Exhibit 10.1

 

EXECUTION COPY

 

 

CREDIT AGREEMENT

 

Dated as of March 2, 2007

 

among

 

DOCTOR ACQUISITION CO.,

 

RDA HOLDING CO.,

 

THE READER’S DIGEST ASSOCIATION, INC.,

 

THE OVERSEAS BORROWERS PARTY HERETO,

 

The Lenders Party Hereto

 

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

 

CITICORP NORTH AMERICA, INC. and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
as Co-Syndication Agents,

 

and

 

THE ROYAL BANK OF SCOTLAND PLC,
as Documentation Agent

 

 

 

 

J.P. MORGAN SECURITIES INC.,
CITIGROUP GLOBAL MARKETS INC.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and RBS SECURITIES CORPORATION,
as Co-Lead Arrangers and Joint Bookrunners

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

2

 

 

SECTION 1.01.

Defined Terms

2

SECTION 1.02.

Other Interpretive Provisions

48

SECTION 1.03.

Accounting Terms

48

SECTION 1.04.

Rounding

48

SECTION 1.05.

References to Agreements, Laws, Etc

49

SECTION 1.06.

Times of Day

49

SECTION 1.07.

Timing of Payment of Performance

49

SECTION 1.08.

Currency Equivalents Generally

49

SECTION 1.09.

Change of Currency

50

 

 

 

ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS

50

 

 

SECTION 2.01.

The Loans

50

SECTION 2.02.

Borrowings, Conversions and Continuations of Loans

51

SECTION 2.03.

Letters of Credit

52

SECTION 2.04.

Swing Line Loans

59

SECTION 2.05.

Prepayments

61

SECTION 2.06.

Termination or Reduction of Commitments

64

SECTION 2.07.

Repayment of Loans

65

SECTION 2.08.

Interest

65

SECTION 2.09.

Fees

66

SECTION 2.10.

Computation of Interest and Fees

66

SECTION 2.11.

Evidence of Indebtedness

66

SECTION 2.12.

Payments Generally

67

SECTION 2.13.

Sharing of Payments

69

SECTION 2.14.

Incremental Credit Extensions

70

SECTION 2.15.

Overseas Borrower Costs

73

 

 

 

ARTICLE III TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

73

 

 

SECTION 3.01.

Taxes

73

SECTION 3.02.

Illegality

76

SECTION 3.03.

Inability to Determine Rates

76

SECTION 3.04.

Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurocurrency
Rate Loans

76

SECTION 3.05.

Funding Losses

78

SECTION 3.06.

Matters Applicable to All Requests for Compensation

78

SECTION 3.07.

Replacement of Lenders under Certain Circumstances

79

SECTION 3.08.

Survival

80

 

 

 

ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

80

 

 

SECTION 4.01.

Conditions of Initial Credit Extension

80

SECTION 4.02.

Conditions to All Credit Extensions

83

SECTION 4.03.

Conditions of Initial Credit Extension to Overseas Borrower

84

 

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ARTICLE V REPRESENTATIONS AND WARRANTIES

85

 

 

SECTION 5.01.

Existence, Qualification and Power; Compliance with Laws

85

SECTION 5.02.

Authorization; No Contravention

85

SECTION 5.03.

Governmental Authorization; Other Consents

85

SECTION 5.04.

Binding Effect

86

SECTION 5.05.

Financial Statements; No Material Adverse Effect

86

SECTION 5.06.

Litigation

87

SECTION 5.07.

No Default

87

SECTION 5.08.

Ownership of Property; Liens

87

SECTION 5.09.

Environmental Compliance

87

SECTION 5.10.

Taxes

88

SECTION 5.11.

ERISA Compliance

88

SECTION 5.12.

Subsidiaries; Equity Interests

89

SECTION 5.13.

Margin Regulations; Investment Company Act

89

SECTION 5.14.

Disclosure

89

SECTION 5.15.

Intellectual Property; Licenses, Etc

89

SECTION 5.16.

Solvency

90

SECTION 5.17.

Labor Matters

90

SECTION 5.18.

Collateral

90

 

 

 

ARTICLE VI AFFIRMATIVE COVENANTS

91

 

 

SECTION 6.01.

Financial Statements

91

SECTION 6.02.

Certificates; Other Information

92

SECTION 6.03.

Notices

94

SECTION 6.04.

Payment of Obligations

94

SECTION 6.05.

Preservation of Existence, Etc

94

SECTION 6.06.

Maintenance of Properties

94

SECTION 6.07.

Maintenance of Insurance

95

SECTION 6.08.

Compliance with Laws

95

SECTION 6.09.

Inspection Rights

95

SECTION 6.10.

Covenant to Guarantee Obligations and Give Security

95

SECTION 6.11.

Compliance with Environmental Laws

97

SECTION 6.12.

Further Assurances

98

SECTION 6.13.

Use of Proceeds

99

SECTION 6.14.

Interest Rate Protection

99

SECTION 6.15.

Designation of Subsidiaries

99

SECTION 6.16.

Ownership of Overseas Borrowers

99

SECTION 6.17.

Post-Closing Covenants

99

 

 

 

ARTICLE VII NEGATIVE COVENANTS

100

 

 

SECTION 7.01.

Liens

100

SECTION 7.02.

Investments

103

SECTION 7.03.

Indebtedness

107

SECTION 7.04.

Fundamental Changes

110

SECTION 7.05.

Dispositions

112

SECTION 7.06.

Restricted Payments

113

SECTION 7.07.

Change in Nature of Business

115

SECTION 7.08.

Transactions with Affiliates

115

 

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SECTION 7.09.

Burdensome Agreements

116

SECTION 7.10.

Financial Covenant

116

SECTION 7.11.

Accounting Changes

117

SECTION 7.12.

Prepayments, Etc. of Indebtedness

117

SECTION 7.13.

Holding Company

117

SECTION 7.14.

Capital Expenditures

118

 

 

 

ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES

119

 

 

SECTION 8.01.

Events of Default

119

SECTION 8.02.

Remedies Upon Event of Default

121

SECTION 8.03.

Exclusion of Immaterial Subsidiaries

121

SECTION 8.04.

Application of Funds

122

SECTION 8.05.

Company’s Right to Cure

123

SECTION 8.06.

CAM Exchange

123

 

 

 

ARTICLE IX ADMINISTRATIVE AGENT AND OTHER AGENTS

124

 

 

SECTION 9.01.

Appointment and Authorization of Agents

124

SECTION 9.02.

Delegation of Duties

125

SECTION 9.03.

Liability of Agents

125

SECTION 9.04.

Reliance by Agents

126

SECTION 9.05.

Notice of Default

126

SECTION 9.06.

Credit Decision; Disclosure of Information by Agents

126

SECTION 9.07.

Indemnification of Agents

127

SECTION 9.08.

Agents in their Individual Capacities

127

SECTION 9.09.

Successor Agents

128

SECTION 9.10.

Administrative Agent May File Proofs of Claim

128

SECTION 9.11.

Collateral and Guarantee Matters

129

SECTION 9.12.

Other Agents; Arrangers and Managers

130

SECTION 9.13.

Appointment of Supplemental Administrative Agents

130

 

 

 

ARTICLE X MISCELLANEOUS

131

 

 

SECTION 10.01.

Amendments, Etc

131

SECTION 10.02.

Notices and Other Communications; Facsimile Copies

133

SECTION 10.03.

No Waiver; Cumulative Remedies

135

SECTION 10.04.

Attorney Costs, Expenses and Taxes

135

SECTION 10.05.

Indemnification by the Company

135

SECTION 10.06.

Payments Set Aside

136

SECTION 10.07.

Successors and Assigns

137

SECTION 10.08.

Confidentiality

140

SECTION 10.09.

Setoff

142

SECTION 10.10.

Interest Rate Limitation

142

SECTION 10.11.

Counterparts

142

SECTION 10.12.

Integration

143

SECTION 10.13.

Survival of Representations and Warranties

143

SECTION 10.14.

Severability

143

SECTION 10.15.

Tax Forms

143

SECTION 10.16.

GOVERNING LAW

145

SECTION 10.17.

WAIVER OF RIGHT TO TRIAL BY JURY

146

 

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SECTION 10.18.

Binding Effect

146

SECTION 10.19.

Lender Action

146

SECTION 10.20.

USA PATRIOT Act

146

SECTION 10.21.

Agent for Service of Process

146

SECTION 10.22.

Effectiveness of the Merger; Assignment and Delegation to and Assumption by
Reader’s Digest

147

SECTION 10.23.

Judgment Currency

147

SECTION 10.24.

German Tax Confirmation

147

 

iv

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SCHEDULES

 

 

1.01A

 

Certain Security Interests and Guarantees

 

 

1.01B

 

Mortgaged Properties

 

 

1.01C

 

Management Adjustments

 

 

1.01D

 

Excluded Subsidiaries

 

 

1.01E

 

Foreign Subsidiaries

 

 

1.01F

 

Holdings Contractual Obligations

 

 

1.01G

 

Unrestricted Subsidiaries

 

 

1.01H

 

Mandatory Cost Formulae

 

 

1.01I

 

Existing Letters of Credit

 

 

2.01

 

Commitments

 

 

5.05

 

Certain Liabilities

 

 

5.09

 

Environmental Matters

 

 

5.10

 

Taxes

 

 

5.11

 

ERISA Compliance

 

 

5.12

 

Subsidiaries and Other Equity Investments

 

 

5.18

 

Collateral Matters

 

 

7.01(b)

 

Existing Liens

 

 

7.02(f)

 

Existing Investments

 

 

7.03(b)

 

Existing Indebtedness

 

 

7.05(k)

 

Dispositions

 

 

7.08

 

Transactions with Affiliates

 

 

7.09

 

Existing Restrictions

 

 

10.02

 

Administrative Agent’s Office, Certain Addresses for Notices

 

 

EXHIBITS

 

            Form of

 

 

A

 

Committed Loan Notice

 

 

B

 

Swing Line Loan Notice

 

 

C-1

 

U.S. Term Note

 

 

C-2

 

Revolving Credit Note

 

 

C-3

 

Euro Term Note

 

 

D

 

Compliance Certificate

 

 

E

 

Assignment and Assumption

 

 

F

 

Guarantee and Security Agreement

 

 

G

 

Mortgage

 

 

H-1

 

Opinion of Cravath, Swaine & Moore LLP

 

 

H-2

 

Opinion of Richards, Layton & Finger

 

 

H-3

 

Opinion of General Counsel (Company)

 

 

H-4

 

Opinion of General Counsel (WRC Media)

 

 

H-5

 

Opinion of General Counsel (Direct Holdings)

 

 

I

 

Letter of Credit Application (commercial)

 

 

J

 

Letter of Credit Application (standby)

 

 

K

 

Continuing Agreement

 

 

L

 

German Tax Confirmation

 

 

v

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of March 2, 2007, among
DOCTOR ACQUISITION CO., a Delaware corporation (“Acquisition Co”) (to be merged
with and into Reader’s Digest (as defined herein), the “Company”), RDA HOLDING
CO., a Delaware corporation (“Holdings”), THE READER’S DIGEST ASSOCIATION, INC.,
a Delaware corporation (“Reader’s Digest”), the Overseas Borrowers from time to
time party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), CITICORP NORTH AMERICA, INC. and MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED, as Co-Syndication Agents, and THE ROYAL
BANK OF SCOTLAND PLC, as Documentation Agent.

 

PRELIMINARY STATEMENTS

 

Pursuant to the Purchase Agreement (as this and other capitalized terms used in
these preliminary statements are defined in Section 1.01 below), Holdings agreed
to acquire Reader’s Digest (the “Acquisition”) through the merger of Acquisition
Co with and into Reader’s Digest (the “Merger”), with Reader’s Digest being the
surviving corporation.  Immediately following and as a result of the Merger,
Reader’s Digest will assume all rights and obligations of Acquisition Co as the
Company hereunder.

 

Pursuant to the WRC Acquisition Agreement, Holdings agreed to acquire WRC
Media, Inc., a Delaware corporation (“WRC Media” and such acquisition, the “WRC
Acquisition”).  Substantially concurrently with the Acquisition, Holdings will
contribute all of the capital stock of WRC Media to the Company.  In addition,
pursuant to the DH Acquisition Agreement, Holdings agreed to acquire Direct
Holdings U.S. Corp., a Delaware corporation (“Direct Holdings” and, such
acquisition, the “DH Acquisition” together with the Acquisition and the WRC
Acquisition, the “Acquisitions”).  Substantially concurrently with the
Acquisition, Holdings will contribute all of the capital stock of Direct
Holdings to the Company.

 

Acquisition Co has requested that concurrently with the consummation of the
Acquisitions, the Lenders extend credit to Acquisition Co and the German
Borrower in the form of Term Loans in an initial aggregate Dollar Amount of
$1,310,000,000 and in the form a Revolving Credit Facility in an initial
aggregate amount of $300,000,000.  The Revolving Credit Facility may include one
or more Swing Line Loans and one or more Letters of Credit from time to time.

 

The proceeds of the Term Loans and any Revolving Credit Loans made on the
Closing Date, together with the proceeds of (i) the issuance of the Senior
Subordinated Notes, (ii) the issuance of the Holdings Senior PIK Preferred,
(iii) the issuance of the Holdings Common Equity, (iv) the Sponsor Equity
Contributions, and (v) cash on hand at Reader’s Digest of up to $70,000,000 will
be used to pay the cash portion of the Purchase Price and the Transaction
Expenses and to refinance certain outstanding Indebtedness of Reader’s Digest,
WRC Media and Direct Holdings.  The proceeds of Revolving Credit Loans and Swing
Line Loans and the Letters of Credit made on or after the Closing Date will be
used for working capital and other general corporate purposes of Holdings and
its Subsidiaries, including the financing of Permitted Acquisitions.

 

1

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The applicable Lenders have indicated their willingness to lend, and the L/C
Issuers have indicated their willingness to issue Letters of Credit, in each
case, on the terms and subject to the conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01.  Defined Terms .  As used in this Agreement, the following terms
shall have the meanings set forth below:

 

“Acquired EBITDA” means, with respect to any Acquired Entity or Business for any
period, the amount for such period of Consolidated EBITDA of such Acquired
Entity or Business (determined as if references to the Company and the
Restricted Subsidiaries in the definition of Consolidated EBITDA were references
to such Acquired Entity or Business and its Subsidiaries), all as determined on
a consolidated basis for such Acquired Entity or Business.

 

“Acquired Entity or Business” has the meaning set forth in the definition of the
term “Consolidated EBITDA”.

 

“Acquisition” has the meaning set forth in the preliminary statements to this
Agreement.

 

“Acquisition Co” has the meaning specified in the introductory paragraph to this
Agreement.

 

“Acquisitions” has the meaning set forth in the preliminary statements to this
Agreement.

 

“Additional Lender” has the meaning set forth in Section 2.14(a).

 

“Additional Overseas Lender” has the meaning set forth in Section 2.14(b).

 

“Administrative Agent” means JPMorgan Chase Bank, in its capacity as
administrative agent under any of the Loan Documents, or any permitted successor
administrative agent.

 

“Administrative Agent’s Office” means, with respect to any currency, the
Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 10.02 with respect to such currency, or such other address or account
with respect to such currency as the Administrative Agent may from time to time
notify the Company and the Lenders in writing (including by electronic mail or
by posting to Intralinks or other similar information transmission systems).

 

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

 

2

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“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.  “Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and
“Controlled” have meanings correlative thereto.

 

“Agent-Related Persons” means the Agents, together with their respective
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.

 

“Agents” means, collectively, the Administrative Agent, the Co-Syndication
Agents, the Documentation Agent and the Supplemental Administrative Agents (if
any).

 

“Aggregate Commitments” means the Commitments of all the Lenders.

 

“Aggregate Credit Exposures” means, at any time, the sum of (a) the unused
portion of each Revolving Credit Commitment then in effect, (b) the unused
portion of each U.S. Term Commitment then in effect, (c) the unused portion of
each Euro Term Commitment then in effect and (c) the Total Outstandings at such
time.

 

“Agreement” means this Credit Agreement.

 

“Agreement Currency” has the meaning specified in Section 10.23.

 

“Alternative Currency” means Sterling, Euros, Canadian Dollars or Australian
Dollars.

 

“Alternative Currency Loan” means a Loan that is a Eurocurrency Rate Loan and
that is made in an Alternative Currency pursuant to the applicable Committed
Loan Notice.

 

“Applicable Rate” means a percentage per annum equal to:

 

(a) with respect to Term Loans, (i) for Eurocurrency Rate Loans, 2.00% and
(ii) for Base Rate Loans, 1.00%; and

 

(b)  with respect to Revolving Credit Loans, unused Revolving Credit Commitments
and Letter of Credit fees, until delivery of financial statements for the first
full fiscal quarter commencing on or after the Closing Date pursuant to
Section 6.01, (A) for Eurocurrency Rate Loans, 2.25%, (B) for Base Rate Loans,
1.25%, (C) for Letter of Credit fees, 2.25% and (D) for commitment fees, 0.375%
and (ii) thereafter, the following percentages per annum, based upon the Total
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section 6.02(b):

 

Applicable Rate

Pricing
Level

 

Total Leverage Ratio

 

Eurocurrency
Rate and
Letter of
Credit Fees

 

Base Rate

 

Commitment
Fee Rate

 

1

 

>6.0:1

 

2.25%

 

1.25%

 

0.375%

 

2

 

<6.0:1 but >5.0:1

 

2.00%

 

1.00%

 

0.375%

 

 

3

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Applicable Rate

Pricing
Level

 

Total Leverage Ratio

 

Eurocurrency
Rate and
Letter of
Credit Fees

 

Base Rate

 

Commitment
Fee Rate

 

3

 

<5.0:1 but >4.0:1

 

1.75%

 

0.75%

 

0.375%

 

4

 

<4.0:1

 

1.50%

 

0.50%

 

0.250%

 

 

Any increase or decrease in the Applicable Rate resulting from a change in the
Total Leverage Ratio shall become effective as of the first Business Day
immediately following the date a Compliance Certificate (together with the
related financial statements) is delivered pursuant to Section 6.02(b); provided
that, at the option of the Administrative Agent or the Required Lenders, (x) the
highest Pricing Level shall apply as of the third Business Day after the date on
which a Compliance Certificate (together with the related financial statements)
was required to have been delivered but was not delivered, and shall continue to
so apply to and including the date on which such Compliance Certificate
(together with the related financial statements) is so delivered (and thereafter
the Pricing Level otherwise determined in accordance with this definition shall
apply) and (y) the next-higher Pricing Level to the Pricing Level then in effect
shall apply as of the first Business Day after an Event of Default under
Section 8.01(a) shall have occurred and be continuing, and shall continue to so
apply to but excluding the date on which such Event of Default is cured or
waived (and thereafter the Pricing Level otherwise determined in accordance with
this definition shall apply).

 

“Appropriate Lender” means, at any time, (a) with respect to Loans of any Class,
the Lenders of such Class, (b) with respect to Letters of Credit, the relevant
L/C Issuers and the Revolving Credit Lenders and (c) with respect to the Swing
Line Facility, the Swing Line Lender and the Revolving Credit Lenders.

 

“Approved Bank” has the meaning specified in clause (c) of the definition of
“Cash Equivalents”.

 

“Approved Fund” means any Fund that is administered, advised or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers, advises or manages a Lender.

 

“Arrangers” means J.P. Morgan Securities Inc., Citigroup Global Markets Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities
Corporation, each in its capacity as a Joint Bookrunner and a Co-Lead Arranger
under this Agreement.

 

“Assignees” has the meaning specified in Section 10.07(b).

 

“Assignment and Assumption” means an Assignment and Assumption substantially in
the form of Exhibit E.

 

“Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any law firm or other external legal counsel.

 

“Attributable Indebtedness” means, on any date, in respect of any Capitalized
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP.

 

4

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“Audited Financial Statements” means (a) the audited consolidated balance sheets
of Reader’s Digest and its Subsidiaries as of each of June 30, 2004, June 30,
2005 and June 30, 2006, and the related audited consolidated statements of
income, stockholders’ equity and cash flows for Reader’s Digest and its
Subsidiaries for the periods ended on such dates, (b) the audited consolidated
balance sheets of WRC Media and its Subsidiaries as of each of December 31,
2004, December 31, 2005 and December 31, 2006, and the related audited
consolidated statements of income, stockholders’ equity and cash flows for WRC
Media and its Subsidiaries for the periods ended on such dates, and (c) the
audited consolidated balance sheets of Direct Holdings and its Subsidiaries as
of each of June 26, 2004, June 25, 2005 and June 24, 2006, and the related
audited consolidated statements of income, stockholders’ equity and cash flows
for Direct Holdings and its Subsidiaries for the periods ended on such dates.

 

“Australian Dollars” means the lawful currency of Australia.

 

“Auto-Renewal Letter of Credit” has the meaning specified in
Section 2.03(b)(iii).

 

“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by JPMorgan Chase
Bank as its “prime rate.”  The “prime rate” is a rate set by JPMorgan Chase Bank
based upon various factors including JPMorgan Chase Bank costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.  Any change in such rate announced by JPMorgan Chase Bank
shall take effect at the opening of business on the day specified in the public
announcement of such change.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Board” means the Board of Governors of the Federal Reserve System of the United
States (or any successor).

 

“Borrowers” means the Company, the German Borrower and the other Overseas
Borrowers.

