**Exhibit 10.7**

 

**EXECUTION COPY**

 

RECEIVABLES FUNDING AND ADMINISTRATION AGREEMENT

 

Dated as of November 25, 2005

 

by and among

 

VERTIS RECEIVABLES II, LLC,

 

as Borrower,

 

THE FINANCIAL INSTITUTIONS SIGNATORY HERETO FROM TIME TO TIME,

 

as Lenders,

 

and

 

GENERAL ELECTRIC CAPITAL CORPORATION,

 

as a Lender, as Swing Line Lender and as Administrative Agent

 

Receivables Funding and Administration Agreement

 

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TABLE OF CONTENTS

 
|                                              | **Page**                                                                    |
|---------------------------------------------------|-----------------------------------------------------------------------------|
|                                              |                                                                        |   |   |
| ARTICLE I.  DEFINITIONS AND INTERPRETATION   |                                                                        | 1 |
|                                              |                                                                        |   |   |
|                                              | Section 1.01. Definitions                                              | 1 |
|                                              | Section 1.02. Rules of Construction                               | 1 |
|                                              |                                                                        |   |
| ARTICLE II. AMOUNTS AND TERMS OF ADVANCES    | 2                                                                           |
|                                              |                                                                        |   |   |
|                                              | Section 2.01. Advances                                                 | 2 |
|                                              | Section 2.02. Optional Changes in Aggregate Commitment                 | 4 |
|                                              | Section 2.03. Procedures for Making Advances                           | 5 |
|                                              | Section 2.04. Pledge and Release of Transferred Receivables            | 8 |
|                                              | Section 2.05. Commitment Termination Date                              | 8 |
|                                              | Section 2.06. Interest; Charges                                        | 8 |
|                                              | Section 2.07. Fees                                                     | 9 |
|                                              | Section 2.08. Application of Collections; Time and Method of  Payments | 9 |
|                                              | Section 2.09. Capital Requirements; Additional Costs                   | 14 |
|                                              | Section 2.10. Breakage Costs                                           | 15 |
|                                              |                                                                        |   |
| ARTICLE III. CONDITIONS PRECEDENT            | 15                                                                          |
|                                              |                                                                        |   |   |
|                                              | Section 3.01. Conditions to Effectiveness of Agreement                 | 15 |
|                                              | Section 3.02. Conditions Precedent to All Advances                     | 17 |
|                                              |                                                                        |   |
| ARTICLE IV. REPRESENTATIONS AND WARRANTIES   |                                                                        | 18 |
|                                              |                                                                        |   |   |
|                                              | Section 4.01. Representations and Warranties of the Borrower           | 18 |
|                                              |                                                                        |   |
| ARTICLE V. GENERAL COVENANTS OF THE BORROWER | 26                                                                          |
|                                              |                                                                        |   |   |
|                                              | Section 5.01. Affirmative Covenants of the Borrower                    | 26 |
|                                              | Section 5.02. Reporting Requirements of the Borrower                   | 27 |
|                                              | Section 5.03. Negative Covenants of the Borrower                       | 28 |
|                                              |                                                                        |   |   |
| ARTICLE VI. ACCOUNTS                         | 31                                                                          |
|                                              |                                                                        |   |   |
|                                              | Section 6.01. Establishment of Accounts                                | 31 |
|                                              |                                                                        |   |   |
| ARTICLE VII. GRANT OF SECURITY INTERESTS     | 34                                                                          |
|                                              |                                                                        |   |   |
|                                              | Section 7.01. Borrower’s Grant of Security Interest               | 34 |
|                                              | Section 7.02. Borrower’s Agreements                               | 36 |
|                                              | Section 7.03. Delivery of Collateral                                   | 36 |

 

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|                                  | Section 7.04. Borrower Remains Liable                                                          | 36     |
|---------------------------------------|-----------------------------------------------------------------------------------------------------|--------|
|                                  | Section 7.05. Covenants of the Borrower Regarding the Borrower  Collateral                     | 36     |
|                                  |                                                                                                |   |   |
| ARTICLE VIII. TERMINATION EVENTS | 39                                                                                                  |
|                                  |                                                                                                |   |   |
|                                  | Section 8.01. Termination Events                                                               | 39     |
|                                  |                                                                                                |   |   |
| ARTICLE IX. REMEDIES             | 43                                                                                                  |
|                                  |                                                                                                |   |   |
|                                  | Section 9.01. Actions Upon Termination Event                                                   | 43     |
|                                  | Section 9.02. Exercise of Remedies                                                             | 45     |
|                                  | Section 9.03. Power of Attorney                                                                | 46     |
|                                  | Section 9.04. Continuing Security Interest                                                     | 46     |
|                                  |                                                                                                |   |   |
| ARTICLE X. INDEMNIFICATION       | 46                                                                                                  |
|                                  |                                                                                                |   |   |
|                                  | Section 10.01. Indemnities by the Borrower                                                     | 46     |
|                                  |                                                                                                |   |   |
| ARTICLE XI. ADMINISTRATIVE AGENT | 48                                                                                                  |
|                                  |                                                                                                |   |   |
|                                  | Section 11.01. Authorization and Action                                                        | 48     |
|                                  | Section 11.02. Reliance                                                                        | 48     |
|                                  | Section 11.03. GE Capital and Affiliates                                                       | 49     |
|                                  | Section 11.04. Lender Credit Decision                                                          | 49     |
|                                  | Section 11.05. Indemnification                                                                 | 50     |
|                                  | Section 11.06. Successor Administrative Agent                                                  | 50     |
|                                  | Section 11.07. Setoff and Sharing of Payments                                                  | 51     |
|                                  |                                                                                                |   |   |
| ARTICLE XII. MISCELLANEOUS       | 51                                                                                                  |
|                                  |                                                                                                |   |   |
|                                  | Section 12.01. Notices                                                                         | 51     |
|                                  | Section 12.02. Binding Effect; Assignability                                                   | 52     |
|                                  | Section 12.03. Termination; Survival of Borrower Obligations  Upon Commitment Termination Date | 55     |
|                                  | Section 12.04. Costs, Expenses and Taxes                                                       | 55     |
|                                  | Section 12.05. Confidentiality                                                                 | 57     |
|                                  | Section 12.06. Complete Agreement; Modification of Agreement                                   | 58     |
|                                  | Section 12.07. Amendments and Waivers                                                          | 58     |
|                                  | Section 12.08. No Waiver; Remedies                                                             | 60     |
|                                  | Section 12.09. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF  JURY TRIAL                   | 60     |
|                                  | Section 12.10. Counterparts                                                                    | 62     |
|                                  | Section 12.11. Severability                                                                    | 62     |
|                                  | Section 12.12. Section Titles                                                             | 62     |
|                                  | Section 12.13. Further Assurances                                                              | 62     |
|                                  | Section 12.14. No Proceedings                                                                  | 63     |
|                                  | Section 12.15. Limitation on Payments                                                          | 63     |

 

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| **EXHIBITS**             | ** ** | ** **                                                                                                             | ** ** |
|--------------------------|------------|------------------------------------------------------------------------------------------------------------------------|------------|
| Exhibit 2.01(a)(ii) |       | Form of Revolving Note                                                                                            |       |
| Exhibit 2.01(b)(ii) |       | Form of Swing Line Note                                                                                           |       |
| Exhibit 2.02(a)     |       | Form of Commitment Reduction Notice                                                                               |       |
| Exhibit 2.02(b)     |       | Form of Commitment Termination Notice                                                                             |       |
| Exhibit 2.03(a)     |       | Form of Borrowing Request                                                                                         |       |
| Exhibit 2.03(h)     |       | Form of Repayment Notice                                                                                          |       |
| Exhibit 5.02(b)     |       | Form of Borrowing Base Certificate                                                                                |       |
| Exhibit 9.03        |       | Form of Power of Attorney                                                                                         |       |
| Exhibit 12.02(b)    |       | Form of Assignment Agreement                                                                                      |       |
| Exhibit A           |       | Credit and Collection Policy                                                                                           |       |
|                     |       |                                                                                                                   |       |
| Schedule 4.01(b)    |       | Jurisdiction of organization/organizational  number; Executive Offices; Collateral Locations; Corporate or Other Names |       |
| Schedule 4.01(i)    |       | Taxes                                                                                                                  |       |
| Schedule 4.01(q)    |       | Deposit and Disbursement Accounts                                                                                      |       |
| Schedule 4.01(v)    |       | Supplementary Representations                                                                                          |       |
| Schedule 5.01(b)    |       | Trade Names/Borrower                                                                                                   |       |
|                     |       |                                                                                                                   |       |
| Annex 5.02(a)            |       | Reporting Requirements of the Borrower  (including Form of Monthly Report)                                        |       |
| Annex W                  |       | Administrative Agent’s Account/Lenders’  Accounts                                                            |       |
| Annex X                  |       | Definitions and Interpretations                                                                                        |       |
| Annex Y                  |       | Schedule of Documents                                                                                             |       |
| Annex Z                  |       | Special Concentration Percentages                                                                                      |       |

 

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THIS RECEIVABLES FUNDING AND ADMINISTRATION AGREEMENT (as amended,restated, supplemented or otherwise modified and in effect from time to time,the “Agreement”) is entered into as of November 25,2005 by and among VERTIS RECEIVABLES II, LLC, a Delaware limited liabilitycompany (the “Borrower”), the financialinstitutions signatory hereto from time to time as lenders (the “Lenders”), and GENERAL ELECTRIC CAPITALCORPORATION, a Delaware corporation, as a Lender, as swing line lender (in suchcapacity, the “Swing Line Lender”) and as administrative agent for theLenders hereunder (in such capacity, the “AdministrativeAgent”).

 

RECITALS

 

A.            The Borrower is aspecial purpose limited liability company the sole member of which is Parent(in such capacity, the “Member”).

 

B.            The Borrower hasbeen formed for the purpose of purchasing, or otherwise acquiring by capitalcontribution, Receivables of the Originators party to the Sale Agreement.

 

C.            The Borrower intendsto fund its purchases of the Receivables, in part, by borrowing Advances andpledging all of its right, title and interest in and to the Receivables assecurity therefor, and, subject to the terms and conditions hereof, the Lendersintend to make such Advances, from time to time, as described herein.

 

D.            The AdministrativeAgent has been requested and is willing to act as administrative agent onbehalf of each of the Lenders in connection with the making and financing ofsuch Advances.

 

AGREEMENT

 

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

 

# ARTICLE I.

#  

# DEFINITIONS AND INTERPRETATION

#  

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

##  

## Section 1.02.  Rules of Construction.  For purposes of this Agreement, the rules ofconstruction set forth in Annex X shallgovern.  All Appendices hereto, orexpressly identified to this Agreement, are incorporated herein by referenceand, taken together with this Agreement, shall constitute but a singleagreement.

 

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# ARTICLE II.

#  

# AMOUNTS AND TERMS OF ADVANCES

#  

## Section 2.01.  Advances.

##  

### (a)           Revolving Credit Advances.  (i)  From and after the Effective Dateand until the Commitment Termination Date and subject to the terms andconditions hereof, each Lender (other than the Swing Line Lender) severallyagrees to make its Pro Rata Share of advances (each such advance hereunder, a “Revolving Credit Advance”) to the Borrower fromtime to time.  The Outstanding PrincipalAmount of all Revolving Credit Advances shall not at any time exceed theAggregate Commitment and the Outstanding Principal Amount of Revolving CreditAdvances made by each Lender shall not exceed such Lender’s severalCommitment.  Except to the extentprovided in Section 2.06(c), no Lendershall make any Revolving Credit Advances if, after giving effect thereto, aFunding Excess would exist.  The Borrowermay from time to time borrow, repay and reborrow Revolving Credit Advanceshereunder on the terms and conditions set forth herein.

###  

(ii)           The Borrower shallexecute and deliver to each Lender (other than a Swing Line Lender) that makesa request therefor, a note to evidence the Revolving Credit Advances which maybe made hereunder from time to time by such Lender.  Each such note shall be (x) in the principalamount of the Commitment of the applicable Lender, (y) dated as of the date ofissuance thereof, and (z) substantially in the form of Exhibit 2.01(a)(ii) (each,a “Revolving Note”).  Each Revolving Note shall represent theobligation of the Borrower to pay the amount of each Lender’s Commitment or, ifless, the Lender’s Pro Rata Share of the aggregate Outstanding Principal Amountof all outstanding Revolving Credit Advances made to the Borrower, togetherwith interest thereon as prescribed in Section 2.06.  The Outstanding Principal Amount of RevolvingCredit Advances and all other accrued and unpaid Borrower Obligations shall beimmediately due and payable in full in immediately available funds on theCommitment Termination Date.

 

### (b)           Swing Line Advances.  (i) From and after the Effective Dateand until the Commitment Termination Date and subject to the terms andconditions hereof, the Swing Line Lender agrees to make advances (each suchadvance hereunder, a “Swing Line Advance”)to the Borrower from time to time.  Theaggregate amount of the Swing Line Loan shall not at any time exceed the SwingLine Commitment.  Under no circumstancesshall the Swing Line Lender make a Swing Line Advance if, after giving effectthereto, the aggregate amount of the Swing Line Loan would exceed the SwingLine Commitment.  The Swing Line Lendershall not make any Swing Line Advance, if after giving effect thereto, aFunding Excess would exist. The Borrower may from time to time borrow, repayand reborrow Swing Line Advances hereunder on the terms and conditions setforth herein.  Unless the Swing LineLender has received at least one Business Day’s prior written notice from theLenders instructing it not to make a Swing Line Advance, the Swing Line Lendershall, notwithstanding the failure of any condition precedent set forth in Section 3.01 or 3.02,be entitled to fund such Swing Line Advance, and to have the Lenders makeRevolving Credit Advances in accordance with Section 2.01(b)(iii) orpurchase participating interests in accordance with Section 2.01(b)(iv).  Subject to Section 12.15(b), the

 

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Borrower shall repay theaggregate outstanding principal amount of the Swing Line Loan in full inimmediately available funds on the Commitment Termination Date.

###  

(ii)           The Borrower shallexecute and deliver to the Swing Line Lender a note to evidence the Swing LineLoan.  Such note shall be in theprincipal amount of the Swing Line Commitment, dated the Closing Date andsubstantially in the form of Exhibit 2.01(b)(ii) (the“Swing Line Note”).  The Swing Line Note shall represent theobligation of the Borrower to pay the Swing Line Loan, together with interestthereon as prescribed in Section 2.06.  The Swing Line Loan and all other accrued andunpaid Borrower Obligations shall be immediately due and payable in full inimmediately available funds on the Commitment Termination Date.

 

(iii)          The Swing LineLender, at any time and from time to time no less frequently than once permonth, shall on behalf of the Borrower (and the Borrower hereby irrevocablyauthorizes the Swing Line Lender to so act on its behalf) request each Lender(excluding the Swing Line Lender) to make a Revolving Credit Advance to theBorrower in an amount equal to such Lender’s Pro Rata Share of the principalamount of the Swing Line Loan (the “Refunded SwingLine Loan”) outstanding on the date such notice is given.  Unless the Commitment Termination Date  has occurred (in which event the proceduresof subsection (iv) belowshall apply) and regardless of whether the conditions precedent set forth in Sections 3.01 and 3.02to the making of a Revolving Credit Advance are then satisfied, each Lendershall disburse directly to the Administrative Agent, its Pro Rata Share of aRevolving Credit Advance on behalf of the Swing Line Lender, prior to 3:00 p.m.(New York time), in immediately available funds on the Business Day nextsucceeding the date on which such notice is given; providedthat (i) no Lender shall be required to make such a Revolving CreditAdvance if the Swing Line Advance to be financed was made in violation of thefourth sentence of Section 2.01(b)(i) andthe Funding Excess resulting therefrom has not yet been cured, (ii) noLender shall be required to make such a Revolving Credit Advance if, aftergiving effect to such Revolving Credit Advance, the Outstanding PrincipalAmount of the Revolving Credit Advances made by such Lender would exceed suchLender’s several Commitment and (iii) no Lender shall be required to makesuch a Revolving Credit Advance after the Final Advance Date.  The proceeds of such Revolving CreditAdvances shall be immediately paid to the Swing Line Lender and applied torepay the Refunded Swing Line Loan.

 

(iv)          If, prior torefunding a Swing Line Loan with a Revolving Credit Advance pursuant to Section 2.01(b)(iii), the CommitmentTermination Date or one of the events described in Sections8.01(d) or (e) hasoccurred, then, subject to the provisions of Section 2.01(b)(v) below,each Lender shall, on the date such Revolving Credit Advance was to have beenmade for the benefit of the Borrower, purchase from the Swing Line Lender anundivided participation interest in the Swing Line Loan in an amount equal toits Pro Rata Share of such Swing Line Loan. Upon request by the Swing Line Lender, each Lender shall promptlytransfer to the Swing Line Lender, in immediately available funds, the amountof its participation interest.

 

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(v)           Each Lender’sobligation to make Revolving Credit Advances in accordance with Section 2.01(b)(iii) and topurchase participation interests in accordance with Section 2.01(b)(iv) shall,except to the extent described in the proviso set forth in the second to lastsentence of Section 2.01(b)(iii), beabsolute and unconditional and shall not be affected by any circumstance,including (A) any setoff, counterclaim, recoupment, defense or other rightthat such Lender may have against the Swing Line Lender, the Borrower or anyother Person for any reason whatsoever; (B) the occurrence or continuanceof any Termination Event or Incipient Termination Event; (C) any inabilityof the Borrower to satisfy the conditions precedent to borrowing set forth inthis Agreement at any time; or (D) any other circumstance, happening orevent whatsoever, whether or not similar to any of the foregoing.  If any Lender does not make available to theAdministrative Agent or the Swing Line Lender, as applicable, the amountrequired pursuant to Sections 2.01(b)(iii) or(b)(iv), as the case may be, the Swing LineLender shall be entitled to recover such amount on demand from such Lender,together with interest thereon for each day from the date of non-payment untilsuch amount is paid in full at the Federal Funds Rate for the first twoBusiness Days and at the Index Rate thereafter.

####  

## Section 2.02.  Optional Changes in Aggregate Commitment.

##  

### (a)           So long as noIncipient Termination Event or Termination Event shall have occurred and be continuing,the Borrower may reduce the Aggregate Commitment permanently; provided, that (i) the Borrower shall giveten Business Days’ prior written notice of any such reduction to theAdministrative Agent substantially in the form of Exhibit 2.02(a) (eachsuch notice, a “Commitment Reduction Notice”),(ii) any partial reduction of the Aggregate Commitment shall be in aminimum amount of $5,000,000 or an integral multiple thereof and (iii) nosuch partial reduction shall reduce the Aggregate Commitment below the greaterof (x) the Outstanding Principal Amount at such time and (y) $100,000,000.  Any such reduction in the AggregateCommitment shall result in (i) a reduction in each Lender’s Commitment inan amount equal to such Lender’s Pro Rata Share of the amount by which theAggregate Commitment is being reduced and (ii) a proportional reduction inthe Swing Line Commitment; provided, however, that no such partial reduction shallreduce the Swing Line Commitment below the aggregate amount of the Swing LineLoan.

###  

### (b)           The Borrower may, atany time, on at least 30 days’ prior written notice by the Borrower to theAdministrative Agent, irrevocably terminate the Aggregate Commitment; provided, that (i) such notice oftermination shall be substantially in the form of Exhibit 2.02(b)(the “Commitment Termination Notice”) and (ii) theBorrower shall reduce the aggregate outstanding amount of Advances to zero onthe date specified in such notice, and make all payments required by Section 2.03(h) at thetime and in the manner specified therein. Upon such termination, the Borrower’s right to request that any Lendermake any Advances hereunder shall simultaneously terminate and the CommitmentTermination Date shall automatically occur.

###  

### (c)           Each written noticerequired to be delivered pursuant to Sections 2.02(a) and(b) shall beirrevocable and shall be effective (i) on the day of receipt if receivedby the Administrative Agent and the Lenders not later than 2:00 p.m. (NewYork time) on any Business Day and (ii) on the immediately succeedingBusiness Day if received by the Administrative

 

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Agent and the Lenders aftersuch time on such Business Day or if any such notice is received on a day otherthan a Business Day (regardless of the time of day such notice isreceived).  Each such notice oftermination or reduction shall specify, respectively, the amount of, or theamount of the proposed reduction in, the Aggregate Commitment.

###  

## Section 2.03.  Procedures for Making Advances.

##  

### (a)           Borrowing Requests.  Except as provided in Section 2.06(c),each Borrowing shall be made upon notice by the Borrower to the AdministrativeAgent in the manner provided herein.  Anysuch notice must be given in writing so that it is received no later than 12:00noon (New York time) on the Business Day of the proposed Advance Date set forththerein. Each Borrowing requested pursuant to a Borrowing Request shall be inthe form of an Swing Line Advance until such Swing Line Advance is refunded orotherwise refinanced in accordance with Section 2.01(b)(iii) or(b)(iv). Each such notice (a “Borrowing Request”)shall (i) be substantially in the form of Exhibit 2.03(a),(ii) be irrevocable and (iii) specify the amount of the requestedBorrowing (which shall be in a minimum amount of $1,000,000 or an intergralmultiple of $100,000 in excess of $1,000,000) and the proposed Advance Date(which shall be a Business Day), and shall include such other information asmay be required by the Lenders and the Administrative Agent.  Unless a LIBOR Rate Disruption Event shallhave occurred, each Advance shall be a LIBOR Rate Advance. The AdministrativeAgent shall review the Borrowing Base Certificate delivered in connection witheach Borrowing Request to confirm whether a Funding Excess exists or wouldarise after giving effect to the Borrowing requested in the related BorrowingRequest.  If, in connection with suchreview, the Administrative Agent determines that a Funding Excess exists orwould arise after giving effect to the Borrowing requested in the relatedBorrowing Request, the Administrative Agent shall promptly notify each Lenderthereof.

###  

### (b)           Advances; Payments.

###  

#### (i)            (A) The Administrative Agentshall, promptly after receipt of a Borrowing Request and in any event prior to12:00 noon (New York time) on the date such Borrowing Request is deemedreceived, by telecopy, telephone or other similar form of communication notifythe Swing Line Lender of its receipt of a Borrowing Request relating to arequest for Swing Line Advances, and (B) the Swing Line Lender shall makethe amount of such Swing Line Advance available to the Administrative Agent insame day funds by wire transfer to the Administrative Agent’s account as setforth in Annex W not later than 3:00 p.m.(New York time) on the requested Advance Date. After receipt of such wire transfers (or, in the Administrative Agent’ssole discretion in accordance with Section 2.03(c),before receipt of such wire transfers), subject to the terms hereof (including,without limitation, the satisfaction of the conditions precedent set forth in Section 3.02), the Administrative Agentshall make available to the Borrower by deposit into the Borrower Account onthe Advance Date therefor, the lesser of (x) the amount of the requested Borrowingand (y) the Funding Availability.  Allpayments by each Lender under this Section 2.03(b)(i) shallbe made without setoff, counterclaim or deduction of any kind.

####  

#### (ii)           On each Interest Payment Date, theAdministrative Agent will advise each Lender (other than the Swing Line Lender)by telephone or telecopy of the

 

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amount of suchLender’s Pro Rata Share of principal, interest and Fees (to the extent payableto all Lenders) paid for the benefit of Lenders with respect to each applicableRevolving Credit Advance.  Provided thatsuch Lender has made all payments required to be made by it and purchased allparticipations required to be purchased by it under this Agreement and theother Related Documents as of such Interest Payment Date, the AdministrativeAgent will pay to each Lender such Lender’s Pro Rata Share of principal,interest and Fees (to the extent payable to all Lenders) with respect to eachapplicable Revolving Credit Advance, paid by the Borrower since the previousInterest Payment Date for the benefit of that Lender.  Such payments shall be made by wire transferto such Lender’s account (as specified by such Lender in AnnexW or the applicable Assignment Agreement) not later than 2:00 p.m.(New York time) on each Interest Payment Date.

####  

#### (iii)          On each Interest Payment Date, theAdministrative Agent will advise the Swing Line Lender of the amount ofprincipal, interest and Fees paid for the benefit of the Swing Line Lender withrespect to the Swing Line Loan.  TheAdministrative Agent will pay to the Swing Line Lender the amount of principal,interest and Fees paid by the Borrower since the previous Interest Payment Datefor the benefit of the Swing Line Lender. Such payments shall be made by wire transfer or by book balance to theSwing Line Lender’s account (as specified by the Swing Line Lender in Annex Wor the applicable Assignment Agreement) not later than 2:00 p.m. (New Yorktime) on each Interest Payment Date.

####  

### (c)           Availability of Lenders’ Advances.  The Administrative Agent may assume that eachLender (other than the Swing Line Lender) will make its Pro Rata Share of eachBorrowing of Revolving Credit Advances available to the Administrative Agent oneach Advance Date.  If the AdministrativeAgent has made available to the Borrower such Lender’s Pro Rata Share of anysuch Borrowing but such Pro Rata Share is not, in fact, paid to theAdministrative Agent by such Lender when due, the Administrative Agent will beentitled to recover such amount on demand from such Lender without set-off,counterclaim or deduction of any kind. If any Lender fails to pay the amount of its Pro Rata Share of amountspaid by the Administrative Agent on its behalf pursuant to the precedingsentence forthwith upon the Administrative Agent’s demand, the AdministrativeAgent shall promptly notify the Borrower and the Borrower shall immediatelyrepay such amount to the Administrative Agent. Nothing in this Section 2.03(c) orelsewhere in this Agreement or the other Related Documents shall be deemed torequire the Administrative Agent to advance funds on behalf of any Lender or torelieve any Lender from its obligation to fulfill its Commitment hereunder orto prejudice any rights that the Borrower may have against any Lender as aresult of any default by such Lender hereunder. To the extent that the Administrative Agent advances funds to theBorrower on behalf of any Lender and is not reimbursed therefor on the sameBusiness Day as such Revolving Credit Advance is made, the Administrative Agentshall be entitled to retain for its account all interest accrued on suchRevolving Credit Advance from the date of such Revolving Credit Advance to thedate such Revolving Credit Advance is reimbursed by the applicable Lender.

###  

### (d)           Return of Payments.  (i)  If the Administrative Agent pays anamount to a Lender under this Agreement in the belief or expectation that arelated payment has been or will be received by the Administrative Agent fromthe Borrower and such related payment is not received by the AdministrativeAgent, then the Administrative Agent will be entitled to recover

 

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such amount from such Lender ondemand without set-off, counterclaim or deduction of any kind.

###  

#### (ii)           If at any time any amount received bythe Administrative Agent under this Agreement must be returned to the Borroweror paid to any other Person pursuant to any insolvency law or otherwise, then,notwithstanding any other term or condition of this Agreement or any otherRelated Document, the Administrative Agent will not be required to distributeany portion thereof to any Lender.  Inaddition, each Lender will repay to the Administrative Agent on demand anyportion of such amount that the Administrative Agent has distributed to suchLender, together with interest at such rate, if any, as the AdministrativeAgent is required to pay to the Borrower or such other Person, without set-off,counterclaim or deduction of any kind.

####  

### (e)           Non-Funding Lenders.  The failure of any Lender (each such Lender,a “Non-Funding Lender”) to make anyRevolving Credit Advance to be made by it on the date specified therefor shallnot relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make theRevolving Credit Advance to be made by it, but neither any Other Lender nor theAdministrative Agent shall be responsible for the failure of any Non-FundingLender to make a Revolving Credit Advance to be made by such Non-FundingLender.  Notwithstanding anything setforth herein to the contrary, a Non-Funding Lender shall not have any voting orconsent rights under or with respect to any Related Document or constitute a “Lender”(or be included in the calculation of “Requisite Lenders” hereunder) for anyvoting or consent rights under or with respect to any Related Document unlessand until such Non-Funding Lender shall have cured in full its failures to makeRevolving Credit Advances hereunder.

###  

### (f)            Dissemination of Information.  The Administrative Agent will use reasonableefforts to provide Lenders with (i) copies of all notices and otherdocuments provided to the Administrative Agent pursuant to Section 5.02, (ii) any notice of anIncipient Termination Event or Termination Event received by the AdministrativeAgent from, or delivered by the Administrative Agent to, the Borrower, (iii) noticeof any Termination Event of which the Administrative Agent has actually becomeaware and (iv) notice of any action taken by the Administrative Agentfollowing any Termination Event; provided, however, that, in the absence of gross negligenceor wilful misconduct, the Administrative Agent shall not be liable to anyLender for any failure to do so.

###  

### (g)           Actions in Concert.  Anything in this Agreement to the contrary notwithstanding,each Lender hereby agrees with each other Lender that no Lender shall take anyaction to protect or enforce its rights arising out of this Agreement, theRevolving Notes or the Swing Line Note (including exercising any rights ofset-off) without first obtaining the prior written consent of theAdministrative Agent or the Requisite Lenders, it being the intent of theLenders that any such action to protect or enforce rights under this Agreement,the Revolving Notes and the Swing Line Note shall, subject to any provisionherein requiring that each Lender consent to a particular action, be taken inconcert and at the direction or with the consent of the Administrative Agent orthe Requisite Lenders.

###  

### (h)           Principal Repayments.  Subject to Section 12.15(b), theBorrower may at any time repay outstanding Advances hereunder; provided that (i) the Borrower shall givenot

 

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less than one Business Day’sprior written notice of any such repayment to the Administrative Agentsubstantially in the form of Exhibit 2.03(h) (eachsuch notice, a “Repayment Notice”), (ii) eachsuch notice shall be irrevocable, (iii) each such notice shall specify theamount of the requested repayment and the proposed date of such repayment(which shall be a Business Day),  (iv) anysuch repayment shall be applied first to the Swing Line Loan until theOutstanding Principal Amount thereof has been reduced to zero, and second tothe outstanding Revolving Credit Advances (provided,that if a Funding Excess exists and any outstanding Swing Line Advances weremade in violation of the fourth sentence of Section 2.01(b)(i) or werefunded after the Commitment Termination Date, then such Swing Line Advance willbe repaid after the Revolving Credit Advances) and (v) any such repaymentmust be accompanied by payment of (A) all interest accrued and unpaid onthe portion of the outstanding principal balance of the Advances to be repaidthrough but excluding the date of such repayment and (B) the amountsrequired to be paid in accordance with Section 2.10,if any.  Any such notice of repaymentmust be received by the Administrative Agent no later than 4:00 p.m. (NewYork time) on the Business Day immediately preceding the date of the proposedrepayment; provided, further,that the foregoing requirements shall not apply to repayment of the outstandingprincipal amount of Advances as a result of the application of Collectionspursuant to Section 2.08.

