred Receivable or obligors under the Borrower Assigned Agreements
of the sale to Buyer of such Transferred Receivables and of the pledge of such
Transferred Receivables or Borrower Assigned Agreements, as the case may be, to
the Buyer and its assignees and direct that payments of all amounts due or to
become due to the Buyer thereunder be made directly to the Buyer or any
servicer, collection agent or lockbox or other account designated by the Buyer
and the Buyer may enforce collection of any such Transferred Receivable or the
Borrower Assigned Agreements and adjust, settle or compromise the amount or
payment thereof.  The Buyer shall provide
prompt notice to the Servicer of any such notification of assignment, pledge or
direction of payment to the Obligors under any Transferred Receivables.


 


(k)           Performance of Borrower Assigned
Agreements.  The Servicer shall (i) perform
and observe all the terms and provisions of the Borrower Assigned Agreements to
be performed or observed by it, enforce the Borrower Assigned Agreements on
behalf of the Borrower in accordance with their terms and take all action as
may from time to time be requested by the Buyer in order to accomplish the
foregoing, and (ii) upon the request of and as directed by the Buyer, make
such demands and requests to any other party to the Borrower Assigned
Agreements as are permitted to be made by the Servicer thereunder.


 


(l)            License for Use of Software and
Other Intellectual Property.  Unless
expressly prohibited by the licensor thereof or any provision of applicable
law, if any, the Servicer hereby grants to the Buyer (and to the Administrative
Agent on behalf of the Lenders as assignee of the Buyer) a limited license to
use, without charge, the Servicer’s computer programs, software, printouts and
other computer materials, technical knowledge or processes, data bases,
materials, trademarks, registered trademarks, trademark applications, service
marks, registered service marks, service mark applications, patents, patent
applications, trade names, rights of use of any name, labels, fictitious names,
inventions, designs, trade secrets, goodwill, registrations, copyrights,
copyright applications, permits, licenses, franchises, customer lists, credit
files, correspondence, and advertising materials or any property of a similar
nature, as it pertains to the Transferred Receivables and the other Borrower
Collateral, or any rights to any of the foregoing, only as reasonably required
in connection with the collection of the Transferred Receivables and the
advertising for sale, and selling any of the Borrower Collateral, or exercising
of any other remedies with respect thereto, and the Servicer agrees that its
rights under all licenses and franchise agreements shall inure to the Buyer
(and to the Administrative Agent on behalf of the Lenders as assignee of the
Buyer) for purposes of the license granted herein.  Except upon the occurrence and during the
continuation of a Termination Event, the Buyer agrees not to use (and shall
cause the Administrative Agent to covenant not to use) any such license without
giving the Servicer prior written notice.


 


(m)          Deposit of Collections.  The Servicer shall (and shall cause each of
its Affiliates to) (i) instruct all Obligors to remit all payments with
respect to any Transferred Receivables directly into a Lockbox or Collection
Account, and (ii) deposit or cause to be deposited promptly into a Lockbox
or Collection Account, and in any event no later than the first Business Day
after receipt thereof, all Collections it may receive in respect of Transferred
Receivables (and until so deposited, all such Collections shall be held in
trust for the benefit of Buyer and its assigns (including the Administrative
Agent and the Lenders).  The Servicer
shall not make or permit to be made deposits into a Lockbox or a Collection
Account other than in accordance with this


 


38

















 


Agreement and the other Related
Documents.  Without limiting the
generality of the foregoing, the Servicer shall take reasonable steps to assure
that no Collections or other proceeds with respect to a Receivable reconveyed
to any Originator pursuant to Section 4.04 hereof are paid or
deposited into any Lockbox or Collection Account.


 


(n)           Commingling.  The Servicer shall not (and shall cause each
other member of the Parent Group not to) deposit or permit the deposit of any
funds that do not constitute Collections of Transferred Receivables into any
Lockbox or Collection Account except as otherwise permitted by Section 4.03(n)
hereof.  If any funds not constituting
Collections of Transferred Receivables are nonetheless deposited into a Lockbox
or Collection Account and the Servicer so notifies Buyer, Buyer shall promptly
remit any such amounts to the applicable Originator.  So long as any Transferred Receivables of an
Obligor remain unpaid, the Servicer shall not instruct such Obligor to remit
Collections of any Receivables to any Person or account other than to a Lockbox
or Collection Account.


 


(o)           Separate Identity.  The Servicer shall comply with Section 4.02(i) to
the same extent as if it were an Originator.


 


Section 7.05.  Reporting
Requirements of the Servicer.  The
Servicer hereby agrees that, from and after the Effective Date and until the
Termination Date, it shall prepare and deliver or cause to be prepared and
delivered to the Lenders and the Administrative Agent, on behalf of the Buyer,
the financial statements, notices, reports, and other information set forth in
Annex 5.02(a) to the Funding Agreement at the times, to the Persons and in
the manner set forth in Annex 5.02(a) of the Funding Agreement.


 


ARTICLE VIII

EVENTS OF SERVICER TERMINATION


 


Section 8.01.  Events of
Servicer Termination.  If any of the
following events (each, an “Event of Servicer Termination”) shall occur
(regardless of the reason therefor):


 


(a)           the Servicer shall (i) fail to
make any payment or deposit hereunder when due and payable and the same shall
remain unremedied for three (3) Business Days or more; (ii) fail to
deliver when due any of the reports required to be delivered pursuant to Section 7.05
or any other report related to the Receivables as required by the other Related
Documents and the same shall remain unremedied for five (5) Business Days
after the date specified for delivery of any report;  or (iii) fail or neglect to perform,
keep or observe any other provision of this Agreement or the other Related
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.01) and the same shall remain unremedied for
thirty (30) days or more following the earlier to occur of an Authorized
Officer of the Servicer becoming aware of such breach and the Servicer’s
receipt of notice thereof; or


 


(b)           the Servicer or any Subsidiary which
acts as a Sub-Servicer shall fail to pay when due or within any applicable
grace period any principal or interest on Debt or any Contingent Obligations or
(2) a breach or default of the Servicer or any Subsidiary which acts
as a Sub-Servicer shall occur, or any condition or event shall occur, with
respect to any Debt or any


 


39

















 


Contingent Obligations, in each
case if the effect of such breach, default or occurrence is to cause or to
permit the holder or holders then to cause, Debt and/or Contingent Obligations
having an aggregate principal amount in excess of $5,000,000 to become or be
declared due prior to their stated maturity or


 