 

“Borrowing” means a Revolving Credit Borrowing, a Swing Line Borrowing, or a
Term Borrowing, as the context may require.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located or in
The City of New York; provided, that (a) when used in connection with a
Eurocurrency Rate Loan denominated in a currency other than Euro, the term
“Business Day” shall also exclude any day on which banks are not open for
dealings in deposits in the applicable currency in the London interbank market,
(b) when used in connection with a Eurocurrency Rate Loan denominated in Euro,
the term “Business Day” shall also exclude any day which is not a TARGET Day,
(c) when used in connection with any Loan denominated in Canadian Dollars, the
term “Business Day” shall also exclude any day on which banks are not open for
dealings in deposits in Toronto but shall include any day on which banks are
open for dealings in deposits in Toronto, (d) when used in connection with any
Loan denominated in Sterling, the term “Business Day” shall also exclude any day
on which banks are not open for dealings in deposits in Sterling in London but
shall include any day on which banks are open for dealings in deposits in
Sterling in London, and (e) when used in connection with any

 

5

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Loan denominated in Australian Dollars, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in deposits in Sydney
but shall include any day on which banks are open for dealings in deposits in
Sydney.

 

“CAM” means the mechanism for the allocation and exchange of interests in Loans
and other Credit Extensions under this Agreement and collections thereunder
established in Section 8.06.

 

“CAM Exchange” means the exchange of the Lenders’ interests provided for in
Section 8.06.

 

“CAM Exchange Date” means the date on which any Event of Default referred to in
Section 8.01(f) shall occur or the date on which the Company receives written
notice from the Administrative Agent that any Event of Default referred to in
Section 8.01(g) has occurred.

 

“CAM Percentage” means, as to each Lender, a fraction, expressed as a decimal,
of which (a) the numerator shall be the aggregate Dollar Amount of the
Designated Obligations owed to such Lender (whether or not at the time due and
payable) immediately prior to the CAM Exchange Date and (b) the denominator
shall be the aggregate Dollar Amount of the Designated Obligations owed to all
the Lenders (whether or not at the time due and payable) immediately prior to
the CAM Exchange Date.

 

“Canadian Dollars” means the lawful currency of Canada.

 

“Capital Expenditures” means, for any period, the additions to property, plant
and equipment and other capital expenditures of the Company and its consolidated
Subsidiaries that are (or are required to be) set forth in a consolidated
statement of cash flows of the Company for such period prepared in accordance
with GAAP; provided that the term “Capital Expenditures” shall not include,
without duplication, (i) subject to the terms of Section 2.05(b)(ii)(B),
expenditures of Net Cash Proceeds arising from any Casualty Event or any
Disposition of any property or asset of the Company or any Restricted Subsidiary
(other than any Disposition permitted by Section 7.05(b) (to the extent
constituting a Disposition of inventory in the ordinary course of business),
(d), (e), (f), (g) or (h)), (ii) the purchase price of equipment that is
purchased during such period to the extent the consideration therefore consists
of (x) existing equipment traded in at the time of such purchase or (y) the
proceeds of a concurrent sale of existing equipment, in each case in the
ordinary course of business, (iii) expenditures that are accounted for as
capital expenditures by the Company or any Restricted Subsidiary and that
actually are paid for by a Person other than the Company or any Restricted
Subsidiary and for which neither the Company nor any Restricted Subsidiary has
provided or is required to provide or incur, directly or indirectly, any
consideration or obligation to such Person or any other Person (whether before,
during or after such period), (iv) interest capitalized during such period,
(v) additions resulting from Permitted Acquisitions, (vi) the book value of any
asset owned by the Company or any Restricted Subsidiary prior to or during such
period to the extent that such book value is included as a capital expenditure
during such period as a result of such Person reusing or beginning to reuse such
asset during such period without a corresponding expenditure actually having
been made in such period; provided that (x) any expenditure necessary in order
to permit such asset to be reused shall be included as a Capital Expenditure
during the period that such expenditure actually is made and (y) such book value
shall have been included in Capital Expenditures when such asset was originally
acquired, or (vii) expenditures required to comply with special legal
requirements, including, but not limited to, changes in Environmental Laws.

 

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“Capitalized Leases” means all leases that are required to be, in accordance
with GAAP, recorded as capitalized leases; provided that for all purposes
hereunder the amount of obligations under any Capitalized Lease shall be the
Attributable Indebtedness in respect thereof.

 

“Cash Collateral” has the meaning specified in Section 2.03(g).

 

“Cash Collateral Account” means a blocked account at JPMorgan Chase Bank (or
another commercial bank selected in compliance with Section 9.09) in the name of
the Administrative Agent and under the sole dominion and control of the
Administrative Agent, and otherwise established in a manner satisfactory to the
Administrative Agent.

 

“Cash Collateralize” has the meaning specified in Section 2.03(g).

 

“Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Company or any Restricted Subsidiary:

 

(a)  Dollars, Euros or other Alternative Currency or, in the case of any Foreign
Subsidiary, such local currencies held by it from time to time in the ordinary
course of business;

 

(b)  marketable obligations issued or directly and fully guaranteed or insured
by the government or any agency or instrumentality of (i) the United States or
(ii) any member nation of the European Union, having average maturities of not
more than 12 months from the date of acquisition thereof; provided that the full
faith and credit of the United States or a member nation of the European Union
is pledged in support thereof;

 

(c)  time deposits with, or certificates of deposit, overnight bank deposits or
bankers’ acceptances issued or guaranteed by, or money market deposit accounts
issued or offered by, any commercial bank that (i) is a Lender or (ii) (A) is
organized under the Laws of the United States, any state thereof, the District
of Columbia or any member nation of the Organization for Economic Cooperation
and Development or is the principal banking Subsidiary of a bank holding company
organized under the Laws of the United States, any state thereof, the District
of Columbia or any member nation of the Organization for Economic Cooperation
and Development, and is a member of the Federal Reserve System, and (B) has
combined capital and surplus of at least $250,000,000 (any such bank in the
foregoing clauses (i) or (ii) being an “Approved Bank”), in each case with
average maturities of not more than 12 months from the date of acquisition
thereof;

 

(d)  commercial paper and variable or fixed rate notes issued by an Approved
Bank (or by the parent company thereof) or any commercial paper or any variable
or fixed rate note issued by, or guaranteed by, a corporation rated A-2 (or the
equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or
better by Moody’s, in each case with average maturities of not more than 12
months from the date of acquisition thereof;

 

(e)  fully collateralized repurchase agreements entered into by any Person with
a bank or trust company (including any of the Lenders) or recognized securities
dealer, in each case, having capital and surplus in excess of $250,000,000 for
direct obligations issued by or fully guaranteed or insured by the government or
any agency or instrumentality of (i) the United States or (ii) any member nation
of the European Union;

 

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(f)  securities with average maturities of 12 months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government having an
investment grade rating from either S&P or Moody’s (or the equivalent thereof);

 

(g)  Investments with average maturities of 12 months or less from the date of
acquisition in money market funds rated AAA- (or the equivalent thereof) or
better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s;

 

(h)  instruments equivalent to those referred to in clauses (a) through
(g) above denominated in Euros or other Alternative Currency or any other
foreign currency comparable in credit quality and tenor to those referred to
above and customarily used by corporations for cash management purposes in any
jurisdiction outside the United States to the extent reasonably required in
connection with any business conducted by any Restricted Subsidiary organized in
such jurisdiction; and

 

(i)  Investments in money market investment or similar programs which are
registered under the Investment Company Act of 1940 or which are administered by
financial institutions having capital of at least $250,000,000, and, in either
case, the portfolios of which are limited such that substantially all of such
investments are of the character, quality and maturity described in
clauses (a) through (h) of this definition.

 

“Cash Management Obligations” means obligations owed by Holdings, the Company or
any Restricted Subsidiary to any Lender or any Affiliate of a Lender in respect
of any overdraft and related liabilities arising from treasury, depository and
cash management services or any automated clearing house transfers of funds.

 

“Casualty Event” means any event that gives rise to the receipt by Holdings, the
Company or any Restricted Subsidiary of any insurance proceeds or condemnation
awards in respect of any equipment, fixed assets or real property (including any
improvements thereon) to replace or repair such equipment, fixed assets or real
property.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as subsequently amended.

 

“CERCLIS” means the Comprehensive Environmental Response, Compensation, and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

 

“Change of Control” means the earliest to occur of (a) the Permitted Holders
ceasing to have the power, directly or indirectly, to vote or direct the voting
of securities having a majority of the ordinary voting power for the election of
directors of Holdings; provided that the occurrence of the foregoing event shall
not be deemed a Change of Control if,

 

(i)  at any time prior to the consummation of a Qualifying IPO, and for any
reason whatsoever, (A) the Permitted Holders otherwise have the right, directly
or indirectly, to designate (and do so designate) a majority of the board of
directors of Holdings or (B) the Permitted Holders own, directly or indirectly,
of record and beneficially an amount of common stock of Holdings equal to an
amount more than fifty percent (50%) of the amount of common stock of

 

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Holdings owned, directly or indirectly, by the Permitted Holders of record and
beneficially as of the Closing Date and such ownership by the Permitted Holders
represents the largest single block of voting securities of Holdings held by any
Person or related group for purposes of Section 13(d) of the Exchange Act; or

 

(ii)  at any time after the consummation of a Qualifying IPO, and for any reason
whatsoever, (A) no “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit
plan of such person and its Subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan), excluding the Permitted Holders, shall become the “beneficial owner” (as
defined in Rules 13(d)-3 and 13(d)-5 under such Act), directly or indirectly, of
more than the greater of (x) thirty-five percent (35%) of the then outstanding
voting stock of Holdings (or voting power related thereto) and (y) the
percentage of the then outstanding voting stock of Holdings owned, directly or
indirectly, beneficially by the Permitted Holders, and (B) during each period of
twelve (12) consecutive months, the board of directors of Holdings shall consist
of a majority of the Continuing Directors; or

 

(b)  any “Change of Control” (or any comparable term) in the Senior Subordinated
Note Indenture or in any document pertaining to the Holdings PIK Preferred; or

 

(c)  Holdings ceasing to own, directly or indirectly, all of the outstanding
Equity Interests in the Company other than the Company Preferred Stock.

 

“Charges” has the meaning specified in Section 10.10.

 

“Class” (a) when used with respect to Lenders, refers to whether such Lenders
are Revolving Credit Lenders, U.S. Term Lenders or Euro Term Lenders, (b) when
used with respect to Commitments, refers to whether such Commitments are
Revolving Credit Commitments, U.S. Term Commitments or Euro Term Commitments and
(c) when used with respect to Loans or a Borrowing, refers to whether such
Loans, or the Loans comprising such Borrowing, are Revolving Credit Loans, U.S.
Term Loans or Euro Term Loans.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 4.01.

 

“Code” means the U.S. Internal Revenue Code of 1986 and rules and regulations
related thereto.

 

“Collateral” means all the “Collateral” as defined in any Collateral Document
and shall include the Mortgaged Properties.

 

“Collateral and Guarantee Requirement” means, at any time, the requirement that:

 

(a)  the Administrative Agent shall have received each Collateral Document
required to be delivered on the Closing Date pursuant to Section 4.01(a)(iii) or
pursuant to Section 6.10 at such time, duly executed by each Loan Party thereto;

 

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(b)  all Obligations shall have been unconditionally guaranteed (the “U.S.
Guarantees”) by Holdings, the Company (in the case of Obligations of the
Overseas Borrowers) and each Restricted Subsidiary that is a Domestic Subsidiary
and not an Excluded Subsidiary and each other Restricted Subsidiary that
executes a Security Agreement Supplement (each, a “U.S. Guarantor”);

 

(c)  except as set forth in Section 6.17, all Obligations, if any, of each
Overseas Borrower (the “Overseas Obligations”) shall have been unconditionally
guaranteed (the “Overseas Guarantees” and, together with the U.S. Guarantees,
the “Guarantees”) by each Restricted Subsidiary of such Overseas Borrower, in
each case that is not an Excluded Subsidiary (other than pursuant to clause
(d) of the definition thereof) (each, an “Overseas Guarantor” and, together with
the U.S. Guarantors, the “Guarantors”) prior to, or concurrently with, the
funding of any Loans to any Overseas Borrower, except in each case to the extent
such Overseas Guarantee (A) is prohibited or limited by applicable Law,
including financial assistance rules, (B) would result in material adverse tax
consequences to Holdings and its Subsidiaries, (C) would conflict with the
fiduciary duties of directors of any Subsidiary or (D) could reasonably be
expected to result in personal or criminal liability of any director of any
Subsidiary;

 

(d)  except as set forth in Section 6.17, the Obligations and the U.S.
Guarantees shall have been secured by a security interest in (i) all the Equity
Interests of the Company (other than the Company Preferred Stock) and (ii) all
Equity Interests (other than Equity Interests of Unrestricted Subsidiaries, any
Equity Interest of any Restricted Subsidiary pledged to secure Indebtedness
permitted under Section 7.03(g) and any Equity Interest constituting Excluded
Property (as defined in the Guarantee and Security Agreement)) of each
Subsidiary of the Company directly owned by the Company or any U.S. Guarantor,
in each case having the priority required by the Collateral Documents; provided
that pledges of voting Equity Interests of each Foreign Subsidiary, and of each
Domestic Subsidiary substantially all of whose assets consist of voting Equity
Interests of one or more Foreign Subsidiaries, shall be limited to 65% of the
issued and outstanding voting Equity Interests of such Subsidiary at any time;

 

(e)  except as set forth in Section 6.17, all Overseas Obligations and the
related Overseas Guarantees shall have been secured by a security interest in
all Equity Interests of the relevant Overseas Borrower and each applicable
Overseas Guarantor (to the extent not so pledged pursuant to the preceding
clause (d)) in each case having the priority required by the Collateral
Documents;

 

(f)  except to the extent otherwise permitted hereunder or under any Collateral
Document, (i) to the extent governed by the Uniform Commercial Code, the
execution of the Collateral Documents shall be effective to create a security
interest in all Collateral described therein and proceeds thereof, in each case,
to the extent constituting Collateral and with the priority required by the
Collateral Documents, (ii) except as set forth in Section 6.17, all Overseas
Obligations and the related Overseas Guarantees shall have been secured by a
security interest, and mortgages on, substantially all material owned tangible
and intangible assets of the relevant Overseas Borrower and each applicable
Overseas Guarantor, in each case (x) with the priority required by the
Collateral Documents, (y) except to the extent the granting of such security
interests or mortgages (A) is prohibited or limited by applicable Law, including
financial assistance rules, (B) would result in material adverse tax
consequences to Holdings and its Subsidiaries, (C) would conflict with the
fiduciary duties of directors of any Subsidiary or (D) could

 

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reasonably be expected to result in personal or criminal liability of any
director of any Subsidiary, and (z) subject to exceptions and limitations
consistent with those set forth in the Collateral Documents as in effect on the
Closing Date (to the extent appropriate in the applicable jurisdiction), and
(iii) except as set forth in Section 6.17, all documents and instruments,
including Uniform Commercial Code financing statements and filings made in
respect of Intellectual Property constituting Collateral in the United States
Patent and Trademark Office and the United States Copyright Office, reasonably
requested by the Administrative Agent to be filed, registered or recorded to
create the Liens intended to be created by the Collateral Documents and to
perfect such Liens to the extent required by, and with the priority required by,
the Collateral Documents, shall have been filed, registered or recorded or
delivered to the Administrative Agent for filing, registration or recording;

 

(g)  none of the Collateral shall be subject to any Liens other than Liens
permitted by Section 7.01; and

 

(h)  the Administrative Agent shall have received (i) counterparts of a Mortgage
with respect to any Material Real Property described on Schedule 1.01B hereto or
required to be delivered pursuant to Section 6.10 or 6.12 (the “Mortgaged
Properties”) duly executed and delivered by the record owner of such property,
(ii) a policy or policies of title insurance issued by a nationally recognized
title insurance company insuring the Lien of each such Mortgage as a valid Lien
on the property described therein, free of any other Liens except as expressly
permitted by Section 7.01, together with such endorsements, coinsurance and
reinsurance as the Administrative Agent may reasonably request, and (iii) such
surveys, abstracts, appraisals, legal opinions and other documents (which, in
the case of surveys, abstracts and appraisals, shall be limited to those
existing as of the Closing Date or the date of the relevant acquisition) as the
Administrative Agent may reasonably request with respect to any such Mortgaged
Property.

 

The foregoing definition shall not require the creation or perfection of pledges
of or security interests in, or the obtaining of title insurance or surveys with
respect to, particular assets if and for so long as, in the reasonable judgment
of the Administrative Agent and the Company, the economic detriment to the Loan
Parties of granting or perfecting such pledges or security interests or the cost
of creating or perfecting such pledges or security interests in such assets or
obtaining title insurance or surveys in respect of such assets shall be
excessive in view of the benefits to be obtained by the Lenders therefrom.  The
Administrative Agent may grant extensions of time for the perfection of security
interests in or the obtaining of title insurance with respect to particular
assets (including extensions beyond the Closing Date for the perfection of
security interests in the assets of the Loan Parties on such date) where it
reasonably determines, in consultation with the Company, that perfection cannot
be accomplished without undue effort or expense by the time or times at which it
would otherwise be required by this Agreement or the Collateral Documents.

 

Notwithstanding the foregoing provisions of this definition or anything in this
Agreement or any other Loan Document to the contrary, Liens required to be
granted from time to time pursuant to the Collateral and Guarantee Requirement
shall be subject to exceptions and limitations set forth in the Collateral
Documents as in effect on the Closing Date and, to the extent appropriate in the
applicable jurisdiction, as agreed between the Administrative Agent and the
Company.

 

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“Collateral Documents” means, collectively, the Guarantee and Security
Agreement, the Mortgages, Security Agreement Supplements, security agreements,
pledge agreements or other similar agreements delivered to the Administrative
Agent and the Lenders pursuant to Section 6.10 or Section 6.12 and each of the
other agreements, instruments or documents that creates or purports to create a
Lien or Guarantee in favor of the Administrative Agent for the benefit of the
Secured Parties.

 

“Commitment” means a U.S. Term Commitment, a Euro Term Commitment or a Revolving
Credit Commitment, as the context may require.

 

“Committed Loan Notice” means a notice of (a) a Term Borrowing, (b) a Revolving
Credit Borrowing, (c) a conversion of Loans from one Type to the other, or (d) a
continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a), which, if
in writing, shall be substantially in the form of Exhibit A.

 

“Company” has the meaning specified in the introductory paragraph to this
Agreement and includes the surviving company of the merger between Acquisition
Co and Reader’s Digest to be consummated on the Closing Date.

 

“Company Preferred Stock” means the existing series of Preferred Stock, Second
Preferred Stock and Third Subordinated Preferred Stock of Reader’s Digest;
provided that the aggregate liquidation preference thereof shall not exceed
$29,000,000.

 

“Compensation Period” has the meaning specified in Section 2.12(c)(ii).

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.

 

“Confidential Information Memorandum” means the Confidential Information
Memorandum dated February 2007, as modified or supplemented prior to the Closing
Date.

 

“Consent Solicitation” means a consent solicitation with respect to the Existing
Notes.

