Exhibit 10.8


 


ANNEX X


 


to


 


RECEIVABLES SALE AND
SERVICING AGREEMENT


 


and


 


RECEIVABLES FUNDING AND
ADMINISTRATION AGREEMENT


 


dated as of


 


November 25, 2005


 


Definitions and
Interpretation


 


Annex X





















 


SECTION 1.  Definitions and
Conventions. 
Capitalized terms used in the Sale Agreement (as defined below) and the
Funding Agreement (as defined below) shall have (unless otherwise provided
elsewhere therein) the following respective meanings:


 


“Account” shall
mean any of the Concentration Account, the Borrower Account or the Collection
Accounts.


 


“Account Agreement”
shall mean any of  the Borrower Account
Agreement, the Concentration Account Agreement or the Collection Account
Agreements.


 


“Accounting Changes”
shall mean, with respect to any Person, (a) changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion of the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants (or any successor thereto or any
agency with similar functions); (b) changes in accounting principles
concurred in by such Person’s certified public accountants; (c) purchase
accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and the
application of the accounting principles set forth in FASB 109, including the
establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (d) the reversal of any reserves
established as a result of purchase accounting adjustments.


 


“Additional
Amounts” shall mean any amounts payable to any
Affected Party under Sections 2.09 or 2.10 of the Funding Agreement.


 


“Additional Costs”
shall have the meaning assigned to it in Section 2.09(a)
of the Funding Agreement.


 


“Administrative
Agent” shall have the meaning set forth in the
Preamble of the Funding Agreement.


 


“Administrative
Services Agreement” shall mean that certain
Administrative Services Agreement dated as of the date hereof between the
Borrower and the Parent.


 


“Advance”
shall mean any Revolving Credit Advance or Swing Line Advance, as the context
may require.


 


“Advance Date”
shall mean each day on which any Advance is made.


 


“Adverse Claim”
shall mean any claim of ownership or any Lien, other than any ownership
interest or Lien created under the Sale Agreement or the Funding Agreement.


 


“Affected Party”
shall mean each of the following Persons: each Lender, the Administrative
Agent, the Depositary, each Affiliate of the foregoing Persons, and any SPV or
participant with the rights of a Lender under Section 12.02(c) of
the Funding Agreement and their respective successors, transferees and
permitted assigns.


 


“Affiliate”
shall mean, with respect to any Person, (a) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian
or other fiduciary, ten percent (10%) or more of the Stock having ordinary
voting power in the election of directors of


 





















 


such Person, (b) each
Person that controls, is controlled by or is under common control with such
Person, or (c) each of such Person’s officers, directors, joint venturers
and partners.  For the purposes of this
definition, “control” of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.


 


“Agent Account”
shall mean account number 50232854 with the Depositary in the name of the
Administrative Agent.


 


“Aggregate Commitment”
shall mean as to all Lenders, the aggregate commitment of all Lenders to make
Advances, which aggregate commitment shall be One Hundred Thirty Million
Dollars ($130,000,000) on the Closing Date, as such amount may be adjusted, if
at all, from time to time in accordance with the Funding Agreement.


 


“Appendices”
shall mean, with respect to any Related Document, all exhibits, schedules,
annexes and other attachments thereto, or expressly identified thereto.


 


“Assignment Agreement”
shall mean an assignment agreement in the form of Exhibit 12.02
attached to the Funding Agreement.


 


“Authorized
Officer” shall mean, with respect to any corporation
or limited liability company, the Chairman or Vice-Chairman of the Board, the
President, any Vice President, the General Counsel, the Secretary, the
Treasurer, the Controller, any Assistant Secretary, any Assistant Treasurer,
any manager or managing member and each other officer of such corporation or
limited liability company specifically authorized to sign agreements,
instruments or other documents on behalf of such corporation or limited
liability company in connection with the transactions contemplated by the Sale
Agreement, the Funding Agreement and the other Related Documents.


 


 “Bank” shall mean any of the Collection
Account Banks, the Concentration Account Bank or the Borrower Account Bank.


 


“Bankruptcy Code”
shall mean the provisions of title 11 of the United States Code, 11 U.S.C. § § 101
et seq.


 


“Billed Amount”
shall mean, with respect to any Receivable, the amount billed on the Billing
Date to the Obligor thereunder.


 


“Billing Date”
shall mean, with respect to any Receivable, the date on which the invoice with
respect thereto was generated.


 


“BK
Obligor” means an Obligor that (i) to the actual knowledge of
an Authorized Officer of the Borrower or the Servicer, has admitted in writing
its inability to pay its debts as they become due, (ii) is a debtor in a
voluntary or involuntary bankruptcy proceeding, or (iii) is subject of a
comparable receivership or insolvency proceeding, unless, in the case of a
bankruptcy proceeding in clause (ii) or (iii), the applicable Originator
has been designated as a “critical vendor” and the Obligor thereunder has
obtained (x) in the case of any Receivable


 


2





















 


originated
pre-petition, a final court order approving the payment of the pre-petition
claims of such Originator on an administrative priority basis or (y) in the
case of any Receivable originated post-petition, (A) requisite court
approval to pay the post-petition claims of such Originator on an
administrative priority basis and (B) a debtor-in-possession financing
facility and management of the applicable Originator reasonably believes that
such financing will be available to pay the Receivables owing by such Obligor,
and, in any such case, such Obligor has agreed post-petition to pay the
Receivables owing by such Obligor on a current basis in accordance with its
terms.


 


“Borrower”
shall have the meaning assigned to it in the preamble to the Funding Agreement.


 


“Borrower Account”
shall mean account number 3756599574 maintained by the Borrower at the Borrower
Account Bank, which account shall be subject to a Borrower Account Agreement.


 


“Borrower Account
Agreement” shall mean any agreement among an Originator, the Borrower, the
Administrative Agent, and the Borrower Account Bank with respect to the
Borrower Account that provides, among other things, that (a) all items of
payment deposited in the Borrower Account are held by the Borrower Account Bank
as custodian for the Administrative Agent, (b) the Borrower Account Bank
has no rights of setoff or recoupment or any other claim against the Borrower
Account, as the case may be, other than for payment of its service fees and
other charges directly related to the administration of the Borrower Account
and for returned checks or other items of payment and (c) after notice
from the Administrative Agent to the Borrower Account Bank, the Borrower
Account Bank agrees to forward all Collections received in the Borrower Account
to the Agent Account within one Business Day of receipt, and is otherwise in
form and substance acceptable to the Administrative Agent.  For purposes of clarification, as of the
Closing Date, each reference to the Borrower Account Agreement shall mean a
reference to that certain Blocked Account Agreement (with Activation) dated as
of the Closing Date by and among the Parent, the Borrower, the Administrative
Agent and the Borrower Account Bank.


 


“Borrower Account Bank”
shall mean the bank or other financial institution at which the Borrower
Account is maintained, which shall initially be Bank of America, N.A.


 


“Borrower Account
Collateral” shall have the meaning assigned to it in Section 7.01(c) of the Funding Agreement.


 


“Borrower
Assigned Agreements” shall have the meaning assigned
to it in Section 7.01(b)
of the Funding Agreement.


 


“Borrower
Collateral” shall have the meaning assigned to it in Section 7.01 of the Funding Agreement.


 


“Borrower
Obligations” shall mean all loans, advances, debts,
liabilities, indemnities and obligations for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or such


 


3





















 


amounts are
liquidated or determinable) owing by the Borrower to any Affected Party under
the Funding Agreement, any other Related Document and any document or
instrument delivered pursuant thereto, and all amendments, extensions or
renewals thereof, and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising thereunder, including the Outstanding
Principal Amount, interest, Unused Commitment Fees, amounts payable in respect
of Funding Excess, Successor Servicing Fees and Expenses, Additional Amounts,
Additional Costs and Indemnified Amounts. 
This term includes all principal, interest (including all interest that
accrues after the commencement of any case or proceeding by or against the
Borrower in bankruptcy, whether or not allowed in such case or proceeding),
fees, charges, expenses, attorneys’ fees and any other sum chargeable to the
Borrower under any of the foregoing, whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or
not from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations that are paid to the
extent all or any portion of such payment is avoided or recovered directly or
indirectly from any Lender or the Administrative Agent or any assignee of any
Lender or the Administrative Agent as a preference, fraudulent transfer or
otherwise.


 


“Borrowing” shall
mean (i) the Revolving Credit Advances of the Lenders (other than the
Swing Line Lender) made pursuant to Section 2.01(b)(iii) or (iv) of
the Funding Agreement, and (ii) each Swing Line Advance made by the Swing
Line Lender pursuant to Section 2.01(b)(i) of the Funding Agreement.


 


“Borrowing Base”
shall mean, as of any date of determination, the amount equal to the lesser of:


 


(a) the Aggregate
Commitment,


 


and


 


(b) an amount equal
to the positive difference, if any, of:


 


(i) the product of (1) the
Dynamic Advance Rate multiplied by (2) the Net Receivables Balance,


 


minus


 


(ii) the sum of (W)
the Interest Reserve, (X) the Servicing Fee Reserve, plus (y) if the
EBITDA Shortfall Event shall have occurred, such other reserves as the
Administrative Agent may determine from time to time based upon its reasonable
credit judgment;


 


in each case as
disclosed in the most recently submitted Borrowing Base Certificate or
Borrowing Request or as otherwise determined by the Administrative Agent based
on Borrower Collateral information available to it, including any information
obtained from any audit or from


 


4





















 


any other reports
with respect to the Borrower Collateral, which determination shall be final,
binding and conclusive on all parties to the Funding Agreement (absent manifest
error).


 


“Borrowing Base
Certificate” shall have the meaning assigned to it in Section 5.02(b) of the Funding Agreement.


 


“Borrowing
Request” shall have the meaning assigned to it in Section 2.03(a) of the Funding Agreement.


 


“Breakage Costs”
shall have the meaning assigned to it in Section 2.10
of the Funding Agreement.


 


“Business Day”
shall mean any day that is not a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the State of Maryland, the State of New
York or, with respect to any remittances to be made by any Collection Account
Bank or the Concentration Account Bank to any related Account, in the
jurisdiction(s) in which the Accounts maintained by such Bank are located.


 


“Buyer”
shall have the meaning assigned to it in the preamble to the Sale Agreement.


 


 “Buyer
Indemnified Person” shall have the meaning assigned to
it in Section 5.01 of the Sale Agreement.