###  

## Section 2.04.  Pledge and Release of Transferred Receivables.

##  

### (a)           Pledge. The Borrower shall indicate in its Records that the TransferredReceivables have been pledged hereunder and that the Administrative Agent has alien on and security interest in all such Transferred Receivables for thebenefit of the Lenders.  The Borrowershall, and shall cause the Servicer to, hold all Contracts and other documentsrelating to such Transferred Receivables in trust for the benefit of theAdministrative Agent on behalf of the Lenders in accordance with their interestshereunder.

###  

### (b)           Repurchases of Transferred Receivables.  If an Originator is required to repurchaseTransferred Receivables from the Borrower pursuant to Section 4.04of the Sale Agreement, upon payment by such Originator to a Collection Accountof the applicable repurchase price thereof (which repurchase price shall not beless than an amount equal to the Billed Amount of such Transferred Receivable minus the sum of (A) Collections received inrespect thereof and (B) the amount of any Dilution Factors taken intoaccount in the calculation of the Sale Price therefor), the AdministrativeAgent on behalf of the Lenders shall  bedeemed to have released their liens on and security interests in theTransferred Receivables being so repurchased without any requirement of furtheraction by the Agent or any Lender.

###  

## Section 2.05.  Commitment Termination Date.  Notwithstanding anything to the contrary setforth herein, no Lender shall have any obligation to make any Advances from andafter the Commitment Termination Date.

##  

## Section 2.06.  Interest; Charges.

##  

### (a)           The Borrower shallpay interest to the Administrative Agent, for the ratable benefit of theLenders, with respect to the outstanding amount of each Revolving CreditAdvance made or maintained by each Lender, in arrears on each applicableInterest Payment Date, (i) for each LIBOR Rate Advance, at the applicableLIBOR Rate as in effect from time to

 

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time during the periodapplicable to such Interest Payment Date, and (ii) for each Index RateAdvance outstanding from time to time, at the applicable Index Rate as ineffect from time to time during the period applicable to such Interest PaymentDate.  The Borrower shall pay interest tothe Administrative Agent, for the benefit of the Swing Line Lender, withrespect to the outstanding amount of each Swing Line Advance, in arrears oneach applicable Interest Payment Date, at the LIBOR Rate as in effect from timeto time during the period applicable to such Interest Payment Date.  Interest for each Advance shall be calculatedbased upon actual days elapsed during the applicable calendar month or otherperiod, for a 360 day year based upon actual days elapsed since the last InterestPayment Date.  Unless a LIBOR Rate DisruptionEvent shall have occurred, each Advance shall be a LIBOR Rate Advance.

###  

### (b)           So long as anyTermination Event shall have occurred and be continuing, the interest ratesapplicable to each Advance and any other unpaid Borrower Obligation hereundershall be increased by two percent (2.0%) per annum (such increased rate, ineach case, the “Default Rate”), and alloutstanding Borrower Obligations shall bear interest at the applicable DefaultRate from the date of such Termination Event until such Termination Event iswaived or cured.

###  

### (c)           The AdministrativeAgent is authorized to, and at its sole election may, charge to the Borrower asRevolving Credit Advances and cause to be paid all Fees, Rating Agency fees,expenses, charges, costs, interest and principal, other than principal of theAdvances, owing by the Borrower under this Agreement or any of the otherRelated Documents if and to the extent the Borrower fails to pay any suchamounts as and when due, and any charges so made shall constitute part of theOutstanding Principal Amount hereunder even if such charges would cause theaggregate balance of the Outstanding Principal Amount to exceed the BorrowingBase.

###  

## Section 2.07.  Fees.

##  

### (a)           On the EffectiveDate, the Borrower shall pay to the Administrative Agent, for the account ofitself and the Lenders, as applicable, the fees set forth in the Fee Letterthat are payable on the Effective Date.

###  

### (b)           From and after theClosing Date, as additional compensation for the Lenders, the Borrower agreesto pay to Administrative Agent, for the ratable benefit of such Lenders,monthly in arrears, on each Settlement Date prior to the Commitment TerminationDate and on the Commitment Termination Date, the Unused Commitment Fee.

###  

### (c)           On each SettlementDate, the Borrower shall pay to the Servicer or to the Successor Servicer, asapplicable, the Servicing Fee or the Successor Servicing Fees and Expenses,respectively, in each case to the extent of available funds therefor pursuantto Section 2.08.

###  

## Section 2.08.  Application of Collections; Time and Method of Payments.  The entirety of this Section 2.08shall be subject to Section 12.15(b) (including, withoutlimitation, subsections (a), (b), (c), (d) and(e)).

 

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### (a)           Each Advance shallmature, and be payable, on the earlier of (i) the date funds are allocatedto such Advance pursuant to clause (iii)or(iv)of subsection (c) below (andin such case only to the extent of the funds so allocated), and (ii) theCommitment Termination Date (in which case such Advance shall be payable infull).

###  

### (b)           On each BusinessDay, the Administrative Agent shall allocate amounts on deposit in the AgentAccount on such day and not previously allocated under this subsection (b) asfollows, in the following order of priority:

###  

#### (i)            first,to be retained in the Agent Account and paid in accordance with clause (i) of thefollowing subsection (c), an amountequal to the aggregate Fees accrued and unpaid through such date and allunreimbursed expenses of the Administrative Agent which are reimbursablepursuant to the terms hereof; provided, that, the sum of (i) theamounts retained pursuant to this clause first and (ii) the amountspaid pursuant to clause (i) of the following subsection (c) shallnot exceed $100,000 in any calendar year;

####  

#### (ii)           second,to be retained in the Agent Account and paid in accordance with clause (ii) of thefollowing subsection (c), an amountequal to the aggregate interest with respect to all outstanding Advances;

 

(iii)          third,unless an Event of Servicer Termination (other than the type specified inSection 8.01(i) of the Sale Agreement) has occurred and is continuing, to beretained in the Agent Account and paid in accordance with clause (iii)of the following subsection (c), an amount equal to the aggregateServicing Fees and accrued and unpaid through such date;

 

#### (iv)          fourth, to be retained in theAgent Account and paid in accordance with clause (iv) of thefollowing subsection (c) or set aside and applied by theAdministrative Agent in accordance with the following subsection (d),as applicable, an amount equal to all outstanding Advances which are then dueand payable on such Business Bay; it being understood that if and to extent aFunding Excess is determined to exist on such Business Day, Advances in anamount equal to such Funding Excess are due and payable in accordance with thefollowing subsection (d);

####  

#### (v)           fifth, theextent not already retained in the Agent Account in accordance with clausefirst, to be retained in the Agent Account and paid in accordance with clause (vi) of thefollowing subsection (c), anamount equal to the aggregate Fees accrued and unpaid through such date and allunreimbursed expenses of the Administrative Agent which are reimbursablepursuant to the terms hereof;

####  

#### (vi)          sixth,if any of the conditions precedent set forth in Section 3.02shallnot be satisfied, to be retained in the Agent Account until paid in accordancewith the following subsection (c) orall such conditions are satisfied;

####  

#### (vii)         seventh, to be retained in theAgent Account and paid in accordance with the following subsection (c),an amount equal to the aggregate amount

 

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of all otheraccrued and unpaid Borrower Obligations which are then required to be paidaccording to such subsection, including, without limitation, the expenses ofthe Lenders reimbursable under Section 12.04;and

####  

#### (viii)        eighth, unless a TerminationEvent or Incipient Termination Event has occurred and is continuing, (A) tobe paid as directed by the applicable Originator to the Borrower and the Agentin writing, *first,* an amount equal to the purchaseprice for Sold Receivables payable on that date, *then*tothe extent of remaining amounts available to the payment of the balance due onthe applicable Subordinated Note, and (B) *then*any remaining amounts available after such payment shall be paid to theBorrower Account (if a Termination Event or Incipient Termination Event hasoccurred and is continuing, all such amounts payable under this clause seventh,shall remain in the Agent Account).

####  

### (c)           On each SettlementDate on which any Borrower Obligations are due for payment, the AdministrativeAgent shall withdraw amounts on deposit in the Agent Account and pay such amountsas follows in the following order of priority:

###  

#### (i)            first,to the extent then due and payable, *pro rata*, to the payment of all Fees accrued and unpaidthrough such date and all unreimbursed expenses of the Administrative Agentwhich are reimbursable pursuant to the terms hereof; provided, that, thedisbursement pursuant to this clause first shall not exceed $100,000 inany calendar year;

####  

#### (ii)           second,if such Business Day is an Interest Payment Date, to the payment of accrued andunpaid interest which is then due and payable in respect of the applicableAdvances, *pro rata*;

 

(iii)          third,unless an Event of Servicer Termination (other than the type specified inSection 8.01(i) of the Sale Agreement) has occurred and is continuing, to thepayment of all Servicing Fees accrued and unpaid through such date;

####  

#### (iv)          fourth,to the payment of any outstanding Advances then due and payable, *pro rata*; provided, that principal on Advances shall beapplied in the following order, to the payment of the Outstanding PrincipalAmount of Advances, *first*,in respect of Swing Line Advances, (provided,that if a Funding Excess exists and any outstanding Swing Line Advances weremade in violation of the fourth sentence of Section 2.01(b)(i),then such Swing Line Advance will be repaid after the Revolving CreditAdvances), and *second*,in respect of Revolving Credit Advances, *pro rata*;

####  

#### (v)           fifth,if any of the conditions precedent set forth in Section 3.02shall not be satisfied, to the payment of the Outstanding Principal Amount ofall other Advances, *first*,in respect of Swing Line Advances (provided,that if a Funding Excess exists and any outstanding Swing Line Advances weremade in violation of the fourth sentence of Section 2.01(b)(i),then such Swing Line Advance will be repaid after the Revolving CreditAdvances), and *second*,in respect of Revolving Credit Advances, together with amounts payable withrespect thereto under Section 2.10, ifany, *pro rata*;

 

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(vi)          sixth, to theextent then due and payable and not otherwise paid in accordance with clausefirst above, *pro rata*, to the payment of allFees accrued and unpaid through such date and all unreimbursed expenses of theAdministrative Agent which are reimbursable pursuant to the terms hereof;

 

(vii)         seventh, tothe extent then due and payable, *pro rata*, tothe payment of all other obligations of the Borrower accrued and unpaidhereunder, including, without limitation, the expenses of the Lendersreimbursable under Section 12.04; and

 

#### (viii)        eighth, unless a TerminationEvent or Incipient Termination Event has occurred and is continuing, (A) tobe paid as directed by the applicable Originator to the Borrower and the Agentin writing, *first,* an amount equal to the purchase pricefor Sold Receivables payable on that date, *then*to theextent of remaining amounts available to the payment of the balance due on theapplicable Subordinated Note, and (B) *then* anyremaining amounts available after such payment shall be paid to the BorrowerAccount (if a Termination Event or Incipient Termination Event has occurred andis continuing, all such amounts payable under this clause seventh, shall remainin the Agent Account).

####  

### (d)           If and to the extenta Funding Excess is determined to exist on any Business Day, (i) by no later than 4:00 p.m. (New Yorktime) on the Business Day immediately succeeding the Business Day thatsuch Funding Excess was determined to exist, the Administrative Agent shallallocate the amounts set aside pursuant to clause (b)(iv) of Section 2.08to reduce such Funding Excess and (ii) if such Funding Excess is greaterthan the amounts set aside pursuant to clause (b)(iv) of Section 2.08to reduce such Funding Excess, the Borrower shall deposit in the Agent Account,by no later than 4:00 p.m. (New York time) on the Business Day immediatelysucceeding the Business Day that such Funding Excess was determined to exist,an amount equal to the amount of such shortfall.  Such amounts paid or allocated pursuant tothe foregoing sentence shall be applied by the Administrative Agent first, inimmediate repayment of the outstanding amount of Swing Line Advances, and if noSwing Line Advances are outstanding, and second, in immediate repayment of theoutstanding amount of Revolving Credit Advances (together with amounts payablewith respect thereto under Section 2.10).

###  

### (e)           To the extent thatamounts on deposit in the Agent Account on any day are insufficient to payamounts due on such day in respect of the matured portion of any Advances orany interest, Fees or any other amounts due and payable by the Borrowerhereunder, the Borrower shall pay, upon notice from the Administrative Agent,the amount of such insufficiency to the Administrative Agent in Dollars, inimmediately available funds (for the account of the Administrative Agent, theapplicable Lenders, Affected Parties or Indemnified Persons) not later than4:00 p.m. (New York time) on such day. Any such payment made on such date but after such time shall be deemedto have been made on, and interest shall continue to accrue and be payablethereon at the LIBOR Rate (in the case of LIBOR Rate Advances) or the IndexRate (in all other cases), until the next succeeding Business Day.

###  

### (f)            The Borrower herebyirrevocably waives the right to direct the application of any and all paymentsreceived from or on behalf of the Borrower, and the Borrower hereby

 

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irrevocably agrees that any andall such payments shall be applied by the Administrative Agent in accordancewith this Section 2.08.

###  

### (g)           All payments ofprincipal of the Advances and all payments of interest, Fees and other amountspayable by the Borrower hereunder shall be made in Dollars, in immediatelyavailable funds.  If any such paymentbecomes due on a day other than a Business Day, the maturity thereof will beextended to the next succeeding Business Day and interest thereon at the LIBORRate (in the case of LIBOR Rate Advances) or Index Rate (in all other cases)shall be payable during such extension. Payments received at or prior to 4:00 p.m. (New York time) on anyBusiness Day shall be deemed to have been received on such Business Day.  Payments received after 4:00 p.m. (NewYork time) on any Business Day or on a day that is not a Business Day shall bedeemed to have been received on the following Business Day.

###  

### (h)           Any and all paymentsby the Borrower hereunder shall be made in accordance with this Section 2.08 without setoff or counterclaimand free and clear of and without deduction for any and all present or futuretaxes, levies, imposts, deductions, Charges or withholdings (excluding any taximposed on or measured by the net income or profits or any franchise or othertax in lieu thereof (including branch profits or similar taxes) of any AffectedParty by (i) the jurisdiction under the laws of which such Affected Partyis organized or any political subdivision thereof, or (ii) thejurisdiction of such Affected Party’s applicable lending office or anypolitical subdivision thereof) (such non-excluded taxes, levies, imposts,deductions, Charges and withholdings being “IndemnifiedTaxes”).  If the Borrowershall be required by law to deduct any Indemnified Taxes from or in respect ofany sum payable hereunder, (i) the sum payable shall be increased as muchas shall be necessary so that after making all required deductions (includingdeductions applicable to additional sums payable under this Section 2.08) the Affected Party entitled toreceive any such payment receives an amount equal to the sum it would havereceived had no such deductions been made, (ii) the Borrower shall makesuch deductions, and (iii) the Borrower shall pay the full amount deductedto the relevant taxing or other authority in accordance with applicablelaw.  Within 30 days after the date ofany payment of Indemnified Taxes, the Borrower shall furnish to theAdministrative Agent the original or a certified copy of a receipt evidencingpayment thereof.  The Borrower shall indemnifyany Affected Party from and against, and, within ten days of demand therefor,pay any Affected Party for, the full amount of Indemnified Taxes (together withany taxes imposed by any jurisdiction on amounts payable under this Section 2.08) paid by such Affected Partyand any liability (including penalties, interest and expenses) arisingtherefrom or with respect thereto, whether or not such Indemnified Taxes werecorrectly or legally asserted.  Theforegoing notwithstanding, the Borrower shall have no obligation to increasethe amount paid or indemnify any Affected Party under this Section 2.08(h) tothe extent such amounts are payable as a result of, (i) in the case of anAffected Party that is a U.S person as defined in I.R.C. § 7701(a)(30) butis not a person to whom a payment of interest may be made under Treas. Reg. § 1.6049-4(c) withoutthe payor being required to file an information return, the failure of theAffected Party to provide the Borrower with a validly prepared and executed Form W-9or, (ii) in the case of an Affected Party that is not a U.S. person asdefined in I.R.C. § 7701(a)(30), the failure of such person to provide theBorrower with a validly prepared and executed Form W-8BEN, W-8EXP or W-8ECIdemonstrating that such Affected Party is eligible for the portfolio interestexemption under I.R.C. § 871(h) and 881(c) or other exemptionunder U.S. law or applicable treaty

 

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providing for no withholding onthe relevant payment; provided, however, that the Affected Party shallhave no obligation to deliver such forms to the extent it is no longer able todeliver such forms due to a change in law.

###  

### (i)            Upon receipt of anotice in accordance with Section 7.03of the Sale Agreement, the Administrative Agent shall, if such amounts have notbeen applied to the Borrower Obligations, segregate the Unrelated Amounts andthe same shall not be deemed to constitute Collections on TransferredReceivables.

###  

## Section 2.09.  Capital Requirements; Additional Costs.

##  

### (a)           If, due to anyRegulatory Change or any other adoption or any change in any law, treaty,governmental (or quasi governmental) rule, regulation, guideline or order,there shall be (i) any increase the cost to any Affected Party of agreeingto make or making, funding or maintaining any commitment hereunder or under anyother Related Document, including with respect to any Advances or otherOutstanding Principal Amount, (ii) any reduction in any amount receivableby such Affected Party hereunder or thereunder, including with respect to anyAdvances, or other Outstanding Principal Amount or (iii) any increase inthe amount of capital, reserves or other funds required to be maintained bysuch Affected Party against commitments made by it under this Agreement or anyother Related Document and the result of such increase is a reduction in therate of return on such Affected Party’s capital as a consequence of itscommitments hereunder or thereunder (any such increase in cost or reduction inamounts receivable or rate of return are hereinafter referred to as “Additional Costs”), then the Borrower shall fromtime to time and within 15 days after notice and demand from the AdministrativeAgent to the Borrower (together with the certificate referred to in the nextsentence) pay to the Administrative Agent on behalf of such Affected Partyadditional amounts sufficient to compensate such Affected Party for suchAdditional Costs together with interest thereon from the date demanded untilpayment in full thereof at the applicable Index Rate.  A certificate as to the amount of suchIncreased Costs and showing the basis of the computation thereof submitted bythe Affected Party to the Borrower shall be final, binding and conclusive onthe parties hereto (absent manifest error) for all purposes. Each AffectedParty agrees that, as promptly as practicable after it becomes aware of anycircumstance referred to above that would result in any such Additional Costs,it shall, to the extent not inconsistent with its internal policies of generalapplication, use reasonable commercial efforts to minimize costs and expensesincurred by it and payable to it by the Borrower pursuant to this Section 2.09(a).

###  

### (b)           Determinations byany Affected Party for purposes of this Section 2.09of the effect of any Regulatory Change on its costs of making, funding ormaintaining any commitments hereunder or under any other Related Documents oron amounts payable to it hereunder or thereunder or of the additional amountsrequired to compensate such Affected Party in respect of any Additional Costsshall be set forth in a written notice to the Borrower in reasonable detail andshall be final, binding and conclusive on the Borrower (absent manifest error)for all purposes.

###  

### (c)           Notwithstandinganything to the contrary contained herein, if the introduction of or any changein any law or regulation (or any change in the interpretation thereof) shallmake it unlawful, or any central bank or other Governmental Authority shallassert

 

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that it is unlawful, for anyLender to agree to make or to make or to continue to fund or maintain any LIBORRate Advance, then, unless that Lender is able to make or to continue to fundor to maintain such LIBOR Rate Advance at another branch or office of thatLender without, in that Lender’s opinion, adversely affecting it or itsAdvances or the income obtained therefrom, on notice thereof and demandtherefor by such Lender to the Borrower through the Administrative Agent, (i) theobligation of such Lender to agree to make or to make or to continue to fund ormaintain LIBOR Rate Advances shall terminate and (ii) Borrower shallforthwith prepay in full all outstanding LIBOR Rate Advances owing to suchLender, together with interest accrued thereon, unless Borrower, within five (5) BusinessDays after the delivery of such notice and demand, converts all such LIBOR RateAdvances into Index Rate Advances.

###  

## Section 2.10.  Breakage Costs. To induce the Lenders to provide the LIBOR Rate on the terms providedherein, if (i) any LIBOR Rate Advances are, except by reason of therequirements in Section 2.03(c),repaid in whole or in part on any date other than an Interest Payment Date(whether that repayment is made pursuant to any other provision of thisAgreement or any other Related Document or is the result of acceleration, byoperation of law or otherwise); (ii) the Borrower shall default in paymentwhen due of the principal amount of or interest on any LIBOR Rate Advance; (iii) theBorrower shall default in making any borrowing of LIBOR Rate Advances after theBorrower has given notice requesting the same in accordance herewith (includingany failure to satisfy conditions precedent to the making of any LIBOR RateAdvances); or (iv) the Borrower shall fail to make any prepayment of aLIBOR Rate Advance after the Borrower has given a notice thereof in accordanceherewith, then, in any such case, the Borrower shall indemnify and holdharmless each Lender from and against all losses, costs and expenses resultingfrom or arising from any of the foregoing (any such loss, cost or expense, “Breakage Costs”). Such indemnification shall include any loss (including loss of margin)or expense arising from the reemployment of funds obtained by it or from feespayable to terminate deposits from which such funds were obtained (ifany).  For the purpose of calculatingamounts payable to a Lender under this subsection, each Lender shall be deemedto have actually funded its relevant LIBOR Rate Advance through the purchase ofa deposit bearing interest at the LIBOR Rate in an amount equal to the amountof that LIBOR Rate Advance; provided, however, that each Lender may fund each of itsLIBOR Rate Advances in any manner it sees fit, and the foregoing assumptionshall be utilized only for the calculation of amounts payable under thissubsection.  This covenant shall survivethe termination of this Agreement and the payment of the Revolving Notes andall other amounts payable hereunder.  Thedetermination by any Lender of the amount of any such loss or expense shall beset forth in a written notice to the Borrower in reasonable detail and shall befinal, binding and conclusive on the Borrower (absent manifest error) for allpurposes.  Notwithstanding the foregoing,the Borrower shall in no case be liable for any Breakage Costs incurredpursuant to clause (i) of the first sentence of this Section 2.10if the principal amount of any repayment of LIBOR Rate Advances made on anydate of determination is less than $25,000,000.

##  

# ARTICLE III.

#  

# CONDITIONS PRECEDENT

#  

## Section 3.01.  Conditions to Effectiveness of Agreement.  This Agreement shall not be effective untilthe date on which each of the following conditions have been satisfied, in

 

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the sole discretion of, orwaived in writing by, the Lenders and the Administrative Agent (such date, the “Effective Date”):

##  

### (a)           Funding Agreement; Other Related Documents.  This Agreement and (to the extent requestedby the Lenders) the Notes shall have been duly executed by, and delivered to,the parties hereto and the Lenders and the Administrative Agent shall havereceived such other documents, instruments, agreements and legal opinions aseach Lender and the Administrative Agent shall request in connection with thetransactions contemplated by this Agreement, including all those listed in the Schedule ofDocuments, each in form and substance satisfactory to each Lender and theAdministrative Agent.

###  

### (b)           Governmental Approvals.  The Lenders and the Administrative Agentshall have received (i) satisfactory evidence that the Borrower, theServicer and the Originators have obtained all required consents and approvalsof all Persons, including all requisite Governmental Authorities, to theexecution, delivery and performance of this Agreement and the other RelatedDocuments and the consummation of the transactions contemplated hereby orthereby or (ii) an Officer’s Certificate from each of the Borrower and theServicer in form and substance satisfactory to the Lenders and theAdministrative Agent affirming that no such consents or approvals are required.

###  

### (c)           Compliance with Laws.  The Borrower and the Transaction Partiesshall be in compliance with all applicable foreign, federal, state and locallaws and regulations, including, without limitation, those specificallyreferenced in Section 5.01(a), exceptto the extent noncompliance could not reasonably be expected to have a MaterialAdverse Effect.

###  

### (d)           Payment of Fees. The Borrower shall have paid all fees required to be paid by it on theEffective Date, including all fees required hereunder and under the Fee Letter,and shall have reimbursed the Administrative Agent for all Rating Agency feesand all other reasonable fees, costs and expenses of closing the transactionscontemplated hereunder and under the other Related Documents, including theAdministrative Agent’s reasonable legal and audit expenses, and other documentpreparation costs.

###  

### (e)           Representations and Warranties.  Each representation and warranty by the Borrowerand each Transaction Party contained herein and in each other Related Documentshall be true and correct as of the Effective Date, except to the extent thatsuch representation or warranty expressly relates solely to an earlier date.

###  

### (f)            No Termination Event.  No Incipient Termination Event or TerminationEvent hereunder shall have occurred and be continuing or would result aftergiving effect to any of the transactions contemplated on the Closing Date.

###  

### (g)           Audit.  TheAdministrative Agent shall have completed a prefunding audit of the Receivablesas of the Closing Date, the scope and results of which are satisfactory to theAdministrative Agent and each Lender in its sole discretion.

###  

### (h)           Material Adverse Change.  There will have been (i) since September 30,2005 no material adverse change individually or in the aggregate, (x) in thebusiness, the

 

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financial or other condition ofthe Transaction Parties, taken as a whole, or (y) in the Receivables or RelatedProperty, taken as a whole and (ii) no litigation commenced which isreasonably likely to be adversely determined, and if so determined, would havea Material Adverse Effect on the Borrower or the Transaction Parties taken as awhole, their business, or which challenges the transactions contemplated underthis Agreement, the Sale Agreement and the other Related Documents.

###  

### (i)            Prior Obligations.  Evidence satisfactory to the AdministrativeAgent that all obligations under the Existing Securitization Program will havebeen satisfied concurrently with the making of the initial Advance and that allLiens upon any of the Receivables to be transferred to Borrower under the SaleAgreement shall have been terminated and released immediately upon such payment.

###  

### (j)            Waiver of Set-Off Rights.  Each Originator shall have waived its rightsof set-off with respect to the Receivables.

###  

### (k)           Rating AgencyConfirmations.   The AdministrativeAgent shall have received such confirmations or assurances from the RatingAgencies related to the transactions contemplated by this Agreement and theother Related Documents deemed necessary or desirable by the AdministrativeAgent.

###  

## Section 3.02.  Conditions Precedent to All Advances.  No Lender shall be obligated to make any Advanceshereunder (including the initial Advances but excluding Advances made pursuantto Section 2.01(b)(iii),Section 2.01(b)(iv) or2.06(c)) on any date if, as of the datethereof:

##  

### (a)           any representationor warranty of the Borrower, the Servicer or any Originator contained herein orin any of the other Related Documents shall be untrue or incorrect in anymaterial respect (without duplication of any materiality qualifier containedtherein) as of such date (unless the giving of any such untrue or incorrectrepresentation or warranty has been cured in accordance with Section 4.04of the Sale Agreement), either before or after giving effect to the Advances tobe made on such date and to the application of the proceeds therefrom, exceptto the extent that such representation or warranty expressly relates to anearlier date and except for changes therein expressly permitted by thisAgreement;

###  

### (b)           any event shall haveoccurred, or would result from the making of such Advances or from theapplication of the proceeds therefrom, that constitutes an IncipientTermination Event, a Termination Event, an Incipient Servicer Termination Eventor an Event of Servicer Termination;

###  

### (c)           the CommitmentTermination Date shall have occurred;

###  

### (d)           either before orafter giving effect to such Advance and to the application of the proceedstherefrom, a Funding Excess would exist; or

###  

### (e)           any Originator, theBorrower or the Servicer shall fail to have taken such other action, includingdelivery of approvals, consents, opinions, documents and instruments to

 

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the Lenders and theAdministrative Agent, as any Lender or the Administrative Agent and, ifapplicable, either Rating Agency, may reasonably request;

###  

### (f)            on or prior to suchdate, the Borrower or the Servicer shall have failed to  deliver any Monthly Report, Weekly Report,Daily Report or Borrowing Base Certificate required to be delivered inaccordance with Section 5.02 hereof orthe Sale Agreement and such failure shall be continuing;

###  

### (g)           the AdministrativeAgent shall have determined that any event or condition has occurred that hashad, or could reasonably be expected to have or result in, a Material AdverseEffect.

###  

The delivery by the Borrower of a Borrowing Request and the acceptanceby the Borrower of the funds from the related Borrowing on any Advance Dateshall be deemed to constitute, as of any such Advance Date, as the case may be,a representation and warranty by the Borrower that the conditions in this Section 3.02 have been satisfied.

 

# ARTICLE IV.

#  

# REPRESENTATIONS AND WARRANTIES

#  

## Section 4.01.  Representations and Warranties of the Borrower.  To induce each Lender to make Advances fromtime to time and the Administrative Agent to take any action required to be performedby it hereunder, the Borrower makes the following representations andwarranties to each Lender and the Administrative Agent on the Effective Dateand each Advance Date, each and all of which shall survive the execution anddelivery of this Agreement.

##  

### (a)           Existence; Compliance with Law.  The Borrower (i) is a limited liabilitycompany duly formed, validly existing and in good standing under the laws ofits jurisdiction of incorporation, is a “registered organization” as defined inthe UCC of such jurisdiction and is not organized under the laws of any otherjurisdiction; (ii) is duly qualified to conduct business and is in goodstanding in each other jurisdiction where its ownership or lease of property orthe conduct of its business requires such qualification except where thefailure to be so qualified could not reasonably be expected to have a MaterialAdverse Effect; (iii) has the requisite power and authority and the legalright to own, pledge, mortgage or otherwise encumber and operate its properties,to lease the property it operates under lease, and to conduct its business, ineach case, as now, heretofore and proposed to be conducted; (iv) has allmaterial licenses, permits, consents or approvals from or by, and has made allfilings with, and has given all notices to, all Governmental Authorities havingjurisdiction, to the extent required for such ownership, operation and conduct;(v) is in compliance with its limited liability company agreement; and (vi) subjectto specific representations set forth herein regarding ERISA, tax and otherlaws, is in compliance with all applicable provisions of law, except where thefailure to comply, individually or in the aggregate, could not reasonably beexpected to have a Material Adverse Effect within the meaning of clauses (a)(ii) and(b) through (e) of the definition thereof.

