Document:

Exhibit 10.6

 

EXECUTION COPY

 

RECEIVABLES SALE AND SERVICING AGREEMENT

 

Dated as of November 25, 2005

 

by and among

 

EACH OF THE ENTITIES PARTY HERETO FROM TIME TO TIME

AS ORIGINATORS,

 

VERTIS RECEIVABLES II, LLC,

 

as Buyer,

 

and

 

VERTIS, INC.,

 

as Servicer

 

 

Receivables Sale and Servicing
Agreement

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND
  INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 1.01. Definitions

  	
  1

  
	
   

  	
  Section 1.02. Rules of
  Construction

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II TRANSFERS OF
  RECEIVABLES

  	
  2

  
	
   

  	
   

  
	
   

  	
  Section 2.01. Agreement to
  Transfer

  	
  2

  
	
   

  	
  Section 2.02. Grant of
  Security Interest

  	
  3

  
	
   

  	
  Section 2.03. Originator
  Support Agreement

  	
  3

  
	
   

  	
  Section 2.04. Originators
  Remain Liable

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III CONDITIONS
  PRECEDENT

  	
  4

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.01. Conditions
  Precedent to Initial Transfer

  	
  4

  
	
   

  	
  Section 3.02. Termination of
  Transfers

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.01. Representations
  and Warranties of the Transaction Parties

  	
  5

  
	
   

  	
  Section 4.02. Affirmative
  Covenants of the Originators

  	
  13

  
	
   

  	
  Section 4.03. Negative
  Covenants of the Originators

  	
  19

  
	
   

  	
  Section 4.04. Breach of
  Representations, Warranties or Covenants

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE V INDEMNIFICATION

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 5.01. Indemnification

  	
  22

  
	
   

  	
  Section 5.02. Indemnities by
  the Servicer

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI MISCELLANEOUS

  	
  25

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 6.01. Notices

  	
  25

  
	
   

  	
  Section 6.02. No Waiver;
  Remedies

  	
  26

  
	
   

  	
  Section 6.03. Successors and
  Assigns

  	
  27

  
	
   

  	
  Section 6.04. Termination;
  Survival of Obligations.

  	
  27

  
	
   

  	
  Section 6.05. Complete
  Agreement; Modification of Agreement

  	
  28

  
	
   

  	
  Section 6.06. Amendments and
  Waivers

  	
  28

  
	
   

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

  	
  28

  
	
   

  	
  Section 6.08. Counterparts

  	
  29

  
	
   

  	
  Section 6.09. Severability

  	
  29

  
	
   

  	
  Section 6.10. Section Titles

  	
  30

  
	
   

  	
  Section 6.11. No Setoff

  	
  30

  
	
   

  	
  Section 6.12. Confidentiality

  	
  30

  
	
   

  	
  Section 6.13. Further
  Assurances

  	
  31

  

 

 

	
   

  	
  Section 6.14. Fees and
  Expenses

  	
  32

  
	
   

  	
  Section 6.15. Nonrecourse
  Obligations

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII SERVICER
  PROVISIONS

  	
  32

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.01. Appointment of
  the Servicer

  	
  32

  
	
   

  	
  Section 7.02. Duties and
  Responsibilities of the Servicer

  	
  32

  
	
   

  	
  Section 7.03. Collections on
  Receivables

  	
  33

  
	
   

  	
  Section 7.04. Covenants of the
  Servicer

  	
  35

  
	
   

  	
  Section 7.05. Reporting
  Requirements of the Servicer

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII EVENTS OF
  SERVICER TERMINATION

  	
  39

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 8.01. Events of
  Servicer Termination

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX SUCCESSOR SERVICER
  PROVISIONS

  	
  42

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.01. Servicer Not to
  Resign

  	
  42

  
	
   

  	
  Section 9.02. Appointment of
  the Successor Servicer

  	
  43

  
	
   

  	
  Section 9.03. Duties of the
  Servicer

  	
  43

  
	
   

  	
  Section 9.04. Effect of
  Termination or Resignation

  	
  44

  
	
   

  	
  Section 9.05. Power of
  Attorney

  	
  44

  

 

INDEX OF APPENDICES

 

	
  Exhibit 2.01(a)

  	
  Form of Receivables Assignment

  	
   

  
	
  Exhibit 2.01(c)(ii)

  	
  Form of Subordinated Note

  	
   

  
	
  Exhibit 2.03

  	
  Form of Originator Support Agreement

  	
   

  
	
  Exhibit 9.05

  	
  Form of Power of Attorney

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 4.01(b) 

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

  	
   

  
	
  Schedule 4.01(j)

  	
  Intellectual Property

  	
   

  
	
  Schedule 4.01(k)

  	
  Investigations, Audits, Etc.

  	
   

  
	
  Schedule 4.01(l)

  	
  Litigation

  	
   

  
	
  Schedule 4.01(n)

  	
  ERISA

  	
   

  
	
  Schedule 4.01(o)

  	
  Deposit and Disbursement Accounts

  	
   

  
	
  Schedule 4.01(z)

  	
  Supplementary Representations

  	
   

  
	
  Schedule 4.02(g)

  	
  Conduct of Business

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex X

  	
  Definitions and Interpretations

  	
   

  
	
  Annex Y

  	
  Schedule of Documents

  	
   

  
	
  Annex Z

  	
  Financial Test

  	
   

  

 

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

AGREEMENT

 

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

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

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

 

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

 

 

ARTICLE II

TRANSFERS OF RECEIVABLES

 

Section 2.01.  Agreement
to Transfer.

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

ARTICLE III

CONDITIONS PRECEDENT

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

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

 

(a)                                  Organization,
Powers and Good Standing.

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

(g)                                 Margin
Regulations.

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

(m)                               Taxes.

 

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

 

8

 

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

 

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

 

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

 

(n)                                 ERISA.

 

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

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

 

9

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

(v)                                 [RESERVED].

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     Separate
Identity.

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

(k)                                  Payment,
Performance and Discharge of Obligations.

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

(l)                                     [RESERVED].

 

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

 

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

 

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

 

21

 

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

 

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

 

ARTICLE V

INDEMNIFICATION

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

23

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 5.02.  Indemnities
by the Servicer.

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE VI

MISCELLANEOUS

 

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

 

25

 

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

 

	
  Each
  Originator:

  	
   

  	
  c/o Vertis, Inc.

  
	
   

  	
   

  	
  250 West Pratt Street

  
	
   

  	
   

  	
  Baltimore, MD 21201

  
	
   

  	
   

  	
  Attention: Chief Financial Officer and Chief Legal
  Officer

  
	
   

  	
   

  	
  Facsimile No.: (410) 454-0887

  
	
   

  	
   

  	
   

  
	
  Buyer:

  	
   

  	
  Vertis Receivables II, LLC

  
	
   

  	
   

  	
  250 West Pratt Street

  
	
   

  	
   

  	
  Baltimore, MD 21201

  
	
   

  	
   

  	
  Attention: Chief Financial Officer and Chief Legal
  Officer

  
	
   

  	
   

  	
  Facsimile No.: (410) 454-0887

  
	
   

  	
   

  	
   

  
	
  Parent:

  	
   

  	
  Vertis, Inc.

  
	
   

  	
   

  	
  250 West Pratt Street

  
	
   

  	
   

  	
  Baltimore, MD 21201

  
	
   

  	
   

  	
  Attention: Chief Financial Officer and Chief Legal
  Officer

  
	
   

  	
   

  	
  Facsimile No.: (410) 454-0887.

  

 

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

 

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

 

26

 

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

 

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

 

Section 6.04.  Termination;
Survival of Obligations.

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

Section 6.12.  Confidentiality.

 

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

 

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

 

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

 

30

 

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

 

Section 6.13.  Further
Assurances.

 

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

 

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

 

31

 

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

 

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

 

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

 

ARTICLE VII

SERVICER PROVISIONS

 

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

 

Section 7.02.  Duties and
Responsibilities of the Servicer.

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

Section 7.03.  Collections
on Receivables.

 

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

 

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

 

33

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

ARTICLE VIII

EVENTS OF SERVICER TERMINATION

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

(l)            a Change of Control shall occur; or

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

ARTICLE IX

SUCCESSOR SERVICER PROVISIONS

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

44

 

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

 

 

	
   

  	
  VERTIS RECEIVABLES II, LLC, as Buyer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT, LLC, as an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WEBCRAFT CHEMICALS, LLC, as an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENTERON GROUP, LLC, as an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V. Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS MAILING, LLC, as
  an Originator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  
	
   

  	
  Name:

  	
   John V.
  Howard, Jr.

  
	
   

  	
  Title:

  	
   

  	
   Chief Legal
  Officer and Secretary

  
					

 

S-1

 

EXHIBIT 2.01(a)

 

Form of

 

RECEIVABLES ASSIGNMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

	
  [NAME OF
  ORIGINATOR]

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  VERTIS
  RECEIVABLES II, LLC, as Buyer

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
				

 

2

 

EXHIBIT 2.01(c)(ii)

 

Form of

 

SUBORDINATED NOTE

 

	
  $[                ]

  	
   

  	
  [                ]

  

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

	
   

  	
  VERTIS
  RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
						

 

4

 

SCHEDULE OF LOANS TO SUBORDINATED NOTE

 

	
  Date

  	
   

  	
  Amount
  of

  Subordinated Loan

  	
   

  	
  Amount
  of

  Principal Paid

  	
   

  	
  Unpaid

  Principal Balance

  	
   

  	
  Notation

  made by

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

5

 

EXHIBIT 2.03

 

Form of

 

ORIGINATOR SUPPORT AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

AGREEMENT

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  VERTIS, INC., as
  Parent

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
						

 

4

 

EXHIBIT 9.05

 

Form of

 

POWER OF ATTORNEY

 

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

 

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

 

 

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

 

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

 

 

	
  Grantor

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
  (SEAL)

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
								

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

 

2

 

SCHEDULE 4.01(b)

 

JURISDICTION OF ORGANIZATION; EXECUTIVE OFFICES; COLLATERAL

LOCATIONS; CORPORATE, LEGAL AND OTHER NAMES; IDENTIFICATION

NUMBERS

 

[Attached]

 

 

SCHEDULE 4.01(j)

 

INTELLECTUAL PROPERTY

 

None.

 

 

SCHEDULE 4.01(k)

 

INVESTIGATIONS, AUDITS, ETC.

 

[Attached]

 

 

SCHEDULE 4.01(l)

 

LITIGATION

 

[Attached]

 

 

SCHEDULE 4.01(n)

 

ERISA

 

[Attached]

 

 

SCHEDULE 4.01(o)

 

DEPOSIT AND DISBURSEMENT ACCOUNTS

 

[Attached]

 

 

SCHEDULE 4.01(z)

 

SUPPLEMENTARY REPRESENTATIONS

 

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

 

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

 

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

 

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

 

4.                                       Priority.

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

2

 

SCHEDULE 4.02(g)

 

CONDUCT OF BUSINESS

 

[Attached]

 

 

ANNEX X

 

DEFINITIONS

 

[Attached]

 

 

ANNEX Y

 

SCHEDULE OF DOCUMENTS

 

[Attached]

 

 

ANNEX Z

 

FINANCIAL TEST

 

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

 

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

 

	
  Consolidated Net
  Income is defined as follows:

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  

 

 

	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Net
  Income

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA is
  defined as follows:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Net
  Income (from above)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plus:

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Interest
  Expense, net of interest income

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Non-cash
  interest expense and amortization of original issue discount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  any fees payable
  with respect to the Related Documents

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  gain/ (losses)
  from extraordinary items

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  non-recurring
  gains/ (losses)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  amortization of
  deferred financing fees

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  restructuring
  charges (GAAP)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  restructuring
  charges (non-GAAP)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  depreciation and
  amortization

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Required EBITDA

  	
   

  	
  $

  	
  160,000,000

  
						

 

2

 

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

 

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

 

3Exhibit 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

 

 

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

  

 

i

 

	
   

  	
  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

  

 

ii

 

	
  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

  	
   

  

 

iii

 

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 liability
company (the “Borrower”), the financial
institutions signatory hereto from time to time as lenders (the “Lenders”), and GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation, as a Lender, as swing line lender (in such
capacity, the “Swing Line Lender”) and as administrative agent for the
Lenders hereunder (in such capacity, the “Administrative
Agent”).

 

RECITALS

 

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

 

B.            The Borrower has
been formed for the purpose of purchasing, or otherwise acquiring by capital
contribution, Receivables of the Originators party to the Sale Agreement.

 

C.            The Borrower intends
to fund its purchases of the Receivables, in part, by borrowing Advances and
pledging all of its right, title and interest in and to the Receivables as
security therefor, and, subject to the terms and conditions hereof, the Lenders
intend to make such Advances, from time to time, as described herein.

 

D.            The Administrative
Agent has been requested and is willing to act as administrative agent on
behalf of each of the Lenders in connection with the making and financing of
such Advances.

 

AGREEMENT

 

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

 

ARTICLE I.

 

DEFINITIONS AND INTERPRETATION

 

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

 

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

 

 

ARTICLE II.

 

AMOUNTS AND TERMS OF ADVANCES

 

Section 2.01.  Advances.

 

(a)           Revolving Credit Advances.  (i)  From and after the Effective Date
and until the Commitment Termination Date and subject to the terms and
conditions hereof, each Lender (other than the Swing Line Lender) severally
agrees to make its Pro Rata Share of advances (each such advance hereunder, a “Revolving Credit Advance”) to the Borrower from
time to time.  The Outstanding Principal
Amount of all Revolving Credit Advances shall not at any time exceed the
Aggregate Commitment and the Outstanding Principal Amount of Revolving Credit
Advances made by each Lender shall not exceed such Lender’s several
Commitment.  Except to the extent
provided in Section 2.06(c), no Lender
shall make any Revolving Credit Advances if, after giving effect thereto, a
Funding Excess would exist.  The Borrower
may from time to time borrow, repay and reborrow Revolving Credit Advances
hereunder on the terms and conditions set forth herein.

 

(ii)           The Borrower shall
execute and deliver to each Lender (other than a Swing Line Lender) that makes
a request therefor, a note to evidence the Revolving Credit Advances which may
be made hereunder from time to time by such Lender.  Each such note shall be (x) in the principal
amount of the Commitment of the applicable Lender, (y) dated as of the date of
issuance thereof, and (z) substantially in the form of Exhibit 2.01(a)(ii) (each,
a “Revolving Note”).  Each Revolving Note shall represent the
obligation of the Borrower to pay the amount of each Lender’s Commitment or, if
less, the Lender’s Pro Rata Share of the aggregate Outstanding Principal Amount
of all outstanding Revolving Credit Advances made to the Borrower, together
with interest thereon as prescribed in Section 2.06.  The Outstanding Principal Amount of Revolving
Credit Advances and all other accrued and unpaid Borrower Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date.

 

(b)           Swing Line Advances.  (i) From and after the Effective Date
and until the Commitment Termination Date and subject to the terms and
conditions hereof, the Swing Line Lender agrees to make advances (each such
advance hereunder, a “Swing Line Advance”)
to the Borrower from time to time.  The
aggregate amount of the Swing Line Loan shall not at any time exceed the Swing
Line Commitment.  Under no circumstances
shall the Swing Line Lender make a Swing Line Advance if, after giving effect
thereto, the aggregate amount of the Swing Line Loan would exceed the Swing
Line Commitment.  The Swing Line Lender
shall not make any Swing Line Advance, if after giving effect thereto, a
Funding Excess would exist. The Borrower may from time to time borrow, repay
and reborrow Swing Line Advances hereunder on the terms and conditions set
forth herein.  Unless the Swing Line
Lender has received at least one Business Day’s prior written notice from the
Lenders instructing it not to make a Swing Line Advance, the Swing Line Lender
shall, 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 make
Revolving Credit Advances in accordance with Section 2.01(b)(iii) or
purchase participating interests in accordance with Section 2.01(b)(iv).  Subject to Section 12.15(b), the

 

2

 

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

 

(ii)           The Borrower shall
execute and deliver to the Swing Line Lender a note to evidence the Swing Line
Loan.  Such note shall be in the
principal amount of the Swing Line Commitment, dated the Closing Date and
substantially in the form of Exhibit 2.01(b)(ii) (the
“Swing Line Note”).  The Swing Line Note shall represent the
obligation of the Borrower to pay the Swing Line Loan, together with interest
thereon as prescribed in Section 2.06.  The Swing Line Loan and all other accrued and
unpaid Borrower Obligations shall be immediately due and payable in full in
immediately available funds on the Commitment Termination Date.

 

(iii)          The Swing Line
Lender, at any time and from time to time no less frequently than once per
month, shall on behalf of the Borrower (and the Borrower hereby irrevocably
authorizes 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 the
Borrower in an amount equal to such Lender’s Pro Rata Share of the principal
amount of the Swing Line Loan (the “Refunded Swing
Line Loan”) outstanding on the date such notice is given.  Unless the Commitment Termination Date  has occurred (in which event the procedures
of subsection (iv) below
shall apply) and regardless of whether the conditions precedent set forth in Sections 3.01 and 3.02
to the making of a Revolving Credit Advance are then satisfied, each Lender
shall disburse directly to the Administrative Agent, its Pro Rata Share of a
Revolving 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 next
succeeding the date on which such notice is given; provided
that (i) no Lender shall be required to make such a Revolving Credit
Advance if the Swing Line Advance to be financed was made in violation of the
fourth sentence of Section 2.01(b)(i) and
the Funding Excess resulting therefrom has not yet been cured, (ii) no
Lender shall be required to make such a Revolving Credit Advance if, after
giving effect to such Revolving Credit Advance, the Outstanding Principal
Amount of the Revolving Credit Advances made by such Lender would exceed such
Lender’s several Commitment and (iii) no Lender shall be required to make
such a Revolving Credit Advance after the Final Advance Date.  The proceeds of such Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to
repay the Refunded Swing Line Loan.

 

(iv)          If, prior to
refunding a Swing Line Loan with a Revolving Credit Advance pursuant to Section 2.01(b)(iii), the Commitment
Termination Date or one of the events described in Sections
8.01(d) or (e) has
occurred, 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 been
made for the benefit of the Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan in an amount equal to
its Pro Rata Share of such Swing Line Loan. 
Upon request by the Swing Line Lender, each Lender shall promptly
transfer to the Swing Line Lender, in immediately available funds, the amount
of its participation interest.

 

3

 

(v)           Each Lender’s
obligation to make Revolving Credit Advances in accordance with Section 2.01(b)(iii) and to
purchase 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 last
sentence of Section 2.01(b)(iii), be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
that such Lender may have against the Swing Line Lender, the Borrower or any
other Person for any reason whatsoever; (B) the occurrence or continuance
of any Termination Event or Incipient Termination Event; (C) any inability
of the Borrower to satisfy the conditions precedent to borrowing set forth in
this Agreement at any time; or (D) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.  If any Lender does not make available to the
Administrative Agent or the Swing Line Lender, as applicable, the amount
required pursuant to Sections 2.01(b)(iii) or
(b)(iv), as the case may be, the Swing Line
Lender 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 until
such amount is paid in full at the Federal Funds Rate for the first two
Business Days and at the Index Rate thereafter.

 

Section 2.02.  Optional Changes in Aggregate Commitment.