 


“Capital Lease”
shall mean, with respect to any Person, any lease of any property (whether
real, personal or mixed) by such Person as lessee that, in accordance with
GAAP, would be required to be classified and accounted for as a capital lease
on a balance sheet of such Person.


 


“Capital Lease
Obligation” shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder
that, in accordance with GAAP, would appear on a balance sheet of such lessee
in respect of such Capital Lease.


 


 “Change of
Control” means
(I) at any time prior to the consummation of a Qualified IPO, (i) a
“Change of Control” under, and as defined in, the Existing Credit Agreement as
in effect on the Closing Date, shall have occurred; (ii) the ratio of (x)
either (A) the percentage of the voting interest in Holdings’ outstanding
Stock on a fully diluted basis or (B) the percentage of the economic
interest in Holdings’ outstanding Stock, in each case owned by the THL Group at
any time, to (y) (A) the percentage of the voting interest in Holdings’
outstanding Stock on a fully diluted basis or (B) the percentage of the
economic interest in Holdings’ outstanding Stock, as the case may be, in each
case held by the THL Group on the Closing Date, shall at any time be less than
..51:1.0 or (iii) THL Group and the Evercore Group shall cease collectively
to own on a fully diluted basis in the aggregate at least 51% of the economic
and voting interest in Holdings’ outstanding Stock; (II) at any time after the
consummation of a Qualified IPO, (i) a “Change of Control” under, and as
defined in, the Existing Credit Agreement as in effect on the Closing Date,
shall have occurred; (ii) any “Person” or “group” (as such terms are used
in Sections 13(d) and 14(d) of the Securities Exchange Act) is or
becomes the 


 


5





















 


“beneficial owner”
(as defined in Rules 13(d)-3 and 13(d)-5 under the Securities Exchange
Act), directly or indirectly, of 20% or more of the economic and voting interest
in Holdings’ outstanding Stock unless the THL Group and The Evercore Group
shall collectively own a greater percentage of the economic and voting interest
in Holdings’ outstanding Stock than such “Person” or “Group” that holds 20% or
more of such Stock; (iii) the ratio of (x) either (A) the percentage
of the voting interest in Holdings’ outstanding Stock on a fully diluted basis
or (B) the percentage of the economic interest in Holdings’ outstanding
Stock, in each case owned by the THL Group at any time, to (y) (A) the
percentage of the voting interest in Holdings’ outstanding Stock on a fully
diluted basis or (B) the percentage of the economic interest in Holdings’
outstanding Stock, as the case may be, in each case held by the THL Group on
the Closing Date, shall at any time be less than .30:1.0; (iv) THL Group
and the Evercore Group shall cease collectively to own on a fully diluted basis
in the aggregate at least 30% of the economic and voting interest in Holdings’
outstanding Stock; and (III) at any time (i) the board of directors of
Holdings shall cease to consist of a majority of Continuing Directors; (ii) Holdings
shall cease to own 100% on a fully diluted basis of the shares of outstanding
Stock of the Parent and the each Originator; (iii) the Parent shall at any
time cease to own, directly or indirectly, 100% of the outstanding Stock of the
Borrower or (viii) any Originator ceases to own and control all of the
economic and voting rights associated with all of the outstanding Stock of any
of its Subsidiaries.


 


“Charges” shall
mean (i) all federal, state, provincial, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable); (ii) all levies, assessments, charges, or claims of
any governmental entity or any claims of statutory lienholders, the nonpayment
of which could give rise by operation of law to a Lien on Borrower Collateral
or any other property of the Borrower or any Originator and (iii) any such
taxes, levies, assessment, charges or claims which constitute a lien or
encumbrance on any property of the Borrower or any Originator.


 


“Closing Date”
shall mean November 25, 2005.


 


“Collection
Account” shall mean any deposit account established by
or assigned to the Borrower for the deposit of Collections pursuant to and in
accordance with Section 6.01(a)
of the Funding Agreement.


 


“Collection
Account Agreement” shall mean any agreement among an
Originator, the Borrower, the Administrative Agent, and a Collection Account
Bank with respect to a Lockbox and Collection Account that provides, among
other things, that (a) all items of payment deposited in such Lockbox and
Collection Account are held by such Collection Account Bank as custodian for
the Administrative Agent, (b) such Collection Account Bank has no rights
of setoff or recoupment or any other claim against such Collection Account, as
the case may be, other than for payment of its service fees and other charges
directly related to the administration of such Collection Account and for
returned checks or other items of payment and (c) such Collection Account
Bank agrees to forward all Collections received in such Collection Account to
the Concentration Account within one Business Day of receipt, and is otherwise
in form and substance acceptable to the Administrative Agent.  For purposes of clarification, as of the
Closing Date, each reference to Collection Account Agreement and Concentration
Account Agreement shall mean a reference to that certain Multiparty Blocked
Account Agreement dated


 


6





















 


as of the Closing
Date by and among the Parent, the Borrower, the Administrative Agent, the
Concentration Account Bank and Bank of America, N.A., as Collection Account
Bank.


 


“Collection
Account Bank” shall mean any bank or other financial
institution at which one or more Collection Accounts are maintained.


 


“Collections”
shall mean, with respect to any Receivable, all cash collections and other
proceeds of such Receivable (including late charges, fees and interest arising
thereon, and all recoveries with respect thereto that have been written off as
uncollectible).


 


“Commitment”
shall mean as to any Lender, the aggregate commitment of such Lender to make
Revolving Credit Advances as set forth in the signature page to the
Funding Agreement or in the most recent Assignment Agreement executed by such
Lender, as such amount may be adjusted, if at all, from time to time in
accordance with the Funding Agreement.


 


“Commitment
Reduction Notice” shall have the meaning assigned to
it in Section 2.02(a) of the Funding Agreement.


 


“Commitment
Termination Date” shall mean the earliest of (a) the
date so designated pursuant to Section 9.01 of
the Funding Agreement, (b) the Final Advance Date, and (c) the date
of termination of the Aggregate Commitment specified in a notice from the
Borrower to the Lenders delivered pursuant to and in accordance with Section 2.02(b) of the Funding Agreement.


 


“Commitment
Termination Notice” shall have the meaning assigned to
it in Section 2.02(b) of the Funding Agreement.


 


“Concentration
Account” shall mean account number 3756294549 maintained by the Borrower at
Concentration Account Bank, which account shall be subject to a Concentration
Account Agreement.


 


“Concentration
Account Agreement” shall mean any agreement among an Originator, the
Borrower, the Administrative Agent, and the Concentration Account Bank with
respect to the Concentration Account that provides, among other things, that (a) all
items of payment deposited in the Concentration Account are held by the
Concentration Account Bank as custodian for the Administrative Agent, (b) the
Concentration Account Bank has no rights of setoff or recoupment or any other
claim against the Concentration Account, as the case may be, other than for
payment of its service fees and other charges directly related to the
administration of the Concentration Account and for returned checks or other
items of payment and (c) the Concentration Account Bank agrees to forward
all Collections received in the Concentration Account to the Borrower Account
within one Business Day of receipt, and is otherwise in form and substance
acceptable to the Administrative Agent. 
For purposes of clarification, as of the Closing Date, each reference to
Collection Account Agreement and Concentration Account Agreement shall mean a
reference to that certain Multiparty Blocked Account Agreement dated as of the
Closing Date by and among the Parent, the Borrower, the Administrative Agent,
the Concentration Account Bank and Bank of America, N.A., as Collection Account
Bank.


 


7





















 


“Concentration Account
Bank” shall mean the bank or other financial institution at which the
Concentration Account is maintained, which shall initially be Bank of America,
N.A.


 


“Concentration Percentage” shall mean, with
respect to an Obligor as of any date of determination, the General
Concentration Percentage or, if applicable, the Special Concentration
Percentage for such Obligor at such date of determination.


 


“Contingent
Obligation” means, as applied to any Person, any direct or indirect
liability of that Person:  (i) with
respect to Guaranteed Indebtedness and with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the purpose or intent of the
Person incurring such liability, or the effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto; (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (iii) under any foreign
exchange contract, currency swap agreement, interest rate swap agreement or
other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates, (iv) any
agreement, contract or transaction involving commodity options or future
contracts, (v) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement, or (vi) pursuant
to any agreement to purchase, repurchase or otherwise acquire any obligation or
any property constituting security therefor, to provide funds for the payment
or discharge of such obligation or to maintain the solvency, financial
condition or any balance sheet item or level of income of another.  The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise supported
or, if not a fixed and determined amount, the maximum amount so guaranteed.


 


“Continuing Directors”
shall mean the directors of Holdings on the Closing Date and each other
director, if such director’s nomination for election to the board of directors
of Holdings who later joins the board of directors approved by the affirmative
vote of a majority of the then Continuing Directors at the time of such
nomination.


 


“Contract”
shall mean any agreement or invoice pursuant to, or under which, an Obligor
shall be obligated to make payments with respect to any Receivable.


 


“Contractual
Obligation” means, as applied to any Person, any indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject including the Related Documents.


 


“Contributed
Receivables” shall have the meaning assigned to it in Section 2.01(d) of the Sale
Agreement.


 


“Credit Agreement”
shall mean the Existing Credit Agreement and any refinancings, replacements or
refundings thereof that (a) are agreed to by (i) the Administrative
Agent and Requisite Lenders or (b) (i) have terms and conditions no
less favorable (as


 


8





















 


determined by the
Administrative Agent, in the exercise of its reasonable credit judgment) to the
Administrative Agent or any Lender than the terms and conditions of the
Existing Credit Agreement and (ii) with respect to which an intercreditor
agreement having terms and conditions acceptable to the Administrative Agent
and the Lenders.


 


“Credit and
Collection Policies” shall mean the written credit,
collection, customer relations and service policies of the Originators in
effect on the Closing Date and attached as Exhibit A to the Funding
Agreement, as the same may from time to time be amended, restated, supplemented
or otherwise modified with the prior written consent of the Administrative
Agent.


 


“Daily Report”
shall mean a Borrowing Base Certificate.


 


“Debt”
means, with respect to any Person, without duplication (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than six (6) months
unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers’ acceptances and surety
bonds, whether or not matured (excluding ordinary trade credit), (c) all
obligations evidenced by notes, bonds, debentures or similar instruments, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e) all
Capital Lease Obligations and the present value (discounted at the Index Rate
as in effect on the Closing Date) of future rental payments under all synthetic
leases, (f) all net settlement obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all net payment obligations
of such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all indebtedness referred to above secured by
(or for which the holder of such indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness, (i) the
“Obligations” of such Person as defined in the Existing Credit Agreement and
(k) in the case of the Borrower, the Borrower Obligations


 


“Default Rate”
shall have the meaning assigned to it in Section 2.06(b)
of the Funding Agreement.