(c)           (1) the Servicer or any
Subsidiary which acts as a Sub-Servicer commences a voluntary case under the
Bankruptcy Code, or consents to the entry of an order for relief in an
involuntary case or to the conversion of an involuntary case to a voluntary
case under any such law or consents to the appointment of or taking possession
by a receiver, trustee or other custodian for all or a substantial part of its
property; or (2) the Servicer or any Subsidiary which acts as a
Sub-Servicer makes any assignment for the benefit of creditors; or (3) the
board of directors (or equivalent thereof) or the shareholders (or equivalent
thereof) of the Servicer or any Subsidiary which acts as a Sub-Servicer adopts
any resolution or otherwise authorizes action in connection with the
administration, liquidation, winding-up or dissolution of the Servicer or any
Subsidiary which acts as a Sub-Servicer or to approve any of the actions
referred to in this Section 8.01(c); or


 


(d)           (1) a court enters a decree or
order for relief with respect to the Servicer or any Subsidiary which acts as a
Sub-Servicer in an involuntary case under the Bankruptcy Code, which decree or
order is not stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following
events for sixty (60) days unless dismissed, bonded or discharged:  (a) an involuntary case is commenced
against the Servicer or any Subsidiary which
acts as a Sub-Servicer, under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect; or (b) a decree or order of a
court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian, administrator or other officer having similar powers over the Servicer or any Subsidiary which acts as a
Sub-Servicer, or over all or a substantial part of its property, is entered; or
(c) a receiver, trustee or other custodian is appointed without the
consent of the Servicer or any Subsidiary which acts as a Sub-Servicer for, or
an encumbrance takes possession of, all or a substantial part of the property
of the Servicer or any Subsidiary which acts as a Sub-Servicer; or


 


(e)           the Servicer or any Subsidiary which
acts as a Sub-Servicer generally does not pay its debts as such debts become
due or any Authorized Officer thereof admits in writing its inability to, or is
generally unable to, pay its debts as such debts become due; or


 


(f)            any money judgment, writ or warrant
of attachment, or similar process (other than those described elsewhere in this
Section 8.01) involving an amount in the aggregate at any time in
excess of $5,000,000 (to the extent not adequately covered by insurance
provided by a reputable and solvent insurance company) is entered or filed
against the Servicer or any Subsidiary which acts as a Sub-Servicer or any of
their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five (5) Business
Days prior to the date of any proposed sale thereunder; or


 


(g)           (i) any information contained in
any Borrowing Base Certificate is untrue or incorrect in any respect other than
an Immaterial Misstatement, (ii) any information contained in any Monthly
Report, Weekly Report or Daily Report is untrue or incorrect in any material
respect or (iii) any representation or warranty of the Servicer herein or
in any other Related


 


40

















 


Document or in any written
statement, report, financial statement or certificate (other than a Borrowing
Base Certificate) made or delivered by the Servicer to any Affected Party
hereto or thereto is untrue or incorrect in any material respect (without
duplication of any materiality qualifier contained therein) as of the date when
made or deemed made and such representation and warranty, if relating to any
Transferred Receivable, has not been cured by the repurchase of any such
Transferred Receivable pursuant to Section 4.04; or


 


(h)           the Buyer shall have determined that
any event or condition that materially adversely affects the ability of the
Servicer to collect the Transferred Receivables or to otherwise perform
hereunder has occurred; or


 


(i)            a Termination Event shall have
occurred or this Agreement shall have been terminated; or


 


(j)            a deterioration has taken place in
the quality of servicing of Transferred Receivables or other Receivables serviced
by the Servicer that the Buyer, in its sole discretion, determines to be
material, and such material deterioration has not been eliminated within 30
days after written notice thereof shall have been given by the Administrative
Agent to the Servicer; or


 


(k)           the Servicer shall assign or purport
to assign any of its obligations hereunder without the prior written consent of
the Buyer; or


 


(l)            a Change of Control shall occur; or


 


(m)          a default or breach of the test set
forth in Annex Z shall occur and (i) such event cannot reasonably
be expected to be corrected or reversed within 45 days of the date of such
default or breach or (ii) 45 days shall have passed since the date of such
default or breach; or


 


(n)           (i) Holdings or any of Holdings’
Significant Subsidiaries shall fail to pay when due or within any applicable
grace period any principal or interest on Debt or any Contingent Obligations or
(2) a breach or default of Holdings or any of Holdings’ Significant
Subsidiaries shall occur, or any condition or event shall occur, with respect
to any Debt or any Contingent Obligations, in each case if the effect of such
breach, default or occurrence is to cause or to permit the holder or holders
then to cause, Debt and/or Contingent Obligations having an aggregate principal
amount in excess of $5,000,000 to become or be declared due prior to their
stated maturity;


 


(ii) (1) Holdings
or any of Holdings’ Significant Subsidiaries commences a voluntary case under
the Bankruptcy Code, or consents to the entry of an order for relief in an
involuntary case or to the conversion of an involuntary case to a voluntary
case under any such law or consents to the appointment of or taking possession
by a receiver, trustee or other custodian for all or a substantial part of its property;
or (2) Holdings or any of Holdings’ Significant Subsidiaries makes any
assignment for the benefit of creditors; or (3) the board of directors (or
equivalent thereof) or the shareholders (or equivalent thereof) of Holdings or
any of Holdings’ Significant Subsidiaries adopts any resolution or otherwise
authorizes action in connection with the administration, liquidation,
winding-up or dissolution of Holdings or any of Holdings’ Significant
Subsidiaries or to approve any of the actions referred to in this Section 8.01(n)(ii);
or


 


41

















 


(iii)          (1) a court enters a decree or
order for relief with respect to Holdings or any of Holdings’ Significant
Subsidiaries in an involuntary case under the Bankruptcy Code, which decree or
order is not stayed or other similar relief is not granted under any applicable
federal or state law; or (2) the continuance of any of the following
events for sixty (60) days unless dismissed, bonded or discharged:  (A) an involuntary case is commenced
against the Holdings or any of Holdings’ Significant Subsidiaries, under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect; or (B) a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian, administrator or other
officer having similar powers over Holdings or any of Holdings’ Significant
Subsidiaries, or over all or a substantial part of its property, is entered; or
(C) a receiver, trustee or other custodian is appointed without the
consent of Holdings or any of Holdings’ Significant Subsidiaries for, or an
encumbrance takes possession of, all or a substantial part of the property of
Holdings or any of Holdings’ Significant Subsidiaries; or


 


(iv)          Holdings or any of Holdings’
Significant Subsidiaries generally does not pay its debts as such debts become
due or any Authorized Officer thereof admits in writing its inability to, or is
generally unable to, pay its debts as such debts become due; or


 


(iv)          any money judgment, writ or warrant of
attachment, or similar process (other than those described elsewhere in this Section 8.01)
involving an amount in the aggregate at any time in excess of $5,000,000 (to
the extent not adequately covered by insurance provided by a reputable and
solvent insurance company) is entered or filed against Holdings or any of
Holdings’ Significant Subsidiaries or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) Business Days prior to the
date of any proposed sale thereunder;


 


then, and in any such
event, the Buyer may, by delivery of a Servicer Termination Notice to the
Servicer, terminate the servicing responsibilities of the Servicer hereunder,
without demand, protest or further notice of any kind, all of which are hereby
waived by the Servicer.  Upon the
delivery of any such notice, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Successor Servicer acting pursuant
to Section 9.02; provided, that notwithstanding anything to
the contrary herein, the Servicer agrees to continue to follow the procedures
set forth in Section 7.02 with respect to Collections on the
Transferred Receivables until a Successor Servicer has assumed the
responsibilities and obligations of the Servicer in accordance with Section 9.02.