 

(a)           So long as no
Incipient 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 give
ten Business Days’ prior written notice of any such reduction to the
Administrative Agent substantially in the form of Exhibit 2.02(a) (each
such notice, a “Commitment Reduction Notice”),
(ii) any partial reduction of the Aggregate Commitment shall be in a
minimum amount of $5,000,000 or an integral multiple thereof and (iii) no
such partial reduction shall reduce the Aggregate Commitment below the greater
of (x) the Outstanding Principal Amount at such time and (y) $100,000,000.  Any such reduction in the Aggregate
Commitment shall result in (i) a reduction in each Lender’s Commitment in
an amount equal to such Lender’s Pro Rata Share of the amount by which the
Aggregate Commitment is being reduced and (ii) a proportional reduction in
the Swing Line Commitment; provided, however, that no such partial reduction shall
reduce the Swing Line Commitment below the aggregate amount of the Swing Line
Loan.

 

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

 

(c)           Each written notice
required to be delivered pursuant to Sections 2.02(a) and
(b) shall be
irrevocable and shall be effective (i) on the day of receipt if received
by the Administrative Agent and the Lenders not later than 2:00 p.m. (New
York time) on any Business Day and (ii) on the immediately succeeding
Business Day if received by the Administrative

 

4

 

Agent and the Lenders after
such time on such Business Day or if any such notice is received on a day other
than a Business Day (regardless of the time of day such notice is
received).  Each such notice of
termination or reduction shall specify, respectively, the amount of, or the
amount 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 Administrative
Agent in the manner provided herein.  Any
such notice must be given in writing so that it is received no later than 12:00
noon (New York time) on the Business Day of the proposed Advance Date set forth
therein. Each Borrowing requested pursuant to a Borrowing Request shall be in
the form of an Swing Line Advance until such Swing Line Advance is refunded or
otherwise 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 requested
Borrowing (which shall be in a minimum amount of $1,000,000 or an intergral
multiple 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 as
may be required by the Lenders and the Administrative Agent.  Unless a LIBOR Rate Disruption Event shall
have occurred, each Advance shall be a LIBOR Rate Advance. The Administrative
Agent shall review the Borrowing Base Certificate delivered in connection with
each Borrowing Request to confirm whether a Funding Excess exists or would
arise after giving effect to the Borrowing requested in the related Borrowing
Request.  If, in connection with such
review, the Administrative Agent determines that a Funding Excess exists or
would arise after giving effect to the Borrowing requested in the related
Borrowing Request, the Administrative Agent shall promptly notify each Lender
thereof.

 

(b)           Advances; Payments.

 

(i)            (A) The Administrative Agent
shall, promptly after receipt of a Borrowing Request and in any event prior to
12:00 noon (New York time) on the date such Borrowing Request is deemed
received, by telecopy, telephone or other similar form of communication notify
the Swing Line Lender of its receipt of a Borrowing Request relating to a
request for Swing Line Advances, and (B) the Swing Line Lender shall make
the amount of such Swing Line Advance available to the Administrative Agent in
same day funds by wire transfer to the Administrative Agent’s account as set
forth 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’s
sole 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 Agent
shall make available to the Borrower by deposit into the Borrower Account on
the Advance Date therefor, the lesser of (x) the amount of the requested Borrowing
and (y) the Funding Availability.  All
payments by each Lender under this Section 2.03(b)(i) shall
be made without setoff, counterclaim or deduction of any kind.

 

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

 

5

 

amount of such
Lender’s Pro Rata Share of principal, interest and Fees (to the extent payable
to all Lenders) paid for the benefit of Lenders with respect to each applicable
Revolving Credit Advance.  Provided that
such Lender has made all payments required to be made by it and purchased all
participations required to be purchased by it under this Agreement and the
other Related Documents as of such Interest Payment Date, the Administrative
Agent 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 each
applicable Revolving Credit Advance, paid by the Borrower since the previous
Interest Payment Date for the benefit of that Lender.  Such payments shall be made by wire transfer
to such Lender’s account (as specified by such Lender in Annex
W 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, the
Administrative Agent will advise the Swing Line Lender of the amount of
principal, interest and Fees paid for the benefit of the Swing Line Lender with
respect to the Swing Line Loan.  The
Administrative Agent will pay to the Swing Line Lender the amount of principal,
interest and Fees paid by the Borrower since the previous Interest Payment Date
for the benefit of the Swing Line Lender. 
Such payments shall be made by wire transfer or by book balance to the
Swing Line Lender’s account (as specified by the Swing Line Lender in Annex W
or the applicable Assignment Agreement) not later than 2:00 p.m. (New York
time) on each Interest Payment Date.

 

(c)           Availability of Lenders’ Advances.  The Administrative Agent may assume that each
Lender (other than the Swing Line Lender) will make its Pro Rata Share of each
Borrowing of Revolving Credit Advances available to the Administrative Agent on
each Advance Date.  If the Administrative
Agent has made available to the Borrower such Lender’s Pro Rata Share of any
such Borrowing but such Pro Rata Share is not, in fact, paid to the
Administrative Agent by such Lender when due, the Administrative Agent will be
entitled 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 amounts
paid by the Administrative Agent on its behalf pursuant to the preceding
sentence forthwith upon the Administrative Agent’s demand, the Administrative
Agent shall promptly notify the Borrower and the Borrower shall immediately
repay such amount to the Administrative Agent. 
Nothing in this Section 2.03(c) or
elsewhere in this Agreement or the other Related Documents shall be deemed to
require the Administrative Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitment hereunder or
to prejudice any rights that the Borrower may have against any Lender as a
result of any default by such Lender hereunder. 
To the extent that the Administrative Agent advances funds to the
Borrower on behalf of any Lender and is not reimbursed therefor on the same
Business Day as such Revolving Credit Advance is made, the Administrative Agent
shall be entitled to retain for its account all interest accrued on such
Revolving Credit Advance from the date of such Revolving Credit Advance to the
date such Revolving Credit Advance is reimbursed by the applicable Lender.

 

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

 

6

 

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

 

(ii)           If at any time any amount received by
the Administrative Agent under this Agreement must be returned to the Borrower
or paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other
Related Document, the Administrative Agent will not be required to distribute
any portion thereof to any Lender.  In
addition, each Lender will repay to the Administrative Agent on demand any
portion of such amount that the Administrative Agent has distributed to such
Lender, together with interest at such rate, if any, as the Administrative
Agent 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 any
Revolving Credit Advance to be made by it on the date specified therefor shall
not relieve any other Lender (each such other Lender, an “Other Lender”) of its obligations to make the
Revolving Credit Advance to be made by it, but neither any Other Lender nor the
Administrative Agent shall be responsible for the failure of any Non-Funding
Lender to make a Revolving Credit Advance to be made by such Non-Funding
Lender.  Notwithstanding anything set
forth herein to the contrary, a Non-Funding Lender shall not have any voting or
consent rights under or with respect to any Related Document or constitute a “Lender”
(or be included in the calculation of “Requisite Lenders” hereunder) for any
voting or consent rights under or with respect to any Related Document unless
and until such Non-Funding Lender shall have cured in full its failures to make
Revolving Credit Advances hereunder.

 

(f)            Dissemination of Information.  The Administrative Agent will use reasonable
efforts to provide Lenders with (i) copies of all notices and other
documents provided to the Administrative Agent pursuant to Section 5.02, (ii) any notice of an
Incipient Termination Event or Termination Event received by the Administrative
Agent from, or delivered by the Administrative Agent to, the Borrower, (iii) notice
of any Termination Event of which the Administrative Agent has actually become
aware and (iv) notice of any action taken by the Administrative Agent
following any Termination Event; provided, however, that, in the absence of gross negligence
or wilful misconduct, the Administrative Agent shall not be liable to any
Lender 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 any
action to protect or enforce its rights arising out of this Agreement, the
Revolving Notes or the Swing Line Note (including exercising any rights of
set-off) without first obtaining the prior written consent of the
Administrative Agent or the Requisite Lenders, it being the intent of the
Lenders that any such action to protect or enforce rights under this Agreement,
the Revolving Notes and the Swing Line Note shall, subject to any provision
herein requiring that each Lender consent to a particular action, be taken in
concert and at the direction or with the consent of the Administrative Agent or
the Requisite Lenders.

 

(h)           Principal Repayments.  Subject to Section 12.15(b), the
Borrower may at any time repay outstanding Advances hereunder; provided that (i) the Borrower shall give
not

 

7

 

less than one Business Day’s
prior written notice of any such repayment to the Administrative Agent
substantially in the form of Exhibit 2.03(h) (each
such notice, a “Repayment Notice”), (ii) each
such notice shall be irrevocable, (iii) each such notice shall specify the
amount of the requested repayment and the proposed date of such repayment
(which shall be a Business Day),  (iv) any
such repayment shall be applied first to the Swing Line Loan until the
Outstanding Principal Amount thereof has been reduced to zero, and second to
the outstanding Revolving Credit Advances (provided,
that if a Funding Excess exists and any outstanding Swing Line Advances were
made in violation of the fourth sentence of Section 2.01(b)(i) or were
funded after the Commitment Termination Date, then such Swing Line Advance will
be repaid after the Revolving Credit Advances) and (v) any such repayment
must be accompanied by payment of (A) all interest accrued and unpaid on
the portion of the outstanding principal balance of the Advances to be repaid
through but excluding the date of such repayment and (B) the amounts
required to be paid in accordance with Section 2.10,
if any.  Any such notice of repayment
must be received by the Administrative Agent no later than 4:00 p.m. (New
York time) on the Business Day immediately preceding the date of the proposed
repayment; provided, further,
that the foregoing requirements shall not apply to repayment of the outstanding
principal amount of Advances as a result of the application of Collections
pursuant to Section 2.08.

 

Section 2.04.  Pledge and Release of Transferred Receivables.

 

(a)           Pledge. 
The Borrower shall indicate in its Records that the Transferred
Receivables have been pledged hereunder and that the Administrative Agent has a
lien on and security interest in all such Transferred Receivables for the
benefit of the Lenders.  The Borrower
shall, and shall cause the Servicer to, hold all Contracts and other documents
relating to such Transferred Receivables in trust for the benefit of the
Administrative Agent on behalf of the Lenders in accordance with their interests
hereunder.

 

(b)           Repurchases of Transferred Receivables.  If an Originator is required to repurchase
Transferred Receivables from the Borrower pursuant to Section 4.04
of the Sale Agreement, upon payment by such Originator to a Collection Account
of the applicable repurchase price thereof (which repurchase price shall not be
less than an amount equal to the Billed Amount of such Transferred Receivable minus the sum of (A) Collections received in
respect thereof and (B) the amount of any Dilution Factors taken into
account in the calculation of the Sale Price therefor), the Administrative
Agent on behalf of the Lenders shall  be
deemed to have released their liens on and security interests in the
Transferred Receivables being so repurchased without any requirement of further
action by the Agent or any Lender.

 

Section 2.05.  Commitment Termination Date.  Notwithstanding anything to the contrary set
forth herein, no Lender shall have any obligation to make any Advances from and
after the Commitment Termination Date.

 

Section 2.06.  Interest; Charges.

 

(a)           The Borrower shall
pay interest to the Administrative Agent, for the ratable benefit of the
Lenders, with respect to the outstanding amount of each Revolving Credit
Advance made or maintained by each Lender, in arrears on each applicable
Interest Payment Date, (i) for each LIBOR Rate Advance, at the applicable
LIBOR Rate as in effect from time to

 

8

 

time during the period
applicable to such Interest Payment Date, and (ii) for each Index Rate
Advance outstanding from time to time, at the applicable Index Rate as in
effect from time to time during the period applicable to such Interest Payment
Date.  The Borrower shall pay interest to
the Administrative Agent, for the benefit of the Swing Line Lender, with
respect to the outstanding amount of each Swing Line Advance, in arrears on
each applicable Interest Payment Date, at the LIBOR Rate as in effect from time
to time during the period applicable to such Interest Payment Date.  Interest for each Advance shall be calculated
based upon actual days elapsed during the applicable calendar month or other
period, for a 360 day year based upon actual days elapsed since the last Interest
Payment Date.  Unless a LIBOR Rate Disruption
Event shall have occurred, each Advance shall be a LIBOR Rate Advance.

 

(b)           So long as any
Termination Event shall have occurred and be continuing, the interest rates
applicable to each Advance and any other unpaid Borrower Obligation hereunder
shall be increased by two percent (2.0%) per annum (such increased rate, in
each case, the “Default Rate”), and all
outstanding Borrower Obligations shall bear interest at the applicable Default
Rate from the date of such Termination Event until such Termination Event is
waived or cured.

 

(c)           The Administrative
Agent is authorized to, and at its sole election may, charge to the Borrower as
Revolving Credit Advances and cause to be paid all Fees, Rating Agency fees,
expenses, charges, costs, interest and principal, other than principal of the
Advances, owing by the Borrower under this Agreement or any of the other
Related Documents if and to the extent the Borrower fails to pay any such
amounts as and when due, and any charges so made shall constitute part of the
Outstanding Principal Amount hereunder even if such charges would cause the
aggregate balance of the Outstanding Principal Amount to exceed the Borrowing
Base.

 

Section 2.07.  Fees.

 

(a)           On the Effective
Date, the Borrower shall pay to the Administrative Agent, for the account of
itself and the Lenders, as applicable, the fees set forth in the Fee Letter
that are payable on the Effective Date.

 

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

 

(c)           On each Settlement
Date, the Borrower shall pay to the Servicer or to the Successor Servicer, as
applicable, the Servicing Fee or the Successor Servicing Fees and Expenses,
respectively, in each case to the extent of available funds therefor pursuant
to Section 2.08.

 

Section 2.08.  Application of Collections; Time and Method of Payments.  The entirety of this Section 2.08
shall be subject to Section 12.15(b) (including, without
limitation, subsections (a), (b), (c), (d) and
(e)).

 

9

 

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

 

(b)           On each Business
Day, the Administrative Agent shall allocate amounts on deposit in the Agent
Account on such day and not previously allocated under this subsection (b) as
follows, in the following order of priority:

 

(i)            first,
to be retained in the Agent Account and paid in accordance with clause (i) of the
following subsection (c), an amount
equal to the aggregate Fees accrued and unpaid through such date and all
unreimbursed expenses of the Administrative Agent which are reimbursable
pursuant to the terms hereof; provided, that, the sum of (i) the
amounts retained pursuant to this clause first and (ii) the amounts
paid pursuant to clause (i) of the following subsection (c) shall
not exceed $100,000 in any calendar year;

 

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

 

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

 

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

 

(v)           fifth, the
extent not already retained in the Agent Account in accordance with clause
first, to be retained in the Agent Account and paid in accordance with clause (vi) of the
following subsection (c), an
amount equal to the aggregate Fees accrued and unpaid through such date and all
unreimbursed expenses of the Administrative Agent which are reimbursable
pursuant to the terms hereof;

 

(vi)          sixth,
if any of the conditions precedent set forth in Section 3.02 shall
not be satisfied, to be retained in the Agent Account until paid in accordance
with the following subsection (c) or
all such conditions are satisfied;

 

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

 

10

 

of all other
accrued and unpaid Borrower Obligations which are then required to be paid
according to such subsection, including, without limitation, the expenses of
the Lenders reimbursable under Section 12.04;
and

 

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

 

(c)           On each Settlement
Date on which any Borrower Obligations are due for payment, the Administrative
Agent shall withdraw amounts on deposit in the Agent Account and pay such amounts
as 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 unpaid
through such date and all unreimbursed expenses of the Administrative Agent
which are reimbursable pursuant to the terms hereof; provided, that, the
disbursement pursuant to this clause first shall not exceed $100,000 in
any calendar year;

 

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

 

(iii)          third,
unless an Event of Servicer Termination (other than the type specified in
Section 8.01(i) of the Sale Agreement) has occurred and is continuing, to the
payment 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 be
applied in the following order, to the payment of the Outstanding Principal
Amount of Advances, first,
in respect of Swing Line Advances, (provided,
that if a Funding Excess exists and any outstanding Swing Line Advances were
made in violation of the fourth sentence of Section 2.01(b)(i),
then such Swing Line Advance will be repaid after the Revolving Credit
Advances), and second,
in respect of Revolving Credit Advances, pro rata;

 

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

 

11

 

(vi)          sixth, to the
extent then due and payable and not otherwise paid in accordance with clause
first above, pro rata, to the payment of all
Fees accrued and unpaid through such date and all unreimbursed expenses of the
Administrative Agent which are reimbursable pursuant to the terms hereof;

 

(vii)         seventh, to
the extent then due and payable, pro rata, to
the payment of all other obligations of the Borrower accrued and unpaid
hereunder, including, without limitation, the expenses of the Lenders
reimbursable under Section 12.04; and

 

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

 

(d)           If and to the extent
a Funding Excess is determined to exist on any Business Day, (i) by no later than 4:00 p.m. (New York
time) on the Business Day immediately succeeding the Business Day that
such Funding Excess was determined to exist, the Administrative Agent shall
allocate the amounts set aside pursuant to clause (b)(iv) of Section 2.08
to reduce such Funding Excess and (ii) if such Funding Excess is greater
than the amounts set aside pursuant to clause (b)(iv) of Section 2.08
to 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 immediately
succeeding 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 to
the foregoing sentence shall be applied by the Administrative Agent first, in
immediate repayment of the outstanding amount of Swing Line Advances, and if no
Swing Line Advances are outstanding, and second, in immediate repayment of the
outstanding amount of Revolving Credit Advances (together with amounts payable
with respect thereto under Section 2.10).

 

(e)           To the extent that
amounts on deposit in the Agent Account on any day are insufficient to pay
amounts due on such day in respect of the matured portion of any Advances or
any interest, Fees or any other amounts due and payable by the Borrower
hereunder, the Borrower shall pay, upon notice from the Administrative Agent,
the amount of such insufficiency to the Administrative Agent in Dollars, in
immediately available funds (for the account of the Administrative Agent, the
applicable Lenders, Affected Parties or Indemnified Persons) not later than
4:00 p.m. (New York time) on such day. 
Any such payment made on such date but after such time shall be deemed
to have been made on, and interest shall continue to accrue and be payable
thereon at the LIBOR Rate (in the case of LIBOR Rate Advances) or the Index
Rate (in all other cases), until the next succeeding Business Day.

 

(f)            The Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of the Borrower, and the Borrower hereby

 

12

 

irrevocably agrees that any and
all such payments shall be applied by the Administrative Agent in accordance
with this Section 2.08.

 

(g)           All payments of
principal of the Advances and all payments of interest, Fees and other amounts
payable by the Borrower hereunder shall be made in Dollars, in immediately
available funds.  If any such payment
becomes due on a day other than a Business Day, the maturity thereof will be
extended to the next succeeding Business Day and interest thereon at the LIBOR
Rate (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 any
Business Day shall be deemed to have been received on such Business Day.  Payments received after 4:00 p.m. (New
York time) on any Business Day or on a day that is not a Business Day shall be
deemed to have been received on the following Business Day.

