**Exhibit 10.8**

 

ANNEX X

 

to

 

RECEIVABLES SALE ANDSERVICING AGREEMENT

 

and

 

RECEIVABLES FUNDING ANDADMINISTRATION AGREEMENT

 

dated as of

 

November 25, 2005

 

Definitions andInterpretation

 

*Annex X*

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SECTION 1.  Definitions andConventions. Capitalized terms used in the Sale Agreement (as defined below) and theFunding Agreement (as defined below) shall have (unless otherwise providedelsewhere therein) the following respective meanings:

 

“Account” shallmean any of the Concentration Account, the Borrower Account or the CollectionAccounts.

 

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

 

“Accounting Changes”shall mean, with respect to any Person, (a) changes in accountingprinciples required by the promulgation of any rule, regulation, pronouncementor opinion of the Financial Accounting Standards Board of the AmericanInstitute of Certified Public Accountants (or any successor thereto or anyagency with similar functions); (b) changes in accounting principlesconcurred in by such Person’s certified public accountants; (c) purchaseaccounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and theapplication of the accounting principles set forth in FASB 109, including theestablishment of reserves pursuant thereto and any subsequent reversal (inwhole or in part) of such reserves; and (d) the reversal of any reservesestablished as a result of purchase accounting adjustments.

 

“AdditionalAmounts” shall mean any amounts payable to anyAffected 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.

 

“AdministrativeAgent” shall have the meaning set forth in thePreamble of the Funding Agreement.

 

“AdministrativeServices Agreement” shall mean that certainAdministrative Services Agreement dated as of the date hereof between theBorrower and the Parent.

 

“Advance”shall mean any Revolving Credit Advance or Swing Line Advance, as the contextmay 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 ownershipinterest or Lien created under the Sale Agreement or the Funding Agreement.

 

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

 

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

 

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such Person, (b) eachPerson that controls, is controlled by or is under common control with suchPerson, or (c) each of such Person’s officers, directors, joint venturersand partners.  For the purposes of thisdefinition, “control” of a Person shall mean the possession, directly orindirectly, of the power to direct or cause the direction of its management orpolicies, whether through the ownership of voting securities, by contract orotherwise.

 

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

 

“Aggregate Commitment”shall mean as to all Lenders, the aggregate commitment of all Lenders to makeAdvances, which aggregate commitment shall be One Hundred Thirty MillionDollars ($130,000,000) on the Closing Date, as such amount may be adjusted, ifat 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 12.02attached to the Funding Agreement.

 

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

 

 “Bank” shall mean any of the CollectionAccount 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. § § 101et seq.

 

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

 

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

 

“BKObligor” means an Obligor that (i) to the actual knowledge ofan Authorized Officer of the Borrower or the Servicer, has admitted in writingits inability to pay its debts as they become due, (ii) is a debtor in avoluntary or involuntary bankruptcy proceeding, or (iii) is subject of acomparable receivership or insolvency proceeding, unless, in the case of abankruptcy proceeding in clause (ii) or (iii), the applicable Originatorhas been designated as a “critical vendor” and the Obligor thereunder hasobtained (x) in the case of any Receivable

 

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originatedpre-petition, a final court order approving the payment of the pre-petitionclaims of such Originator on an administrative priority basis or (y) in thecase of any Receivable originated post-petition, (A) requisite courtapproval to pay the post-petition claims of such Originator on anadministrative priority basis and (B) a debtor-in-possession financingfacility and management of the applicable Originator reasonably believes thatsuch 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 theReceivables owing by such Obligor on a current basis in accordance with itsterms.

 

“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 BorrowerAccount Bank, which account shall be subject to a Borrower Account Agreement.

 

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

 

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

 

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

 

“BorrowerAssigned Agreements” shall have the meaning assignedto it in Section 7.01(b)of the Funding Agreement.

 

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

 

“BorrowerObligations” 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 suchperformance is then required or contingent, or such

 

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

 

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

 

and

 

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

 

(i) the product of (1) theDynamic 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 theEBITDA Shortfall Event shall have occurred, such other reserves as theAdministrative Agent may determine from time to time based upon its reasonablecredit judgment;

 

in each case asdisclosed in the most recently submitted Borrowing Base Certificate orBorrowing Request or as otherwise determined by the Administrative Agent basedon Borrower Collateral information available to it, including any informationobtained from any audit or from

 

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

 

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

 

“BorrowingRequest” 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 2.10of the Funding Agreement.

 

“Business Day”shall mean any day that is not a Saturday, a Sunday or a day on which banks arerequired or permitted to be closed in the State of Maryland, the State of NewYork or, with respect to any remittances to be made by any Collection AccountBank or the Concentration Account Bank to any related Account, in thejurisdiction(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.

 

 “BuyerIndemnified Person” shall have the meaning assigned toit in Section 5.01 of the Sale Agreement.

 

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

 

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

 

 “Change ofControl” 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 asin effect on the Closing Date, shall have occurred; (ii) the ratio of (x)either (A) the percentage of the voting interest in Holdings’ outstandingStock on a fully diluted basis or (B) the percentage of the economicinterest in Holdings’ outstanding Stock, in each case owned by the THL Group atany time, to (y) (A) the percentage of the voting interest in Holdings’outstanding Stock on a fully diluted basis or (B) the percentage of theeconomic interest in Holdings’ outstanding Stock, as the case may be, in eachcase 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 collectivelyto own on a fully diluted basis in the aggregate at least 51% of the economicand voting interest in Holdings’ outstanding Stock; (II) at any time after theconsummation of a Qualified IPO, (i) a “Change of Control” under, and asdefined in, the Existing Credit Agreement as in effect on the Closing Date,shall have occurred; (ii) any “Person” or “group” (as such terms are usedin Sections 13(d) and 14(d) of the Securities Exchange Act) is orbecomes the 

 

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“beneficial owner”(as defined in Rules 13(d)-3 and 13(d)-5 under the Securities ExchangeAct), directly or indirectly, of 20% or more of the economic and voting interestin Holdings’ outstanding Stock unless the THL Group and The Evercore Groupshall collectively own a greater percentage of the economic and voting interestin Holdings’ outstanding Stock than such “Person” or “Group” that holds 20% ormore of such Stock; (iii) the ratio of (x) either (A) the percentageof the voting interest in Holdings’ outstanding Stock on a fully diluted basisor (B) the percentage of the economic interest in Holdings’ outstandingStock, in each case owned by the THL Group at any time, to (y) (A) thepercentage of the voting interest in Holdings’ outstanding Stock on a fullydiluted 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 onthe Closing Date, shall at any time be less than .30:1.0; (iv) THL Groupand the Evercore Group shall cease collectively to own on a fully diluted basisin 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 ofHoldings shall cease to consist of a majority of Continuing Directors; (ii) Holdingsshall cease to own 100% on a fully diluted basis of the shares of outstandingStock of the Parent and the each Originator; (iii) the Parent shall at anytime cease to own, directly or indirectly, 100% of the outstanding Stock of theBorrower or (viii) any Originator ceases to own and control all of theeconomic and voting rights associated with all of the outstanding Stock of anyof its Subsidiaries.