 


ARTICLE IX

SUCCESSOR SERVICER PROVISIONS


 


Section 9.01.  Servicer
Not to Resign.  The Servicer shall
not resign from the obligations and duties hereby imposed on it except upon a
determination that (a) the performance of its duties hereunder has become
impermissible under applicable law or regulation and (b) there is no
reasonable action that the Servicer could take to make the performance of its
duties hereunder become permissible under applicable law.  Any such determination shall (i) with
respect to clause (a) above, be evidenced by an opinion of counsel
to such effect and (ii) with respect to clause (b) above, be
evidenced by an Officer’s Certificate to such effect, in each case delivered


 


42

















 


to the Administrative
Agent.  No such resignation shall become
effective until a Successor Servicer shall have assumed the responsibilities
and obligations of the Servicer in accordance with Section 9.02.


 


Section 9.02.  Appointment
of the Successor Servicer.  In
connection with the termination of the Servicer’s responsibilities or the
resignation by the Servicer under this Agreement pursuant to Sections 8.01
or 9.01, the Buyer may at any time appoint a successor servicer to the
Servicer that shall be acceptable to the Administrative Agent and shall succeed
to all rights and assume all of the responsibilities, duties and liabilities of
the Servicer under this Agreement (the Administrative Agent, in such capacity,
or such successor servicer being referred to as the “Successor Servicer”);
provided, that the Successor Servicer shall have no responsibility for
any actions of the Servicer prior to the date of its appointment or assumption
of duties as Successor Servicer.  In
selecting a Successor Servicer, the Buyer may (but shall not be required to)
obtain bids from any potential Successor Servicer and may agree to any bid it
deems appropriate.  The Successor
Servicer shall accept its appointment by executing, acknowledging and
delivering to the Buyer an instrument in form and substance acceptable to the
Buyer.


 


Section 9.03.  Duties of
the Servicer.  The Servicer covenants
and agrees that, following the appointment of, or assumption of duties by, a
Successor Servicer:


 


(a)           The Servicer shall terminate its
activities as Servicer hereunder in a manner that facilitates the transfer of
servicing duties to the Successor Servicer and is otherwise acceptable to the
Buyer and, without limiting the generality of the foregoing, shall, at its own
expense, timely deliver (i) any funds to the Administrative Agent that
were required to be remitted to the Administrative Agent for deposit in the
Agent Account under the Funding Agreement and (ii) all Servicing Records
and other information with respect to the Transferred Receivables to the
Successor Servicer at a place selected by the Successor Servicer.  The Servicer shall cooperate with the
Successor Servicer in effecting the termination of the responsibilities and
rights of the predecessor Servicer under this Agreement and shall account for
all funds and shall execute and deliver such instruments and do such other
things as may be required to vest and confirm in the Successor Servicer all
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer.  All reasonable costs and
expenses (including reasonable attorneys’ fees) incurred in connection with
transferring all files and other documents in respect of the Transferred
Receivables to the Successor Servicer shall be for the account of the
predecessor Servicer.


 


(b)           The Servicer shall terminate each
existing Sub-Servicing Agreement and the Successor Servicer shall not be deemed
to have assumed any of the Servicer’s interests therein or to have replaced the
Servicer as a party thereto.


 


(c)           In the event that the Servicer is terminated as Servicer hereunder but
no Successor Servicer has been appointed, the Servicer shall at the direction
of Buyer with the consent of the Administrative Agent timely deliver to the
Administrative Agent as assignee of Buyer or its designee, at a place
designated by the Administrative Agent or such designee, copies of all
Servicing Records and other information with respect to the Transferred
Receivables which otherwise would be required to be delivered to the Successor
Servicer under Section 9.03(a) above, and all reasonable costs
and expenses (including reasonable attorneys’ fees) incurred in


 


43

















 


connection with transferring
such files and other documents to the Administrative Agent shall be for the
account of the predecessor Servicer.


 


Section 9.04.  Effect of
Termination or Resignation.  Any
termination of or resignation by the Servicer hereunder shall not affect any
claims that the Buyer or its assigns may have against the Servicer for events
or actions taken or not taken by the Servicer arising prior to any such
termination or resignation.


 


Section 9.05.  Power of
Attorney.  On the Closing Date, the
Servicer shall execute and deliver a power of attorney in substantially in the
form attached hereto as Exhibit 9.05 (a “Power of Attorney”).  The Power of Attorney is a power coupled with
an interest and shall be irrevocable until this Agreement has terminated in
accordance with its terms and all of the Transferred Receivables have been
indefeasibly paid or otherwise written off as uncollectible.  The powers conferred on the Buyer under each
Power of Attorney are solely to protect the interests of the Buyer in the
Transferred Receivables and the ability of the Successor Servicer to assume the
servicing rights, powers and responsibilities of the Servicer hereunder and
shall not impose any duty upon the Buyer or the Successor Servicer to exercise
any such powers.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 


44

















 


IN WITNESS WHEREOF, the parties have caused this
Receivables Sale and Servicing Agreement to be executed by their respective duly
authorized representatives, as of the date first above written.


 


 


	
   

  	
  VERTIS RECEIVABLES II, LLC, as Buyer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS, INC., as Servicer, an Originator and as
  Parent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT, LLC, as an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT CHEMICALS, LLC, as an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENTERON GROUP, LLC, as an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V. Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS MAILING, LLC, as
  an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
					



 


S-1

















 


EXHIBIT 2.01(a)


 


Form of


 


RECEIVABLES ASSIGNMENT


 


THIS RECEIVABLES
ASSIGNMENT (the “Receivables Assignment”) is entered into as of November 25,
2005 by and between [Name of Originator] (the “Originator”) and VERTIS
RECEIVABLES II, LLC (“Buyer”).


 


1.                                       We refer to that certain Receivables Sale
and Servicing Agreement (as amended, restated, supplemented or otherwise
modified from time to time, the “Sale Agreement”) of even date herewith
among the Originator, the other Originators party thereto, Vertis, Inc. and
Buyer.  All of the terms, covenants and
conditions of the Sale Agreement are hereby made a part of this Receivables
Assignment and are deemed incorporated herein in full.  Unless otherwise defined herein, capitalized
terms or matters of construction defined or established in the Sale Agreement
shall be applied herein as defined or established therein.