 

“Consolidated EBITDA” means, for any period, the Consolidated Net Income for
such period, plus:

 

(a)  without duplication and to the extent already deducted (and not added back)
in arriving at such Consolidated Net Income, the sum of the following amounts
for such period:

 

(i)  total interest expense and, to the extent not reflected in such total
interest expense, any losses on hedging obligations or other derivative
instruments entered into for the purpose of hedging interest rate risk, net of
interest income and gains on such hedging obligations, and costs of surety bonds
in connection with financing activities,

 

(ii)  taxes and provision for taxes, including taxes based on income, profits or
capital of the Company and the Restricted Subsidiaries and state, franchise and
similar taxes and foreign withholding taxes paid or accrued during such period,

 

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(iii)  depreciation and amortization,

 

(iv)  Non-Cash Charges,

 

(v)  extraordinary losses and unusual or non-recurring charges,

 

(vi)  the amount of any restructuring, transition and management charges accrued
during such period, including any charges to establish accruals and reserves or
to make payments associated with the reassessment or realignment of the business
and operations of the Company and its Subsidiaries, including, without
limitation, the sale or closing of facilities, severance, stay bonuses and
curtailments or modifications to pension and post-retirement employee benefit
plans, asset writedowns or asset disposals (including leased facilities),
writedowns for purchase and lease commitments, start up costs for new
facilities, writedowns of excess, obsolete or unbalanced inventories, relocation
costs, including costs of moving and relocating personnel, equipment,
facilities, personal property and inventory, which are not otherwise capitalized
and any related promotional costs of exiting products or product lines,

 

(vii) any deductions consisting of subsidiary income attributable to minority
interests in a Subsidiary, except to the extent actually paid to a holder of
Equity Interests in such Subsidiary (or any designee of such Person) other than
the Company and its Subsidiaries (with such payments to be deducted in the
period made),

 

(viii)  the amount of management, consulting and advisory fees and related
expenses paid by Holdings, the Company or any Restricted Subsidiary to the
Sponsors to the extent permitted hereunder,

 

(ix)  any costs or expenses incurred by the Company or a Restricted Subsidiary
pursuant to any management equity plan or stock option plan or any other
management or employee benefit plan or agreement or any stock subscription or
shareholder agreement, to the extent that such costs or expenses are funded with
cash proceeds contributed to the capital of Holdings or net cash proceeds of an
issuance of Equity Interests of Holdings (other than Disqualified Equity
Interests) Not Otherwise Applied,

 

(x)  to the extent actually reimbursed, expenses incurred to the extent covered
by indemnification provisions in any agreement in connection with a Permitted
Acquisition,

 

(xi)  expenses resulting from liability or casualty events,

 

(xii)  the amount of net cost savings projected by the Company in good faith to
be realized as a result of specified actions taken during such period
(calculated on a pro forma basis as though such cost savings had been realized
on the first day of such period), net of the amount of actual benefits realized
during such period from such actions; provided that (A) such cost savings are
reasonably identifiable and factually supportable (in the reasonable good faith
determination of the Company), (B) such actions are taken within 36 months after
the Closing Date or within 24 months after the closing date of a Permitted
Acquisition, as the

 

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case may be, (C) no cost savings shall be added pursuant to this clause (xii) to
the extent duplicative of any expenses or charges relating to such cost savings
that are included in clause (vi) above with respect to such period and (D) the
aggregate amount of cost savings added pursuant to this clause (xii) shall not
exceed $105,000,000 (for any such cost savings related to the Acquisitions in
the aggregate) or $75,000,000 (for any such cost savings related to other
specified actions in the aggregate) for any period consisting of four
consecutive quarters,

 

(xiii)  Permitted Holdings Distributions not to exceed $12,500,000 in any fiscal
year plus any reasonable indemnification claims made by directors or officers of
Holdings (or any parent thereof) attributable to the ownership or operations of
the Company and its Subsidiaries,

 

(xiv)  with regard to any period ending prior to July 1, 2008, the nonrecurring
management adjustments during the four-quarter period ending on the last day of
such period described in Schedule 1.01C to the extent occurring during such
period, and

 

(xv)  non-cash charges pursuant to SFAS 158, less

 

(b)  without duplication and to the extent included in arriving at such
Consolidated Net Income, the sum of the following amounts for such period:

 

(i)  extraordinary gains and unusual or non-recurring gains,

 

(ii)  non-cash gains (excluding any non-cash gain to the extent it represents
the reversal of an accrual or reserve for a potential cash item that reduced
Consolidated EBITDA in any prior period),

 

(iii)  gains on asset sales (other than asset sales in the ordinary course of
business),

 

(iv)  any net after-tax income from the early extinguishment of Indebtedness or
hedging obligations or other derivative instruments, and

 

(v)  all gains from sales of investments recorded using the equity method,

 

in each case, as determined on a consolidated basis for the Company and the
Restricted Subsidiaries in accordance with GAAP; provided that, to the extent
included in Consolidated Net Income,

 

(i)  there shall be excluded in determining Consolidated EBITDA currency
translation gains and losses related to currency remeasurements of Indebtedness
(including the net loss or gain resulting from Swap Contracts for currency
exchange risk),

 

(ii)  there shall be excluded in determining Consolidated EBITDA for any period
any adjustments resulting from the application of Statement of Financial
Accounting Standards No. 133, and

 

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(iii)  for purposes of determining the Total Leverage Ratio only, (A) there
shall be included in determining Consolidated EBITDA for any period, without
duplication, the Acquired EBITDA of any Person, property, business or asset
acquired by the Company or any Restricted Subsidiary during such period (but not
the Acquired EBITDA of any related Person, property, business or assets to the
extent not so acquired), to the extent not subsequently sold, transferred or
otherwise disposed by the Company or such Restricted Subsidiary (each such
Person, property, business or asset acquired and not subsequently so disposed
of, an “Acquired Entity or Business”), based on the actual Acquired EBITDA of
such Acquired Entity or Business for such period (including the portion thereof
occurring prior to such acquisition), (B) there shall be included in determining
Consolidated EBITDA for any period, without duplication, an adjustment in
respect of each Acquired Entity or Business equal to the amount of the Pro Forma
Adjustment with respect to such Acquired Entity or Business for such period
(including the portion thereof occurring prior to such acquisition) as
reasonably determined by the Company in good faith and specified in a
certificate executed by a Responsible Officer and delivered to the
Administrative Agent, and (C) there shall be excluded in determining
Consolidated EBITDA for any period the Disposed EBITDA of any Person, property,
business or asset sold, transferred or otherwise disposed of, closed or
classified as discontinued operations by the Company or any Restricted
Subsidiary during such period (each such Person, property, business or asset so
sold or disposed of, a “Sold Entity or Business”), based on the actual Disposed
EBITDA of such Sold Entity or Business for such period (including the portion
thereof occurring prior to such sale, transfer or disposition).

 

For the purpose of the definition of Consolidated EBITDA, “Non-Cash Charges”
means (a) non-cash losses on asset sales, disposals or abandonments (other than
of current assets), (b) any impairment charge or asset write-off related to
intangible assets, long-lived assets, and investments in debt and equity
securities pursuant to GAAP, (c) all losses from investments recorded using the
equity method, (d) stock-based awards compensation expense, and (e) other
non-cash charges (provided that if any non-cash charges referred to in this
clause (e) represent an accrual or reserve for potential cash items in any
future period, the cash payment in respect thereof in such future period shall
be subtracted from Consolidated EBITDA in such future period to such extent, and
excluding non-cash charges consisting of amortization of a prepaid cash item
that was paid in a prior period).  Notwithstanding the foregoing, Consolidated
EBITDA for the fiscal quarters ending March 31, 2006, June 30, 2006,
September 30, 2006, December 31, 2006 and March 31, 2007 shall be deemed to be
$38,000,000, $78,000,000, $0, $154,000,000 and $50,000,000, respectively.

 

“Consolidated Net Income” means, for any period, the net income (loss) of the
Company and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, excluding, without duplication,
(a) extraordinary items for such period, (b) the cumulative effect of a change
in accounting principles during such period to the extent included in
Consolidated Net Income, (c) any Transaction Expenses, (d) any fees and expenses
incurred during such period, or any amortization thereof for such period, in
connection with the consummation of any Permitted Acquisition, investment, asset
disposition, issuance or repayment of debt, issuance of equity securities,
refinancing transaction or amendment or other modification of any debt
instrument (in each case, including any such transaction consummated prior to
the Closing Date and any such transaction undertaken but not completed) and any
charges or non-recurring merger costs incurred during such period as a result of
any such transaction, (e) any

 

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income (loss) for such period attributable to the early extinguishment of
Indebtedness, (f) accruals and reserves that are established within twelve
months after the Closing Date that are so required to be established as a result
of the Transaction in accordance with GAAP, (g) the income (loss) of any
Unrestricted Subsidiary, provided that Consolidated Net Income shall be
increased by the amount of dividends or other distributions actually paid or
made to the Company or one of the Restricted Subsidiaries by such Unrestricted
Subsidiary during such period in respect of the income earned by such
Unrestricted Subsidiary in such period or in any prior period (to the extent not
previously included in Consolidated Net Income), (h) the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary of Holdings or is
merged into or consolidated with Holdings or any of its Subsidiaries and (i) the
income (or deficit) of any Person (other than a Subsidiary of the Company) in
which the Company or any of its Subsidiaries has an ownership interest, except
to the extent that any such income is actually received by (or such deficit is
actually distributed to) the Company or such Subsidiary in the form of dividends
or similar distributions.  There shall be excluded from Consolidated Net Income
(i) for any period, at the option of the Company or the Required Lenders
(without prejudice to the application of the proviso set forth in the definition
of “GAAP”), the effects of any change by the Company in its accounting policies,
accounting treatment for any matter or application of GAAP, (ii) for any period,
the purchase accounting effects of adjustments to property, inventory and
equipment, pension and post-retirement employee benefit plan (including health
plan) assets and liabilities, software and other intangible assets and deferred
revenue and deferred expenses in component amounts required or permitted by GAAP
and related authoritative pronouncements (including the effects of such
adjustments pushed down to Holdings, the Company and the Restricted
Subsidiaries), as a result of the Transaction, any acquisition consummated prior
to the Closing Date, any Permitted Acquisitions, or the amortization or
write-off of any amounts thereof, (iii) for any period, any gains or losses
resulting from any reappraisal, revaluation or write-up or write-down of assets
acquired pursuant to the Acquisitions to the extent such reappraisal,
revaluation, write-up or write-down is made during the period beginning on the
Closing Date and ending on the date 18 months after the Closing Date, and
(iv) for any period, any gains or losses resulting from any reappraisal,
revaluation or write-up or write-down of assets acquired pursuant to a Permitted
Acquisition to the extent such reappraisal, revaluation, write-up or write-down
is made during the period beginning on the date that such Permitted Acquisition
is consummated and ending on the date six months after such date.

 

“Consolidated Total Debt” means, as of any date of determination, the aggregate
principal amount of Indebtedness of the Company and the Restricted Subsidiaries
outstanding on such date, determined on a consolidated basis in accordance with
GAAP (but excluding the effects of any discounting of Indebtedness resulting
from the application of purchase accounting in connection with the Transaction
or any Permitted Acquisition), required to be reflected as “indebtedness” (or
the equivalent thereof) on a consolidated balance sheet of the Company in
accordance with GAAP (other than Indebtedness described in clause (b) (other
than in respect of drawings thereunder to the extent not reimbursed within two
Business Days after the date of such drawing) or (c) of the definition of
Indebtedness).

 

“Consolidated Working Capital” means, at any date, the excess of (a) the sum of
all amounts (other than cash and Cash Equivalents) that would, in conformity
with GAAP, be set forth opposite the caption “total current assets” (or any like
caption) on a consolidated balance sheet of the Company and the Restricted
Subsidiaries at such date, but excluding the current portion of current and
deferred income tax assets, over (b) the sum of all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current
liabilities” (or any like caption) on a consolidated balance sheet of the
Company and the Restricted Subsidiaries on such date, excluding, without
duplication, (i) the current portion of any Funded Debt, (ii) all

 

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Indebtedness consisting of Loans and L/C Obligations to the extent otherwise
included therein, (iii) the current portion of interest, (iv) the current
portion of current and deferred income taxes and (v) the current portion of
deferred revenue.  There shall also be excluded from Consolidated Working
Capital to the extent otherwise included therein (i) at the option of the
Company or the Required Lenders (without prejudice to the application of the
proviso set forth in the definition of “GAAP”), the effects of any change by the
Company in its accounting policies, accounting treatment for any matter or
application of GAAP, (ii) the purchase accounting effects of adjustments to
property, inventory and equipment, pension and post-retirement employee benefit
plan (including health plan) assets and liabilities, software and other
intangible assets and deferred revenue and deferred expenses in component
amounts required or permitted by GAAP and related authoritative pronouncements
(including the effects of such adjustments pushed down to Holdings, the Company
and the Restricted Subsidiaries), as a result of the Transaction, any
acquisition consummated prior to the Closing Date, any Permitted Acquisitions,
or the amortization or write-off of any amounts thereof, (iii) for any period,
any gains or losses resulting from any reappraisal, revaluation or write-up or
write-down of assets acquired pursuant to the Acquisitions to the extent such
reappraisal, revaluation, write-up or write-down is made during the period
beginning on the Closing Date and ending on the date 18 months after the Closing
Date, and (iv) for any period, any gains or losses resulting from any
reappraisal, revaluation or write-up or write-down of assets acquired pursuant
to a Permitted Acquisition to the extent such reappraisal, revaluation, write-up
or write-down is made during the period beginning on the date that such
Permitted Acquisition is consummated and ending on the date six months after
such date.

 

“Continuing Agreement” means the Continuing Agreement substantially in the form
of Exhibit K.

 

“Continuing Directors” means the directors of Holdings on the Closing Date, as
elected or appointed after giving effect to the Acquisitions and the other
transactions contemplated hereby, and each other director, if, in each case,
such other directors’ nomination for election to the board of directors of
Holdings is recommended by a majority of the then Continuing Directors or such
other director receives the vote of the Permitted Holders in his or her election
by the stockholders of Holdings.

 

“Contract Consideration” has the meaning set forth in the definition of “Excess
Cash Flow”.

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Control” has the meaning specified in the definition of “Affiliate.”

 

“Co-Syndication Agents” means Citicorp North America, Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Co-Syndication Agents under this
Agreement.

 

“Credit Extension” means each of the following:  (a) a Borrowing and (b) an L/C
Credit Extension.

 

“Cumulative Excess Cash Flow” means the sum of Excess Cash Flow (but not less
than zero in any period) for the fiscal year ending on June 30, 2008 and Excess
Cash Flow for each succeeding and completed fiscal year.

 

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“Cure Amount” has the meaning specified in Section 8.05.

 

“Cure Period” has the meaning specified in Section 8.05.

 

“Debt Issuance” means the issuance by any Person and its Subsidiaries of any
Indebtedness for borrowed money.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally (including, in the case of Loan Parties incorporated or organized in
England or Wales, administration, administrative receivership, voluntary
arrangement and schemes of arrangement).

 

“Decrees” has the meaning specified in Section 10.24.

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Default Rate” means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate applicable to Base Rate Loans plus (c) 2.0% per annum; provided
that with respect to the principal amount of any Eurocurrency Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including the
Applicable Rate and any Mandatory Cost) otherwise applicable to such Loan plus
2.0% per annum, in each case, to the fullest extent permitted by applicable
Laws.

 

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the U.S. Term Loans, Euro Term Loans, Revolving Credit Loans, participations in
L/C Obligations or participations in Swing Line Loans required to be funded by
it hereunder within one (1) Business Day of the date required to be funded by it
hereunder, unless subsequently cured, (b) has otherwise failed to pay over to
the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within one (1) Business Day of the date when due, unless
subsequently cured, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.

 

“Defeasance” means a covenant defeasance in respect of the Existing Notes
pursuant to Article VIII of the Existing Note Indenture, including the placement
of sufficient funds in escrow with the trustee under the Existing Note Indenture
and consummation of all other actions necessary to satisfy the provisions of
such Article.

 

“Designated Obligations” means all obligations of the Borrowers with respect to
(a) principal of and interest on the Loans, (b) Unreimbursed Amounts and
interest thereon and (c) accrued and unpaid fees under the Loan Documents.

 

“DH Acquisition” has the meaning set forth in the preliminary statements to this
Agreement.

 

“DH Acquisition Agreement” means the Stock Acquisition Agreement, dated as of
January 23, 2007, among Direct Holdings U.S. Corp., RDA Holding Co. and each of
the members of Direct Holdings Worldwide L.L.C.

 

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“Direct Holdings” has the meaning set forth in the preliminary statements to
this Agreement.

 

“Disposed EBITDA” means, with respect to any Sold Entity or Business for any
period, the amount for such period of Consolidated EBITDA of such Sold Entity or
Business (determined as if references to the Company and the Restricted
Subsidiaries in the definition of Consolidated EBITDA were references to such
Sold Entity or Business and its Subsidiaries), all as determined on a
consolidated basis for such Sold Entity or Business.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction and any sale of Equity
Interests held in another Person) of any property by any Person, including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated therewith;
provided that “Disposition” and “Dispose” shall not be deemed to include any
issuance by a Person of any of its Equity Interests to another Person.

 

“Disqualified Equity Interests” means any Equity Interest (other than the
Company Preferred Stock) which, by its terms (or by the terms of any security or
other Equity Interests into which it is convertible or for which it is
exchangeable), or upon the happening of any event or condition (a) matures or is
mandatorily redeemable (other than solely for Qualified Equity Interests),
pursuant to a sinking fund obligation or otherwise (except as a result of a
change of control, public equity offering or asset sale so long as any rights of
the holders thereof upon the occurrence of a change of control, public equity
offering or asset sale event shall be subject to the prior repayment in full of
the Loans and all other Obligations that are accrued and payable and the
termination of the Commitments and the expiration, cancellation, termination or
cash collateralization of any Letters of Credit in accordance with the terms
hereof), (b) is redeemable at the option of the holder thereof (other than
solely for Qualified Equity Interests), in whole or in part, (c) requires the
scheduled payments of dividends in cash, or (d) is or becomes convertible into
or exchangeable for Indebtedness or any other Equity Interests that would
constitute Disqualified Equity Interests, in each case, prior to the date that
is 91 days after the Maturity Date of the Term Loans.

 

“Documentation Agent” means The Royal Bank of Scotland plc, as Documentation
Agent under this Agreement.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Dollar Amount” means, at any time:

 

(A)  WITH RESPECT TO ANY LOAN DENOMINATED IN DOLLARS (INCLUDING, WITH RESPECT TO
ANY SWING LINE LOAN, ANY FUNDED PARTICIPATION THEREIN), THE PRINCIPAL AMOUNT
THEREOF THEN OUTSTANDING (OR IN WHICH SUCH PARTICIPATION IS HELD);

 

(B)  WITH RESPECT TO ANY ALTERNATIVE CURRENCY LOAN, THE PRINCIPAL AMOUNT THEREOF
THEN OUTSTANDING IN THE RELEVANT ALTERNATIVE CURRENCY, CONVERTED TO DOLLARS IN
ACCORDANCE WITH SECTION 1.08.

 

“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of
the United States, any state thereof or the District of Columbia.

 

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“ECF Percentage” means 50%; provided that with respect to each fiscal year of
the Company, the ECF Percentage shall be 25% in respect of such fiscal year if
the Total Leverage Ratio as of the last day of such fiscal year is less than or
equal to 6.00:1.00 but greater than 5.00:1.00; and provided further that the ECF
Percentage shall be 0% in respect of such fiscal year if the Total Leverage
Ratio as of the last day of such fiscal year is less than or equal to 5.00:1.00.

 

“Eligible Assignee” means any Assignee permitted by and consented to in
accordance with Section 10.07(b).

 

“EMU” means the economic and monetary union in accordance with the Treaty of
Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty of
1992 and the Amsterdam Treaty of 1998.

 

“EMU Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

 

“Environmental Laws” means any and all Laws relating to pollution, the
protection of the environment, natural resources, or, to the extent relating to
exposure to Hazardous Materials, human health or to the release of any Hazardous
Materials into the environment, including those related to air emissions and
discharges to public water or waste treatment systems.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

 

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

“Equity Contribution” shall mean the sum of (a) the Sponsor Equity
Contributions, (b) the gross proceeds of the issuance on or prior to the Closing
Date of the Holdings Senior PIK Preferred and (c) the gross proceeds of the
issuance on or prior to the Closing Date of the Holdings Common Equity.

 

“Equity Interests” means, with respect to any Person, all of the shares,
interests, rights, participations or other equivalents (however designated) of
capital stock of (or other ownership or profit interests or units in) such
Person and all of the warrants, options or other rights for the purchase,
acquisition or exchange from such Person of any of the foregoing (including
through convertible securities).

 

“Equity Investors” means the Sponsors, J. Rothschild Group Ltd., Goldentree
Asset Management, LP, GSO Capital Partners LP, Merrill Lynch Capital
Corporation, Magnetar Financial LLC and the Management Stockholders.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is under common control with any Loan Party within the meaning of Section 414 of
the Code or Section 4001 of ERISA.

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by any Loan Party or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization or is in endangered or critical status; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate; (g) on and
after the effectiveness of the Pension Act, a determination that any Pension
Plan is, or is expected to be, in “at risk” status (within the meaning of Title
IV of ERISA); or (h) the existence with respect to any Pension Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), and, on and after the effectiveness of the Pension Act,
any failure by any Pension Plan to satisfy the minimum funding standards (within
the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to
such Pension Plan, whether or not waived.

 

“Euro” and “€”means the lawful currency of the Participating Member States
introduced in accordance with EMU Legislation.