 

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

 

“Closing Date”shall mean November 25, 2005.

 

“CollectionAccount” shall mean any deposit account established byor assigned to the Borrower for the deposit of Collections pursuant to and inaccordance with Section 6.01(a)of the Funding Agreement.

 

“CollectionAccount Agreement” shall mean any agreement among anOriginator, the Borrower, the Administrative Agent, and a Collection AccountBank with respect to a Lockbox and Collection Account that provides, amongother things, that (a) all items of payment deposited in such Lockbox andCollection Account are held by such Collection Account Bank as custodian forthe Administrative Agent, (b) such Collection Account Bank has no rightsof setoff or recoupment or any other claim against such Collection Account, asthe case may be, other than for payment of its service fees and other chargesdirectly related to the administration of such Collection Account and forreturned checks or other items of payment and (c) such Collection AccountBank agrees to forward all Collections received in such Collection Account tothe Concentration Account within one Business Day of receipt, and is otherwisein form and substance acceptable to the Administrative Agent.  For purposes of clarification, as of theClosing Date, each reference to Collection Account Agreement and ConcentrationAccount Agreement shall mean a reference to that certain Multiparty BlockedAccount Agreement dated

 

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as of the ClosingDate by and among the Parent, the Borrower, the Administrative Agent, theConcentration Account Bank and Bank of America, N.A., as Collection AccountBank.

 

“CollectionAccount Bank” shall mean any bank or other financialinstitution at which one or more Collection Accounts are maintained.

 

“Collections”shall mean, with respect to any Receivable, all cash collections and otherproceeds of such Receivable (including late charges, fees and interest arisingthereon, and all recoveries with respect thereto that have been written off asuncollectible).

 

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

 

“CommitmentReduction Notice” shall have the meaning assigned toit in Section 2.02(a) of the Funding Agreement.

 

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

 

“CommitmentTermination Notice” shall have the meaning assigned toit in Section 2.02(b) of the Funding Agreement.

 

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

 

“ConcentrationAccount Agreement” shall mean any agreement among an Originator, theBorrower, the Administrative Agent, and the Concentration Account Bank withrespect to the Concentration Account that provides, among other things, that (a) allitems of payment deposited in the Concentration Account are held by theConcentration Account Bank as custodian for the Administrative Agent, (b) theConcentration Account Bank has no rights of setoff or recoupment or any otherclaim against the Concentration Account, as the case may be, other than forpayment of its service fees and other charges directly related to theadministration of the Concentration Account and for returned checks or otheritems of payment and (c) the Concentration Account Bank agrees to forwardall Collections received in the Concentration Account to the Borrower Accountwithin one Business Day of receipt, and is otherwise in form and substanceacceptable to the Administrative Agent. For purposes of clarification, as of the Closing Date, each reference toCollection Account Agreement and Concentration Account Agreement shall mean areference to that certain Multiparty Blocked Account Agreement dated as of theClosing Date by and among the Parent, the Borrower, the Administrative Agent,the Concentration Account Bank and Bank of America, N.A., as Collection AccountBank.

 

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

 

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

 

“ContingentObligation” means, as applied to any Person, any direct or indirectliability of that Person:  (i) withrespect to Guaranteed Indebtedness and with respect to any Indebtedness, lease,dividend or other obligation of another Person if the purpose or intent of thePerson incurring such liability, or the effect thereof, is to provide assuranceto the obligee of such liability that such liability will be paid ordischarged, or that any agreements relating thereto will be complied with, orthat the holders of such liability will be protected (in whole or in part)against loss with respect thereto; (ii) with respect to any letter ofcredit issued for the account of that Person or as to which that Person isotherwise liable for reimbursement of drawings; (iii) under any foreignexchange contract, currency swap agreement, interest rate swap agreement orother similar agreement or arrangement designed to alter the risks of thatPerson arising from fluctuations in currency values or interest rates, (iv) anyagreement, contract or transaction involving commodity options or futurecontracts, (v) to make take-or-pay or similar payments if requiredregardless of nonperformance by any other party or parties to an agreement, or (vi) pursuantto any agreement to purchase, repurchase or otherwise acquire any obligation orany property constituting security therefor, to provide funds for the paymentor discharge of such obligation or to maintain the solvency, financialcondition or any balance sheet item or level of income of another.  The amount of any Contingent Obligation shallbe equal to the amount of the obligation so guaranteed or otherwise supportedor, 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 otherdirector, if such director’s nomination for election to the board of directorsof Holdings who later joins the board of directors approved by the affirmativevote of a majority of the then Continuing Directors at the time of suchnomination.

 

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

 

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

 

“ContributedReceivables” shall have the meaning assigned to it in Section 2.01(d) of the SaleAgreement.

 

“Credit Agreement”shall mean the Existing Credit Agreement and any refinancings, replacements orrefundings thereof that (a) are agreed to by (i) the AdministrativeAgent and Requisite Lenders or (b) (i) have terms and conditions noless favorable (as

 

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

 

“Credit andCollection Policies” shall mean the written credit,collection, customer relations and service policies of the Originators ineffect on the Closing Date and attached as Exhibit A to the FundingAgreement, as the same may from time to time be amended, restated, supplementedor otherwise modified with the prior written consent of the AdministrativeAgent.

 

“Daily Report”shall mean a Borrowing Base Certificate.