 


2.                                       For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Originator hereby
sells, or, in the event the Originator is a Member of Buyer, sells or
contributes, to Buyer, without recourse, except as provided in Section 4.04
of the Sale Agreement, all of the Originator’s right, title and interest in, to
and under all of its Receivables (including all Collections, Records and
proceeds with respect thereto) existing as of the Closing Date and thereafter
created or arising at any time until the Commitment Termination Date.


 


3.                                       Subject to the terms and conditions of
the Sale Agreement, the Originator hereby covenants and agrees to assign, sell
or contribute, as applicable, execute and deliver, or cause to be assigned,
sold or contributed, executed and delivered, and to do or make, or cause to be
done or made, upon request of Buyer and at the Originator’s expense, any and
all agreements, instruments, papers, deeds, acts or things, supplemental,
confirmatory or otherwise, as may be reasonably required by Buyer for the
purpose of or in connection with acquiring or more effectively vesting in Buyer
or evidencing the vesting in Buyer of the property, rights, title and interests
of the Originator sold or contributed hereunder or intended to be sold or
contributed hereunder.


 


4.                                       Wherever possible, each provision of this
Receivables Assignment shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Receivables
Assignment shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Receivables Assignment.


 


5.                                       THIS RECEIVABLES ASSIGNMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402
OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO


 

















 


CONFLICTS OF LAW PRINCIPLES), AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.


 


IN WITNESS
WHEREOF, the parties have caused this Receivables Assignment to be executed by
their respective officers thereunto duly authorized, as of the day and year
first above written.


 


	
  [NAME OF
  ORIGINATOR]

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  VERTIS
  RECEIVABLES II, LLC, as Buyer

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
				



 


2

















 


EXHIBIT 2.01(c)(ii)


 


Form of


 


SUBORDINATED NOTE


 


	
  $[                ]

  	
   

  	
  [                ]

  



 


FOR VALUE
RECEIVED, the undersigned, VERTIS RECEIVABLES II, LLC, a Delaware limited
liability company (the “Borrower”), hereby promises to pay to the order
of [                                ],
a [                                ]
(the “Subordinated Lender”), or its assigns, at 250 West Pratt Street,
Baltimore, MD  21201, or at such other
place as the holder of this Subordinated Note (“Note”) may designate
from time to time in writing, in lawful money of the United States of America
and in immediately available funds, the principal amount of [         ]
DOLLARS [$         ], or, if less,
the aggregate unpaid principal amount of all Subordinated Loans (as defined in
the Sale Agreement referred to below) made to the Borrower, upon the earlier to
occur of (i) Final Advance Date and (ii) the Termination Date (in
each case, as defined in Annex X to the Sale Agreement referred to
below), together with interest thereon from time to time from the Effective
Date (as defined in the Sale Agreement referred to below) at the rate shown in
The Wall Street Journal as the “Prime Rate” on such date (the “Interest Rate”)
on the unpaid principal amount of each Subordinated Loan for the period
commencing on and including the date of such Subordinated Loan to but excluding
the date such Subordinated Loan is paid in full.


 


The date, amount
and interest rate of each Subordinated Loan made by the Subordinated Lender to
the Borrower, and each payment made by or on behalf of the Borrower on account
of the principal thereof, shall be recorded by the Subordinated Lender on its
books and, prior to any transfer of this Note, endorsed by the Subordinated Lender
on the schedule attached hereto or any continuation thereof.  The books of the Subordinated Lender and such
schedule shall be presumptive evidence of the amounts due and owing to the
Subordinated Lender by the Borrower; provided, that any failure of the
Subordinated Lender to record a notation in its books or on the schedule to
this Note as aforesaid or any error in so recording shall not limit or
otherwise affect the obligation of the Borrower to repay Subordinated Loans in
accordance with their respective terms set forth herein.


 


All capitalized
terms, unless otherwise defined herein, shall have the meanings assigned to
them in the Receivables Sale and Servicing Agreement of even date herewith (as
the same may be subsequently amended, restated or otherwise modified, the “Sale Agreement”)
by and among the Borrower, the Subordinated Lender, the other Originators
thereunder and Vertis, Inc.  This
Note is issued pursuant to the Sale Agreement and is one of the Subordinated
Notes referred to therein.  All of the
terms, covenants and conditions of the Sale Agreement and all other instruments
evidencing the indebtedness hereunder, including the other Related Documents,
are hereby made a part of this Note and are deemed incorporated herein in full.


 


The Borrower may
at any time and from time to time voluntarily repay, in whole or in part, all
Subordinated Loans made hereunder.  Any
amount so repaid may, subject to the terms and conditions hereof, be reborrowed
hereunder; provided, that all repayments of


 

















 


Subordinated Loans or any portion thereof shall be made together with
payment of all interest accrued on the amount repaid to (but excluding) the
date of such repayment.


 


Interest shall be
payable on the outstanding principal amount of this Note from time to time in
arrears on the first Business Day of each calendar month.  All computations of interest shall be made by
the Subordinated Lender on the basis of a 365 day year, in each case for the
actual number of days occurring in the period for which such interest is
payable.  The Interest Rate shall be
determined (i) on the first Business Day immediately prior to the
Effective Date for calculation of the Interest Rate for the period from the
Effective Date through the end of the first calendar month following the
Effective Date, and (ii) as of the last Business Day of each month for use
in calculating the interest that is payable for the following calendar month,
and the Interest Rate so determined shall be utilized for such calendar
month.  Each determination by the
Subordinated Lender of an interest rate hereunder shall be final, binding and
conclusive on the Borrower (absent manifest error).  The Borrower shall pay interest at the
applicable Interest Rate on unpaid interest on any Subordinated Loan or any
installment thereof, and on any other amount payable by the Borrower hereunder
(to the extent permitted by law) that shall not be paid in full when due
(whether at stated maturity, by acceleration or otherwise) for the period
commencing on the due date thereof to (but excluding) the date the same is
indefeasibly paid in full.


 


If any payment or
prepayment on this Note becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
and, with respect to payments of principal, interest thereon shall be payable
at the Interest Rate during such extension.