 

(h)           Any and all payments
by the Borrower hereunder shall be made in accordance with this Section 2.08 without setoff or counterclaim
and free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, Charges or withholdings (excluding any tax
imposed on or measured by the net income or profits or any franchise or other
tax in lieu thereof (including branch profits or similar taxes) of any Affected
Party by (i) the jurisdiction under the laws of which such Affected Party
is organized or any political subdivision thereof, or (ii) the
jurisdiction of such Affected Party’s applicable lending office or any
political subdivision thereof) (such non-excluded taxes, levies, imposts,
deductions, Charges and withholdings being “Indemnified
Taxes”).  If the Borrower
shall be required by law to deduct any Indemnified Taxes from or in respect of
any sum payable hereunder, (i) the sum payable shall be increased as much
as shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.08) the Affected Party entitled to
receive any such payment receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make
such deductions, and (iii) the Borrower shall pay the full amount deducted
to the relevant taxing or other authority in accordance with applicable
law.  Within 30 days after the date of
any payment of Indemnified Taxes, the Borrower shall furnish to the
Administrative Agent the original or a certified copy of a receipt evidencing
payment thereof.  The Borrower shall indemnify
any Affected Party from and against, and, within ten days of demand therefor,
pay any Affected Party for, the full amount of Indemnified Taxes (together with
any taxes imposed by any jurisdiction on amounts payable under this Section 2.08) paid by such Affected Party
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally asserted.  The
foregoing notwithstanding, the Borrower shall have no obligation to increase
the amount paid or indemnify any Affected Party under this Section 2.08(h) to
the extent such amounts are payable as a result of, (i) in the case of an
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 information return, the failure of the
Affected Party to provide the Borrower with a validly prepared and executed Form W-9
or, (ii) in the case of an Affected Party that is not a U.S. person as
defined in I.R.C. § 7701(a)(30), the failure of such person to provide the
Borrower with a validly prepared and executed Form W-8BEN, W-8EXP or W-8ECI
demonstrating that such Affected Party is eligible for the portfolio interest
exemption under I.R.C. § 871(h) and 881(c) or other exemption
under U.S. law or applicable treaty

 

13

 

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

 

(i)            Upon receipt of a
notice in accordance with Section 7.03
of the Sale Agreement, the Administrative Agent shall, if such amounts have not
been applied to the Borrower Obligations, segregate the Unrelated Amounts and
the same shall not be deemed to constitute Collections on Transferred
Receivables.

 

Section 2.09.  Capital Requirements; Additional Costs.

 

(a)           If, due to any
Regulatory 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 agreeing
to make or making, funding or maintaining any commitment hereunder or under any
other Related Document, including with respect to any Advances or other
Outstanding Principal Amount, (ii) any reduction in any amount receivable
by such Affected Party hereunder or thereunder, including with respect to any
Advances, or other Outstanding Principal Amount or (iii) any increase in
the amount of capital, reserves or other funds required to be maintained by
such Affected Party against commitments made by it under this Agreement or any
other Related Document and the result of such increase is a reduction in the
rate of return on such Affected Party’s capital as a consequence of its
commitments hereunder or thereunder (any such increase in cost or reduction in
amounts receivable or rate of return are hereinafter referred to as “Additional Costs”), then the Borrower shall from
time to time and within 15 days after notice and demand from the Administrative
Agent to the Borrower (together with the certificate referred to in the next
sentence) pay to the Administrative Agent on behalf of such Affected Party
additional amounts sufficient to compensate such Affected Party for such
Additional Costs together with interest thereon from the date demanded until
payment in full thereof at the applicable Index Rate.  A certificate as to the amount of such
Increased Costs and showing the basis of the computation thereof submitted by
the Affected Party to the Borrower shall be final, binding and conclusive on
the parties hereto (absent manifest error) for all purposes. Each Affected
Party agrees that, as promptly as practicable after it becomes aware of any
circumstance referred to above that would result in any such Additional Costs,
it shall, to the extent not inconsistent with its internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by the Borrower pursuant to this Section 2.09(a).

 

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

 

(c)           Notwithstanding
anything to the contrary contained herein, if the introduction of or any change
in any law or regulation (or any change in the interpretation thereof) shall
make it unlawful, or any central bank or other Governmental Authority shall
assert

 

14

 

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

 

Section 2.10.  Breakage Costs. 
To induce the Lenders to provide the LIBOR Rate on the terms provided
herein, if (i) any LIBOR Rate Advances are, except by reason of the
requirements 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 this
Agreement or any other Related Document or is the result of acceleration, by
operation of law or otherwise); (ii) the Borrower shall default in payment
when due of the principal amount of or interest on any LIBOR Rate Advance; (iii) the
Borrower shall default in making any borrowing of LIBOR Rate Advances after the
Borrower has given notice requesting the same in accordance herewith (including
any failure to satisfy conditions precedent to the making of any LIBOR Rate
Advances); or (iv) the Borrower shall fail to make any prepayment of a
LIBOR Rate Advance after the Borrower has given a notice thereof in accordance
herewith, then, in any such case, the Borrower shall indemnify and hold
harmless each Lender from and against all losses, costs and expenses resulting
from 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 fees
payable to terminate deposits from which such funds were obtained (if
any).  For the purpose of calculating
amounts payable to a Lender under this subsection, each Lender shall be deemed
to have actually funded its relevant LIBOR Rate Advance through the purchase of
a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Rate Advance; provided, however, that each Lender may fund each of its
LIBOR Rate Advances in any manner it sees fit, and the foregoing assumption
shall be utilized only for the calculation of amounts payable under this
subsection.  This covenant shall survive
the termination of this Agreement and the payment of the Revolving Notes and
all other amounts payable hereunder.  The
determination by any Lender of the amount of any such loss or expense shall be
set forth in a written notice to the Borrower in reasonable detail and shall be
final, binding and conclusive on the Borrower (absent manifest error) for all
purposes.  Notwithstanding the foregoing,
the Borrower shall in no case be liable for any Breakage Costs incurred
pursuant to clause (i) of the first sentence of this Section 2.10
if the principal amount of any repayment of LIBOR Rate Advances made on any
date 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 until
the date on which each of the following conditions have been satisfied, in

 

15

 

the sole discretion of, or
waived 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 requested
by the Lenders) the Notes shall have been duly executed by, and delivered to,
the parties hereto and the Lenders and the Administrative Agent shall have
received such other documents, instruments, agreements and legal opinions as
each Lender and the Administrative Agent shall request in connection with the
transactions contemplated by this Agreement, including all those listed in the Schedule of
Documents, each in form and substance satisfactory to each Lender and the
Administrative Agent.

 

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

 

(c)           Compliance with Laws.  The Borrower and the Transaction Parties
shall be in compliance with all applicable foreign, federal, state and local
laws and regulations, including, without limitation, those specifically
referenced in Section 5.01(a), except
to the extent noncompliance could not reasonably be expected to have a Material
Adverse Effect.

 

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

 

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

 

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

 

(g)           Audit.  The
Administrative Agent shall have completed a prefunding audit of the Receivables
as of the Closing Date, the scope and results of which are satisfactory to the
Administrative 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 the
business, the

 

16

 

financial or other condition of
the Transaction Parties, taken as a whole, or (y) in the Receivables or Related
Property, taken as a whole and (ii) no litigation commenced which is
reasonably likely to be adversely determined, and if so determined, would have
a Material Adverse Effect on the Borrower or the Transaction Parties taken as a
whole, their business, or which challenges the transactions contemplated under
this Agreement, the Sale Agreement and the other Related Documents.

 

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

 

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

 

(k)           Rating Agency
Confirmations.   The Administrative
Agent shall have received such confirmations or assurances from the Rating
Agencies related to the transactions contemplated by this Agreement and the
other Related Documents deemed necessary or desirable by the Administrative
Agent.

 

Section 3.02.  Conditions Precedent to All Advances.  No Lender shall be obligated to make any Advances
hereunder (including the initial Advances but excluding Advances made pursuant
to Section 2.01(b)(iii), Section 2.01(b)(iv) or
2.06(c)) on any date if, as of the date
thereof:

 

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

 

(b)           any event shall have
occurred, or would result from the making of such Advances or from the
application of the proceeds therefrom, that constitutes an Incipient
Termination Event, a Termination Event, an Incipient Servicer Termination Event
or an Event of Servicer Termination;

 

(c)           the Commitment
Termination Date shall have occurred;

 

(d)           either before or
after giving effect to such Advance and to the application of the proceeds
therefrom, a Funding Excess would exist; or

 

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

 

17

 

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

 

(f)            on or prior to such
date, 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 in
accordance with Section 5.02 hereof or
the Sale Agreement and such failure shall be continuing;

 

(g)           the Administrative
Agent shall have determined that any event or condition has occurred that has
had, or could reasonably be expected to have or result in, a Material Adverse
Effect.

 

The delivery by the Borrower of a Borrowing Request and the acceptance
by the Borrower of the funds from the related Borrowing on any Advance Date
shall 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 from
time to time and the Administrative Agent to take any action required to be performed
by it hereunder, the Borrower makes the following representations and
warranties to each Lender and the Administrative Agent on the Effective Date
and each Advance Date, each and all of which shall survive the execution and
delivery of this Agreement.

 

(a)           Existence; Compliance with Law.  The Borrower (i) is a limited liability
company duly formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation, is a “registered organization” as defined in
the UCC of such jurisdiction and is not organized under the laws of any other
jurisdiction; (ii) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification except where the
failure to be so qualified could not reasonably be expected to have a Material
Adverse Effect; (iii) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease, and to conduct its business, in
each case, as now, heretofore and proposed to be conducted; (iv) has all
material licenses, permits, consents or approvals from or by, and has made all
filings with, and has given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(v) is in compliance with its limited liability company agreement; and (vi) subject
to specific representations set forth herein regarding ERISA, tax and other
laws, is in compliance with all applicable provisions of law, except where the
failure to comply, individually or in the aggregate, could not reasonably be
expected 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 Other
Names; FEIN.  The state of
organization and the organization identification number of the Borrower and

 

18

 

current location of the
Borrower’s chief executive office, principal place of business, other offices,
the premises within which any Borrower Collateral is stored or located, and the
locations of its records concerning the Borrower Collateral (including
originals of the Borrower Assigned Agreements) are set forth in Schedule 4.01(b) or such
other locations identified in writing by the Borrower to the Administrative
Agent after the Closing Date and none of such locations has changed since the
date 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) lists
the federal employer identification number of the Borrower.

 

(c)           Power, Authorization, Enforceable Obligations.  The execution, delivery and performance by
the Borrower of this Agreement and the other Related Documents to which it is a
party, and the creation and perfection of all Liens and ownership interests
provided for herein and therein: (i) are within the Borrower’s limited
liability company power; (ii) have been duly authorized by all necessary
or proper actions; (iii) do not contravene any provision of the Borrower’s
certificate of formation or limited liability company agreement; (iv) do
not violate any law or regulation, or any order or decree of any court or
Governmental Authority except if such violations have not had and could not
reasonably be expected to have a Material Adverse Effect; (v) do not
conflict with or result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance required by,
any indenture, mortgage, deed of trust, lease, agreement or other instrument to
which the Borrower is a party or by which the Borrower or any of the property
of the Borrower is bound; (vi) do not result in the creation or imposition
of any Adverse Claim upon any of the property of the Borrower; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except those which have been duly obtained, made or complied with prior
to the Effective Date as provided in Section 3.01(b).  The exercise by each of the Borrower, the
Lenders or the Administrative Agent of any of its rights and remedies under any
Related Document to which it is a party do not require the consent or approval
of any Governmental Authority or any other Person, except those which will have
been duly obtained, made or complied with prior to the Closing Date as provided
in Section 3.01(b).  On or prior to the Effective Date, each of
the Related Documents to which the Borrower is a party shall have been duly
executed and delivered by the Borrower and each such Related Document shall
then constitute a legal, valid and binding obligation of the Borrower
enforceable 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 right
or power to enter into or perform any of its obligations under the Related
Documents to which it is a party, or the validity or enforceability of any
Related Document or any action taken thereunder, (ii) seeks to prevent the
transfer, sale, pledge or contribution of any Receivable or the consummation of
any of the transactions contemplated under this Agreement or the other Related
Documents, or (iii) is reasonably likely to be adversely determined and,
if adversely determined, could reasonably be expected to have a Material
Adverse Effect within the meaning of clauses (a)(ii) and (b) through (e) of
the definition thereof.  There is no
Litigation pending or threatened that seeks damages or injunctive relief
against, or alleges criminal misconduct by, the Borrower.

 

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

 

19

 

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

 

(g)           Ownership of Property; Liens.  None of the properties and assets (including
the Transferred Receivables) of the Borrower are subject to any Adverse Claims
other than Permitted Encumbrances not attaching to Transferred Receivables, and
there are no facts, circumstances or conditions known to the Borrower that may
result in (i) with respect to the Transferred Receivables, any Adverse
Claims (including Adverse Claims arising under environmental laws) and (ii) with
respect to its other properties and assets, any Adverse Claims (including
Adverse Claims arising under environmental laws) other than Permitted
Encumbrances.  The Borrower has received
all assignments, bills of sale and other documents, and has duly effected all
recordings, filings and other actions necessary to establish, protect and
perfect the Borrower’s right, title and interest in and to the Transferred
Receivables and its other properties and assets.  No effective financing statement or other
similar instrument are of record in any filing office listing the Borrower or
any Originator as debtor and covering any of the Transferred Receivables or the
other Borrower Collateral, and the Liens granted to the Lender pursuant to Section 7.01 are and will be at all times
fully perfected first priority Liens in and to the Borrower Collateral.

 

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

 

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

 

20

 

would, if not paid, have a
Material 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 attach
to the Receivables.  All taxes required
by law to be withheld or collected and remitted (including, without limitation,
income tax, unemployment insurance and workmen’s compensation premiums) with
respect to the Borrower have been withheld or collected and paid to the
appropriate Governmental Authorities (or are properly being held for such
payment), except for amounts the nonpayment of which would not be reasonably likely
to have a Material Adverse Effect within the meaning of clauses (a)(ii) and
(b) through (e) of the definition thereof.  It is not necessary that this Agreement or
any other Related Document be filed, registered, recorded or enrolled in
connection with any Taxes with any court, public office or other authority in
any jurisdiction or that any ad valorem stamp duty, stamp duty, documentary,
registration or similar tax or duty be paid on the execution or delivery of
this Agreement or any other Related Document. Except as described on Schedule 4.01(i), as of the Effective Date,
neither the Borrower nor any Affiliate that files tax returns including tax
items for the Borrower has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any
Charges.  As of the Effective Date, (i) Borrower
has elected to be disregarded as an entity separate from its owner for federal
income tax purposes under Section 301.7701-3(b)(1) of the United
States Treasury Regulations and is therefore not an association taxable as a
corporation for federal income tax purposes, and (ii) neither the Borrower
nor any of its Affiliates has agreed or been requested to make any adjustment
under IRC 481(a), by reason of a change in accounting method or otherwise, that
could reasonably be expected to have a Material Adverse Effect.  The Advances will constitute Debt for federal
income tax purposes.

 

(j)            Full Disclosure. 
No representation or warranty of the Borrower contained in this
Agreement, any Borrowing Base Certificate, any of the other Related Documents
or any other document, certificate or written statement furnished by on behalf
of the Borrower to the Administrative Agent or any Lender relating to this
Agreement, the Transferred Receivables or any of the other Related Documents
contains any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in any material respect in light of the
circumstances in which the same were made. All information contained in this
Agreement, any Borrowing Base Certificate or any of the other Related
Documents, or any other written statement or information furnished to any
Lender or the Administrative Agent has been prepared in good faith by the
management of the Borrower with the exercise of reasonable diligence.

 

(k)           ERISA.  The
Borrower is in compliance with ERISA and has not incurred and does not expect
to incur any liabilities (other than (x) premium payments arising in the
ordinary course of business, (y) liabilities arising under Section 4041(b) of
ERISA and (z) interest or penalties in connection with late premium payments
that have not remained outstanding for more than thirty (30) days from the day
such interest or penalties were incurred) payable to the PBGC under Title IV of
ERISA.

 

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

 

21

 

(m)          Margin Regulations.  The Borrower is not engaged in the business
of extending credit for the purpose of “purchasing” or “carrying” any “margin
security,” as such terms are defined in Regulation U of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as “Margin Stock”).  The Borrower owns no Margin Stock, and no
portion of the proceeds of the Advances made hereunder will be used, directly or
indirectly, for the purpose of purchasing or carrying any Margin Stock, for the
purpose of reducing or retiring any Debt that was originally incurred to
purchase or carry any Margin Stock or for any other purpose that might cause
any portion of such proceeds to be considered a “purpose credit” within the
meaning of Regulations T, U or X of the Federal Reserve Board.  The Borrower will not take or permit to be
taken any action that might cause any Related Document to violate any
regulation of the Federal Reserve Board.

 

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

 

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

 

(p)           Nonconsolidation. 
The Borrower is operated in such a manner that the separate corporate
existence 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 or
insolvency of any member of the Parent Group and, without limiting the
generality of the foregoing:

 

(i)            the Borrower is a limited purpose
limited liability company whose activities are restricted in its limited
liability company agreement to those activities expressly permitted hereunder
and under the other Related Documents and the Borrower has not engaged, and
does not presently engage, in any business or other activity other than those
activities expressly permitted hereunder and under the other Related Documents,
nor has the Borrower entered into any agreement other than this Agreement, the
other Related Documents to which it is a party and, with the prior written
consent of the Administrative Agent, any other agreement necessary to carry out
more effectively the provisions and purposes hereof or thereof;

 

(ii)           the Borrower has duly appointed a
board of managers and its business is managed solely by its own officers and
managers, each of whom when acting for the Borrower shall be acting solely in
his 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 all
employees, consultants and agents directly or indirectly through reimbursement
of the Parent, from its own funds, for services provided to the Borrower by
such employees, consultants and agents and, to the

 

22

 

extent any
employee, consultant or agent of the Borrower is also an employee, consultant
or agent of such member of the Parent Group on a basis which reflects the
respective services rendered to the Borrower and such member of the Parent
Group and in accordance with the terms of the Administrative Services
Agreement;

 

(iv)          Borrower shall pay its own incidental
administrative costs and expenses not covered under the terms of the
Administrative Services Agreement from its own funds, and shall allocate all
other shared overhead expenses (including, without limitation, telephone and
other utility charges, the services of shared employees, consultants and
agents, and reasonable legal and auditing expenses) which are not reflected in
the Servicing Fee, and other items of cost and expense shared between the
Borrower and the Parent, pursuant to the terms of the Administrative Services
Agreement, on the basis of actual use to the extent practicable and, to the
extent such allocation is not practicable, on a basis reasonably related to
actual use or the value of services rendered; except as otherwise expressly
permitted hereunder, under the other Related Documents and under the Borrower’s
organizational documents, no member of the Parent Group (A) pays the
Borrower’s expenses, (B) guarantees the Borrower’s obligations, or (C) advances
funds to the Borrower for the payment of expenses or otherwise;

 

(v)           other than the purchase and
acceptance through capital contribution of Transferred Receivables pursuant to
the Sale Agreement, the acceptance of Subordinated Loans therein, the payment
of distributions and the return of capital to the Member, the servicing
arrangements with the Servicer under the Sale Agreement and the transactions
contemplated under the Administrative Services Agreement, the Borrower engages
and has engaged in no intercorporate transactions with any member of the Parent
Group;

 

(vi)          the Borrower maintains records and
books of account separate from that of each member of the Parent Group, holds
regular meetings of its board of directors and otherwise observes limited
liability company formalities;

 

(vii)         (A) the financial statements
(other than consolidated financial statements) and books and records of the
Borrower and each member of the Parent Group reflect the separate existence of
the Borrower and (B) the consolidated financial statements of the Parent
Group shall contain disclosure to the effect that the Borrower’s assets are not
available to the creditors of any member of the Parent Group;

 

(viii)        (A) the Borrower maintains its
assets separately from the assets of each member of the Parent Group (including
through the maintenance of separate bank accounts and except for any Records to
the extent necessary to assist the Servicer in connection with the servicing of
the Transferred Receivables), (B) the Borrower’s funds (including all
money, checks and other cash proceeds) and assets, and records relating
thereto, have not been and are not commingled with those of any member of the
Parent Group and (C) the separate creditors of the Borrower will be
entitled, on the winding-up of the Borrower, to be satisfied out of the
Borrower’s assets prior to any value in the Borrower becoming available to the
Member;

 

23

 

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

 

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

 

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

 

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

 

(xiii)         the Borrower maintains at least one
independent manager each of whom (A) is not a Stockholder, director,
officer, employee or associate, or any relative of the foregoing, of any member
of the Parent Group (other than the Borrower), all as provided in its limited
liability company agreement, (B) has (1) prior experience as an
independent director for an entity whose organizational documents required the
unanimous consent of all independent managers thereof before such corporation
could consent to the institution of bankruptcy or insolvency proceedings
against it or could file a petition seeking relief under any applicable federal
or state law relating to bankruptcy and (2) at least three years of
employment experience with one or more entities that provide, in the ordinary
course of their respective businesses, advisory, management, independent
director services or placement services to issuers of securitization or
structured finance instruments, agreements or securities, and (C) is
otherwise acceptable to the Administrative Agent;

 

(xiv)        the limited liability company agreement
of the Borrower requires the affirmative vote of each independent manager
before a voluntary petition under Section 301 of the Bankruptcy Code may
be filed by the Borrower; and

 

(xv)         Borrower shall maintain (1) correct
and complete books and records of account and (2) minutes of the meetings
and 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 Borrower
maintains deposit or other bank accounts as of the Closing Date, including any
Account, and such schedule correctly identifies the name, address and
telephone number of each depository, the name in which the account is held, a
description of the purpose of the account, and the complete account number
therefor.  Each Account constitutes a
deposit account or a securities account within the meaning of the applicable
UCC.  The Borrower (or the Servicer on
its behalf) has delivered to the Administrative Agent a fully executed agreement
pursuant to which the Borrower Account Bank

 

24

 

(with respect to the Borrower
Account), the Concentration Account Bank (in the case of the Concentration
Account) and each Collection Account Bank (with respect to each Collection
Account) has agreed to comply with all instructions originated by the
Administrative Agent directing the disposition of funds in the Accounts without
further consent by the Borrower, the Servicer or any Originator.  None of the Transaction Parties has access to
any of the Accounts. No Account is in the name of any person other than the
Borrower or the Administrative Agent, and the Borrower has not consented to any
Bank following the instructions of any Person other than the Administrative
Agent.  Accordingly, the Administrative
Agent has a first priority perfected security interest in each Account, and all
funds on deposit therein.