###  

### (b)           Executive Offices; Collateral Locations; Corporate or OtherNames; FEIN.  The state oforganization and the organization identification number of the Borrower and

 

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current location of theBorrower’s chief executive office, principal place of business, other offices,the premises within which any Borrower Collateral is stored or located, and thelocations of its records concerning the Borrower Collateral (includingoriginals of the Borrower Assigned Agreements) are set forth in Schedule 4.01(b) or suchother locations identified in writing by the Borrower to the AdministrativeAgent after the Closing Date and none of such locations has changed since thedate of the formation of the Borrower. Except as set forth in Schedule 4.01(b),the Borrower has not been known as or used any fictitious or trade name.  In addition, Schedule 4.01(b) liststhe federal employer identification number of the Borrower.

###  

### (c)           Power, Authorization, Enforceable Obligations.  The execution, delivery and performance bythe Borrower of this Agreement and the other Related Documents to which it is aparty, and the creation and perfection of all Liens and ownership interestsprovided for herein and therein: (i) are within the Borrower’s limitedliability company power; (ii) have been duly authorized by all necessaryor proper actions; (iii) do not contravene any provision of the Borrower’scertificate of formation or limited liability company agreement; (iv) donot violate any law or regulation, or any order or decree of any court orGovernmental Authority except if such violations have not had and could notreasonably be expected to have a Material Adverse Effect; (v) do notconflict with or result in the breach or termination of, constitute a defaultunder or accelerate or permit the acceleration of any performance required by,any indenture, mortgage, deed of trust, lease, agreement or other instrument towhich the Borrower is a party or by which the Borrower or any of the propertyof the Borrower is bound; (vi) do not result in the creation or impositionof any Adverse Claim upon any of the property of the Borrower; and (vii) donot require the consent or approval of any Governmental Authority or any otherPerson, except those which have been duly obtained, made or complied with priorto the Effective Date as provided in Section 3.01(b).  The exercise by each of the Borrower, theLenders or the Administrative Agent of any of its rights and remedies under anyRelated Document to which it is a party do not require the consent or approvalof any Governmental Authority or any other Person, except those which will havebeen duly obtained, made or complied with prior to the Closing Date as providedin Section 3.01(b).  On or prior to the Effective Date, each ofthe Related Documents to which the Borrower is a party shall have been dulyexecuted and delivered by the Borrower and each such Related Document shallthen constitute a legal, valid and binding obligation of the Borrowerenforceable against it in accordance with its terms.

###  

### (d)           No Litigation. No Litigation is now pending or, to the knowledge of the Borrower,threatened against the Borrower that (i) challenges the Borrower’s rightor power to enter into or perform any of its obligations under the RelatedDocuments to which it is a party, or the validity or enforceability of anyRelated Document or any action taken thereunder, (ii) seeks to prevent thetransfer, sale, pledge or contribution of any Receivable or the consummation ofany of the transactions contemplated under this Agreement or the other RelatedDocuments, or (iii) is reasonably likely to be adversely determined and,if adversely determined, could reasonably be expected to have a MaterialAdverse Effect within the meaning of clauses (a)(ii) and (b) through (e) ofthe definition thereof.  There is noLitigation pending or threatened that seeks damages or injunctive reliefagainst, or alleges criminal misconduct by, the Borrower.

###  

### (e)           Solvency. After giving effect to the sale or contribution of Receivables and theAdvances to be made on such date and to the application of the proceedstherefrom, the Borrower is and will be Solvent.

 

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### (f)            Material Adverse Effect.  Since the date of the Borrower’sorganization, (i) the Borrower has not incurred any obligations,contingent or non-contingent liabilities, liabilities for Charges, long-termleases or unusual forward or long-term commitments, other than in connectionwith the transaction contemplated by the Related Documents, (ii) nocontract, lease or other agreement or instrument has been entered into by theBorrower or has become binding upon the Borrower’s assets, other than inconnection with the Related Documents, and no law or regulation applicable tothe Borrower has been adopted that has had or could reasonably be expected tohave a Material Adverse Effect within the meaning of clauses (a)(ii) and (b) through(e) of the definition thereof and (iii) the Borrower is not indefault and no third party is in default under any material contract, lease orother agreement or instrument to which the Borrower is a party.  Since the date of the Borrower’sorganization, no event has occurred with respect to the Borrower that alone ortogether with other events could reasonably be expected to have a MaterialAdverse Effect within the meaning of clauses (a)(ii) and (b) through (e) ofthe definition thereof.

###  

### (g)           Ownership of Property; Liens.  None of the properties and assets (includingthe Transferred Receivables) of the Borrower are subject to any Adverse Claimsother than Permitted Encumbrances not attaching to Transferred Receivables, andthere are no facts, circumstances or conditions known to the Borrower that mayresult in (i) with respect to the Transferred Receivables, any AdverseClaims (including Adverse Claims arising under environmental laws) and (ii) withrespect to its other properties and assets, any Adverse Claims (includingAdverse Claims arising under environmental laws) other than PermittedEncumbrances.  The Borrower has receivedall assignments, bills of sale and other documents, and has duly effected allrecordings, filings and other actions necessary to establish, protect andperfect the Borrower’s right, title and interest in and to the TransferredReceivables and its other properties and assets.  No effective financing statement or othersimilar instrument are of record in any filing office listing the Borrower orany Originator as debtor and covering any of the Transferred Receivables or theother Borrower Collateral, and the Liens granted to the Lender pursuant to Section 7.01 are and will be at all timesfully perfected first priority Liens in and to the Borrower Collateral.

###  

### (h)           Ventures, Subsidiaries and Affiliates; Outstanding Stock andDebt.  The Borrower has noSubsidiaries, and is not engaged in any joint venture or partnership with anyother Person.  The Borrower has noInvestments in any Person other than Permitted Investments.  The Member is the only member of theBorrower.  There are no outstandingrights to purchase or options, warrants or similar rights or agreementspursuant to which the Borrower may be required to issue, sell, repurchase orredeem some or all of its membership interests. Other than the SubordinatedLoans, the Borrower has no outstanding Debt on the Effective Date.

###  

### (i)            Taxes.  AllTax Returns required to be filed by the Borrower have been timely and properlyfiled and (ii) all taxes that are payable by the Borrower (other thantaxes being or about to be contested in good faith by appropriate proceedingsand for which adequate reserves have been provided for in accordance with GAAP)have been paid, except where the failure to file Tax Returns or pay Taxes wouldnot have a Material Adverse Effect within the meaning of clauses (a)(ii) and(b) through (e) of the definition thereof and has not resulted in aLien which has attached to the Receivables. No Governmental Authority has asserted any claim for taxes, or to theBorrower’s knowledge, has threatened to assert any claim for taxes that

 

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would, if not paid, have aMaterial Adverse Effect within the meaning of clauses (a)(ii) and (b) through(e) of the definition thereof or would result in a Lien which would attachto the Receivables.  All taxes requiredby law to be withheld or collected and remitted (including, without limitation,income tax, unemployment insurance and workmen’s compensation premiums) withrespect to the Borrower have been withheld or collected and paid to theappropriate Governmental Authorities (or are properly being held for suchpayment), except for amounts the nonpayment of which would not be reasonably likelyto have a Material Adverse Effect within the meaning of clauses (a)(ii) and(b) through (e) of the definition thereof.  It is not necessary that this Agreement orany other Related Document be filed, registered, recorded or enrolled inconnection with any Taxes with any court, public office or other authority inany jurisdiction or that any ad valorem stamp duty, stamp duty, documentary,registration or similar tax or duty be paid on the execution or delivery ofthis Agreement or any other Related Document. Except as described on Schedule 4.01(i), as of the Effective Date,neither the Borrower nor any Affiliate that files tax returns including taxitems for the Borrower has executed or filed with the IRS or any otherGovernmental Authority any agreement or other document extending, or having theeffect of extending, the period for assessment or collection of anyCharges.  As of the Effective Date, (i) Borrowerhas elected to be disregarded as an entity separate from its owner for federalincome tax purposes under Section 301.7701-3(b)(1) of the UnitedStates Treasury Regulations and is therefore not an association taxable as acorporation for federal income tax purposes, and (ii) neither the Borrowernor any of its Affiliates has agreed or been requested to make any adjustmentunder IRC 481(a), by reason of a change in accounting method or otherwise, thatcould reasonably be expected to have a Material Adverse Effect.  The Advances will constitute Debt for federalincome tax purposes.

###  

### (j)            Full Disclosure. No representation or warranty of the Borrower contained in thisAgreement, any Borrowing Base Certificate, any of the other Related Documentsor any other document, certificate or written statement furnished by on behalfof the Borrower to the Administrative Agent or any Lender relating to thisAgreement, the Transferred Receivables or any of the other Related Documentscontains any untrue statement of a material fact or omitted, omits or will omitto state a material fact necessary in order to make the statements containedherein or therein not misleading in any material respect in light of thecircumstances in which the same were made. All information contained in thisAgreement, any Borrowing Base Certificate or any of the other RelatedDocuments, or any other written statement or information furnished to anyLender or the Administrative Agent has been prepared in good faith by themanagement of the Borrower with the exercise of reasonable diligence.

###  

### (k)           ERISA.  TheBorrower is in compliance with ERISA and has not incurred and does not expectto incur any liabilities (other than (x) premium payments arising in theordinary course of business, (y) liabilities arising under Section 4041(b) ofERISA and (z) interest or penalties in connection with late premium paymentsthat have not remained outstanding for more than thirty (30) days from the daysuch interest or penalties were incurred) payable to the PBGC under Title IV ofERISA.

###  

### (l)            Brokers. No broker or finder acting on behalf of the Borrower was employed orutilized in connection with this Agreement or the other Related Documents orthe transactions contemplated hereby or thereby and the Borrower has noobligation to any Person in respect of any finder’s or brokerage fees inconnection therewith.

 

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### (m)          Margin Regulations.  The Borrower is not engaged in the businessof extending credit for the purpose of “purchasing” or “carrying” any “marginsecurity,” as such terms are defined in Regulation U of the Federal ReserveBoard as now and from time to time hereafter in effect (such securities beingreferred to herein as “Margin Stock”).  The Borrower owns no Margin Stock, and noportion of the proceeds of the Advances made hereunder will be used, directly orindirectly, for the purpose of purchasing or carrying any Margin Stock, for thepurpose of reducing or retiring any Debt that was originally incurred topurchase or carry any Margin Stock or for any other purpose that might causeany portion of such proceeds to be considered a “purpose credit” within themeaning of Regulations T, U or X of the Federal Reserve Board.  The Borrower will not take or permit to betaken any action that might cause any Related Document to violate anyregulation of the Federal Reserve Board.

###  

### (n)           Nonapplicability of Bulk Sales Laws.  No transaction contemplated by this Agreementor any of the Related Documents requires compliance with any bulk sales act orsimilar law.

###  

### (o)           Government Regulation.  The Borrower is not an “investment company”or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investmentcompany,” as such terms are defined in the Investment Company Act.  The making of Advances by the Lendershereunder, the application of the proceeds thereof and the consummation of thetransactions contemplated by this Agreement and the other Related Documentswill not violate any provision of any such statute or any rule, regulation ororder issued by the Securities and Exchange Commission.

###  

### (p)           Nonconsolidation. The Borrower is operated in such a manner that the separate corporateexistence of the Borrower, on the one hand, and any member of the Parent Group,on the other hand, would not be disregarded in the event of the bankruptcy orinsolvency of any member of the Parent Group and, without limiting thegenerality of the foregoing:

###  

#### (i)            the Borrower is a limited purposelimited liability company whose activities are restricted in its limitedliability company agreement to those activities expressly permitted hereunderand under the other Related Documents and the Borrower has not engaged, anddoes not presently engage, in any business or other activity other than thoseactivities expressly permitted hereunder and under the other Related Documents,nor has the Borrower entered into any agreement other than this Agreement, theother Related Documents to which it is a party and, with the prior writtenconsent of the Administrative Agent, any other agreement necessary to carry outmore effectively the provisions and purposes hereof or thereof;

####  

#### (ii)           the Borrower has duly appointed aboard of managers and its business is managed solely by its own officers andmanagers, each of whom when acting for the Borrower shall be acting solely inhis or her capacity as an officer or manager and not as an officer, director,employee or agent of any member of the Parent Group;

####  

#### (iii)          Borrower shall compensate allemployees, consultants and agents directly or indirectly through reimbursementof the Parent, from its own funds, for services provided to the Borrower bysuch employees, consultants and agents and, to the

 

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extent anyemployee, consultant or agent of the Borrower is also an employee, consultantor agent of such member of the Parent Group on a basis which reflects therespective services rendered to the Borrower and such member of the ParentGroup and in accordance with the terms of the Administrative ServicesAgreement;

####  

#### (iv)          Borrower shall pay its own incidentaladministrative costs and expenses not covered under the terms of theAdministrative Services Agreement from its own funds, and shall allocate allother shared overhead expenses (including, without limitation, telephone andother utility charges, the services of shared employees, consultants andagents, and reasonable legal and auditing expenses) which are not reflected inthe Servicing Fee, and other items of cost and expense shared between theBorrower and the Parent, pursuant to the terms of the Administrative ServicesAgreement, on the basis of actual use to the extent practicable and, to theextent such allocation is not practicable, on a basis reasonably related toactual use or the value of services rendered; except as otherwise expresslypermitted hereunder, under the other Related Documents and under the Borrower’sorganizational documents, no member of the Parent Group (A) pays theBorrower’s expenses, (B) guarantees the Borrower’s obligations, or (C) advancesfunds to the Borrower for the payment of expenses or otherwise;

####  

#### (v)           other than the purchase andacceptance through capital contribution of Transferred Receivables pursuant tothe Sale Agreement, the acceptance of Subordinated Loans therein, the paymentof distributions and the return of capital to the Member, the servicingarrangements with the Servicer under the Sale Agreement and the transactionscontemplated under the Administrative Services Agreement, the Borrower engagesand has engaged in no intercorporate transactions with any member of the ParentGroup;

####  

#### (vi)          the Borrower maintains records andbooks of account separate from that of each member of the Parent Group, holdsregular meetings of its board of directors and otherwise observes limitedliability company formalities;

####  

#### (vii)         (A) the financial statements(other than consolidated financial statements) and books and records of theBorrower and each member of the Parent Group reflect the separate existence ofthe Borrower and (B) the consolidated financial statements of the ParentGroup shall contain disclosure to the effect that the Borrower’s assets are notavailable to the creditors of any member of the Parent Group;

####  

#### (viii)        (A) the Borrower maintains itsassets separately from the assets of each member of the Parent Group (includingthrough the maintenance of separate bank accounts and except for any Records tothe extent necessary to assist the Servicer in connection with the servicing ofthe Transferred Receivables), (B) the Borrower’s funds (including allmoney, checks and other cash proceeds) and assets, and records relatingthereto, have not been and are not commingled with those of any member of theParent Group and (C) the separate creditors of the Borrower will beentitled, on the winding-up of the Borrower, to be satisfied out of theBorrower’s assets prior to any value in the Borrower becoming available to theMember;

 

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#### (ix)           all business correspondence and othercommunications of the Borrower are conducted in the Borrower’s own name, on itsown stationery and through a separately-listed telephone number;

####  

#### (x)            the Borrower has and shall maintainseparate office space from the offices of any member of the Parent Group andidentify such office by a sign in its own name;

####  

#### (xi)           the Borrower shall respond to anyinquiries with respect to ownership of a Transferred Receivable by stating thatit is the owner of such Transferred Receivable, and that such TransferredReceivable is pledged to the Administrative Agent for the benefit of the Lenders;

####  

#### (xii)          the Borrower presents itself to thepublic as a legal entity separate from each such member and independentlyengaged in the business of purchasing and financing Receivables;

####  

#### (xiii)         the Borrower maintains at least oneindependent manager each of whom (A) is not a Stockholder, director,officer, employee or associate, or any relative of the foregoing, of any memberof the Parent Group (other than the Borrower), all as provided in its limitedliability company agreement, (B) has (1) prior experience as anindependent director for an entity whose organizational documents required theunanimous consent of all independent managers thereof before such corporationcould consent to the institution of bankruptcy or insolvency proceedingsagainst it or could file a petition seeking relief under any applicable federalor state law relating to bankruptcy and (2) at least three years ofemployment experience with one or more entities that provide, in the ordinarycourse of their respective businesses, advisory, management, independentdirector services or placement services to issuers of securitization orstructured finance instruments, agreements or securities, and (C) isotherwise acceptable to the Administrative Agent;

####  

#### (xiv)        the limited liability company agreementof the Borrower requires the affirmative vote of each independent managerbefore a voluntary petition under Section 301 of the Bankruptcy Code maybe filed by the Borrower; and

####  

#### (xv)         Borrower shall maintain (1) correctand complete books and records of account and (2) minutes of the meetingsand other proceedings of its members and board of managers.

####  

### (q)           Deposit and Disbursement Accounts.  Schedule 4.01(q)lists all banks and other financial institutions at which the Borrowermaintains deposit or other bank accounts as of the Closing Date, including anyAccount, and such schedule correctly identifies the name, address andtelephone number of each depository, the name in which the account is held, adescription of the purpose of the account, and the complete account numbertherefor.  Each Account constitutes adeposit account or a securities account within the meaning of the applicableUCC.  The Borrower (or the Servicer onits behalf) has delivered to the Administrative Agent a fully executed agreementpursuant to which the Borrower Account Bank

 

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(with respect to the BorrowerAccount), the Concentration Account Bank (in the case of the ConcentrationAccount) and each Collection Account Bank (with respect to each CollectionAccount) has agreed to comply with all instructions originated by theAdministrative Agent directing the disposition of funds in the Accounts withoutfurther consent by the Borrower, the Servicer or any Originator.  None of the Transaction Parties has access toany of the Accounts. No Account is in the name of any person other than theBorrower or the Administrative Agent, and the Borrower has not consented to anyBank following the instructions of any Person other than the AdministrativeAgent.  Accordingly, the AdministrativeAgent has a first priority perfected security interest in each Account, and allfunds on deposit therein.

###  

### (r)            Transferred Receivables.

###  

#### (i)            Transfers.  Each Transferred Receivable was purchased byor contributed to the Borrower on the relevant Transfer Date pursuant to theSale Agreement.

####  

#### (ii)           Eligibility.  Each Transferred Receivable designated as anEligible Receivable in each Borrowing Base Certificate, Monthly Report, WeeklyReport or Daily Report, as the case may be, constitutes an Eligible Receivableas of the date specified in such Borrowing Base Certificate, Monthly Report,Weekly Report or Daily Report, as applicable.

####  

#### (iii)          Nonavoidabilityof Transfers.  The Borrowershall (A) have received each Contributed Receivable as a contribution tothe capital of the Borrower by the Member as a member of the Borrower and (B) (1) havepurchased each Sold Receivable from the applicable Originator for cashconsideration or with the proceeds of a Subordinated Loan and (2) haveaccepted assignment of any Eligible Receivables transferred pursuant to clause (b) of Section 4.04of the Sale Agreement, in each case in an amount that constitutes fairconsideration and reasonably equivalent value therefor. No Sale has been madefor or on account of an antecedent debt (other than any contractual obligationto purchase Receivables from the Originators under the Sale Agreement) owed byany Originator to the Borrower and no such Sale is or may be avoidable orsubject to avoidance under any bankruptcy laws, rules or regulations.

####  

### (s)           Assignment of Interest in Related Documents.  The Borrower’s interests in, to and under theReceivables Sale and Servicing Agreement and each Originator Support Agreement,if any, have been assigned by the Borrower to the Administrative Agent (for thebenefit of itself and the Lenders) as security for the Borrower Obligations.

###  

### (t)            Notices to Obligors.  Each Obligor of Transferred Receivables hasbeen directed to remit all payments with respect to such Receivables fordeposit in a Lockbox or Collection Account.

###  

### (u)           Representations and Warranties in Other Related Documents.  Each of the representations and warranties ofthe Borrower contained in the Related Documents (other than this Agreement) istrue and correct in all respects and the Borrower hereby makes each such

 

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representation and warranty to,and for the benefit of, the Lenders and the Administrative Agent as if the samewere set forth in full herein.

###  

### (v)           Supplementary Representations.  Each of the representations and warranties ofthe Borrower set forth on Schedule 4.01(v) istrue and correct in all respects.

###  

### (w)          Intent. TheBorrower has not entered into this Agreement or any of the other RelatedDocuments with the intent of hindering, delaying or defrauding present orfuture creditors of itself or any Transaction Party.  The Borrower has not removed or concealed anyassets from its creditors or participated in the removal or concealing of assetsof any Transaction Party or any other Person, nor will any of them do so in thefuture.   The transfers contemplated bythis Agreement and the other Transaction Documents are being undertaken in goodfaith by the Borrower for bona fide business purposes.

###  

# ARTICLE V.

#  

# GENERAL COVENANTS OF THEBORROWER

#  

## Section 5.01.  Affirmative Covenants of the Borrower.  The Borrower covenants and agrees that fromand after the Effective Date and until the Termination Date:

##  

### (a)           Compliance with Agreements and Applicable Laws.  The Borrower shall (i) perform each ofits obligations under this Agreement and the other Related Documents and (ii) complywith all federal, state and local laws and regulations applicable to it and theTransferred Receivables, including those relating to truth in lending, retailinstallment sales, fair credit billing, fair credit reporting, equal creditopportunity, fair debt collection practices, privacy, licensing, taxation,ERISA and labor matters and environmental laws and environmental permitsexcept, solely with respect to this clause (ii),where the failure to so comply could not reasonably be expected to have aMaterial Adverse Effect.

###  

### (b)           Maintenance of Existence and Conduct of Business.  The Borrower shall:  (i) do or cause to be done all thingsnecessary to preserve and keep in full force and effect its limited liabilitycompany existence and its rights and franchises; (ii) continue to conductits business substantially as now conducted or as otherwise permitted hereunderand in accordance with (1) the terms of its limited liability companyagreement and (2) Section 4.01(p);(iii) at all times maintain, preserve and protect all of its assets andproperties used or useful in the conduct of its business, including alllicenses, permits, charters and registrations, and keep the same in goodrepair, working order and condition in all material respects (taking intoconsideration ordinary wear and tear) and from time to time make, or cause tobe made, all necessary or appropriate repairs, replacements and improvementsthereto consistent with industry practices; and (iv) transact businessonly in the name of “Vertis Receivables II, LLC” or such trade names as are setforth in Schedule 5.01(b) or upon 30 days’ prior written notice toAdministrative Agent, in any other legal name with respect to which all actionrequested by Administrative Agent pursuant to Section 12.13 shallhave been taken with respect to the Transferred Receivable

###  

### (c)           Deposit of Collections.  The Borrower shall deposit or cause to bedeposited promptly into a Collection Account, and in any event no later thanthe first Business

 

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Day after receipt thereof, allCollections it may receive with respect to any Transferred Receivable.

###  

### (d)           Use of Proceeds. The Borrower shall utilize the proceeds of the Advances made hereundersolely for (i) the repayment of Advances made hereunder and the payment ofany fees due hereunder, (ii) the purchase of Receivables from theOriginators pursuant to the Sale Agreement, (iii) the payment ofdistributions to the Member, (iv) the repayment of Subordinated Loans, and(v) the payment of administrative fees or Servicing Fees or expenses tothe Servicer or routine administrative or operating expenses, in each case onlyas expressly permitted by and in accordance with the terms of this Agreementand the other Related Documents.

###  

### (e)           Payment and Performance of Charges and other Obligations.

###  

#### (i)            Subject to Section 5.01(e)(ii),the Borrower shall pay, perform and discharge or cause to be paid, performedand discharged promptly all charges and claims payable by it, including (A) Chargesimposed upon it, its income and profits, or any of its property (real, personalor mixed) and all Charges with respect to tax, social security and unemploymentwithholding required to be paid by it, and (B) lawful claims for labor,materials, supplies and services or otherwise before any thereof shall becomepast due.

####  

#### (ii)           The Borrower may in good faithcontest, by appropriate proceedings, the validity or amount of any charges orclaims described in Section 5.01(e)(i);provided, that (A) adequate reserveswith respect to such contest are maintained on the books of the Borrower, inaccordance with GAAP, (B) such contest is maintained and prosecutedcontinuously and with diligence, (C) none of the Borrower Collateralbecomes subject to forfeiture or loss as a result of such contest, (D) noLien shall be imposed to secure payment of such charges or claims other thaninchoate tax liens and (E) the Administrative Agent has not advised theBorrower in writing that it reasonably believes that failure to pay or todischarge such claims or charges could have or result in a Material AdverseEffect within the meaning of clauses (a)(ii) and (b) through (e) ofthe definition thereof.

####  

### (f)            ERISA.  TheBorrower shall give the Administrative Agent prompt written notice of any eventthat (i) could reasonably be expected to result in the imposition of aLien on any Borrower Collateral under Section 412 of the IRC or Section 302or 4068 of ERISA, or (ii) could reasonably be expected to result in theincurrence by Borrower of any liabilities under Title IV of ERISA (other thanpremium payments arising in the ordinary course of business).

###  

## Section 5.02.  Reporting Requirements of the Borrower.  The Borrower hereby agrees that from andafter the Effective Date until the Termination Date, it shall furnish or causeto be furnished to the Administrative Agent and the Lenders:

##  

### (a)           The financialstatements, notices, reports and other information at the times, to the Personsand in the manner set forth in Annex 5.02(a).

 

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### (b)           No later than 11:00 a.m.on any Advance Date and at the same time each Monthly Report, Weekly Report orDaily Report, as applicable, is required to be delivered pursuant to the termsof Annex 5.02(a), a completed certificatein the form attached hereto as Exhibit 5.02(b)(each, a “Borrowing Base Certificate”), provided, that if (i) an IncipientTermination Event or a Termination Event shall have occurred and be continuingor (ii) the Administrative Agent, in good faith, believes that anIncipient Termination Event or a Termination Event is imminent or reasonablydeems the Lenders’ rights or interests in the Transferred Receivables or theBorrower Collateral insecure, then such Borrowing Base Certificates shall bedelivered daily; and each Borrowing Base Certificate shall be prepared by theBorrower or the Servicer as of the last day of the previous month or week, inthe event Borrowing Base Certificates are required to be delivered on a monthlyor weekly basis, and as of the close of business on the previous Business Day,in the event Borrowing Base Certificates are required to be delivered on eachBusiness Day.

###  

### (c)           Such other reports,statements and reconciliations with respect to the Borrowing Base or BorrowerCollateral as any Lender or the Administrative Agent shall from time to timerequest in its reasonable discretion.

###  

## Section 5.03.  Negative Covenants of the Borrower.  The Borrower covenants and agrees that,without the prior written consent of the Requisite Lenders and theAdministrative Agent (other than in connection with the waiver of any of thecovenants set forth in subsections(c), (d), (n) or (p) ofthis Section 5.03 which shall onlyrequire the prior written consent of the Administrative Agent), from and afterthe Effective Date until the Termination Date:

##  

### (a)           Sale of Membership Interests and Assets.  The Borrower shall not sell, transfer,convey, assign or otherwise dispose of, or assign any right to receive incomein respect of, any of its properties or other assets or issue any membershipinterests (whether in a public or a private offering or otherwise), anyTransferred Receivable or Contract therefor or any of its rights with respectto any Lockbox or any Account, the Agent Account or any other deposit accountin which any Collections of any Transferred Receivable are deposited except asotherwise expressly permitted by this Agreement or any of the other RelatedDocuments.

###  

### (b)           Liens. Except to the extent contemplated in Section 7.03(c) of theSale Agreement, the Borrower shall not create, incur, assume or permit to exist(i) any Adverse Claim on or with respect to its Transferred Receivables or(ii) any Adverse Claim on or with respect to its other properties orassets (whether now owned or hereafter acquired) except for PermittedEncumbrances.  In addition, the Borrowershall not become a party to any agreement, note, indenture or instrument ortake any other action that would prohibit the creation of a Lien on any of itsproperties or other assets in favor of the Lenders as additional collateral forthe Borrower Obligations, except as otherwise expressly permitted by this Agreementor any of the other Related Documents.

###  

### (c)           Modifications of Receivables, Contracts or Credit andCollection Policies.  TheBorrower shall not, without the prior written consent of the AdministrativeAgent, extend, amend, forgive, discharge, compromise, waive, cancel orotherwise modify the terms of any Transferred Receivable or amend, modify orwaive any term or condition of any Contract related thereto, provided, that the Borrower may (i) take,and may authorize the Servicer on its behalf to

 

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take, such actions as areexpressly permitted by the terms of any Related Document or the Credit andCollection Policies so long as, after giving effect to any such action, noReceivables which constituted Eligible Receivables prior to such action wouldno longer constitute Eligible Receivables as a result of such action, and (ii) sellor otherwise transfer Transferred Receivables for which the applicable Obligoris a BK Obligor to a third party that is not an Affiliate of Holdings; provided,that with respect to the sales or transfers contemplated by this Section 5.03(c)(iii),(A) until the Termination Date, no such transfers shall be permitted underthis Section 5.03(c)(iii) if either a Termination Event or anIncipient Termination Event shall have occurred and be continuing prior to orafter the consummation of any such transfer, (B) the Outstanding Balanceof any Transferred Receivables sold or otherwise transferred in any transactionpursuant to this Section 5.03(c)(iii) shall not exceed$3,000,000, (C) the aggregate Outstanding Balance of all TransferredReceivables sold or otherwise transferred pursuant to this Section 5.03(c)(iii) fromand after the Closing Date shall not exceed $10,000,000, (D) each sale ortransfer of Transferred Receivables pursuant to this Section 5.03(c)(iii) shallbe made without any recourse to the Borrower and (E) any buyer of anyTransferred Receivables sold or otherwise transferred pursuant to this Section 5.03(c)(iii) shallagree in writing that, until the date that is one year plus one day followingthe date on which all Borrower Obligations have been indefeasibly paid in fullin cash, such Person shall not, directly or indirectly, institute or cause tobe instituted against Borrower any proceeding of the type referred to in Sections8.01(d) or 8.01(e) of this Agreement.