 


As set forth
below, the indebtedness evidenced by this Subordinated Note is subordinate in
right of payment to all Borrower Obligations and all renewals, extensions,
refinancings or refundings of any such obligations (whether for principal,
interest (including but not limited to interest accruing after the filing of a
petition initiating any bankruptcy, insolvency or receivership proceeding (each,
an “Insolvency Proceeding”) whether or not such interest is allowed in
such Insolvency Proceeding), fees, indemnities, repurchase price, expenses or
otherwise) (collectively, the “Senior Obligations”).  The subordination provisions contained herein
are for the direct benefit of, and may be enforced by, any holder of a Senior
Obligation, and may not be terminated, amended or otherwise revoked until the
Senior Obligations have been indefeasibly paid in full in cash and the Related
Documents terminated in accordance with their respective terms. This
Subordinated Note shall not be subject to any defense or any rights of set-off,
including on account of any past or present debt.  Upon the occurrence and during the continuance
of any Termination Event or Incipient Termination Event, the Subordinated
Lender shall not demand, accelerate, sue for, take, receive or accept from the
Borrower, directly or indirectly, in cash or other property or by set-off or
any other manner (including, without limitation, from or by way of collateral)
any payment of or security for all or any part of the indebtedness under this
Subordinated Note or exercise any remedies or take any action or proceeding to
enforce the same.  The Subordinated Lender
hereby agrees that prior to the date that is one year and one day after all of
the Senior Obligations have been indefeasibly paid in full in cash and the
Related Documents terminated in accordance with their respective terms, the
Subordinated Lender will not take any action to institute any Insolvency
Proceeding in respect of the Borrower or which would be reasonably likely to
cause the Borrower to be subject to, or seek the protection of, any such
Insolvency Proceeding.


 


2

















 


If the Borrower
becomes subject to any Insolvency Proceeding, then the holders of the Senior
Obligations shall receive payment in full of all amounts due or to become due
on or with respect to the Senior Obligations before the Subordinated Lender
shall be entitled to receive any payment on account of this Subordinated
Note.  Accordingly, any payment or
distribution of assets of the Borrower of any kind or character, whether in
cash, securities or other property, in any applicable Insolvency Proceeding,
that would otherwise be payable to or deliverable upon or with respect to any
or all indebtedness under this Subordinated Note, is hereby assigned to and
shall be paid or delivered by the person making such payment or delivery
(whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee
or otherwise) directly to the Administrative Agent for application to, or as
collateral for the payment of, the Senior Obligations until such Senior
Obligations shall have been indefeasibly paid in full in cash.


 


In no contingency
or event whatsoever, whether by reason of advancement of the proceeds hereof or
otherwise, shall the amount paid or agreed to be paid to Subordinated Lender
for the use, forbearance or detention of money advanced hereunder exceed the
highest rate of interest permissible under law (the “Maximum Lawful
Rate”).  In the event that a court of
competent jurisdiction determines that Subordinated Lender has charged or
received interest hereunder in excess of the Maximum Lawful Rate, the amount of
interest payable hereunder shall be equal to the amount payable under the
Maximum Lawful Rate; provided, that if at any time thereafter the amount
of interest payable to Subordinated Lender hereunder is less than the amount
payable under the Maximum Lawful Rate, the Borrower shall continue to pay
interest hereunder at the Maximum Lawful Rate until such time as the total
interest received by Subordinated Lender from the making of Subordinated Loans
hereunder is equal to the total interest that Subordinated Lender would have
received had the amount of interest payable to Subordinated Lender hereunder
been (but for the operation of this paragraph) the amount of interest payable
from the Effective Date.  Thereafter, the
amount of interest payable hereunder shall be the amount determined in
accordance with the terms hereof unless and until the amount so calculated
again exceeds the amount payable under the Maximum Lawful Rate, in which event
this paragraph shall again apply.  In no
event shall the total interest received by Subordinated Lender pursuant to the
terms hereof exceed the amount that Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at the Maximum
Lawful Rate.  In the event the amount
payable under the Maximum Lawful Rate is calculated pursuant to this paragraph,
such interest shall be calculated at a daily rate equal to the Maximum Lawful
Rate divided by the number of days in the year in which such calculation is
made.  In the event that a court of
competent jurisdiction, notwithstanding the provisions of this Note, shall make
a final determination that Subordinated Lender has received interest hereunder
in excess of the Maximum Lawful Rate, Subordinated Lender shall, to the extent
permitted by applicable law, promptly apply such excess first to any interest
due and not yet paid hereunder, then to the outstanding principal amount of the
Subordinated Loans, then to fees and any other unpaid charges, and thereafter
shall refund any excess to the Borrower or as a court of competent jurisdiction
may otherwise order.


 


Wherever possible
each provision of this Note shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Note
shall be prohibited or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note.


 


3

















 


Time is of the
essence of this Note.  To the fullest
extent permitted by applicable law, the Borrower expressly waives presentment,
demand, diligence, protest and all notices of any kind whatsoever with respect
to this Note.


 


BECAUSE
DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. 
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE
JUDICIAL SYSTEM AND OF ARBITRATION, THE BORROWER HERETO WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES UNDER THIS NOTE, THE SALE AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.


 


THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402
OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES), AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


 


IN WITNESS WHEREOF,
the Borrower has caused this Note to be signed and delivered by its duly
authorized officer as of the date set forth above.


 


	
   

  	
  VERTIS
  RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
						



 


4

















 


SCHEDULE OF LOANS TO SUBORDINATED NOTE


 


	
  Date

  	
   

  	
  Amount
  of

  Subordinated Loan

  	
   

  	
  Amount
  of

  Principal Paid

  	
   

  	
  Unpaid

  Principal Balance

  	
   

  	
  Notation

  made by

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


5

















 


EXHIBIT 2.03


 


Form of


 


ORIGINATOR SUPPORT AGREEMENT


 


THIS ORIGINATOR
SUPPORT AGREEMENT (“Agreement”) is entered into as of [            ,
       ], by VERTIS, INC., a Delaware
corporation (“Parent”), in favor of VERTIS RECEIVABLES II, LLC, a Delaware
limited liability company (“SPE”).


 


RECITALS


 


A.                                   SPE, as purchaser, has entered into a
Receivables Sale and Servicing Agreement dated as of November 25, 2005 (as
the same may from time to time be amended, restated, supplemented or otherwise
modified, the “Sale Agreement”), with Parent, and the persons party
thereto as “Originators.”  Unless
otherwise defined herein, capitalized terms or matters of construction defined
or established Annex X to the Sale Agreement shall be applied herein as
defined or established therein.


 


B.                                     It is a condition precedent to [            ]
becoming a party to the Sale Agreement as an “Originator” that Parent, as
owner, directly or indirectly, of at least 100% of the outstanding Stock having
ordinary voting power to elect the board of directors of [            ]
and each other Originator, shall have executed and delivered this Agreement.