 

“Debt”means, with respect to any Person, without duplication (a) allindebtedness of such Person for borrowed money or for the deferred purchaseprice of property payment for which is deferred six (6) months or more,but excluding obligations to trade creditors incurred in the ordinary course ofbusiness that are unsecured and not overdue by more than six (6) monthsunless being contested in good faith, (b) all reimbursement and otherobligations with respect to letters of credit, bankers’ acceptances and suretybonds, whether or not matured (excluding ordinary trade credit), (c) allobligations evidenced by notes, bonds, debentures or similar instruments, (d) allindebtedness created or arising under any conditional sale or other titleretention agreement with respect to property acquired by such Person (eventhough the rights and remedies of the seller or lender under such agreement inthe event of default are limited to repossession or sale of such property), (e) allCapital Lease Obligations and the present value (discounted at the Index Rateas in effect on the Closing Date) of future rental payments under all syntheticleases, (f) all net settlement obligations of such Person under commoditypurchase or option agreements or other commodity price hedging arrangements, ineach case whether contingent or matured, (g) all net payment obligationsof such Person under any foreign exchange contract, currency swap agreement,interest rate swap, cap or collar agreement or other similar agreement orarrangement designed to alter the risks of that Person arising fromfluctuations in currency values or interest rates, in each case whethercontingent or matured, (h) all indebtedness referred to above secured by(or for which the holder of such indebtedness has an existing right, contingentor 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 suchPerson 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) theaggregate Outstanding Balance of all Receivables which became DefaultedReceivables during the Settlement Period immediately preceding such date and (ii) withrespect to any Obligor that, during the Settlement Period

 

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

 

to

 

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

 

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

 

(a)                                  the average aggregate Outstanding Balanceof all Receivables as of the last day of the three Settlement Periodsimmediately preceding such date (a) with respect to which any payment, orpart thereof, remains unpaid for more than 120 days after its Billing Date, or (b) thatotherwise has been or should be written off in accordance with the Credit andCollection Policies;

 

to

 

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

 

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

 

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

 

(a)                                  the average aggregate Outstanding Balanceof all Receivables as of the last day of the three Settlement Periodsimmediately preceding such date with respect to which any payment, or partthereof, remains unpaid for a period between 91 and 120 days after therespective Billing Dates therefor as of the last day of the Settlement Periodimmediately preceding such date

 

to

 

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

 

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

 

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

 

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

 

(a)                                  the aggregate Dilution Factors for allTransferred Receivables during the Settlement Period immediately preceding suchdate

 

to

 

(b)                                 the aggregate Billed Amount of allTransferred Receivables originated during the Settlement Period immediatelypreceding such date.

 

“Dilution ReserveRatio” shall mean, as of any date of determination, the ratio (expressed asa 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 |

 

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

 

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

 

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

 

“Dynamic AdvanceRate” shall mean, as of any date of determination, apercentage equal to the lesser of (i) 85% and (ii) 100% minus the sumof the Loss Reserve Ratio and the Dilution Reserve Ratio as of such date.

 

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

 

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

 

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

 

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

 

“EligibleReceivable” shall mean, as of any date ofdetermination, a Transferred Receivable:

 

# (a)                                  (i) thatis due and payable in full within 60 days of its Billing Date therefor; provided,that a Transferred Receivable otherwise satisfying the requirements of “EligibleReceivable” but for this clause (a)(i) may constitute an “EligibleReceivable” if (x) such Receivable is due and payable more than 60 but within90 days of the Billing Date thereof and (y) the Outstanding Balance of suchTransferred Receivable, when added to the Outstanding Balance of all otherTransferred Receivables then constituting “Eligible Receivables” by reason ofthis proviso, does not exceed an amount equal to 5% of the Outstanding Balanceof all Eligible Receivables (a “Permitted 90 Day Receivable”) and (ii) nopayment or part thereof of such Transferred Receivable remains unpaid for morethan 90 days after its Billing Date; provided, that a Permitted 90 DayReceivable may constitute an “Eligible Receivable” if no payment or partthereof of such Transferred Receivable remains unpaid for more than 120 daysafter its billing date;

#  

# (b)                                 thatis not a liability of an Excluded Obligor or an Obligor with respect to whichmore than 50% of the aggregate Outstanding Balance of all Receivables owing bysuch Obligor are outstanding more than 90 days after the Billing Date thereof;

#  

# (c)                                  thatis not a liability of an Obligor organized under the laws of any jurisdictionoutside of the United States of America (including the District of Columbia butotherwise excluding its territories and possessions); provided,that a Receivable otherwise

#  

12

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# 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. VirginIslands and (y) the Outstanding Balance of such Receivable, when added to theOutstanding Balance of all other Receivables then constituting EligibleReceivables by reason of clause (i) of this proviso, does not exceed anamount equal to $1,000,000 or (ii) (x) the Obligor is organized under thelaws of Canada and (y) if S&P’s rating of the foreign currency ofCanada is not A or higher, the Outstanding Balance of such Receivable, whenadded to the Outstanding Balance of all other Receivables then constitutingEligible Receivables by reason of clause (ii) of this proviso, does notexceed an amount equal to $2,000,000;

#  

# (d)                                 thatis denominated and payable in Dollars in the United States of America and isnot represented by a note or other negotiable instrument or by chattel paper;

#  

# (e)                                  thatis not subject to any right of rescission, dispute, offset (including, withoutlimitation, as a result of customer promotional allowances, discounts, rebates,or claims for damages), hold back defense, adverse claim or other claim (withonly the portion of any such Receivable subject to any such right ofrescission, dispute, offset (including, without limitation, as a result ofcustomer promotional allowances, discounts, rebates, or claims for damages),hold back defense, adverse claim or other claim being considered an IneligibleReceivable by virtue of this clause (e)), whether arising out of transactionsconcerning the Contract therefor or otherwise;

#  

# (f)                                    withrespect to which the Obligor thereunder is not a BK Obligor;

#  

# (g)                                 thatis not an Unapproved Receivable;

#  

# (h)                                 thatdoes not represent “billed but not yet shipped” goods or merchandise, partiallyperformed or unperformed services, consigned goods or “sale or return” goodsand does not arise from a transaction for which any additional performance bythe Originator thereof, or acceptance by or other act of the Obligorthereunder, including any required submission of documentation, remains to beperformed as a condition to any payments on such Receivable or theenforceability of such Receivable under applicable law;

#  

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

#  

# (j)                                     thatis not the liability of an Obligor that has any claim against or affecting theOriginator thereof or the property of such Originator which gives rise to aright of set-off against such Receivable (with only that portion of Receivablesowing by such Obligor equal to the amount of such claim being an Ineligible Receivable);

#  

# (k)                                  thatwas originated in accordance with and satisfies in all material respects allapplicable requirements of the Credit and Collection Policies;

#  

# (l)                                     thatrepresents the genuine, legal, valid and binding obligation of the Obligorthereunder enforceable by the holder thereof in accordance with its terms;

 