 


“Default Ratio”
shall mean, as of any date of determination, the ratio (expressed as a percentage)
of:


 


(a)                                  the sum of (without duplication) (i) the
aggregate Outstanding Balance of all Receivables which became Defaulted
Receivables during the Settlement Period immediately preceding such date and (ii) with
respect to any Obligor that, during the Settlement Period


 


9





















 


immediately
preceding such date, became (A) a debtor in a voluntary or involuntary
bankruptcy proceeding, or (B) the subject of a comparable receivership or
insolvency proceeding, the aggregate Outstanding Balance of Receivables owing
by such Obligor that were owing by such Obligor before such Obligor became (x)
a debtor in a voluntary or involuntary bankruptcy proceeding, or (y) the
subject of a comparable receivership or insolvency;


 


to


 


(b)                                 the aggregate Outstanding Balance of all
Receivables originated during the Settlement Period which ended five (5) months
prior to the last day of the Settlement Period immediately preceding such date.


 


“Default Trigger
Ratio” shall mean, as of any date of determination,
the ratio (expressed as a percentage) of:


 


(a)                                  the average aggregate Outstanding Balance
of all Receivables as of the last day of the three Settlement Periods
immediately preceding such date (a) with respect to which any payment, or
part thereof, remains unpaid for more than 120 days after its Billing Date, or (b) that
otherwise has been or should be written off in accordance with the Credit and
Collection Policies;


 


to


 


(b)                                 the average aggregate Outstanding Balance
of all Transferred Receivables as of the last day of the three Settlement
Periods immediately preceding such date.


 


“Defaulted
Receivable” shall mean any Receivable (a) with
respect to which any payment, or part thereof, remains unpaid for more than 150
days after its Billing Date, (b) with respect to which the Obligor
thereunder is a BK Obligor or (c) that otherwise has been or should be
written off in accordance with the Credit and Collection Policies.


 


“Delinquency
Ratio” shall mean, as of any date of determination,
the ratio (expressed as a percentage) of:


 


(a)                                  the average aggregate Outstanding Balance
of all Receivables as of the last day of the three Settlement Periods
immediately preceding such date with respect to which any payment, or part
thereof, remains unpaid for a period between 91 and 120 days after the
respective Billing Dates therefor as of the last day of the Settlement Period
immediately preceding such date


 


to


 


(b)                                 the average aggregate Outstanding Balance
of all Transferred Receivables as of the last day of the three Settlement
Periods immediately preceding such date.


 


“Depositary”
shall have the meaning assigned to it in Section 6.01(c)(i)
of the Funding Agreement.


 


10





















 


“Dilution Factors”
shall mean, with respect to any Receivable, any portion of which (a) was
reduced, canceled or written-off as a result of (i) any credits, rebates,
freight charges, cash discounts, volume discounts, cooperative advertising
expenses, royalty payments, warranties, cost of parts required to be maintained
by agreement (either express or implied), allowances for early payment,
warehouse and other allowances, defective, rejected, returned or repossessed
merchandise or services, or any failure by any Originator to deliver any
merchandise or services or otherwise perform under the underlying Contract or
invoice, (ii) any change in or cancellation of any of the terms of the
underlying Contract or invoice or any cash discount, rebate, retroactive price
adjustment or any other adjustment by the applicable Originator which reduces
the amount payable by the Obligor on the related Receivable except to the
extent based on credit related reasons, (iii) any setoff in respect of any
claim by the Obligor thereof (whether such claim arises out of the same or a
related transaction or an unrelated transaction) or (iv) or any check
issued by any Transaction Party to an Obligor on account of discounts,
incorrect billings, incentive payments, credits, volume rebates or other
rebates, allowances, chargebacks, returned or repossessed goods to an Obligor
or (b) is subject to any specific dispute, offset, counterclaim or defense
whatsoever (except discharge in bankruptcy of the Obligor thereof).


 


“Dilution Ratio”
shall mean, as of any date of determination, the ratio (expressed as a
percentage) of:


 


(a)                                  the aggregate Dilution Factors for all
Transferred Receivables during the Settlement Period immediately preceding such
date


 


to


 


(b)                                 the aggregate Billed Amount of all
Transferred Receivables originated during the Settlement Period immediately
preceding such date.


 


“Dilution Reserve
Ratio” shall mean, as of any date of determination, the ratio (expressed as
a percentage) calculated in accordance with the following formula: 


 


	
  DRR

  	
   

  	
  =

  	
   

  	
  [(2.0 *ADR) + [(HDR-ADR) x (HDR/ADR)]] x DHF];

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  where

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DRR

  	
   

  	
  =

  	
   

  	
  the Dilution Reserve Ratio;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ADR

  	
   

  	
  =

  	
   

  	
  the average of the Dilution Ratios occurring during
  the twelve most recent calendar Settlement Periods preceding such date;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HDR

  	
   

  	
  =

  	
   

  	
  the highest Dilution Ratio occurring during the
  twelve most recent Settlement Periods preceding such date; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DHF

  	
   

  	
  =

  	
   

  	
  a Dilution Horizon Factor equal to (x) the aggregate
  principal amount of Receivables originated during the most recent Settlement
  Period preceding such date divided by (y) the

  



 


11





















 


	
   

  	
   

  	
   

  	
   

  	
  aggregate Outstanding Balance of all Eligible
  Receivables as of the end of the Settlement Period immediately preceding such
  date.

  



 


“Dilution Trigger
Ratio” shall mean, as of any date of determination, the average of the
Dilution Ratios for the three most recently ended Settlement Periods.


 


“Dollars”
or “$” 
shall mean lawful currency of the United States of America.


 


“Dynamic Advance
Rate” shall mean, as of any date of determination, a
percentage equal to the lesser of (i) 85% and (ii) 100% minus the sum
of the Loss Reserve Ratio and the Dilution Reserve Ratio as of such date.


 


“EBITDA” has the
meaning assigned to it in Annex Z of the Sale Agreement.


 


“EBITDA
Shortfall Event” shall mean any time after which Holdings and its
consolidated Subsidiaries shall have failed to maintain a consolidated EBITDA
of $180,000,000 or greater for any rolling four fiscal quarter period.


 


“Effective Date”
shall have the meaning assigned to it in Section 3.01
of the Funding Agreement.


 


“Election Notice”
shall have the meaning assigned to it in Section 2.01(d)
of the Sale Agreement.


 


“Eligible
Receivable” shall mean, as of any date of
determination, a Transferred Receivable:


 


(a)                                  (i) that
is due and payable in full within 60 days of its Billing Date therefor; provided,
that a Transferred Receivable otherwise satisfying the requirements of “Eligible
Receivable” but for this clause (a)(i) may constitute an “Eligible
Receivable” if (x) such Receivable is due and payable more than 60 but within
90 days of the Billing Date thereof and (y) the Outstanding Balance of such
Transferred Receivable, when added to the Outstanding Balance of all other
Transferred Receivables then constituting “Eligible Receivables” by reason of
this proviso, does not exceed an amount equal to 5% of the Outstanding Balance
of all Eligible Receivables (a “Permitted 90 Day Receivable”) and (ii) no
payment or part thereof of such Transferred Receivable remains unpaid for more
than 90 days after its Billing Date; provided, that a Permitted 90 Day
Receivable may constitute an “Eligible Receivable” if no payment or part
thereof of such Transferred Receivable remains unpaid for more than 120 days
after its billing date;


 


(b)                                 that
is not a liability of an Excluded Obligor or an Obligor with respect to which
more than 50% of the aggregate Outstanding Balance of all Receivables owing by
such Obligor are outstanding more than 90 days after the Billing Date thereof;


 


(c)                                  that
is not a liability of an Obligor organized under the laws of any jurisdiction
outside of the United States of America (including the District of Columbia but
otherwise excluding its territories and possessions); provided,
that a Receivable otherwise


 


12





















 


satisfying the requirements of “Eligible Receivable”
but for this clause (c) may constitute an Eligible Receivable if (i) (x)
the Obligor is organized under the laws of Puerto Rico or the U.S. Virgin
Islands and (y) the Outstanding Balance of such Receivable, when added to the
Outstanding Balance of all other Receivables then constituting Eligible
Receivables by reason of clause (i) of this proviso, does not exceed an
amount equal to $1,000,000 or (ii) (x) the Obligor is organized under the
laws of Canada and (y) if S&P’s rating of the foreign currency of
Canada is not A or higher, the Outstanding Balance of such Receivable, when
added to the Outstanding Balance of all other Receivables then constituting
Eligible Receivables by reason of clause (ii) of this proviso, does not
exceed an amount equal to $2,000,000;


 


(d)                                 that
is denominated and payable in Dollars in the United States of America and is
not represented by a note or other negotiable instrument or by chattel paper;


 


(e)                                  that
is not subject to any right of rescission, dispute, offset (including, without
limitation, as a result of customer promotional allowances, discounts, rebates,
or claims for damages), hold back defense, adverse claim or other claim (with
only the portion of any such Receivable subject to any such right of
rescission, dispute, offset (including, without limitation, as a result of
customer promotional allowances, discounts, rebates, or claims for damages),
hold back defense, adverse claim or other claim being considered an Ineligible
Receivable by virtue of this clause (e)), whether arising out of transactions
concerning the Contract therefor or otherwise;


 


(f)                                    with
respect to which the Obligor thereunder is not a BK Obligor;


 


(g)                                 that
is not an Unapproved Receivable;


 


(h)                                 that
does not represent “billed but not yet shipped” goods or merchandise, partially
performed or unperformed services, consigned goods or “sale or return” goods
and does not arise from a transaction for which any additional performance by
the Originator thereof, or acceptance by or other act of the Obligor
thereunder, including any required submission of documentation, remains to be
performed as a condition to any payments on such Receivable or the
enforceability of such Receivable under applicable law;


 


(i)                                     as
to which the representations and warranties of Sections 4.01(x)(ii)
through (iv) of the Sale Agreement are true and correct in all respects
as of the Transfer Date therefor;


 


(j)                                     that
is not the liability of an Obligor that has any claim against or affecting the
Originator thereof or the property of such Originator which gives rise to a
right of set-off against such Receivable (with only that portion of Receivables
owing by such Obligor equal to the amount of such claim being an Ineligible Receivable);


 