 

“Eurocurrency Rate” means, for any Interest Period with respect to any
Eurocurrency Rate Loan:

 

(A)  THE RATE PER ANNUM EQUAL TO THE RATE DETERMINED BY THE ADMINISTRATIVE AGENT
TO BE THE OFFERED RATE THAT APPEARS ON THE PAGE OF THE DOW JONES MARKET SCREEN
(OR ANY SUCCESSOR THERETO) THAT DISPLAYS AN AVERAGE BRITISH BANKERS ASSOCIATION
INTEREST SETTLEMENT RATE FOR DEPOSITS IN DOLLARS OR THE RELEVANT ALTERNATIVE
CURRENCY (FOR DELIVERY ON THE FIRST DAY OF SUCH INTEREST PERIOD) WITH A TERM
EQUIVALENT TO SUCH INTEREST PERIOD, DETERMINED AS OF APPROXIMATELY 11:00 A.M.
(LONDON TIME) TWO (2) BUSINESS DAYS PRIOR TO THE FIRST DAY OF SUCH INTEREST
PERIOD, OR, IF DIFFERENT, THE DATE ON WHICH QUOTATIONS WOULD CUSTOMARILY BE
PROVIDED BY LEADING BANKS IN THE LONDON INTERBANK MARKET FOR DEPOSITS OF AMOUNTS
IN THE RELEVANT CURRENCY FOR DELIVERY ON THE FIRST DAY OF SUCH INTEREST PERIOD,
OR

 

(B)  IF THE RATE REFERENCED IN THE PRECEDING CLAUSE (A) DOES NOT APPEAR ON SUCH
PAGE OR SERVICE OR SUCH PAGE OR SERVICE SHALL NOT BE AVAILABLE, THE RATE PER
ANNUM EQUAL TO THE RATE DETERMINED BY THE ADMINISTRATIVE AGENT TO BE THE OFFERED
RATE ON SUCH OTHER PAGE OR OTHER SERVICE THAT DISPLAYS AN AVERAGE BRITISH
BANKERS ASSOCIATION INTEREST SETTLEMENT RATE FOR DEPOSITS IN DOLLARS OR THE
RELEVANT ALTERNATIVE CURRENCY (FOR DELIVERY ON THE FIRST DAY OF SUCH INTEREST
PERIOD) WITH A TERM EQUIVALENT TO SUCH INTEREST PERIOD, DETERMINED AS OF
APPROXIMATELY 11:00 A.M. (LONDON TIME) TWO (2) BUSINESS DAYS PRIOR TO THE FIRST
DAY

 

21

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OF SUCH INTEREST PERIOD, OR, IF DIFFERENT, THE DATE ON WHICH QUOTATIONS WOULD
CUSTOMARILY BE PROVIDED BY LEADING BANKS IN THE LONDON INTERBANK MARKET FOR
DEPOSITS OF AMOUNTS IN THE RELEVANT CURRENCY FOR DELIVERY ON THE FIRST DAY OF
SUCH INTEREST PERIOD, OR

 

(C)  IF THE RATES REFERENCED IN THE PRECEDING CLAUSES (A) AND (B) ARE NOT
AVAILABLE, THE RATE PER ANNUM DETERMINED BY THE ADMINISTRATIVE AGENT AS THE RATE
OF INTEREST AT WHICH DEPOSITS IN DOLLARS OR THE RELEVANT ALTERNATIVE CURRENCY
FOR DELIVERY ON THE FIRST DAY OF SUCH INTEREST PERIOD IN SAME DAY FUNDS IN THE
APPROXIMATE AMOUNT OF THE EUROCURRENCY RATE LOAN BEING MADE, CONTINUED OR
CONVERTED BY JPMORGAN CHASE BANK AND WITH A TERM EQUIVALENT TO SUCH INTEREST
PERIOD WOULD BE OFFERED BY JPMORGAN CHASE BANK’S LONDON BRANCH TO MAJOR BANKS IN
THE LONDON INTERBANK EURODOLLAR MARKET AT THEIR REQUEST AT APPROXIMATELY
11:00 A.M. (LONDON TIME) TWO (2) BUSINESS DAYS PRIOR TO THE FIRST DAY OF SUCH
INTEREST PERIOD OR, IF DIFFERENT, THE DATE ON WHICH QUOTATIONS WOULD CUSTOMARILY
BE PROVIDED BY LEADING BANKS IN THE LONDON INTERBANK MARKET FOR DEPOSITS OF
AMOUNTS IN THE RELEVANT CURRENCY FOR DELIVERY ON THE FIRST DAY OF SUCH INTEREST
PERIOD.

 

“Eurocurrency Rate Loan” means a Loan, whether denominated in Dollars or in an
Alternative Currency, that bears interest at a rate based on the Eurocurrency
Rate.

 

“Euro Refinanced Term Loans” has the meaning specified in Section 10.01.

 

“Euro Replacement Term Loans” has the meaning specified in Section 10.01.

 

“Euro Term Commitment” means, as to each Euro Term Lender, its obligation to
make a Euro Term Loan to the German Borrower pursuant to Section 2.01(c) in an
aggregate Dollar Amount not to exceed the amount set forth opposite such
Lender’s name on Schedule 2.01 under the caption “Euro Term Commitment” or in
the Assignment and Assumption pursuant to which such Euro Term Lender becomes a
party hereto, as applicable, as such amount may be adjusted from time to time in
accordance with this Agreement.  The initial aggregate amount of the Euro Term
Commitments is $100,000,000.

 

“Euro Term Lender” means, at any time, any Lender that has a Euro Term
Commitment or a Euro Term Loan at such time.

 

“Euro Term Loan” means a Loan made pursuant to Section 2.01(c).

 

“Euro Term Note” means a promissory note of the German Borrower payable to any
Euro Term Lender, in substantially the form of Exhibit C-3 hereto, evidencing
the aggregate Indebtedness of the German Borrower to such Euro Term Lender
resulting from the Euro Term Loans made by such Euro Term Lender.

 

“Event of Default” has the meaning specified in Section 8.01.

 

“Excess Cash Flow” means, for any period, an amount equal to:

 

(a) the sum, without duplication, of:

 

(i) Consolidated Net Income for such period,

 

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(ii) an amount equal to the amount of all non-cash charges (including
depreciation and amortization) to the extent deducted in arriving at such
Consolidated Net Income,

 

(iii) an amount equal to the aggregate net non-cash loss on Dispositions by the
Company and the Restricted Subsidiaries during such period to the extent
deducted in arriving at such Consolidated Net Income, and

 

(iv) decreases in Consolidated Working Capital for such period, and; minus

 

(b) the sum, without duplication among the clauses below and without duplication
of any amounts otherwise deducted in arriving at Consolidated Net Income for
such period, of:

 

(i) an amount equal to the amount of all non-cash credits included in arriving
at such Consolidated Net Income and cash charges included in clauses (a) through
(e) of the definition of Consolidated Net Income,

 

(ii) an amount equal to the aggregate net non-cash gain on Dispositions by the
Company and the Restricted Subsidiaries during such period to the extent
included in arriving at such Consolidated Net Income,

 

(iii) without duplication of amounts deducted pursuant to clause (xi) below in
prior fiscal years, the amount of Capital Expenditures made in cash or accrued
during such period pursuant to Section 7.14, except to the extent that such
Capital Expenditures were financed with the proceeds of any issuance or sale of
Equity Interests of Holdings, with the proceeds of any Indebtedness (other than
Revolving Credit Loans) of Holdings, the Company or the Restricted Subsidiaries,
or, to the extent not otherwise included in Consolidated Net Income, with the
proceeds of any Disposition of property of or any Casualty Event with respect to
property of Holdings, the Company or the Restricted Subsidiaries,

 

(iv) the aggregate amount of all principal payments or prepayments of
Indebtedness of the Company and the Restricted Subsidiaries (including (A) the
principal component of payments in respect of Capitalized Leases, (B) the amount
of any mandatory prepayment of Term Loans pursuant to Section 2.05(b)(ii) to the
extent required due to a Disposition that resulted in an increase to
Consolidated Net Income and not in excess of the amount of such increase and
(C) the amount of any repayment of Term Loans pursuant to Section 2.07(a), but
excluding (X) all other prepayments of Term Loans and (Y) all prepayments of
Revolving Credit Loans and Swing Line Loans) made during such period (other than
in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), except to the extent
that such payments or prepayments were financed with the proceeds of any
issuance or sale of Equity Interests of Holdings, with the proceeds of any other
Indebtedness of Holdings, the Company or the Restricted Subsidiaries, or, to the
extent not otherwise included in Consolidated Net Income, with the proceeds of
any Disposition of property of or any Casualty Event with respect to property of
Holdings, the Company or the Restricted Subsidiaries,

 

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(v) increases in Consolidated Working Capital for such period,

 

(vi) cash payments by the Company and the Restricted Subsidiaries during such
period in respect of long-term liabilities of the Company and the Restricted
Subsidiaries other than Indebtedness,

 

(vii) without duplication of amounts deducted pursuant to clause (xi) below in
prior fiscal years, the amount of Investments and Permitted Acquisitions made
during such period pursuant to Section 7.02 (other than Section 7.02(a)), except
to the extent that such Investments and Permitted Acquisitions were financed
with the proceeds of any issuance or sale of Equity Interests of Holdings, with
the proceeds of any Indebtedness of Holdings, the Company or the Restricted
Subsidiaries, or, to the extent not otherwise included in Consolidated Net
Income, with the proceeds of any Disposition of property of or any Casualty
Event with respect to property of Holdings, the Company or the Restricted
Subsidiaries,

 

(viii) the amount (without duplication) of Restricted Payments paid by Holdings
during such period pursuant to Section 7.06(g), (h)(i) or (i), except to the
extent such Restricted Payments were financed with the proceeds of any issuance
or sale of Equity Interests of Holdings, with the proceeds of any Indebtedness
of Holdings, the Company or the Restricted Subsidiaries, or, to the extent not
otherwise included in Consolidated Net Income, with the proceeds of any
Disposition of property of or any Casualty Event with respect to property of
Holdings, the Company or the Restricted Subsidiaries,

 

(ix) the aggregate amount of expenditures actually made by the Company and the
Restricted Subsidiaries in cash during such period (including expenditures for
the payment of financing fees) to the extent that such expenditures are not
expensed during such period,

 

(x) the aggregate amount of any premium, make-whole or penalty payments actually
paid in cash by the Company and the Restricted Subsidiaries during such period
that are required to be made in connection with any prepayment of Indebtedness,
and

 

(xi) without duplication of amounts deducted from Excess Cash Flow in prior
periods, the aggregate consideration required to be paid in cash by the Company
or any of the Restricted Subsidiaries pursuant to binding contracts (the
“Contract Consideration”) entered into prior to or during such period relating
to Permitted Acquisitions or Capital Expenditures to be consummated or made
during the fiscal year of the Company following the end of such period, provided
that to the extent the aggregate cash consideration paid for such Permitted
Acquisitions or Capital Expenditures during such fiscal year (other than amounts
financed with the proceeds of any issuance or sale of Equity Interests of
Holdings, with the proceeds of any Indebtedness of Holdings, the Company or the
Restricted Subsidiaries, or, to the extent not otherwise included in
Consolidated Net Income, with the proceeds of any Disposition of property of or
any Casualty Event with respect to property of Holdings, the Company or the
Restricted Subsidiaries) is less than the Contract Consideration, the amount of

 

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such shortfall shall be added to the calculation of Excess Cash Flow at the end
of such period of four consecutive fiscal quarters.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Exchange Rate” means on any day with respect to any currency other than
Dollars, the rate at which such currency may be exchanged into Dollars, as set
forth at approximately 11:00 a.m. (London time) on such day on the Reuters World
Currency Page for such currency; in the event that such rate does not appear on
any Reuters World Currency Page, the Exchange Rate shall be determined by
reference to such other publicly available service for displaying exchange rates
as may be agreed upon by the Administrative Agent and the Company, or, in the
absence of such agreement, such Exchange Rate shall instead be the arithmetic
average of the spot rates of exchange of the Administrative Agent in the market
where its foreign currency exchange operations in respect of such currency are
then being conducted, at or about 10:00 a.m. (New York City time) on such date
for the purchase of Dollars for delivery two Business Days later.

 

“Excluded Subsidiary” means (a) any Subsidiary that is not a wholly-owned
Subsidiary unless such Subsidiary executes a Security Agreement Supplement,
(b) each Subsidiary listed on Schedule 1.01D hereto, (c) any Foreign Subsidiary,
or any other Subsidiary created or acquired after the date hereof, that is
prohibited by applicable Law from guaranteeing the Obligations (in each case
unless such Subsidiary subsequently executes a Security Agreement Supplement),
(d) other than with respect to the Overseas Obligations to the extent required
by the definition of “Collateral and Guarantee Requirement”, any Foreign
Subsidiary, any Domestic Subsidiary that is a Subsidiary of a Foreign Subsidiary
and any Domestic Subsidiary substantially all of whose assets consist of voting
Equity Interests of one or more Foreign Subsidiaries (in each case unless such
Subsidiary executes a Security Agreement Supplement), (e) any Restricted
Subsidiary acquired pursuant to a Permitted Acquisition financed with secured
Indebtedness incurred pursuant to Section 7.03(g) and each Restricted Subsidiary
thereof that guarantees such Indebtedness; provided that each such Restricted
Subsidiary shall cease to be an Excluded Subsidiary under this clause (e) if
such secured Indebtedness is repaid or becomes unsecured or if such Restricted
Subsidiary ceases to guarantee such secured Indebtedness, as applicable, (f) any
Immaterial Subsidiary and (g) any other Subsidiary with respect to which, in the
reasonable judgment of the Administrative Agent (confirmed in writing by notice
to the Company), the cost or other consequences (including any adverse tax
consequences) of providing a Guarantee shall be excessive in view of the
benefits to be obtained by the Lenders therefrom.

 

“Existing Credit Agreement” means the Five-Year Revolving Credit Agreement,
dated as of April 14, 2005, among Reader’s Digest, Books Are Fun, Ltd.,
QSP, Inc., Reiman Media Group, Inc., the lenders party thereto and JPMorgan
Chase Bank, N.A., as administrative agent.

 

“Existing DH/WRC Debt Agreements” means (a) the Credit and Guaranty Agreement
dated as of July 22, 2005, among Weekly Reader Corporation,
CompassLearning, Inc., WRC Media, Inc., the subsidiary guarantors party thereto,
Goldman Sachs Specialty Lending Group, L.P., as administrative agent and
collateral agent, and the lenders from time to time party thereto, (b) the Term
Loan and Guaranty Agreement dated as of July 22, 2005, among Weekly Reader
Corporation, CompassLearning, Inc., WRC Media, Inc., the subsidiary guarantors
party thereto, The Bank of New York, as collateral agent, and the lenders from
time to time party thereto, (c) the Amended and Restated Financing Agreement
dated as of May 31, 2005, by and among Direct Holdings Americas Inc., Direct
Holdings Custom Publishing Inc., Direct Holdings

 

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Education Inc., Alex Inc., Direct Holdings.com, Inc., Direct Holdings Customer
Service, Inc., Direct Holdings Libraries, Inc., Direct Holdings U.S. Corp.,
Direct Holdings Worldwide L.L.C. and The CIT Group/Business Credit, Inc. and
(d) the Term Loan B Financing Agreement dated as of May 31, 2005, by and among
Direct Holdings Americas Inc., Direct Holdings Custom Publishing Inc., Direct
Holdings Education Inc., Alex Inc., Direct Holdings.com, Inc., Direct Holdings
Customer Service, Inc., Direct Holdings Libraries, Inc., Direct Holdings U.S.
Corp., Direct Holdings Worldwide L.L.C. and The CIT Group/Business Credit, Inc.

 

“Existing Letters of Credit” means the letters of credit set forth on Schedule
1.01I.

 

“Existing Notes” means Reader’s Digest’s existing 6½% senior unsecured notes due
2011.

 

“Existing Note Indenture” means the Indenture entered into by Reader’s Digest in
connection with the issuance of the Existing Notes, together with all
instruments and other agreements entered into by Reader’s Digest in connection
therewith.

 

“Facility” means the U.S. Term Loans, the Euro Term Loans, the Revolving Credit
Facility, the Swing Line Sublimit or the Letter of Credit Sublimit, as the
context may require.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to JPMorgan Chase Bank
on such day on such transactions as determined by the Administrative Agent.

 

“Foreign Immaterial Subsidiary” means any Foreign Subsidiary that is an
Immaterial Subsidiary.  For the avoidance of doubt, as of the Closing Date, none
of Caribe Condor S.A. de C.V., Reader’s Digest Deutschland Holding GmbH, The
Reader’s Digest Assoc. Pty. Limited or 1302791 Alberta ULC shall constitute a
Foreign Immaterial Subsidiary.

 

“Foreign Jurisdiction Deposit” means a deposit or Guarantee incurred in the
ordinary course of business and required by any Governmental Authority in a
foreign jurisdiction as a condition of doing business in such jurisdiction.

 

“Foreign Lender” has the meaning specified in Section 10.15(a)(i).

 

“Foreign Subsidiary” means any direct or indirect Restricted Subsidiary of the
Company which (a) is not a Domestic Subsidiary or (b) is set forth on Schedule
1.01E.

 

“Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course.

 

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“Funded Debt” means all Indebtedness of the Company and the Restricted
Subsidiaries for borrowed money that matures more than one year from the date of
its creation or matures within one year from such date that is renewable or
extendable, at the option of such Person, to a date more than one year from such
date or arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year from
such date, including Indebtedness in respect of the Loans.

 

“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time; provided, however, that if the Company
notifies the Administrative Agent that the Company requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the
Closing Date in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Company that the Required
Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on
the basis of GAAP as in effect and applied immediately before such change shall
have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.

 

“German Borrower” means RD German Holdings GmbH.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Granting Lender” has the meaning specified in Section 10.07(h).

 

“Group Member” means Holdings, the Company and the Restricted Subsidiaries.

 

“Guarantee” means, as to any Person, without duplication, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other monetary obligation, (ii) to purchase or
lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or monetary other obligation of the payment or
performance of such Indebtedness or other monetary obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Indebtedness or other monetary obligation, or
(iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other monetary obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other monetary obligation of any other Person, whether or not
such Indebtedness or monetary other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien); provided that the term “Guarantee” shall not include endorsements
for collection or deposit, in either case in the ordinary course of business. 
The amount of any Guarantee shall be deemed to be an amount equal to the stated
or determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the

 

27

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maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantee and Security Agreement” means, collectively, the Guarantee and
Collateral Agreement executed by the Loan Parties, substantially in the form of
Exhibit F, together with each other security agreement supplement executed and
delivered pursuant to Section 6.10.

 

“Guarantors” has the meaning set forth in the definition of “Collateral and
Guarantee Requirement”.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedge Bank” means any Person that is a Lender or an Affiliate of a Lender at
the time it enters into a Secured Hedge Agreement, in its capacity as a party
thereto.

 

“Holdings” has the meaning set forth in the introductory paragraph to this
Agreement.

 

“Holdings Common Equity” means common stock of Holdings to be issued on or prior
to the Closing Date to the holders of the Holdings Senior PIK Preferred.

 

“Holdings Junior PIK Preferred” means the Junior PIK Preferred Stock of Holdings
issued on the Closing Date (and any additional Junior PIK Preferred Stock issued
in connection with (i) the surrender of any such Junior PIK Preferred Stock
pursuant to a transfer or exchange thereof or (ii) the issuance of any
replacement certificate).

 

“Holdings Operating Expenses” means operating costs and expenses incurred by
Holdings, which will include, in any event, without limitation, costs and
expenses incurred in connection with (in each case to the extent not prohibited
by the Loan Documents and in each case other than interest or dividend payments
or expenses related to activities not permitted to be undertaken by Holdings
pursuant to Section 7.13) (i) the maintenance of its existence and the ownership
of an investment in the Company or the Subsidiaries of the Company, and the
exercise of rights and performance of obligations in connection therewith,
(ii) the entry into, and exercise of rights and performance of obligations in
respect of (A) contracts and agreements with or for the benefit of officers,
directors and employees of Holdings, the Company or any Subsidiary relating to
their employment or directorships, (B) insurance policies and related contracts
and agreements, (C) any equity subscription agreements, registration rights
agreements, voting and other stockholder agreements, engagement letters,
underwriting agreements and other agreements in respect of Equity Interests of
Holdings or any offering, issuance or sale thereof, (D) the Loan Documents and
(E) the Senior Subordinated Note Indenture, the Holdings PIK Preferred and
related agreements, (iii) the offering, issuance and sale of Equity Interests of
Holdings, (iv) the filing of registration statements, and compliance with
applicable reporting and other obligations, under federal, state or other
securities laws, (v) the performance of obligations under and compliance by
Holdings with its certificate of incorporation and by-laws or any applicable
law, ordinance, regulation rule, order, judgment, decree or permit, including,
without limitation, as a result of or in connection with the activities of the
Company or the Subsidiaries of the Company,

 

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(vi) the performance of contractual obligations in existence on the date hereof
and set forth on Schedule 1.01F, (vii) payment of taxes for the benefit of or
relating to Holdings, the Company and its Subsidiaries and (viii) other
activities incidental or related to the foregoing.

 

“Holdings PIK Preferred” means (a) the Holdings Senior PIK Preferred and (b) the
Holdings Junior PIK Preferred.

 

“Holdings Senior PIK Preferred” means the Series A PIK Preferred Stock of
Holdings issued on the Closing Date (and any additional Series A PIK Preferred
Stock issued in connection with (i) the surrender of any such Series A PIK
Preferred Stock pursuant to a transfer or exchange thereof or (ii) the issuance
of any replacement certificate).

 

“Honor Date” has the meaning specified in Section 2.03(c)(i).

 

“Immaterial Subsidiary” means any Subsidiary that, together with its
consolidated Subsidiaries, does not, as of the day of the most recent completed
fiscal quarter of the Company, have assets with a value in excess of 1% of the
consolidated total assets of the Company and the Subsidiaries and did not, as of
the four quarter period ending on the last day of such fiscal quarter, have
revenues exceeding 1% of the total revenues of the Company and the Subsidiaries;
provided that if (i) the aggregate assets then owned by all Subsidiaries of the
Company that would otherwise constitute Immaterial Subsidiaries shall have a
value in excess of 5% of the consolidated total assets of the Company and the
Subsidiaries or (ii) the combined revenues of all Subsidiaries of the Company
that would otherwise constitute Immaterial Subsidiaries shall exceed 5% of the
total revenues of the Company and the Subsidiaries, only those such Subsidiaries
as shall then have aggregate assets of less than 5% of the consolidated total
assets of the Company and the Subsidiaries and combined revenues of less than 5%
of the total revenues of the Company and the Subsidiaries and as shall be
designated in writing by the Company to the Administrative Agent as Immaterial
Subsidiaries shall be deemed to constitute Immaterial Subsidiaries.

 

“Incremental Amendment” has the meaning set forth in Section 2.14(a).

 

“Incremental Facility Closing Date” has the meaning set forth in
Section 2.14(a).

 

“Incremental Overseas Amendment” has the meaning set forth in Section 2.14(b).

 

“Incremental Overseas Facility Closing Date” has the meaning set forth in
Section 2.14(b).

 

“Incremental Overseas Term Loans” has the meaning set forth in Section 2.14(b).

 

“Incremental U.S. Term Loans” has the meaning set forth in Section 2.14(a).