13

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# (m)                               thatis entitled to be paid pursuant to the terms of the Contract therefor and hasnot been paid in full or been compromised, adjusted, extended, reduced,satisfied, subordinated, rescinded or modified (except for adjustments to theOutstanding Balance thereof to reflect Dilution Factors made in accordance withthe Credit and Collection Policies);

#  

# (n)                                 thatdoes not contravene any laws, rules or regulations applicable thereto(including laws, rules and regulations relating to usury, consumerprotection, truth in lending, fair credit billing, fair credit reporting, equalcredit opportunity, fair debt collection practices and privacy) and withrespect to which no party to the Contract therefor is in violation of any suchlaw, rule or regulation;

#  

# (o)                                 withrespect to which no proceedings or investigations are pending or threatenedbefore any Governmental Authority (i) asserting the invalidity of suchReceivable or the Contract therefor, (ii) asserting the bankruptcy orinsolvency of the Obligor thereunder; unless, in the case of a bankruptcyproceeding, the applicable Originator has been designated as a “critical vendor”and the Obligor thereunder has obtained (A) in the case of any Receivableoriginated pre-petition, a final court order approving the payment of thepre-petition claims of such Originator on an administrative priority basis or (B) inthe case of any Receivable originated post-petition, (1) a requisite courtorder approving the payment of the post-petition claims of such Originator onan administrative priority basis and (2) a debtor-in-possession financingfacility and management of the applicable Originator reasonably believes thatsuch 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 theReceivables owing by such Obligor on a current basis in accordance with itsterms, (iii) seeking payment of such Receivable or payment and performanceof such Contract or (iv) seeking any determination or ruling that couldaffect the validity or enforceability of such Receivable or such Contract;

#  

# (p)                                 (i) thatis an “account” or a “general intangible” within the meaning of the UCC (or anyother applicable legislation) of the jurisdictions in which the each of theOriginators, the Parent and the Borrower are organized and in which chiefexecutive offices of each of the Originators, the Parent and the Borrower arelocated and (ii) under the terms of the related Contract, the right topayment thereof may be freely assigned, including as a result of compliancewith applicable law (or with respect to which, the prohibition on theassignment of rights to payment are made fully ineffective under applicablelaw);

#  

# (q)                                 thatis 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 suchReceivable), except to the extent that payment thereof may be made to a Lockboxor otherwise as directed pursuant to Article VIof the Funding Agreement;

#  

# (r)                                    withrespect to which all material consents, licenses, approvals or authorizationsof, or registrations with, any Governmental Authority required to be obtained,effected or given in connection with the creation of such Receivable or theContract therefor have been duly obtained, effected or given and are in fullforce and effect;

#  

# (s)                                  thatis created through the provision of merchandise, goods or services by theOriginator thereof in the ordinary course of its business;

 

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

#  

# (u)                                 thatdoes not constitute a rebilled amount arising from a deduction taken by anObligor with respect to a previously arising Receivable;

#  

# (v)                                 asto which the Borrower has a first priority perfected ownership interest and inwhich the Administrative Agent has a first priority perfected securityinterest, in each case not subject to any Lien, right, claim, security interestor 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)                               tothe extent such Transferred Receivable represents postage or sales tax, suchportions of such Receivable shall not be an Eligible Receivable;

#  

# (x)                                   thatdoes not represent the balance owed by an Obligor on a Receivable in respect ofwhich the Obligor has made partial payment;

#  

# (y)                                 withrespect to which no check, draft or other item of payment was previouslyreceived that was returned unpaid or otherwise;

#  

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

#  

# (aa)                            if theEBITDA Shortfall Event has occurred, that complies with such other reasonablecriteria and reasonable requirements beginning on the day after receipt by theBorrower of written notice from the Administrative Agent setting forth suchadditional reasonable criteria and reasonable requirements following a detailedanalysis of the receivables and discussion with the Borrower; and

#  

# (bb)                          ifadditional criteria are required or recommended by S&P or Moody’s, thatcomplies with such other criteria required or recommended by S&P or Moody’sfrom and after the date the Borrower receives written notice of such criteriafrom the Administrative Agent.

#  

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

 

“ERISA Affiliate”shall mean, with respect to any Originator, any trade or business (whether ornot incorporated) that, together with such Originator, are treated as a singleemployer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

 

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“ERISA Event”shall mean, with respect to any Originator or any ERISA Affiliate, theoccurrence of one or more of the following events:  (a) any event described in Section 4043(c) ofERISA with respect to a Title IV Plan unless the 30-day notice requirement withrespect thereto has been waived pursuant to the regulations under Section 4043of ERISA; (b) the withdrawal of any Originator or ERISA Affiliate from aTitle IV Plan subject to Section 4063 of ERISA during a plan year in whichit was a “substantial employer,” as defined in Section 4001(a)(2) ofERISA; (c) the complete or partial withdrawal of any Originator or anyERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice ofintent to terminate a Title IV Plan or the treatment of a plan amendment as atermination under Section 4041 of ERISA; (e) the institution ofproceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) thefailure by any Originator or ERISA Affiliate to make when due requiredcontributions to a Multiemployer Plan or Title IV Plan unless such failure iscured within 30 days; (g) any other event or condition that mightreasonably be expected to constitute grounds under Section 4042 of ERISAfor the termination of, or the appointment of a trustee to administer, anyTitle IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069or 4212(c) of ERISA; (h) the termination of a Multiemployer Planunder Section 4041A of ERISA or the reorganization or insolvency of aMultiemployer Plan under Section 4241 of ERISA; or (i) the loss of aQualified 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 toresult in liabilities to an Originator or any of its ERISA Affiliates in excessof $500,000.

 

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

 

“Event ofServicer Termination” shall have the meaningassigned to it in Section 8.01 ofthe Sale Agreement.

 

“Evercore” meansEvercore Capital Partners L.P.

 

“Evercore Affiliates”means Evercore and any Person that directly or indirectly through one or moreintermediaries, 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 ordisposing of securities of Holdings.

