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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a) the Aggregate Commitment,

 

and

 

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

 

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

 

minus

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

“ Closing Date ” shall mean November 25, 2005.

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

“ Daily Report ” shall mean a Borrowing Base Certificate.

 

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

 

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

 

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

 

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

 

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

 

to

 

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

 

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

 

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

 

to

 

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

 

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

 

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

 

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

 

to

 

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

 

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

 

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

 

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

 

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

 

to

 

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

 

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

 

DRR		=		[(2.0 *ADR) + [(HDR-ADR) x (HDR/ADR)]] x DHF];
				where
DRR		=		the Dilution Reserve Ratio;
ADR		=		the average of the Dilution Ratios occurring during the twelve most recent calendar Settlement Periods preceding such date;
HDR		=		the highest Dilution Ratio occurring during the twelve most recent Settlement Periods preceding such date; and
DHF		=		a Dilution Horizon Factor equal to (x) the aggregate principal amount of Receivables originated during the most recent Settlement Period preceding such date divided by (y) the

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                  that is not an Unapproved Receivable;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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