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

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(a)  all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

 

(b)  the maximum amount (after giving effect to any prior drawings or reductions
which may have been reimbursed) of all letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds, performance
bonds and similar instruments issued or created by or for the account of such
Person;

 

(c)  net obligations of such Person under any Swap Contract;

 

(d)  all obligations of such Person to pay the deferred purchase price of
property or services (other than (i) trade accounts payable in the ordinary
course of business, (ii) any earn-out obligation until such obligation becomes a
liability on the balance sheet of such Person in accordance with GAAP,
(iii) deferred or equity compensation arrangements payable to directors,
officers or employees and (iv) any such obligation to pay royalties or
commissions to authors);

 

(e)  indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements and mortgage,
industrial revenue bond, industrial development bond and similar financings),
whether or not such indebtedness shall have been assumed by such Person or is
limited in recourse;

 

(f)  all Attributable Indebtedness;

 

(g)  all obligations of such Person to purchase, redeem, retire or otherwise
acquire for value any Disqualified Equity Interests; and

 

(h)  all Guarantees of such Person in respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall (A) include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, except to the extent such Person’s
liability for such Indebtedness is otherwise limited and only to the extent such
Indebtedness would be included in the calculation of Consolidated Total Debt and
(B) in the case of Holdings and its Subsidiaries, exclude (i) all intercompany
Indebtedness having a term not exceeding 364 days (inclusive of any roll over or
extensions of terms) and made in the ordinary of business consistent with past
practice in connection with the cash management activities of Holdings and its
Subsidiaries, (ii) customer deposits and advances and interest payable thereon
in the ordinary course of business in accordance with customary trade terms and
other obligations incurred in the ordinary course of business through credit on
an open account basis customarily extended to such Person, (iii) statutory or
other legal requirements to make deposits in connection with sweepstakes or
similar contests, or surety bonds or letters of credit posted pursuant to such
requirements and (iv) obligations under overdraft arrangements with banks
outside the United States incurred in the ordinary course of business to cover
working capital needs.  The amount of any net obligation under any Swap Contract
on any date shall be deemed to be the Swap Termination Value thereof as of such
date.  The amount of Indebtedness of any Person for purposes of clause (e) shall
be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value of the property encumbered thereby
as determined by such Person in good faith.

 

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“Indemnified Liabilities” has the meaning set forth in Section 10.05.

 

“Indemnitees” has the meaning set forth in Section 10.05.

 

“Information” has the meaning specified in Section 10.08.

 

“Intellectual Property” has the meaning set forth in the Guarantee and Security
Agreement.

 

“Interest Payment Date” means, (a) as to any Eurocurrency Rate Loan, the last
day of each Interest Period applicable to such Loan and the Maturity Date of the
Facility under which such Loan was made; provided that if any Interest Period
for a Eurocurrency Rate Loan exceeds three months, the respective dates that
fall every three months after the beginning of such Interest Period shall also
be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing
Line Loan), the last Business Day of each March, June, September and
December and the Maturity Date of the Facility under which such Loan was made.

 

“Interest Period” means, as to each Eurocurrency Rate Loan, the period
commencing on the date such Eurocurrency Rate Loan is disbursed or converted to
or continued as a Eurocurrency Rate Loan and ending on the date one or two weeks
(with respect to the initial Interest Period applicable to the Euro Term Loans)
or one, two, three or six months thereafter, or to the extent available to each
Lender of such Eurocurrency Rate Loan (as reasonably determined by each such
Lender in good faith), nine or twelve months, as selected by the relevant
Borrower in its Committed Loan Notice; provided that:

 

(a)  any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Business Day;

 

(b)  any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

 

(c)  no Interest Period shall extend beyond the Maturity Date of the Facility
under which such Loan was made.

 

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests or debt or other securities of another Person or
(b) a loan, advance or capital contribution to, Guarantee or assumption of
Indebtedness of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or joint
venture interest in such other Person (excluding, in the case of Holdings and
its Subsidiaries, intercompany loans, advances, or Indebtedness having a term
not exceeding 364 days (inclusive of any roll over or extensions of terms) and
made in the ordinary course of business consistent with past practice in
connection with the cash management activities of Holdings and its Subsidiaries)
or (c) the purchase or other acquisition (in one transaction or a series of
transactions) of all or substantially all of the property and assets or business
of another Person or assets constituting a business unit, line of business or
division of such Person.  For purposes of

 

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covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment.

 

“IP Rights” has the meaning set forth in Section 5.15.

 

“IRS” means the United States Internal Revenue Service.

 

“JPMorgan Chase Bank” means JPMorgan Chase Bank, N.A. and its successors.

 

“Judgment Currency” has the meaning specified in Section 10.23.

 

“Junior Financing” has the meaning specified in Section 7.12.

 

“Junior Financing Documentation” means any documentation governing any Junior
Financing.

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities.

 

“L/C Advance” means, with respect to each Revolving Credit Lender, such Lender’s
funding of its participation in any L/C Borrowing in accordance with its Pro
Rata Share.

 

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed or refinanced as a Refunding Loan
in accordance with Section 2.03(c).

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

 

“L/C Issuer” means JPMorgan Chase Bank and any other Lender that becomes an L/C
Issuer in accordance with Section 2.03(k) or 10.07(j), in each case, in its
capacity as an issuer of Letters of Credit hereunder, or any successor issuer of
Letters of Credit permitted hereunder.

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

 

“Lender” has the meaning specified in the introductory paragraph to this
Agreement and, as the context requires, includes an L/C Issuer and the Swing
Line Lender, and their respective successors and assigns as permitted hereunder,
each of which is referred to herein as a “Lender,” together with, in each case,
any Affiliate of any such financial institution through which such financial
institution elects, by notice to the Administrative Agent and the Company, to
make any Loans available to any Overseas Borrower; provided that, for all
purposes of voting or consenting with respect to (a) any amendment,
supplementation or modification of any Loan Document, (b) any waiver of any
requirements of any Loan Document or any Default or Event of Default and its
consequences, or (c) any other matter as to which a Lender may vote or consent
pursuant to Section 10.01 of this Agreement, the financial institution making
such election shall

 

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be deemed the “Lender” rather than such Affiliate, which shall not be entitled
to vote or consent (it being agreed that failure of any such Affiliate to fund
an obligation under this Agreement shall not relieve its affiliated financial
institution from funding).

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Company and the
Administrative Agent.

 

“Letter of Credit” means any letter of credit issued hereunder.  A Letter of
Credit may be a commercial letter of credit or a standby letter of credit.

 

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the relevant L/C Issuer, provided that any such application or agreement
shall not be inconsistent with the terms hereof or impose any additional
obligations or liabilities on any Loan Party.  Any Letter of Credit Application
delivered to JPMorgan Chase Bank as L/C Issuer for a commercial letter of credit
shall be substantially in the form of Exhibit I or such other form as may be
reasonably acceptable to JPMorgan Chase Bank.  Any Letter of Credit Application
delivered to JPMorgan Chase Bank as L/C Issuer for a standby letter of credit
shall be substantially in the form of Exhibit J or such other form as may be
reasonably acceptable to JPMorgan Chase Bank.

 

“Letter of Credit Expiration Date” means the day that is five (5) Business Days
prior to the scheduled Maturity Date then in effect for the Revolving Credit
Facility (or, if such day is not a Business Day, the next preceding Business
Day).

 

“Letter of Credit Sublimit” means an amount equal to the lesser of
(a) $50,000,000 and (b) the aggregate amount of the Revolving Credit
Commitments.  The Letter of Credit Sublimit is part of, and not in addition to,
the Revolving Credit Facility.

 

“Lien” means any mortgage, pledge, hypothecation, collateral assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or preferential arrangement intended to create a security interest of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title to
real property, and any Capitalized Lease having substantially the same economic
effect as any of the foregoing).

 

“Loan” means an extension of credit by a Lender to a Borrower under Article II
in the form of a U.S. Term Loan, a Euro Term Loan, a Revolving Credit Loan or a
Swing Line Loan.

 

“Loan Documents” means, collectively, (i) this Agreement, (ii) the Notes,
(iii) the Collateral Documents, (iv) each Letter of Credit Application and
(v) the Continuing Agreement (if applicable).

 

“Loan Parties” means, collectively, each Borrower and each Guarantor; provided
that for purposes of Article VII, unless such Person is or becomes a U.S.
Guarantor, each Overseas Borrower and each Overseas Guarantor shall not be
treated as a Loan Party and shall be treated as a Subsidiary that is not a Loan
Party.

 

“Management Stockholders” means the members of management of Holdings or its
Subsidiaries who are investors in Holdings or any direct or indirect parent
thereof.

 

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“Mandatory Cost” means, with respect to any period, the percentage rate per
annum determined in accordance with Schedule 1.01H.

 

“Master Agreement” has the meaning specified in the definition of “Swap
Contract.”

 

“Material Adverse Change” means a material adverse effect on (a) the business,
financial condition or results of operations of Reader’s Digest and its
subsidiaries, taken as a whole, (b) the ability of Reader’s Digest to perform
its obligations under the Purchase Agreement or (c) the ability of Reader’s
Digest to consummate the Acquisition and the other Transactions (as defined in
the Purchase Agreement) to be performed or consummated by Reader’s Digest, other
than any event, change, effect, development, condition or occurrence to the
extent arising out of or relating to:  (i) general economic conditions,
(ii) conditions generally affecting industries in which any of Reader’s Digest
or its subsidiaries operate (except, in the case of clauses (i) and (ii) above,
if the event, change, effect, development, condition or occurrence
disproportionately impacts the business, financial condition or results of
operations of Reader’s Digest and its subsidiaries, taken as a whole, relative
to companies operating in the industries in which Reader’s Digest or its
subsidiaries operate), (iii) the public announcement of the Purchase Agreement
and the Acquisition, (iv) any changes in law or interpretation thereof or
(v) any changes in GAAP or interpretation thereof.

 

“Material Adverse Effect” means an event, change or occurrence that,
individually or in the aggregate, has had or could reasonably be expected to
have a material adverse effect on (a) the business, assets, results of operation
or financial condition of the Company and its Subsidiaries, taken as a whole, or
(b) the rights and remedies of the Administrative Agent and the Lenders under
any Loan Document.

 

“Material Real Property” means, on any date, any real property owned by any Loan
Party with a fair market value as of such date in excess of $2,500,000.

 

“Maturity Date” means (a) with respect to the Revolving Credit Facility,
March 2, 2013 and (b) with respect to the Term Loans, March 2, 2014.

 

“Maximum Rate” has the meaning specified in Section 10.10.

 

“Merger” has the meaning set forth in the preliminary statements to this
Agreement.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

“Mortgage” means, collectively, the deeds of trust, trust deeds, hypothecs and
mortgages made by the Loan Parties in favor or for the benefit of the
Administrative Agent on behalf of the Lenders substantially in the form of
Exhibit G (with such changes as may be customary to account for local Law
matters or as otherwise may be reasonably satisfactory to the Administrative
Agent), and any other mortgages executed and delivered pursuant to Section 6.10.

 

“Mortgage Policies” has the meaning specified in Section 6.12(b)(ii).

 

“Mortgaged Properties” has the meaning specified in paragraph (g) of the
definition of Collateral and Guarantee Requirement.

 

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“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

 

“Net Cash Proceeds” means:

 

(a)  with respect to the Disposition of any asset by Holdings, the Company or
any Restricted Subsidiary or any Casualty Event, an amount equal to (i) the sum
of cash and Cash Equivalents received in connection with such Disposition or
Casualty Event (including any cash or Cash Equivalents received by way of
deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received and, with respect to any Casualty
Event, any insurance proceeds or condemnation awards in respect of such Casualty
Event actually received by or paid to or for the account of Holdings, the
Company or any Restricted Subsidiary) less (ii) the sum of (A) the principal
amount, premium or penalty, if any, interest and other amounts on any
Indebtedness that is secured by the asset subject to such Disposition or
Casualty Event and that is required to be repaid (and is repaid) in connection
with such Disposition or Casualty Event (other than Indebtedness under the Loan
Documents), (B) the out-of-pocket expenses (including attorneys’ fees,
investment banking fees, accounting fees and other professional and
transactional fees, survey costs, title insurance premiums, and related search
and recording charges, transfer taxes, deed or mortgage recording taxes, other
customary expenses and brokerage, consultant and other customary commissions and
fees) actually incurred by Holdings, the Company or such Restricted Subsidiary
in connection with such Disposition or Casualty Event, (C) taxes paid or
reasonably estimated to be actually payable in connection therewith, (D) any
reserve for adjustment in accordance with GAAP in respect of (x) the sale price
of such asset or assets and (y) any liabilities associated with such asset or
assets and retained by Holdings, the Company or any Restricted Subsidiary after
such sale or other disposition thereof, including pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction and (E) the Company’s reasonable estimate of payments required to be
made with respect to unassumed liabilities relating to the assets involved
within one year of such Disposition or Casualty Event, and it being understood
that “Net Cash Proceeds” shall include (i) any cash or Cash Equivalents received
upon the Disposition of any non-cash consideration received by Holdings, the
Company or any Restricted Subsidiary in any such Disposition, (ii) an amount
equal to any reversal (without the satisfaction of any applicable liabilities in
cash in a corresponding amount) of any reserve described in clause (C) or
(D) above at the time of such reversal and (iii) an amount equal to any
estimated liabilities described in clause (E) above that have not been satisfied
in cash within three hundred and sixty-five (365) days after such Disposition or
Casualty Event; provided that (x) no net cash proceeds calculated in accordance
with the foregoing realized in a single transaction or series of related
transactions shall constitute Net Cash Proceeds unless such net cash proceeds
shall exceed $5,000,000 and (y) no such net cash proceeds shall constitute Net
Cash Proceeds under this clause (a) in any fiscal year until the aggregate
amount of all such net cash proceeds in such fiscal year shall exceed
$10,000,000 (and thereafter only net cash proceeds in excess of such amount
shall constitute Net Cash Proceeds under this clause (a)); and

 

(b)  with respect to the incurrence or issuance of any Indebtedness or Equity
Interests by Holdings, the Company or any Restricted Subsidiary, an amount equal
to (i)

 

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the sum of the cash received in connection with such incurrence or issuance less
(ii) the attorneys’ fees, investment banking fees, accountants’ fees,
underwriting or other discounts, commissions, costs and other out-of-pocket
fees, transfer and similar taxes and other customary out-of-pocket expenses
actually incurred by Holdings, the Company or such Restricted Subsidiary in
connection with such incurrence or issuance.

 

“Non-Cash Charges” has the meaning set forth in the definition of the term
“Consolidated EBITDA”.

 

“Non-Consenting Lenders” has the meaning specified in Section 3.07(d).

 

“Nonrenewal Notice Date” has the meaning specified in Section 2.03(b)(iii).

 

“Note” means a U.S. Term Note, a Euro Term Note or a Revolving Credit Note, as
the context may require.

 

“Notice of Intent to Cure” has the meaning specified in Section 6.02(b).

 

“Not Otherwise Applied” means, with reference to any amount of Net Cash Proceeds
of any transaction or event or of Excess Cash Flow, that such amount (a) was not
required to be applied to prepay the Loans pursuant to Section 2.05(b), and
(b) was not previously applied as a Cure Amount or in determining the
permissibility of a transaction under the Loan Documents where such
permissibility was contingent on receipt of such amount or utilization of such
amount for a specified purpose.  The Company shall promptly notify the
Administrative Agent of any application of such amount as contemplated by
(b) above.

 

“NPL” means the National Priorities List under CERCLA.

 

“Obligations” means all (a) monetary obligations of any Loan Party and its
Subsidiaries arising under any Loan Document, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or Subsidiary of
any proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims
in such proceeding, (b) monetary obligations of any Loan Party and its
Subsidiaries arising under any Secured Hedge Agreement and (c) monetary Cash
Management Obligations.  Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Loan Documents (and of their
Subsidiaries to the extent they have obligations under the Loan Documents)
include (x) the obligation (including guarantee obligations) to pay principal,
interest, Letter of Credit commissions, reimbursement obligations, charges,
expenses, fees, Attorney Costs, indemnities, and other amounts payable by any
Loan Party or its Subsidiaries under any Loan Document and (y) the obligation of
any Loan Party or any of its Subsidiaries to reimburse any amount in respect of
any of the foregoing that any Lender, in its sole discretion, may elect to pay
or advance on behalf of such Loan Party or such Subsidiary.

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any

 

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agreement, instrument, filing or notice with respect thereto filed in connection
with its formation or organization with the applicable Governmental Authority in
the jurisdiction of its formation or organization and, if applicable, any
certificate or articles of formation or organization of such entity.

 

“Other Taxes” has the meaning specified in Section 3.01(b).

 

“Outstanding Amount” means (a) with respect to the U.S. Term Loans, Euro Term
Loans, Revolving Credit Loans and Swing Line Loans on any date, the Dollar
Amount thereof after giving effect to any borrowings and prepayments or
repayments of U.S. Term Loans, Euro Term Loans, Revolving Credit Loans
(including any refinancing of outstanding unpaid drawings under Letters of
Credit or L/C Credit Extensions as a Revolving Credit Borrowing) and Swing Line
Loans, as the case may be, occurring on such date; and (b) with respect to any
L/C Obligations on any date, the amount thereof on such date after giving effect
to any L/C Credit Extension occurring on such date and any other changes thereto
as of such date, including as a result of any reimbursements of outstanding
unpaid drawings under any Letters of Credit (including any refinancing of
outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions as
a Revolving Credit Borrowing) or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.

 

“Overnight Rate” means, for any day, (a) with respect to any amount denominated
in Dollars, the Federal Funds Rate, and (b) with respect to any amount
denominated in an Alternative Currency, the rate of interest per annum at which
overnight deposits in the applicable Alternative Currency, in an amount
approximately equal to the amount with respect to which such rate is being
determined, would be offered for such day by a branch or Affiliate of JPMorgan
Chase Bank in the applicable offshore interbank market for such currency to
major banks in such interbank market.

 

“Overseas Borrowers” means, collectively, (a) the German Borrower and (b) any
other Foreign Subsidiary which has borrowed Incremental Overseas Term Loans in
accordance with Section 2.14(b).

 

“Overseas Guarantees” has the meaning set forth in the definition of “Collateral
and Guarantee Requirement”.

 

“Overseas Guarantors” has the meaning set forth in the definition of “Collateral
and Guarantee Requirement”.

 

“Overseas Obligations” has the meaning set forth in the definition of
“Collateral and Guarantee Requirement”.

 

“Participant” has the meaning specified in Section 10.07(e).

 

“Participating Member State” means each state so described in any EMU
Legislation.

 

“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

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“Pension Act” shall mean the Pension Protection Act of 2006, as it presently
exists or as it may be amended from time to time.

 

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA
and is sponsored or maintained by any Loan Party or any ERISA Affiliate or to
which any Loan Party or any ERISA Affiliate contributes or has an obligation to
contribute, or in the case of a multiple employer or other plan described in
Section 4064(a) of ERISA, has made contributions at any time during the
immediately preceding five (5) plan years.

 

“Perfection Certificate” means a certificate in the form of Annex 2 to the
Guarantee and Security Agreement or any other form approved by the
Administrative Agent.

 

“Permitted Acquisition” has the meaning specified in Section 7.02(i).

 

“Permitted Equity Issuance” means any sale or issuance of any Qualified Equity
Interests of Holdings to the extent permitted hereunder or any capital
contribution made to Holdings in respect of its Qualified Equity Interests.

 

“Permitted Holders” means the Equity Investors other than (i) the Management
Stockholders to the extent that the amount of the outstanding voting stock of
Holdings owned beneficially or of record by such Management Stockholders in the
aggregate at any time exceeds ten percent (10%) of the total amount of the
outstanding voting stock of Holdings at such time and (ii) Goldentree Asset
Management, LP, GSO Capital Partners LP and Magnetar Financial LLC.

 

“Permitted Holdings Distributions” means payments, dividends or distributions by
the Company to Holdings in order to pay Holdings Operating Expenses.

 

“Permitted Refinancing” means, with respect to any Person, any modification,
refinancing, refunding, renewal or extension of any Indebtedness of such Person;
provided that (a) the principal amount (or accreted value, if applicable)
thereof does not exceed the principal amount (or accreted value, if applicable)
of the Indebtedness so modified, refinanced, refunded, renewed or extended
except by an amount equal to unpaid accrued interest and premium thereon plus
other reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such modification, refinancing, refunding, renewal or extension
and by an amount equal to any existing commitments unutilized thereunder,
(b) other than with respect to a Permitted Refinancing in respect of
Indebtedness permitted pursuant to Section 7.03(e), such modification,
refinancing, refunding, renewal or extension has a final maturity date equal to
or later than the earlier of (x) the final maturity date of the Indebtedness so
modified, refinanced, refunded, renewed or extended and (y) the date which is 91
days after the Maturity Date with respect to the Term Loans, (c) other than with
respect to a Permitted Refinancing in respect of Indebtedness permitted pursuant
to Section 7.03(e), such modification, refinancing, refunding, renewal or
extension has a Weighted Average Life to Maturity equal to or greater than the
remaining Weighted Average Life to Maturity of, the Indebtedness being modified,
refinanced, refunded, renewed or extended, (d) to the extent such Indebtedness
being modified, refinanced, refunded, renewed or extended is subordinated in
right of payment to the Obligations, such modification, refinancing, refunding,
renewal or extension is subordinated in right of payment to the Obligations on
terms at least as favorable to the Lenders (in the reasonable good faith
determination of the Company) as those contained in the documentation governing
the

 

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Indebtedness being modified, refinanced, refunded, renewed or extended, and
(e) the terms and conditions (including, if applicable, as to collateral but
excluding as to subordination, interest rate or other pricing terms and
redemption or prepayment premium) of any such modified, refinanced, refunded,
renewed or extended Indebtedness, taken as a whole, are not materially less
favorable to the Lenders (in the reasonable good faith determination of the
Company) than the terms and conditions of the Indebtedness being modified,
refinanced, refunded, renewed or extended.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by any Loan Party or, with respect to any
such plan that is subject to Section 412 of the Code or Section 302 or Title IV
of ERISA, any ERISA Affiliate.