 

(r)            Transferred Receivables.

 

(i)            Transfers.  Each Transferred Receivable was purchased by
or contributed to the Borrower on the relevant Transfer Date pursuant to the
Sale Agreement.

 

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

 

(iii)          Nonavoidability
of Transfers.  The Borrower
shall (A) have received each Contributed Receivable as a contribution to
the capital of the Borrower by the Member as a member of the Borrower and (B) (1) have
purchased each Sold Receivable from the applicable Originator for cash
consideration or with the proceeds of a Subordinated Loan and (2) have
accepted assignment of any Eligible Receivables transferred pursuant to clause (b) of Section 4.04
of the Sale Agreement, in each case in an amount that constitutes fair
consideration and reasonably equivalent value therefor. No Sale has been made
for or on account of an antecedent debt (other than any contractual obligation
to purchase Receivables from the Originators under the Sale Agreement) owed by
any Originator to the Borrower and no such Sale is or may be avoidable or
subject to avoidance under any bankruptcy laws, rules or regulations.

 

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

 

(t)            Notices to Obligors.  Each Obligor of Transferred Receivables has
been directed to remit all payments with respect to such Receivables for
deposit in a Lockbox or Collection Account.

 

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

 

25

 

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

 

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

 

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

 

ARTICLE V.

 

GENERAL COVENANTS OF THE
BORROWER

 

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

 

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

 

(b)           Maintenance of Existence and Conduct of Business.  The Borrower shall:  (i) do or cause to be done all things
necessary to preserve and keep in full force and effect its limited liability
company existence and its rights and franchises; (ii) continue to conduct
its business substantially as now conducted or as otherwise permitted hereunder
and in accordance with (1) the terms of its limited liability company
agreement and (2) Section 4.01(p);
(iii) at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, including all
licenses, permits, charters and registrations, and keep the same in good
repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to
be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and (iv) transact business
only in the name of “Vertis Receivables II, LLC” or such trade names as are set
forth in Schedule 5.01(b) or upon 30 days’ prior written notice to
Administrative Agent, in any other legal name with respect to which all action
requested by Administrative Agent pursuant to Section 12.13 shall
have been taken with respect to the Transferred Receivable

 

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

 

26

 

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

 

(d)           Use of Proceeds. 
The Borrower shall utilize the proceeds of the Advances made hereunder
solely for (i) the repayment of Advances made hereunder and the payment of
any fees due hereunder, (ii) the purchase of Receivables from the
Originators pursuant to the Sale Agreement, (iii) the payment of
distributions to the Member, (iv) the repayment of Subordinated Loans, and
(v) the payment of administrative fees or Servicing Fees or expenses to
the Servicer or routine administrative or operating expenses, in each case only
as expressly permitted by and in accordance with the terms of this Agreement
and 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, performed
and discharged promptly all charges and claims payable by it, including (A) Charges
imposed upon it, its income and profits, or any of its property (real, personal
or mixed) and all Charges with respect to tax, social security and unemployment
withholding required to be paid by it, and (B) lawful claims for labor,
materials, supplies and services or otherwise before any thereof shall become
past due.

 

(ii)           The Borrower may in good faith
contest, by appropriate proceedings, the validity or amount of any charges or
claims described in Section 5.01(e)(i);
provided, that (A) adequate reserves
with respect to such contest are maintained on the books of the Borrower, in
accordance with GAAP, (B) such contest is maintained and prosecuted
continuously and with diligence, (C) none of the Borrower Collateral
becomes subject to forfeiture or loss as a result of such contest, (D) no
Lien shall be imposed to secure payment of such charges or claims other than
inchoate tax liens and (E) the Administrative Agent has not advised the
Borrower in writing that it reasonably believes that failure to pay or to
discharge such claims or charges could have or result in a Material Adverse
Effect within the meaning of clauses (a)(ii) and (b) through (e) of
the definition thereof.

 

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

 

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

 

(a)           The financial
statements, notices, reports and other information at the times, to the Persons
and in the manner set forth in Annex 5.02(a).

 

27

 

(b)           No later than 11:00 a.m.
on any Advance Date and at the same time each Monthly Report, Weekly Report or
Daily Report, as applicable, is required to be delivered pursuant to the terms
of Annex 5.02(a), a completed certificate
in the form attached hereto as Exhibit 5.02(b)
(each, a “Borrowing Base Certificate”), provided, that if (i) an Incipient
Termination Event or a Termination Event shall have occurred and be continuing
or (ii) the Administrative Agent, in good faith, believes that an
Incipient Termination Event or a Termination Event is imminent or reasonably
deems the Lenders’ rights or interests in the Transferred Receivables or the
Borrower Collateral insecure, then such Borrowing Base Certificates shall be
delivered daily; and each Borrowing Base Certificate shall be prepared by the
Borrower or the Servicer as of the last day of the previous month or week, in
the event Borrowing Base Certificates are required to be delivered on a monthly
or 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 each
Business Day.

 

(c)           Such other reports,
statements and reconciliations with respect to the Borrowing Base or Borrower
Collateral as any Lender or the Administrative Agent shall from time to time
request 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 the
Administrative Agent (other than in connection with the waiver of any of the
covenants set forth in subsections  (c), (d), (n) or (p) of
this Section 5.03 which shall only
require the prior written consent of the Administrative Agent), from and after
the 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 income
in respect of, any of its properties or other assets or issue any membership
interests (whether in a public or a private offering or otherwise), any
Transferred Receivable or Contract therefor or any of its rights with respect
to any Lockbox or any Account, the Agent Account or any other deposit account
in which any Collections of any Transferred Receivable are deposited except as
otherwise expressly permitted by this Agreement or any of the other Related
Documents.

 

(b)           Liens. 
Except to the extent contemplated in Section 7.03(c) of the
Sale 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 or
assets (whether now owned or hereafter acquired) except for Permitted
Encumbrances.  In addition, the Borrower
shall not become a party to any agreement, note, indenture or instrument or
take any other action that would prohibit the creation of a Lien on any of its
properties or other assets in favor of the Lenders as additional collateral for
the Borrower Obligations, except as otherwise expressly permitted by this Agreement
or any of the other Related Documents.

 

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

 

28

 

take, such actions as are
expressly permitted by the terms of any Related Document or the Credit and
Collection Policies so long as, after giving effect to any such action, no
Receivables which constituted Eligible Receivables prior to such action would
no longer constitute Eligible Receivables as a result of such action, and (ii) sell
or otherwise transfer Transferred Receivables for which the applicable Obligor
is a BK Obligor to a third party that is not an Affiliate of Holdings; provided,
that 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 under
this Section 5.03(c)(iii) if either a Termination Event or an
Incipient Termination Event shall have occurred and be continuing prior to or
after the consummation of any such transfer, (B) the Outstanding Balance
of any Transferred Receivables sold or otherwise transferred in any transaction
pursuant to this Section 5.03(c)(iii) shall not exceed
$3,000,000, (C) the aggregate Outstanding Balance of all Transferred
Receivables sold or otherwise transferred pursuant to this Section 5.03(c)(iii) from
and after the Closing Date shall not exceed $10,000,000, (D) each sale or
transfer of Transferred Receivables pursuant to this Section 5.03(c)(iii) shall
be made without any recourse to the Borrower and (E) any buyer of any
Transferred Receivables sold or otherwise transferred pursuant to this Section 5.03(c)(iii) shall
agree in writing that, until the date that is one year plus one day following
the date on which all Borrower Obligations have been indefeasibly paid in full
in cash, such Person shall not, directly or indirectly, institute or cause to
be instituted against Borrower any proceeding of the type referred to in Sections
8.01(d) or 8.01(e) of this Agreement.

 

(d)           Changes in Instructions to Obligors.  The Borrower shall not make any change in its
instructions to Obligors regarding the deposit of Collections with respect to
the Transferred Receivables, except to the extent the Administrative Agent
directs the Borrower to change such instructions to Obligors or the
Administrative Agent consents in writing to such change or as otherwise
required by this Agreement.

 

(e)           Capital Structure and Business.  The Borrower shall not (i) make any
changes in any of its business objectives, purposes or operations, (ii) make
any change in its capital structure, including the issuance of any membership
interests, warrants or other securities convertible into membership interests
or any revision of the terms of its outstanding membership interests, (iii) amend,
waive or modify any term or provision of its certificate of formation or
limited liability company agreement, (iv) make any change to its name
indicated on the public records of its jurisdiction of organization or (v) change
its jurisdiction of organization.  The
Borrower shall not engage in any business other than as provided in its
certificate of formation, limited liability company agreement and the Related
Documents.  Without limiting the
foregoing, the Borrower shall not make an election to be treated as an
association taxable as a corporation under Section 301.7701-3(a) of
the Treasury Regulations and shall not issue any additional membership
interests or take other actions which would cause the Company to cease to be
disregarded as an entity separate from its owner for federal income tax
purposes.

 

(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) merge
with, consolidate with, acquire all or substantially all of the assets or
capital Stock of, or otherwise combine with or acquire, any Person.

 

29

 

(g)           Sale Characterization; Receivables Sale and Servicing
Agreement.  The Borrower shall
not make statements or disclosures, prepare any financial statements or in any
other respect account for or treat the transactions contemplated by the Sale
Agreement (including for accounting, tax and reporting purposes) in any manner
other than (i) with respect to each Sale of each Sold Receivable effected
pursuant to the Sale Agreement, as a true sale and absolute assignment of the
title to and sole record and beneficial ownership interest of the Transferred
Receivables by the Originators to the Borrower or (ii) with respect to
each contribution of Contributed Receivables thereunder, as an increase in the
stated capital of the Borrower.

 

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

 

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

 

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

 

(k)           Investments. 
Except as otherwise expressly permitted hereunder or under the other
Related Documents, the Borrower shall not make any investment in, or make or
accrue loans or advances of money to, any Person, including the Member, any
director, officer or employee of the Borrower, Holdings or any of Holdings’
other Subsidiaries, through the direct or indirect lending of money, holding of
securities or otherwise, except with respect to Transferred Receivables and
Permitted Investments.

 

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

 

30

 

(m)          ERISA.  The
Borrower shall not cause or permit to occur an event that (i) could
reasonably be expected to result in the imposition of a Lien on any Borrower
Collateral under Section 412 of the IRC or Section 302 or 4068 of
ERISA, or (ii) could reasonably be expected to result in the incurrence by
Borrower of any liabilities under Title IV of ERISA (other than (x) premium
payments arising in the ordinary course of business, (y) liabilities arising
under Section 4041(b) of ERISA and (z) interest or penalties in
connection with late premium payments that have not remained outstanding for
more than thirty (30) days from the day such interest or penalties were
incurred).

 

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

 

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

 

(p)           Additional Members of Borrower.  The Borrower shall not admit any additional
member without the prior written consent of the Administrative Agent other than
a “Special Member” as such term is defined in the Borrower’s limited liability
company agreement as of the date hereof.

 

ARTICLE VI.

 

ACCOUNTS

 

Section 6.01.  Establishment of Accounts.

 

(a)           Collection Accounts.

 

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

 

(ii)           The Borrower (or an Originator on
Borrower’s behalf) has instructed all existing Obligors of Transferred
Receivables, and shall instruct all future Obligors of such Receivables, to
make payments in respect thereof only (A) by check or money order mailed
to one or more lockboxes or post office boxes under the control of the
Administrative Agent (each a “Lockbox” and
collectively the “Lockboxes”) or (B) by
wire transfer or moneygram directly to a Collection Account.  Schedule 4.01(q)
lists all Lockboxes and all Collection Account Banks at which the Borrower
maintains Collection Accounts as of the Effective Date, and such schedule correctly
identifies (1) with respect to each such Collection Account Bank, the
name, address and telephone number thereof,

 

31

 

(2) with
respect to each Collection Account, the name in which such account is held and
the complete account number therefor, and (3) with respect to each
Lockbox, the lockbox number and address thereof.  The Borrower (or the Servicer on Borrower’s
behalf) shall endorse, to the extent necessary, all checks or other instruments
received in any Lockbox so that the same can be deposited in the Collection
Account, in the form so received (with all necessary endorsements), on the
first Business Day after the date of receipt thereof.  In addition, the Borrower shall deposit or
cause to be deposited into a Collection Account all cash, checks, money orders
or other proceeds of Transferred Receivables or Borrower Collateral received by
it 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 the
first Business Day following the date of receipt thereof, and until so
deposited all such items or other proceeds shall be held in trust for the
benefit of the Administrative Agent.  The
Borrower shall not make and shall not permit the Servicer to make any deposits
into a Lockbox or any Collection Account except in accordance with the terms of
this Agreement or any other Related Document.

 

(iii)          If, for any reason, a Collection
Account Agreement terminates or any Collection Account Bank fails to comply
with its obligations under the Collection Account Agreement to which it is a
party, then the Borrower shall promptly notify all Obligors of Transferred
Receivables who had previously been instructed to make payments to a Collection
Account maintained at any such Collection Account Bank to make all future
payments to a new Collection Account in accordance with this Section 6.01(a)(iii).  Neither the Borrower nor the Servicer on the
Borrower’s behalf shall close any Collection Account unless it shall have (A) received
the prior written consent of the Administrative Agent, (B) established a
new account with the same Collection Account Bank or with a new depositary
institution satisfactory to the Administrative Agent, (C) entered into an
agreement covering such new account with such Collection Account Bank or with
such new depositary institution substantially in the form of the predecessor
Collection Account Agreement or that is satisfactory in all respects to the
Administrative Agent (whereupon, for all purposes of this Agreement and the
other Related Documents, such new account shall become a Collection Account,
such new agreement shall become a Collection Account Agreement and any new
depositary institution shall become a Collection Account Bank), and (D) taken
all such action as the Administrative Agent shall reasonably require to grant
and perfect a first priority Lien in such new Collection Account to the Lender
under Section 7.01 of this Agreement.  Except as permitted by this Section 6.01(a), the Borrower shall not, and
shall not permit the Servicer to, open any new Lockbox or Collection Account
without the prior written consent of the Administrative Agent.

 

(b)           Concentration Account.

 

(i)            The Borrower has established the
Concentration Account subject to a fully executed Concentration Account
Agreement.  The Borrower agrees that the
Administrative Agent shall have exclusive dominion and control of the Concentration
Account and all monies, instruments and other property from time to time on
deposit therein.

 

32

 

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

 

(iii)          If, for any reason, the Concentration
Account Agreement relating to the Concentration Account terminates or the
Concentration Account Bank fails to comply with its obligations under such
Concentration Account Agreement, then the Borrower shall promptly notify the
Administrative Agent thereof and the Borrower, the Servicer or the
Administrative Agent, as the case may be, shall instruct all Collection Account
Banks who had previously been instructed to make transfers to the Concentration
Account maintained at any such Concentration Account Bank to make all future
payments to a new Concentration Account in accordance with this Section 6.01(b)(iii).  Neither the Borrower nor the Servicer on the
Borrower’s behalf shall close the Concentration Account unless it shall have (A) received
the prior written consent of the Administrative Agent, (B) established a
new account with the same Concentration Account Bank or with a new depositary
institution satisfactory to the Administrative Agent, (C) entered into an
agreement covering such new account with such Concentration Account Bank or
with such new depositary institution substantially in the form of the
Concentration Account Agreement or that is satisfactory in all respects to the
Administrative Agent (whereupon, for all purposes of this Agreement and the
other Related Documents, such new account shall become the Concentration
Account, such new agreement shall become a Concentration Account Agreement and
any new depositary institution shall become the Concentration Account Bank),
and (D) taken all such action as the Administrative Agent shall reasonably
require to grant and perfect a first priority Lien in such new Concentration Account
to the Lender under Section 7.01 of
this Agreement.  Except as permitted by
this Section 6.01(b), the Borrower
shall not, and shall not permit the Servicer to open a new Concentration
Account without the prior written consent of the Administrative Agent.

 

(c)           Agent Account.

 

(i)            The Administrative Agent has
established and shall maintain the Agent Account with Deutsche Bank Trust
Company Americas (the “Depositary”).  The Agent Account shall be registered in the
name of the Administrative Agent and the Administrative Agent shall, subject to
the terms of this Agreement, have exclusive dominion and control thereof and of
all monies, instruments and other property from time to time on deposit
therein.

 

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

 

(iii)          If, for any reason, the Depositary
wishes to resign as depositary of the Agent Account or fails to carry out the
instructions of the Administrative Agent, then

 

33

 

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

 

(d)           Borrower Account.

 

(i)            The Borrower has established the
Borrower Account subject to a fully executed Borrower Account Agreement and
agrees that, subject to clause (ii) below, the Administrative Agent
shall have exclusive dominion and control of such Borrower Account and all
monies, instruments and other property from time to time on deposit therein.