(k)                                  that
was originated in accordance with and satisfies in all material respects all
applicable requirements of the Credit and Collection Policies;


 


(l)                                     that
represents the genuine, legal, valid and binding obligation of the Obligor
thereunder enforceable by the holder thereof in accordance with its terms;


 


13





















 


(m)                               that
is entitled to be paid pursuant to the terms of the Contract therefor and has
not been paid in full or been compromised, adjusted, extended, reduced,
satisfied, subordinated, rescinded or modified (except for adjustments to the
Outstanding Balance thereof to reflect Dilution Factors made in accordance with
the Credit and Collection Policies);


 


(n)                                 that
does not contravene any laws, rules or regulations applicable thereto
(including laws, rules and regulations relating to usury, consumer
protection, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) and with
respect to which no party to the Contract therefor is in violation of any such
law, rule or regulation;


 


(o)                                 with
respect to which no proceedings or investigations are pending or threatened
before any Governmental Authority (i) asserting the invalidity of such
Receivable or the Contract therefor, (ii) asserting the bankruptcy or
insolvency of the Obligor thereunder; unless, in the case of a bankruptcy
proceeding, the applicable Originator has been designated as a “critical vendor”
and the Obligor thereunder has obtained (A) in the case of any Receivable
originated pre-petition, a final court order approving the payment of the
pre-petition claims of such Originator on an administrative priority basis or (B) in
the case of any Receivable originated post-petition, (1) a requisite court
order approving the payment of the post-petition claims of such Originator on
an administrative priority basis and (2) a debtor-in-possession financing
facility and management of the applicable Originator reasonably believes that
such financing will be available to pay the Receivables owing by such Obligor,
and, in any such case, such Obligor has agreed post-petition to pay the
Receivables owing by such Obligor on a current basis in accordance with its
terms, (iii) seeking payment of such Receivable or payment and performance
of such Contract or (iv) seeking any determination or ruling that could
affect the validity or enforceability of such Receivable or such Contract;


 


(p)                                 (i) that
is an “account” or a “general intangible” within the meaning of the UCC (or any
other applicable legislation) of the jurisdictions in which the each of the
Originators, the Parent and the Borrower are organized and in which chief
executive offices of each of the Originators, the Parent and the Borrower are
located and (ii) under the terms of the related Contract, the right to
payment thereof may be freely assigned, including as a result of compliance
with applicable law (or with respect to which, the prohibition on the
assignment of rights to payment are made fully ineffective under applicable
law);


 


(q)                                 that
is payable solely and directly to an Originator and not to any other Person
(including any shipper of the merchandise or goods that gave rise to such
Receivable), except to the extent that payment thereof may be made to a Lockbox
or otherwise as directed pursuant to Article VI
of the Funding Agreement;


 


(r)                                    with
respect to which all material consents, licenses, approvals or authorizations
of, or registrations with, any Governmental Authority required to be obtained,
effected or given in connection with the creation of such Receivable or the
Contract therefor have been duly obtained, effected or given and are in full
force and effect;


 


(s)                                  that
is created through the provision of merchandise, goods or services by the
Originator thereof in the ordinary course of its business;


 


14





















 


(t)                                    that
is not the liability of an Obligor that, under the terms of the Credit and
Collection Policies, is receiving or should receive merchandise, goods or
services on a “cash on delivery” basis;


 


(u)                                 that
does not constitute a rebilled amount arising from a deduction taken by an
Obligor with respect to a previously arising Receivable;


 


(v)                                 as
to which the Borrower has a first priority perfected ownership interest and in
which the Administrative Agent has a first priority perfected security
interest, in each case not subject to any Lien, right, claim, security interest
or other interest of any other Person (other than, in the case of the Borrower,
the Lien of the Administrative Agent for the benefit of the Lenders);


 


(w)                               to
the extent such Transferred Receivable represents postage or sales tax, such
portions of such Receivable shall not be an Eligible Receivable;


 


(x)                                   that
does not represent the balance owed by an Obligor on a Receivable in respect of
which the Obligor has made partial payment;


 


(y)                                 with
respect to which no check, draft or other item of payment was previously
received that was returned unpaid or otherwise;


 


(z)                                   with
respect to which no Authorized Officer of the Borrower, the Servicer or any
Originator thereof has any actual knowledge of any fact (including any defaults
by the Obligor thereunder on any other Receivable) that would cause such Person
to expect that any payments on such Receivable will not be paid in full within (i) 60
days of its Billing Date therefor in the case of any Transferred Receivable
other than a Permitted 90 Day Receivable or (ii) 90 days of its Billing
Date therefor in the case of any Transferred Receivable that is a Permitted 90
Day Receivable;


 


(aa)                            if the
EBITDA Shortfall Event has occurred, that complies with such other reasonable
criteria and reasonable requirements beginning on the day after receipt by the
Borrower of written notice from the Administrative Agent setting forth such
additional reasonable criteria and reasonable requirements following a detailed
analysis of the receivables and discussion with the Borrower; and


 


(bb)                          if
additional criteria are required or recommended by S&P or Moody’s, that
complies with such other criteria required or recommended by S&P or Moody’s
from and after the date the Borrower receives written notice of such criteria
from the Administrative Agent.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974 and any
regulations promulgated thereunder.


 


“ERISA Affiliate”
shall mean, with respect to any Originator, any trade or business (whether or
not incorporated) that, together with such Originator, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.


 


15





















 


“ERISA Event”
shall mean, with respect to any Originator or any ERISA Affiliate, the
occurrence of one or more of the following events:  (a) any event described in Section 4043(c) of
ERISA with respect to a Title IV Plan unless the 30-day notice requirement with
respect thereto has been waived pursuant to the regulations under Section 4043
of ERISA; (b) the withdrawal of any Originator or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which
it was a “substantial employer,” as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Originator or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the
failure by any Originator or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within 30 days; (g) any other event or condition that might
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069
or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 of ERISA; or (i) the loss of a
Qualified Plan’s qualification or tax exempt status, in each case of clauses (a) through
(i), that individually or in the aggregate could reasonably be expected to
result in liabilities to an Originator or any of its ERISA Affiliates in excess
of $500,000.


 


“ESOP” means a
Plan that is intended to satisfy the requirements of Section 4975(e)(7) of
the IRC.


 


“Event of
Servicer Termination” shall have the meaning
assigned to it in Section 8.01 of
the Sale Agreement.


 


“Evercore” means
Evercore Capital Partners L.P.


 


“Evercore Affiliates”
means Evercore and any Person that directly or indirectly through one or more
intermediaries, controls or is in common control with Evercore.


 


“Evercore Group”
means Evercore and any Evercore Affiliates who act as a partnership, syndicate,
limited partnership or other group for the purpose of acquiring, holding or
disposing of securities of Holdings.


 


“Excess
Concentration Amount” shall mean, with respect to any
Obligor of a Receivable and as of any date of determination after giving effect
to all Eligible Receivables transferred on such date, the amount by which the
Outstanding Balance of Eligible Receivables owing by such Obligor exceeds (i) the
Concentration Percentage for such Obligor multiplied by
(ii) the Outstanding Balance of all Eligible Receivables on such date; provided,
however, that in the case of an Obligor which is an Affiliate of other
Obligors, the Excess Concentration Amount for such Obligor shall be calculated
as if such Obligor and such one or more affiliated Obligors were one Obligor.


 


“Excess Funds”
means the excess of (a) the aggregate projected value of the Buyer’s
assets and other property (including cash and cash equivalents), over (b) the
sum of (i)


 


16





















 


the sum of all scheduled
payments of principal, interest and other amounts payable on all indebtedness
of the Buyer for borrowed money, plus (ii) the sum of all other
liabilities, indebtedness and other obligations of Buyer for borrowed money,
together with all unpaid interest then accrued thereon, plus (iii) any
taxes payable by the Buyer to the IRS, plus (iv) all other indebtedness,
liabilities and obligations of the Buyer then due and payable, but the amount
of any liability, indebtedness or obligation of the Buyer shall not exceed the
projected value of the assets to which recourse for such liability,
indebtedness or obligation is limited. 
Excess Funds shall be calculated once each Business Day.


 


 “Excluded Obligor”
shall mean any Obligor (a) that is an Affiliate of any Originator, the
Parent, Holdings or the Borrower, or (b) that is a Governmental Authority
(unless approved by the Administrative Agent as a result of satisfactory
compliance with all assignment of claims statutes and regulations applicable to
such Governmental Authority’s Receivables or such other agreements have been
entered into which are satisfactory to the Administrative Agent in its sole
discretion, which shall include a waiver of such Obligor’s setoff rights), or (c) if
the EBITDA Shortfall Event has occurred, that is designated as an Excluded
Obligor upon ten (10) Business Days’ prior written notice from the
Administrative Agent to the Borrower, the Servicer and the Parent.


 


“Excluded Receivable”
means indebtedness of any Person (whether constituting an account, chattel
paper, document, instrument or general intangible (under which such Person’s
principal obligation is a monetary obligation) and whether or not earned by
performance) arising from the provision of merchandise, goods or services by an
Originator to such Person, including the right to payment of any interest or
finance charges and other obligations of such Person with respect thereto that
was originated by the (A) response management facility located in
Rochester, New York, (B) sheet fed printing facility located in Chicago,
Illinois and (C)  media placement business formerly known as The Newspaper
Network located in Atlanta, Georgia, Greenville, South Carolina and Sacramento,
California.


 


“Existing
Credit Agreement” means that certain Credit Agreement dated as of December        ,
2004 by and among the Parent, Vertis Limited and Vertis Digital Services
Limited, as borrowers, the persons party thereto as credit parties, GE Capital,
as agent, L/C issuer, swing line lender and a lender, the other lenders from
time to time party thereto, GECC Capital Markets Group, Inc., as lead
arranger, and Bank of America, N.A., as documentation agent and joint-lead
arranger, together with all amendments, restatements, supplements or
modifications thereto that are in effect on the Closing Date or adopted from
time to time thereafter to the extent not prohibited under the Related
Documents.


 


“Existing
Securitization Program” means that certain trade receivables securitization
program evidenced by, among other documents, that certain Amended and Restated
Indenture and Servicing Agreement, dated as of December 9, 2002, among
Vertis Receivables, LLC, as issuer, the Parent, as servicer and Manufacturers
and Traders Trust Company, as trustee and that certain Amended and Restated
Receivables Purchase Agreement, dated as of December 9, 2002, among Vertis
Receivables, LLC, the Parent, as servicer, and various Affiliates of the
Parent, as sellers.