###  

### (d)           Changes in Instructions to Obligors.  The Borrower shall not make any change in itsinstructions to Obligors regarding the deposit of Collections with respect tothe Transferred Receivables, except to the extent the Administrative Agentdirects the Borrower to change such instructions to Obligors or theAdministrative Agent consents in writing to such change or as otherwiserequired by this Agreement.

###  

### (e)           Capital Structure and Business.  The Borrower shall not (i) make anychanges in any of its business objectives, purposes or operations, (ii) makeany change in its capital structure, including the issuance of any membershipinterests, warrants or other securities convertible into membership interestsor any revision of the terms of its outstanding membership interests, (iii) amend,waive or modify any term or provision of its certificate of formation orlimited liability company agreement, (iv) make any change to its nameindicated on the public records of its jurisdiction of organization or (v) changeits jurisdiction of organization.  TheBorrower shall not engage in any business other than as provided in itscertificate of formation, limited liability company agreement and the RelatedDocuments.  Without limiting theforegoing, the Borrower shall not make an election to be treated as anassociation taxable as a corporation under Section 301.7701-3(a) ofthe Treasury Regulations and shall not issue any additional membershipinterests or take other actions which would cause the Company to cease to bedisregarded as an entity separate from its owner for federal income taxpurposes.

###  

### (f)            Mergers, Subsidiaries, Etc.  The Borrower shall not directly or indirectly,by operation of law or otherwise, (i) form or acquire any Subsidiary, or (ii) mergewith, consolidate with, acquire all or substantially all of the assets orcapital Stock of, or otherwise combine with or acquire, any Person.

 

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###  

### (g)           Sale Characterization; Receivables Sale and ServicingAgreement.  The Borrower shallnot make statements or disclosures, prepare any financial statements or in anyother respect account for or treat the transactions contemplated by the SaleAgreement (including for accounting, tax and reporting purposes) in any mannerother than (i) with respect to each Sale of each Sold Receivable effectedpursuant to the Sale Agreement, as a true sale and absolute assignment of thetitle to and sole record and beneficial ownership interest of the TransferredReceivables by the Originators to the Borrower or (ii) with respect toeach contribution of Contributed Receivables thereunder, as an increase in thestated capital of the Borrower.

###  

### (h)           Restricted Payments.  The Borrower shall not enter into any lendingtransaction with any other Person.  TheBorrower shall not at any time (i) advance credit to any Person or (ii) declareany distributions, repurchase any membership interest, return any capital, ormake any other payment or distribution of cash or other property or assets inrespect of the Borrower’s membership interest or make a repayment with respectto any Subordinated Loans if, after giving effect to any such advance ordistribution, a Funding Excess, Incipient Termination Event or TerminationEvent would exist or otherwise result therefrom.

###  

### (i)            Indebtedness. The Borrower shall not create, incur, assume or permit to exist anyDebt, except (i) Debt of the Borrower to any Affected Party, IndemnifiedPerson, the Servicer or any other Person expressly permitted by this Agreementor any other Related Document, (ii) Subordinated Loans pursuant to theSubordinated Notes, (iii) deferred taxes, and (iv) endorser liabilityin connection with the endorsement of negotiable instruments for deposit orcollection in the ordinary course of business.

###  

### (j)            Prohibited Transactions.  The Borrower shall not enter into, or be aparty to, any transaction with any Person except as expressly permittedhereunder or under any other Related Document except as reasonably necessary oradvisable to its performance of its obligations hereunder and under the otherRelated Documents.

###  

### (k)           Investments. Except as otherwise expressly permitted hereunder or under the otherRelated Documents, the Borrower shall not make any investment in, or make oraccrue loans or advances of money to, any Person, including the Member, anydirector, officer or employee of the Borrower, Holdings or any of Holdings’other Subsidiaries, through the direct or indirect lending of money, holding ofsecurities or otherwise, except with respect to Transferred Receivables andPermitted Investments.

###  

### (l)            Commingling. The Borrower shall not deposit or permit the deposit of any funds thatdo not constitute Collections of Transferred Receivables into any CollectionAccount or the Concentration Account, except as otherwise contemplated under Section 4.02(l) of the Sale Agreement.  If funds that are not Collections aredeposited into a Collection Account or the Concentration Account, the Borrowershall, or shall cause the Servicer to notify the Administrative Agent inwriting promptly upon discovery thereof, and, the Administrative Agent shallpromptly remit (or direct the applicable Collection Account Bank or theConcentration Account Bank to remit) any such amounts that are not Collectionsto the applicable Originator or other Person designated in such notice.

 

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### (m)          ERISA.  TheBorrower shall not cause or permit to occur an event that (i) couldreasonably be expected to result in the imposition of a Lien on any BorrowerCollateral under Section 412 of the IRC or Section 302 or 4068 ofERISA, or (ii) could reasonably be expected to result in the incurrence byBorrower of any liabilities under Title IV of ERISA (other than (x) premiumpayments arising in the ordinary course of business, (y) liabilities arisingunder Section 4041(b) of ERISA and (z) interest or penalties inconnection with late premium payments that have not remained outstanding formore than thirty (30) days from the day such interest or penalties wereincurred).

###  

### (n)           Related Documents.  The Borrower shall not amend, modify or waiveany term or provision of any Related Document without the prior written consentof the Administrative Agent.

###  

### (o)           Board Policies. The Borrower shall not modify the terms of any policy or resolutions ofits board of managers if such modification could reasonably be expected to haveor result in a Material Adverse Effect.

###  

### (p)           Additional Members of Borrower.  The Borrower shall not admit any additionalmember without the prior written consent of the Administrative Agent other thana “Special Member” as such term is defined in the Borrower’s limited liabilitycompany agreement as of the date hereof.

###  

# ARTICLE VI.

#  

# ACCOUNTS

#  

## Section 6.01.  Establishment of Accounts.

##  

### (a)           Collection Accounts.

###  

#### (i)            The Borrower has established witheach Collection Account Bank one or more Collection Accounts subject, in eachcase, to a fully executed Collection Account Agreement.  The Borrower agrees that the AdministrativeAgent shall have exclusive dominion and control of each Collection Account andall monies, instruments and other property from time to time on deposit therein.  The Borrower shall not make or cause to bemade, or have any ability to make or cause to be made, any withdrawals from anyCollection Account except as provided in Section 6.01(b)(ii).

####  

#### (ii)           The Borrower (or an Originator onBorrower’s behalf) has instructed all existing Obligors of TransferredReceivables, and shall instruct all future Obligors of such Receivables, tomake payments in respect thereof only (A) by check or money order mailedto one or more lockboxes or post office boxes under the control of theAdministrative Agent (each a “Lockbox” andcollectively the “Lockboxes”) or (B) bywire transfer or moneygram directly to a Collection Account.  Schedule 4.01(q)lists all Lockboxes and all Collection Account Banks at which the Borrowermaintains Collection Accounts as of the Effective Date, and such schedule correctlyidentifies (1) with respect to each such Collection Account Bank, thename, address and telephone number thereof,

 

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(2) withrespect to each Collection Account, the name in which such account is held andthe complete account number therefor, and (3) with respect to eachLockbox, the lockbox number and address thereof.  The Borrower (or the Servicer on Borrower’sbehalf) shall endorse, to the extent necessary, all checks or other instrumentsreceived in any Lockbox so that the same can be deposited in the CollectionAccount, in the form so received (with all necessary endorsements), on thefirst Business Day after the date of receipt thereof.  In addition, the Borrower shall deposit orcause to be deposited into a Collection Account all cash, checks, money ordersor other proceeds of Transferred Receivables or Borrower Collateral received byit other than in a Lockbox or a Collection Account, in the form so received(with all necessary endorsements), not later than the close of business on thefirst Business Day following the date of receipt thereof, and until sodeposited all such items or other proceeds shall be held in trust for thebenefit of the Administrative Agent.  TheBorrower shall not make and shall not permit the Servicer to make any depositsinto a Lockbox or any Collection Account except in accordance with the terms ofthis Agreement or any other Related Document.

####  

#### (iii)          If, for any reason, a CollectionAccount Agreement terminates or any Collection Account Bank fails to complywith its obligations under the Collection Account Agreement to which it is aparty, then the Borrower shall promptly notify all Obligors of TransferredReceivables who had previously been instructed to make payments to a CollectionAccount maintained at any such Collection Account Bank to make all futurepayments to a new Collection Account in accordance with this Section 6.01(a)(iii).  Neither the Borrower nor the Servicer on theBorrower’s behalf shall close any Collection Account unless it shall have (A) receivedthe prior written consent of the Administrative Agent, (B) established anew account with the same Collection Account Bank or with a new depositaryinstitution satisfactory to the Administrative Agent, (C) entered into anagreement covering such new account with such Collection Account Bank or withsuch new depositary institution substantially in the form of the predecessorCollection Account Agreement or that is satisfactory in all respects to theAdministrative Agent (whereupon, for all purposes of this Agreement and theother Related Documents, such new account shall become a Collection Account,such new agreement shall become a Collection Account Agreement and any newdepositary institution shall become a Collection Account Bank), and (D) takenall such action as the Administrative Agent shall reasonably require to grantand perfect a first priority Lien in such new Collection Account to the Lenderunder Section 7.01 of this Agreement.  Except as permitted by this Section 6.01(a), the Borrower shall not, andshall not permit the Servicer to, open any new Lockbox or Collection Accountwithout the prior written consent of the Administrative Agent.

####  

### (b)           Concentration Account.

###  

#### (i)            The Borrower has established theConcentration Account subject to a fully executed Concentration AccountAgreement.  The Borrower agrees that theAdministrative Agent shall have exclusive dominion and control of the ConcentrationAccount and all monies, instruments and other property from time to time ondeposit therein.

 

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#### (ii)           The Borrower (or the Servicer onBorrower’s behalf) shall require all Collection Account Banks to automaticallytransfer to the Concentration Account on a daily basis all collected andavailable funds on deposit in each Collection Account.  The Borrower (or the Servicer on Borrower’sbehalf) will require the Concentration Account Bank to automatically transferall collected and available funds on deposit in the Concentration Account tothe Agent Account on a daily basis.

####  

#### (iii)          If, for any reason, the ConcentrationAccount Agreement relating to the Concentration Account terminates or theConcentration Account Bank fails to comply with its obligations under suchConcentration Account Agreement, then the Borrower shall promptly notify theAdministrative Agent thereof and the Borrower, the Servicer or theAdministrative Agent, as the case may be, shall instruct all Collection AccountBanks who had previously been instructed to make transfers to the ConcentrationAccount maintained at any such Concentration Account Bank to make all futurepayments to a new Concentration Account in accordance with this Section 6.01(b)(iii).  Neither the Borrower nor the Servicer on theBorrower’s behalf shall close the Concentration Account unless it shall have (A) receivedthe prior written consent of the Administrative Agent, (B) established anew account with the same Concentration Account Bank or with a new depositaryinstitution satisfactory to the Administrative Agent, (C) entered into anagreement covering such new account with such Concentration Account Bank orwith such new depositary institution substantially in the form of theConcentration Account Agreement or that is satisfactory in all respects to theAdministrative Agent (whereupon, for all purposes of this Agreement and theother Related Documents, such new account shall become the ConcentrationAccount, such new agreement shall become a Concentration Account Agreement andany new depositary institution shall become the Concentration Account Bank),and (D) taken all such action as the Administrative Agent shall reasonablyrequire to grant and perfect a first priority Lien in such new Concentration Accountto the Lender under Section 7.01 ofthis Agreement.  Except as permitted bythis Section 6.01(b), the Borrowershall not, and shall not permit the Servicer to open a new ConcentrationAccount without the prior written consent of the Administrative Agent.

####  

### (c)           Agent Account.

###  

#### (i)            The Administrative Agent hasestablished and shall maintain the Agent Account with Deutsche Bank TrustCompany Americas (the “Depositary”).  The Agent Account shall be registered in thename of the Administrative Agent and the Administrative Agent shall, subject tothe terms of this Agreement, have exclusive dominion and control thereof and ofall monies, instruments and other property from time to time on deposittherein.

####  

#### (ii)           The Lenders and the AdministrativeAgent shall deposit into the Agent Account from time to time all monies,instruments and other property received by any of them as proceeds of theTransferred Receivables.

####  

#### (iii)          If, for any reason, the Depositarywishes to resign as depositary of the Agent Account or fails to carry out theinstructions of the Administrative Agent, then

 

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theAdministrative Agent shall promptly notify the Lenders.  Neither the Lenders nor the AdministrativeAgent shall close the Agent Account unless (A) a new deposit account hasbeen established with a new depositary institution, (B) the Lenders andthe Administrative Agent have entered into an agreement covering such newaccount with such new depositary institution satisfactory in all respects tothe Administrative Agent (whereupon such new account shall become the AgentAccount and such new depositary institution shall become the Depositary for allpurposes of this Agreement and the other Related Documents), and (C) theLenders and the Administrative Agent have taken all such action as theAdministrative Agent shall require to grant and perfect a first priority Lienin such new Agent Account to the Administrative Agent on behalf of the Lenders.

####  

### (d)           Borrower Account.

###  

#### (i)            The Borrower has established theBorrower Account subject to a fully executed Borrower Account Agreement andagrees that, subject to clause (ii) below, the Administrative Agentshall have exclusive dominion and control of such Borrower Account and allmonies, instruments and other property from time to time on deposit therein.

####  

#### (ii)           The Administrative Agent herebyagrees that until such time as it exercises its right to take control of theBorrower Account under Section 7.05(d),the Borrower Account Bank shall be entitled to follow the instructions of theBorrower, or the Administrative Agent on behalf of the Borrower, with respectto the withdrawal, transfer or payment of funds on deposit in the BorrowerAccount.

####  

# ARTICLE VII.

#  

# GRANT OF SECURITY INTERESTS

#  

## Section 7.01.  Borrower’s Grant of Security Interest.  To secure the prompt and complete payment,performance and observance of all Borrower Obligations, and to induce theAdministrative Agent and the Lenders to enter into this Agreement and performthe obligations required to be performed by them hereunder in accordance withthe terms and conditions hereof, the Borrower hereby grants, assigns, conveys,pledges, hypothecates and transfers to the Administrative Agent, for thebenefit of the Administrative Agent, the Lenders, the Indemnified Persons andthe Affected Parties, a Lien upon and security interest in all of the Borrower’sright, title and interest in, to and under, but none of its obligations arisingfrom, the following property, whether now owned by or owing to, or hereafteracquired by or arising in favor of, the Borrower (including under any tradenames, styles or derivations of the Borrower), and regardless of where located(all of which being hereinafter collectively referred to as the “Borrower Collateral”):

##  

### (a)           all Receivables;

###  

### (b)           the Sale Agreement,all Collection Account Agreements, the Concentration Account Agreement and allother Related Documents now or hereafter in effect relating to the purchase,servicing, processing or collection of Receivables (collectively, the “Borrower Assigned Agreements”), including (i) allrights of the Borrower to receive moneys

 

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due and to become duethereunder or pursuant thereto, (ii) all rights of the Borrower to receiveproceeds of any insurance, indemnity, warranty or guaranty with respectthereto, (iii) all claims of the Borrower for damages or breach withrespect thereto or for default thereunder and (iv) the right of theBorrower to amend, waive or terminate the same and to perform and to compelperformance and otherwise exercise all remedies thereunder;

###  

### (c)           all of the following(collectively, the “Borrower Account Collateral”):

###  

#### (i)            the Collection Accounts, theLockboxes, and all funds on deposit therein and all certificates andinstruments, if any, from time to time representing or evidencing theCollection Accounts, the Lockboxes or such funds,

####  

#### (ii)           the Agent Account and all funds ondeposit therein and all certificates and instruments, if any, from time to timerepresenting or evidencing the Agent Account or such funds,

####  

#### (iii)          the Concentration Account and allfunds on deposit therein and all certificates and instruments, if any, fromtime to time representing or evidencing the Concentration Account or such funds,

####  

#### (iv)          the Borrower Account and all funds ondeposit therein and all certificates and instruments, if any, from time to timerepresenting or evidencing the Borrower Account or such funds,

####  

#### (v)           all notes, certificates of depositand other instruments from time to time delivered to or otherwise possessed byany Lender or any assignee or agent on behalf of any Lender in substitution foror in addition to any of the then existing Borrower Account Collateral, and

####  

#### (vi)          all interest, dividends, cash,instruments, investment property and other property from time to time received,receivable or otherwise distributed with respect to or in exchange for any andall of the then existing Borrower Account Collateral;

####  

### (d)           all other propertyrelating to the Receivables that may from time to time hereafter be granted andpledged by the Borrower or by any Person on its behalf whether under thisAgreement or otherwise, including any deposit with any Lender or theAdministrative Agent of additional funds by the Borrower;

###  

### (e)           all other personalproperty of the Borrower of every kind and nature not described above includingwithout limitation all goods (including inventory, equipment and any accessionsthereto), instruments (including promissory notes), documents, accounts, chattelpaper (whether tangible or electronic), deposit accounts, letter-of-creditrights, commercial tort claims, securities and all other investment property,supporting obligations, any other contract rights or rights to the payment ofmoney, insurance claims and proceeds, and all general intangibles (includingall payment intangibles); and

 

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### (f)            to the extent nototherwise included, all proceeds and products of the foregoing and allaccessions to, substitutions and replacements for, and profits of, each of theforegoing Borrower Collateral (including proceeds that constitute property ofthe types described in Sections 7.01(a) through(e)).

###  

## Section 7.02.  Borrower’s Agreements.  The Borrower hereby (a) collaterallyassigns, transfers and conveys the benefits of the representations, warrantiesand covenants of each Originator made to the Borrower under the Sale Agreementto the Administrative Agent for the benefit of the Lenders hereunder; (b) acknowledgesand agrees that the rights of the Borrower to require payment of a RejectedAmount from an Originator under the Sale Agreement may be enforced by theLenders and the Administrative Agent; and (c) certifies that the SaleAgreement provides that the indemnification and payment provisions of Article V thereof and the provisions of Sections4.03(j), Section 4.04, 6.12, 6.14 and 6.15thereof shall survive the sale of the Transferred Receivables (and undividedpercentage ownership interests therein) and the termination of the SaleAgreement and this Agreement.

##  

## Section 7.03.  Delivery of Collateral.  All certificates or instruments representingor evidencing all or any portion of the Borrower Collateral shall be deliveredto and held by or on behalf of the Administrative Agent and shall be insuitable form for transfer by delivery or shall be accompanied by duly executedinstruments of transfer or assignment in blank, all in form and substancereasonably satisfactory to the Administrative Agent.  The Administrative Agent shall have the right(a) at any time to exchange certificates or instruments representing orevidencing Borrower Collateral for certificates or instruments of smaller orlarger denominations and (b) upon the occurrence of a Termination Event,to exercise its rights and remedies with respect to such Collateral under theUCC.

##  

## Section 7.04.  Borrower Remains Liable.  It is expressly agreed by the Borrower that,anything herein to the contrary notwithstanding, the Borrower shall remainliable under any and all of the Transferred Receivables, the Contractstherefor, the Borrower Assigned Agreements and any other agreementsconstituting the Borrower Collateral to which it is a party to observe andperform all the conditions and obligations to be observed and performed by itthereunder.  The Lenders and theAdministrative Agent shall not have any obligation or liability under any suchReceivables, Contracts or agreements by reason of or arising out of thisAgreement or the granting herein or therein of a Lien thereon or the receipt bythe Administrative Agent or the Lenders of any payment relating theretopursuant hereto or thereto.  The exerciseby any Lender or the Administrative Agent of any of its respective rights underthis Agreement shall not release any Originator, the Borrower or the Servicerfrom any of their respective duties or obligations under any such Receivables,Contracts or agreements.  None of theLenders or the Administrative Agent shall be required or obligated in anymanner to perform or fulfill any of the obligations of any Originator, theBorrower or the Servicer under or pursuant to any such Receivable, Contract oragreement, or to make any payment, or to make any inquiry as to the nature orthe sufficiency of any payment received by it or the sufficiency of anyperformance by any party under any such Receivable, Contract or agreement, orto present or file any claims, or to take any action to collect or enforce anyperformance or the payment of any amounts that may have been assigned to it orto which it may be entitled at any time or times.

 

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## Section 7.05.  Covenants of the Borrower Regarding the Borrower Collateral.

##  

### (a)           Offices and Records.  The Borrower shall maintain its principalplace of business and chief executive office and the office at which it storesits Records at the respective locations specified in Schedule 4.01(b)or, upon 30 days’ prior written notice to the Administrative Agent, at suchother location in a jurisdiction where all action requested by theAdministrative Agent pursuant to Section 12.13shall have been taken with respect to the Borrower Collateral.  The Borrower shall, and shall cause theServicer to at its own cost and expense, maintain adequate and complete recordsof the Transferred Receivables and the Borrower Collateral, including recordsof any and all payments received, credits granted and merchandise returned withrespect thereto and all other dealings therewith.  The Borrower shall, and shall cause the Servicerto, by no later than the Effective Date, mark conspicuously with a legend, inform and substance satisfactory to the Administrative Agent, its computerrecords pertaining to the Borrower Collateral and its file cabinets or otherstorage facilities where it maintains information pertaining to SubstantialContracts that constitute the Borrower Collateral, to evidence this Agreementand the assignment and Liens granted pursuant to this Article VIII.  Upon the occurrence and during thecontinuance of a Termination Event, the Borrower shall, and shall cause theServicer to, deliver and turn over such books and records to the AdministrativeAgent or its representatives at any time on demand of the AdministrativeAgent.  Prior to the occurrence of aTermination Event and upon notice from the Administrative Agent, the Borrowershall, and shall cause the Servicer to, permit any representative of theAdministrative Agent to inspect such books and records and shall providephotocopies thereof to the Administrative Agent as more specifically set forthin Section 7.05(b).

###  

### (b)           Access. The Borrower shall, and shall cause the Servicer to, at its or theServicer’s own expense, during normal business hours, from time to time uponten (10) Business Day’s prior notice (or, if a Termination Event hasoccurred and in continuing, one (1) Business Day’s prior notice) asfrequently as the Administrative Agent determines to be appropriate:  (i) provide the Administrative Agent andany of its officers, employees and agents access to its properties (includingproperties utilized in connection with the collection, processing or servicingof the Transferred Receivables), facilities, advisors and employees (includingofficers) and to the Borrower Collateral, (ii) permit the AdministrativeAgent and any of its officers, employees and agents to inspect, audit and makeextracts from its books and records, including all Records, (iii) permitthe Administrative Agent and its officers, employees and agents to inspect,review and evaluate the Transferred Receivables and the Borrower Collateral and(iv) permit the Administrative Agent and its officers, employees andagents to discuss matters relating to the Transferred Receivables or itsperformance under this Agreement or the other Related Documents or its affairs,finances and accounts with any of its officers, directors, employees,representatives or agents (in each case, with those persons having knowledge ofsuch matters) and with its independent certified public accountants as specifiedin Section 7.05(c); provided, however, that, so longas no Termination Event or Incipient Termination Event has occurred and iscontinuing, (i) the Administrative Agent shall be limited to two (2) auditspursuant to this Section 7.05(b) during each calendar year and(ii) the Borrower’s obligations to reimburse out-of-pocket expenses inrespect of each such audit shall not exceed (x) $50,000 minus (y) the amountsincurred by the Originators pursuant to Section 4.02(b) of the SaleAgreement in connection with any contemporaneous audit of the Originators. TheBorrower agrees that it shall not request any audit of any Originator under Section 4.02(b) ofthe Sale Agreement unless directed in writing to do so by the AdministrativeAgent. If (i) the Administrative Agent in good

 

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faith deems any Lender’s rightsor interests in the Transferred Receivables, the Borrower Assigned Agreementsor any other Borrower Collateral insecure or the Administrative Agent in good faithbelieves that an Incipient Termination Event or a Termination Event is imminentor (ii) an Incipient Termination Event or a Termination Event shall haveoccurred and be continuing, then the Borrower shall, and shall cause theServicer to, at its own expense, provide such access at all times without priornotice from the Administrative Agent and provide the Administrative Agent withaccess to the suppliers and customers of the Borrower and the Servicer; provided,that, the Borrower shall have the opportunity to be present at the time of anysuch access to it’s the Borrower’s suppliers or customers.  The Borrower shall, and shall cause theServicer to, make available to the Administrative Agent and its counsel, asquickly as is possible under the circumstances, copies of all books andrecords, including Records, that the Administrative Agent may request.  The Borrower shall, and shall cause theServicer to, and the Servicer shall deliver any document or instrument necessaryfor the Administrative Agent, as the Administrative Agent may from time to timerequest, to obtain records from any service bureau or other Person thatmaintains records for the Borrower or the Servicer, and shall maintainduplicate records or supporting documentation on media, including computertapes and discs owned by the Borrower or the Servicer.

###  

### (c)           Communication with Accountants.  The Borrower hereby authorizes (and shallcause the Servicer to authorize) the Lenders and the Administrative Agent tocommunicate directly with its independent certified public accountants andauthorizes and shall instruct those accountants and advisors to disclose andmake available to the Lenders and the Administrative Agent any and allfinancial statements and other supporting financial documents, schedules andinformation relating to the Borrower or the Servicer (including copies of anyissued management letters) and to discuss matters with respect to its business,financial condition and other affairs; provided, that the AdministrativeAgent shall notify the Borrower or the Servicer, as applicable, prior to anycontact with such accountants and advisors and shall give the Borrower or theServicer, as applicable, the opportunity to participate in such discussions.

###  

### (d)           Collection of Transferred Receivables.  In connection with the collection of amountsdue or to become due to the Borrower under the Transferred Receivables, theBorrower Assigned Agreements and any other Borrower Collateral pursuant to theSale Agreement, the Borrower shall, or shall cause the Servicer to, take suchaction as it, and from and after the occurrence and during the continuance of aTermination Event, the Administrative Agent, may deem necessary or desirable toenforce collection of the Transferred Receivables, the Borrower AssignedAgreements and the other Borrower Collateral; providedthat the Borrower may, rather than commencing any such action or taking anyother enforcement action, at its option, elect to pay to the AdministrativeAgent, for deposit into the Agent Account, an amount equal to the OutstandingBalance of any such Transferred Receivable; provided,further, that if a Termination Event shallhave occurred and be continuing, then the Administrative Agent may, withoutprior notice to the Seller or the Servicer, (x) exercise its rights under theAccount Agreements (in which case the Servicer shall be required, pursuant tothe Sale Agreement, to deposit any Collections it then has in its possession orat any time thereafter receives, immediately in a Collection Account or, ifdirected by the Administration Agent, in the Agent Account) and (y) notify anyObligor under any Transferred Receivable or obligors under the BorrowerAssigned Agreements of the pledge of such Transferred Receivables or Borrower

 

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Assigned Agreements, as thecase may be, to the Administrative Agent on behalf of the Lenders hereunder anddirect that payments of all amounts due or to become due to the Borrowerthereunder be made directly to the Administrative Agent or any servicer,collection agent or lockbox or other account designated by the AdministrativeAgent and, upon such notification and at the sole cost and expense of theBorrower, the Administrative Agent may enforce collection of any such TransferredReceivable or the Borrower Assigned Agreements and adjust, settle or compromisethe amount or payment thereof.  TheAdministrative Agent shall provide prompt notice to the Borrower and theServicer of any such notification of pledge or direction of payment to theObligors under any Transferred Receivables.

###  

### (e)           Performance of Borrower Assigned Agreements.  The Borrower shall, and shall cause theServicer to, (i) perform and observe all the terms and provisions of theBorrower Assigned Agreements to be performed or observed by it, maintain theBorrower Assigned Agreements in full force and effect, enforce the BorrowerAssigned Agreements in accordance with their terms and take all action as mayfrom time to time be requested by the Administrative Agent in order toaccomplish the foregoing, and (ii) upon the request of and as directed bythe Administrative Agent, make such demands and requests to any other party tothe Borrower Assigned Agreements as are permitted to be made by the Borrower orthe Servicer thereunder.

###  

### (f)            License for Use of Software and Other Intellectual Property.  Unless expressly prohibited by the licensorthereof or any provision of applicable law, if any, the Borrower hereby grantsto the Administrative Agent on behalf of the Lenders a limited license to use,without charge, the Borrower’s rights to use its own and the Servicer’scomputer programs, software, printouts and other computer materials, technicalknowledge or processes, data bases, materials, trademarks, registered trademarks,trademark applications, service marks, registered service marks, service markapplications, patents, patent applications, trade names, rights of use of anyname, labels, fictitious names, inventions, designs, trade secrets, goodwill,registrations, copyrights, copyright applications, permits, licenses,franchises, customer lists, credit files, correspondence, and advertisingmaterials or any property of a similar nature, as it pertains to the BorrowerCollateral, or any rights to any of the foregoing, only as reasonably requiredin connection with the collection of the Transferred Receivables and theadvertising for sale, and selling any of the Borrower Collateral, or exercisingof any other remedies hereto, and the Borrower agrees that its rights under alllicenses and franchise agreements shall inure to the Administrative Agent’sbenefit (on behalf of the Lenders) for purposes of the license grantedherein.  Except upon the occurrence andduring the continuation of a Termination Event, the Administrative Agent andthe Lenders agree not to use any such license without giving the Borrower priorwritten notice.