 

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

 

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 the
Administrative Agent and the Lenders to enter into this Agreement and perform
the obligations required to be performed by them hereunder in accordance with
the terms and conditions hereof, the Borrower hereby grants, assigns, conveys,
pledges, hypothecates and transfers to the Administrative Agent, for the
benefit of the Administrative Agent, the Lenders, the Indemnified Persons and
the Affected Parties, a Lien upon and security interest in all of the Borrower’s
right, title and interest in, to and under, but none of its obligations arising
from, the following property, whether now owned by or owing to, or hereafter
acquired by or arising in favor of, the Borrower (including under any trade
names, 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 all
other Related Documents now or hereafter in effect relating to the purchase,
servicing, processing or collection of Receivables (collectively, the “Borrower Assigned Agreements”), including (i) all
rights of the Borrower to receive moneys

 

34

 

due and to become due
thereunder or pursuant thereto, (ii) all rights of the Borrower to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect
thereto, (iii) all claims of the Borrower for damages or breach with
respect thereto or for default thereunder and (iv) the right of the
Borrower to amend, waive or terminate the same and to perform and to compel
performance and otherwise exercise all remedies thereunder;

 

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

 

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

 

(ii)           the Agent Account and all funds on
deposit therein and all certificates and instruments, if any, from time to time
representing or evidencing the Agent Account or such funds,

 

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

 

(iv)          the Borrower Account and all funds on
deposit therein and all certificates and instruments, if any, from time to time
representing or evidencing the Borrower Account or such funds,

 

(v)           all notes, certificates of deposit
and other instruments from time to time delivered to or otherwise possessed by
any Lender or any assignee or agent on behalf of any Lender in substitution for
or 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 and
all of the then existing Borrower Account Collateral;

 

(d)           all other property
relating to the Receivables that may from time to time hereafter be granted and
pledged by the Borrower or by any Person on its behalf whether under this
Agreement or otherwise, including any deposit with any Lender or the
Administrative Agent of additional funds by the Borrower;

 

(e)           all other personal
property of the Borrower of every kind and nature not described above including
without limitation all goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts, chattel
paper (whether tangible or electronic), deposit accounts, letter-of-credit
rights, commercial tort claims, securities and all other investment property,
supporting obligations, any other contract rights or rights to the payment of
money, insurance claims and proceeds, and all general intangibles (including
all payment intangibles); and

 

35

 

(f)            to the extent not
otherwise included, all proceeds and products of the foregoing and all
accessions to, substitutions and replacements for, and profits of, each of the
foregoing Borrower Collateral (including proceeds that constitute property of
the types described in Sections 7.01(a) through
(e)).

 

Section 7.02.  Borrower’s Agreements.  The Borrower hereby (a) collaterally
assigns, transfers and conveys the benefits of the representations, warranties
and covenants of each Originator made to the Borrower under the Sale Agreement
to the Administrative Agent for the benefit of the Lenders hereunder; (b) acknowledges
and agrees that the rights of the Borrower to require payment of a Rejected
Amount from an Originator under the Sale Agreement may be enforced by the
Lenders and the Administrative Agent; and (c) certifies that the Sale
Agreement provides that the indemnification and payment provisions of Article V thereof and the provisions of Sections
4.03(j), Section 4.04, 6.12, 6.14 and 6.15
thereof shall survive the sale of the Transferred Receivables (and undivided
percentage ownership interests therein) and the termination of the Sale
Agreement and this Agreement.

 

Section 7.03.  Delivery of Collateral.  All certificates or instruments representing
or evidencing all or any portion of the Borrower Collateral shall be delivered
to and held by or on behalf of the Administrative Agent and shall be in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
reasonably satisfactory to the Administrative Agent.  The Administrative Agent shall have the right
(a) at any time to exchange certificates or instruments representing or
evidencing Borrower Collateral for certificates or instruments of smaller or
larger denominations and (b) upon the occurrence of a Termination Event,
to exercise its rights and remedies with respect to such Collateral under the
UCC.

 

Section 7.04.  Borrower Remains Liable.  It is expressly agreed by the Borrower that,
anything herein to the contrary notwithstanding, the Borrower shall remain
liable under any and all of the Transferred Receivables, the Contracts
therefor, the Borrower Assigned Agreements and any other agreements
constituting the Borrower Collateral to which it is a party to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder.  The Lenders and the
Administrative Agent shall not have any obligation or liability under any such
Receivables, Contracts or agreements by reason of or arising out of this
Agreement or the granting herein or therein of a Lien thereon or the receipt by
the Administrative Agent or the Lenders of any payment relating thereto
pursuant hereto or thereto.  The exercise
by any Lender or the Administrative Agent of any of its respective rights under
this Agreement shall not release any Originator, the Borrower or the Servicer
from any of their respective duties or obligations under any such Receivables,
Contracts or agreements.  None of the
Lenders or the Administrative Agent shall be required or obligated in any
manner to perform or fulfill any of the obligations of any Originator, the
Borrower or the Servicer under or pursuant to any such Receivable, Contract or
agreement, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any such Receivable, Contract or agreement, or
to present or file any claims, or to take any action to collect or enforce any
performance or the payment of any amounts that may have been assigned to it or
to which it may be entitled at any time or times.

 

36

 

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

 

(a)           Offices and Records.  The Borrower shall maintain its principal
place of business and chief executive office and the office at which it stores
its Records at the respective locations specified in Schedule 4.01(b)
or, upon 30 days’ prior written notice to the Administrative Agent, at such
other location in a jurisdiction where all action requested by the
Administrative Agent pursuant to Section 12.13
shall have been taken with respect to the Borrower Collateral.  The Borrower shall, and shall cause the
Servicer to at its own cost and expense, maintain adequate and complete records
of the Transferred Receivables and the Borrower Collateral, including records
of any and all payments received, credits granted and merchandise returned with
respect thereto and all other dealings therewith.  The Borrower shall, and shall cause the Servicer
to, by no later than the Effective Date, mark conspicuously with a legend, in
form and substance satisfactory to the Administrative Agent, its computer
records pertaining to the Borrower Collateral and its file cabinets or other
storage facilities where it maintains information pertaining to Substantial
Contracts that constitute the Borrower Collateral, to evidence this Agreement
and the assignment and Liens granted pursuant to this Article VIII.  Upon the occurrence and during the
continuance of a Termination Event, the Borrower shall, and shall cause the
Servicer to, deliver and turn over such books and records to the Administrative
Agent or its representatives at any time on demand of the Administrative
Agent.  Prior to the occurrence of a
Termination Event and upon notice from the Administrative Agent, the Borrower
shall, and shall cause the Servicer to, permit any representative of the
Administrative Agent to inspect such books and records and shall provide
photocopies thereof to the Administrative Agent as more specifically set forth
in Section 7.05(b).

 

(b)           Access. 
The Borrower shall, and shall cause the Servicer to, at its or the
Servicer’s own expense, during normal business hours, from time to time upon
ten (10) Business Day’s prior notice (or, if a Termination Event has
occurred and in continuing, one (1) Business Day’s prior notice) as
frequently as the Administrative Agent determines to be appropriate:  (i) provide the Administrative Agent and
any of its officers, employees and agents access to its properties (including
properties utilized in connection with the collection, processing or servicing
of the Transferred Receivables), facilities, advisors and employees (including
officers) and to the Borrower Collateral, (ii) permit the Administrative
Agent and any of its officers, employees and agents to inspect, audit and make
extracts from its books and records, including all Records, (iii) permit
the 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 and
agents to discuss matters relating to the Transferred Receivables or its
performance 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 of
such matters) and with its independent certified public accountants as specified
in Section 7.05(c); provided, however, that, so long
as no Termination Event or Incipient Termination Event has occurred and is
continuing, (i) the Administrative Agent shall be limited to two (2) audits
pursuant to this Section 7.05(b) during each calendar year and
(ii) the Borrower’s obligations to reimburse out-of-pocket expenses in
respect of each such audit shall not exceed (x) $50,000 minus (y) the amounts
incurred by the Originators pursuant to Section 4.02(b) of the Sale
Agreement in connection with any contemporaneous audit of the Originators. The
Borrower agrees that it shall not request any audit of any Originator under Section 4.02(b) of
the Sale Agreement unless directed in writing to do so by the Administrative
Agent. If (i) the Administrative Agent in good

 

37

 

faith deems any Lender’s rights
or interests in the Transferred Receivables, the Borrower Assigned Agreements
or any other Borrower Collateral insecure or the Administrative Agent in good faith
believes that an Incipient Termination Event or a Termination Event is imminent
or (ii) an Incipient Termination Event or a Termination Event shall have
occurred and be continuing, then the Borrower shall, and shall cause the
Servicer to, at its own expense, provide such access at all times without prior
notice from the Administrative Agent and provide the Administrative Agent with
access 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 any
such access to it’s the Borrower’s suppliers or customers.  The Borrower shall, and shall cause the
Servicer to, make available to the Administrative Agent and its counsel, as
quickly as is possible under the circumstances, copies of all books and
records, including Records, that the Administrative Agent may request.  The Borrower shall, and shall cause the
Servicer to, and the Servicer shall deliver any document or instrument necessary
for the Administrative Agent, as the Administrative Agent may from time to time
request, to obtain records from any service bureau or other Person that
maintains records for the Borrower or the Servicer, and shall maintain
duplicate records or supporting documentation on media, including computer
tapes and discs owned by the Borrower or the Servicer.

 

(c)           Communication with Accountants.  The Borrower hereby authorizes (and shall
cause the Servicer to authorize) the Lenders and the Administrative Agent to
communicate directly with its independent certified public accountants and
authorizes and shall instruct those accountants and advisors to disclose and
make available to the Lenders and the Administrative Agent any and all
financial statements and other supporting financial documents, schedules and
information relating to the Borrower or the Servicer (including copies of any
issued management letters) and to discuss matters with respect to its business,
financial condition and other affairs; provided, that the Administrative
Agent shall notify the Borrower or the Servicer, as applicable, prior to any
contact with such accountants and advisors and shall give the Borrower or the
Servicer, as applicable, the opportunity to participate in such discussions.

 

(d)           Collection of Transferred Receivables.  In connection with the collection of amounts
due or to become due to the Borrower under the Transferred Receivables, the
Borrower Assigned Agreements and any other Borrower Collateral pursuant to the
Sale Agreement, the Borrower shall, or shall cause the Servicer to, take such
action as it, and from and after the occurrence and during the continuance of a
Termination Event, the Administrative Agent, may deem necessary or desirable to
enforce collection of the Transferred Receivables, the Borrower Assigned
Agreements and the other Borrower Collateral; provided
that the Borrower may, rather than commencing any such action or taking any
other enforcement action, at its option, elect to pay to the Administrative
Agent, for deposit into the Agent Account, an amount equal to the Outstanding
Balance of any such Transferred Receivable; provided,
further, that if a Termination Event shall
have occurred and be continuing, then the Administrative Agent may, without
prior notice to the Seller or the Servicer, (x) exercise its rights under the
Account Agreements (in which case the Servicer shall be required, pursuant to
the Sale Agreement, to deposit any Collections it then has in its possession or
at any time thereafter receives, immediately in a Collection Account or, if
directed by the Administration Agent, in the Agent Account) and (y) notify any
Obligor under any Transferred Receivable or obligors under the Borrower
Assigned Agreements of the pledge of such Transferred Receivables or Borrower

 

38

 

Assigned Agreements, as the
case may be, to the Administrative Agent on behalf of the Lenders hereunder and
direct that payments of all amounts due or to become due to the Borrower
thereunder be made directly to the Administrative Agent or any servicer,
collection agent or lockbox or other account designated by the Administrative
Agent and, upon such notification and at the sole cost and expense of the
Borrower, the Administrative Agent may enforce collection of any such Transferred
Receivable or the Borrower Assigned Agreements and adjust, settle or compromise
the amount or payment thereof.  The
Administrative Agent shall provide prompt notice to the Borrower and the
Servicer of any such notification of pledge or direction of payment to the
Obligors under any Transferred Receivables.

 

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

 

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

 

ARTICLE VIII.

 

TERMINATION EVENTS

 

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

 

(a)           (i) the
Borrower shall fail to pay, (A) any installment or other payment of
principal of any Advance when due, or to repay Advances to reduce their balance
to the

 

39

 

maximum amount of Revolving
Loans then permitted to be outstanding when due or (B) within three (3) Business
Days after the due date, any interest on any Advances, any other Borrower
Obligations or any other amount due under this Agreement or any of the other
Related Documents or (ii) any Transaction Party shall fail to pay, within
three (3) Business Days after the due date, any amount due under the Sale
Agreement or any of the other Related Documents; provided, that no
Termination Event shall occur if such any failure to pay arises solely as a
result of the failure of the Administrative Agent to make transfers of amounts
available in the Agent Account on any Settlement Date in accordance with Section 2.08;
or

 

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

 

(c)           (1) any Transaction
Party or the Borrower shall fail to pay when due or within any applicable grace
period any principal or interest on Debt (other than the Advances with respect
to the Borrower) or any Contingent Obligations or (2) a breach or default
of any Transaction Party or the Borrower, or the occurrence of any condition or
event, with respect to any Debt (other than the Advances with respect to the
Borrower) or any Contingent Obligations, in each case if the effect of such
breach, default or occurrence is to cause or to permit the holder or holders
then to cause, Debt and/or Contingent Obligations having an aggregate principal
amount in excess of $5,000,000 to become or be declared due prior to their
stated maturity; or

 

(d)

 

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

 

40

 

(ii)           a case or proceeding shall have been
commenced against the Borrower seeking a decree or order in respect of the
Borrower under the Bankruptcy Code or any other applicable federal, state or
foreign 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) ordering
the winding up or liquidation of the affairs of any such Person;

 

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

 

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

 

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

 

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

 

(i)            (i) any
information contained in any Borrowing Base Certificate or any Borrowing
Request is untrue or incorrect in any respect other than an Immaterial
Misstatement, or (ii) any representation or warranty of any Originator or
the Borrower herein or in any other Related Document or in any statement,
report, financial statement or certificate (other than a Borrowing Base
Certificate or any Borrowing Request) made or delivered by or on behalf of such
Originator or the Borrower to any Affected Party hereto or thereto is untrue or
incorrect in any material respect (without duplication of any materiality
qualifier contained therein) as of the date when made or deemed made (unless
previously cured by such Originator pursuant to Section 4.04 of the
Sale Agreement); or

 

(j)            any Governmental
Authority (including the IRS or the PBGC) shall file notice of a Lien with
regard to any assets of any Originator or any of such Originator’s ERISA

 

41

 

Affiliates (other than a Lien (i) limited
by its terms to assets other than Receivables and (ii) not materially
adversely affecting the financial condition of such Originator or such ERISA
Affiliate or the ability of any Transaction Party or the Borrower to perform
its duties hereunder or under the Related Documents); or

 

(k)           any Governmental
Authority (including the IRS or the PBGC) shall file notice of a Lien with
regard to any of the assets of the Borrower, including, without limitation, any
Lien on any Borrower Collateral under Section 412 of the IRC or Section 302
or 4068 of ERISA; or

 

(l)            (1) there
shall have occurred any event which, in the reasonable judgment of the
Administrative Agent, materially and adversely impairs (i) the ability of
any Originator to originate Receivables of a credit quality which are at least
of the credit quality of the Receivables as of the Effective Date, (ii) the
financial condition or operations of any Originator or the Borrower, or (iii) the
collectibility of Receivables, or (2) the Administrative Agent shall have
determined (and so notified the Borrower) that any event or condition that has
had or could reasonably be expected to have or result in a Material Adverse
Effect has occurred; or

 

(m)          the Sale Agreement
shall for any reason cease to evidence the transfer to the Borrower of the
legal and equitable title to, and ownership of, the Transferred Receivables; or

 

(n)           except as otherwise
expressly provided herein, any Account Agreement or the Sale Agreement shall
have been modified, amended or terminated without the prior written consent of
the Administrative Agent; or

 

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

 

(p)           (A) the
Borrower shall cease to hold valid and properly perfected title to and sole
record and beneficial ownership in the Transferred Receivables and the other
Borrower Collateral or (B) the Administrative Agent (on behalf of the
Lenders) shall cease to hold a first priority, perfected Lien in the
Transferred Receivables or any of the Borrower Collateral; or

 

(q)           a Change of Control
shall occur; or

 

(r)            the Borrower shall
amend its certificate of formation or limited liability company agreement
without the express prior written consent of the Requisite Lenders and the
Administrative Agent; or

 

(s)           the Borrower shall
have received an Election Notice pursuant to Section 2.01(d) of
the Sale Agreement; or

 

(t)            (i) the
Default Ratio shall exceed 3.0%; (ii) the Delinquency Ratio shall exceed
2.5%; (iii) the Dilution Trigger Ratio shall exceed 3.0% or (iv) the
Receivables Collection Turnover shall exceed 45 days; or

 

42

 

(u)           any material
provision of any Related Document shall for any reason cease to be valid,
binding and enforceable in accordance with its terms (or any Originator or the
Borrower shall challenge the enforceability of any Related Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Related Documents has ceased to be
or otherwise is not valid, binding and enforceable in accordance with its
terms); or

 

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

 

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

 

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

 

then, and in
any such event, the Administrative Agent, may, with the consent of the
Requisite Lenders, and shall, at the request of the Requisite Lenders, by
notice to the Borrower, declare the Commitment Termination Date to have
occurred without demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided,
that the Commitment Termination Date shall automatically occur (i) upon
the 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 in
Section 8.01(a) if the
same shall not have been remedied by such time or (iii) four Business Days
after the occurrence of the Termination Event described in Section 8.01(x) if the same shall not have
been remedied by such time, in each case without demand, protest or any notice
of any kind, all of which are hereby expressly waived by the Borrower.  Upon the occurrence of the Commitment
Termination Date, all Borrower Obligations shall automatically be and become
due and payable in full, without any action to be taken on the part of any
Person.  In addition, if any Event of
Servicer Termination shall have occurred, then, the Administrative Agent may,
and shall, at the request of the Requisite Lenders, by delivery of a Servicer
Termination Notice to Buyer and the Servicer, terminate the servicing
responsibilities of the Servicer under the Sale Agreement in accordance with
the 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 the
Administrative Agent shall have declared the Commitment Termination Date to
have occurred or the Commitment Termination Date shall be deemed to have
occurred pursuant to Section 8.01,

 

43

 

then the Administrative Agent
may exercise in respect of the Borrower Collateral, in addition to any and all
other rights and remedies granted to it hereunder, under any other Related
Document or under any other instrument or agreement securing, evidencing or
relating to the Borrower Obligations or otherwise available to it, all of the
rights and remedies of a secured party upon default under the UCC (such rights
and remedies to be cumulative and nonexclusive), and, in addition, may take the
following actions:

 

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

 

(b)           The Administrative
Agent may, without notice except as specified below, solicit and accept bids
for and sell the Borrower Collateral or any part thereof to any Person other
than the Borrower or any Originator in one or more parcels at public or private
sale, at any exchange, broker’s board or any of the Lenders’ or Agent’s offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Administrative Agent may deem commercially reasonable.  The Administrative Agent shall have the right
to conduct such sales on the Borrower’s premises or elsewhere and shall have
the right to use any of the Borrower’s premises without charge for such sales
at such time or times as the Administrative Agent deems necessary or
advisable.  The Borrower agrees that, to
the extent notice of sale shall be required by law, ten days’ notice to the
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.  The Administrative Agent shall not be
obligated to make any sale of Borrower Collateral regardless of notice of sale
having been given.  The Administrative
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed for such sale, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.  Every such sale shall operate to divest all
right, title, interest, claim and demand whatsoever of the Borrower in and to
the Borrower Collateral so sold, and shall be a perpetual bar, both at law and
in equity, against each Originator, the Borrower, any Person claiming any right
in the Borrower Collateral sold through any Originator or the Borrower, and
their respective successors or assigns. 
The Administrative Agent shall deposit the net proceeds of any such sale
in the Agent Account and such proceeds shall be applied against all or any part
of the Borrower Obligations.

 

(c)           Upon the completion
of any sale under Section 9.01(b), the
Borrower shall deliver or cause to be delivered to the purchaser or purchasers
at such sale on the date thereof, or within a reasonable time thereafter if it
shall be impracticable to make immediate delivery, all of the Borrower
Collateral sold on such date, but in any event full title and right of
possession to such property shall vest in such purchaser or purchasers upon the
completion of such sale.  Nevertheless,
if so requested by the Administrative Agent or by any such purchaser, the

 

44

 

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

 

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

 

(e)           The Administrative
Agent may (but in no event shall be obligated to) exercise, at the sole cost
and expense of the Borrower, any and all rights and remedies of the Borrower
under or in connection with the Borrower Assigned Agreements or the other
Borrower Collateral, including any and all rights of the Borrower to demand or
otherwise require payment of any amount under, or performance of any provisions
of, the Borrower Assigned Agreements. 
Without limiting the foregoing, the Administrative Agent shall, upon the
occurrence of any Event of Servicer Termination, have the right to name any
Successor Servicer (including itself) pursuant to Article VIII of the Sale
Agreement.