 

“ExcessConcentration Amount” shall mean, with respect to anyObligor of a Receivable and as of any date of determination after giving effectto all Eligible Receivables transferred on such date, the amount by which theOutstanding Balance of Eligible Receivables owing by such Obligor exceeds (i) theConcentration 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 otherObligors, the Excess Concentration Amount for such Obligor shall be calculatedas 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’sassets and other property (including cash and cash equivalents), over (b) thesum of (i)

 

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the sum of all scheduledpayments of principal, interest and other amounts payable on all indebtednessof the Buyer for borrowed money, plus (ii) the sum of all otherliabilities, indebtedness and other obligations of Buyer for borrowed money,together with all unpaid interest then accrued thereon, plus (iii) anytaxes payable by the Buyer to the IRS, plus (iv) all other indebtedness,liabilities and obligations of the Buyer then due and payable, but the amountof any liability, indebtedness or obligation of the Buyer shall not exceed theprojected 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, theParent, Holdings or the Borrower, or (b) that is a Governmental Authority(unless approved by the Administrative Agent as a result of satisfactorycompliance with all assignment of claims statutes and regulations applicable tosuch Governmental Authority’s Receivables or such other agreements have beenentered into which are satisfactory to the Administrative Agent in its solediscretion, which shall include a waiver of such Obligor’s setoff rights), or (c) ifthe EBITDA Shortfall Event has occurred, that is designated as an ExcludedObligor upon ten (10) Business Days’ prior written notice from theAdministrative Agent to the Borrower, the Servicer and the Parent.

 

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

 

“ExistingCredit Agreement” means that certain Credit Agreement dated as of December        ,2004 by and among the Parent, Vertis Limited and Vertis Digital ServicesLimited, 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 fromtime to time party thereto, GECC Capital Markets Group, Inc., as leadarranger, and Bank of America, N.A., as documentation agent and joint-leadarranger, together with all amendments, restatements, supplements ormodifications thereto that are in effect on the Closing Date or adopted fromtime to time thereafter to the extent not prohibited under the RelatedDocuments.

 

“ExistingSecuritization Program” means that certain trade receivables securitizationprogram evidenced by, among other documents, that certain Amended and RestatedIndenture and Servicing Agreement, dated as of December 9, 2002, amongVertis Receivables, LLC, as issuer, the Parent, as servicer and Manufacturersand Traders Trust Company, as trustee and that certain Amended and RestatedReceivables Purchase Agreement, dated as of December 9, 2002, among VertisReceivables, LLC, the Parent, as servicer, and various Affiliates of theParent, as sellers.

 

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“Federal FundsRate” means, for any day, a floating rate equal to theweighted average of the rates on overnight federal funds transactions amongmembers of the Federal Reserve System, as determined by the AdministrativeAgent.

 

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

 

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

 

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

 

“FinalAdvance Date” shall mean (i) December 22, 2008 or (ii) ifthe Existing Credit Agreement is extended by GE Capital or refinanced by GECapital 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’ forecastedconsolidated  (accompanied by mutuallyacceptable supplemental non-consolidated information customarily prepared bymanagement): (a) balance sheets; (b) profit and loss statements; and (c) cashflow statements, all prepared on a basis substantially consistent with thehistorical financial statements of Holdings and the Originators, together withappropriate supporting details and a statement of underlying assumptions and inthe form and in detail substantially consistent with the financial budgets andprojections (as appropriate).

 

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

 

“FundingAvailability” shall mean, as of any date of determination,the amount, if any, by which the Borrowing Base exceeds the OutstandingPrincipal 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 OutstandingPrincipal Amount exceeds the Borrowing Base, in each case as disclosed in themost recently submitted Borrowing Base Certificate or Borrowing Request or asotherwise determined by the Administrative Agent based on Borrower Collateralinformation available to it, including any information obtained from any auditor from any other reports with respect to the Borrower Collateral, whichdetermination shall be final, binding and conclusive on all parties to theFunding Agreement (absent manifest error).

 

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

 

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

 

“GeneralConcentration Percentage” shall mean at any time ofdetermination with respect to any Obligor having an unsecured long-term debtrating and equivalent short-term rating from each of S&P and Moody’s asdescribed below, an amount equal to the highest applicable percentage listedopposite such Obligor times the aggregate Outstanding Balance of EligibleReceivables 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 ofcalculating the foregoing, (i) if an Obligor’s unsecured long–term debtrating (or equivalent short-term rating) results in two different GeneralConcentration Percentages (because of differences in the long-term unsecureddebt ratings assigned by each of S&P and Moody’s, the General ConcentrationPercentage for such Obligor shall be based upon the lower of the long-termunsecured debt ratings and the short-term ratings; (ii) an Obligor whichdoes not have a long-term debt rating from S&P and/or Moody’s but which hasthe equivalent short-term rating from such Rating Agency as described aboveshall be deemed to have the related long-term rating and (iii) an Obligorwhich does not have a short-term rating from S&P and/or Moody’s but whichhas the equivalent long-term debt rating from such Rating Agency as describedabove shall be deemed to have the related short-term rating.

 

“General TrialBalance” shall mean, with respect to any Originatorand as of any date of determination, such Originator’s accounts receivabletrial balance (whether in the form of a computer printout, magnetic tape ordiskette) as of such date, listing Obligors and the Receivables owing by suchObligors as of such date together with the aged Outstanding Balances of suchReceivables, in form and substance satisfactory to the Borrower and theAdministrative Agent.

 

“GovernmentalAuthority” shall mean any nation or government, any state, provinceor other political subdivision thereof, and any agency, department or otherentity exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government.

 

“GuaranteedIndebtedness” shall mean, as to any Person, anyobligation of such Person guaranteeing any indebtedness, lease, dividend, orother obligation (“primary obligation”)

 

19

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of any otherPerson (the “primary obligor”) inany manner, including any obligation or arrangement of such Person to (a) purchaseor repurchase any such primary obligation, (b) advance or supply funds (i) forthe purchase or payment of any such primary obligation or (ii) to maintainworking capital or equity capital of the primary obligor or otherwise tomaintain the net worth or solvency or any balance sheet condition of theprimary obligor, (c) purchase property, securities or services primarilyfor the purpose of assuring the owner of any such primary obligation of theability of the primary obligor to make payment of such primary obligation, or (d) indemnifythe owner of such primary obligation against loss in respect thereof.  The amount of any Guaranteed Indebtedness atany 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 respectof which such Guaranteed Indebtedness is incurred and (y) the maximumamount for which such Person may be liable pursuant to the terms of the instrumentembodying such Guaranteed Indebtedness; or, if not stated or determinable, themaximum reasonably anticipated liability (assuming full performance) in respectthereof.

 

“Holdings” meansVertis Holdings, Inc., a Delaware corporation.

 

“ImmaterialMisstatement” means (i) any untrue or incorrect information set forthin any Borrowing Base Certificate which does not cause the calculation of theBorrowing Base reflected on such Borrowing Base Certificate to be greater thanwhat the calculation of the Borrowing Base would have been if such informationwere not untrue or incorrect or (ii) any untrue or incorrect informationinadvertently set forth in any Borrowing Base Certificate which does not causethe calculation of the Borrowing Base reflected on such Borrowing Base Certificateto be more than $500,000 greater than what the calculation of the BorrowingBase would have been if such information were not untrue or incorrect; provided,that in the case of clause (ii), such information is corrected within twoBusiness Days.