###  

# ARTICLE VIII.

#  

# TERMINATION EVENTS

#  

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

##  

### (a)           (i) theBorrower shall fail to pay, (A) any installment or other payment ofprincipal of any Advance when due, or to repay Advances to reduce their balanceto the

 

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maximum amount of RevolvingLoans then permitted to be outstanding when due or (B) within three (3) BusinessDays after the due date, any interest on any Advances, any other BorrowerObligations or any other amount due under this Agreement or any of the otherRelated Documents or (ii) any Transaction Party shall fail to pay, withinthree (3) Business Days after the due date, any amount due under the SaleAgreement or any of the other Related Documents; provided, that noTermination Event shall occur if such any failure to pay arises solely as aresult of the failure of the Administrative Agent to make transfers of amountsavailable in the Agent Account on any Settlement Date in accordance with Section 2.08;or

###  

### (b)           (i) theBorrower or any Transaction Party shall fail or neglect to perform, keep orobserve any requirement set forth in Section 5.01(c) or Section 5.03of this Agreement or Section 4.02(l) or Section 4.03 of the SaleAgreement, (ii) the Borrower or any Transaction Party shall fail orneglect to perform, keep or observe any requirement set forth in Section 5.02of this Agreement and the same shall remain unremedied for five (5) BusinessDays after the date specified for performance of any such requirement or (iii) theBorrower or any Transaction Party shall fail or neglect to perform, keep orobserve any other covenant or other provision of this Agreement or the otherRelated Documents (other than any provision embodied in or covered by any otherclause of this Section 8.01) and thesame shall remain unremedied for thirty (30) Business Days or more followingthe earlier to occur of an Authorized Officer of the Borrower or the applicableTransaction Party becoming aware of such breach and the Borrower’s receipt ofnotice thereof; or

###  

### (c)           (1) any TransactionParty or the Borrower shall fail to pay when due or within any applicable graceperiod any principal or interest on Debt (other than the Advances with respectto the Borrower) or any Contingent Obligations or (2) a breach or defaultof any Transaction Party or the Borrower, or the occurrence of any condition orevent, with respect to any Debt (other than the Advances with respect to theBorrower) or any Contingent Obligations, in each case if the effect of suchbreach, default or occurrence is to cause or to permit the holder or holdersthen to cause, Debt and/or Contingent Obligations having an aggregate principalamount in excess of $5,000,000 to become or be declared due prior to theirstated maturity; or

###  

### (d)

###  

#### (i)            (1) A court enters a decree or orderfor relief with respect to any Transaction Party in an involuntary case underthe Bankruptcy Code, which decree or order is not stayed or other similarrelief is not granted under any applicable federal or state law; or (2) thecontinuance of any of the following events for sixty (60) days unlessdismissed, bonded or discharged:  (a) aninvoluntary case is commenced against any Transaction Party under anyapplicable bankruptcy, insolvency or other similar law now or hereafter ineffect; or (b) a decree or order of a court for the appointment of areceiver, liquidator, sequestrator, trustee, custodian, administrator or otherofficer having similar powers over****anyTransaction Party or over all or a substantial part of its property, isentered; or (c) a receiver, trustee or other custodian is appointedwithout the consent of a Transaction Party for, or an encumbrance takespossession of, all or a substantial part of the property of****suchTransaction Party; or

 

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#### (ii)           a case or proceeding shall have beencommenced against the Borrower seeking a decree or order in respect of theBorrower under the Bankruptcy Code or any other applicable federal, state orforeign bankruptcy or other similar law, (i) appointing a custodian,receiver, liquidator, assignee, trustee or sequestrator (or similar official)for the Borrower or for any substantial part of the Borrower’s assets, or (ii) orderingthe winding up or liquidation of the affairs of any such Person;

####  

### (e)           (1) Any TransactionParty or the Borrower commences a voluntary case under the Bankruptcy Code, orconsents to the entry of an order for relief in an involuntary case or to theconversion of an involuntary case to a voluntary case under any such law orconsents to the appointment of or taking possession by a receiver, trustee orother custodian for all or a substantial part of its property; or (2) anyTransaction Party or the Borrower makes any assignment for the benefit ofcreditors; or (3) the board of directors (or equivalent thereof) or theshareholders (or equivalent thereof) of any Transaction Party or the Borroweradopts any resolution or otherwise authorizes action in connection with theadministration, liquidation, winding-up or dissolution of such TransactionParty or the Borrower or to approve any of the actions referred to in this Section 8.01(e);

###  

### (f)            (i) anyOriginator, the Borrower or the Servicer generally does not pay its debts assuch debts become due (within the meaning of Section 303(h) of theBankruptcy Code of the United States), (ii) any Authorized Officer of anyOriginator, the Borrower or the Servicer admits in writing its inability to, oris generally unable to, pay its debts as such debts become due or (iii) anyOriginator, the Borrower or the Servicer is not Solvent; or

###  

### (g)           any money judgment,writ or warrant of attachment, or similar process (other than those describedelsewhere in this Section 8.01) involving an amount in theaggregate at any time in excess of $5,000,000 (to the extent not adequatelycovered by insurance provided by a reputable and solvent insurance company) isentered or filed against one or more of the Transaction Party or the Borroweror any of their respective assets and remains undischarged, unvacated, unbondedor unstayed for a period of thirty (30) days or in any event later than five (5) BusinessDays prior to the date of any proposed sale thereunder; or

###  

### (h)           a judgment or orderfor the payment of money shall be rendered against the Borrower; or

###  

### (i)            (i) anyinformation contained in any Borrowing Base Certificate or any BorrowingRequest is untrue or incorrect in any respect other than an ImmaterialMisstatement, or (ii) any representation or warranty of any Originator orthe Borrower herein or in any other Related Document or in any statement,report, financial statement or certificate (other than a Borrowing BaseCertificate or any Borrowing Request) made or delivered by or on behalf of suchOriginator or the Borrower to any Affected Party hereto or thereto is untrue orincorrect in any material respect (without duplication of any materialityqualifier contained therein) as of the date when made or deemed made (unlesspreviously cured by such Originator pursuant to Section 4.04 of theSale Agreement); or

###  

### (j)            any GovernmentalAuthority (including the IRS or the PBGC) shall file notice of a Lien withregard to any assets of any Originator or any of such Originator’s ERISA

 

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Affiliates (other than a Lien (i) limitedby its terms to assets other than Receivables and (ii) not materiallyadversely affecting the financial condition of such Originator or such ERISAAffiliate or the ability of any Transaction Party or the Borrower to performits duties hereunder or under the Related Documents); or

###  

### (k)           any GovernmentalAuthority (including the IRS or the PBGC) shall file notice of a Lien withregard to any of the assets of the Borrower, including, without limitation, anyLien on any Borrower Collateral under Section 412 of the IRC or Section 302or 4068 of ERISA; or

###  

### (l)            (1) thereshall have occurred any event which, in the reasonable judgment of theAdministrative Agent, materially and adversely impairs (i) the ability ofany Originator to originate Receivables of a credit quality which are at leastof the credit quality of the Receivables as of the Effective Date, (ii) thefinancial condition or operations of any Originator or the Borrower, or (iii) thecollectibility of Receivables, or (2) the Administrative Agent shall havedetermined (and so notified the Borrower) that any event or condition that hashad or could reasonably be expected to have or result in a Material AdverseEffect has occurred; or

###  

### (m)          the Sale Agreementshall for any reason cease to evidence the transfer to the Borrower of thelegal and equitable title to, and ownership of, the Transferred Receivables; or

###  

### (n)           except as otherwiseexpressly provided herein, any Account Agreement or the Sale Agreement shallhave been modified, amended or terminated without the prior written consent ofthe Administrative Agent; or

###  

### (o)           (i) any Eventof Servicer Termination specified in Section 8.01(a) through (m) ofthe Sale Agreement shall have occurred, or (ii) an Event of ServicerTermination specified in Section 8.01(n) of the Sale Agreement shall haveoccurred; or

###  

### (p)           (A) theBorrower shall cease to hold valid and properly perfected title to and solerecord and beneficial ownership in the Transferred Receivables and the otherBorrower Collateral or (B) the Administrative Agent (on behalf of theLenders) shall cease to hold a first priority, perfected Lien in theTransferred Receivables or any of the Borrower Collateral; or

###  

### (q)           a Change of Controlshall occur; or

###  

### (r)            the Borrower shallamend its certificate of formation or limited liability company agreementwithout the express prior written consent of the Requisite Lenders and theAdministrative Agent; or

###  

### (s)           the Borrower shallhave received an Election Notice pursuant to Section 2.01(d) ofthe Sale Agreement; or

###  

### (t)            (i) theDefault Ratio shall exceed 3.0%; (ii) the Delinquency Ratio shall exceed2.5%; (iii) the Dilution Trigger Ratio shall exceed 3.0% or (iv) theReceivables Collection Turnover shall exceed 45 days; or

 

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### (u)           any materialprovision of any Related Document shall for any reason cease to be valid,binding and enforceable in accordance with its terms (or any Originator or theBorrower shall challenge the enforceability of any Related Document or shallassert in writing, or engage in any action or inaction based on any suchassertion, that any provision of any of the Related Documents has ceased to beor otherwise is not valid, binding and enforceable in accordance with itsterms); or

###  

### (v)           the incurrence of aliability to the PBGC under Title IV of ERISA by any Originator or the Serviceror any of their respective ERISA Affiliates (except for premium paymentsarising in the ordinary course of business and liabilities arising under Section 4041(b) ofERISA), in excess of $500,000;

###  

### (w)          any member of theParent Group shall create, incur, assume or permit to exist any Debt, except (i) Debtof such Person to any Affected Party, Buyer Indemnified Person or any otherPerson expressly permitted by the Sale Agreement or any other Related Document,and (ii) other Debt permitted pursuant to Section 5.1 of the ExistingCredit Agreement as in effect as of the Closing Date; or

###  

### (x)            a Funding Excessexists at any time and the Borrower has not repaid the amount of such FundingExcess within one (1) Business Day in accordance with Section 2.08 hereof;

###  

### then, and inany such event, the Administrative Agent, may, with the consent of theRequisite Lenders, and shall, at the request of the Requisite Lenders, bynotice to the Borrower, declare the Commitment Termination Date to haveoccurred without demand, protest or further notice of any kind, all of whichare hereby expressly waived by the Borrower; provided,that the Commitment Termination Date shall automatically occur (i) uponthe occurrence of any of the Termination Events described in Sections 8.01(d), (e),(j), (k) or (s),(ii) three days after the occurrence of the Termination Event described inSection 8.01(a) if thesame shall not have been remedied by such time or (iii) four Business Daysafter the occurrence of the Termination Event described in Section 8.01(x) if the same shall not havebeen remedied by such time, in each case without demand, protest or any noticeof any kind, all of which are hereby expressly waived by the Borrower.  Upon the occurrence of the CommitmentTermination Date, all Borrower Obligations shall automatically be and becomedue and payable in full, without any action to be taken on the part of anyPerson.  In addition, if any Event ofServicer Termination shall have occurred, then, the Administrative Agent may,and shall, at the request of the Requisite Lenders, by delivery of a ServicerTermination Notice to Buyer and the Servicer, terminate the servicingresponsibilities of the Servicer under the Sale Agreement in accordance withthe terms thereof.

###  

# ARTICLE IX.

#  

# REMEDIES

#  

## Section 9.01.  Actions Upon Termination Event.  Except as provided in Section 9.01(f) below,if any Termination Event shall have occurred and be continuing and theAdministrative Agent shall have declared the Commitment Termination Date tohave occurred or the Commitment Termination Date shall be deemed to haveoccurred pursuant to Section 8.01,

 

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then the Administrative Agentmay exercise in respect of the Borrower Collateral, in addition to any and allother rights and remedies granted to it hereunder, under any other RelatedDocument or under any other instrument or agreement securing, evidencing orrelating to the Borrower Obligations or otherwise available to it, all of therights and remedies of a secured party upon default under the UCC (such rightsand remedies to be cumulative and nonexclusive), and, in addition, may take thefollowing actions:

##  

### (a)           The AdministrativeAgent may, without notice to the Borrower except as required by law and at anytime or from time to time, (i) charge, offset or otherwise apply amountspayable to the Borrower from the Agent Account, the Borrower Account, theConcentration Account or any Collection Account against all or any part of theBorrower Obligations and (ii) without limiting the terms of Section 7.05(d), notify any Obligor underany Transferred Receivable or obligors under the Borrower Assigned Agreementsof the transfer of the Transferred Receivables to the Borrower and of thepledge of such Transferred Receivables or Borrower Assigned Agreements, as thecase may be, to the Administrative Agent on behalf of the Lenders hereunder anddirect that payments of all amounts due or to become due to the Borrowerthereunder be made directly to the Administrative Agent or any servicer,collection agent or lockbox or other account designated by the AdministrativeAgent.

###  

### (b)           The AdministrativeAgent may, without notice except as specified below, solicit and accept bidsfor and sell the Borrower Collateral or any part thereof to any Person otherthan the Borrower or any Originator in one or more parcels at public or privatesale, at any exchange, broker’s board or any of the Lenders’ or Agent’s officesor elsewhere, for cash, on credit or for future delivery, and upon such otherterms as the Administrative Agent may deem commercially reasonable.  The Administrative Agent shall have the rightto conduct such sales on the Borrower’s premises or elsewhere and shall havethe right to use any of the Borrower’s premises without charge for such salesat such time or times as the Administrative Agent deems necessary oradvisable.  The Borrower agrees that, tothe extent notice of sale shall be required by law, ten days’ notice to theBorrower of the time and place of any public sale or the time after which anyprivate sale is to be made shall constitute reasonable notification.  The Administrative Agent shall not beobligated to make any sale of Borrower Collateral regardless of notice of salehaving been given.  The AdministrativeAgent may adjourn any public or private sale from time to time by announcementat the time and place fixed for such sale, and such sale may, without furthernotice, be made at the time and place to which it was so adjourned.  Every such sale shall operate to divest allright, title, interest, claim and demand whatsoever of the Borrower in and tothe Borrower Collateral so sold, and shall be a perpetual bar, both at law andin equity, against each Originator, the Borrower, any Person claiming any rightin the Borrower Collateral sold through any Originator or the Borrower, andtheir respective successors or assigns. The Administrative Agent shall deposit the net proceeds of any such salein the Agent Account and such proceeds shall be applied against all or any partof the Borrower Obligations.

###  

### (c)           Upon the completionof any sale under Section 9.01(b), theBorrower shall deliver or cause to be delivered to the purchaser or purchasersat such sale on the date thereof, or within a reasonable time thereafter if itshall be impracticable to make immediate delivery, all of the BorrowerCollateral sold on such date, but in any event full title and right ofpossession to such property shall vest in such purchaser or purchasers upon thecompletion of such sale.  Nevertheless,if so requested by the Administrative Agent or by any such purchaser, the

 

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Borrower shall confirm any suchsale or transfer by executing and delivering to such purchaser all properinstruments of conveyance and transfer and releases as may be designated in anysuch request.

###  

### (d)           At any sale under Section 9.01(b), any Lender or theAdministrative Agent may bid for and purchase the property offered for saleand, upon compliance with the terms of sale, may hold, retain and dispose ofsuch property without further accountability therefor.

###  

### (e)           The AdministrativeAgent may (but in no event shall be obligated to) exercise, at the sole costand expense of the Borrower, any and all rights and remedies of the Borrowerunder or in connection with the Borrower Assigned Agreements or the otherBorrower Collateral, including any and all rights of the Borrower to demand orotherwise require payment of any amount under, or performance of any provisionsof, the Borrower Assigned Agreements. Without limiting the foregoing, the Administrative Agent shall, upon theoccurrence of any Event of Servicer Termination, have the right to name anySuccessor Servicer (including itself) pursuant to Article VIII of the SaleAgreement.

###  

### (f)            If only aTermination Event specified in Section 8.01(o)(ii) hereofshall have occurred and be continuing, the Administrative Agent’s remediesshall be limited to the rights expressly provided for in this Section 9.01(f) andthose incidental to the exercise thereof. Administrative Agent shall have the right to, or the right to direct theBuyer to: (i) terminate the Servicer and take all actions in furtherancethereof in accordance with Article 9 of the Sale Agreement, (ii) exerciseall rights of the Buyer or the Administrative Agent, under the terms of theSale Agreement, to direct the conduct of the Servicer thereunder, and (iii) tocollect and enforce the Borrower Collateral in as provided in Section 9-607of the applicable UCC and to apply Collections to the Borrower Obligations inaccordance Article II hereof; provided, Administrative Agentshall not have any right to foreclose on the Borrower Collateral in the mannerprovided in Section 9-610 or 9-620 of the applicable UCC.   For the avoidance of doubt, (i) uponthe occurrence and during the continuance of a Termination Event specified in Section 8.01(o)(ii) hereof,no Lender shall have any obligation to make any Advances pursuant to thisAgreement and (ii) if, in addition to the Termination Event specified in Section 8.01(o)(ii) hereof,any other Termination Event shall have occurred and be continuing, theAdministrative Agent shall be entitled to exercise any of the other remediesset forth in this Article IX.

###  

## Section 9.02.  Exercise of Remedies.  No failure or delay on the part of theAdministrative Agent or any Lender in exercising any right, power or privilegeunder this Agreement and no course of dealing between any Originator, theBorrower or the Servicer, on the one hand, and the Administrative Agent or anyLender, on the other hand, shall operate as a waiver of such right, power orprivilege, nor shall any single or partial exercise of any right, power orprivilege under this Agreement preclude any other or further exercise of suchright, power or privilege or the exercise of any other right, power orprivilege.  The rights and remedies underthis Agreement are cumulative, may be exercised singly or concurrently, and arenot exclusive of any rights or remedies that the Administrative Agent or anyLender would otherwise have at law or in equity.  No notice to or demand on any party heretoshall entitle such party to any other or further notice or demand in similar orother circumstances, or constitute a waiver of the right of the party providingsuch notice or making such demand to any other or further action in anycircumstances without notice or demand.

 

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## Section 9.03.  Power of Attorney.  On the Closing Date, the Borrower shallexecute and deliver a power of attorney substantially in the form attachedhereto as Exhibit 9.03 (a “Power of Attorney”).  The Power of Attorney is a power coupled withan interest and shall be irrevocable until this Agreement has terminated inaccordance with its terms and all of the Borrower Obligations are indefeasiblypaid or otherwise satisfied in full.  Thepowers conferred on the Administrative Agent under each Power of Attorney aresolely to protect the Liens of the Administrative Agent and the Lenders uponand interests in the Borrower Collateral and shall not impose any duty upon theAdministrative Agent to exercise any such powers.  The Administrative Agent shall not beaccountable for any amount other than amounts that it actually receives as aresult of the exercise of such powers and none of the Administrative Agent’sofficers, directors, employees, agents or representatives shall be responsibleto the Borrower, any Originator, the Servicer or any other Person for any actor failure to act, except to the extent of damages attributable to their owngross negligence or willful misconduct as determined by a court of competentjurisdiction.

##  

## Section 9.04.  Continuing Security Interest.  This Agreement shall create a continuing Lienin the Borrower Collateral until the Termination Date.

##  

# ARTICLE X.

#  

# INDEMNIFICATION

#  

## Section 10.01.  Indemnities by the Borrower.

##  

### (a)           Without limiting anyother rights that the Lenders or the Administrative Agent or any of theirrespective officers, directors, employees, attorneys, agents, representatives,transferees, successors or assigns (each, an “IndemnifiedPerson”) may have hereunder or under applicable law, the Borrowerhereby agrees to indemnify and hold harmless each Indemnified Person from andagainst any and all Indemnified Amounts that may be claimed or asserted  by any Person other than the Borrower againstor incurred by any such Indemnified Person in connection with or arising out ofthe transactions contemplated under this Agreement or under any other RelatedDocument or any actions or failures to act in connection therewith, includingany and all Rating Agency costs and any and all legal costs and expensesarising out of or incurred in connection with disputes between or among anyparties to any of the Related Documents; provided,that the Borrower shall not be liable for any indemnification to an IndemnifiedPerson to the extent that any such Indemnified Amount (v) in the case ofan Affected Party that is a U.S person as defined in I.R.C. § 7701(a)(30)but is not a person to whom a payment of interest may be made under Treas. Reg.§ 1.6049-4(c) without the payor being required to file an informationreturn, results from a failure of the Affected Party to provide the Borrowerwith a validly prepared and executed Form W-9, (w) in the case of anAffected Party that is not a U.S. person as defined in I.R.C. § 7701(a)(30),results from a failure of the Affected Party to provide Borrower with a validlyprepared and executed Form W-8BEN, W-8EXP or W-8ECI demonstrating thatsuch Affected Party is eligible for the portfolio interest exemption underI.R.C. § 871(h) and 881(c) or other exemption under U.S. law orapplicable treaty providing for no withholding on the relevant payment; provided,however, that the Affected Party shall have no obligation to deliver such formsto the extent it is no longer able to deliver such forms due to a change inlaw,  (x) results from such IndemnifiedPerson’s gross

 

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negligence or willfulmisconduct, in each case as determined by a court of competent jurisdiction,(y) constitutes recourse for uncollectible or uncollected TransferredReceivables as a result of the insolvency, bankruptcy or the failure (withoutcause or justification) or inability on the part of the related Obligor toperform its obligations thereunder or (z) includes any tax imposed on ormeasured by the net income or profits or any franchise or other tax in lieu thereof(including branch profits or similar taxes) of any Indemnified Person by (i) thejurisdiction under the laws of which such Indemnified Person is organized orany political subdivision thereof or (ii) the jurisdiction of suchIndemnified Person’s applicable lending office or any political subdivisionthereof.  Without limiting the generalityof the foregoing, the Borrower shall pay on demand to each Indemnified Personany and all Indemnified Amounts relating to or resulting from:

###  

#### (i)            reliance on any representation orwarranty made or deemed made by the Borrower (or any of its officers) under orin connection with this Agreement or any other Related Document (without regardto any qualifications concerning the occurrence or non-occurrence of a MaterialAdverse Effect or similar concepts of materiality) or on any other informationdelivered by the Borrower pursuant hereto or thereto that shall have beenincorrect when made or deemed made or delivered;

####  

#### (ii)           the failure by the Borrower to complywith any term, provision or covenant contained in this Agreement, any otherRelated Document or any agreement executed in connection herewith or therewith(without regard to any qualifications concerning the occurrence ornon-occurrence of a Material Adverse Effect or similar concepts ofmateriality), any applicable law, rule or regulation with respect to anyTransferred Receivable or the Contract therefor, or the nonconformity of anyTransferred Receivable or the Contract therefor with any such applicable law, rule orregulation;

####  

#### (iii)          (1) the failure to vest andmaintain vested in the Borrower valid and properly perfected title to and solerecord and beneficial ownership of the Receivables that constitute TransferredReceivables, together with all Collections in respect thereof and all otherBorrower Collateral, free and clear of any Adverse Claim and (2) thefailure to maintain or transfer to the Administrative Agent, for the benefit ofitself and the Lenders, a first priority, perfected Lien in any portion of theBorrower Collateral;

####  

#### (iv)          any dispute, claim, offset or defenseof any Obligor (other than its discharge in bankruptcy) to the payment of anyTransferred Receivable (including a defense based on such Receivable or theContract therefor not being a legal, valid and binding obligation of suchObligor enforceable against it in accordance with its terms), or any otherclaim resulting from the sale of the merchandise or services giving rise tosuch Receivable or the furnishing of or failure to furnish such merchandise orservices or relating to collection activities with respect to such Receivable(if such collection activities were performed by any of its Affiliates actingas Servicer);

####  

#### (v)           any products liability claim or otherclaim arising out of or in connection with merchandise, insurance or servicesthat is the subject of any Contract with respect to any Transferred Receivable;

 

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#### (vi)          the commingling of Collections withrespect to Transferred Receivables by the Borrower at any time with its otherfunds or the funds of any other Person except as contemplated pursuant to Section 7.03of the Sale Agreement;

####  

#### (vii)         any failure by the Borrower to causethe filing of, or any delay in filing, financing statements or other similarinstruments or documents under the UCC of any applicable jurisdiction or anyother applicable laws with respect to any Transferred Receivable hereunder orany other Borrower Collateral, whether at the time of the Borrower’sacquisition thereof or any Advance made hereunder or at any subsequent time;

####  

#### (viii)        any investigation, litigation orproceeding related to this Agreement or the ownership of Receivables orCollections with respect thereto;

####  

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

####  

#### (x)            any withholding, deduction or Chargeimposed upon any payments with respect to any Transferred Receivable, anyBorrower Assigned Agreement or any other Borrower Collateral.

####  

#### If and to the extent that this Section 10.01 may be unenforceablefor any reason, the Borrower agrees to make the maximum contribution to thepayment and satisfaction thereof which is permissible under applicable law.

####  

### (b)           Any IndemnifiedAmounts subject to the indemnification provisions of this Section 10.01 not paid in accordance with Section 2.08 shall be paid by the Borrowerto the Indemnified Person entitled thereto within five Business Days followingdemand therefor.

###  

# ARTICLE XI.

#  

# ADMINISTRATIVE AGENT

#  

## Section 11.01.  Authorization and Action.

##  

### (a)           The AdministrativeAgent may take such action and carry out such functions under this Agreement asare authorized to be performed by it pursuant to the terms of this Agreement,any other Related Document or otherwise contemplated hereby or thereby or arereasonably incidental thereto; provided,that the duties of the Administrative Agent under this Agreement and the otherRelated Documents shall be determined solely by the express provisions of thisAgreement, and, other than the duties set forth in Section 11.02,any permissive right of the Administrative Agent hereunder shall not beconstrued as a duty.

###  

## Section 11.02.  Reliance. None of the Administrative Agent, any of its Affiliates or any of theirrespective directors, officers, agents or employees shall be liable for anyaction

 

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taken or omitted to be taken byany of them under or in connection with this Agreement or the other RelatedDocuments, except for damages solely caused by its or their own gross negligenceor willful misconduct as finally determined by a court of competentjurisdiction.  Without limiting thegenerality of the foregoing, and notwithstanding any term or provision hereofto the contrary, the Borrower and each Lender hereby acknowledge and agree thatthe Administrative Agent as such (a) has no duties or obligations otherthan as set forth expressly herein, and has no fiduciary obligations to anyperson, (b) acts as a representative hereunder for the Lenders and has noduties or obligations to, shall incur no liabilities or obligations to, anddoes not act as an agent in any capacity for, the Borrower (other than, withrespect to the Administrative Agent, under the Power of Attorney with respectto remedial actions) or the Originators, (c) may consult with legalcounsel, independent public accountants and other experts selected by it andshall not be liable for any action taken or omitted to be taken by it in goodfaith in accordance with the advice of such counsel, accountants or experts, (d) makesno representation or warranty hereunder to any Affected Party and shall not beresponsible to any such Person for any statements, representations orwarranties made in or in connection with this Agreement or the other RelatedDocuments, (e) except to the extent set forth in Section 2.03(a),shall not have any duty to ascertain or to inquire as to the performance orobservance of any of the terms, covenants or conditions of this Agreement orthe other Related Documents on the part of the Borrower, the Servicer, anyOriginator, the Parent, Holdings or any Lender, or to inspect the property(including the books and records) of the Borrower, the Servicer, anyOriginator, the Parent, Holdings or any Lender, (f) shall not beresponsible to the Borrower, the Servicer, any Lender or any other Person forthe due execution, legality, validity, enforceability, genuineness, sufficiencyor value of this Agreement or the other Related Documents or any otherinstrument or document furnished pursuant hereto or thereto, (g) shallincur no liability under or in respect of this Agreement or the other RelatedDocuments by acting upon any notice, consent, certificate or other instrumentor writing believed by it to be genuine and signed, sent or communicated by theproper party or parties and (h) shall not be bound to make anyinvestigation into the facts or matters stated in any notice or othercommunication hereunder and may conclusively rely on the accuracy of such factsor matters.

##  

## Section 11.03.  GE Capital and Affiliates.  GE Capital and its Affiliates may generallyengage in any kind of business with any Obligor, the Parent, the Originators,the Borrower, the Servicer, Holdings, any Lender, any of their respectiveAffiliates and any Person who may do business with or own securities of suchPersons or any of their respective Affiliates, all as if GE Capital were notthe Administrative Agent and without the duty to account therefor to anyObligor, the Parent, any Originator, the Borrower, the Servicer, Holdings, anyLender or any other Person.

##  

## Section 11.04.  Lender Credit Decision.  Each Lender acknowledges that it has,independently and without reliance upon the Administrative Agent or any otherLender, and based upon such documents and information as it has deemed appropriate,made its own credit and financial analysis of the Borrower and its own decisionto enter into this Agreement.  EachLender also acknowledges that it will, independently and without reliance uponthe Administrative Agent or any other Lender and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under this Agreement.

 

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## Section 11.05.  Indemnification. Each of the Lenders severally agrees to indemnify the AdministrativeAgent (to the extent not reimbursed by the Borrower and without limiting theobligations of the Borrower hereunder), ratably according to their respectivePro Rata Shares, from and against any and all liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursementsof any kind or nature whatsoever which may be imposed on, incurred by, orasserted against the Administrative Agent in any way relating to or arising outof this Agreement or any other Related Document or any action taken or omittedby the Administrative Agent in connection herewith or therewith; provided, however,that no Lender shall be liable for any portion of such liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses or disbursements resulting solely from the Administrative Agent’sgross negligence or willful misconduct as finally determined by a court ofcompetent jurisdiction.  Without limitingthe foregoing, each Lender agrees to reimburse the Administrative Agentpromptly upon demand for its ratable share of any out-of-pocket expenses(including counsel fees) incurred by the Administrative Agent in connectionwith the preparation, execution, delivery, administration, modification,amendment or enforcement (whether through negotiations, legal proceedings orotherwise) of, or legal advice in respect of rights or responsibilities under,this Agreement and each other Related Document, to the extent that theAdministrative Agent is not reimbursed for such expenses by the Borrower.