 


17





















 


“Federal Funds
Rate” means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by the Administrative
Agent.


 


“Federal Reserve
Board” shall mean the Board of Governors of the
Federal Reserve System.


 


“Fee Letter”
shall mean that certain letter agreement dated the Closing Date between the
Parent and the Administrative Agent.


 


“Fees” shall mean
any and all fees payable to the Administrative Agent or any Lender pursuant to
the Funding Agreement or any other Related Document, including, without limitation,
the Unused Commitment Fee.


 


“Final
Advance Date” shall mean (i) December 22, 2008 or (ii) if
the Existing Credit Agreement is extended by GE Capital or refinanced by GE
Capital with a termination date no earlier than November 25, 2010, November 25,
2010, as such date may be further extended with the consent of the Borrower,
the Lenders and the Administrative Agent.


 


“Financial Projections”
means Holdings, Originators’ and their Subsidiaries’ forecasted
consolidated  (accompanied by mutually
acceptable supplemental non-consolidated information customarily prepared by
management): (a) balance sheets; (b) profit and loss statements; and (c) cash
flow statements, all prepared on a basis substantially consistent with the
historical financial statements of Holdings and the Originators, together with
appropriate supporting details and a statement of underlying assumptions and in
the form and in detail substantially consistent with the financial budgets and
projections (as appropriate).


 


“Funding
Agreement” shall mean that certain Receivables Funding
and Administration Agreement dated as of the Closing Date, by and among the
Borrower, the Lenders, the Swing Line Lender and the Administrative Agent.


 


“Funding
Availability” shall mean, as of any date of determination,
the amount, if any, by which the Borrowing Base exceeds the Outstanding
Principal Amount, in each case as of the end of the immediately preceding day.


 


“Funding Excess”
shall mean, as of any date of determination, the extent to which the Outstanding
Principal Amount exceeds the Borrowing Base, in each case as disclosed in the
most recently submitted Borrowing Base Certificate or Borrowing Request or as
otherwise determined by the Administrative Agent based on Borrower Collateral
information available to it, including any information obtained from any audit
or from any other reports with respect to the Borrower Collateral, which
determination shall be final, binding and conclusive on all parties to the
Funding Agreement (absent manifest error).


 


“GAAP”
shall mean generally accepted accounting principles in the United States of
America as in effect from time to time, consistently applied as such term is
further defined in Section 2(a) of
this Annex X.


 


18





















 


“GE Capital”
shall mean General Electric Capital Corporation, a Delaware corporation.


 


“General
Concentration Percentage” shall mean at any time of
determination with respect to any Obligor having an unsecured long-term debt
rating and equivalent short-term rating from each of S&P and Moody’s as
described below, an amount equal to the highest applicable percentage listed
opposite such Obligor times the aggregate Outstanding Balance of Eligible
Receivables as of such time of determination:


	
  Long-Term

  Rating of Obligor

  	
   

  	
  Equivalent

  Short-Term

  Rating

  	
   

  	
  Applicable

  Percentage

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A+ or better and A1 or
  better

  	
   

  	
  A-1 or better and P-1 or
  better

  	
   

  	
  15%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB or better and Baa2 or
  better

  	
   

  	
  A-2 and P-2

  	
   

  	
  5%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BBB- or better and Baa3 or
  better

  	
   

  	
  A-3 and P-3

  	
   

  	
  4.5%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lower than BBB- or Baa3 or Not Rated

  	
   

  	
  Lower than A-3 or P-3
  or Not Rated

  	
   

  	
  3%

  



 


For purposes of
calculating the foregoing, (i) if an Obligor’s unsecured long–term debt
rating (or equivalent short-term rating) results in two different General
Concentration Percentages (because of differences in the long-term unsecured
debt ratings assigned by each of S&P and Moody’s, the General Concentration
Percentage for such Obligor shall be based upon the lower of the long-term
unsecured debt ratings and the short-term ratings; (ii) an Obligor which
does not have a long-term debt rating from S&P and/or Moody’s but which has
the equivalent short-term rating from such Rating Agency as described above
shall be deemed to have the related long-term rating and (iii) an Obligor
which does not have a short-term rating from S&P and/or Moody’s but which
has the equivalent long-term debt rating from such Rating Agency as described
above shall be deemed to have the related short-term rating.


 


“General Trial
Balance” shall mean, with respect to any Originator
and as of any date of determination, such Originator’s accounts receivable
trial balance (whether in the form of a computer printout, magnetic tape or
diskette) as of such date, listing Obligors and the Receivables owing by such
Obligors as of such date together with the aged Outstanding Balances of such
Receivables, in form and substance satisfactory to the Borrower and the
Administrative Agent.


 


“Governmental
Authority” shall mean any nation or government, any state, province
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.


 


“Guaranteed
Indebtedness” shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation (“primary obligation”)


 


19





















 


of any other
Person (the “primary obligor”) in
any manner, including any obligation or arrangement of such Person to (a) purchase
or repurchase any such primary obligation, (b) advance or supply funds (i) for
the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or (d) indemnify
the owner of such primary obligation against loss in respect thereof.  The amount of any Guaranteed Indebtedness at
any time shall be deemed to be the amount equal to the lesser at such time of
(x) the stated or determinable amount of the primary obligation in respect
of which such Guaranteed Indebtedness is incurred and (y) the maximum
amount for which such Person may be liable pursuant to the terms of the instrument
embodying such Guaranteed Indebtedness; or, if not stated or determinable, the
maximum reasonably anticipated liability (assuming full performance) in respect
thereof.


 


“Holdings” means
Vertis Holdings, Inc., a Delaware corporation.


 


“Immaterial
Misstatement” means (i) any untrue or incorrect information set forth
in any Borrowing Base Certificate which does not cause the calculation of the
Borrowing Base reflected on such Borrowing Base Certificate to be greater than
what the calculation of the Borrowing Base would have been if such information
were not untrue or incorrect or (ii) any untrue or incorrect information
inadvertently set forth in any Borrowing Base Certificate which does not cause
the calculation of the Borrowing Base reflected on such Borrowing Base Certificate
to be more than $500,000 greater than what the calculation of the Borrowing
Base would have been if such information were not untrue or incorrect; provided,
that in the case of clause (ii), such information is corrected within two
Business Days.


 


“Incipient
Servicer Termination Event” shall mean any event that,
with the passage of time or notice or both, would, unless cured or waived,
become an Event of Servicer Termination.


 


“Incipient
Termination Event” shall mean any event that, with the
passage of time or notice or both, would, unless cured or waived, become a
Termination Event.


 


“Indemnified
Amounts” shall mean, with respect to any Person, any
and all suits, actions, proceedings, claims, damages, losses, liabilities and
reasonable expenses (including, but not limited to, reasonable attorneys’ fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal).


 


“Indemnified
Person” shall have the meaning assigned to it in Section 10.01(a) of the Funding
Agreement.


 


“Indemnified
Taxes” shall have the meaning assigned to it in Section 2.08(h) of the Funding Agreement.


 


“Index Rate”
shall mean, for any day, a floating rate equal to the higher of (i) the
rate publicly quoted from time to time by The Wall Street Journal
as the “base rate on corporate


 


20





















 


loans at large
U.S. money center commercial banks” (or, if The Wall Street
Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled “Selected
Interest Rates” as the Bank prime loan rate or its equivalent), and (ii) the
sum of the Federal Funds Rate plus fifty (50) basis points per annum.   Each change in any interest rate provided
for in the Funding Agreement based upon the Index Rate shall take effect at the
time of such change in the Index Rate.


 


“Index Rate
Advance” shall mean an Advance or portion thereof
bearing interest by reference to the Index Rate.  Unless an event of the type described in the
proviso to the definition of “LIBOR Rate” set forth in this Annex X
shall have occurred, no Advance shall be an Index Rate Advance.


 


“Ineligible
Receivable” shall mean any Receivable (or portion
thereof) which fails to satisfy all of the requirements of an “Eligible
Receivable” set forth in the definition thereof.


 


 “Interest Payment
Date” shall mean, with respect to any Advance, the
first Business Day of each month; provided,
that, in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the aggregate Outstanding Principal Amount
has been paid in full and (y) the Commitment Termination Date shall be deemed
to be an “Interest Payment Date” with respect to any interest which is then
accrued under the Funding Agreement.


 


“Interest Reserve”
shall mean, as of any date of determination, an amount equal to the product of (i) 1.5,
(ii) the Index Rate, (iii) the Outstanding Principal Amount and (iv) a
fraction, the numerator of which is the higher of (a) 30 and (b) the
Receivables Collection Turnover as of the end of the Settlement Period
immediately preceding such date multiplied by 2, and the denominator of which
is 360.


 


“Investment Company
Act” shall mean the provisions of the Investment
Company Act of 1940, 15 U.S.C. § § 80a et seq.,
and any regulations promulgated thereunder.


 


“Investments”
shall mean, with respect to any Borrower Account Collateral, the certificates,
instruments, investment property or other investments in which amounts
constituting such collateral are invested from time to time.


 


“IRC”
shall mean the Internal Revenue Code of 1986 and any regulations promulgated
thereunder.


 


“IRS”
shall mean the Internal Revenue Service.


 


“Lender”
shall have the meaning assigned to it in the preamble of the Funding Agreement.
For the avoidance of doubt, unless the context otherwise requires, the term “Lenders”
includes the Swing Line Lender.


 


“LIBOR Business
Day” shall mean a Business Day on which banks in the
city of London are generally open for interbank or foreign exchange
transactions.


 


21





















 


“LIBOR Rate”
shall mean, for each calendar month, a per annum rate of interest determined by
the Administrative Agent equal to the sum of 0.50% plus:


 


(a)                                  the offered rate for deposits in United
States Dollars for the applicable calendar month which appears on Telerate Page 3750
as of 11:00 a.m., London time, on the second full LIBOR Business Day next
preceding the first day of each calendar month (unless the first day of such
calendar month is not a LIBOR Business Day, in which event the next succeeding
LIBOR Business Day will be used); divided by


 


(b)                                 a number equal to 1.0 minus
the aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day which is two (2) LIBOR
Business Days prior to the beginning of such calendar month (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve system or other governmental
authority having jurisdiction with respect thereto, as now and from time to
time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency
liabilities” in Regulation D of such Board) which are required to be maintained
by a member bank of the Federal Reserve System;


 


provided, that if a LIBOR Rate Disruption Event
shall occur, the LIBOR Rate shall in all such cases be equal to the Index Rate.  For the avoidance of doubt, except as
provided in the immediately preceding proviso, the LIBOR Rate determined for
any calendar month shall remain fixed for such calendar month.