 

“IncipientServicer 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.

 

“IncipientTermination Event” shall mean any event that, with thepassage of time or notice or both, would, unless cured or waived, become aTermination Event.

 

“IndemnifiedAmounts” shall mean, with respect to any Person, anyand all suits, actions, proceedings, claims, damages, losses, liabilities andreasonable expenses (including, but not limited to, reasonable attorneys’ feesand disbursements and other costs of investigation or defense, including thoseincurred upon any appeal).

 

“IndemnifiedPerson” shall have the meaning assigned to it in Section 10.01(a) of the FundingAgreement.

 

“IndemnifiedTaxes” 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) therate publicly quoted from time to time by The Wall Street Journalas the “base rate on corporate

 

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loans at largeU.S. money center commercial banks” (or, if The Wall StreetJournal ceases quoting a base rate of the typedescribed, the highest per annum rate of interest published by the FederalReserve Board in Federal Reserve statistical release H.15 (519) entitled “SelectedInterest Rates” as the Bank prime loan rate or its equivalent), and (ii) thesum of the Federal Funds Rate plus fifty (50) basis points per annum.   Each change in any interest rate providedfor in the Funding Agreement based upon the Index Rate shall take effect at thetime of such change in the Index Rate.

 

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

 

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

 

 “Interest PaymentDate” shall mean, with respect to any Advance, thefirst Business Day of each month; provided,that, in addition to the foregoing, each of (x) the date upon which all of theCommitments have been terminated and the aggregate Outstanding Principal Amounthas been paid in full and (y) the Commitment Termination Date shall be deemedto be an “Interest Payment Date” with respect to any interest which is thenaccrued 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) afraction, the numerator of which is the higher of (a) 30 and (b) theReceivables Collection Turnover as of the end of the Settlement Periodimmediately preceding such date multiplied by 2, and the denominator of whichis 360.

 

“Investment CompanyAct” shall mean the provisions of the InvestmentCompany 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 amountsconstituting such collateral are invested from time to time.

 

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

 

“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 BusinessDay” shall mean a Business Day on which banks in thecity of London are generally open for interbank or foreign exchangetransactions.

 

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

 

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

 

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

 

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

 

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

 

“LIBOR RateAdvance” shall mean an Advance or portion thereofbearing interest by reference to the LIBOR Rate. Unless a LIBOR Rate DisruptionEvent shall have occurred, each Advance shall be a LIBOR Rate Advance.

 

“LIBOR Rate DisruptionEvent” means, for any Lender, notification by such Lender to the Borrowerand the Administrative Agent of any of the following:  (i) determination by such Lender that itwould be contrary to law or the directive of any central bank or othergovernmental authority to obtain United States dollars in the London interbankmarket to fund or maintain its Advances, (ii) the inability of suchLender, by reason of circumstances affecting the London interbank marketgenerally, to obtain United States dollars in such market to fund its Advancesor (iii) a determination by such Lender that the maintenance of itsAdvances will not adequately and fairly reflect the cost to such Lender offunding 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 orencumbrance, or preference, priority or other security agreement orpreferential arrangement of any kind or nature whatsoever (including any leaseor title retention agreement, any financing lease having substantially the sameeconomic effect as any of the foregoing, and the filing of, or

 

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agreement to give,any financing statement perfecting a security interest under the UCC orcomparable 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 beforeany court, board, commission, agency or instrumentality of any federal, state,local or foreign government or of any agency or subdivision thereof or beforeany arbitrator or panel of arbitrators.

 

“Lockbox” has themeaning assigned to such term in Section 6.01 of the FundingAgreement.

 

 “Loss Reserve Ratio” shall mean, as ofany date of determination, the ratio (expressed as a percentage) calculated inaccordance 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 AdverseEffect” shall mean a material adverse effect on (a) thebusiness, assets, operations or financial or other condition of (i) anyOriginator or the Originators considered as a whole, (ii) the Borrower or (iii) theServicer, (b) the ability of any Originator, the Borrower, the Parent orthe Servicer to perform any of its obligations under the Related Documents inaccordance with the terms thereof, (c) the validity or enforceability ofany Related Document or the rights and remedies of the Borrower, the Lenders orthe Administrative Agent under any Related Document, (d) the federalincome tax attributes of the sale, contribution or pledge of the TransferredReceivables pursuant to any Related Document or (e) the TransferredReceivables (or collectibility thereof), the Contracts therefor, the BorrowerCollateral (in each case, taken as a whole) or the ownership interests or Liensof the Borrower or the Lenders or the Administrative Agent thereon or thepriority 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.

 

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

 

“Net ReceivablesBalance” means, as of any date of determination, theamount equal to:

 

(a)                                  the Outstanding Balance of EligibleReceivables,

 

minus

 

(b)                                 the Excess Concentration Amount;

 

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

 

“NetWorth” 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 OutstandingPrincipal Amount at such time, plus (ii) theaggregate outstanding principal balance of the Subordinated Loans (includingany 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 theFunding Agreement.

 

“Non-Funding Lender”shall have the meaning assigned to it in Section 2.03(e) of theFunding 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 tomake payments in respect thereof.

 

“Officer’sCertificate” shall mean, with respect to any Person, acertificate signed by an Authorized Officer of such Person.

 

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

 

“OriginatorSupport Agreement” shall mean an agreementsubstantially in the form of Section 2.03 to the Sale Agreementmade by Parent in favor of the Borrower.

 

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

 

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

 

“OutstandingPrincipal Amount” shall mean, as of any date ofdetermination, the amount equal to (a) the aggregate Advances made by theLenders under the Funding Agreement on or before such date, minus(b) the aggregate amounts disbursed to any Lender in reduction of the principalof such Advances pursuant to the Funding Agreement on or before such date andnot required to be returned as preference payments or otherwise; provided, that references to the OutstandingPrincipal Amount of any Lender shall mean an amount equal to (x) the aggregateAdvances made by such Lender pursuant to the Funding Agreement on or beforesuch date, minus (y) theaggregate amounts disbursed to such Lender in reduction of the principal ofsuch Advances pursuant to the Funding Agreement on or before such date and notrequired 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 otherthan the Borrower.

 

“PBGC”shall mean the Pension Benefit Guaranty Corporation.