 

“Pledged Debt” has the meaning specified in the Guarantee and Security
Agreement.

 

“Pledged Equity” has the meaning specified in the Guarantee and Security
Agreement.

 

“Post-Acquisition Period” means, with respect to any Permitted Acquisition, the
period beginning on the date such Permitted Acquisition is consummated and
ending on the last day of the sixth full consecutive fiscal quarter immediately
following the date on which such Permitted Acquisition is consummated.

 

“Pro Forma Adjustment” means, for any Test Period that includes all or any part
of a fiscal quarter included in any Post-Acquisition Period, with respect to the
Acquired EBITDA of the applicable Acquired Entity or Business or the
Consolidated EBITDA of the Company, the pro forma increase or decrease in such
Acquired EBITDA or such Consolidated EBITDA, as the case may be, projected by
the Company in good faith as a result of (a) actions taken during such
Post-Acquisition Period for the purposes of realizing reasonably identifiable
and factually supportable cost savings or (b) any additional costs incurred
during such Post-Acquisition Period, in each case in connection with the
combination of the operations of such Acquired Entity or Business with the
operations of the Company and the Restricted Subsidiaries; provided that, so
long as such actions are taken during such Post-Acquisition Period or such costs
are incurred during such Post-Acquisition Period, as applicable, with respect to
the cost savings related to such actions or such additional costs, as
applicable, it may be reasonably assumed, for purposes of projecting such pro
forma increase or decrease to such Acquired EBITDA or such Consolidated EBITDA,
as the case may be, that such cost savings will be realizable during the
entirety of such Test Period, or such additional costs, as applicable, will be
incurred during the entirety of such Test Period; provided further that any such
pro forma increase or decrease to such Acquired EBITDA or such Consolidated
EBITDA, as the case may be, shall be without duplication for cost savings or
additional costs already included in such Acquired EBITDA or such Consolidated
EBITDA, as the case may be, for such Test Period.

 

“Pro Forma Balance Sheet” has the meaning set forth in Section 5.05(a)(ii).

 

“Pro Forma Basis”, “Pro Forma Compliance” and “Pro Forma Effect” mean, with
respect to compliance with any test or covenant hereunder, that (A) to the
extent applicable, the Pro Forma Adjustment shall have been made and (B) all
Specified Transactions and the following transactions in connection therewith
shall be deemed to have occurred as of the first

 

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day of the applicable period of measurement in such test or covenant: 
(a) income statement items (whether positive or negative) attributable to the
property or Person subject to such Specified Transaction, (i) in the case of a
Disposition of all or substantially all Equity Interests in any Subsidiary of
the Company owned by the Company or any of its Subsidiaries or any division,
product line, or facility used for operations of the Company or any of its
Subsidiaries, shall be excluded, and (ii) in the case of a Permitted Acquisition
or Investment described in the definition of “Specified Transaction”, shall be
included, (b) any retirement of Indebtedness and (c) any Indebtedness incurred
or assumed by the Company or any of the Restricted Subsidiaries in connection
therewith and if such Indebtedness has a floating or formula rate, shall have an
implied rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination; provided
that, without limiting the application of the Pro Forma Adjustment pursuant to
clause (A) above (but without duplication thereof), the foregoing pro forma
adjustments may be applied to any such test or covenant solely to the extent
that such adjustments are consistent with the definition of Consolidated EBITDA
and give effect to events (including operating expense reductions) that are
(i) in the reasonable good faith determination of the Company (x) directly
attributable to such transaction and (y) factually supportable or (ii) otherwise
consistent with the definition of Pro Forma Adjustment.

 

“Pro Rata Share” means, with respect to each Lender at any time a fraction
(expressed as a percentage, carried out to the ninth decimal place), the
numerator of which is the amount of the Commitments (or, in the case of the Term
Facility, outstanding Term Loans) of such Lender under the applicable Facility
or Facilities at such time and the denominator of which is the amount of the
Aggregate Commitments (or, in the case of the Term Facility, aggregate
outstanding Term Loans) under the applicable Facility or Facilities at such
time; provided that (if applicable) if such Commitments have been terminated,
then the Pro Rata Share of each Lender shall be determined based on the Pro Rata
Share of such Lender immediately prior to such termination and after giving
effect to any subsequent assignments made pursuant to the terms hereof.

 

“Projections” shall have the meaning set forth in Section 6.01(c).

 

“Purchase Agreement” means the Agreement and Plan of Merger, dated as of
November 16, 2006, among Holdings, Acquisition Co and Reader’s Digest.

 

“Purchase Price” means the total funds required to consummate the Acquisitions.

 

“Qualified Equity Interests” means any Equity Interests that are not
Disqualified Equity Interests.

 

“Qualifying IPO” means the issuance by Holdings or any direct or indirect parent
of Holdings of its common Equity Interests in an underwritten primary public
offering for cash (other than a public offering pursuant to a registration
statement on Form S-8) pursuant to an effective registration statement filed
with the SEC in accordance with the Securities Act (whether alone or in
connection with a secondary public offering).

 

“Reader’s Digest” has the meaning specified in the introductory paragraph to
this Agreement.

 

“Refunding Loans” has the meaning set forth in Section 2.03(c)(i).

 

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“Register” has the meaning set forth in Section 10.07(d).

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
or the regulations issued thereunder, other than events for which the thirty
(30) day notice period has been waived.

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of U.S. Term Loans, Euro Term Loans or Revolving Credit Loans, a
Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of
Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

 

“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the sum of the (a) Total Outstandings (with the aggregate Dollar
Amount of each Lender’s risk participation and funded participation in L/C
Obligations and Swing Line Loans being deemed “held” by such Lender for purposes
of this definition), (b) aggregate unused U.S. Term Commitments, (c) aggregate
unused Euro Term Commitments and (d) aggregate unused Revolving Credit
Commitments.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or controller or other similar officer of a Loan
Party and, as to any document delivered on the Closing Date, any secretary or
assistant secretary of a Loan Party.  Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest of Holdings,
the Company or any Restricted Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, defeasance, acquisition,
cancellation or termination of any such Equity Interest, or on account of any
return of capital to Holdings or the Company’s stockholders, partners or members
(or the equivalent Persons thereof).

 

“Restricted Subsidiary” means any Subsidiary of the Company other than an
Unrestricted Subsidiary.

 

“Revolving Commitment Increase” has the meaning set forth in Section 2.14(a).

 

“Revolving Commitment Increase Lender” has the meaning set forth in
Section 2.14(a).

 

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous
Revolving Credit Loans of the same Type and, in the case of Eurocurrency Rate
Loans, having the same Interest Period made by each of the Revolving Credit
Lenders pursuant to Section 2.01(b).

 

“Revolving Credit Commitments” means, as to each Revolving Credit Lender, its
obligation to (a) make Revolving Credit Loans to the Company pursuant to
Section 2.01(b), (b) purchase participations in L/C Obligations and (c) purchase
participations in Swing Line

 

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Loans, in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth, opposite such Lender’s name on Schedule 2.01 under
the caption “Revolving Credit Commitment” or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement.  The
aggregate Revolving Credit Commitments of all Revolving Credit Lenders shall be
$300,000,000 on the Closing Date, as such amount may be adjusted from time to
time in accordance with this Agreement.

 

“Revolving Credit Exposure” means, as to each Revolving Credit Lender, the sum
of the outstanding principal amount of such Revolving Credit Lender’s Revolving
Credit Loans and its Pro Rata Share of the L/C Obligations and outstanding Swing
Line Loans at such time.

 

“Revolving Credit Facility” means, at any time, the aggregate amount of the
Revolving Credit Lenders’ Revolving Credit Commitments at such time.

 

“Revolving Credit Lenders” means, at any time, any Lender that has a Revolving
Credit Commitment at such time.

 

“Revolving Credit Loans” has the meaning specified in Section 2.01(b).

 

“Revolving Credit Note” means a promissory note of the Company payable to any
Revolving Credit Lender, in substantially the form of Exhibit C-2 hereto,
evidencing the aggregate Indebtedness of the Company to such Revolving Credit
Lender resulting from the Revolving Credit Loans made by such Revolving Credit
Lender.

 

“Rollover Amount” has the meaning set forth in Section 7.14(b).

 

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

 

“Same Day Funds” means (a) with respect to disbursements and payments in
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in an Alternative Currency, same day or other funds as may be
determined by the Administrative Agent to be customary in the place of
disbursement or payment for the settlement of international banking transactions
in the relevant Alternative Currency.

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Secured Hedge Agreement” means any Swap Contract permitted under Article VII
that is entered into by and between any Loan Party or any Restricted Subsidiary
and any Hedge Bank.

 

“Secured Obligations” has the meaning specified in the Guarantee and Security
Agreement.

 

“Secured Parties” means, collectively, the Administrative Agent, the other
Agents, the Lenders, the Hedge Banks, any Affiliate of a Lender to which
Obligations are owed, the Supplemental Administrative Agent and each co-agent or
sub-agent appointed by the Administrative Agent from time to time pursuant to
Section 9.01(c).

 

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“Securities Act” means the Securities Act of 1933.

 

“Security Agreement Supplement” has the meaning specified in the Guarantee and
Security Agreement.

 

“Senior Subordinated Note Indenture” means the Indenture entered into by the
Company and certain of its Subsidiaries in connection with the issuance of the
Senior Subordinated Notes, together with all instruments and other agreements
entered into by the Company or such Subsidiaries in connection therewith.

 

“Senior Subordinated Notes” means the $600,000,000 aggregate principal amount of
senior subordinated notes of the Company issued on the Closing Date pursuant to
the Senior Subordinated Note Indenture.

 

“Sold Entity or Business” has the meaning set forth in the definition of the
term “Consolidated EBITDA”.

 

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

 

“SPC” has the meaning specified in Section 10.07(h).

 

“Specified Transaction” means, with respect to any period, any Investment,
Disposition, incurrence or repayment of Indebtedness, Restricted Payment,
Subsidiary designation, Incremental U.S. Term Loan, Incremental Overseas Term
Loan or Revolving Commitment Increase that by the terms of this Agreement
requires “Pro Forma Compliance” with a test or covenant hereunder or requires
such test or covenant to be calculated on a “Pro Forma Basis”.

 

“Sponsors” means Ripplewood Holdings L.L.C. and its Affiliates, but not
including, however, any portfolio companies of any of the foregoing.

 

“Sponsor Equity Contributions” means, collectively, (a) the contribution by the
Equity Investors of an aggregate amount of cash of not less than $374,992,909.09
to Holdings, and (b) the further contribution by Holdings to the Company of any
portion of such cash contribution proceeds not used by Holdings to pay
Transaction Expenses.

 

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the relevant

 

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Lender is subject for eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve
percentages shall include those imposed pursuant to such Regulation D. 
Eurocurrency Rate Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation.  The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.

 

“Sterling” means the lawful currency of the United Kingdom.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned directly, or indirectly through one or more
intermediaries, or both, by such Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Company, as well as any other entity that,
following the consummation of the Acquisitions, will become a Subsidiary of the
Company.

 

“Successful Consent Solicitation” means a Consent Solicitation that results in
the receipt of consents in respect of an aggregate amount of Existing Notes
necessary to modify the Existing Note Indenture to remove any provisions thereof
that would restrict or prohibit the Transactions or the entering into of the
Loan Documents or the Senior Subordinated Note Indenture.

 

“Supplemental Administrative Agent” has the meaning specified in Section 9.13
and “Supplemental Administrative Agents” shall have the corresponding meaning.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more

 

44

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mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.04.

 

“Swing Line Facility” means the revolving credit facility made available by the
Swing Line Lender pursuant to Section 2.04.

 

“Swing Line Lender” means JPMorgan Chase Bank, in its capacity as provider of
Swing Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning specified in Section 2.04(a).

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.04(b), which, if in writing, shall be substantially in the form of
Exhibit B.

 

“Swing Line Obligations” means, as at any date of determination, the aggregate
principal amount of all Swing Line Loans outstanding.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $30,000,000 and
(b) the aggregate amount of the Revolving Credit Commitments.  The Swing Line
Sublimit is part of, and not in addition to, the Revolving Credit Commitments.

 

“TARGET Day” means any day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer (TARGET) payment system (or, if such payment system
ceases to be operative, such other payment system (if any) determined by the
Administrative Agent to be a suitable replacement) is open for the settlement of
payments in Euro.

 

“Tax Confirmation” has the meaning specified in Section 10.24.

 

“Taxes” has the meaning specified in Section 3.01(a).

 

“Term Borrowing” means a borrowing consisting of simultaneous Term Loans of the
same Type and currency and, in the case of Eurocurrency Rate Loans, having the
same Interest Period made by each of the Term Lenders pursuant to Section 2.01.

 

“Term Commitment” means a U.S. Term Commitment or a Euro Term Commitment, as the
context may require.

 

“Term Lender” means a U.S. Term Lender or a Euro Term Lender, as the context may
require.

 

“Term Loan” means a U.S. Term Loan or a Euro Term Loan, as the context may
require.

 

“Term Note” means a U.S. Term Note or Euro Term Note, as the context may
require.

 

“Test Period” means, for any determination under this Agreement, the four
consecutive fiscal quarters of the Company then last ended.

 

45

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“Threshold Amount” means $20,000,000.

 

“Total Leverage Ratio” means, with respect to any Test Period, the ratio as of
the last day of such Test Period of (a) Consolidated Total Debt as of the last
day of such Test Period to (b) Consolidated EBITDA for such Test Period.

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

“Tranche” means a category of Commitments or Credit Extensions thereunder.  For
purposes hereof, each of the following comprises a separate Tranche:  (a) the
unused Revolving Commitments, (b) the outstanding Revolving Credit Loans and L/C
Obligations in respect of Letters of Credit, (c) the outstanding U.S. Term Loans
and (d) the outstanding Euro Term Loans.

 

“Transaction” means, collectively, (a) the Sponsor Equity Contributions, (b) the
Acquisition, (c) the Merger, (d) the DH Acquisition, (e) the WRC Acquisition,
(f) the issuance of the Senior Subordinated Notes, (g) the issuance of the
Holdings PIK Preferred, (h) the issuance of the Holdings Common Equity, (i) the
funding of the Term Loans, (j) the consummation of a Successful Consent
Solicitation or a Defeasance, (k) the repayment, repurchase or redemption of
certain outstanding Indebtedness of Reader’s Digest, WRC Media and Direct
Holdings, (l) the consummation of any other transactions in connection with the
foregoing and (m) the payment of fees and expenses incurred in connection with
any of the foregoing.

 

“Transaction Expenses” means any fees or expenses incurred or paid by Holdings,
the Company or any Restricted Subsidiary in connection with the Transaction,
this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby.

 

“Type” means, with respect to a Loan denominated in Dollars, its character as a
Base Rate Loan or a Eurocurrency Rate Loan.

 

“Unaudited Financial Statements” means (i) the unaudited consolidated balance
sheets and related statements of income, stockholders’ equity and cash flows of
Reader’s Digest and Direct Holdings and their respective Subsidiaries for each
subsequent fiscal quarter ended after the fiscal year ended June 30, 2006 and
June 24, 2006, respectively, for which such financial statements are available
(and which are publicly available, in the case of Reader’s Digest) prior to the
Closing Date, and (ii) the unaudited consolidated balance sheets and related
statements of income, stockholders’ equity and cash flows of WRC Media and its
Subsidiaries for each subsequent fiscal quarter ended after the fiscal year
ended December 31, 2006, for which such financial statements are available prior
to the Closing Date.

 

“Uniform Commercial Code” means the Uniform Commercial Code as the same may from
time to time be in effect in the State of New York or the Uniform Commercial
Code (or similar code or statute) of another jurisdiction, to the extent it may
be required to apply to any item or items of Collateral.

 

“United States” and “U.S.” mean the United States of America.

 

“Unreimbursed Amount” has the meaning set forth in Section 2.03(c)(i).

 

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“Unrestricted Subsidiary” means (i) each Subsidiary of the Company listed on
Schedule 1.01G and (ii) any Subsidiary of the Company designated by the board of
directors of Holdings as an Unrestricted Subsidiary pursuant to Section 6.15
subsequent to the date hereof.

 

“U.S. Guarantees” has the meaning set forth in the definition of “Collateral and
Guarantee Requirement”.

 

“U.S. Guarantor” has the meaning set forth in the definition of “Collateral and
Guarantee Requirement”.

 

“U.S. Lender” has the meaning set forth in Section 10.15(b).

 

“U.S. Refinanced Term Loans” has the meaning specified in Section 10.01.

 

“U.S. Replacement Term Loans” has the meaning specified in Section 10.01.

 

“U.S. Term Commitment” means, as to each U.S. Term Lender, its obligation to
make a U.S. Term Loan to the Company pursuant to Section 2.01(a) in an aggregate
Dollar Amount not to exceed the amount set forth opposite such Lender’s name on
Schedule 2.01 under the caption “U.S. Term Commitment” or in the Assignment and
Assumption pursuant to which such U.S. Term Lender becomes a party hereto, as
applicable, as such amount may be adjusted from time to time in accordance with
this Agreement.  The initial aggregate amount of the Term Commitments is
$1,210,000,000.

 

“U.S. Term Lender” means, at any time, any Lender that has a U.S. Term
Commitment or a U.S. Term Loan at such time.

 

“U.S. Term Loan” means a Loan made pursuant to Section 2.01(a).

 

“U.S. Term Note” means a promissory note of the Company payable to any U.S. Term
Lender, in substantially the form of Exhibit C-1 hereto, evidencing the
aggregate Indebtedness of the Company to such U.S. Term Lender resulting from
the U.S. Term Loans made by such U.S. Term Lender.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing:  (i) the sum of the products
obtained by multiplying (a) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by (ii) the then outstanding principal amount of
such Indebtedness.

 

“wholly owned” means, with respect to a Subsidiary of a Person, a Subsidiary of
such Person all of the outstanding Equity Interests of which (other than
(x) director’s qualifying shares and (y) shares issued to foreign nationals to
the extent required by applicable Law) are owned by such Person and/or by one or
more wholly owned Subsidiaries of such Person.

 

“WRC Acquisition” has the meaning set forth in the preliminary statements to
this Agreement.

 

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“WRC Acquisition Agreement” means the Agreement and Plan of Merger, dated as of
January 23, 2007, among RDA Holding Co., WRC Acquisition Co. and WRC Media Inc.

 

“WRC Media” has the meaning set forth in the preliminary statements to this
Agreement.

 

SECTION 1.02.  Other Interpretive Provisions.  With reference to this Agreement
and each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

 

(A)  THE MEANINGS OF DEFINED TERMS ARE EQUALLY APPLICABLE TO THE SINGULAR AND
PLURAL FORMS OF THE DEFINED TERMS.

 

(B)  (I)  THE WORDS “HEREIN,” “HERETO,” “HEREOF” AND “HEREUNDER” AND WORDS OF
SIMILAR IMPORT WHEN USED IN ANY LOAN DOCUMENT SHALL REFER TO SUCH LOAN DOCUMENT
AS A WHOLE AND NOT TO ANY PARTICULAR PROVISION THEREOF.

 

(ii)  Article, Section, Exhibit and Schedule references are to the Loan Document
in which such reference appears.

 

(iii)  The term “including” is by way of example and not limitation.

 

(iv)  The term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

 

(C)  IN THE COMPUTATION OF PERIODS OF TIME FROM A SPECIFIED DATE TO A LATER
SPECIFIED DATE, THE WORD “FROM” MEANS “FROM AND INCLUDING;” THE WORDS “TO” AND
“UNTIL” EACH MEAN “TO BUT EXCLUDING;” AND THE WORD “THROUGH” MEANS “TO AND
INCLUDING.”

 

(D)  SECTION HEADINGS HEREIN AND IN THE OTHER LOAN DOCUMENTS ARE INCLUDED FOR
CONVENIENCE OF REFERENCE ONLY AND SHALL NOT AFFECT THE INTERPRETATION OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

SECTION 1.03.  Accounting Terms.  (a)  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP, applied in a manner consistent with that used in
preparing the Audited Financial Statements, except as otherwise specifically
prescribed herein.

 

(B)  NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, FOR PURPOSES OF
DETERMINING COMPLIANCE WITH ANY TEST OR COVENANT CONTAINED IN THIS AGREEMENT
WITH RESPECT TO ANY PERIOD DURING WHICH ANY SPECIFIED TRANSACTION OCCURS, THE
TOTAL LEVERAGE RATIO SHALL BE CALCULATED WITH RESPECT TO SUCH PERIOD AND SUCH
SPECIFIED TRANSACTION ON A PRO FORMA BASIS.  TO THE EXTENT THAT ANY PROVISION OF
ANY LOAN DOCUMENT REQUIRES OR TESTS FOR PRO FORMA COMPLIANCE WITH SECTION 7.10
PRIOR TO THE FIRST TEST DATE SET FORTH IN SECTION 7.10, SUCH PROVISION SHALL BE
DEEMED TO REFER TO THE FIRST COVENANT LEVEL SET FORTH THEREIN.