##  

## Section 11.06.  Successor Administrative Agent.  The Administrative Agent may resign at anytime by giving not less than thirty (30) days’ prior written notice thereof toeach of the Lenders and the Borrower. Upon any such resignation, the Requisite Lenders shall have the right toappoint a successor Administrative Agent that meets the qualifications of anassignee of a Lender hereunder; provided, that, so long as noTermination Event or an Incipient Termination Event shall have occurred and becontinuing, such successor Administrative Agent shall require the approval bythe Borrower, which approval shall not be unreasonably withheld or delayed. Ifno successor Administrative Agent shall have been so appointed by the RequisiteLenders and shall have accepted such appointment within 30 days after theresigning the Administrative Agent’s giving notice of resignation, then theresigning Administrative Agent may, on behalf of the Lenders, appoint asuccessor Administrative Agent, which shall be a Lender, if a Lender is willingto accept such appointment, or otherwise shall be a commercial bank orfinancial institution or a subsidiary of a commercial bank or financialinstitution which commercial bank or financial institution is organized underthe laws of the United States of America or of any State thereof which has along-term debt rating from S&P of “A–” or better and Moody’s of “A3” orbetter and has a combined capital and surplus of at least $300,000,000.  If no successor Administrative Agent has beenappointed pursuant to the foregoing, by the 30th day after the date such noticeof resignation was given by the resigning Administrative Agent, suchresignation shall become effective and the Requisite Lenders shall thereafterperform all the duties of the Administrative Agent hereunder until such time,if any, as the Requisite Lenders appoint a successor Administrative Agent asprovided above.  Upon the acceptance ofany appointment as the Administrative Agent hereunder by a successorAdministrative Agent, such successor Administrative Agent shall succeed to andbecome vested with all the rights, powers, privileges and duties of theresigning Administrative Agent.  Upon theearlier of the acceptance of any appointment as the Administrative Agenthereunder by a successor Administrative Agent or the effective date of theresigning Administrative Agent’s resignation, the resigning AdministrativeAgent shall be discharged from its duties and obligations under this Agreement

 

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and the other RelatedDocuments, except that any indemnity rights or other rights in favor of suchresigning Administrative Agent shall continue. After any resigning Administrative Agent’s resignation hereunder, theprovisions of this Article XI shallinure to its benefit as to any actions taken or omitted to be taken by it whileit was the Administrative Agent under this Agreement and the other RelatedDocuments.

##  

## Section 11.07.  Setoff and Sharing of Payments.  In addition to any rights now or hereaftergranted under applicable law and not by way of limitation of any such rights,upon the occurrence and during the continuance of any Termination Event, eachLender and each holder of any Note is hereby authorized at any time or fromtime to time, without notice to the Borrower or to any other Person, any suchnotice being hereby expressly waived (but subject to Section 2.03(b)(i)), to set off and to appropriateand to apply any and all balances held by it at any of its offices for theaccount of the Borrower (regardless of whether such balances are then due tothe Borrower) and any other properties or assets any time held or owing by thatLender or that holder to or for the credit or for the account of the Borroweragainst and on account of any of the Borrower Obligations which are not paidwhen due.  Any Lender or holder of anyNote exercising a right to set off or otherwise receiving any payment on accountof the Borrower Obligations in excess of its Pro Rata Share thereof shallpurchase for cash (and the other Lenders or holders shall sell) suchparticipations in each such other Lender’s or holder’s Pro Rata Share of theBorrower Obligations as would be necessary to cause such Lender to share theamount so set off or otherwise received with each other Lender or holder inaccordance with their respective Pro Rata Shares.  Each Lender’s obligation pursuant to this Section 11.07 is in addition to and not inlimitation of its obligations to purchase a participation equal to its Pro RataShare of the Swing Line Loan pursuant to Section 2.01(b).  The Borrower agrees, to the fullest extentpermitted by law, that (a) any Lender or holder may exercise its right toset off with respect to amounts in excess of its Pro Rata Share of the BorrowerObligations and may sell participations in such amount so set off to otherLenders and holders and (b) any Lender or holders so purchasing aparticipation in the Advances made or other Borrower Obligations held by otherLenders or holders may exercise all rights of set off, bankers’ lien,counterclaim or similar rights with respect to such participation as fully asif such Lender or holder were a direct holder of the Advances, and the otherBorrower Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or anyportion of the set-off amount or payment otherwise received is thereafterrecovered from the Lender that has exercised the right of set-off, the purchaseof participations by that Lender shall be rescinded and the purchase pricerestored without interest.

##  

# ARTICLE XII.

#  

# MISCELLANEOUS

#  

## Section 12.01.  Notices. Except as otherwise provided herein, whenever it is provided herein thatany notice, demand, request, consent, approval, declaration or othercommunication shall or may be given to or served upon any of the parties by anyother parties, or whenever any of the parties desires to give or serve upon anyother parties any communication with respect to this Agreement, each suchnotice, demand, request, consent, approval, declaration or other communicationshall be in writing and shall be deemed to have been validly served, given ordelivered (a) upon the earlier of actual receipt and three Business Daysafter deposit in

 

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the United States Mail,registered or certified mail, return receipt requested, with proper postageprepaid, (b) upon transmission, when sent by email of the signed notice inPDF form or facsimile (with such email or facsimile promptly confirmed bydelivery of a copy by personal delivery or United States Mail as otherwiseprovided in this Section 12.01), (c) oneBusiness Day after deposit with a reputable overnight courier with all chargesprepaid or (d) when delivered, if hand delivered by messenger, all ofwhich shall be addressed to the party to be notified and sent to the address orfacsimile number set forth below or to such other address (or facsimile number)as may be substituted by notice given as herein provided.  The giving of any notice required hereundermay be waived in writing by the party entitled to receive such notice.  Failure or delay in delivering copies of anynotice, demand, request, consent, approval, declaration or other communicationto any Person (other than any Lender and the Administrative Agent) designatedin any written notice provided hereunder to receive copies shall in no wayadversely affect the effectiveness of such notice, demand, request, consent,approval, declaration or other communication. Notwithstanding the foregoing, whenever it is provided herein that anotice is to be given to any other party hereto by a specific time, such noticeshall only be effective if actually received by such party prior to such time,and if such notice is received after such time or on a day other than aBusiness Day, such notice shall only be effective on the immediately succeedingBusiness Day.

 
| Borrower:                                                   |
|-------------------------------------------------------------|
|                                                        |
| Vertis Receivables II, LLC                                  |
| 250 W. Pratt Street                                         |
| Baltimore, MD 21201                                         |
| Attention: Chief Financial Officer and  Chief Legal Officer |
| Telephone:                                                  |
| Facsimile:                                                  |
|                                                        |
| Administrative Agent:                                       |
|                                                        |
| General Electric Capital Corporation                        |
| 201 Merritt 7                                               |
| Norwalk, Connecticut 06851                                  |
| Attention: Vice President, Portfolio  Underwriting          |
| Telephone:                                                  |
| Facsimile:                                                  |

 

## Section 12.02.  Binding Effect; Assignability.

##  

### (a)           This Agreement shallbe binding upon and inure to the benefit of the Borrower, each Lender and theAdministrative Agent and their respective successors and permitted assigns.  The Borrower may not assign, transfer,hypothecate or otherwise convey any of its rights or obligations hereunder orinterests herein without the express prior written consent of the RequisiteLenders and the Administrative Agent. Any such purported assignment, transfer, hypothecation or otherconveyance by the Borrower without the prior express written consent of theRequisite Lenders and the Administrative Agent shall be void.

 

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### (b)           The Borrower herebyconsents to any Lender’s assignment or pledge of, and/or sale of participationsin, at any time or times after the Effective Date of the Related Documents,Advances, and any Commitment or of any portion thereof or interest therein,including any Lender’s rights, title, interests, remedies, powers or dutiesthereunder  (including, withoutlimitation, an assignment by the Swing Line Lender of all or any portion of itsSwing Line Commitment), whether evidenced by a writing or not, made inaccordance with this Section 12.02(b).  Any assignment by a Lender shall (i) requirethe execution of an assignment agreement (an “AssignmentAgreement”) substantially in the form attached hereto as Exhibit 12.02(b) orotherwise in form and substance satisfactory to the Administrative Agent, andacknowledged by, the Administrative Agent and other than in the case of anassignment by a Lender to one of its Affiliates, the consent of theAdministrative Agent and, so long as no Termination Event has occurred and iscontinuing, the Borrower (which consent shall not be unreasonably withheld ordelayed); (ii) so long as no Termination Event or an Incipient TerminationEvent shall have occurred and be continuing, each assignee of a Lender (otherthan a SPV) shall require the approval by the Borrower, which approval shallnot be unreasonably withheld or delayed; provided, further that assignments bya Lender to any Affiliate of the Agent or any Lenders shall not be subject tothe consent of the Borrower; (iii) if a partial assignment, be in anamount at least equal to $5,000,000 and, after giving effect to any suchpartial assignment, the assigning Lender shall have retained Commitments in anamount at least equal to $5,000,000; (iv) require the delivery to theAdministration Agent by the assignee or participant, as the case may be, of anyforms, certificates or other evidence with respect to United States taxwithholding matters, and (iv) other than in the case of an assignment by aLender to one of its Affiliates, include a payment to the Administrative Agentby the assignor or assignee Lender of an assignment fee of $3,500.  In the case of an assignment by a Lenderunder this Section 12.02, the assigneeshall have, to the extent of such assignment, the same rights, benefits andobligations as it would if it were a Lender hereunder.  The assigning Lender shall be relieved of itsobligations hereunder with respect to its Commitments or assigned portion thereof from and after the date of suchassignment.  The Borrower herebyacknowledges and agrees that any assignment made in accordance with this Section 12.02(b) will giverise to a direct obligation of the Borrower to the assignee and that theassignee shall thereupon be a “Lender” for all purposes.  In all instances, each Lender’s obligation tomake Revolving Credit Advances hereunder shall be several and not joint andshall be limited to such Lender’s Pro Rata Share of the applicableCommitment.  In the event any Lenderassigns or otherwise transfers all or any part of a Revolving Note or the SwingLine Note, such Lender shall so notify the Borrower and the Borrower shall,upon the request of  such Lender, executenew Revolving Notes or Swing Line Notes in exchange for the Revolving Notes orSwing Line Notes, as the case may be, being assigned.  Notwithstanding the foregoing provisions ofthis Section 12.02(b), any Lender mayat any time pledge or assign all or any portion of such Lender’s rights underthis Agreement and the other Related Documents to any Federal Reserve Bank orto any holder or trustee of such Lender’s securities; provided,however, that no such pledge or assignmentto any Federal Reserve Bank, holder or trustee shall release such Lender fromsuch Lender’s obligations hereunder or under any other Related  Document and no such holder or trustee shallbe entitled to enforce any rights of such Lender hereunder unless such holderor trustee becomes a Lender hereunder through execution of an AssignmentAgreement as set forth above.  A Lendermay not grant an assignment or participation to a Person who is (x) not a “UnitedStates person” (within the meaning of IRC Section 7701(a)(30) unless suchPerson is exempt from United States withholding tax as of the date of such

 

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participation and provides a Form W-8BEN,W-8ECI or W-8IMY, as applicable, to the Administrative Agent before givingeffect to such assignment.

###  

### (c)           In addition to theforegoing right, any Lender may, without notice to or consent from theAdministrative Agent or the Borrower, (x) grant to an SPV the option to makeall or any part of any Advance that such Lender would otherwise be required tomake hereunder (and the exercise of such option by such SPV and the making ofLoans pursuant thereto shall satisfy the obligation of such Lender to make suchLoans hereunder); (y) assign to an SPV all or a portion of its rights (but notits obligations) under the Related Documents, including a sale of any Advancesor other Borrower Obligations hereunder and such Lender’s right to receivepayment with respect to any such Borrower Obligation and (z) sellparticipations to one or more Persons in or to all or a portion of its rightsand obligations under the Related Documents (including all its rights andobligations with respect to the Advances); provided,however, that (x) no such SPV or participant shall have a commitment, or bedeemed to have made an offer to commit, to make Advances hereunder, and noneshall be liable to any Person for any obligations of such Lender hereunder (it beingunderstood that nothing in this Section 12.02(c) shalllimit any rights the Lender may have as against such SPV or participant underthe terms of the applicable option, sale or participation agreement between oramong such parties); and (y) no such SPV or holder of any such participationshall be entitled to require such Lender to take or omit to take any actionhereunder except actions directly affecting (i) any reduction in theprincipal amount of, or interest rate or Fees payable with respect to, anyAdvance in which such holder participates, (ii) any extension of anyscheduled payment of the principal amount of any Advance in which such holderparticipates or the final maturity date thereof, and (iii) any release ofall or substantially all of the Borrower Collateral (other than in accordancewith the terms of this Agreement or the other Related Documents).  Solely for purposes of Sections2.08, 2.09, 2.10, and 9.01,Borrower acknowledges and agrees that each such sale or participation shallgive rise to a direct obligation of the Borrower to the participant or SPV andeach such participant or SPV shall be considered to be a “Lender” for purposesof such sections.  Except as set forth inthe preceding sentence, such Lender’s rights and obligations, and the rightsand obligations of the other Lenders and the Administrative Agent towards suchLender under any Related Document shall remain unchanged and none of theBorrower, the Administrative Agent or any Lender (other than the Lender sellinga participation or assignment to an SPV) shall have any duty to any participantor SPV and may continue to deal solely with the assigning or selling Lender asif no such assignment or sale had occurred.

###  

### (d)           Except as expresslyprovided in this Section 12.02, no Lendershall, as between the Borrower and that Lender, or between the AdministrativeAgent and that Lender, be relieved of any of its obligations hereunder as aresult of any sale, assignment, transfer or negotiation of, or granting ofparticipation in, all or any part of the Advances, the Revolving Notes, theSwing Line Note or other Borrower Obligations owed to such Lender.

###  

### (e)           The Borrower shallassist any Lender permitted to sell assignments or participations under this Section 12.02 as reasonably required toenable the assigning or selling Lender to effect any such assignment orparticipation, including the execution and delivery of any and all agreements,notes and other documents and instruments as shall be reasonably requested andthe participation of management in meetings with potential assignees orparticipants.  The Borrower shall, if theAdministrative Agent so requests in connection with an

 

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initial syndication of theCommitments hereunder, assist in the preparation of informational materials forsuch syndication.

###  

### (f)            A Lender mayfurnish any information concerning the Borrower, the Originator, the Servicerand/or the Receivables in the possession of such Lender from time to time toassignees and participants (including prospective assignees andparticipants).  Each Lender shall obtainfrom all prospective and actual assignees or participants confidentialitycovenants substantially equivalent to those contained in Section 12.05.

###  

## Section 12.03.  Termination; Survival of Borrower Obligations UponCommitment Termination Date.

##  

### (a)           This Agreement shallcreate and constitute the continuing obligations of the parties hereto inaccordance with its terms, and shall remain in full force and effect until theTermination Date.

###  

### (b)           Except as otherwiseexpressly provided herein or in any other Related Document, no termination orcancellation (regardless of cause or procedure) of any commitment made by anyAffected Party under this Agreement shall in any way affect or impair theobligations, duties and liabilities of the Borrower or the rights of anyAffected Party relating to any unpaid portion of the Borrower Obligations, dueor not due, liquidated, contingent or unliquidated or any transaction or eventoccurring prior to such termination, or any transaction or event, theperformance of which is required after the Commitment Termination Date.  Except as otherwise expressly provided hereinor in any other Related Document, all undertakings, agreements, covenants,warranties and representations of or binding upon the Borrower and all rightsof any Affected Party hereunder, all as contained in the Related Documents,shall not terminate or expire, but rather shall survive any such termination orcancellation and shall continue in full force and effect until the TerminationDate; provided, that the rights andremedies provided for herein with respect to any breach of any representationor warranty made by the Borrower pursuant to Article IV,the indemnification and payment provisions of Article Xand Sections 11.05, 12.05, 12.14and 12.15 shall be continuing and shallsurvive the Termination Date.

###  

## Section 12.04.  Costs, Expenses and Taxes.  (a)  Subject to the terms of Section 7.05(b) hereof,the Borrower shall reimburse the Administrative Agent for all reasonable out ofpocket expenses incurred in connection with the negotiation and preparation ofthis Agreement and the other Related Documents (including the reasonable feesand expenses of all of its special counsel, advisors, consultants and auditorsretained in connection with the transactions contemplated thereby and advice inconnection therewith).  The Borrowershall reimburse each Lender and the Administrative Agent for all fees,reasonable costs and expenses, including the fees, costs and expenses ofcounsel or other advisors for advice, assistance, or other representation inconnection with:

##  

#### (i)            the forwarding to the Borrower orany other Person on behalf of the Borrower by any Lender of any proceeds ofAdvances made by such Lender hereunder;

 

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#### (ii)           any amendment, modification or waiverof, consent with respect to, or termination of this Agreement or any of theother Related Documents or advice in connection with the administration hereofor thereof or their respective rights hereunder or thereunder;

####  

#### (iii)          any Litigation, contest or dispute(whether instituted by the Borrower, any Lender, the Administrative Agent orany other Person as a party, witness, or otherwise) in any way relating to theBorrower Collateral, any of the Related Documents or any other agreement to beexecuted or delivered in connection herewith or therewith, including anyLitigation, contest, dispute, suit, case, proceeding or action, and any appealor review thereof, in connection with a case commenced by or against theBorrower, the Servicer or any other Person that may be obligated to any Lenderor the Administrative Agent by virtue of the Related Documents, including anysuch Litigation, contest, dispute, suit, proceeding or action arising inconnection with any work-out or restructuring of the transactions contemplatedhereby during the pendency of one or more Termination Events;

####  

#### (iv)          any attempt to enforce any remedies ofa Lender or the Administrative Agent against the Borrower, the Servicer or anyother Person that may be obligated to them by virtue of any of the RelatedDocuments, including any such attempt to enforce any such remedies in thecourse of any work-out or restructuring of the transactions contemplated herebyduring the pendency of one or more Termination Events;

####  

#### (v)           any work-out or restructuring of thetransactions contemplated hereby during the pendency of one or more TerminationEvents; and

####  

#### (vi)          efforts to (A) monitor theAdvances or any of the Borrower Obligations, (B) evaluate, observe orassess the Originators, the Parent, the Borrower, the Member or the Servicer ortheir respective affairs, and (C) verify, protect, evaluate, assess,appraise, collect, sell, liquidate or otherwise dispose of any of the BorrowerCollateral;

####  

including all attorneys’ and other professional and service providers’fees arising from such services, including those in connection with anyappellate proceedings, and all expenses, costs, charges and other fees incurredby such counsel and others in connection with or relating to any of the eventsor actions described in this Section 12.04,all of which shall be payable, on demand, by the Borrower to the applicableLender or the Administrative Agent, as applicable.  Without limiting the generality of theforegoing, such expenses, costs, charges and fees may include: fees, costs andexpenses of accountants, appraisers, investment bankers, management and other consultantsand paralegals; court costs and expenses; photocopying and duplicationexpenses; court reporter fees, costs and expenses; long distance telephonecharges; air express charges; telegram or facsimile charges; secretarialovertime charges; and expenses for travel, lodging and food paid or incurred inconnection with the performance of such legal or other advisory services.

 

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### (b)           In addition, theBorrower shall pay on demand any and all stamp, sales, excise and other taxes(excluding income taxes imposed by the jurisdiction under the laws of whichsuch person is organized), gross receipts or franchise taxes and fees payableor determined to be payable in connection with the execution, delivery, filingor recording of this Agreement or any other Related Document, and the Borroweragrees to indemnify and save each Indemnified Person harmless from and againstany and all liabilities with respect to or resulting from any delay or failureto pay such taxes and fees.

###  

## Section 12.05.  Confidentiality.

##  

### (a)           Except to the extentotherwise required by applicable law or reasonably believed to be appropriateto be filed publicly with the Securities and Exchange Commission, or unless theAdministrative Agent shall otherwise consent in writing, the Borrower agrees tomaintain the confidentiality of this Agreement (and all drafts hereof anddocuments ancillary hereto), in its communications with third parties otherthan any Affected Party or any Indemnified Person or any financial institutionparty to the Credit Agreement and otherwise not to disclose, deliver orotherwise make available to any third party (other than its directors,officers, employees, accountants or counsel) the original or any copy of all orany part of this Agreement (or any draft hereof and documents ancillary hereto)except to an Affected Party or an Indemnified Person or any financialinstitution party to the Credit Agreement.

###  

### (b)           The Borrower agreesthat it shall not (and shall not permit any of its Subsidiaries to) issue anynews release or make any public announcement pertaining to the transactionscontemplated by this Agreement and the other Related Documents without theprior written consent of the Requisite Lenders and the Administrative Agent(which consent shall not be unreasonably withheld) unless such news release orpublic announcement is required by law, in which case the Borrower shallconsult with the Administrative Agent and any Lenders specifically referencedtherein prior to the issuance of such news release or public announcement.  The Borrower may, however, disclose thegeneral terms of the transactions contemplated by this Agreement and the otherRelated Documents to trade creditors, suppliers and other similarly-situatedPersons so long as such disclosure is not in the form of a news release orpublic announcement.

###  

### (c)           The AdministrativeAgent and each Lender agrees to maintain the confidentiality of the Information(as defined below), and will not use such confidential Information for anypurpose or in any matter except in connection with this Agreement, except thatInformation may be disclosed (1) to (i) each Affected Party (ii) itsand each Affected Party’s and their respective Affiliates’ directors, officers,employees and agents, including accountants, legal counsel and other advisors(it being understood that the Persons to whom such disclosure is made will beinformed of the confidential nature of such Information and instructed to keepsuch Information confidential and to not disclose or use such Information inviolation of Regulation FD (17 C.F.R. § 243.100-243.103)) and (iii) industrytrade organizations for inclusion in league table measurements, (2) anyregulatory authority (it being understood that it will to the extent reasonablypracticable provide the Borrower with an opportunity to request confidentialtreatment from such regulatory authority), (3) to the extent required byapplicable laws or regulations or by any subpoena or similar legal process, (4) toany other party to this Agreement, (5) to the extent required inconnection with the exercise of any remedies hereunder or any suit,

 

57

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action or proceeding relatingto this Agreement or any other Related Document or the enforcement of rightshereunder or thereunder, (6) subject to an agreement containing provisionssubstantially the same as those of this Section, to any assignee of (orparticipant in), or any prospective assignee of (or participant in), any of itsrights or obligations under this Agreement, (7) with the consent of theBorrower or (8) to the extent such Information (i) becomes publiclyavailable other than as a result of a breach of this Section or any otherconfidentiality agreement to which it is party with the Borrower or Holdings orany subsidiary thereof or (ii) becomes available to the AdministrativeAgent, or any Lender on a nonconfidential basis from a source other thanHoldings or any subsidiary thereof.  Forthe purposes of this Section, “*Information*” means all information received from theBorrower and Servicer relating to the Borrower, the Servicer, Holdings or anysubsidiary thereof or their businesses, or any Obligor, other than any suchinformation that is available to the Administrative Agent or any Lender on anonconfidential basis prior to disclosure by Borrower or Servicer; provided that in the case of information receivedfrom the Borrower or Servicer after the date hereof, such information isclearly identified at the time of delivery as confidential.  Any Person required to maintain theconfidentiality of Information as provided in this Section shall beconsidered to have complied with its obligation to do so if such Person hasexercised the same degree of care to maintain the confidentiality of suchInformation as such Person would accord to its own confidential information.

###  

## Section 12.06.  Complete Agreement; Modification of Agreement.  This Agreement and the other RelatedDocuments constitute the complete agreement among the parties hereto withrespect to the subject matter hereof and thereof, supersede all prioragreements and understandings relating to the subject matter hereof andthereof, and may not be modified, altered or amended except as set forth in Section 12.07.

##  

## Section 12.07.  Amendments and Waivers.

##  

### (a)           Except for actionsexpressly permitted to be taken by the Administrative Agent, no amendment,modification, termination or waiver of any provision of this Agreement or anyNote, or any consent to any departure by the Borrower therefrom, shall in anyevent be effective unless the same shall be in writing and signed (1) bythe Borrower, (2) by the Requisite Lenders or, to the extent requiredunder clause (b) below, by all affectedLenders and the Swing Line Lender, as applicable, (3) to the extentrequired under clause (b) or clause (c) below, by the Administrative Agent and(4) if such amendment, modification or waiver modifies the activities  in which the Borrower is permitted to engage,by the Lenders then holding more than 50% of the Outstanding Principal Amount.  Except as set forth in clause(b) below, all amendments, modifications, terminations or waiversrequiring the consent of any Lenders without specifying the required percentageof Lenders shall require the written consent of the Requisite Lenders.

###  

### (b)           (i) Noamendment, modification, termination or waiver shall, unless in writing andsigned by each Lender directly affected thereby, do any of the following: (1) increasethe principal amount of any Lender’s Commitment; (2) reduce the principalof, rate of interest on or Fees payable with respect to any Advance made by anyaffected Lender; (3) extend any scheduled payment date or final maturitydate of the principal amount of any Advance of any affected Lender; (4) waive,forgive, defer, extend or postpone any payment of interest or Fees as to anyaffected Lender; (5) change the percentage of the Aggregate Commitments orof the

 

58

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aggregate Outstanding PrincipalAmount which shall be required for Lenders or any of them to take any actionhereunder; (6) release all or substantially all of the BorrowerCollateral; or (7) amend or waive this Section 12.07or the definition of the term “Requisite Lenders”  insofar as such definition affects thesubstance of this Section 12.07.  Furthermore, no amendment, modification,termination or waiver shall be effective to the extent that it (y) affects therights or duties of the Administrative Agent under this Agreement or any otherRelated Document unless in writing and signed by the Administrative Agent or(z) affects the rights or duties of the Swing Line Lender under this Agreementor modifies or amends any other provision of this Agreement or any otherRelated Document relating the Swing Line Loan, Swing Line Advances or the SwingLine Lender unless in writing and signed by the Swing Line Lender.

###  

#### (ii)           Each amendment, modification,termination or waiver shall be effective only in the specific instance and forthe specific purpose for which it was given. No amendment, modification, termination or waiver shall be required forthe Administrative Agent to take additional Borrower Collateral pursuant to anyRelated Document. No amendment, modification, termination or waiver of anyprovision of any Note shall be effective without the written concurrence of theholder of such Note.  No notice to ordemand on the Borrower in any case shall entitle the Borrower to any other orfurther notice or demand in similar or other circumstances.  Any amendment, modification, termination, waiveror consent effected in accordance with this Section 12.07shall be binding upon each holder of a Note at the time outstanding and eachfuture holder of a Note.

####  

### (c)           If, in connectionwith any proposed amendment, modification, waiver or termination (a “Proposed Change”):

###  

#### (i)            requiring the consent of allaffected Lenders, the consent of Requisite Lenders is obtained, but the consentof other Lenders whose consent is required is not obtained (any such Lenderwhose consent is not obtained as described this clause(i) or in clause (ii) belowbeing referred to as a “Non-Consenting Lender”),or

####  

#### (ii)           requiring the consent of RequisiteLenders, the consent of Lenders holding 51% or more of the AggregateCommitments is obtained, but the consent of Requisite Lenders is not obtained,or

####  

then, so long as the Administrative Agent is not a Non-ConsentingLender, at the Borrower’s request the Administrative Agent, or a Personacceptable to the Administrative Agent, shall have the right with theAdministrative Agent’s consent and in the Administrative Agent’s solediscretion (but shall have no obligation) to purchase from such Non-ConsentingLenders, and such Non-Consenting Lenders agree that they shall, upon theAdministrative Agent’s request, sell and assign to the Administrative Agent orsuch Person, all of the Commitments of such Non-Consenting Lender for an amountequal to the principal balance of all Advances held by the Non-ConsentingLender and all accrued interest and Fees with respect thereto through the dateof sale, such purchase and sale to be consummated pursuant to an executedAssignment Agreement.

 

### (d)           Upon indefeasiblepayment in full in cash and performance of all of the Borrower Obligations(other than indemnification obligations under Section 10.01),termination

 

59

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of the Aggregate Commitment anda release of all claims against the Administrative Agent and Lenders, and solong as no suits, actions, proceedings or claims are pending or threatenedagainst any Indemnified Person asserting any damages, losses or liabilitiesthat are Indemnified Liabilities, the Administrative Agent shall deliver to theBorrower termination statements and other documents necessary or appropriate toevidence the termination of the Liens securing payment of the BorrowerObligations.

###  

## Section 12.08.  No Waiver; Remedies.  The failure by any Lender or theAdministrative Agent, at any time or times, to require strict performance bythe Borrower or the Servicer of any provision of this Agreement, anyReceivables Assignment or any other Related Document shall not waive, affect ordiminish any right of any Lender or the Administrative Agent thereafter todemand strict compliance and performance herewith or therewith.  Any suspension or waiver of any breach ordefault hereunder shall not suspend, waive or affect any other breach ordefault whether the same is prior or subsequent thereto and whether the same orof a different type.  None of the undertakings,agreements, warranties, covenants and representations of the Borrower or theServicer contained in this Agreement, any Receivables Assignment or any otherRelated Document, and no breach or default by the Borrower or the Servicerhereunder or thereunder, shall be deemed to have been suspended or waived byany Lender or the Administrative Agent unless such waiver or suspension is byan instrument in writing signed by an officer of or other duly authorizedsignatory of the applicable Lenders and the Administrative Agent and directedto the Borrower or the Servicer, as applicable, specifying such suspension orwaiver.  The rights and remedies of theLenders and the Administrative Agent under this Agreement and the other RelatedDocuments shall be cumulative and nonexclusive of any other rights and remediesthat the Lenders and the Administrative Agent may have hereunder, thereunder,under any other agreement, by operation of law or otherwise.  Recourse to the Borrower Collateral shall notbe required.