 

(f)            If only a
Termination Event specified in Section 8.01(o)(ii) hereof
shall have occurred and be continuing, the Administrative Agent’s remedies
shall be limited to the rights expressly provided for in this Section 9.01(f) and
those incidental to the exercise thereof. 
Administrative Agent shall have the right to, or the right to direct the
Buyer to: (i) terminate the Servicer and take all actions in furtherance
thereof in accordance with Article 9 of the Sale Agreement, (ii) exercise
all rights of the Buyer or the Administrative Agent, under the terms of the
Sale Agreement, to direct the conduct of the Servicer thereunder, and (iii) to
collect and enforce the Borrower Collateral in as provided in Section 9-607
of the applicable UCC and to apply Collections to the Borrower Obligations in
accordance Article II hereof; provided, Administrative Agent
shall not have any right to foreclose on the Borrower Collateral in the manner
provided in Section 9-610 or 9-620 of the applicable UCC.   For the avoidance of doubt, (i) upon
the 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 this
Agreement 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, the
Administrative Agent shall be entitled to exercise any of the other remedies
set forth in this Article IX.

 

Section 9.02.  Exercise of Remedies.  No failure or delay on the part of the
Administrative Agent or any Lender in exercising any right, power or privilege
under this Agreement and no course of dealing between any Originator, the
Borrower or the Servicer, on the one hand, and the Administrative Agent or any
Lender, on the other hand, shall operate as a waiver of such right, power or
privilege, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege.  The rights and remedies under
this Agreement are cumulative, may be exercised singly or concurrently, and are
not exclusive of any rights or remedies that the Administrative Agent or any
Lender would otherwise have at law or in equity.  No notice to or demand on any party hereto
shall entitle such party to any other or further notice or demand in similar or
other circumstances, or constitute a waiver of the right of the party providing
such notice or making such demand to any other or further action in any
circumstances without notice or demand.

 

45

 

Section 9.03.  Power of Attorney.  On the Closing Date, the Borrower shall
execute and deliver a power of attorney substantially in the form attached
hereto as Exhibit 9.03 (a “Power of Attorney”).  The Power of Attorney is a power coupled with
an interest and shall be irrevocable until this Agreement has terminated in
accordance with its terms and all of the Borrower Obligations are indefeasibly
paid or otherwise satisfied in full.  The
powers conferred on the Administrative Agent under each Power of Attorney are
solely to protect the Liens of the Administrative Agent and the Lenders upon
and interests in the Borrower Collateral and shall not impose any duty upon the
Administrative Agent to exercise any such powers.  The Administrative Agent shall not be
accountable for any amount other than amounts that it actually receives as a
result of the exercise of such powers and none of the Administrative Agent’s
officers, directors, employees, agents or representatives shall be responsible
to the Borrower, any Originator, the Servicer or any other Person for any act
or failure to act, except to the extent of damages attributable to their own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction.

 

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

 

ARTICLE X.

 

INDEMNIFICATION

 

Section 10.01.  Indemnities by the Borrower.

 

(a)           Without limiting any
other rights that the Lenders or the Administrative Agent or any of their
respective officers, directors, employees, attorneys, agents, representatives,
transferees, successors or assigns (each, an “Indemnified
Person”) may have hereunder or under applicable law, the Borrower
hereby agrees to indemnify and hold harmless each Indemnified Person from and
against any and all Indemnified Amounts that may be claimed or asserted  by any Person other than the Borrower against
or incurred by any such Indemnified Person in connection with or arising out of
the transactions contemplated under this Agreement or under any other Related
Document or any actions or failures to act in connection therewith, including
any and all Rating Agency costs and any and all legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Related Documents; provided,
that the Borrower shall not be liable for any indemnification to an Indemnified
Person to the extent that any such Indemnified Amount (v) in the case of
an 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 information
return, results from a failure of the Affected Party to provide the Borrower
with a validly prepared and executed Form W-9, (w) in the case of an
Affected 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 validly
prepared and executed Form W-8BEN, W-8EXP or W-8ECI demonstrating that
such Affected Party is eligible for the portfolio interest exemption under
I.R.C. § 871(h) and 881(c) or other exemption under U.S. law or
applicable treaty providing for no withholding on the relevant payment; provided,
however, that the Affected Party shall have no obligation to deliver such forms
to the extent it is no longer able to deliver such forms due to a change in
law,  (x) results from such Indemnified
Person’s gross

 

46

 

negligence or willful
misconduct, in each case as determined by a court of competent jurisdiction,
(y) constitutes recourse for uncollectible or uncollected Transferred
Receivables as a result of the insolvency, bankruptcy or the failure (without
cause or justification) or inability on the part of the related Obligor to
perform its obligations thereunder or (z) includes any tax imposed on or
measured 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) the
jurisdiction under the laws of which such Indemnified Person is organized or
any political subdivision thereof or (ii) the jurisdiction of such
Indemnified Person’s applicable lending office or any political subdivision
thereof.  Without limiting the generality
of the foregoing, the Borrower shall pay on demand to each Indemnified Person
any and all Indemnified Amounts relating to or resulting from:

 

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

 

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

 

(iii)          (1) the failure to vest and
maintain vested in the Borrower valid and properly perfected title to and sole
record and beneficial ownership of the Receivables that constitute Transferred
Receivables, together with all Collections in respect thereof and all other
Borrower Collateral, free and clear of any Adverse Claim and (2) the
failure to maintain or transfer to the Administrative Agent, for the benefit of
itself and the Lenders, a first priority, perfected Lien in any portion of the
Borrower Collateral;

 

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

 

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

 

47

 

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

 

(vii)         any failure by the Borrower to cause
the filing of, or any delay in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or any
other applicable laws with respect to any Transferred Receivable hereunder or
any other Borrower Collateral, whether at the time of the Borrower’s
acquisition thereof or any Advance made hereunder or at any subsequent time;

 

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

 

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

 

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

 

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

 

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

 

ARTICLE XI.

 

ADMINISTRATIVE AGENT

 

Section 11.01.  Authorization and Action.

 

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

 

Section 11.02.  Reliance. 
None of the Administrative Agent, any of its Affiliates or any of their
respective directors, officers, agents or employees shall be liable for any
action

 

48

 

taken or omitted to be taken by
any of them under or in connection with this Agreement or the other Related
Documents, except for damages solely caused by its or their own gross negligence
or willful misconduct as finally determined by a court of competent
jurisdiction.  Without limiting the
generality of the foregoing, and notwithstanding any term or provision hereof
to the contrary, the Borrower and each Lender hereby acknowledge and agree that
the Administrative Agent as such (a) has no duties or obligations other
than as set forth expressly herein, and has no fiduciary obligations to any
person, (b) acts as a representative hereunder for the Lenders and has no
duties or obligations to, shall incur no liabilities or obligations to, and
does not act as an agent in any capacity for, the Borrower (other than, with
respect to the Administrative Agent, under the Power of Attorney with respect
to remedial actions) or the Originators, (c) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts, (d) makes
no representation or warranty hereunder to any Affected Party and shall not be
responsible to any such Person for any statements, representations or
warranties made in or in connection with this Agreement or the other Related
Documents, (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 or
observance of any of the terms, covenants or conditions of this Agreement or
the other Related Documents on the part of the Borrower, the Servicer, any
Originator, the Parent, Holdings or any Lender, or to inspect the property
(including the books and records) of the Borrower, the Servicer, any
Originator, the Parent, Holdings or any Lender, (f) shall not be
responsible to the Borrower, the Servicer, any Lender or any other Person for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or the other Related Documents or any other
instrument or document furnished pursuant hereto or thereto, (g) shall
incur no liability under or in respect of this Agreement or the other Related
Documents by acting upon any notice, consent, certificate or other instrument
or writing believed by it to be genuine and signed, sent or communicated by the
proper party or parties and (h) shall not be bound to make any
investigation into the facts or matters stated in any notice or other
communication hereunder and may conclusively rely on the accuracy of such facts
or matters.

 

Section 11.03.  GE Capital and Affiliates.  GE Capital and its Affiliates may generally
engage in any kind of business with any Obligor, the Parent, the Originators,
the Borrower, the Servicer, Holdings, any Lender, any of their respective
Affiliates and any Person who may do business with or own securities of such
Persons or any of their respective Affiliates, all as if GE Capital were not
the Administrative Agent and without the duty to account therefor to any
Obligor, the Parent, any Originator, the Borrower, the Servicer, Holdings, any
Lender 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 other
Lender, 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 decision
to enter into this Agreement.  Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.

 

49

 

Section 11.05.  Indemnification. 
Each of the Lenders severally agrees to indemnify the Administrative
Agent (to the extent not reimbursed by the Borrower and without limiting the
obligations of the Borrower hereunder), ratably according to their respective
Pro Rata Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any other Related Document or any action taken or omitted
by 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’s
gross negligence or willful misconduct as finally determined by a court of
competent jurisdiction.  Without limiting
the foregoing, each Lender agrees to reimburse the Administrative Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Related Document, to the extent that the
Administrative Agent is not reimbursed for such expenses by the Borrower.

 

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

 

50

 

and the other Related
Documents, except that any indemnity rights or other rights in favor of such
resigning Administrative Agent shall continue. 
After any resigning Administrative Agent’s resignation hereunder, the
provisions of this Article XI shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Administrative Agent under this Agreement and the other Related
Documents.

 

Section 11.07.  Setoff and Sharing of Payments.  In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Termination Event, each
Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to the Borrower or to any other Person, any such
notice being hereby expressly waived (but subject to Section 2.03(b)(i)), to set off and to appropriate
and to apply any and all balances held by it at any of its offices for the
account of the Borrower (regardless of whether such balances are then due to
the Borrower) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of the Borrower
against and on account of any of the Borrower Obligations which are not paid
when due.  Any Lender or holder of any
Note exercising a right to set off or otherwise receiving any payment on account
of the Borrower Obligations in excess of its Pro Rata Share thereof shall
purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Borrower Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares.  Each Lender’s obligation pursuant to this Section 11.07 is in addition to and not in
limitation of its obligations to purchase a participation equal to its Pro Rata
Share of the Swing Line Loan pursuant to Section 2.01(b).  The Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender or holder may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the Borrower
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holders so purchasing a
participation in the Advances made or other Borrower Obligations held by other
Lenders or holders may exercise all rights of set off, bankers’ lien,
counterclaim or similar rights with respect to such participation as fully as
if such Lender or holder were a direct holder of the Advances, and the other
Borrower Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or any
portion of the set-off amount or payment otherwise received is thereafter
recovered from the Lender that has exercised the right of set-off, the purchase
of participations by that Lender shall be rescinded and the purchase price
restored without interest.

 

ARTICLE XII.

 

MISCELLANEOUS

 

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

 

51

 

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

 

	
  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 shall
be binding upon and inure to the benefit of the Borrower, each Lender and the
Administrative 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 or
interests herein without the express prior written consent of the Requisite
Lenders and the Administrative Agent. 
Any such purported assignment, transfer, hypothecation or other
conveyance by the Borrower without the prior express written consent of the
Requisite Lenders and the Administrative Agent shall be void.

 

52

 

(b)           The Borrower hereby
consents to any Lender’s assignment or pledge of, and/or sale of participations
in, 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 duties
thereunder  (including, without
limitation, an assignment by the Swing Line Lender of all or any portion of its
Swing Line Commitment), whether evidenced by a writing or not, made in
accordance with this Section 12.02(b).  Any assignment by a Lender shall (i) require
the execution of an assignment agreement (an “Assignment
Agreement”) substantially in the form attached hereto as Exhibit 12.02(b) or
otherwise in form and substance satisfactory to the Administrative Agent, and
acknowledged by, the Administrative Agent and other than in the case of an
assignment by a Lender to one of its Affiliates, the consent of the
Administrative Agent and, so long as no Termination Event has occurred and is
continuing, the Borrower (which consent shall not be unreasonably withheld or
delayed); (ii) so long as no Termination Event or an Incipient Termination
Event shall have occurred and be continuing, each assignee of a Lender (other
than a SPV) shall require the approval by the Borrower, which approval shall
not be unreasonably withheld or delayed; provided, further that assignments by
a Lender to any Affiliate of the Agent or any Lenders shall not be subject to
the consent of the Borrower; (iii) if a partial assignment, be in an
amount at least equal to $5,000,000 and, after giving effect to any such
partial assignment, the assigning Lender shall have retained Commitments in an
amount at least equal to $5,000,000; (iv) require the delivery to the
Administration Agent by the assignee or participant, as the case may be, of any
forms, certificates or other evidence with respect to United States tax
withholding matters, and (iv) other than in the case of an assignment by a
Lender to one of its Affiliates, include a payment to the Administrative Agent
by the assignor or assignee Lender of an assignment fee of $3,500.  In the case of an assignment by a Lender
under this Section 12.02, the assignee
shall have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were a Lender hereunder.  The assigning Lender shall be relieved of its
obligations hereunder with respect to its 
Commitments or assigned portion thereof from and after the date of such
assignment.  The Borrower hereby
acknowledges and agrees that any assignment made in accordance with this Section 12.02(b) will give
rise to a direct obligation of the Borrower to the assignee and that the
assignee shall thereupon be a “Lender” for all purposes.  In all instances, each Lender’s obligation to
make Revolving Credit Advances hereunder shall be several and not joint and
shall be limited to such Lender’s Pro Rata Share of the applicable
Commitment.  In the event any Lender
assigns or otherwise transfers all or any part of a Revolving Note or the Swing
Line Note, such Lender shall so notify the Borrower and the Borrower shall,
upon the request of  such Lender, execute
new Revolving Notes or Swing Line Notes in exchange for the Revolving Notes or
Swing Line Notes, as the case may be, being assigned.  Notwithstanding the foregoing provisions of
this Section 12.02(b), any Lender may
at any time pledge or assign all or any portion of such Lender’s rights under
this Agreement and the other Related Documents to any Federal Reserve Bank or
to any holder or trustee of such Lender’s securities; provided,
however, that no such pledge or assignment
to any Federal Reserve Bank, holder or trustee shall release such Lender from
such Lender’s obligations hereunder or under any other Related  Document and no such holder or trustee shall
be entitled to enforce any rights of such Lender hereunder unless such holder
or trustee becomes a Lender hereunder through execution of an Assignment
Agreement as set forth above.  A Lender
may not grant an assignment or participation to a Person who is (x) not a “United
States person” (within the meaning of IRC Section 7701(a)(30) unless such
Person is exempt from United States withholding tax as of the date of such

 

53

 

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

 

(c)           In addition to the
foregoing right, any Lender may, without notice to or consent from the
Administrative Agent or the Borrower, (x) grant to an SPV the option to make
all or any part of any Advance that such Lender would otherwise be required to
make hereunder (and the exercise of such option by such SPV and the making of
Loans pursuant thereto shall satisfy the obligation of such Lender to make such
Loans hereunder); (y) assign to an SPV all or a portion of its rights (but not
its obligations) under the Related Documents, including a sale of any Advances
or other Borrower Obligations hereunder and such Lender’s right to receive
payment with respect to any such Borrower Obligation and (z) sell
participations to one or more Persons in or to all or a portion of its rights
and obligations under the Related Documents (including all its rights and
obligations with respect to the Advances); provided,
however, that (x) no such SPV or participant shall have a commitment, or be
deemed to have made an offer to commit, to make Advances hereunder, and none
shall be liable to any Person for any obligations of such Lender hereunder (it being
understood that nothing in this Section 12.02(c) shall
limit any rights the Lender may have as against such SPV or participant under
the terms of the applicable option, sale or participation agreement between or
among such parties); and (y) no such SPV or holder of any such participation
shall be entitled to require such Lender to take or omit to take any action
hereunder except actions directly affecting (i) any reduction in the
principal amount of, or interest rate or Fees payable with respect to, any
Advance in which such holder participates, (ii) any extension of any
scheduled payment of the principal amount of any Advance in which such holder
participates or the final maturity date thereof, and (iii) any release of
all or substantially all of the Borrower Collateral (other than in accordance
with the terms of this Agreement or the other Related Documents).  Solely for purposes of Sections
2.08, 2.09, 2.10, and 9.01,
Borrower acknowledges and agrees that each such sale or participation shall
give rise to a direct obligation of the Borrower to the participant or SPV and
each such participant or SPV shall be considered to be a “Lender” for purposes
of such sections.  Except as set forth in
the preceding sentence, such Lender’s rights and obligations, and the rights
and obligations of the other Lenders and the Administrative Agent towards such
Lender under any Related Document shall remain unchanged and none of the
Borrower, the Administrative Agent or any Lender (other than the Lender selling
a participation or assignment to an SPV) shall have any duty to any participant
or SPV and may continue to deal solely with the assigning or selling Lender as
if no such assignment or sale had occurred.

 

(d)           Except as expressly
provided in this Section 12.02, no Lender
shall, as between the Borrower and that Lender, or between the Administrative
Agent and that Lender, be relieved of any of its obligations hereunder as a
result of any sale, assignment, transfer or negotiation of, or granting of
participation in, all or any part of the Advances, the Revolving Notes, the
Swing Line Note or other Borrower Obligations owed to such Lender.

 

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

 

54

 

initial syndication of the
Commitments hereunder, assist in the preparation of informational materials for
such syndication.

 

(f)            A Lender may
furnish any information concerning the Borrower, the Originator, the Servicer
and/or the Receivables in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and
participants).  Each Lender shall obtain
from all prospective and actual assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 12.05.

 

Section 12.03.  Termination; Survival of Borrower Obligations Upon
Commitment Termination Date.

 

(a)           This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Termination Date.

 

(b)           Except as otherwise
expressly provided herein or in any other Related Document, no termination or
cancellation (regardless of cause or procedure) of any commitment made by any
Affected Party under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Borrower or the rights of any
Affected Party relating to any unpaid portion of the Borrower Obligations, due
or not due, liquidated, contingent or unliquidated or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date.  Except as otherwise expressly provided herein
or in any other Related Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Borrower and all rights
of any Affected Party hereunder, all as contained in the Related Documents,
shall not terminate or expire, but rather shall survive any such termination or
cancellation and shall continue in full force and effect until the Termination
Date; provided, that the rights and
remedies provided for herein with respect to any breach of any representation
or warranty made by the Borrower pursuant to Article IV,
the indemnification and payment provisions of Article X
and Sections 11.05, 12.05, 12.14
and 12.15 shall be continuing and shall
survive 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 of
pocket expenses incurred in connection with the negotiation and preparation of
this Agreement and the other Related Documents (including the reasonable fees
and expenses of all of its special counsel, advisors, consultants and auditors
retained in connection with the transactions contemplated thereby and advice in
connection therewith).  The Borrower
shall reimburse each Lender and the Administrative Agent for all fees,
reasonable costs and expenses, including the fees, costs and expenses of
counsel or other advisors for advice, assistance, or other representation in
connection with:

 

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

 

55

 

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

 

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

 

(iv)          any attempt to enforce any remedies of
a Lender or the Administrative Agent against the Borrower, the Servicer or any
other Person that may be obligated to them by virtue of any of the Related
Documents, including any such attempt to enforce any such remedies in the
course of any work-out or restructuring of the transactions contemplated hereby
during the pendency of one or more Termination Events;

 

(v)           any work-out or restructuring of the
transactions contemplated hereby during the pendency of one or more Termination
Events; and

 

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

 

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

 

56

 

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

 

Section 12.05.  Confidentiality.