 


AGREEMENT


 


NOW, THEREFORE, in
consideration of the premises and of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and in order to induce SPE to make purchases under the
Sale Agreement, Parent hereby agrees as follows:


 


Section 1.  Unconditional
Undertaking.  Parent hereby
unconditionally and irrevocably undertakes and agrees with and for the benefit
of SPE and the Administrative Agent (for itself and for the benefit of the
Lenders and the Swing Line Lender) to cause the due and punctual performance
and observance by the Servicer and each other Originator and their respective
successors and assigns (collectively, the “Vertis Entities”) of all of
the terms, covenants, conditions, agreements and undertakings on the part of
such Vertis Entity to be performed or observed under the Sale Agreement or any
document delivered by such Vertis Entity in connection with the Sale Agreement,
the Funding Agreement and the Related Documents in accordance with the terms
thereof, including the punctual payment when due of all obligations of such
Vertis Entity now or hereafter existing under the Sale Agreement whether for
indemnification payments, fees, expenses or otherwise (such terms, covenants,
conditions, agreements, undertakings and other obligations being the “Guaranteed
Obligations”), and agrees to pay any and all reasonable and documented
expenses (including reasonable and documented fees and expenses of attorneys,
auditors and accountants) incurred by SPE and its assigns in enforcing any
rights under this Agreement; provided, that the foregoing unconditional
undertaking of Parent is not intended to, and shall not, constitute a guarantee
of the collectibility or payment of the Transferred Receivables.  Parent agrees that each of its Subsidiaries
that


 

















 


becomes an “Originator” under the Sale Agreement shall be deemed to be
an “Originator” for purposes of this Agreement. 
In the event that any Vertis Entity shall fail in any manner whatsoever
to perform or observe any of its Guaranteed Obligations when the same shall be
required to be performed or observed under the Sale Agreement or any such other
Related Document, then Parent will itself duly and punctually perform or
observe, or cause to be duly and punctually performed or observed, such
Guaranteed Obligations, and it shall not be a condition to the accrual of the
obligation of Parent hereunder to perform or observe any Guaranteed Obligation
(or to cause the same to be performed or observed) that SPE or the
Administrative Agent, as applicable, shall have first made any request of or
demand upon or given any notice to Parent or to any Vertis Entity or their respective
successors or assigns, or have instituted any action or proceeding against
Parent or any Vertis Entity or their respective successors or assigns in
respect thereof.


 


Section 2.  Obligation
Absolute.  Parent undertakes that the
Guaranteed Obligations will be performed or paid strictly in accordance with
the terms of the Sale Agreement or any other Related Document delivered by a
Vertis Entity in connection with the Sale Agreement regardless of any law,
regulation or order applicable to SPE now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of SPE or the
Administrative Agent with respect thereto. 
The obligations of Parent under this Agreement are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against Parent to enforce this Agreement, irrespective of whether
any action is brought against any Vertis Entity or whether any Vertis Entity is
joined in any such action or actions. 
The liability of Parent under this Agreement shall be absolute and
unconditional irrespective of:


 


(a)                                  any lack of validity
or enforceability of the Sale Agreement or any other agreement or instrument
relating thereto;


 


(b)                                 any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Guaranteed Obligations, or any other amendment or waiver of or any consent to
departure from the Sale Agreement or any other agreement or instrument relating
thereto, including, without limitation, any increase in the Guaranteed
Obligations resulting from additional purchases or contributions of Receivables
or otherwise;


 


(c)                                  any taking, exchange,
release or non-perfection of any collateral, or any taking, release or
amendment or waiver of or consent to departure from any guaranty, for all or
any of the Guaranteed Obligations;


 


(d)                                 any manner of
application of collateral, or proceeds thereof, to all or any of the Guaranteed
Obligations, or any manner of sale or other disposition of any collateral for
all or any of the Guaranteed Obligations or any other assets of any Vertis
Entity or any of its subsidiaries;


 


(e)                                  any change,
restructuring or termination of the corporate structure or existence of any
Vertis Entity or any of its subsidiaries; or


 


2

















 


(f)                                    any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Vertis Entity or a guarantor.


 


This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by SPE upon
the insolvency, bankruptcy or reorganization of any Vertis Entity or otherwise,
all as though payment had not been made.


 


Section 3.  Waivers.  Parent hereby waives promptness, diligence,
notice of acceptance and, except to the extent required under the Sale
Agreement any other notice with respect to any of the Guaranteed Obligations
and this Agreement and any requirement that SPE protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take
any action against any Vertis Entity or any other person or entity or any
collateral.


 


Section 4.  Subrogation.  Parent agrees not to exercise any rights that
it may acquire by way of subrogation against any Vertis Entity and its property
or any rights of indemnification, contribution and reimbursement from any
Vertis Entity and its property, in each case in connection with this Agreement
and any payments made hereunder, until such time as the Guaranteed Obligations
have been paid and performed in full and the Termination Date has occurred.


 


Section 5.  Separate Identity from Buyer.  Parent shall itself, and shall ensure that
each of its Affiliates, at all times comply with the covenants and agreements
of the Originators set forth in Section 4.02(i) of the Sale
Agreement as if Parent and each of its Affiliates were identified therein.  Parent is party to no agreements with SPE or
the Administrative Agent other than pursuant to the Related Documents.


 


Section 6.  No Proceedings.  From and after the Closing Date and until the
date one year plus one day following the date on which all Borrower Obligations
have been indefeasibly paid in full in cash, Parent shall not, directly or indirectly,
institute or cause to be instituted against SPE any proceeding of the type
referred to in Sections 8.01(c) or 8.01(d) of the Sale
Agreement.


 


Section 7.  Amendments
and Waivers.  No amendment or waiver
of any provision of this Agreement, and no consent to any departure by Parent
herefrom, shall in any event be effective unless the same shall be in writing
and signed by SPE and the Administrative Agent, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.


 


Section 8.  Addresses for
Notices.  All notices and other
communications hereunder shall be sent in the manner provided in Section 6.01
of the Sale Agreement, which provisions are incorporated herein by this
reference as though fully set forth herein.


 


Section 9.  No Waiver;
Remedies.  No failure on the part of
SPE or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any


 


3

















 


other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.


 


Section 10.  Continuing
Agreement; Assignments under Sale Agreement.  This Agreement is a continuing agreement and
shall (a) remain in full force and effect until the Termination Date has
occurred and the payment and performance in full of the Guaranteed Obligations
and the payment of all other amounts payable under this Agreement, (b) be
binding upon Parent, its successors and assigns, and (c) inure to the
benefit of, and be enforceable by, SPE and its successors, transferees and
assigns.  Without limiting the generality
of the foregoing clause (c), if Buyer assigns all or any of the
Transferred Receivables, or any interest therein, the assignees shall thereupon
become vested with all the benefits in respect thereof granted to SPE and the
Administrative Agent herein or otherwise, including the rights to receive any
notices hereunder, to consent to any waivers, amendments or other modifications
of this Agreement, and/or to be reimbursed for any expenses in enforcing any
rights hereunder.


 


Section 11.  Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.