 

SECTION 1.04.  Rounding.  Any financial ratios required to be maintained by the
Company pursuant to this Agreement (or required to be satisfied in order for a
specific action to

 

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be permitted under this Agreement) shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

 

SECTION 1.05.  References to Agreements, Laws, Etc.  Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are permitted by
any Loan Document; and (b) references to any Law shall include all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.

 

SECTION 1.06.  Times of Day.  Unless otherwise specified, all references herein
to times of day shall be references to Eastern time (daylight or standard, as
applicable).

 

SECTION 1.07.  Timing of Payment of Performance.  When the payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day, the date of
such payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day.

 

SECTION 1.08.  Currency Equivalents Generally.  (a)  Any amount specified in
this Agreement (other than in Articles II, IX and X or as set forth in paragraph
(b) of this Section) or any of the other Loan Documents to be in Dollars shall
also include the equivalent of such amount in any currency other than Dollars,
such equivalent amount to be determined at the rate of exchange quoted by the
Reuters World Currency Page for the applicable currency at 11:00 a.m. (London
time) on such day (or, in the event such rate does not appear on any Reuters
World Currency Page, by reference to such other publicly available service for
displaying exchange rates as may be agreed upon by the Administrative Agent and
the Company, or, in the absence of such agreement, such rate shall instead be
the arithmetic average of the spot rates of exchange of the Administrative Agent
in the market where its foreign currency exchange operations in respect of such
currency are then being conducted, at or about 10:00 a.m. (New York City time)
on such date for the purchase of Dollars for delivery two Business Days later). 
Notwithstanding the foregoing, for purposes of determining compliance with
Sections 7.01, 7.02 and 7.03 with respect to any amount of Indebtedness or
Investment in a currency other than Dollars, no Default shall be deemed to have
occurred solely as a result of changes in rates of exchange occurring after the
time such Indebtedness or Investment is incurred; provided that, for the
avoidance of doubt, the foregoing provisions of this Section 1.08 shall
otherwise apply to such Sections, including with respect to determining whether
any Indebtedness or Investment may be incurred at any time under such Sections.

 

(B)  FOR PURPOSES OF DETERMINING COMPLIANCE UNDER SECTIONS 7.02, 7.05, 7.06,
7.10 AND 7.14, ANY AMOUNT IN A CURRENCY OTHER THAN DOLLARS WILL BE CONVERTED TO
DOLLARS BASED ON THE AVERAGE EXCHANGE RATE FOR SUCH CURRENCY FOR THE MOST RECENT
TWELVE-MONTH PERIOD IMMEDIATELY PRIOR TO THE DATE OF DETERMINATION DETERMINED IN
A MANNER CONSISTENT WITH THAT USED IN CALCULATING EBITDA FOR THE APPLICABLE
PERIOD, PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT BE DEEMED TO APPLY TO
THE DETERMINATION OF ANY AMOUNT OF INDEBTEDNESS.  FOR PURPOSES OF DETERMINING
COMPLIANCE WITH SECTION 7.10, (I) THE DOLLAR AMOUNT OF THE EURO TERM LOANS WILL
BE DETERMINED BASED ON THE EXCHANGE RATE IN EFFECT ON THE CLOSING DATE, (II) THE
DOLLAR AMOUNT OF ANY

 

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INCREMENTAL OVERSEAS TERM LOANS WILL BE DETERMINED BASED ON THE EXCHANGE RATE IN
EFFECT ON THE APPLICABLE INCREMENTAL OVERSEAS FACILITY CLOSING DATE AND
(III) THE EQUIVALENT IN DOLLARS OF ANY OTHER INDEBTEDNESS DENOMINATED IN A
CURRENCY OTHER THAN DOLLARS WILL REFLECT THE CURRENCY TRANSLATION EFFECTS,
DETERMINED IN ACCORDANCE WITH GAAP, OF SWAP CONTRACTS FOR CURRENCY EXCHANGE
RISKS WITH RESPECT TO THE APPLICABLE CURRENCY IN EFFECT ON THE DATE OF
DETERMINATION OF THE DOLLAR EQUIVALENT OF SUCH OTHER INDEBTEDNESS.

 

(C)  FOR ALL PURPOSES UNDER THIS AGREEMENT, THE ADMINISTRATIVE AGENT SHALL
DETERMINE THE DOLLAR AMOUNT OF EACH ALTERNATIVE CURRENCY LOAN AS OF THE CLOSING
DATE, IN THE CASE OF ANY EURO TERM LOAN, AND AS OF THE RELEVANT INCREMENTAL
OVERSEAS CLOSING DATE, IN THE CASE OF ANY OTHER ALTERNATIVE CURRENCY LOAN.  EACH
SUCH DETERMINATION SHALL BE BASED ON THE EXCHANGE RATE ON OR ABOUT THE DATE OF
THE RELATED INITIAL COMMITTED LOAN NOTICE.  NOTWITHSTANDING THE FOREGOING, THE
EXCHANGE RATE APPLICABLE TO THE EURO TERM LOANS ON THE CLOSING DATE SHALL BE
DEEMED TO BE 1.3206.

 

SECTION 1.09.  Change of Currency.  Each provision of this Agreement shall be
subject to such reasonable changes of construction as the Administrative Agent
may from time to time specify with the Company’s consent to appropriately
reflect a change in currency of any country and any relevant market conventions
or practices relating to such change in currency.

 

ARTICLE II

 

THE COMMITMENTS AND CREDIT EXTENSIONS

 

SECTION 2.01.  The Loans.  (a)  The U.S. Term Borrowings.  Subject to the terms
and conditions set forth herein, each U.S. Term Lender severally agrees to make
to the Company a single loan denominated in Dollars in a Dollar Amount equal to
such U.S. Term Lender’s U.S. Term Commitment on the Closing Date.  Amounts
borrowed under this Section 2.01(a) and repaid or prepaid may not be
reborrowed.  U.S. Term Loans may be Base Rate Loans or Eurocurrency Rate Loans,
as further provided herein.

 

(B)  THE REVOLVING CREDIT BORROWINGS.  SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH HEREIN, EACH REVOLVING CREDIT LENDER SEVERALLY AGREES TO MAKE LOANS
DENOMINATED IN DOLLARS TO THE COMPANY AS ELECTED BY THE COMPANY PURSUANT TO
SECTION 2.02 (EACH SUCH LOAN, A “REVOLVING CREDIT LOAN”) FROM TIME TO TIME, ON
ANY BUSINESS DAY UNTIL THE MATURITY DATE, IN AN AGGREGATE PRINCIPAL AMOUNT NOT
TO EXCEED AT ANY TIME OUTSTANDING THE AMOUNT OF SUCH LENDER’S REVOLVING CREDIT
COMMITMENT; PROVIDED THAT (I) AFTER GIVING EFFECT TO ANY REVOLVING CREDIT
BORROWING, THE AMOUNT OF THE REVOLVING CREDIT EXPOSURE OF ANY LENDER SHALL NOT
EXCEED SUCH LENDER’S REVOLVING CREDIT COMMITMENT, AND (II) THE AGGREGATE
PRINCIPAL AMOUNT OF REVOLVING CREDIT LOANS MADE ON THE CLOSING DATE SHALL NOT
EXCEED $10,000,000.  WITHIN THE LIMITS OF EACH LENDER’S REVOLVING CREDIT
COMMITMENT, AND SUBJECT TO THE OTHER TERMS AND CONDITIONS HEREOF, THE COMPANY
MAY BORROW UNDER THIS SECTION 2.01(B), PREPAY UNDER SECTION 2.05, AND REBORROW
UNDER THIS SECTION 2.01(B).  REVOLVING CREDIT LOANS MAY BE BASE RATE LOANS OR
EUROCURRENCY RATE LOANS, AS FURTHER PROVIDED HEREIN.

 

(C)  THE EURO TERM BORROWINGS.  SUBJECT TO THE TERMS AND CONDITIONS SET FORTH
HEREIN, EACH EURO TERM LENDER SEVERALLY AGREES TO MAKE TO THE GERMAN BORROWER A
SINGLE LOAN DENOMINATED IN EUROS IN A DOLLAR AMOUNT EQUAL TO SUCH EURO TERM
LENDER’S EURO TERM COMMITMENT ON THE CLOSING DATE.  AMOUNTS BORROWED UNDER THIS
SECTION 2.01(C) AND REPAID OR PREPAID MAY NOT BE REBORROWED.  EURO TERM LOANS
MUST BE EUROCURRENCY RATE LOANS, AS FURTHER PROVIDED HEREIN.

 

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SECTION 2.02.  Borrowings, Conversions and Continuations of Loans.  (a)  Each
Term Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans
or Revolving Credit Loans from one Type to the other, and each continuation of
Eurocurrency Rate Loans shall be made upon the relevant Borrower’s notice to the
Administrative Agent, which may be given by telephone.  Each such notice must be
received by the Administrative Agent not later than (i) 12:30 p.m. (New York
time or London time in the case of any Borrowing denominated in an Alternative
Currency) three (3) Business Days prior to the requested date of any Borrowing
or continuation of Eurocurrency Rate Loans or any conversion of Base Rate Loans
to Eurocurrency Rate Loans, and (ii) 11:00 a.m. (New York time) on the requested
date of any Borrowing of Base Rate Loans.  Each telephonic notice by the
relevant Borrower pursuant to this Section 2.02(a) must be confirmed promptly by
delivery to the Administrative Agent of a written Committed Loan Notice,
appropriately completed and signed by a Responsible Officer of such Borrower. 
Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans
shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof (or comparable amounts determined by the Administrative Agent
in the case of Alternative Currency Loans).  Except as provided in Sections
2.03(c) and 2.04(c), each Borrowing of or conversion to Base Rate Loans shall be
in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof.  Each Committed Loan Notice (whether telephonic or written) shall
specify (i) whether the relevant Borrower is requesting a Term Borrowing, a
Revolving Credit Borrowing, a conversion of U.S. Term Loans or Revolving Credit
Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans,
(ii) the requested date of the Borrowing, conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of Loans
to be borrowed, converted or continued, (iv) the currency in which the Loans to
be borrowed are to be denominated, (v) the Type of Loans to be borrowed or to
which existing Term Loans or Revolving Credit Loans are to be converted, and
(vi) if applicable, the duration of the Interest Period with respect thereto. 
If with respect to Loans denominated in Dollars the Company fails to specify a
Type of Loan in a Committed Loan Notice or fails to give a timely notice
requesting a conversion or continuation, then the applicable Term Loans or
Revolving Credit Loans shall be made as, or converted to, Base Rate Loans.  Any
such automatic conversion to Base Rate Loans shall be effective as of the last
day of the Interest Period then in effect with respect to the applicable
Eurocurrency Rate Loans.  If the relevant Borrower requests a Borrowing of,
conversion to, or continuation of Eurocurrency Rate Loans in any such Committed
Loan Notice, but fails to specify an Interest Period (or fails to give a timely
notice requesting a continuation of Eurocurrency Rate Loans denominated in an
Alternative Currency), it will be deemed to have specified an Interest Period of
one (1) month.

 

(B)  FOLLOWING RECEIPT OF A COMMITTED LOAN NOTICE, THE ADMINISTRATIVE AGENT
SHALL PROMPTLY NOTIFY EACH LENDER OF THE AMOUNT OF ITS PRO RATA SHARE OF THE
APPLICABLE CLASS OF LOANS, AND IF NO TIMELY NOTICE OF A CONVERSION OR
CONTINUATION IS PROVIDED BY THE COMPANY, THE ADMINISTRATIVE AGENT SHALL NOTIFY
EACH LENDER OF THE DETAILS OF ANY AUTOMATIC CONVERSION TO BASE RATE LOANS OR
CONTINUATION DESCRIBED IN SECTION 2.02(A).  IN THE CASE OF EACH BORROWING, EACH
APPROPRIATE LENDER SHALL MAKE THE AMOUNT OF ITS LOAN AVAILABLE TO THE
ADMINISTRATIVE AGENT IN SAME DAY FUNDS AT THE ADMINISTRATIVE AGENT’S OFFICE FOR
THE APPLICABLE CURRENCY NOT LATER THAN 1:00 P.M. (NEW YORK TIME) ON THE BUSINESS
DAY SPECIFIED IN THE APPLICABLE COMMITTED LOAN NOTICE.  UPON SATISFACTION OF THE
APPLICABLE CONDITIONS SET FORTH IN SECTION 4.02 (AND, IF SUCH BORROWING IS THE
INITIAL CREDIT EXTENSION, SECTION 4.01, AND, IF SUCH BORROWING IS MADE BY AN
OVERSEAS BORROWER, SECTION 4.03), THE ADMINISTRATIVE AGENT SHALL MAKE ALL FUNDS
SO RECEIVED AVAILABLE TO THE RELEVANT BORROWER IN LIKE FUNDS AS RECEIVED BY THE
ADMINISTRATIVE AGENT EITHER BY (I) CREDITING THE ACCOUNT OF SUCH BORROWER ON THE
BOOKS OF JPMORGAN CHASE BANK WITH THE AMOUNT OF SUCH FUNDS OR (II) WIRE TRANSFER
OF SUCH FUNDS, IN EACH CASE IN ACCORDANCE WITH INSTRUCTIONS PROVIDED TO (AND
REASONABLY ACCEPTABLE TO) THE ADMINISTRATIVE AGENT BY SUCH

 

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BORROWER; PROVIDED THAT IF, ON THE DATE THE COMMITTED LOAN NOTICE WITH RESPECT
TO SUCH BORROWING IS GIVEN BY THE RELEVANT BORROWER, THERE ARE SWING LINE LOANS
OR L/C BORROWINGS OUTSTANDING, THEN THE PROCEEDS OF SUCH BORROWING SHALL BE
APPLIED, FIRST, TO THE PAYMENT IN FULL OF ANY SUCH L/C BORROWINGS, SECOND, TO
THE PAYMENT IN FULL OF ANY SUCH SWING LINE LOANS, AND THIRD, TO THE RELEVANT
BORROWER AS PROVIDED ABOVE.

 

(C)  EXCEPT AS OTHERWISE PROVIDED HEREIN, A EUROCURRENCY RATE LOAN MAY BE
CONTINUED OR CONVERTED ONLY ON THE LAST DAY OF AN INTEREST PERIOD FOR SUCH
EUROCURRENCY RATE LOAN UNLESS THE COMPANY PAYS THE AMOUNT DUE, IF ANY, UNDER
SECTION 3.05 IN CONNECTION THEREWITH.

 

(D)  THE ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY THE COMPANY AND THE LENDERS
OF THE INTEREST RATE APPLICABLE TO ANY INTEREST PERIOD FOR EUROCURRENCY RATE
LOANS UPON DETERMINATION OF SUCH INTEREST RATE.  THE DETERMINATION OF THE
EUROCURRENCY RATE BY THE ADMINISTRATIVE AGENT SHALL BE CONCLUSIVE IN THE ABSENCE
OF MANIFEST ERROR.  AT ANY TIME THAT BASE RATE LOANS ARE OUTSTANDING, THE
ADMINISTRATIVE AGENT SHALL NOTIFY THE COMPANY AND THE LENDERS OF ANY CHANGE IN
JPMORGAN CHASE BANK PRIME RATE USED IN DETERMINING THE BASE RATE PROMPTLY
FOLLOWING THE PUBLIC ANNOUNCEMENT OF SUCH CHANGE.

 

(E)  AFTER GIVING EFFECT TO ALL TERM BORROWINGS, ALL REVOLVING CREDIT
BORROWINGS, ALL CONVERSIONS OF TERM LOANS OR REVOLVING CREDIT LOANS FROM ONE
TYPE TO THE OTHER, AND ALL CONTINUATIONS OF TERM LOANS OR REVOLVING CREDIT LOANS
AS THE SAME TYPE, THERE SHALL NOT BE MORE THAN TWENTY (20) INTEREST PERIODS IN
EFFECT.

 

(F)  THE FAILURE OF ANY LENDER TO MAKE THE LOAN TO BE MADE BY IT AS PART OF ANY
BORROWING SHALL NOT RELIEVE ANY OTHER LENDER OF ITS OBLIGATION, IF ANY,
HEREUNDER TO MAKE ITS LOAN ON THE DATE OF SUCH BORROWING, BUT NO LENDER SHALL BE
RESPONSIBLE FOR THE FAILURE OF ANY OTHER LENDER TO MAKE THE LOAN TO BE MADE BY
SUCH OTHER LENDER ON THE DATE OF ANY BORROWING.

 

SECTION 2.03.  Letters of Credit.  (a)  The Letter of Credit Commitment.  (i)   
On and after the Closing Date, each Existing Letter of Credit will constitute a
Letter of Credit under this Agreement and for purposes hereof will be deemed to
have been issued on the Closing Date.  Subject to the terms and conditions set
forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the
other Revolving Credit Lenders set forth in this Section 2.03, (1) from time to
time on any Business Day during the period from the Closing Date until the
Letter of Credit Expiration Date, to issue Letters of Credit denominated in
Dollars for the account of the Company (provided that any Letter of Credit may
be for the benefit of Holdings or any Subsidiary of the Company) and to amend or
renew Letters of Credit previously issued by it, in accordance with
Section 2.03(b), and (2) to honor drafts under the Letters of Credit and (B) the
Revolving Credit Lenders severally agree to participate in Letters of Credit
issued pursuant to this Section 2.03; provided that no L/C Issuer shall be
obligated to make any L/C Credit Extension with respect to any Letter of Credit,
and no Lender shall be obligated to participate in any Letter of Credit to the
extent that, as of the date of such L/C Credit Extension, (x) the amount of the
Revolving Credit Exposure of any Lender would exceed such Lender’s Revolving
Credit Commitment or (y) the Outstanding Amount of the L/C Obligations would
exceed the Letter of Credit Sublimit.  Within the foregoing limits, and subject
to the terms and conditions hereof, the Company’s ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Company may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.

 

(II)  AN L/C ISSUER SHALL BE UNDER NO OBLIGATION TO ISSUE ANY LETTER OF CREDIT
IF:

 

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(A)  ANY ORDER, JUDGMENT OR DECREE OF ANY GOVERNMENTAL AUTHORITY OR ARBITRATOR
SHALL BY ITS TERMS PURPORT TO ENJOIN OR RESTRAIN SUCH L/C ISSUER FROM ISSUING
SUCH LETTER OF CREDIT, OR ANY LAW APPLICABLE TO SUCH L/C ISSUER OR ANY DIRECTIVE
(WHETHER OR NOT HAVING THE FORCE OF LAW) FROM ANY GOVERNMENTAL AUTHORITY WITH
JURISDICTION OVER SUCH L/C ISSUER SHALL PROHIBIT, OR DIRECT THAT SUCH L/C ISSUER
REFRAIN FROM, THE ISSUANCE OF LETTERS OF CREDIT GENERALLY OR SUCH LETTER OF
CREDIT IN PARTICULAR; OR

 

(B)  THE ISSUANCE OF SUCH LETTER OF CREDIT WOULD VIOLATE ANY LAWS BINDING UPON
SUCH L/C ISSUER.

 

(III)  EACH LETTER OF CREDIT SHALL, UNLESS OTHERWISE AGREED BY THE APPLICABLE
L/C ISSUER AND SUBJECT TO SECTION 2.03(B)(III), EXPIRE NO LATER THAN THE EARLIER
OF (X) TWELVE MONTHS AFTER THE DATE OF ISSUANCE OR LAST RENEWAL AND (Y) UNLESS
CASH COLLATERALIZED PRIOR TO THE LETTER OF CREDIT EXPIRATION DATE, THE LETTER OF
CREDIT EXPIRATION DATE.  AN L/C ISSUER SHALL BE UNDER NO OBLIGATION TO AMEND ANY
LETTER OF CREDIT IF (A) SUCH L/C ISSUER WOULD HAVE NO OBLIGATION AT SUCH TIME TO
ISSUE SUCH LETTER OF CREDIT IN ITS AMENDED FORM UNDER THE TERMS HEREOF, OR
(B) THE BENEFICIARY OF SUCH LETTER OF CREDIT DOES NOT ACCEPT THE PROPOSED
AMENDMENT TO SUCH LETTER OF CREDIT.