 

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

 

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

 

(c)           The Administrative
Agent and each Lender agrees to maintain the confidentiality of the Information
(as defined below), and will not use such confidential Information for any
purpose or in any matter except in connection with this Agreement, except that
Information may be disclosed (1) to (i) each Affected Party (ii) its
and each Affected Party’s and their respective Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential and to not disclose or use such Information in
violation of Regulation FD (17 C.F.R. § 243.100-243.103)) and (iii) industry
trade organizations for inclusion in league table measurements, (2) any
regulatory authority (it being understood that it will to the extent reasonably
practicable provide the Borrower with an opportunity to request confidential
treatment from such regulatory authority), (3) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (4) to
any other party to this Agreement, (5) to the extent required in
connection with the exercise of any remedies hereunder or any suit,

 

57

 

action or proceeding relating
to this Agreement or any other Related Document or the enforcement of rights
hereunder or thereunder, (6) subject to an agreement containing provisions
substantially the same as those of this Section, to any assignee of (or
participant in), or any prospective assignee of (or participant in), any of its
rights or obligations under this Agreement, (7) with the consent of the
Borrower or (8) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or any other
confidentiality agreement to which it is party with the Borrower or Holdings or
any subsidiary thereof or (ii) becomes available to the Administrative
Agent, or any Lender on a nonconfidential basis from a source other than
Holdings or any subsidiary thereof.  For
the purposes of this Section, “Information” means all information received from the
Borrower and Servicer relating to the Borrower, the Servicer, Holdings or any
subsidiary thereof or their businesses, or any Obligor, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by Borrower or Servicer; provided that in the case of information received
from the Borrower or Servicer after the date hereof, such information is
clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Section 12.06.  Complete Agreement; Modification of Agreement.  This Agreement and the other Related
Documents constitute the complete agreement among the parties hereto with
respect to the subject matter hereof and thereof, supersede all prior
agreements and understandings relating to the subject matter hereof and
thereof, and may not be modified, altered or amended except as set forth in Section 12.07.

 

Section 12.07.  Amendments and Waivers.

 

(a)           Except for actions
expressly permitted to be taken by the Administrative Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
Note, or any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed (1) by
the Borrower, (2) by the Requisite Lenders or, to the extent required
under clause (b) below, by all affected
Lenders and the Swing Line Lender, as applicable, (3) to the extent
required 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 waivers
requiring the consent of any Lenders without specifying the required percentage
of Lenders shall require the written consent of the Requisite Lenders.

 

(b)           (i) No
amendment, modification, termination or waiver shall, unless in writing and
signed by each Lender directly affected thereby, do any of the following: (1) increase
the principal amount of any Lender’s Commitment; (2) reduce the principal
of, rate of interest on or Fees payable with respect to any Advance made by any
affected Lender; (3) extend any scheduled payment date or final maturity
date 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 any
affected Lender; (5) change the percentage of the Aggregate Commitments or
of the

 

58

 

aggregate Outstanding Principal
Amount which shall be required for Lenders or any of them to take any action
hereunder; (6) release all or substantially all of the Borrower
Collateral; or (7) amend or waive this Section 12.07
or the definition of the term “Requisite Lenders”  insofar as such definition affects the
substance of this Section 12.07.  Furthermore, no amendment, modification,
termination or waiver shall be effective to the extent that it (y) affects the
rights or duties of the Administrative Agent under this Agreement or any other
Related Document unless in writing and signed by the Administrative Agent or
(z) affects the rights or duties of the Swing Line Lender under this Agreement
or modifies or amends any other provision of this Agreement or any other
Related Document relating the Swing Line Loan, Swing Line Advances or the Swing
Line 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 for
the specific purpose for which it was given. 
No amendment, modification, termination or waiver shall be required for
the Administrative Agent to take additional Borrower Collateral pursuant to any
Related Document. No amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
holder of such Note.  No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.  Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 12.07
shall be binding upon each holder of a Note at the time outstanding and each
future holder of a Note.

 

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

 

(i)            requiring the consent of all
affected Lenders, the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such Lender
whose consent is not obtained as described this clause
(i) or in clause (ii) below
being referred to as a “Non-Consenting Lender”),
or

 

(ii)           requiring the consent of Requisite
Lenders, the consent of Lenders holding 51% or more of the Aggregate
Commitments is obtained, but the consent of Requisite Lenders is not obtained,
or

 

then, so long as the Administrative Agent is not a Non-Consenting
Lender, at the Borrower’s request the Administrative Agent, or a Person
acceptable to the Administrative Agent, shall have the right with the
Administrative Agent’s consent and in the Administrative Agent’s sole
discretion (but shall have no obligation) to purchase from such Non-Consenting
Lenders, and such Non-Consenting Lenders agree that they shall, upon the
Administrative Agent’s request, sell and assign to the Administrative Agent or
such Person, all of the Commitments of such Non-Consenting Lender for an amount
equal to the principal balance of all Advances held by the Non-Consenting
Lender and all accrued interest and Fees with respect thereto through the date
of sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.

 

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

 

59

 

of the Aggregate Commitment and
a release of all claims against the Administrative Agent and Lenders, and so
long as no suits, actions, proceedings or claims are pending or threatened
against any Indemnified Person asserting any damages, losses or liabilities
that are Indemnified Liabilities, the Administrative Agent shall deliver to the
Borrower termination statements and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Borrower
Obligations.

 

Section 12.08.  No Waiver; Remedies.  The failure by any Lender or the
Administrative Agent, at any time or times, to require strict performance by
the Borrower or the Servicer of any provision of this Agreement, any
Receivables Assignment or any other Related Document shall not waive, affect or
diminish any right of any Lender or the Administrative Agent thereafter to
demand strict compliance and performance herewith or therewith.  Any suspension or waiver of any breach or
default hereunder shall not suspend, waive or affect any other breach or
default whether the same is prior or subsequent thereto and whether the same or
of a different type.  None of the undertakings,
agreements, warranties, covenants and representations of the Borrower or the
Servicer contained in this Agreement, any Receivables Assignment or any other
Related Document, and no breach or default by the Borrower or the Servicer
hereunder or thereunder, shall be deemed to have been suspended or waived by
any Lender or the Administrative Agent unless such waiver or suspension is by
an instrument in writing signed by an officer of or other duly authorized
signatory of the applicable Lenders and the Administrative Agent and directed
to the Borrower or the Servicer, as applicable, specifying such suspension or
waiver.  The rights and remedies of the
Lenders and the Administrative Agent under this Agreement and the other Related
Documents shall be cumulative and nonexclusive of any other rights and remedies
that 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 not
be required.

 

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

 

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

 

(b)           EACH
PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE BOROUGH OF

 

60

 

MANHATTAN IN NEW YORK CITY SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK CITY; PROVIDED FURTHER THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE ANY LENDER OR THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE BORROWER COLLATERAL OR ANY OTHER SECURITY
FOR THE BORROWER OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE LENDERS OR THE ADMINISTRATIVE AGENT.  EACH PARTY HERETO SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON
CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.  EACH PARTY HERETO HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
PARTY AT THE ADDRESS PROVIDED FOR IN SECTION 12.01 HEREOF AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT
THEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE
PREPAID.  NOTHING IN THIS SECTION SHALL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

 

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

 

61

 

Section 12.10.  Counterparts.  This Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement.

 

Section 12.11.  Severability. 
Wherever possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

Section 12.12.  Section Titles.  The section, titles and table of contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.

 

Section 12.13.  Further Assurances.

 

(a)                                  The
Borrower 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 and
duly execute and deliver any and all further instruments and documents and take
such further action that may be necessary or desirable or that any of the
Lenders or the Administrative Agent may request to (i) perfect, protect,
preserve, continue and maintain fully the Liens granted to the Administrative
Agent for the benefit of itself and the Lenders under this Agreement, (ii) enable
the Lenders or the Administrative Agent to exercise and enforce its rights
under this Agreement or any of the other Related Documents or (iii) otherwise
carry out more effectively the provisions and purposes of this Agreement or any
other Related Document.  Without limiting
the generality of the foregoing, the Borrower shall, upon request of any of the
Lenders or the Administrative Agent, (A) execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices that may be necessary or desirable or that
any of the Lenders or the Administrative Agent may request to perfect, protect
and preserve the Liens granted pursuant to this Agreement, free and clear of
all Adverse Claims, (B) mark, or cause the Servicer to mark, each Contract
evidencing which constitutes “chattel paper” under the UCC and evidences a
Transferred Receivable with a legend, acceptable to each Lender and the
Administrative Agent evidencing that the Borrower has purchased such
Transferred Receivables and that the Administrative Agent, for the benefit of
the Lenders, has a security interest in and lien thereon, (C) mark, or
cause the Servicer to mark, its computer records pertaining to the Transferred
Receivables with such a legend and (D) notify or cause the Servicer to
notify Obligors of the Liens on the Transferred Receivables granted hereunder.

 

(b)                                 Without
limiting the generality of the foregoing, the Borrower hereby authorizes the
Lenders and the Administrative Agent, and each of the Lenders hereby authorizes
the Administrative Agent, to file one or more financing or continuation
statements, or amendments thereto or assignments thereof, relating to all or
any part of the Transferred Receivables, including Collections with respect
thereto, or the Borrower Collateral without the signature of the Borrower or,
as applicable, the Lenders, as applicable, to the extent permitted by
applicable law.  A carbon, photographic
or other reproduction of this Agreement or of any notice

 

62

 

or financing
statement covering the Transferred Receivables, the Borrower Collateral or any
part thereof shall be sufficient as a notice or financing statement where
permitted by law.

 

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

 

Section 12.15.  Limitation
on Payments.

 

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

 

(b)                                 Without
limiting Section 12.15(a), all payments required to be made by the
Borrower to the Agent, the Lenders, the Affected Parties and the Indemnified
Persons pursuant to this Agreement and the other Related Documents shall be
made only from (i) Collections, (ii) proceeds from the repurchase of
Transferred Receivables from the Borrower by the Originators pursuant to
Section 4.04 of the Sale Agreement, (iii) indemnification and
reimbursement payments made by the Originators and the Servicer pursuant the
Sale Agreement, including, without limitation Article V thereof and (iv) payments
made by the Parent pursuant to the Originator Support Agreement and in no event
shall be made from cash contributions made by the Parent.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

63

 

IN WITNESS WHEREOF, the parties have caused this Receivables Funding
and Administration Agreement to be executed by their respective officers
thereunto 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) to
Funding Agreement

 

FORM OF REVOLVING NOTE

 

	
  $130,000,000

  	
  November 25, 2005

  

 

FOR VALUE RECEIVED, the undersigned, VERTIS RECEIVABLES II, LLC, a
Delaware limited liability company (the “Borrower”), HEREBY PROMISES TO PAY to
the order of GENERAL ELECTRIC CAPITAL CORPORATION (the “Lender”), at the
offices of GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as
agent for the Lender (the “Administrative Agent”), at its address at 201
Merritt 7, Norwalk, CT 06851, or at such other place as the Administrative
Agent may designate from time to time in writing, in lawful money of the United
States of America and in immediately available funds, the amount of ONE HUNDRED
THIRTY MILLION DOLLARS AND NO CENTS ($130,000,000) or, if less, the aggregate
unpaid amount of all Revolving Credit Advances made to the undersigned under
the “Funding Agreement” (as hereinafter defined).  All capitalized terms used but not otherwise
defined 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 to
that certain Receivables Funding and Administration Agreement dated as of November 25,
2005 by and among the Borrower, the Lender (and any other “Lender” party
thereto), and the Administrative Agent (including all annexes, exhibits and
schedules thereto, and as from time to time amended, restated, supplemented or
otherwise modified, the “Funding Agreement”), and is entitled to the benefit
and security of the Funding Agreement and all of the other Related Documents
referred to therein.  Reference is hereby
made to the Funding Agreement for a statement of all of the terms and
conditions under which the Revolving Credit Advances evidenced hereby are made
and are to be repaid.  The date and
amount of each Revolving Credit Advance made by the Lender to the Borrower, the
rates of interest applicable thereto and each payment made on account of the
principal thereof, shall be recorded by the Administrative Agent on its books;
provided that the failure of the Administrative Agent to make any such
recordation shall not affect the obligations of the Borrower to make a payment
when due of any amount owing under the Funding Agreement or this Revolving Note
in respect of the Revolving Credit Advances actually made by the Lender to the
Borrower.

 

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

 

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

 

 

Upon and after the occurrence of any Termination Event, this Revolving
Note may, as provided in the Funding Agreement, and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable.

 

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

 

Except as provided in the Funding Agreement, this Revolving Note may
not be assigned by the Lender to any Person.

 

THIS REVOLVING
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE 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) to
Funding Agreement

 

FORM OF SWING LINE NOTE

 

	
  $130,000,000

  	
  November 25, 2005

  

 

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

 

This Swing Line Note is issued pursuant to that certain Receivables
Funding and Administration Agreement dated as of November 25, 2005 by and
among the Borrower, the Swing Line Lender, the other “Lenders” party thereto,
and the Administrative Agent (including all annexes, exhibits and schedules
thereto and as from time to time amended, restated, supplemented or otherwise
modified, the “Funding Agreement”), and is entitled to the benefit and security
of the Funding Agreement and all of the other Related Documents referred to
therein.  Reference is hereby made to the
Funding Agreement for a statement of all of the terms and conditions under
which the Swing Line Advances evidenced hereby are made and are to be
repaid.  The date and amount of each
Swing Line Advance made by Swing Line Lender to the Borrower, the rate of
interest applicable thereto and each payment made on account of the principal
thereof, shall be recorded by the Administrative Agent on its books; provided
that the failure of the Administrative Agent to make any such recordation shall
not affect the obligations of the Borrower to make a payment when due of any
amount owing under the Funding Agreement or this Swing Line Note in respect of
the Swing Line Advances made by Swing Line Lender to the Borrower.

 

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

 

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

 

 

Upon and after the occurrence of any Termination Event, this Swing Line
Note may, as provided in the Funding Agreement, and without demand, notice or
legal process of any kind, be declared, and immediately shall become, due and
payable.

 

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

 

THIS SWING
LINE NOTE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE.

 

	
   

  	
  VERTIS RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

P-2

 

Exhibit 2.02(a) to
Funding Agreement

 

FORM OF COMMITMENT REDUCTION NOTICE

 

[Insert Date]

 

General Electric Capital Corporation,

as Administrative Agent

201 Merritt 7

Norwalk, Connecticut 06851

Attention:  Vice President –
Portfolio/Underwriting

 

Re:                               Receivables
Funding and Administration

Agreement dated as of November 25, 2005

 

Ladies and
Gentlemen:

 

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

 

Pursuant to Section 2.02(a) of
the Funding Agreement, the Borrower hereby irrevocably notifies the Lenders and
the Administrative Agent of its election to permanently reduce the Aggregate
Commitment to [$       ], effective as of [              
       ], [       ].(1) After
such reduction, the Aggregate Commitment will not be less than the Outstanding
Principal Amount.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  VERTIS RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
							

 

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

 

 

Exhibit 2.02(b) to
Funding Agreement

 

FORM OF COMMITMENT TERMINATION NOTICE

 

[Insert Date]

 

General Electric Capital
Corporation,

as Administrative Agent

201 Merritt 7

Norwalk, Connecticut 06851

Attention:  Vice President –
Portfolio/Underwriting

 

Re:                               Receivables
Funding and Administration

Agreement dated as of November 25, 2005

 

Ladies and
Gentlemen:

 

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

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  VERTIS RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
							

 

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

 

 

Exhibit 2.03(a) to
Funding Agreement

 

FORM OF BORROWING REQUEST

 

[Insert Date]

 

General Electric Capital
Corporation,

as Administrative Agent

201 Merritt 7

Norwalk, Connecticut 06851

Attention:  Vice President –
Portfolio/Underwriting

 

Re:                               Receivables
Funding and Administration

Agreement dated as of November 25, 2005

 

Ladies and
Gentlemen:

 

This notice is given pursuant to Section 2.03(a) of
that certain Receivables Funding and Administration Agreement dated as of November 25,
2005 (the “Funding Agreement”), by
and among Vertis Receivables II, LLC (the “Borrower”),
the financial institutions party thereto as lenders (the “Lenders”) and General Electric Capital
Corporation, as a lender, a Swing Line Lender and as administrative agent for
the Lenders (in such capacity, the “Administrative
Agent”).  Capitalized terms
used and not otherwise defined herein shall have the respective meanings
ascribed to them in the Funding Agreement.

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  VERTIS RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
							

 

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

 

 

Exhibit to Borrowing Request

 

Pro Forma Calculation of Borrowing Base

 

[Attached]

 

2

 

Exhibit 2.03(h) to
Funding Agreement

 

FORM OF REPAYMENT NOTICE

 

[Insert Date]

 

General Electric Capital
Corporation,

as Administrative Agent

201 Merritt 7

Norwalk, Connecticut 06851

Attention:  Vice President –
Portfolio/Underwriting

 

Re:                               Receivables
Funding and Administration

Agreement dated as of November 25, 2005

 

Ladies and
Gentlemen:

 

This notice is given pursuant to Section 2.03(h) of
that certain Receivables Funding and Administration Agreement dated as of November 25,
2005 (the “Funding
Agreement”), by and among Vertis Receivables II, LLC (the “Borrower”), the
financial institutions party thereto as lenders (the “Lenders”), and General Electric
Capital Corporation, as a lender (in such capacity, the “Lender”) and as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”).  Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Funding Agreement.

 

Pursuant to Section 2.03(h) of
the Funding Agreement, the Borrower hereby notifies the Lenders and the
Administrative Agent of its request to repay the principal amount of
outstanding Advances in an amount equal to [$        ]
on [               
    ], [      ] (which is a
Business Day), from [Collections/other sources].  In connection therewith, the Borrower will
pay to the Administrative Agent (1) all interest accrued on the
outstanding principal balance of Advances being repaid through but excluding
the date of such repayment and (2) any and all Breakage Costs payable
under Section 2.10 of the Funding
Agreement by virtue thereof.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  VERTIS RECEIVABLES II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
							

 

 

Exhibit 5.02(b) to
Funding Agreement

 

Form of

 

BORROWING BASE CERTIFICATE

 

[Attached]

 

 

Exhibit 9.03
to Funding Agreement

 

Form of

 

POWER OF ATTORNEY

 

This Power of Attorney is executed and delivered by Vertis Receivables
II, LLC, as Borrower, (“Grantor”) under the
Funding 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 dated
as of November 25, 2005 (the “Funding Agreement”), by and among Grantor, the other parties
thereto and Attorney and the other Related Documents.  Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Funding
Agreement.  No person to whom this Power
of Attorney is presented, as authority for Attorney to take any action or
actions contemplated hereby, shall be required to inquire into or seek
confirmation from Grantor as to the authority of Attorney to take any action
described below, or as to the existence of or fulfillment of any condition to
this Power of Attorney, which is intended to grant to Attorney unconditionally
the authority to take and perform the actions contemplated herein, and Grantor
irrevocably waives any right to commence any suit or action, in law or equity,
against any person or entity that acts in reliance upon or acknowledges the
authority granted under this Power of Attorney. 
The power of attorney granted hereby is coupled with an interest and may
not be revoked or cancelled by Grantor until all Borrower Obligations under the
Related Documents have been indefeasibly paid in full and Attorney has provided
its written consent thereto.