 


Section 12.  GOVERNING
LAW.  THIS AGREEMENT AND THE
ORIGINATOR OBLIGATIONS ARISING HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL
OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES)
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.


 


IN WITNESS
WHEREOF, Parent has caused this Agreement to be duly executed and delivered by
its officer thereunto duly authorized as of the date first above written.


 


	
   

  	
  VERTIS, INC., as
  Parent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
						



 


4

















 


EXHIBIT 9.05


 


Form of


 


POWER OF ATTORNEY


 


This Power of
Attorney is executed and delivered by Vertis, Inc., as Servicer “Grantor”)
in favor of Vertis Receivables II, LLC (“SPE”) or such Successor
Servicer as the SPE may designate herein (the SPE or such Successor Servicer,
the “Attorney”) pursuant to that certain Receivables Sale and Servicing
Agreement dated as of November 25, 2005 (as the same may from time to time
be amended, restated, supplement or otherwise modified, the “Sale Agreement”),
by and among Grantor, as Servicer, the persons party thereto as “Originators”,
and SPE, as Buyer (the “SPE”). 
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Sale Agreement.  No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall be required to inquire into or seek confirmation from Grantor as
to the authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which
is intended to grant to Attorney unconditionally the authority to take and
perform the actions contemplated herein, and Grantor irrevocably waives any
right to commence any suit or action, in law or equity, against any person or
entity that acts in reliance upon or acknowledges the authority granted under
this Power of Attorney.  The power of
attorney granted hereby is coupled with an interest and may not be revoked or
cancelled by Grantor until all Transferred Receivables under the Sale Agreement
have been indefeasibly paid in full and/or written-off as uncollectible and
Attorney has provided its written consent thereto.


 


Grantor hereby
irrevocably constitutes and appoints Attorney (and all officers, employees or
agents designated by Attorney), with full power of substitution, as its true
and lawful attorney in fact with full irrevocable power and authority in its
place and stead and in its name or in Attorney’s own name, from time to time in
Attorney’s discretion, to take any and all appropriate action and to execute and
deliver any and all documents and instruments that may be necessary or
desirable to accomplish the purposes of the Sale Agreement, and, without
limiting the generality of the foregoing, hereby grants to Attorney the power
and right, on its behalf, without notice to or assent by it, upon the
occurrence and during the continuance of any Termination Event, to do the
following:  (a) open mail for it,
and ask, demand, collect, give acquittances and receipts for, take possession
of, or endorse and receive payment of, any checks, drafts, notes, acceptances,
or other instruments for the payment of moneys due in respect of Transferred
Receivables, and sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any Transferred Receivable or
other Borrower Collateral; (b) pay or discharge any taxes, Liens, or other
encumbrances levied or placed on or threatened against any Borrower Collateral;
(c) defend any suit, action or proceeding brought against it or any
Borrower Collateral if the Grantor does not defend such suit, action or
proceeding or if Attorney believes that it is not pursuing such defense in a
manner that will maximize the recovery to Attorney, and settle, compromise or
adjust any suit, action, or proceeding described above and, in connection
therewith, give such discharges or releases as Attorney may deem appropriate; (d) file
or prosecute any claim, Litigation, suit or proceeding in any court of
competent jurisdiction or before any arbitrator, or take any other action
otherwise deemed appropriate by Attorney for the


 

















 


purpose of collecting any and all such moneys due with respect to any
Transferred Receivable or other Borrower Collateral or otherwise with respect
to the Related Documents whenever payable and to enforce any other right in
respect of its property; (e) sell, transfer, pledge, make any agreement
with respect to, or otherwise deal with, any Transferred Receivables or other
Borrower Collateral, and execute, in connection with such sale or action, any
endorsements, assignments or other instruments of conveyance or transfer in
connection therewith; and (g) cause the certified public accountants then
engaged by it to prepare and deliver to Attorney at any time and from time to
time, promptly upon Attorney’s request, any and all financial statements or
other reports required to be delivered by or on behalf of Grantor under the
Related Documents, all as though Attorney were the absolute owner of its
property for all purposes, and to do, at Attorney’s option and its expense, at
any time or from time to time, all acts and other things that Attorney
reasonably deems necessary to perfect, preserve, or realize upon the
Transferred Receivables and the SPE’s interests therein, all as fully and
effectively as it might do.  Grantor
hereby ratifies, to the extent permitted by law, all that said attorneys shall
lawfully do or cause to be done by virtue hereof.


 


IN WITNESS
WHEREOF, this Power of Attorney is executed by Grantor, and Grantor has caused
its seal to be affixed pursuant to the authority of its board of directors this
        day of November, 2005.


 


 


	
  Grantor

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
  (SEAL)

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
								



[Notarization in appropriate
form for the state of execution is required.]


 


2

















 


SCHEDULE 4.01(b)


 


JURISDICTION OF ORGANIZATION; EXECUTIVE OFFICES; COLLATERAL

LOCATIONS; CORPORATE, LEGAL AND OTHER NAMES; IDENTIFICATION

NUMBERS


 


[Attached]


 

















 


SCHEDULE 4.01(j)


 


INTELLECTUAL PROPERTY


 


None.


 

















 


SCHEDULE 4.01(k)


 


INVESTIGATIONS, AUDITS, ETC.


 


[Attached]


 

















 


SCHEDULE 4.01(l)


 


LITIGATION


 


[Attached]


 

















 


SCHEDULE 4.01(n)


 


ERISA


 


[Attached]


 

















 


SCHEDULE 4.01(o)


 


DEPOSIT AND DISBURSEMENT ACCOUNTS


 


[Attached]


 

















 


SCHEDULE 4.01(z)


 


SUPPLEMENTARY REPRESENTATIONS


 


In addition to the representations, warranties and
covenants contained in Section 4.01
hereof, each Originator, hereby makes the following additional representations,
warranties and covenants:


 


1.                                       Receivables. 
Each Eligible Receivable constitutes an “account” or a “general
intangible” within the meaning of the applicable UCC.


 


2.                                       Creation of
Security Interest.  Immediately
prior to their transfer thereof to the Buyer, the Originators owned and had
good and marketable title to the Receivables free and clear of any Adverse
Claim.  The Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the Receivables,
the Accounts and the Lockboxes in favor of the Buyer, which security interest
is prior to all other Adverse Claims and is enforceable as such as against any
creditors of and purchasers from the Originators.


 


3.                                       Perfection. 
The Originators have caused the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the sale of the Receivables from the
Originators to the Buyer pursuant to this Agreement.


 


4.                                       Priority.


 


(a)                                  Other than the transfer of the Receivables
by the Originators to the Borrower pursuant to this Agreement, no
Originator  has pledged, assigned, sold,
conveyed, or otherwise granted a security interest in any of the Receivables,
the Accounts or the Lockboxes to any other Person.