##  

## Section 12.09.  **GOVERNING LAW;CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL****.**

##  

### **(a)          **THISAGREEMENT AND EACH OTHER RELATED DOCUMENT (EXCEPT TO THE EXTENT THAT ANYRELATED DOCUMENT EXPRESSLY PROVIDES TO THE CONTRARY) AND THE OBLIGATIONSARISING HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERSOF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED ANDENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDINGSECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISEWITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT THAT THEPERFECTION, EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF THEADMINISTRATIVE AGENT IN THE RECEIVABLES OR REMEDIES HEREUNDER OR THEREUNDER, INRESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THESTATE OF NEW YORK, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

###  

### **(b)          **EACHPARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTSLOCATED IN THE BOROUGH OF

** **

**60**

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** **

**MANHATTAN IN NEW YORK CITY SHALL HAVEJURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEMPERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TOTHIS AGREEMENT OR ANY OTHER RELATED DOCUMENT;****PROVIDED****, THAT EACH PARTY HERETOACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY ACOURT LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK CITY;****PROVIDED********FURTHER****THAT NOTHING IN THISAGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY LENDER OR THEADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANYOTHER JURISDICTION TO REALIZE ON THE BORROWER COLLATERAL OR ANY OTHER SECURITYFOR THE BORROWER OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER INFAVOR OF THE LENDERS OR THE ADMINISTRATIVE AGENT.  EACH PARTY HERETO SUBMITS AND CONSENTS INADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVEBASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR****FORUM****NON****CONVENIENS****AND HEREBY CONSENTS TO THEGRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCHCOURT.  EACH PARTY HERETO HEREBY WAIVESPERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCHACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHERPROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCHPARTY AT THE ADDRESS PROVIDED FOR IN****SECTION 12.01****HEREOF AND THAT SERVICE SOMADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPTTHEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGEPREPAID.  NOTHING IN THIS SECTION SHALLAFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNERPERMITTED BY LAW.**

###  

### **(c)          **BECAUSEDISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOSTQUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THEPARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THANARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY AJUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATIONOF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETOWAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TORESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISINGOUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIPESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATEDDOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

61

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##  

## Section 12.10.  Counterparts.  This Agreement may be executed in any numberof separate counterparts, each of which shall collectively and separatelyconstitute one agreement.

##  

## Section 12.11.  Severability. Wherever possible, each provision of this Agreement shall be interpretedin such a manner as to be effective and valid under applicable law, but if anyprovision of this Agreement shall be prohibited by or invalid under applicablelaw, such provision shall be ineffective only to the extent of such prohibitionor invalidity without invalidating the remainder of such provision or theremaining provisions of this Agreement.

##  

## Section 12.12.  Section Titles.  The section, titles and table of contentscontained in this Agreement are and shall be without substantive meaning orcontent of any kind whatsoever and are not a part of the agreement between theparties hereto.

##  

## Section 12.13.  Further Assurances.

##  

### (a)                                  TheBorrower shall, or shall cause the Servicer to, at its sole cost and expense,upon request of any of the Lenders or the Administrative Agent, promptly andduly execute and deliver any and all further instruments and documents and takesuch further action that may be necessary or desirable or that any of theLenders or the Administrative Agent may request to (i) perfect, protect,preserve, continue and maintain fully the Liens granted to the AdministrativeAgent for the benefit of itself and the Lenders under this Agreement, (ii) enablethe Lenders or the Administrative Agent to exercise and enforce its rightsunder this Agreement or any of the other Related Documents or (iii) otherwisecarry out more effectively the provisions and purposes of this Agreement or anyother Related Document.  Without limitingthe generality of the foregoing, the Borrower shall, upon request of any of theLenders or the Administrative Agent, (A) execute and file such financingor continuation statements, or amendments thereto or assignments thereof, andsuch other instruments or notices that may be necessary or desirable or thatany of the Lenders or the Administrative Agent may request to perfect, protectand preserve the Liens granted pursuant to this Agreement, free and clear ofall Adverse Claims, (B) mark, or cause the Servicer to mark, each Contractevidencing which constitutes “chattel paper” under the UCC and evidences aTransferred Receivable with a legend, acceptable to each Lender and theAdministrative Agent evidencing that the Borrower has purchased suchTransferred Receivables and that the Administrative Agent, for the benefit ofthe Lenders, has a security interest in and lien thereon, (C) mark, orcause the Servicer to mark, its computer records pertaining to the TransferredReceivables with such a legend and (D) notify or cause the Servicer tonotify Obligors of the Liens on the Transferred Receivables granted hereunder.

###  

### (b)                                 Withoutlimiting the generality of the foregoing, the Borrower hereby authorizes theLenders and the Administrative Agent, and each of the Lenders hereby authorizesthe Administrative Agent, to file one or more financing or continuationstatements, or amendments thereto or assignments thereof, relating to all orany part of the Transferred Receivables, including Collections with respectthereto, or the Borrower Collateral without the signature of the Borrower or,as applicable, the Lenders, as applicable, to the extent permitted byapplicable law.  A carbon, photographicor other reproduction of this Agreement or of any notice

###  

### 62

### 

###  

### or financingstatement covering the Transferred Receivables, the Borrower Collateral or anypart thereof shall be sufficient as a notice or financing statement wherepermitted by law.

###  

## Section 12.14.  No Proceedings. Each of Administrative Agent and each Lender agrees that, from and afterthe Closing Date and until the date one year plus one day following theTermination Date, it will not, directly or indirectly, institute or cause to beinstituted against the Borrower any proceeding of the type referred to in Sections8.01(d) and 8.01(e).  This Section 12.14shall survive the termination of this Agreement.

##  

## Section 12.15.  Limitationon Payments.

##  

### (a)                                  Notwithstandingany provision in any other section of this Agreement to the contrary, theobligation of the Borrower to pay any amounts payable to Lender or any otherAffected Party pursuant to Sections 2.09, 2.10 and 10.01of this Agreement shall be paid pursuant hereto only if the Borrower has ExcessFunds, the excess of the amounts due hereunder over the amounts paid shall notconstitute a “claim” under Section 101(5) of the Bankruptcy Codeagainst the Borrower until such time as the Borrower has Excess Funds.  The foregoing shall not operate to limit therights of the Administrative Agent or any other Affected Party to enforce anyclaims of Borrower or its assigns against the Originators under the SaleAgreement or any other Related Document.

###  

### (b)                                 Withoutlimiting Section 12.15(a), all payments required to be made by theBorrower to the Agent, the Lenders, the Affected Parties and the IndemnifiedPersons pursuant to this Agreement and the other Related Documents shall bemade only from (i) Collections, (ii) proceeds from the repurchase ofTransferred Receivables from the Borrower by the Originators pursuant toSection 4.04 of the Sale Agreement, (iii) indemnification andreimbursement payments made by the Originators and the Servicer pursuant theSale Agreement, including, without limitation Article V thereof and (iv) paymentsmade by the Parent pursuant to the Originator Support Agreement and in no eventshall be made from cash contributions made by the Parent.

###  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

63

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IN WITNESS WHEREOF, the parties have caused this Receivables Fundingand Administration Agreement to be executed by their respective officersthereunto duly authorized, as of the date first above written.

 
|   | VERTIS RECEIVABLES II, LLC, as the Borrower |
|--------|---------------------------------------------|
|   |                                        |
|   |                                        |   |
|   | By:                                         | /S/ John V. Howard, Jr. |   |
|   | Name:                                       | John V. Howard, Jr. |
|   | Title:                                      | Chief Legal Officer and Secretary |
|        |                                             |  |  |  |  |

 

S-1

----

 
| Commitment: $130,000,000 | GENERAL ELECTRIC CAPITAL CORPORATION, |
|--------------------------|---------------------------------------|
|                     | as a Lender and as Swing Line Lender  |
|                     |                                  |   |
|                     | By:                                   | /S/ Kelly Stotler |   |
|                     | Name:                                 | Kelly Stotler |
|                     | Title:                                | Duly Authorized  Signatory |   |
|                     |                                  |   |
|                     |                                  |   |
|                     | GENERAL ELECTRIC CAPITAL CORPORATION, |
|                     | as Administrative Agent               |
|                     |                                  |   |
|                     | By:                                   | /S/ Kelly Stotler |   |
|                     | Name:                                 | Kelly Stotler |
|                     | Title:                                | Duly Authorized Signatory |   |
|                          |                                       |  |  |  |  |  |  |

 

S-2

----

 

Exhibit 2.01(a)(ii) toFunding Agreement

 

FORM OF REVOLVING NOTE

 
| $130,000,000 | November 25, 2005 |
|--------------|------------------------|

 

FOR VALUE RECEIVED, the undersigned, VERTIS RECEIVABLES II, LLC, aDelaware limited liability company (the “Borrower”), HEREBY PROMISES TO PAY tothe order of GENERAL ELECTRIC CAPITAL CORPORATION (the “Lender”), at theoffices of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, asagent for the Lender (the “Administrative Agent”), at its address at 201Merritt 7, Norwalk, CT 06851, or at such other place as the AdministrativeAgent may designate from time to time in writing, in lawful money of the UnitedStates of America and in immediately available funds, the amount of ONE HUNDREDTHIRTY MILLION DOLLARS AND NO CENTS ($130,000,000) or, if less, the aggregateunpaid amount of all Revolving Credit Advances made to the undersigned underthe “Funding Agreement” (as hereinafter defined).  All capitalized terms used but not otherwisedefined herein have the meanings given to them in the Funding Agreement or in Annex X thereto.

 

This Revolving Note is one of the Revolving Notes issued pursuant tothat certain Receivables Funding and Administration Agreement dated as of November 25,2005 by and among the Borrower, the Lender (and any other “Lender” partythereto), and the Administrative Agent (including all annexes, exhibits andschedules thereto, and as from time to time amended, restated, supplemented orotherwise modified, the “Funding Agreement”), and is entitled to the benefitand security of the Funding Agreement and all of the other Related Documentsreferred to therein.  Reference is herebymade to the Funding Agreement for a statement of all of the terms andconditions under which the Revolving Credit Advances evidenced hereby are madeand are to be repaid.  The date andamount of each Revolving Credit Advance made by the Lender to the Borrower, therates of interest applicable thereto and each payment made on account of theprincipal thereof, shall be recorded by the Administrative Agent on its books;provided that the failure of the Administrative Agent to make any suchrecordation shall not affect the obligations of the Borrower to make a paymentwhen due of any amount owing under the Funding Agreement or this Revolving Notein respect of the Revolving Credit Advances actually made by the Lender to theBorrower.

 

The principal amount of the indebtedness evidenced hereby shall bepayable in the amounts and on the dates specified in the Funding Agreement, theterms of which are hereby incorporated herein by reference.  Interest thereon shall be paid until suchprincipal amount is paid in full at such interest rates and at such times, andpursuant to such calculations, as are specified in the Funding Agreement.

 

If any payment on this Revolving Note becomes due and payable on a dayother than a Business Day, the maturity thereof shall be extended to the nextsucceeding Business Day and, with respect to payments of principal, interestthereon shall be payable at the then applicable rate during such extension.

 

----

 

Upon and after the occurrence of any Termination Event, this RevolvingNote may, as provided in the Funding Agreement, and without demand, notice orlegal process of any kind, be declared, and immediately shall become, due andpayable.

 

Time is of the essence of this Revolving Note.  Demand, presentment, protest and notice ofnonpayment and protest are hereby waived by the Borrower.

 

Except as provided in the Funding Agreement, this Revolving Note maynot be assigned by the Lender to any Person.

 

**THIS REVOLVINGNOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THESTATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.**

** **
|   | VERTIS RECEIVABLES II, LLC |
|--------|----------------------------|
|   |                       |   |
|   |                       |   |
|   | By:                        |   |   |
|   | Name:                      |   |
|   | Title:                     |   |
|        |                            |  |  |  |

 

S-2

----

 

Exhibit 2.01(b)(ii) toFunding Agreement

 

FORM OF SWING LINE NOTE

 
| $130,000,000 | November 25, 2005 |
|--------------|------------------------|

 

FOR VALUE RECEIVED, the undersigned, VERTIS RECEIVABLES II, LLC, aDelaware limited liability company (the “Borrower”), HEREBY PROMISES TO PAY tothe order of GENERAL ELECTRIC CAPITAL CORPORATION (“GE Capital”), a Delawarecorporation (the “Swing Line Lender”), at the offices of GE Capital, as agent(in such capacity, the “Administrative Agent”), at the Agent’s address at 201Merritt 7, Norwalk, CT 06851, or at such other place as the AdministrativeAgent may designate from time to time in writing, in lawful money of the UnitedStates of America and in immediately available funds, the amount of ONE HUNDREDTHIRTY MILLION DOLLARS AND NO CENTS ($130,000,000) or, if less, the aggregateunpaid amount of all Swing Line Advances made to the undersigned under the “FundingAgreement” (as hereinafter defined).  Allcapitalized terms used but not otherwise defined herein have the meanings givento them in the Funding Agreement or in Annex Xthereto.

 

This Swing Line Note is issued pursuant to that certain ReceivablesFunding and Administration Agreement dated as of November 25, 2005 by andamong the Borrower, the Swing Line Lender, the other “Lenders” party thereto,and the Administrative Agent (including all annexes, exhibits and schedulesthereto and as from time to time amended, restated, supplemented or otherwisemodified, the “Funding Agreement”), and is entitled to the benefit and securityof the Funding Agreement and all of the other Related Documents referred totherein.  Reference is hereby made to theFunding Agreement for a statement of all of the terms and conditions underwhich the Swing Line Advances evidenced hereby are made and are to berepaid.  The date and amount of eachSwing Line Advance made by Swing Line Lender to the Borrower, the rate ofinterest applicable thereto and each payment made on account of the principalthereof, shall be recorded by the Administrative Agent on its books; providedthat the failure of the Administrative Agent to make any such recordation shallnot affect the obligations of the Borrower to make a payment when due of anyamount owing under the Funding Agreement or this Swing Line Note in respect ofthe Swing Line Advances made by Swing Line Lender to the Borrower.

 

The principal amount of the indebtedness evidenced hereby shall bepayable in the amounts and on the dates specified in the Funding Agreement, theterms of which are hereby incorporated herein by reference.  Interest thereon shall be paid until suchprincipal amount is paid in full at such interest rates and at such times, andpursuant to such calculations, as are specified in the Funding Agreement.

 

If any payment on this Swing Line Note becomes due and payable on a dayother than a Business Day, the maturity thereof shall be extended to the nextsucceeding Business Day and, with respect to payments of principal, interestthereon shall be payable at the then applicable rate during such extension.

 

----

 

Upon and after the occurrence of any Termination Event, this Swing LineNote may, as provided in the Funding Agreement, and without demand, notice orlegal process of any kind, be declared, and immediately shall become, due andpayable.

 

Time is of the essence of this Swing Line Note.  Demand, presentment, protest and notice ofnonpayment and protest are hereby waived by Borrower.

 

**THIS SWINGLINE NOTE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OFNEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.**

** **
|   | VERTIS RECEIVABLES II, LLC |
|--------|----------------------------|
|   |                       |   |
|   |                       |   |
|   | By:                        |   |   |
|   | Name:                      |   |
|   | Title:                     |   |
|        |                            |  |  |  |

** **

**P-2**

----

** **

Exhibit 2.02(a) toFunding Agreement

 

FORM OF COMMITMENT REDUCTION NOTICE

 

[Insert Date]

 

General Electric Capital Corporation,as Administrative Agent201 Merritt 7Norwalk, Connecticut 06851Attention:  Vice President –Portfolio/Underwriting

 

Re:                               ReceivablesFunding and AdministrationAgreement dated as of November 25, 2005

 

Ladies andGentlemen:

 

This notice is given pursuant to Section 2.02(a) ofthat certain Receivables Funding and Administration Agreement dated as of November 25,2005 (the “**FundingAgreement**”), by and among Vertis Receivables II, LLC (the “**Borrower**”), thefinancial institutions party thereto as lenders (the “**Lenders”**) and General ElectricCapital Corporation, as Lender, Swing Line Lender and as administrative agentfor the Lenders (in such capacity, the “**Administrative Agent**”). Capitalized terms used and not otherwise defined herein shall have therespective meanings ascribed to them in the Funding Agreement.

 

Pursuant to Section 2.02(a) ofthe Funding Agreement, the Borrower hereby irrevocably notifies the Lenders andthe Administrative Agent of its election to permanently reduce the AggregateCommitment to [$       ], effective as of [                     ], [       ].(1) Aftersuch reduction, the Aggregate Commitment will not be less than the OutstandingPrincipal Amount.

 
|   | Very truly yours,          |
|--------|----------------------------|
|   |                       |
|   | VERTIS RECEIVABLES II, LLC |
|   |                       |   |
|   |                       |   |
|   | By:                        |   |   |
|   | Name:                      |   |   |
|   | Title:                     |   |   |   |
|        |                            |  |  |  |  |  |

 

----

(1)          This day shall be a Business Day at least tenBusiness Day after the date this notice is given.

 

----

 

Exhibit 2.02(b) toFunding Agreement

 

FORM OF COMMITMENT TERMINATION NOTICE

 

[Insert Date]

 

General Electric CapitalCorporation,as Administrative Agent

201 Merritt 7Norwalk, Connecticut 06851Attention:  Vice President –Portfolio/Underwriting

 

Re:                               ReceivablesFunding and AdministrationAgreement dated as of November 25, 2005

 

Ladies andGentlemen:

 

This notice is given pursuant to Section 2.02(b) ofthat certain Receivables Funding and Administration Agreement dated as of November 25, 2005 (the “**Funding Agreement**”), by andamong Vertis Receivables II, LLC (the “**Borrower**”), the financial institutions party thereto aslenders (the “**Lenders**”)and General Electric Capital Corporation, as a Lender, Swing Line Lender and asadministrative agent for the Lenders (in such capacity, the “**Administrative Agent**”).  Capitalized terms used and not otherwisedefined herein shall have the respective meanings ascribed to them in theFunding Agreement.

 

Pursuant to Section 2.02(b) ofthe Funding Agreement, the Borrower hereby irrevocably notifies the Lenders andthe Administrative Agent of its election to terminate the Aggregate Commitmenteffective as of [              ],[      ](2). In connection therewith, the Borrower shall reduce Outstanding PrincipalAmount to zero on or prior to such date and make all other payments required bySection 2.03(h) and pay any otherfees that are due and payable pursuant to the Fee Letter at the time and in themanner specified therein.

 
|   | Very truly yours,          |
|--------|----------------------------|
|   |                       |
|   | VERTIS RECEIVABLES II, LLC |
|   |                       |   |
|   |                       |   |
|   | By:                        |   |   |
|   | Name:                      |   |   |
|   | Title:                     |   |   |   |
|        |                            |  |  |  |  |  |

 

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(2)          Which day shall be a Business Day at least 30days after the date this notice is given

 

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Exhibit 2.03(a) toFunding Agreement

 

FORM OF BORROWING REQUEST

 

[Insert Date]

 

General Electric CapitalCorporation,as Administrative Agent

201 Merritt 7

Norwalk, Connecticut 06851

Attention:  Vice President –Portfolio/Underwriting

 

Re:                               ReceivablesFunding and AdministrationAgreement dated as of November 25, 2005

 

Ladies andGentlemen:

 

This notice is given pursuant to Section 2.03(a) ofthat certain Receivables Funding and Administration Agreement dated as of November 25,2005 (the “**Funding Agreement**”), byand among Vertis Receivables II, LLC (the “**Borrower**”),the financial institutions party thereto as lenders (the “**Lenders**”) and General Electric CapitalCorporation, as a lender, a Swing Line Lender and as administrative agent forthe Lenders (in such capacity, the “**AdministrativeAgent**”).  Capitalized termsused and not otherwise defined herein shall have the respective meaningsascribed to them in the Funding Agreement.

 

Pursuant to Section 2.01 ofthe Funding Agreement, the Borrower hereby requests that a Borrowing be made tothe Borrower on [               ],[         ], in the amount of [$         ]which shall be a Swing Line Advance consisting of [Index Rate Advances](3) [LIBORRate Advances], to be disbursed to the Borrower in accordance with Section 2.04(a) of the FundingAgreement.  The Borrower herebyrepresents and warrants that the conditions set forth in Section 3.02of the Funding Agreement have been satisfied. Attached hereto is a certificate setting forth a pro forma calculationof the Borrowing Base after giving effect to the acquisition by the Borrower ofnew Transferred Receivables and the receipt of Collections since the date ofthe most recent Borrowing Base Certificate, and the making of such Borrowing.

 
|   | Very truly yours,          |
|--------|----------------------------|
|   |                       |
|   | VERTIS RECEIVABLES II, LLC |
|   |                       |   |
|   |                       |   |
|   | By:                        |   |   |
|   | Name:                      |   |   |
|   | Title:                     |   |   |   |
|        |                            |  |  |  |  |  |

 

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(3)          Unless a LIBOR Rate Disruption Event shallhave occurred, all Revolving Credit Advances shall be LIBOR Rate Advances.

 

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Exhibit to Borrowing Request

 

Pro Forma Calculation of Borrowing Base

 

[Attached]

 

2

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Exhibit 2.03(h) toFunding Agreement

 

FORM OF REPAYMENT NOTICE

 

[Insert Date]

 

General Electric CapitalCorporation,as Administrative Agent

201 Merritt 7

Norwalk, Connecticut 06851

Attention:  Vice President –Portfolio/Underwriting

 

Re:                               ReceivablesFunding and AdministrationAgreement dated as of November 25, 2005

 

Ladies andGentlemen:

 

This notice is given pursuant to Section 2.03(h) ofthat certain Receivables Funding and Administration Agreement dated as of November 25,2005 (the “**FundingAgreement**”), by and among Vertis Receivables II, LLC (the “**Borrower**”), thefinancial institutions party thereto as lenders (the “**Lenders**”), and General ElectricCapital Corporation, as a lender (in such capacity, the “**Lender**”) and as administrativeagent for the Lenders (in such capacity, the “**Administrative Agent**”).  Capitalized terms used and not otherwisedefined herein shall have the respective meanings ascribed to them in theFunding Agreement.

 

Pursuant to Section 2.03(h) ofthe Funding Agreement, the Borrower hereby notifies the Lenders and theAdministrative Agent of its request to repay the principal amount ofoutstanding Advances in an amount equal to [$        ]on [                   ], [      ] (which is aBusiness Day), from [Collections/other sources].  In connection therewith, the Borrower willpay to the Administrative Agent (1) all interest accrued on theoutstanding principal balance of Advances being repaid through but excludingthe date of such repayment and (2) any and all Breakage Costs payableunder Section 2.10 of the FundingAgreement by virtue thereof.

 
|   | Very truly yours,          |
|--------|----------------------------|
|   |                       |
|   | VERTIS RECEIVABLES II, LLC |
|   |                       |   |
|   |                       |   |
|   | By:                        |   |   |
|   | Name:                      |   |   |
|   | Title:                     |   |   |   |
|        |                            |  |  |  |  |  |

 

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Exhibit 5.02(b) toFunding Agreement

 

Form of

 

BORROWING BASE CERTIFICATE

 

**[Attached]**

 

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Exhibit 9.03to Funding Agreement

 

Form of

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by Vertis ReceivablesII, LLC, as Borrower, (“Grantor”) under theFunding Agreement (as defined below), to General Electric Capital Corporation,as Administrative Agent under the Funding Agreement (hereinafter referred to as“**Attorney**”),pursuant to that certain Receivables Funding and Administration Agreement datedas of November 25, 2005 (the “**Funding Agreement**”), by and among Grantor, the other partiesthereto and Attorney and the other Related Documents.  Capitalized terms used herein and nototherwise defined shall have the meanings ascribed to them in the FundingAgreement.  No person to whom this Powerof Attorney is presented, as authority for Attorney to take any action oractions contemplated hereby, shall be required to inquire into or seekconfirmation from Grantor as to the authority of Attorney to take any actiondescribed below, or as to the existence of or fulfillment of any condition tothis Power of Attorney, which is intended to grant to Attorney unconditionallythe authority to take and perform the actions contemplated herein, and Grantorirrevocably waives any right to commence any suit or action, in law or equity,against any person or entity that acts in reliance upon or acknowledges theauthority granted under this Power of Attorney. The power of attorney granted hereby is coupled with an interest and maynot be revoked or cancelled by Grantor until all Borrower Obligations under theRelated Documents have been indefeasibly paid in full and Attorney has providedits written consent thereto.

 

Grantor hereby irrevocably constitutes and appoints Attorney (and allofficers, employees or agents designated by Attorney), with full power ofsubstitution, as its true and lawful attorney in fact with full irrevocablepower and authority in its place and stead and in its name or in Attorney’s ownname, from time to time in Attorney’s discretion, to take any and allappropriate action and to execute and deliver any and all documents andinstruments that may be necessary or desirable to accomplish the purposes ofthe Funding Agreement, and, without limiting the generality of the foregoing,hereby grants to Attorney the power and right, on its behalf, without notice toor assent by it, upon the occurrence and during the continuance of anyTermination Event, to do the following:  (a) openmail for it, and ask, demand, collect, give acquaintances and receipts for,take possession of, or endorse and receive payment of, any checks, drafts,notes, acceptances, or other instruments for the payment of moneys due inrespect of Transferred Receivables, and sign and endorse any invoices, freightor express bills, bills of lading, storage or warehouse receipts, draftsagainst debtors, assignments, verifications, and notices in connection with anyBorrower Collateral; (b)  pay or discharge any taxes, Liens, or otherencumbrances levied or placed on or threatened against any Borrower Collateral;(c) defend any suit, action or proceeding brought against it or anyBorrower Collateral if the Grantor does not defend such suit, action orproceeding or if Attorney believes that it is not pursuing such defense in amanner that will maximize the recovery to Attorney, and settle, compromise oradjust any suit, action, or proceeding described above and, in connectiontherewith, give such 

 

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discharges or releases as Attorney may deem appropriate;(d) file or prosecute any claim, Litigation, suit or proceeding in anycourt of competent jurisdiction or before any arbitrator, or take any otheraction otherwise deemed appropriate by Attorney for the purpose of collectingany and all such moneys due with respect to any Borrower Collateral orotherwise with respect to the Related Documents whenever payable and to enforceany other right in respect of its property; (e) sell, transfer, pledge,make any agreement with respect to, or otherwise deal with, any BorrowerCollateral, and execute, in connection with such sale or action, anyendorsements, assignments or other instruments of conveyance or transfer inconnection therewith; and (f) cause the certified public accountants thenengaged by it to prepare and deliver to Attorney at any time and from time totime, promptly upon Attorney’s request, any and all financial statements orother reports required to be delivered by or on behalf of Grantor under theRelated Documents, all as though Attorney were the absolute owner of itsproperty for all purposes, and to do, at Attorney’s option and its expense, atany time or from time to time, all acts and other things that Attorneyreasonably deems necessary to perfect, preserve, or realize upon the BorrowerCollateral and the Lenders’ Liens thereon, all as fully and effectively as itmight do.  Grantor hereby ratifies, tothe extent permitted by law, all that said attorneys shall lawfully do or causeto be done by virtue hereof.

 

**IN WITNESSWHEREOF**, this Power of Attorney is executed byGrantor, and Grantor has caused its seal to be affixed pursuant to theauthority of its board of directors this       day ofNovember, 2005.

 

 
| Grantor |   |   |
|---------|--------|--------|
| ATTEST: |   |   |   |   |
|    |   |   |
|    |   |   |
| By:     |   |   |   | (SEAL) |
| Title:  |   |   |   |   |
|         |        |        |  |  |  |  |  |  |

**[Notarizationin appropriate form for the state of execution is required.]**

 

2

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Exhibit 12.02(b) toFunding Agreement

 

FORM OF ASSIGNMENT AGREEMENT

 

This Assignment Agreement (this “Agreement”) is made as of                      ,        by and between                                                                        (“Assignor Lender”) and                                                  (“Assignee Lender”) and acknowledged and consented to by GENERAL ELECTRICCAPITAL CORPORATION, as administrative agent (“Administrative Agent”).  All capitalized terms used in this Agreementand not otherwise defined herein will have the respective meanings set forth inthe Funding Agreement as hereinafter defined.

 

RECITALS:

 

WHEREAS, Vertis Receivables II, LLC, a Delaware limited liabilitycompany (the “Borrower”), the financial institutions signatory thereto fromtime to time as lenders (the “Lenders”), and the Administrative Agent haveentered into that certain Receivables Funding and Administration Agreementdated as of November 25, 2005 (as amended, restated, supplemented orotherwise modified from time to time, the “Funding Agreement”) pursuant towhich the Lenders (including the Assignor Lender) have agreed to make certainAdvances to Borrower;

 

WHEREAS, Assignor Lender desires to assign to Assignee Lender **[**all/a portion**]** of its interestin the Advances (as described below) and the Borrower Collateral and todelegate to Assignee Lender [all/a portion] of its Commitment and other dutieswith respect to such Advances and Borrower Collateral;

 

WHEREAS, Assignee Lender desires to become a Lender under the FundingAgreement and to accept such assignment and delegation from Assignor Lender;and

 

WHEREAS, Assignee Lender desires to appoint the Administrative Agent toserve as agent for Assignee Lender under the Funding Agreement;

 

NOW, THEREFORE, in consideration of the premises and the agreements,provisions, and covenants herein contained, Assignor Lender and Assignee Lenderagree as follows:

 

##### **1.****                                      ASSIGNMENT,DELEGATION, AND ACCEPTANCE**

#####  

###### 1.1                                 Assignment. Assignor Lender hereby transfers and assigns to Assignee Lender, withoutrecourse and without representations or warranties of any kind (except as setforth in Section 3.2 below), **[**all/such percentage**]** of AssignorLender’s right, title, and interest in the Advances, Related Documents andBorrower Collateral as will result in Assignee Lender having as of theEffective Date (as hereinafter defined) a Pro Rata Share thereof, as follows:

######  

###### 

######  

 
| **Assignee Lender’s Loans** | ** ** | **Principal Amount** | ** ** | **Pro Rata Share** | ** ** |
|----------------------------------|------------|----------------------|------------|--------------------|------------|
|                             |       |                 |       |               |       |
| Advances                         |       | $                    |       |               |       |   |   | % |   |
|                                  |            |                      |            |                    |            |  |  |  |  |

######  

###### 1.2                                 Delegation. Assignor Lender hereby irrevocably assigns and delegates to AssigneeLender [all/a portion] of its Commitments and its other duties and obligationsas a Lender under the Related Documents equivalent to **[**100%/      %**]** of AssignorLender’s Commitment (such percentage representing a commitment of $                 ).