 

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

 

 

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

 

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

 

 

	
  Grantor

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  (SEAL)

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
									

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

 

2

 

Exhibit 12.02(b) to
Funding 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 ELECTRIC
CAPITAL CORPORATION, as administrative agent (“Administrative Agent”).  All capitalized terms used in this Agreement
and not otherwise defined herein will have the respective meanings set forth in
the Funding Agreement as hereinafter defined.

 

RECITALS:

 

WHEREAS, Vertis Receivables II, LLC, a Delaware limited liability
company (the “Borrower”), the financial institutions signatory thereto from
time to time as lenders (the “Lenders”), and the Administrative Agent have
entered into that certain Receivables Funding and Administration Agreement
dated as of November 25, 2005 (as amended, restated, supplemented or
otherwise modified from time to time, the “Funding Agreement”) pursuant to
which the Lenders (including the Assignor Lender) have agreed to make certain
Advances to Borrower;

 

WHEREAS, Assignor Lender desires to assign to Assignee Lender [all/a portion] of its interest
in the Advances (as described below) and the Borrower Collateral and to
delegate to Assignee Lender [all/a portion] of its Commitment and other duties
with respect to such Advances and Borrower Collateral;

 

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

 

WHEREAS, Assignee Lender desires to appoint the Administrative Agent to
serve 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 Lender
agree as follows:

 

1.                                      ASSIGNMENT,
DELEGATION, AND ACCEPTANCE

 

1.1                                 Assignment. 
Assignor Lender hereby transfers and assigns to Assignee Lender, without
recourse and without representations or warranties of any kind (except as set
forth in Section 3.2 below), [all/such percentage] of Assignor
Lender’s right, title, and interest in the Advances, Related Documents and
Borrower Collateral as will result in Assignee Lender having as of the
Effective 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 Assignee
Lender [all/a portion] of its Commitments and its other duties and obligations
as a Lender under the Related Documents equivalent to [100%/      %] of Assignor
Lender’s Commitment (such percentage representing a commitment of $                 ).

 

1.3                                 Acceptance by Assignee Lender.  By its execution of this Agreement, Assignee
Lender irrevocably purchases, assumes and accepts such assignment and
delegation and agrees to be a Lender with respect to the delegated interest
under the Related Documents and to be bound by the terms and conditions
thereof.  By its execution of this
Agreement, Assignor Lender agrees, to the extent provided herein, to relinquish
its rights and be released from its obligations and duties under the Funding
Agreement.

 

1.4                                 Effective Date. 
Such assignment and delegation by Assignor Lender and acceptance by
Assignee Lender will be effective and Assignee Lender will become a Lender
under 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 is
defined below).

 

2.                                      INITIAL PAYMENT
AND 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 then
outstanding 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]  [Assignee
Lender] will
pay to the Administrative Agent, for its own account in immediately available
funds, not later than 12:00 noon (New York City time) on the Effective Date, an
assignment fee in the amount of $3,500 (the “Assignment Fee”) as required
pursuant to Section 12.02(b) of the Funding Agreement.

 

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

 

2

 

3.                                      REPRESENTATIONS, WARRANTIES
AND 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 a
legal, valid, and binding agreement of Assignee Lender, enforceable according
to its terms;

 

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

 

(c)                                  Assignee Lender is
familiar with transactions of the kind and scope reflected in the Related
Documents and in this Agreement;

 

(d)                                 Assignee Lender has
made its own independent investigation and appraisal of the financial condition
and affairs of the Borrower and its Affiliates, has conducted its own
evaluation of the Advances, the Related Documents and the Borrower’s and its
Affiliates’ creditworthiness, has made its decision to become a Lender to
Borrower under the Funding Agreement independently and without reliance upon
Assignor Lender, any other Lender or the Administrative Agent, and will
continue to do so;

 

(e)                                  Assignee Lender is
entering into this Agreement in the ordinary course of its business, and is
acquiring its interest in the Advances for its own account and not with a view
to or for sale in connection with any subsequent distribution; provided,
however, that at all times the distribution of Assignee Lender’s property
shall, subject to the terms of the Funding Agreement, be and remain within its
control;

 

(f)                                    No future
assignment or participation granted by Assignee Lender pursuant to Section 12.02 of the Funding Agreement will
require Assignor Lender, the Administrative Agent, or Borrower to file any
registration statement with the Securities and Exchange Commission or to apply
to qualify under the blue sky laws of any state;

 

(g)                                 Assignee Lender will
not enter into any written or oral agreement with, or acquire any equity or
other ownership interest in, the Borrower or any of its Affiliates without the
prior written consent of the Administrative Agent; and

 

(h)                                 As of the Effective
Date, Assignee Lender is entitled to receive payments of principal and interest
under the Funding Agreement without deduction for or on account of any taxes
imposed by the United States of America or any political subdivision
thereof  and Assignee Lender will
indemnify the Administrative Agent from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, or
expenses that are not paid by the Borrower pursuant to the terms of the Funding
Agreement.

 

3

 

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

 

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

 

(b)                                 This Agreement is a
legal, valid and binding agreement of Assignor Lender, enforceable according to
its terms;

 

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

 

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

 

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

 

(f)                                    This Agreement
complies, 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) the
Related Documents or any other document or instrument furnished pursuant
thereto or the Advances or other Borrower Obligations, (b) the creation,
validity, genuineness, enforceability, sufficiency, value or collectibility of
any of them, (c) the amount, value or existence of the Borrower
Collateral,  (d) the perfection or
priority of any Lien upon the Borrower Collateral, or (e) the financial
condition of Borrower or any of its Affiliates or other obligor or the
performance or observance by Borrower or any of its Affiliates of its
obligations under any of the Related Documents. 
Neither Assignor Lender nor the Administrative Agent has or will have
any duty, either initially or on a continuing basis, to make any investigation,
evaluation, appraisal of, or any responsibility or liability with respect to
the accuracy or completeness of, any information provided to Assignee Lender
which has been provided to Assignor Lender or the Administrative Agent by
Borrower or any of its Affiliates. 
Nothing in this Agreement or in the Related Documents shall impose upon
the Assignor Lender or the Administrative Agent any fiduciary relationship in
respect of the Assignee Lender.

 

5.                                      FAILURE TO ENFORCE

 

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

 

4

 

acquiescence therein.  No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege.  All
rights and remedies existing under this Agreement are cumulative with, and not
exclusive of, any rights or remedies otherwise available.

 

6.                                      NOTICES

 

Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and
addressed 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 of
this Agreement will be effective without the written concurrence of Assignor
Lender, the Administrative Agent and Assignee Lender.

 

8.                                      SEVERABILITY

 

Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law.  In the event any provision of this Agreement
is 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 such
provision or the remaining provisions of the Agreement.  In addition, in the event any provision of or
obligation under this Agreement is or is held to be invalid, illegal, or
unenforceable in any jurisdiction, the validity, legality, and enforceability
of the remaining provisions or obligations in any other jurisdictions will not
in any way be affected or impaired thereby.

 

9.                                      SECTION TITLES

 

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

 

10.                               SUCCESSORS AND ASSIGNS

 

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

 

11.                               APPLICABLE LAW

 

THIS AGREEMENT
WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.

 

5

 

12.                               COUNTERPARTS

 

This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which, when so executed and delivered, will
be deemed an original and all of which shall together constitute one and the
same instrument.

 

6

 

 

IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date 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)

  	
   

  	
   

  	
   

  
															

 

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

 

7

 

SCHEDULE 2.1

 

Assignor
Lender’s Loans

 

Principal Amount

 

	
  Advances

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accrued Interest

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Unused Line Fee

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other + or -

  	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
  $

  	
   

  	
   

  	
   

  	
   

  
							

 

All determined as of the Effective Date

 

 

 

Exhibit A to Funding Agreement

 

CREDIT AND COLLECTION POLICY

 

[Attached]

 

 

SCHEDULE 4.01(b)

to

FUNDING AGREEMENT

 

JURISDICTION OF ORGANIZATION; EXECUTIVE OFFICES; COLLATERAL

LOCATIONS; CORPORATE, LEGAL AND OTHER NAMES; IDENTIFICATION

NUMBERS

 

[Attached]

 

 

SCHEDULE 4.01(i)

to

FUNDING AGREEMENT

 

TAXES

 

[Attached]

 

 

SCHEDULE 4.01(q)

to

FUNDING AGREEMENT

 

DEPOSIT AND DISBURSEMENT ACCOUNTS

 

[Attached]

 

 

SCHEDULE 4.01(v)

to

FUNDING AGREEMENT

 

SUPPLEMENTARY REPRESENTATIONS

 

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

 

1.             Receivables;
Accounts.

 

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

 

(b)           Each Account
constitutes a “deposit account” or “securities account” within the meaning of
the applicable UCC.

 

(c)           With respect to each
Account which constitutes a “securities account” within the meaning of the
applicable UCC:

 

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

 

ii.             The Borrower has
received all consents and approvals required by the terms of the applicable
Account Agreement and related Bank to the transfer to the Administrative Agent
of its interest and rights in the Account hereunder.

 

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

 

2.             Creation of
Security Interest.  The Borrower owns and
has good and marketable title to the Receivables, Accounts and Lockboxes, free
and clear of any Adverse Claim.  The
Agreement creates a valid and continuing security interest (as defined in the
applicable UCC) in the Receivables, Accounts and Lockboxes in favor of the
Administrative Agent (on behalf of itself and the Lenders), which security
interest is prior to all other Adverse Claims and is enforceable as such as
against any creditors of and purchasers from the Borrower.

 

3.             Perfection.

 

(a)           The Borrower has
caused the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law and entered into
Account Agreements in order to perfect the sale of the Receivables from the
Originators to the Borrower pursuant to the Sale Agreement and the security
interest granted by the Borrower to the Administrative Agent (on behalf of
itself and the Lenders) in the Receivables hereunder.

 

 

(b)           With respect to the
Borrower Account, the Borrower has delivered to the Administrative Agent (on
behalf of itself and the Lenders), a fully executed Borrower Account Agreement
pursuant to which the applicable Borrower Account Bank has agreed, following
the occurrence and continuation of a Termination Event, to comply with all
instructions given by the Administrative Agent with respect to all funds on
deposit in the Borrower Account, without further consent by the Borrower, the
Servicer or any Originator.

 

(c)           With respect to each
Account other than the Borrower Account, the Borrower has delivered to the
Administrative Agent (on behalf of itself and the Lenders), a fully executed
Account Agreement pursuant to which the applicable Bank has agreed to comply
with all instructions given by the Administrative Agent with respect to all
funds on deposit in the Accounts and the related Lockboxes, without further
consent by the Borrower, the Servicer or any Originator.

 

5.             Priority.

 

(a)           Other than the
transfer of the Receivables by the Originators to the Borrower pursuant to the
Sale Agreement and the grant of security interest by the Borrower to the
Administrative 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 of
the Receivables, the Accounts and the Lockboxes to any other Person.

 

(b)           The Borrower has not
authorized, or is aware of, any filing of any financing statement against the
Borrower that include a description of collateral covering the Receivables or
all other collateral pledged to the Administrative Agent (on behalf of the
Lenders) pursuant to the Related Documents, other than any financing statement
filed pursuant to the Sale Agreement and this Agreement or financing statements
that have been validly terminated prior to the date hereof.

 

(c)           The Borrower is not
aware of any judgment, ERISA or tax lien filings against either the Borrower or
any Originator.

 

(d)           None of the Accounts
or Lockboxes is in the name of any Person other than the Borrower or the
Administrative Agent.  The Borrower has
not consented to any Bank complying with instructions of any person other than
the Administrative Agent.

 

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

 

7.             Borrower to
Maintain Perfection and Priority.  In
order to evidence the interests of the Administrative Agent and the Lenders
under this Agreement, the Borrower shall, from time to time take such action,
or execute and deliver such instruments (other than filing financing
statements) as may be necessary or advisable (including, such actions as are
reasonably

 

2

 

requested by the Administrative
Agent) to maintain and perfect, as a first-priority interest, the
Administrative Agent’s (on behalf of itself and the Lenders) security interest
in 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 and
within the time limits established by law, prepare and present to the
Administrative Agent for the Administrative Agent’s authorization and approval
all financing statements, amendments, continuations or initial financing
statements in lieu of a continuation statement in the, or other filings
necessary to continue, maintain and perfect the Administrative Agent’s (on
behalf of itself and the Lenders) security interest in the Receivables and all
other collateral pledged to the Administrative Agent (on behalf of itself and
the Lenders) pursuant to the Related Documents as a first-priority interest.
The Administrative Agent’s approval of such filings shall authorize the
Borrower to file such financing statements under the UCC without the signature
of the Borrower, any Originator or the Administrative Agent where allowed by
applicable law.  Notwithstanding anything
else in the Related Documents to the contrary, neither the Borrower, the
Servicer, nor any Originator, shall have any authority to file a termination,
partial termination, release, partial release or any amendment that deletes the
name of a debtor or excludes collateral of any such financing statements,
without the prior written consent of the Administrative Agent.

 

3

 

SCHEDULE 5.01(b)

to

FUNDING AGREEMENT

 

TRADE NAMES/BORROWER

 

None.

 

 

ANNEX 5.02(a)

to

FUNDING AGREEMENT

 

REPORTING REQUIREMENTS OF THE BORROWER

 

The Borrower shall furnish, or cause to be furnished, to each Lender
and 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 the
Borrower as of the last day of the previous calendar month, together with an
unaudited monthly balance sheet of the Borrower certified by an officer of the
Borrower.  It is hereby understood and
agreed that the Borrower shall be required to deliver a Monthly Report pursuant
to the terms of this subsection (a)(i) notwithstanding that the
Borrower may also be required to deliver Weekly Reports and Daily Reports as
hereinafter described.

 

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

 

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

 

(b)           Annual Audited Financials.  As soon as available and in any event within
ninety-five (95) days after the end of each fiscal year of Holdings and the
Parent, as applicable, (1) the consolidated (accompanied by mutually
acceptable supplemental non-consolidated information customarily prepared by
management) balance sheets of (A) the Parent and its Subsidiaries as at
the end of such year and (B) Holdings and its Subsidiaries as at the end
of such year, and, the related consolidated (accompanied by mutually acceptable
supplemental non-consolidated information customarily prepared by management)
statements of income, stockholders’ equity and cash flow for such fiscal year, (2) a
report with respect to the consolidated (together with division-by-division
analysis) financial statements described in clauses (1)(A) and (1)(B) above
from Deloitte & Touche LLP or another firm of certified public
accountants selected by Parent and reasonably acceptable to Administrative
Agent, which report shall be prepared in accordance with Statement of Auditing
Standards No. 58 (the “Statement”)

 

 

“Reports on Audited Financial
Statements” and such report shall be “Unqualified” (as such term is defined in
such 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 in
any event within fifty (50) days after the end of each fiscal quarter
(including the last fiscal month of each fiscal quarter) of Holdings and the
Parent, as applicable, (1) the consolidated (accompanied by mutually
acceptable supplemental non-consolidated information customarily prepared by
management) balance sheets of (A) the Parent and its Subsidiaries as at
the end of such fiscal quarter and (B) Holdings and its Subsidiaries as at
the end of such fiscal quarter, and the related consolidated (accompanied by
mutually acceptable supplemental non-consolidated information customarily
prepared by management) statements of income, stockholders’ equity and cash
flow for such fiscal quarter and for the period from the beginning of the then
current fiscal year of Holdings to the end of such fiscal quarter, (2) the
unaudited 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) a
report setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding figures
from the most recent Financial Projections for the current fiscal year
delivered pursuant to clause (e). In addition, the Borrower shall
furnish, 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 in
reasonable detail (each, a “Compliance Certificate”)
showing the calculations used in determining compliance with the test set forth
on Annex Z to the Sale Agreement.

 

(d)           Monthly Financials.  As soon as available and in any event within
thirty-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 acceptable
supplemental non-consolidated information customarily prepared by management)
balance sheets of (A) the Parent and its Subsidiaries and (B) Holdings
and its Subsidiaries, as at the end of such month, and the related consolidated
(accompanied by mutually acceptable supplemental non-consolidated information
customarily prepared by management) statements of income, stockholders’ equity
and cash flow for such fiscal month and for the period from the beginning of
the then current fiscal year of Holdings to the end of such fiscal month, (2) the
unaudited 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) a
report setting forth in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding figures
from the most recent Financial Projections for the current fiscal year
delivered pursuant to clause (e).

 

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

 

(f)            Accountants’
Reports.  Promptly upon receipt
thereof, copies of all significant reports submitted by Holdings’ or any of its
Subsidiaries’ firm of certified public

 

2

 

accountants in connection with
each annual, interim or special audit or review of any type of the financial
statements or related internal control systems of Holdings or any of its
Subsidiaries made by such accountants, including any comment letter submitted
by such accountants to management in connection with their services.

 

(g)           Default Notices.  As soon as practicable, and in any event
within five Business Days after an Authorized Officer of the Borrower has
actual knowledge of the existence thereof, telephonic or telecopied notice of
each of the following events, in each case specifying the nature and
anticipated effect thereof and what action, if any, the Borrower proposes to
take with respect thereto, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day:

 

(i)            any Incipient
Termination Event or Termination Event;

 

(ii)           any Adverse Claim
made or asserted against any of the Borrower Collateral of which it becomes
aware;

 

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

 

(iv)          the occurrence of
any event of the type described in Sections 4.02(h)(i), (ii) or
(iii) of the Sale Agreement involving
any Obligor obligated under Transferred Receivables with an aggregate
Outstanding Balance at such time of $500,000 or more;

 

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

 

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

 

3

 

of its
business if such cessation could reasonably be expected to have a Material
Adverse Effect; or

 

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

 

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

 

(i)            ERISA Notices.  Promptly after the filing or receiving
thereof, copies of all reports and notices that the Borrower, any Transaction
Party or any of their ERISA Affiliates files under ERISA with the Internal
Revenue Services or the PBGC or the U.S. Department of Labor or that the
Borrower, any Transaction Party or any of their ERISA Affiliates receives from
any of the foregoing or from any multiemployer plan (within the meaning of Section 4001(a)(3) of
ERISA) to which the Borrower, any Transaction Party or any of their ERISA
Affiliates is or was, within the preceding five years, a contributing employer,
in each case in respect of any accumulated funding deficiency under ERISA, any “Reportable
Event” under ERISA, or any assessment of withdrawal liability under ERISA or ay
other event or condition which could, in the aggregate, result in the
imposition of liability on the Borrower, any Transaction Party or any of their
ERISA Affiliates in excess of $500,000.

 

(j)            Litigation. 
Promptly upon learning thereof, written notice of any Litigation
affecting the Borrower, the Transferred Receivables or the Borrower Collateral,
whether or not fully covered by insurance, and regardless of the subject matter
thereof that (i) seeks damages in excess of $100,000, (ii) seeks
injunctive relief, (iii) that seeks damages in excess of $500,000 and is
asserted or instituted against any Plan, its fiduciaries (in their capacity as
a fiduciary of any such Plan) or its assets or against the Borrower or any
ERISA Affiliate of the Borrower in connection with any Plan, (iv) alleges
criminal 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 information
respecting the Transferred Receivables, the Contracts therefor or the condition
or operations, financial or otherwise, of the Borrower, any Originator,
Holdings or any of its other Subsidiaries as any Lender or Administrative Agent
shall, from time to time, reasonably request.

 

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

 

4

 

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

 

5

 

Form of Monthly Report

 

[Attached]

 

 

ANNEX W

ADMINISTRATIVE 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

  

 

 

ANNEX X

 

DEFINITIONS

 

[Attached]

 

 

ANNEX Y

 

SCHEDULE OF DOCUMENTS

 

[Attached]

 

 

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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