 

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

 

“PermittedEncumbrances” shall mean the following encumbrances: (a) Liensfor taxes or assessments or other governmental charges or levies not yet dueand payable; (b) pledges or deposits securing obligations under workmen’scompensation, unemployment insurance, social security or public liability lawsor similar legislation; (c) pledges or deposits securing bids, tenders,government contracts, contracts (other than contracts for the payment ofmoney) or leases to which any Originator, the Borrower or the Servicer isa party as lessee made in the ordinary course of business; (d) depositssecuring statutory obligations of any Originator, the Borrower or the Servicer;(e) inchoate and unperfected workers’, mechanics’, suppliers’ or similarLiens arising in the ordinary course of business; (f) carriers’,warehousemen’s or other similar possessory Liens arising in the ordinary courseof business; (g) deposits securing, or in lieu of, surety, appeal orcustoms bonds in proceedings to which any Originator, the Borrower or theServicer is a party; (h) any judgment Lien not constituting a TerminationEvent under Section 8.01(g) of the Funding Agreement; (i) Liensexisting on the Closing Date and listed on Schedule 5.03(b)of the Funding Agreement; and (j) presently existing or hereinaftercreated Liens in favor of the Buyer, the Borrower, the Lenders or the AdministrativeAgent under the Funding Agreement and the Related Documents.

 

“PermittedInvestments” shall mean any of the following:

 

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

 

(b)                                 repurchase agreements on obligations ofthe type specified in clause (a) of thisdefinition; provided, that theshort-term debt obligations of the party agreeing to repurchase are rated atleast 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 trustcompany incorporated under the laws of the United States of America or anystate, 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 365days; provided, that the short-term obligations ofsuch depository institution or trust company are rated at least A-1 or theequivalent by S&P and P-1 or the equivalent by Moody’s;

 

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

 

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

 

and, in any such case, the applicable investmentshall mature by not later than one Business Day prior to the next succeedingSettlement Date.

 

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

 

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

 

“Power of Attorney”shall have the meaning assigned to it in Section 9.05 of the SaleAgreement 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 theSwing Line Lender), the percentage obtained by dividing (i) the Commitmentof that Lender by (ii) the Aggregate Commitment, as such percentage may beadjusted by assignments permitted pursuant to Section 12.02of the Funding Agreement; provided, however, if all of the Commitments are terminatedpursuant to the terms of the Funding Agreement, then “Pro Rata Share” shallmean with respect to all matters relating to any Lender, the percentageobtained by dividing (x) the sum of (A) such Lender’s RevolvingCredit Advances, plus (B) such

 

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

 

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

 

“QualifiedIPO” means anunderwritten public offering of Holdings Stock which generates net cashproceeds 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) ofthe IRC.

 

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

 

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

 

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

 

(a)                                  indebtedness of such Obligor (whetherconstituting an account, chattel paper, document, instrument or generalintangible (under which the Obligor’s principal obligation is a monetaryobligation) and whether or not earned by performance) arising from theprovision of merchandise, goods or services by an Originator to such Obligor,including the right to payment of any interest or finance charges and otherobligations of such Obligor with respect thereto; but excluding ExcludedReceivables.

 

(b)                                 all Liens and property subject theretofrom time to time securing or purporting to secure any such indebtedness ofsuch Obligor;

 

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

 

(d)                                 all right, title and interest of anyOriginator, 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 ofthe foregoing;

 

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

 

(g)                                 all proceeds with respect to any of theforegoing.

 

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

 

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

 

(a)                                  a fraction, (i) the numerator ofwhich is equal to the aggregate Outstanding Balance of Transferred Receivableson the first day of the three (3) Settlement Periods immediately precedingsuch date and (ii) the denominator of which is equal to aggregateCollections received during such three (3) Settlement Periods with respectto all Transferred Receivables,

 

multipliedby

 

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

 

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

 

“Refunded SwingLine Loan” shall have the meaning assigned to it in Section 2.01(b)(iii) of the FundingAgreement.

 

“RegulatoryChange” shall mean any change after the Closing Datein any federal, state or foreign law, regulation (including Regulation D of theFederal Reserve Board), pronouncement by the Financial Accounting StandardsBoard 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, theFinancial 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 4.04of the Sale Agreement.

 

“RelatedDocuments” shall mean each Collection AccountAgreement, the Concentration Account Agreement, the Borrower Account Agreement,the Sale Agreement, the Funding Agreement, the Revolving Notes, the Swing LineNote, each Receivables Assignment, the Subordinated Notes, each OriginatorSupport Agreement and all other agreements, instruments, documents andcertificates identified in the Schedule of Documents and including allother pledges, powers of attorney, consents, assignments, contracts, notices,and all other written matter whether heretofore, now or hereafter executed byor on behalf of any Person, or any employee of any Person, and delivered inconnection with the Sale Agreement, the Funding Agreement or the transactionscontemplated thereby.  Any reference inthe Sale Agreement, the Funding Agreement or any other Related Document to a RelatedDocument shall include all Appendices thereto, and all amendments,restatements, supplements or other modifications thereto, and shall refer tosuch Related Document as the same may be in effect at any and all times suchreference becomes operative.

 

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“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 CapitalAmount” means $20,000,000.

 

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

 

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

 

“Revolving CreditAdvance” shall have the meaning assigned to it in Section 2.01 of the Funding Agreement.  Unless a LIBOR Rate Disruption Event shallhave 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 includingthe day immediately preceding the Commitment Termination Date.

 

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

 

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

 

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

 

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

 

(a)                                  the Outstanding Balance of such SoldReceivable, minus

 

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

 

(c)                                  a discount reflecting the portion of theSold Receivables that is reasonably expected by such Originator on the TransferDate to become Defaulted Receivables by reason of clause (b) of thedefinition thereof, minus

 

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

 

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

 

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

 

 “Schedule ofDocuments” shall mean the schedule, including allappendices, exhibits or schedules thereto, listing certain documents andinformation to be delivered in connection with the Sale Agreement, the FundingAgreement and the other Related Documents and the transactions contemplatedthereunder, substantially in the form attached as Annex  Y to the FundingAgreement and the Sale Agreement.

 

“Securities Act”shall mean the provisions of the Securities Act of 1933, 15 U.S.C. Sections 77aet seq., and any regulations promulgatedthereunder.

 

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

 

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

 

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

 

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

 

“Servicing FeeRate” shall mean 1.00%.