 


(b)                                 No Originator has authorized, or is
aware of, any filing of any financing statement against any Originator that
include a description of collateral covering the Receivables or all other
assets transferred to the Buyer hereunder, other than any financing statement
filed pursuant to this Agreement and the Funding Agreement or financing
statements that have been validly terminated on or prior to the date hereof.


 


(c)                                  No Originator is aware of any
judgment, ERISA or tax lien filings against any Originator.


 


(d)                                 None of the Accounts or any of the
Lockboxes are in the name of any Person other than the Borrower or the
Administrative Agent.  No Originator has
consented to any Bank complying with instructions of any person other than the
Administrative Agent.


 


5.                                       Survival of
Supplemental Representations. 
Notwithstanding any other provision of this Agreement or any other
Related Document, the representations contained in this Schedule 4.01(z)
shall be continuing, and remain in full force and effect until the termination
of the Sale Agreement in accordance with Section 6.04 thereof.


 


1

















 


6.                                       Originators
to Maintain Perfection and Priority.  In order to
evidence the interests of the Buyer under this Agreement, each Originator shall,
from time to time take such action, or execute and deliver such instruments
(other than filing financing statements) as may be necessary or advisable
(including, such actions as are requested by the Buyer) to maintain and
perfect, as a first-priority interest, the Buyer’s ownership and security
interest in the Receivables and all other assets sold to the Buyer pursuant
hereto.  Each Originator shall, from time
to time and within the time limits established by law, prepare and present to
the Buyer for the Buyer’s authorization and approval all financing statements,
amendments, continuations or initial financing statements in lieu of a
continuation statement in the, or other filings necessary to continue, maintain
and perfect the Buyer’s ownership and security interest in the Receivables and
all other assets sold to the Buyer pursuant hereto as a first-priority
interest. The Buyer’s approval of such filings shall authorize the Originators
to file such financing statements under the UCC without the signature of the
Buyer where allowed by applicable law. 
Notwithstanding anything else in the Related Documents to the contrary,
neither the Servicer nor any Originator shall have any authority to file a
termination, partial termination, release, partial release or any amendment
that deletes the name of a debtor or excludes collateral of any such financing
statements, without the prior written consent of the Buyer.


 


2

















 


SCHEDULE 4.02(g)


 


CONDUCT OF BUSINESS


 


[Attached]


 

















 


ANNEX X


 


DEFINITIONS


 


[Attached]


 

















 


ANNEX Y


 


SCHEDULE OF DOCUMENTS


 


[Attached]


 

















 


ANNEX Z


 


FINANCIAL TEST


 


Minimum
EBITDA.  Holdings and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter, EBITDA (as
calculated in accordance with the table set forth below) for the four fiscal
quarter period then ended of not less than $160,000,000.  In the event that Holdings and its
Subsidiaries are not in compliance with the preceding sentence, THL and
Evercore shall have the option to make a common equity or, on terms and
conditions acceptable to Administrative Agent, preferred equity, contribution
to Holdings and the net proceeds of such equity contribution shall be treated
on a dollar for dollar basis as EBITDA for purposes of determining compliance
with the preceding sentence; provided, that, such an equity contribution shall, for
purposes of its treatment as EBITDA, (i) not be made more than once in any
fiscal year and (ii) not exceed $15,000,000 in amount (i.e., not more than $15,000,000 of such an equity
contribution shall be treated as a replacement for EBITDA in any year and such
an equity contribution may only be made once per year).


 


“EBITDA”
shall be calculated in accordance with the following table:


 


	
  Consolidated Net
  Income is defined as follows:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Net income
  during the measuring period on a consolidated basis excluding:

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  the income (or
  deficit) accrued prior to the date a Subsidiary was merged or consolidated
  into Holdings or any of Holdings’ Subsidiaries

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  the income (or
  deficit) from operations of any entity that is not a Subsidiary of Holdings
  but in which Holdings has an ownership interest, except to the extent any
  such income has actually been received by Holdings or any of its Subsidiaries
  in the form of cash dividends or distributions

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any restoration
  to income of any contingency reserve greater than $1,000,000, except to the
  extent that provision for such reserve was made out of income accrued during
  such period

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any net gain (or
  loss) attributable to the write-up (or write-down) of any asset (other than
  accounts and inventory)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any net gain
  from the collection of the proceeds of life insurance policies

  	
   

  	
   

  	
   

  



 

















 


	
   

  	
  any net gain (or
  loss) arising from the sale of any securities, or the extinguishment of any
  Indebtedness, of Holdings or any of their Subsidiaries

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Net
  Income

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA is
  defined as follows:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Net
  Income (from above)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plus:

  	
  (in each case to
  the extent included in the calculation of Consolidated Net Income, but
  without duplication):

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Interest
  Expense, net of interest income

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Non-cash
  interest expense and amortization of original issue discount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any fees payable
  with respect to the Related Documents

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  gain/ (losses)
  from extraordinary items

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any gain (or
  loss) arising from the sale, exchange or other disposition of assets out of
  the ordinary course of business, other than accounts and inventory

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any other
  non-cash gains/(losses) (other than non-cash losses relating to write-offs,
  write-downs or reserves with respect to accounts and inventory)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  non-recurring
  gains/ (losses)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any provision
  for income taxes/ (net of income tax credits)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  amortization of
  deferred financing fees

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  restructuring
  charges (GAAP)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  restructuring
  charges (non-GAAP)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  depreciation and
  amortization

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any deduction as
  the result of any grant to any members of the management of Holdings or any
  of its Subsidiaries of any Stock

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Required EBITDA

  	
   

  	
  $

  	
  160,000,000

  
						



 


2

















 


Capitalized
terms used in this Annex Z and not otherwise defined herein shall have
the respective meanings ascribed to them in Annex X.


 


Rules of
Construction Concerning Financial Tests.  Unless
otherwise specifically provided therein, any accounting term used in any
Related Document shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations thereunder shall be
computed in accordance with GAAP consistently applied.  That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be
construed to limit the foregoing.  If any
Accounting Changes occur and such changes result in a change in the calculation
of the financial tests, standards or terms used in any Related Document, then
the parties thereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the financial condition of such Persons
and their Subsidiaries shall be the same after such Accounting Changes as if
such Accounting Changes had not been made. 
If the parties thereto agree upon the required amendments thereto, then
after appropriate amendments have been executed and the underlying Accounting
Change with respect thereto has been implemented, any reference to GAAP
contained therein shall, only to the extent of such Accounting Change, refer to
GAAP consistently applied after giving effect to the implementation of such
Accounting Change.  If such parties
cannot agree upon the required amendments within 30 days following the date of
implementation of any Accounting Change, then all financial statements
delivered and all calculations of financial tests and other standards and terms
in accordance with the Related Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change.


 


3