 


If such interest rates
shall cease to be available from Telerate News Service, the LIBOR Rate shall be
determined from such financial reporting service or other information as shall
be mutually acceptable to the Administrative Agent and the Borrower.


 


“LIBOR Rate
Advance” shall mean an Advance or portion thereof
bearing interest by reference to the LIBOR Rate. Unless a LIBOR Rate Disruption
Event shall have occurred, each Advance shall be a LIBOR Rate Advance.


 


“LIBOR Rate Disruption
Event” means, for any Lender, notification by such Lender to the Borrower
and the Administrative Agent of any of the following:  (i) determination by such Lender that it
would be contrary to law or the directive of any central bank or other
governmental authority to obtain United States dollars in the London interbank
market to fund or maintain its Advances, (ii) the inability of such
Lender, by reason of circumstances affecting the London interbank market
generally, to obtain United States dollars in such market to fund its Advances
or (iii) a determination by such Lender that the maintenance of its
Advances will not adequately and fairly reflect the cost to such Lender of
funding such investment at such rate.


 


“Lien”
shall mean any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, lien, charge, claim, security interest, easement or
encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or


 


22





















 


agreement to give,
any financing statement perfecting a security interest under the UCC or
comparable law of any jurisdiction).


 


“Litigation”
shall mean, with respect to any Person, any action, claim, lawsuit, demand,
investigation or proceeding pending or threatened against such Person before
any court, board, commission, agency or instrumentality of any federal, state,
local or foreign government or of any agency or subdivision thereof or before
any arbitrator or panel of arbitrators.


 


“Lockbox” has the
meaning assigned to such term in Section 6.01 of the Funding
Agreement.


 


 “Loss Reserve Ratio” shall mean, as of
any date of determination, the ratio (expressed as a percentage) calculated in
accordance with the following formula: 


 


	
  LRR

  	
   

  	
  =

  	
   

  	
  (LHF * ARR)] * 2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  where

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LRR

  	
   

  	
  =

  	
   

  	
  the Loss Reserve Ratio;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LHF

  	
   

  	
  =

  	
   

  	
  a Loss Horizon Factor equal to (x) the aggregate
  principal amount of Receivables originated during the three (3) most
  recent Settlement Periods preceding such date divided by (y) the
  Outstanding Balance of Eligible Receivables as of the end of the Settlement
  Period immediately preceding such date;

  
	
  ARR

  	
   

  	
  =

  	
   

  	
  the highest three-month rolling average of the
  Default Ratios occurring during the twelve most recent Settlement Periods.

  



 


 “Material Adverse
Effect” shall mean a material adverse effect on (a) the
business, assets, operations or financial or other condition of (i) any
Originator or the Originators considered as a whole, (ii) the Borrower or (iii) the
Servicer, (b) the ability of any Originator, the Borrower, the Parent or
the Servicer to perform any of its obligations under the Related Documents in
accordance with the terms thereof, (c) 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, (d) the federal
income tax attributes of the sale, contribution or pledge of the Transferred
Receivables pursuant to any Related Document or (e) the Transferred
Receivables (or collectibility thereof), the Contracts therefor, 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.


 


“Member”
shall mean the Parent in its capacity as the member of the Borrower.


 


“Monthly Report”
shall have the meaning assigned to it in paragraph (a)
of Annex 5.02(a) to the Funding Agreement.


 


“Moody’s”
shall mean Moody’s Investors Service, Inc. or any successor thereto.


 


23





















 


“Multiemployer
Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA with respect to which any Originator or ERISA Affiliate is making, is
obligated to make, or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.


 


“Net Receivables
Balance” means, as of any date of determination, the
amount equal to:


 


(a)                                  the Outstanding Balance of Eligible
Receivables,


 


minus


 


(b)                                 the Excess Concentration Amount;


 


in each case as
disclosed in the most recently submitted Borrowing Base Certificate or
Borrowing Request or as otherwise determined by the Administrative Agent based
on Borrower Collateral information available to it, including any information
obtained from any audit or from any other reports with respect to the Borrower
Collateral, which determination shall be final, binding and conclusive on all
parties to the Funding Agreement (absent manifest error).


 


“Net
Worth” means as of any date of determination, the excess, if any, of
(a) the aggregate Outstanding Balance of the Receivables at such time, over (b) the sum of (i) the Outstanding
Principal Amount at such time, plus (ii) the
aggregate outstanding principal balance of the Subordinated Loans (including
any Subordinated Loan proposed to be made on the date of determination).


 


“Non-Consenting Lender”
shall have the meaning assigned to it in Section 12.07(c) of the
Funding Agreement.


 


“Non-Funding Lender”
shall have the meaning assigned to it in Section 2.03(e) of the
Funding Agreement.


 


“Notes”
shall mean, collectively, the Revolving Notes and the Swing Line Note.


 


“Obligor”
shall mean, with respect to any Receivable, the Person primarily obligated to
make payments in respect thereof.


 


“Officer’s
Certificate” shall mean, with respect to any Person, a
certificate signed by an Authorized Officer of such Person.


 


“Originator”
shall have the meaning assigned to it in the preamble to the Sale Agreement.


 


“Originator
Support Agreement” shall mean an agreement
substantially in the form of Section 2.03 to the Sale Agreement
made by Parent in favor of the Borrower.


 


“Other Lender”
shall have the meaning assigned to it in Section 2.03(e) of the
Funding Agreement.


 


24





















 


“Outstanding
Balance” shall mean, with respect to any Receivable,
as of any date of determination, the amount (which amount shall not be less
than zero) equal to (a) the Billed Amount thereof, minus
(b) all Collections received from the Obligor thereunder, minus (c) all discounts to, or any other
modifications by, the Originator, the Borrower or the Servicer that reduce such
Billed Amount; provided, that if
the Administrative Agent or the Servicer makes a good faith determination that
all payments by such Obligor with respect to such Billed Amount have been made,
the Outstanding Balance shall be zero.


 


“Outstanding
Principal Amount” shall mean, as of any date of
determination, the amount equal to (a) the aggregate Advances made by the
Lenders under the Funding Agreement on or before such date, minus
(b) the aggregate amounts disbursed to any Lender in reduction of the principal
of such Advances pursuant to the Funding Agreement on or before such date and
not required to be returned as preference payments or otherwise; provided, that references to the Outstanding
Principal Amount of any Lender shall mean an amount equal to (x) the aggregate
Advances made by such Lender pursuant to the Funding Agreement on or before
such date, minus (y) the
aggregate amounts disbursed to such Lender in reduction of the principal of
such Advances pursuant to the Funding Agreement on or before such date and not
required to be returned as preference payments or otherwise.


 


“Parent”
shall have the meaning assigned to it in the preamble to the Sale Agreement.


 


“Parent Group”
shall mean the Parent, Holdings and each of their respective Affiliates other
than the Borrower.


 


“PBGC”
shall mean the Pension Benefit Guaranty Corporation.


 


“Pension Plan”
shall mean a Plan described in Section 3(2) of ERISA.


 


“Permitted
Encumbrances” shall mean the following encumbrances: (a) Liens
for taxes or assessments or other governmental charges or levies not yet due
and payable; (b) pledges or deposits securing obligations under workmen’s
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (c) pledges or deposits securing bids, tenders,
government contracts, contracts (other than contracts for the payment of
money) or leases to which any Originator, the Borrower or the Servicer is
a party as lessee made in the ordinary course of business; (d) deposits
securing statutory obligations of any Originator, the Borrower or the Servicer;
(e) inchoate and unperfected workers’, mechanics’, suppliers’ or similar
Liens arising in the ordinary course of business; (f) carriers’,
warehousemen’s or other similar possessory Liens arising in the ordinary course
of business; (g) deposits securing, or in lieu of, surety, appeal or
customs bonds in proceedings to which any Originator, the Borrower or the
Servicer is a party; (h) any judgment Lien not constituting a Termination
Event under Section 8.01(g) of the Funding Agreement; (i) Liens
existing on the Closing Date and listed on Schedule 5.03(b)
of the Funding Agreement; and (j) presently existing or hereinafter
created Liens in favor of the Buyer, the Borrower, the Lenders or the Administrative
Agent under the Funding Agreement and the Related Documents.


 


“Permitted
Investments” shall mean any of the following:


 


25





















 


(a)                                  obligations of, or guaranteed as to the
full and timely payment of principal and interest by, the United States of
America or obligations of any agency or instrumentality thereof if such
obligations are backed by the full faith and credit of the United States of
America, in each case with maturities of not more than 90 days from the date
acquired;


 


(b)                                 repurchase agreements on obligations of
the type specified in clause (a) of this
definition; provided, that the
short-term debt obligations of the party agreeing to repurchase are rated at
least A-1 or the equivalent by S&P and P-1 or the equivalent by Moody’s;


 


(c)                                  federal funds, certificates of deposit,
time deposits and bankers’ acceptances of any depository institution or trust
company incorporated under the laws of the United States of America or any
state, in each case with original maturities of not more than 90 days or,
in the case of bankers’ acceptances, original maturities of not more than 365
days; provided, that the short-term obligations of
such depository institution or trust company are rated at least A-1 or the
equivalent by S&P and P-1 or the equivalent by Moody’s;


 


(d)                                 commercial paper of any corporation
incorporated under the laws of the United States of America or any state
thereof with original maturities of not more than 180 days that on the date of
acquisition are rated at least A-1 or the equivalent by S&P and P-1 or the
equivalent by Moody’s; and


 


(e)                                  securities of money market funds rated at
least A-1 or the equivalent by S&P and P-1 or the equivalent by Moody’s;


 


and, in any such case, the applicable investment
shall mature by not later than one Business Day prior to the next succeeding
Settlement Date.


 


 “Person”
shall mean any individual, sole proprietorship, partnership, joint venture,
unincorporated organization, trust, association, corporation (including a
business trust), limited liability company, institution, public benefit
corporation, joint stock company, Governmental Authority or any other entity of
whatever nature.


 


“Plan”
shall mean, at any time during the preceding five years, an “employee benefit
plan,” as defined in Section 3(3) of ERISA, that any Originator or
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any Originator or ERISA
Affiliate.


 


“Power of Attorney”
shall have the meaning assigned to it in Section 9.05 of the Sale
Agreement or Section 9.03 of the Funding Agreement, as applicable.