 

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

 

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

 

“ServicingOfficer” shall mean any officer of the Servicerinvolved in, or responsible for, the administration and servicing of theTransferred Receivables and whose name appears on any Officer’s Certificatelisting servicing officers furnished to the Administrative Agent by theServicer, as such certificate may be amended from time to time.

 

“ServicingRecords” shall mean all Records prepared andmaintained by the Servicer with respect to the Transferred Receivables and theObligors thereunder.

 

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

 

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

 

“SignificantSubsidiary” means, as of any date of determination, any Subsidiary ofHoldings with total assets or total liabilities in excess of $1,000,000 as ofsuch date of determination.

 

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

 

“Solvent” shallmean, with respect to any Person on a particular date, that on such date (a) thefair value of the property of such Person is greater than the total amount ofliabilities, including contingent liabilities, of such Person; (b) thepresent fair salable value of the assets of such Person is not less than theamount that will be required to pay the probable liability of such Person onits Debts as they become absolute and matured; (c) such Person does notintend to, and does not believe that it will, incur Debts or liabilities beyondsuch Person’s ability to pay as such Debts and liabilities mature; and (d) suchPerson is not engaged in a business or transaction, and is not about to engagein a business or transaction, for which such Person’s property would constitutean unreasonably small capital.  Theamount of contingent liabilities (such as Litigation, guaranties and pensionplan liabilities) at any time shall be computed as the amount that, in light ofall the facts and circumstances existing at the time, represents the amountthat can reasonably be expected to become an actual or matured liability.

 

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“SpecialConcentration Percentage” shall mean, with respect toany Obligor, that percentage, if any, set forth in Annex Zto the Funding Agreement with respect to such Obligor, or, with respect to anysuch Obligor or any other Obligor, such other percentage as the AdministrativeAgent may at any time and from time to time designate in its sole discretionwith respect to such Obligor in a written notification to the Borrower and theServicer.

 

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

 

“Stock”shall mean all shares, options, warrants, member interests, general or limitedpartnership interests or other equivalents (regardless of how designated) of orin a corporation, limited liability company, partnership or equivalent entitywhether voting or nonvoting, including common stock, preferred stock or anyother “equity security” (as such term is defined in Rule 3a11-1 of theGeneral Rules and Regulations promulgated by the Securities and ExchangeCommission 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 theSale Agreement.

 

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

 

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

 

“Sub-ServicingAgreement” shall mean any written contract enteredinto between the Servicer and any Sub-Servicer pursuant to and in accordancewith Section 7.01 of the Sale Agreementrelating to the servicing, administration or collection of the TransferredReceivables.

 

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

 

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

 

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

 

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“SuccessorServicing Fees and Expenses” shall mean the fees andexpenses payable to the Successor Servicer as agreed to by the Borrower, theLenders and the Administrative Agent.

 

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

 

“Swing Line Commitment”shall mean, as to the Swing Line Lender, the commitment of the Swing LineLender to make Swing Line Advances pursuant to the terms of the FundingAgreement.  As of the Closing Date, theSwing 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 outstandingto the Borrower.

 

“Swing Line Note”shall have the meaning assigned to it in Section 2.01(b)(ii) of theFunding 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 tobe filed with respect to taxes, including attachments thereto and amendmentsthereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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contributes to orhas an obligation to contribute to on behalf of participants who are or wereemployed by any of them.

 

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

 

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

 

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

 

“TransferredReceivable” shall mean any Sold Receivable orContributed Receivable; provided, that anyReceivable repurchased by an Originator thereof pursuant to Section 4.04of the Sale Agreement shall not be deemed to be a Transferred Receivable fromand after the date of such repurchase unless such Receivable has subsequentlybeen repurchased by or contributed to the Borrower.

 

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

 

“UnapprovedReceivable” shall mean any receivable (a) withrespect to which the Originator’s customer relationship with the Obligorthereof arises as a result of the acquisition by such Originator of anotherPerson or (b) that was originated in accordance with standards establishedby another Person acquired by an Originator, in each case, solely with respectto any such acquisitions that have not been approved in writing by theAdministrative 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) thepresent value of all benefits under the Title IV Plan (based on the assumptionsused to fund the Title IV Plan pursuant to Section 412 of the IRC) as ofthe most recent valuation date over (b) the fair market value of theassets of such Title IV Plan as of such valuation date.

 

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

 

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

 

“UnusedCommitment Fee” shall mean a fee equal to the productof (i) the amount by which the Aggregate Commitment exceeds theOutstanding 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 providedtherein, any accounting term used in any Related Document shall have themeaning customarily given such term in accordance with GAAP, and all financialcomputations thereunder shall be computed in accordance with GAAP consistentlyapplied.  That certain items or computationsare explicitly modified by the phrase “in accordance with GAAP” shall in no waybe construed to limit the foregoing.

 

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

 

(c)  Rules of Construction.  Unless otherwise specified, references in anyRelated Document or any of the Appendices thereto to a Section, subsection orclause refer to such Section, subsection or clause as contained in suchRelated Document.  The words “herein,” “hereof”and “hereunder” and other words of similar import used in any Related Documentrefer to such Related Document as a whole, including all annexes, exhibits andschedules, as the same may from time to time be amended, restated, modified orsupplemented, and not to any particular section, subsection or clausecontained in such Related Document or any such annex, exhibit or schedule.  Any reference to any amount on any date ofdetermination means such amount as of the close of business on such date ofdetermination.  Any reference to ordefinition of any document, instrument or agreement shall, unless expressly notedotherwise, include the same as amended, restated, supplemented or otherwisemodified from time to time.  Whereverfrom the context it appears appropriate, each term stated in either thesingular or plural shall include the singular and the plural, and pronounsstated 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 “withoutlimitation”; the word “or” is not exclusive; references to Persons include theirrespective successors and assigns (to the extent and only to the extentpermitted by the Related Documents) or, in the case of GovernmentalAuthorities, Persons succeeding to the relevant functions of such Persons; andall references to statutes and related regulations shall include any amendmentsof the same and any successor statutes and regulations.

 

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

 

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AdministrativeAgent on or prior to the Closing Date and the underlying calculations forperiods immediately preceding the Closing Date to be used in futurecalculations of the Ratios shall be established by the Administrative Agent onor prior to the Closing Date in accordance with the form of MonthlyReport.  For purposes of calculating theRatios, (i) averages shall be computed by rounding to the second decimalplace and (ii) the Settlement Period in which the date of determinationthereof occurs shall not be included in the computation thereof and the firstSettlement Period immediately preceding such date of determination shall bedeemed to be the Settlement Period immediately preceding the Settlement Periodin which such date of determination occurs.

 

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