######  

###### 1.3                                 Acceptance by Assignee Lender.  By its execution of this Agreement, AssigneeLender irrevocably purchases, assumes and accepts such assignment anddelegation and agrees to be a Lender with respect to the delegated interestunder the Related Documents and to be bound by the terms and conditionsthereof.  By its execution of thisAgreement, Assignor Lender agrees, to the extent provided herein, to relinquishits rights and be released from its obligations and duties under the FundingAgreement.

######  

###### 1.4                                 Effective Date. Such assignment and delegation by Assignor Lender and acceptance byAssignee Lender will be effective and Assignee Lender will become a Lenderunder the Related Documents as of the date of this Agreement (“Effective Date”)and upon payment of the Assigned Amount and the Assignment Fee (as each term isdefined below).

######  

##### **2.****                                      INITIAL PAYMENTAND DELIVERY OF NOTES**

#####  

###### 2.1                                 Payment of the Assigned Amount.  Assignee Lender will pay to Assignor Lender,in immediately available funds, not later than 12:00 noon (New York City time)on the Effective Date, an amount equal to its Pro Rata Share of the thenoutstanding principal amount of the Advances as set forth above in Section 1.1 together with accrued interest,fees and other amounts as set forth on Schedule 2.1(the “Assigned Amount”).

######  

###### 2.2                                 Payment of Assignment Fee.  **[**Assignor Lender**]****[**AssigneeLender**]** willpay to the Administrative Agent, for its own account in immediately availablefunds, not later than 12:00 noon (New York City time) on the Effective Date, anassignment fee in the amount of $3,500 (the “Assignment Fee”) as requiredpursuant to Section 12.02(b) of the Funding Agreement.

######  

###### 2.3                                 Execution and Delivery of Notes.  Following payment of the Assigned Amount andthe Assignment Fee, Assignor Lender will deliver to the Administrative Agentthe Revolving Notes previously delivered to Assignor Lender for redelivery toBorrower and the Administrative Agent will obtain from Borrower for delivery to[Assignor Lender and] Assignee Lender, new executed Revolving Notes evidencingAssignee Lender’s [and Assignor Lender’s respective] Pro Rata Share[s] in theAdvances after giving effect to the assignment described in Section 1. Each new Revolving Note will be issued in the aggregate maximumprincipal amount of the Commitment of [the Assignee Lender] [and the AssignorLender].

######  

###### 2

###### 

######  

##### **3.****                                      **REPRESENTATIONS, WARRANTIESAND COVENANTS****

#####  

###### 3.1                                 Assignee Lender’s Representations, Warranties and Covenants.  Assignee Lender hereby represents, warrants,and covenants the following to Assignor Lender and the Administrative Agent:

######  

(a)                                  This Agreement is alegal, valid, and binding agreement of Assignee Lender, enforceable accordingto its terms;

 

(b)                                 The execution andperformance by Assignee Lender of its duties and obligations under thisAgreement and the Related Documents will not require any registration with,notice to, or consent or approval by any Governmental Authority;

 

(c)                                  Assignee Lender isfamiliar with transactions of the kind and scope reflected in the RelatedDocuments and in this Agreement;

 

(d)                                 Assignee Lender hasmade its own independent investigation and appraisal of the financial conditionand affairs of the Borrower and its Affiliates, has conducted its ownevaluation of the Advances, the Related Documents and the Borrower’s and itsAffiliates’ creditworthiness, has made its decision to become a Lender toBorrower under the Funding Agreement independently and without reliance uponAssignor Lender, any other Lender or the Administrative Agent, and willcontinue to do so;

 

(e)                                  Assignee Lender isentering into this Agreement in the ordinary course of its business, and isacquiring its interest in the Advances for its own account and not with a viewto or for sale in connection with any subsequent distribution; provided,however, that at all times the distribution of Assignee Lender’s propertyshall, subject to the terms of the Funding Agreement, be and remain within itscontrol;

 

(f)                                    No futureassignment or participation granted by Assignee Lender pursuant to Section 12.02 of the Funding Agreement willrequire Assignor Lender, the Administrative Agent, or Borrower to file anyregistration statement with the Securities and Exchange Commission or to applyto qualify under the blue sky laws of any state;

 

(g)                                 Assignee Lender willnot enter into any written or oral agreement with, or acquire any equity orother ownership interest in, the Borrower or any of its Affiliates without theprior written consent of the Administrative Agent; and

 

(h)                                 As of the EffectiveDate, Assignee Lender is entitled to receive payments of principal and interestunder the Funding Agreement without deduction for or on account of any taxesimposed by the United States of America or any political subdivisionthereof  and Assignee Lender willindemnify the Administrative Agent from and against all liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs, orexpenses that are not paid by the Borrower pursuant to the terms of the FundingAgreement.

 

3

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###### 3.2                                 Assignor Lender’s Representations, Warranties and Covenants.  Assignor Lender hereby represents, warrantsand covenants the following to Assignee Lender:

######  

(a)                                  Assignor Lender isthe legal and beneficial owner of the Assigned Amount;

 

(b)                                 This Agreement is alegal, valid and binding agreement of Assignor Lender, enforceable according toits terms;

 

(c)                                  The execution andperformance by Assignor Lender of its duties and obligations under thisAgreement will not require any registration with, notice to or consent orapproval by any Governmental Authority;

 

(d)                                 Assignor Lender hasfull power and authority, and has taken all action necessary to execute anddeliver this Agreement and to fulfill the obligations hereunder and toconsummate the transactions contemplated hereby;

 

(e)                                  Assignor Lender isthe legal and beneficial owner of the interests being assigned hereby, free andclear of any adverse claim, lien, encumbrance, security interest, restrictionon transfer, purchase option, call or similar right of a third party; and

 

(f)                                    This Agreementcomplies, in all material respects, with the terms of the Related Documents.

 

**4.             LIMITATIONS OF LIABILITY**

 

Neither Assignor Lender (except as provided in Section 3.2)nor the Administrative Agent makes any representations or warranties of any kind,nor assumes any responsibility or liability whatsoever, with regard to (a) theRelated Documents or any other document or instrument furnished pursuantthereto or the Advances or other Borrower Obligations, (b) the creation,validity, genuineness, enforceability, sufficiency, value or collectibility ofany of them, (c) the amount, value or existence of the BorrowerCollateral,  (d) the perfection orpriority of any Lien upon the Borrower Collateral, or (e) the financialcondition of Borrower or any of its Affiliates or other obligor or theperformance or observance by Borrower or any of its Affiliates of itsobligations under any of the Related Documents. Neither Assignor Lender nor the Administrative Agent has or will haveany duty, either initially or on a continuing basis, to make any investigation,evaluation, appraisal of, or any responsibility or liability with respect tothe accuracy or completeness of, any information provided to Assignee Lenderwhich has been provided to Assignor Lender or the Administrative Agent byBorrower or any of its Affiliates. Nothing in this Agreement or in the Related Documents shall impose uponthe Assignor Lender or the Administrative Agent any fiduciary relationship inrespect of the Assignee Lender.

 

##### **5.****                                      FAILURE TO ENFORCE**

#####  

No failure or delay on the part of the Administrative Agent or AssignorLender in the exercise of any power, right, or privilege hereunder or under anyRelated Document will impair such power, right, or privilege or be construed tobe a waiver of any default or

 

4

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acquiescence therein.  No single or partial exercise of any suchpower, right, or privilege will preclude further exercise thereof or of anyother right, power, or privilege.  Allrights and remedies existing under this Agreement are cumulative with, and notexclusive of, any rights or remedies otherwise available.

 

##### **6.****                                      NOTICES**

#####  

Unless otherwise specifically provided herein, any notice or othercommunication required or permitted to be given will be in writing andaddressed to the respective party as set forth below its signature hereunder,or to such other address as the party may designate in writing to the other.

 

##### **7.****                                      **AMENDMENTS AND WAIVERS****

#####  

No amendment, modification, termination, or waiver of any provision ofthis Agreement will be effective without the written concurrence of AssignorLender, the Administrative Agent and Assignee Lender.

 

##### **8.****                                      SEVERABILITY**

#####  

Whenever possible, each provision of this Agreement will be interpretedin such manner as to be effective and valid under applicable law.  In the event any provision of this Agreementis or is held to be invalid, illegal, or unenforceable under applicable law,such provision will be ineffective only to the extent of such invalidity,illegality, or unenforceability, without invalidating the remainder of suchprovision or the remaining provisions of the Agreement.  In addition, in the event any provision of orobligation under this Agreement is or is held to be invalid, illegal, orunenforceable in any jurisdiction, the validity, legality, and enforceabilityof the remaining provisions or obligations in any other jurisdictions will notin any way be affected or impaired thereby.

 

##### **9.****                                      SECTION TITLES**

#####  

Section and Subsection titles in this Agreement are includedfor convenience of reference only, do not constitute a part of this Agreementfor any other purpose, and have no substantive effect.

 

##### **10.****                               SUCCESSORS AND ASSIGNS**

#####  

This Agreement shall be binding upon and inure to the benefit of theparties hereto and their respective successors and assigns.

 

##### **11.****                               APPLICABLE LAW**

#####  

**THIS AGREEMENTWILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OFNEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, WITHOUTREGARD TO CONFLICTS OF LAW PRINCIPLES.**

 

5

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##### **12.****                               COUNTERPARTS**

#####  

This Agreement and any amendments, waivers, consents, or supplementsmay be executed in any number of counterparts and by different parties heretoin separate counterparts, each of which, when so executed and delivered, willbe deemed an original and all of which shall together constitute one and thesame instrument.

 

6

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IN WITNESS WHEREOF, this Agreement has been duly executed as of thedate first written above.

 
| Assignee Lender                                                            |      | Assignor Lender |
|----------------------------------------------------------------------------|-----------|-----------------|
|                                                                       |      |            |
|                                                                       |      |            |   |   |
|                                                                       |      |            |   |   |
| By:                                                                        |      |            |   | By: |   |   |
|                                                                       |      |            |   |   |   |   |
| Name:                                                                      |      |            |   | Name: |   |   |
|                                                                       |      |            |   |   |   |   |
| Title:                                                                     |      |            |   | Title: |   |   |
|                                                                       |      |            |   |   |
|                                                                       |      |            |
| Notice Address                                                             |      |            | Notice Address |
|                                                                       |      |            |
|                                                                       |      |            |
| Account Information                                                        |      |            | Account Information |
|                                                                       |      |            |
|                                                                       |      |            |
| Acknowledged  and Consented to:                                            |      |            |
|                                                                       |      |            |
| **GENERAL ELECTRIC CAPITAL CORPORATION****,** as Administrative Agent      |      |            |
|                                                                       |      |            |
|                                                                       |      |            |
| By:                                                                        |      |            |   |   |
|                                                                       | Name:     |            |   |   |
|                                                                       | Title:    |            |   |   |
|                                                                       |      |            |
| [Acknowledged and Consented to:  VERTIS RECEIVABLES II, LLC, as   Borrower |      |            |
|                                                                       |      |            |
| By:                                                                        |      |            |   |   |
|                                                                       | Name:     |            |   |   |
|                                                                       | Title:(4) |            |   |   |
|                                                                            |           |                 |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(4)          Include if the Borrower has a consent rightunder the Section 12.02 of the Funding Agreement.

 

7

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SCHEDULE 2.1

 

**AssignorLender’s Loans**

 

Principal Amount

 
| Advances         |   |   | $      |   |   |
|------------------|--------|--------|--------|--------|--------|
|             |   |   |   |   |   |
| Accrued Interest |   |   | $      |   |   |
|             |   |   |   |   |   |
| Unused Line Fee  |   |   | $      |   |   |
|             |   |   |   |   |
| Other + or -     | $      |   |   |   |   |
|             |   |   |   |   |   |
| Total            | $      |   |   |   |   |
|                  |        |        |        |        |        |  |

 

All determined as of the Effective Date

 

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Exhibit A to Funding Agreement

 

CREDIT AND COLLECTION POLICY

 

**[Attached]**

 

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SCHEDULE 4.01(b)toFUNDING AGREEMENT

 

JURISDICTION OF ORGANIZATION; EXECUTIVE OFFICES; COLLATERALLOCATIONS; CORPORATE, LEGAL AND OTHER NAMES; IDENTIFICATIONNUMBERS

 

**[Attached]**

 

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SCHEDULE 4.01(i)toFUNDING AGREEMENT

 

TAXES

 

**[Attached]**

** **

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** **

SCHEDULE 4.01(q)toFUNDING AGREEMENT

 

DEPOSIT AND DISBURSEMENT ACCOUNTS

 

**[Attached]**

 

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SCHEDULE 4.01(v)toFUNDING AGREEMENT

 

SUPPLEMENTARY REPRESENTATIONS

 

In addition to the representations, warranties and covenants containedin Section 4.01 hereof, the Borrower, hereby makes the followingadditional representations, warranties and covenants:

 

1.             Receivables;Accounts.

 

(a)           Each EligibleReceivable constitutes an “account” or a “general intangible” within themeaning of the applicable UCC.

 

(b)           Each Accountconstitutes a “deposit account” or “securities account” within the meaning ofthe applicable UCC.

 

(c)           With respect to eachAccount which constitutes a “securities account” within the meaning of theapplicable UCC:

 

i.              The securitiesintermediary for each such Account has agreed to treat all assets credited tosuch Account as “financial assets” within the meaning of the UCC.

 

ii.             The Borrower hasreceived all consents and approvals required by the terms of the applicableAccount Agreement and related Bank to the transfer to the Administrative Agentof its interest and rights in the Account hereunder.

 

iii.            No such Account isin the name of any Person other than the Borrower or the AdministrativeAgent.  The Borrower has not consented tothe securities intermediary of any Account to comply with entitlement orders ofany person other than the Administrative Agent.

 

2.             Creation ofSecurity Interest.  The Borrower owns andhas good and marketable title to the Receivables, Accounts and Lockboxes, freeand clear of any Adverse Claim.  TheAgreement creates a valid and continuing security interest (as defined in theapplicable UCC) in the Receivables, Accounts and Lockboxes in favor of theAdministrative Agent (on behalf of itself and the Lenders), which securityinterest is prior to all other Adverse Claims and is enforceable as such asagainst any creditors of and purchasers from the Borrower.

 

3.             Perfection.

 

(a)           The Borrower hascaused the filing of all appropriate financing statements in the proper filingoffice in the appropriate jurisdictions under applicable law and entered intoAccount Agreements in order to perfect the sale of the Receivables from theOriginators to the Borrower pursuant to the Sale Agreement and the securityinterest granted by the Borrower to the Administrative Agent (on behalf ofitself and the Lenders) in the Receivables hereunder.

 

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(b)           With respect to theBorrower Account, the Borrower has delivered to the Administrative Agent (onbehalf of itself and the Lenders), a fully executed Borrower Account Agreementpursuant to which the applicable Borrower Account Bank has agreed, followingthe occurrence and continuation of a Termination Event, to comply with allinstructions given by the Administrative Agent with respect to all funds ondeposit in the Borrower Account, without further consent by the Borrower, theServicer or any Originator.

 

(c)           With respect to eachAccount other than the Borrower Account, the Borrower has delivered to theAdministrative Agent (on behalf of itself and the Lenders), a fully executedAccount Agreement pursuant to which the applicable Bank has agreed to complywith all instructions given by the Administrative Agent with respect to allfunds on deposit in the Accounts and the related Lockboxes, without furtherconsent by the Borrower, the Servicer or any Originator.

 

5.             Priority.

 

(a)           Other than thetransfer of the Receivables by the Originators to the Borrower pursuant to theSale Agreement and the grant of security interest by the Borrower to theAdministrative Agent (on behalf of itself and the Lenders) in the Receivables,the Accounts and the Lockboxes hereunder, the Borrower has not pledged,assigned, sold, conveyed, or otherwise granted a security interest in any ofthe Receivables, the Accounts and the Lockboxes to any other Person.

 

(b)           The Borrower has notauthorized, or is aware of, any filing of any financing statement against theBorrower that include a description of collateral covering the Receivables orall other collateral pledged to the Administrative Agent (on behalf of theLenders) pursuant to the Related Documents, other than any financing statementfiled pursuant to the Sale Agreement and this Agreement or financing statementsthat have been validly terminated prior to the date hereof.

 

(c)           The Borrower is notaware of any judgment, ERISA or tax lien filings against either the Borrower orany Originator.

 

(d)           None of the Accountsor Lockboxes is in the name of any Person other than the Borrower or theAdministrative Agent.  The Borrower hasnot consented to any Bank complying with instructions of any person other thanthe Administrative Agent.

 

6.             Survival ofSupplemental Representations. Notwithstanding any other provision of this Agreement or any otherRelated Document, the representations contained in this Schedule 4.01(v) shallbe continuing, and remain in full force and effect until the Termination Date.

 

7.             Borrower toMaintain Perfection and Priority.  Inorder to evidence the interests of the Administrative Agent and the Lendersunder this Agreement, the Borrower shall, from time to time take such action,or execute and deliver such instruments (other than filing financingstatements) as may be necessary or advisable (including, such actions as arereasonably

 

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requested by the AdministrativeAgent) to maintain and perfect, as a first-priority interest, theAdministrative Agent’s (on behalf of itself and the Lenders) security interestin the Receivables and all other collateral pledged to the Administrative Agent(on behalf of itself and the Lenders) pursuant to the Related Documents.  The Borrower shall, from time to time andwithin the time limits established by law, prepare and present to theAdministrative Agent for the Administrative Agent’s authorization and approvalall financing statements, amendments, continuations or initial financingstatements in lieu of a continuation statement in the, or other filingsnecessary to continue, maintain and perfect the Administrative Agent’s (onbehalf of itself and the Lenders) security interest in the Receivables and allother collateral pledged to the Administrative Agent (on behalf of itself andthe Lenders) pursuant to the Related Documents as a first-priority interest.The Administrative Agent’s approval of such filings shall authorize theBorrower to file such financing statements under the UCC without the signatureof the Borrower, any Originator or the Administrative Agent where allowed byapplicable law.  Notwithstanding anythingelse in the Related Documents to the contrary, neither the Borrower, theServicer, nor any Originator, shall have any authority to file a termination,partial termination, release, partial release or any amendment that deletes thename of a debtor or excludes collateral of any such financing statements,without the prior written consent of the Administrative Agent.

 

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SCHEDULE 5.01(b)toFUNDING AGREEMENT

 

TRADE NAMES/BORROWER

 

**None.**

 

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ANNEX 5.02(a)toFUNDING AGREEMENT

 

REPORTING REQUIREMENTS OF THE BORROWER

 

The Borrower shall furnish, or cause to be furnished, to each Lenderand the Administrative Agent:

 

(a)           Reporting.

 

(i)            Monthly Report. As soon as available, and in any event no later than 11:00 a.m.(New York time) on the fifteenth day of each calendar month, a monthly report(a “Monthly Report”) in the form attached hereto prepared by theBorrower as of the last day of the previous calendar month, together with anunaudited monthly balance sheet of the Borrower certified by an officer of theBorrower.  It is hereby understood andagreed that the Borrower shall be required to deliver a Monthly Report pursuantto the terms of this subsection (a)(i) notwithstanding that theBorrower may also be required to deliver Weekly Reports and Daily Reports ashereinafter described.

 

(ii)           Weekly Report. No later than 5:00 p.m. (New York time) on each Tuesday, a WeeklyReport, prepared by the Borrower as of the last day of the immediatelypreceding week. It is hereby understood and agreed that the Borrower shall berequired to deliver a Weekly Report pursuant to the terms of this subsection (a)(ii) notwithstandingthat the Borrower may also be required to deliver Daily Reports as hereinafterdescribed.

 

(iii)          Daily Report. In the event of (A) a downgrade in the rating of the long-termunsecured indebtedness of Holdings below B3 by Moody’s or (B) thewithdrawal of the rating of Moody’s of the long-term unsecured indebtedness ofHoldings, no later than 5:00 p.m.(New York time) on each  subsequentBusiness Day, a Daily Report, prepared by the Borrower as of the close ofbusiness on the immediately preceding Business Day.

 

(b)           Annual Audited Financials.  As soon as available and in any event withinninety-five (95) days after the end of each fiscal year of Holdings and theParent, as applicable, (1) the consolidated (accompanied by mutuallyacceptable supplemental non-consolidated information customarily prepared bymanagement) balance sheets of (A) the Parent and its Subsidiaries as atthe end of such year and (B) Holdings and its Subsidiaries as at the endof such year, and, the related consolidated (accompanied by mutually acceptablesupplemental non-consolidated information customarily prepared by management)statements of income, stockholders’ equity and cash flow for such fiscal year, (2) areport with respect to the consolidated (together with division-by-divisionanalysis) financial statements described in clauses (1)(A) and (1)(B) abovefrom Deloitte & Touche LLP or another firm of certified publicaccountants selected by Parent and reasonably acceptable to AdministrativeAgent, which report shall be prepared in accordance with Statement of AuditingStandards No. 58 (the “Statement”)

 

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“Reports on Audited FinancialStatements” and such report shall be “Unqualified” (as such term is defined insuch Statement) and (3) the unaudited balance sheet of  the Borrower as at the end of such year, and,the related statement of income for such fiscal year.

 

(c)           Quarterly Financials. As soon as available and inany event within fifty (50) days after the end of each fiscal quarter(including the last fiscal month of each fiscal quarter) of Holdings and theParent, as applicable, (1) the consolidated (accompanied by mutuallyacceptable supplemental non-consolidated information customarily prepared bymanagement) balance sheets of (A) the Parent and its Subsidiaries as atthe end of such fiscal quarter and (B) Holdings and its Subsidiaries as atthe end of such fiscal quarter, and the related consolidated (accompanied bymutually acceptable supplemental non-consolidated information customarilyprepared by management) statements of income, stockholders’ equity and cashflow for such fiscal quarter and for the period from the beginning of the thencurrent fiscal year of Holdings to the end of such fiscal quarter, (2) theunaudited balance sheet of the Borrower as at the end of such fiscal quarter,and, the related statement of income for such fiscal quarter, and (3) areport setting forth in comparative form the corresponding figures for thecorresponding periods of the previous fiscal year and the corresponding figuresfrom the most recent Financial Projections for the current fiscal yeardelivered pursuant to clause (e). In addition, the Borrower shallfurnish, or cause to be furnished, to the Administrative Agent and the Lenders,within fifty (50) days after the end of each fiscal quarter, a statement inreasonable detail (each, a “Compliance Certificate”)showing the calculations used in determining compliance with the test set forthon Annex Z to the Sale Agreement.

 

(d)           Monthly Financials.  As soon as available and in any event withinthirty-five (35) days after the end of each fiscal month (or forty-five (45)days for the last fiscal month of each fiscal year) of Holdings and the Parent,as applicable, (1) the consolidated (accompanied by mutually acceptablesupplemental non-consolidated information customarily prepared by management)balance sheets of (A) the Parent and its Subsidiaries and (B) Holdingsand its Subsidiaries, as at the end of such month, and the related consolidated(accompanied by mutually acceptable supplemental non-consolidated informationcustomarily prepared by management) statements of income, stockholders’ equityand cash flow for such fiscal month and for the period from the beginning ofthe then current fiscal year of Holdings to the end of such fiscal month, (2) theunaudited balance sheet of the Borrower as at the end of such fiscal month,and, the related statement of income for such fiscal month and (3) areport setting forth in comparative form the corresponding figures for thecorresponding periods of the previous fiscal year and the corresponding figuresfrom the most recent Financial Projections for the current fiscal yeardelivered pursuant to clause (e).

 

(e)           FinancialProjections.  As soon as availableand in any event no later than thirty (30) days following the last day of eachof Holdings’ fiscal year, Financial Projections of Holdings and its Subsidiaries for the forthcoming three (3) fiscalyears, year by year, and for the forthcoming fiscal year, fiscal month byfiscal month.

 

(f)            Accountants’Reports.  Promptly upon receiptthereof, copies of all significant reports submitted by Holdings’ or any of itsSubsidiaries’ firm of certified public

 

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accountants in connection witheach annual, interim or special audit or review of any type of the financialstatements or related internal control systems of Holdings or any of itsSubsidiaries made by such accountants, including any comment letter submittedby such accountants to management in connection with their services.

 

(g)           Default Notices.  As soon as practicable, and in any eventwithin five Business Days after an Authorized Officer of the Borrower hasactual knowledge of the existence thereof, telephonic or telecopied notice ofeach of the following events, in each case specifying the nature andanticipated effect thereof and what action, if any, the Borrower proposes totake with respect thereto, which notice, if given telephonically, shall bepromptly confirmed in writing on the next Business Day:

 

(i)            any IncipientTermination Event or Termination Event;

 

(ii)           any Adverse Claimmade or asserted against any of the Borrower Collateral of which it becomesaware;

 

(iii)          the occurrence ofany event that would have a material adverse effect on the aggregate value ofthe Borrower Collateral or on the assignments and Liens granted by the Borrowerpursuant to the Funding Agreement;

 

(iv)          the occurrence ofany event of the type described in Sections4.02(h)(i), (ii) or(iii) of the Sale Agreement involvingany Obligor obligated under Transferred Receivables with an aggregateOutstanding Balance at such time of $500,000 or more;

 

(v)           the commencement ofa case or proceeding by or against the Borrower, the Parent, the Servicer, anyOriginator or any other Subsidiary of Holdings seeking a decree or order inrespect of the Borrower, the Parent, the Servicer, any Originator or any otherSubsidiary of Holdings (A) under the Bankruptcy Code or any otherapplicable federal, state or foreign bankruptcy or other similar law, (B) appointinga custodian, receiver, liquidator, assignee, trustee or sequestrator (orsimilar official) for the Borrower, the Parent, the Servicer, any Originator orany other Subsidiary of Holdings or for any substantial part of its respectiveassets, or (C) ordering the winding up or liquidation of the affairs ofthe Borrower, the Parent, the Servicer, any Originator or any other Subsidiaryof Holdings;

 

(vi)          the receipt ofnotice that (A) the Borrower, the Parent, the Servicer, any Originator,any other Subsidiary of Holdings is being placed under regulatory supervision, (B) anylicense, permit, charter, registration or approval necessary for the conduct ofthe business of the Borrower, the Parent, the Servicer or any Originator is tobe, or may be, suspended or revoked, or (C) the Borrower, the Parent, theServicer, any Originator or any other Subsidiary of Holdings is to cease anddesist any practice, procedure or policy employed by it in the conduct

 

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of itsbusiness if such cessation could reasonably be expected to have a MaterialAdverse Effect; or

 

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

 

(h)           SEC Filings and Press Releases.  Promptly upon their becoming available,copies of:  (i) all financialstatements, reports, notices and proxy statements made publicly available byHoldings, the Borrower, the Parent or any Originator to its security holders; (ii) allregular and periodic reports and all registration statements and prospectuses,if any, filed by Holdings, the Borrower, the Parent or any Originator with anysecurities exchange or with the Securities and Exchange Commission or anygovernmental or private regulatory authority; and (iii) all press releasesand other statements made available by Holdings, the Borrower, the Parent orany Originator to the public concerning material adverse changes ordevelopments in the business of any such Person.

 

(i)            ERISA Notices.  Promptly after the filing or receivingthereof, copies of all reports and notices that the Borrower, any TransactionParty or any of their ERISA Affiliates files under ERISA with the InternalRevenue Services or the PBGC or the U.S. Department of Labor or that theBorrower, any Transaction Party or any of their ERISA Affiliates receives fromany of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) ofERISA) to which the Borrower, any Transaction Party or any of their ERISAAffiliates is or was, within the preceding five years, a contributing employer,in each case in respect of any accumulated funding deficiency under ERISA, any “ReportableEvent” under ERISA, or any assessment of withdrawal liability under ERISA or ayother event or condition which could, in the aggregate, result in theimposition of liability on the Borrower, any Transaction Party or any of theirERISA Affiliates in excess of $500,000.

 

(j)            Litigation. Promptly upon learning thereof, written notice of any Litigationaffecting the Borrower, the Transferred Receivables or the Borrower Collateral,whether or not fully covered by insurance, and regardless of the subject matterthereof that (i) seeks damages in excess of $100,000, (ii) seeksinjunctive relief, (iii) that seeks damages in excess of $500,000 and isasserted or instituted against any Plan, its fiduciaries (in their capacity asa fiduciary of any such Plan) or its assets or against the Borrower or anyERISA Affiliate of the Borrower in connection with any Plan, (iv) allegescriminal misconduct by the Borrower or (v) would, if determined adversely,have a Material Adverse Effect.

 

(k)           Other Documents. With reasonable promptness, such other financial and other informationrespecting the Transferred Receivables, the Contracts therefor or the conditionor operations, financial or otherwise, of the Borrower, any Originator,Holdings or any of its other Subsidiaries as any Lender or Administrative Agentshall, from time to time, reasonably request.

 

(l)            Good Standing Certificates.  As soon as available, and in any event within30 days after the end of each fiscal quarter of each Originator and theBorrower, the Borrower

 

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shall deliver to theAdministrative Agent or make available to the Administrative Agent via “Powerbrief”or a similar website, good standing certificates for each Originator and theBorrower certified as of a recent date by the Secretary of State of the Stateof organization or incorporation for each Originator and the Borrower.

 

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Form of Monthly Report

 

**[Attached]**

 

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ANNEX WADMINISTRATIVE AGENT’S ACCOUNT/LENDERS’ ACCOUNTS

 
| Deutsche Bank Trust Company Americas           |
|------------------------------------------------|
| 90 Hudson Street, 5th  Floor                   |
| Jersey City, NJ 07302                          |
|                                           |
| ABA#   021-001-033                   |
| Account Name:   GECC CAF  Depository |
| Account #   50-232-854               |
| Reference:   Vertis                  |

 

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ANNEX X

 

DEFINITIONS

 

**[Attached]**

 

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ANNEX Y

 

SCHEDULE OF DOCUMENTS

 

**[Attached]**

 

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ANNEX Z

 

SPECIAL CONCENTRATION PERCENTAGES

 

OBLIGOR PERCENTAGE

 
| **Obligor**            | ** ** | **Special Concentration Percentage**                                                                                        |
|------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|
| **The Kroger Company** | ** ** | **So long as the short term debt of this  Obligor is rated A-2 or better by S&P and P-2 or better by Moody’s, 8%** |

 

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