 


“Pro Rata Share”
shall mean with respect to all matters relating to any Lender (other than the
Swing Line Lender), the percentage obtained by dividing (i) the Commitment
of that Lender by (ii) the Aggregate Commitment, as such percentage may be
adjusted by assignments permitted pursuant to Section 12.02
of the Funding Agreement; provided, however, if all of the Commitments are terminated
pursuant to the terms of the Funding Agreement, then “Pro Rata Share” shall
mean with respect to all matters relating to any Lender, the percentage
obtained by dividing (x) the sum of (A) such Lender’s Revolving
Credit Advances, plus (B) such


 


26





















 


Lender’s share of
the obligations to purchase participations in Swing Line Loans or refinance
Swing Line Loans pursuant to Section 2.01(b)(iii) and (iv) of
the Funding Agreement, by (y) the Outstanding Principal Amount.


 


“Proposed Change”
shall have the meaning assigned to it in Section 12.07(c) of the
Funding Agreement.


 


“Qualified
IPO” means an
underwritten public offering of Holdings Stock which generates net cash
proceeds to Holdings of at least $200,000,000.


 


“Qualified Plan”
shall mean a Pension Plan that is intended to be tax-qualified under Section 401(a) of
the IRC.


 


“Rating Agency”
shall mean Moody’s or S&P.


 


“Ratios”
shall mean, collectively, the Default Ratio, the Default Trigger Ratio, the Delinquency
Ratio, the Dilution Ratio, the Dilution Reserve Ratio, the Dilution Trigger
Ratio and the Receivables Collection Turnover.


 


“Receivable”
shall mean, with respect to any Obligor:


 


(a)                                  indebtedness of such Obligor (whether
constituting an account, chattel paper, document, instrument or general
intangible (under which the Obligor’s principal obligation is a monetary
obligation) and whether or not earned by performance) arising from the
provision of merchandise, goods or services by an Originator to such Obligor,
including the right to payment of any interest or finance charges and other
obligations of such Obligor with respect thereto; but excluding Excluded
Receivables.


 


(b)                                 all Liens and property subject thereto
from time to time securing or purporting to secure any such indebtedness of
such Obligor;


 


(c)                                  all guaranties, indemnities and
warranties, insurance policies, financing statements, supporting obligations
and other agreements or arrangements of whatever character from time to time
supporting or securing payment of any such indebtedness;


 


(d)                                 all right, title and interest of any
Originator, the Parent or the Borrower in and to any goods (including returned,
repossessed or foreclosed goods) the sale of which gave rise to a Receivable;


 


(e)                                  all Collections with respect to any of
the foregoing;


 


(f)                                    all Records with respect to any of the
foregoing; and


 


(g)                                 all proceeds with respect to any of the
foregoing.


 


“Receivables
Assignment” shall have the meaning assigned to it in Section 2.01(a) of the Sale Agreement.


 


27





















 


“Receivables
Collection Turnover” shall mean, as of any date of
determination, the amount (expressed in days) equal to:


 


(a)                                  a fraction, (i) the numerator of
which is equal to the aggregate Outstanding Balance of Transferred Receivables
on the first day of the three (3) Settlement Periods immediately preceding
such date and (ii) the denominator of which is equal to aggregate
Collections received during such three (3) Settlement Periods with respect
to all Transferred Receivables,


 


multiplied
by


 


(b)                                 the average number of days per period
contained in such three (3) Settlement Periods.


 


“Records”
shall mean all Contracts and other documents, books, records and other
information (including customer lists, credit files, computer programs, tapes,
disks, data processing software and related property and rights) prepared and
maintained by any Originator, the Servicer, any Sub-Servicer or the Borrower
with respect to the Receivables and the Obligors thereunder and the Borrower
Collateral.


 


“Refunded Swing
Line Loan” shall have the meaning assigned to it in Section 2.01(b)(iii) of the Funding
Agreement.


 


“Regulatory
Change” shall mean any change after the Closing Date
in any federal, state or foreign law, regulation (including Regulation D of the
Federal Reserve Board), pronouncement by the Financial Accounting Standards
Board or the adoption or making after such date of any interpretation,
directive or request under any federal, state or foreign law or regulation
(whether or not having the force of law) by any Governmental Authority, the
Financial Accounting Standards Board or any central bank or comparable agency,
charged with the interpretation or administration thereof that, in each case,
is applicable to any Affected Party.


 


 “Rejected Amount”
shall have the meaning assigned to it in Section 4.04
of the Sale Agreement.


 


“Related
Documents” shall mean each Collection Account
Agreement, the Concentration Account Agreement, the Borrower Account Agreement,
the Sale Agreement, the Funding Agreement, the Revolving Notes, the Swing Line
Note, each Receivables Assignment, the Subordinated Notes, each Originator
Support Agreement and all other agreements, instruments, documents and
certificates identified in the Schedule of Documents and including all
other pledges, powers of attorney, consents, assignments, contracts, notices,
and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Person, or any employee of any Person, and delivered in
connection with the Sale Agreement, the Funding Agreement or the transactions
contemplated thereby.  Any reference in
the Sale Agreement, the Funding Agreement or any other Related Document to a Related
Document shall include all Appendices thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Related Document as the same may be in effect at any and all times such
reference becomes operative.


 


28





















 


“Repayment Notice”  shall have the meaning assigned to it in Section 2.03(h) of the Funding Agreement.


 


“Reportable Event”
shall mean any of the events set forth in Section 4043(c) of ERISA.


 


“Required Capital
Amount” means $20,000,000.


 


“Requisite Lenders”
shall mean (a) two or more Lenders having in the aggregate more than fifty
percent (50%) of the Aggregate Commitment, or (b) if the Commitments have
been terminated, two or more Lenders having in the aggregate more than fifty
percent (50%) aggregate Outstanding Principal Amount; provided that if
at any time there is only one Lender party to the Funding Agreement, “Requisite
Lenders” shall mean such Lender.


 


“Retiree Welfare Plan”
means, at any time, a Welfare Plan that provides for continuing coverage or
benefits for any participant or any beneficiary of a participant after such
participant’s termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of
the participant or the beneficiary of the participant.


 


“Revolving Credit
Advance” shall have the meaning assigned to it in Section 2.01 of the Funding Agreement.  Unless a LIBOR Rate Disruption Event shall
have occurred, each Revolving Credit Advance shall be a LIBOR Rate Advance.


 


“Revolving Note”
shall have the meaning assigned to it in Section 2.01(b)
of the Funding Agreement.


 


“Revolving Period”
shall mean the period from and including the Closing Date through and including
the day immediately preceding the Commitment Termination Date.


 


“S&P”
means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.


 


“Sale”
shall mean with respect to a sale of receivables under the Sale Agreement, a
sale of Receivables by an Originator to the Borrower in accordance with the
terms of the Sale Agreement.


 


“Sale Agreement”
shall mean that certain Receivables Sale and Servicing Agreement dated as of
the Closing Date, by and among each Originator, Servicer and the Borrower, as
the Buyer thereunder.


 


“Sale Price”
shall mean, with respect to any Sale of any Sold Receivable, a price calculated
by the Borrower and approved from time to time by the Administrative Agent
equal to:


 


(a)                                  the Outstanding Balance of such Sold
Receivable, minus


 


29





















 


(b)                                 a discount reflecting the expected costs
to be incurred by the Borrower in financing the purchase of the Sold
Receivables until the Outstanding Balance of such Sold Receivables is paid in
full, minus


 


(c)                                  a discount reflecting the portion of the
Sold Receivables that is reasonably expected by such Originator on the Transfer
Date to become Defaulted Receivables by reason of clause (b) of the
definition thereof, minus


 


(d)                                 a discount reflecting the portion of the
Sold Receivables that is reasonably expected by such Originator on the Transfer
Date to be reduced on account of Dilution Factors, minus


 


(e)                                  amounts expected to be paid to the
Servicer with respect to the servicing, administration and collection of the
Sold Receivables;


 


provided, that such calculations shall be
determined based on the historical experience of (y) such Originator, with
respect to the calculations required in each of clauses (c)
and (d) above, and (z) the Borrower, with respect
to the calculations required in clauses (b)
and (f) above.


 


 “Schedule of
Documents” shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Sale Agreement, the Funding
Agreement and the other Related Documents and the transactions contemplated
thereunder, substantially in the form attached as Annex  Y to the Funding
Agreement and the Sale Agreement.


 


“Securities Act”
shall mean the provisions of the Securities Act of 1933, 15 U.S.C. Sections 77a
et seq., and any regulations promulgated
thereunder.


 


“Securities
Exchange Act” shall mean the provisions of the
Securities Exchange Act of 1934, 15 U.S.C. Sections 78a et seq.,
and any regulations promulgated thereunder.


 


“Servicer” shall
have the meaning assigned to it in the Preamble to the Sale Agreement.


 


“Servicer
Termination Notice” shall mean any notice by the
Administrative Agent to the Servicer that (a) an Event of Servicer
Termination has occurred and (b) the Servicer’s appointment under the
Funding Agreement has been terminated.


 


“Servicing Fee”
shall mean, for any day within a Settlement Period, the amount equal to (a) (i) the
Servicing Fee Rate divided by (ii) 360,
multiplied by (b) the Outstanding
Principal Amount on such day.


 


“Servicing Fee
Rate” shall mean 1.00%.


 


“Servicing Fee Reserve”
shall mean, as of any date of determination, an amount equal to the product of (i) the
Servicing Fee Rate, (ii) the Outstanding Principal Amount and (iii) a
fraction, the numerator of which is the higher of (a) 30 and (b) the
Receivables Collection


 


30





















 


Turnover as of the
end of the Settlement Period immediately preceding such date multiplied by 2,
and the denominator of which is 360.


 


“Servicing
Officer” shall mean any officer of the Servicer
involved in, or responsible for, the administration and servicing of the
Transferred Receivables and whose name appears on any Officer’s Certificate
listing servicing officers furnished to the Administrative Agent by the
Servicer, as such certificate may be amended from time to time.


 


“Servicing
Records” shall mean all Records prepared and
maintained by the Servicer with respect to the Transferred Receivables and the
Obligors thereunder.


 


“Settlement Date”
shall mean (i) the first Business Day of each calendar month and (ii) from
and after the occurrence of a Termination Event, any other Business Day
designated as such by the Administrative Agent in its sole discretion.


 


“Settlement Period”
shall mean (a) solely for purposes of determining the Ratios, (i) with
respect to all Settlement Periods other than the final Settlement Period, each
calendar month, whether occurring before or after the Closing Date, and (ii) with
respect to the final Settlement Period, the period ending on the Termination
Date and beginning with the first day of the calendar month in which the
Termination Date occurs, and (b) for all other purposes, (i) with
respect to the initial Settlement Period, the period from and including the
Closing Date through and including the last day of the calendar month in which
the Closing Date occurs, (ii) with respect to the final Settlement Period,
the period ending on the Termination Date and beginning with the first day of
the calendar month in which the Termination Date occurs, and (iii) with
respect to all other Settlement Periods, each calendar month.


 


“Significant
Subsidiary” means, as of any date of determination, any Subsidiary of
Holdings with total assets or total liabilities in excess of $1,000,000 as of
such date of determination.


 


“Sold Receivable”
shall have the meaning assigned to it in Section 2.01(b)
of the Sale Agreement.


 


“Solvent” shall
mean, with respect to any Person on a particular date, that on such date (a) the
fair value of the property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its Debts as they become absolute and matured; (c) such Person does not
intend to, and does not believe that it will, incur Debts or liabilities beyond
such Person’s ability to pay as such Debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital.  The
amount of contingent liabilities (such as Litigation, guaranties and pension
plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount
that can reasonably be expected to become an actual or matured liability.


 


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“Special
Concentration Percentage” shall mean, with respect to
any Obligor, that percentage, if any, set forth in Annex Z
to the Funding Agreement with respect to such Obligor, or, with respect to any
such Obligor or any other Obligor, such other percentage as the Administrative
Agent may at any time and from time to time designate in its sole discretion
with respect to such Obligor in a written notification to the Borrower and the
Servicer.


 


“SPV” shall mean
any special purpose funding vehicle which acquires any interest in a Lender’s
Advances under the Funding Agreement.


 


“Stock”
shall mean all shares, options, warrants, member interests, general or limited
partnership interests or other equivalents (regardless of how designated) of or
in a corporation, limited liability company, partnership or equivalent entity
whether voting or nonvoting, including common stock, preferred stock or any
other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act).


 


“Stockholder”
shall mean, with respect to any Person, each holder of Stock of such Person.


 


“Subordinated Loan”
shall have the meaning given such term in Section 2.01(c) of the
Sale Agreement.


 


“Subordinated Note”
shall have the meaning given such term in Section 2.01(c) of the
Sale Agreement.


 


“Sub-Servicer”
shall mean any Person with whom the Servicer enters into a Sub-Servicing
Agreement.


 


“Sub-Servicing
Agreement” shall mean any written contract entered
into between the Servicer and any Sub-Servicer pursuant to and in accordance
with Section 7.01 of the Sale Agreement
relating to the servicing, administration or collection of the Transferred
Receivables.


 


“Subsidiary”
shall mean, with respect to any Person, any corporation or other entity (a) of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person or (b) that
is directly or indirectly controlled by such Person within the meaning of
control under Section 15 of the Securities Act.


 


“Substantial Contract”
shall mean a Contract that has forecasted revenue (computed based on the
aggregate level of services or goods to required to be provided during the
entire term of such contract) in an amount greater than (i) $1,250,000 for
inserts, or (ii) $600,000 for any other goods or services.


 


“Successor
Servicer” shall have the meaning assigned to it in Section 9.02 of the Sale Agreement.


 


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“Successor
Servicing Fees and Expenses” shall mean the fees and
expenses payable to the Successor Servicer as agreed to by the Borrower, the
Lenders and the Administrative Agent.


 


“Swing Line Advance”
shall have the meaning assigned to it in Section 2.01(b)(i) of the
Funding Agreement.


 


“Swing Line Commitment”
shall mean, as to the Swing Line Lender, the commitment of the Swing Line
Lender to make Swing Line Advances pursuant to the terms of the Funding
Agreement.  As of the Closing Date, the
Swing Line Commitment is equal to the Aggregate Commitment.


 


“Swing Line Lender”
shall have the meaning set forth in the Preamble of the Funding Agreement.


 


“Swing Line Loan”
shall mean at any time, the aggregate amount of Swing Line Advances outstanding
to the Borrower.


 


“Swing Line Note”
shall have the meaning assigned to it in Section 2.01(b)(ii) of the
Funding Agreement.


 


“Tax Returns”
means all reports, returns, information returns, claims for refund, elections,
estimated tax filings or payments, requests for extension, documents,
statements, declarations and certifications and other information required to
be filed with respect to taxes, including attachments thereto and amendments
thereof.


 


“Termination Date”
shall mean the date on which (a) the Outstanding Principal Amount has been
permanently reduced to zero, (b) all other Borrower Obligations under the
Funding Agreement and the other Related Documents have been indefeasibly repaid
in full and completely discharged (other than contingent indemnification
obligations as to which no unsatisfied claim has been asserted) and (c) the
Aggregate Commitment has been irrevocably terminated in accordance with the
provisions of Section 2.02(b)
of the Funding Agreement.


 


“Termination
Event” shall have the meaning assigned to it in Section 8.01 of the Funding Agreement.


 


“THL” shall mean
Thomas H. Lee Partners L.P., a Delaware limited partnership.


 


“THL Affiliates”
means THL and any person that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
THL.


 


“THL Group” means
THL and any THL Affiliate who act as a partnership, syndicate, limited
partnership or group for the purpose of acquiring, holding or disposing of
securities of Holdings.


 


“Title IV Plan”
shall mean a Pension Plan (other than a Multiemployer Plan) that is covered by
Title IV of ERISA and that any Originator or ERISA Affiliate maintains,


 


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contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any of them.


 


“Transaction Parties”
means the Originators, the Servicer and, if the Parent is not the Servicer, the
Parent.


 


“Transfer”
shall mean any Sale or contribution (or purported Sale or contribution) of
Transferred Receivables by any Originator to the Borrower pursuant to the terms
of the Sale Agreement.


 


“Transfer Date”
shall have the meaning assigned to it in Section 2.01(a)
of the Sale Agreement.


 


“Transferred
Receivable” shall mean any Sold Receivable or
Contributed Receivable; provided, that any
Receivable repurchased by an Originator thereof pursuant to Section 4.04
of the Sale Agreement shall not be deemed to be a Transferred Receivable from
and after the date of such repurchase unless such Receivable has subsequently
been repurchased by or contributed to the Borrower.


 


“UCC”
shall mean, with respect to any jurisdiction, the Uniform Commercial Code as
the same may, from time to time, be enacted and in effect in such jurisdiction.


 


“Unapproved
Receivable” shall mean any receivable (a) with
respect to which the Originator’s customer relationship with the Obligor
thereof arises as a result of the acquisition by such Originator of another
Person or (b) that was originated in accordance with standards established
by another Person acquired by an Originator, in each case, solely with respect
to any such acquisitions that have not been approved in writing by the
Administrative Agent and then only for the period prior to any such approval.


 


“Underfunded Plan”
shall mean any Plan that has an Underfunding.


 


“Underfunding”
shall mean, with respect to any Title IV Plan, the excess, if any, of (a) the
present value of all benefits under the Title IV Plan (based on the assumptions
used to fund the Title IV Plan pursuant to Section 412 of the IRC) as of
the most recent valuation date over (b) the fair market value of the
assets of such Title IV Plan as of such valuation date.


 


“Unfunded Pension
Liability” shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of
all accrued benefits under each Title IV Plan exceeds the fair market value of
all assets of such Title IV Plan allocable to such benefits in accordance with
Title IV of ERISA, all determined as of the most recent valuation date for each
such Title IV Plan using the actuarial assumptions for funding purposes in
effect under such Title IV Plan, and (b) for a period of five years
following a transaction that might reasonably be expected to be covered by Section 4069
of ERISA, the liabilities (whether or not accrued) that could be avoided by any
Originator or any ERISA Affiliate as a result of such transaction.


 


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“Unrelated
Amounts” shall have the meaning assigned to it in Section 7.03 of the Sale Agreement.


 


“Unused
Commitment Fee” shall mean a fee equal to the product
of (i) the amount by which the Aggregate Commitment exceeds the
Outstanding Principal Amount (in each case, as of any date of determination)
and (ii) a per annum margin equal to 0.375%.


 


“Weekly Report”
shall mean a Borrowing Base Certificate.


 


“Welfare Plan”
means a Plan described in Section 3(i) of ERISA.


 


SECTION 2. Other Terms and Rules of Construction.


 


(a)  Accounting Terms.  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.


 


(b)  Other Terms. 
All other undefined terms contained in any of the Related Documents
shall, unless the context indicates otherwise, have the meanings provided for
by the UCC as in effect in the State of New York to the extent the same are
used or defined therein.


 


(c)  Rules of Construction.  Unless otherwise specified, references in any
Related Document or any of the Appendices thereto to a Section, subsection or
clause refer to such Section, subsection or clause as contained in such
Related Document.  The words “herein,” “hereof”
and “hereunder” and other words of similar import used in any Related Document
refer to such Related Document as a whole, including all annexes, exhibits and
schedules, as the same may from time to time be amended, restated, modified or
supplemented, and not to any particular section, subsection or clause
contained in such Related Document or any such annex, exhibit or schedule.  Any reference to any amount on any date of
determination means such amount as of the close of business on such date of
determination.  Any reference to or
definition of any document, instrument or agreement shall, unless expressly noted
otherwise, include the same as amended, restated, supplemented or otherwise
modified from time to time.  Wherever
from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders.  The words “including,”
“includes” and “include” shall be deemed to be followed by the words “without
limitation”; the word “or” is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Related Documents) or, in the case of Governmental
Authorities, Persons succeeding to the relevant functions of such Persons; and
all references to statutes and related regulations shall include any amendments
of the same and any successor statutes and regulations.


 


(d)  Rules of Construction for Determination of Ratios.  The Ratios as of the last day of the
Settlement Period immediately preceding the Closing Date shall be established
by the


 


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Administrative
Agent on or prior to the Closing Date and the underlying calculations for
periods immediately preceding the Closing Date to be used in future
calculations of the Ratios shall be established by the Administrative Agent on
or prior to the Closing Date in accordance with the form of Monthly
Report.  For purposes of calculating the
Ratios, (i) averages shall be computed by rounding to the second decimal
place and (ii) the Settlement Period in which the date of determination
thereof occurs shall not be included in the computation thereof and the first
Settlement Period immediately preceding such date of determination shall be
deemed to be the Settlement Period immediately preceding the Settlement Period
in which such date of determination occurs.


 


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