 

(B)  PROCEDURES FOR ISSUANCE AND AMENDMENT OF LETTERS OF CREDIT; AUTO-RENEWAL
LETTERS OF CREDIT.  (I)  EACH LETTER OF CREDIT SHALL BE ISSUED OR AMENDED, AS
THE CASE MAY BE, UPON THE REQUEST OF THE COMPANY DELIVERED TO AN L/C ISSUER
(WITH A COPY TO THE ADMINISTRATIVE AGENT) IN THE FORM OF A LETTER OF CREDIT
APPLICATION, APPROPRIATELY COMPLETED AND SIGNED BY A RESPONSIBLE OFFICER OF THE
COMPANY.  SUCH LETTER OF CREDIT APPLICATION MUST BE RECEIVED BY THE RELEVANT L/C
ISSUER AND THE ADMINISTRATIVE AGENT NOT LATER THAN 12:30 P.M. AT LEAST THREE
(3) BUSINESS DAYS PRIOR TO THE PROPOSED ISSUANCE DATE OR DATE OF AMENDMENT, AS
THE CASE MAY BE; OR, IN EACH CASE, SUCH LATER DATE AND TIME AS THE RELEVANT
L/C ISSUER MAY AGREE IN A PARTICULAR INSTANCE IN ITS SOLE DISCRETION.  IN THE
CASE OF A REQUEST FOR AN INITIAL ISSUANCE OF A LETTER OF CREDIT, SUCH LETTER OF
CREDIT APPLICATION SHALL SPECIFY IN FORM AND DETAIL REASONABLY SATISFACTORY TO
THE RELEVANT L/C ISSUER:  (A) THE PROPOSED ISSUANCE DATE OF THE REQUESTED LETTER
OF CREDIT (WHICH SHALL BE A BUSINESS DAY); (B) THE AMOUNT THEREOF; (C) THE
EXPIRY DATE THEREOF; (D) THE NAME AND ADDRESS OF THE BENEFICIARY THEREOF;
(E) THE DOCUMENTS TO BE PRESENTED BY SUCH BENEFICIARY IN CASE OF ANY DRAWING
THEREUNDER; (F) THE FULL TEXT OF ANY CERTIFICATE TO BE PRESENTED BY SUCH
BENEFICIARY IN CASE OF ANY DRAWING THEREUNDER; AND (G) SUCH OTHER MATTERS AS THE
RELEVANT L/C ISSUER MAY REASONABLY REQUEST.  IN THE CASE OF A REQUEST FOR AN
AMENDMENT OF ANY OUTSTANDING LETTER OF CREDIT, SUCH LETTER OF CREDIT APPLICATION
SHALL SPECIFY IN FORM AND DETAIL REASONABLY SATISFACTORY TO THE RELEVANT
L/C ISSUER (1) THE LETTER OF CREDIT TO BE AMENDED; (2) THE PROPOSED DATE OF
AMENDMENT THEREOF (WHICH SHALL BE A BUSINESS DAY); (3) THE NATURE OF THE
PROPOSED AMENDMENT; AND (4) SUCH OTHER MATTERS AS THE RELEVANT L/C ISSUER MAY
REASONABLY REQUEST.

 

(II)  PROMPTLY AFTER RECEIPT OF ANY LETTER OF CREDIT APPLICATION, THE RELEVANT
L/C ISSUER WILL CONFIRM WITH THE ADMINISTRATIVE AGENT (BY TELEPHONE OR IN
WRITING) THAT THE ADMINISTRATIVE AGENT HAS RECEIVED A COPY OF SUCH LETTER OF
CREDIT APPLICATION FROM THE COMPANY AND, IF NOT, SUCH L/C ISSUER WILL PROVIDE
THE ADMINISTRATIVE AGENT WITH A COPY THEREOF.  UPON RECEIPT BY THE RELEVANT L/C
ISSUER OF CONFIRMATION FROM THE ADMINISTRATIVE AGENT THAT THE REQUESTED ISSUANCE
OR AMENDMENT IS PERMITTED IN ACCORDANCE WITH THE TERMS HEREOF, THEN, SUBJECT TO
THE TERMS AND CONDITIONS HEREOF, SUCH L/C ISSUER SHALL, ON THE REQUESTED DATE,
ISSUE A LETTER OF CREDIT FOR THE ACCOUNT OF THE COMPANY OR ENTER INTO THE
APPLICABLE AMENDMENT, AS THE CASE MAY BE.  IMMEDIATELY UPON THE ISSUANCE OF EACH
LETTER OF CREDIT, EACH REVOLVING CREDIT LENDER SHALL BE DEEMED TO, AND HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES TO, PURCHASE FROM THE RELEVANT L/C ISSUER
A RISK PARTICIPATION IN SUCH LETTER OF CREDIT IN AN AMOUNT EQUAL TO THE PRODUCT
OF SUCH LENDER’S PRO RATA SHARE TIMES THE AMOUNT OF SUCH LETTER OF CREDIT.

 

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(III)  IF THE COMPANY SO REQUESTS IN ANY APPLICABLE LETTER OF CREDIT
APPLICATION, THE RELEVANT L/C ISSUER SHALL AGREE TO ISSUE A LETTER OF CREDIT
THAT HAS AUTOMATIC RENEWAL PROVISIONS (EACH, AN “AUTO-RENEWAL LETTER OF
CREDIT”); PROVIDED THAT ANY SUCH AUTO-RENEWAL LETTER OF CREDIT MUST PERMIT THE
RELEVANT L/C ISSUER TO PREVENT ANY SUCH RENEWAL AT LEAST ONCE IN EACH TWELVE
MONTH PERIOD (COMMENCING WITH THE DATE OF ISSUANCE OF SUCH LETTER OF CREDIT) BY
GIVING PRIOR NOTICE TO THE BENEFICIARY THEREOF NOT LATER THAN A DAY (THE
“NONRENEWAL NOTICE DATE”) IN EACH SUCH TWELVE MONTH PERIOD TO BE AGREED UPON AT
THE TIME SUCH LETTER OF CREDIT IS ISSUED.  UNLESS OTHERWISE DIRECTED BY THE
RELEVANT L/C ISSUER, THE COMPANY SHALL NOT BE REQUIRED TO MAKE A SPECIFIC
REQUEST TO THE RELEVANT L/C ISSUER FOR ANY SUCH RENEWAL.  ONCE AN AUTO-RENEWAL
LETTER OF CREDIT HAS BEEN ISSUED, THE LENDERS SHALL BE DEEMED TO HAVE AUTHORIZED
(BUT MAY NOT REQUIRE) THE RELEVANT L/C ISSUER TO PERMIT THE RENEWAL OF SUCH
LETTER OF CREDIT AT ANY TIME TO AN EXPIRY DATE NOT LATER THAN THE LETTER OF
CREDIT EXPIRATION DATE; PROVIDED THAT THE RELEVANT L/C ISSUER SHALL NOT PERMIT
ANY SUCH RENEWAL IF (A) THE RELEVANT L/C ISSUER HAS DETERMINED THAT IT WOULD
HAVE NO OBLIGATION AT SUCH TIME TO ISSUE SUCH LETTER OF CREDIT IN ITS RENEWED
FORM UNDER THE TERMS HEREOF (BY REASON OF THE PROVISIONS OF
SECTION 2.03(A)(II) OR SECTION 2.03(A)(III) OR OTHERWISE), OR (B) IT HAS
RECEIVED NOTICE (WHICH MAY BE BY TELEPHONE OR IN WRITING) ON OR BEFORE THE DAY
THAT IS FIVE (5) BUSINESS DAYS BEFORE THE NONRENEWAL NOTICE DATE FROM THE
ADMINISTRATIVE AGENT, ANY REVOLVING CREDIT LENDER OR THE COMPANY THAT ONE OR
MORE OF THE APPLICABLE CONDITIONS SPECIFIED IN SECTION 4.02 IS NOT THEN
SATISFIED.

 

(IV)  PROMPTLY AFTER ITS DELIVERY OF ANY LETTER OF CREDIT OR ANY AMENDMENT TO A
LETTER OF CREDIT TO AN ADVISING BANK WITH RESPECT THERETO OR TO THE BENEFICIARY
THEREOF, THE RELEVANT L/C ISSUER WILL ALSO DELIVER TO THE COMPANY AND THE
ADMINISTRATIVE AGENT A TRUE AND COMPLETE COPY OF SUCH LETTER OF CREDIT OR
AMENDMENT.

 

(C)  DRAWINGS AND REIMBURSEMENTS; FUNDING OF PARTICIPATIONS.  (I)  UPON RECEIPT
FROM THE BENEFICIARY OF ANY LETTER OF CREDIT OF ANY NOTICE OF A DRAWING UNDER
SUCH LETTER OF CREDIT, THE RELEVANT L/C ISSUER SHALL NOTIFY PROMPTLY THE COMPANY
AND THE ADMINISTRATIVE AGENT THEREOF.  NOT LATER THAN 1:00 P.M. ON (X) IF NOTICE
THAT A PAYMENT IS MADE ON ANY DATE BY AN L/C ISSUER UNDER A LETTER OF CREDIT IS
RECEIVED BY THE COMPANY ON OR BEFORE 11:00 A.M. (NEW YORK TIME), THE BUSINESS
DAY IMMEDIATELY FOLLOWING SUCH DATE OR (Y) IF NOTICE THAT A PAYMENT IS MADE ON
ANY DATE BY AN L/C ISSUER UNDER A LETTER OF CREDIT IS RECEIVED BY THE COMPANY
LATER THAN 11:00 A.M. (NEW YORK TIME), THE SECOND BUSINESS DAY IMMEDIATELY
FOLLOWING SUCH DATE (EACH SUCH DATE, AN “HONOR DATE”), THE COMPANY SHALL
REIMBURSE SUCH L/C ISSUER THROUGH THE ADMINISTRATIVE AGENT IN AN AMOUNT EQUAL TO
THE AMOUNT OF SUCH DRAWING.  IN ORDER TO REIMBURSE ANY SUCH DRAWING, THE COMPANY
SHALL HAVE THE OPTION TO REQUEST IN ACCORDANCE WITH SECTION 2.02 A REVOLVING
CREDIT BORROWING OF BASE RATE LOANS (“REFUNDING LOANS”), WITHOUT REGARD TO THE
MINIMUM AND MULTIPLES SPECIFIED IN SECTION 2.02 FOR THE PRINCIPAL AMOUNT OF BASE
RATE LOANS BUT SUBJECT TO THE AMOUNT OF THE UNUTILIZED PORTION OF THE REVOLVING
CREDIT COMMITMENTS OF THE REVOLVING CREDIT LENDERS AND THE CONDITIONS SET FORTH
IN SECTION 4.02.  IF THE COMPANY FAILS TO SO REIMBURSE SUCH L/C ISSUER BY SUCH
TIME, THE ADMINISTRATIVE AGENT SHALL PROMPTLY NOTIFY EACH REVOLVING CREDIT
LENDER OF THE HONOR DATE, THE AMOUNT OF THE UNREIMBURSED DRAWING (THE
“UNREIMBURSED AMOUNT”), AND THE AMOUNT OF SUCH REVOLVING CREDIT LENDER’S PRO
RATA SHARE THEREOF.  ANY NOTICE GIVEN BY AN L/C ISSUER OR THE ADMINISTRATIVE
AGENT PURSUANT TO THIS SECTION 2.03(C)(I) MAY BE GIVEN BY TELEPHONE IF
IMMEDIATELY CONFIRMED IN WRITING; PROVIDED THAT THE LACK OF SUCH AN IMMEDIATE
CONFIRMATION SHALL NOT AFFECT THE CONCLUSIVENESS OR BINDING EFFECT OF SUCH
NOTICE.

 

(II)  EACH REVOLVING CREDIT LENDER (INCLUDING ANY LENDER ACTING AS AN L/C
ISSUER) SHALL, UPON ANY NOTICE PURSUANT TO SECTION 2.03(C)(I) TO MAKE A
REFUNDING LOAN TO THE COMPANY, MAKE SUCH FUNDS AVAILABLE TO THE ADMINISTRATIVE
AGENT FOR THE ACCOUNT OF THE RELEVANT L/C ISSUER, IN DOLLARS, AT THE
ADMINISTRATIVE AGENT’S OFFICE FOR PAYMENTS NOT LATER THAN 1:00 P.M. ON THE

 

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BUSINESS DAY SPECIFIED IN SUCH NOTICE BY THE COMPANY.  THE ADMINISTRATIVE AGENT
SHALL REMIT THE FUNDS SO RECEIVED TO THE RELEVANT L/C ISSUER.

 

(III)  WITH RESPECT TO ANY UNREIMBURSED AMOUNT, THE COMPANY SHALL BE DEEMED TO
HAVE INCURRED FROM THE RELEVANT L/C ISSUER AN L/C BORROWING IN THE AMOUNT OF THE
UNREIMBURSED AMOUNT THAT IS NOT SO REFINANCED, WHICH L/C BORROWING SHALL BE DUE
AND PAYABLE ON DEMAND (TOGETHER WITH INTEREST) AND SHALL BEAR INTEREST AT THE
DEFAULT RATE.  IN SUCH EVENT, UPON DEMAND BY THE RELEVANT L/C ISSUER (THROUGH
THE ADMINISTRATIVE AGENT), EACH REVOLVING CREDIT LENDER SHALL MAKE FUNDS
AVAILABLE TO THE ADMINISTRATIVE AGENT FOR THE ACCOUNT OF THE RELEVANT L/C
ISSUER, IN DOLLARS, AT THE ADMINISTRATIVE AGENT’S OFFICE FOR PAYMENTS IN AN
AMOUNT EQUAL TO ITS PRO RATA SHARE OF THE UNREIMBURSED AMOUNT NOT LATER THAN
1:00 P.M. ON THE BUSINESS DAY FOLLOWING THE DATE OF SUCH DEMAND, AND SUCH
PAYMENT TO THE ADMINISTRATIVE AGENT FOR THE ACCOUNT OF THE RELEVANT L/C ISSUER
SHALL BE DEEMED PAYMENT IN RESPECT OF ITS PARTICIPATION IN SUCH L/C BORROWING
AND SHALL CONSTITUTE AN L/C ADVANCE FROM SUCH LENDER IN SATISFACTION OF ITS
PARTICIPATION OBLIGATION UNDER THIS SECTION 2.03.

 

(IV)  UNTIL EACH REVOLVING CREDIT LENDER FUNDS ITS L/C ADVANCE PURSUANT TO THIS
SECTION 2.03(C) TO REIMBURSE THE RELEVANT L/C ISSUER FOR ANY AMOUNT DRAWN UNDER
ANY LETTER OF CREDIT, INTEREST IN RESPECT OF SUCH LENDER’S PRO RATA SHARE OF
SUCH AMOUNT SHALL BE SOLELY FOR THE ACCOUNT OF THE RELEVANT L/C ISSUER.

 

(V)  EACH REVOLVING CREDIT LENDER’S OBLIGATION TO MAKE REFUNDING LOANS OR L/C
ADVANCES TO REIMBURSE AN L/C ISSUER FOR AMOUNTS DRAWN UNDER LETTERS OF CREDIT,
AS CONTEMPLATED BY THIS SECTION 2.03(C), SHALL BE ABSOLUTE AND UNCONDITIONAL AND
SHALL NOT BE AFFECTED BY ANY CIRCUMSTANCE, INCLUDING (A) ANY SETOFF,
COUNTERCLAIM, RECOUPMENT, DEFENSE OR OTHER RIGHT WHICH SUCH LENDER MAY HAVE
AGAINST THE RELEVANT L/C ISSUER, THE COMPANY OR ANY OTHER PERSON FOR ANY REASON
WHATSOEVER; (B) THE OCCURRENCE OR CONTINUANCE OF A DEFAULT, OR (C) ANY OTHER
OCCURRENCE, EVENT OR CONDITION, WHETHER OR NOT SIMILAR TO ANY OF THE FOREGOING;
PROVIDED THAT EACH REVOLVING CREDIT LENDER’S OBLIGATION TO MAKE REFUNDING LOANS
PURSUANT TO THIS SECTION 2.03(C) IS SUBJECT TO THE CONDITIONS SET FORTH IN
SECTION 4.02.  NO SUCH MAKING OF AN L/C ADVANCE SHALL RELIEVE OR OTHERWISE
IMPAIR THE OBLIGATION OF THE COMPANY TO REIMBURSE THE RELEVANT L/C ISSUER FOR
THE AMOUNT OF ANY PAYMENT MADE BY SUCH L/C ISSUER UNDER ANY LETTER OF CREDIT,
TOGETHER WITH INTEREST AS PROVIDED HEREIN.

 

(VI)  IF ANY REVOLVING CREDIT LENDER FAILS TO MAKE AVAILABLE TO THE
ADMINISTRATIVE AGENT FOR THE ACCOUNT OF THE RELEVANT L/C ISSUER ANY AMOUNT
REQUIRED TO BE PAID BY SUCH LENDER PURSUANT TO THE FOREGOING PROVISIONS OF THIS
SECTION 2.03(C) BY THE TIME SPECIFIED IN SECTION 2.03(C)(III), SUCH L/C ISSUER
SHALL BE ENTITLED TO RECOVER FROM SUCH LENDER (ACTING THROUGH THE ADMINISTRATIVE
AGENT), ON DEMAND, SUCH AMOUNT WITH INTEREST THEREON FOR THE PERIOD FROM THE
DATE SUCH PAYMENT IS REQUIRED TO THE DATE ON WHICH SUCH PAYMENT IS IMMEDIATELY
AVAILABLE TO SUCH L/C ISSUER AT A RATE PER ANNUM EQUAL TO THE FEDERAL FUNDS RATE
FROM TIME TO TIME IN EFFECT.  A CERTIFICATE OF THE RELEVANT L/C ISSUER SUBMITTED
TO ANY REVOLVING CREDIT LENDER (THROUGH THE ADMINISTRATIVE AGENT) WITH RESPECT
TO ANY AMOUNTS OWING UNDER THIS SECTION 2.03(C)(VI) SHALL BE CONCLUSIVE ABSENT
MANIFEST ERROR.

 

(D)  REPAYMENT OF PARTICIPATIONS.  (I)  IF AT ANY TIME AFTER AN L/C ISSUER HAS
MADE A PAYMENT UNDER ANY LETTER OF CREDIT AND HAS RECEIVED FROM ANY REVOLVING
CREDIT LENDER SUCH LENDER’S L/C ADVANCE IN RESPECT OF SUCH PAYMENT IN ACCORDANCE
WITH SECTION 2.03(C), THE ADMINISTRATIVE AGENT RECEIVES FOR THE ACCOUNT OF SUCH
L/C ISSUER ANY PAYMENT IN RESPECT OF THE RELATED UNREIMBURSED AMOUNT OR INTEREST
THEREON (WHETHER DIRECTLY FROM THE COMPANY OR OTHERWISE, INCLUDING PROCEEDS OF
CASH COLLATERAL APPLIED THERETO BY THE ADMINISTRATIVE AGENT),

 

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THE ADMINISTRATIVE AGENT WILL DISTRIBUTE TO SUCH LENDER ITS PRO RATA SHARE
THEREOF (APPROPRIATELY ADJUSTED, IN THE CASE OF INTEREST PAYMENTS, TO REFLECT
THE PERIOD OF TIME DURING WHICH SUCH LENDER’S L/C ADVANCE WAS OUTSTANDING) IN
THE SAME FUNDS AS THOSE RECEIVED BY THE ADMINISTRATIVE AGENT.

 

(II)  IF ANY PAYMENT RECEIVED BY THE ADMINISTRATIVE AGENT FOR THE ACCOUNT OF AN
L/C ISSUER PURSUANT TO SECTION 2.03(C) IS REQUIRED TO BE RETURNED UNDER ANY OF
THE CIRCUMSTANCES DESCRIBED IN SECTION 10.06 (INCLUDING PURSUANT TO ANY
SETTLEMENT ENTERED INTO BY SUCH L/C ISSUER IN ITS DISCRETION), EACH REVOLVING
CREDIT LENDER SHALL PAY TO THE ADMINISTRATIVE AGENT FOR THE ACCOUNT OF SUCH L/C
ISSUER ITS PRO RATA SHARE THEREOF ON DEMAND OF THE ADMINISTRATIVE AGENT, PLUS
INTEREST THEREON FROM THE DATE OF SUCH DEMAND TO THE DATE SUCH AMOUNT IS
RETURNED BY SUCH LENDER, AT A RATE PER ANNUM EQUAL TO THE FEDERAL FUNDS RATE
FROM TIME TO TIME IN EFFECT.

 

(E)  OBLIGATIONS ABSOLUTE.  THE OBLIGATION OF THE COMPANY TO REIMBURSE THE
RELEVANT L/C ISSUER FOR EACH DRAWING UNDER EACH LETTER OF CREDIT ISSUED BY IT
AND TO REPAY EACH L/C BORROWING SHALL BE ABSOLUTE, UNCONDITIONAL AND
IRREVOCABLE, AND SHALL BE PAID STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT UNDER ALL CIRCUMSTANCES, INCLUDING THE FOLLOWING:

 

(I)  ANY LACK OF VALIDITY OR ENFORCEABILITY OF SUCH LETTER OF CREDIT, THIS
AGREEMENT, OR ANY OTHER AGREEMENT OR INSTRUMENT RELATING THERETO;

 

(II)  THE EXISTENCE OF ANY CLAIM, COUNTERCLAIM, SETOFF, DEFENSE OR OTHER RIGHT
THAT ANY LOAN PARTY MAY HAVE AT ANY TIME AGAINST ANY BENEFICIARY OR ANY
TRANSFEREE OF SUCH LETTER OF CREDIT (OR ANY PERSON FOR WHOM ANY SUCH BENEFICIARY
OR ANY SUCH TRANSFEREE MAY BE ACTING), THE RELEVANT L/C ISSUER OR ANY OTHER
PERSON, WHETHER IN CONNECTION WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREBY OR BY SUCH LETTER OF CREDIT OR ANY AGREEMENT OR INSTRUMENT RELATING
THERETO, OR ANY UNRELATED TRANSACTION;

 

(III)  ANY DRAFT, DEMAND, CERTIFICATE OR OTHER DOCUMENT PRESENTED UNDER SUCH
LETTER OF CREDIT PROVING TO BE FORGED, FRAUDULENT, INVALID OR INSUFFICIENT IN
ANY RESPECT OR ANY STATEMENT THEREIN BEING UNTRUE OR INACCURATE IN ANY RESPECT;
OR ANY LOSS OR DELAY IN THE TRANSMISSION OR OTHERWISE OF ANY DOCUMENT REQUIRED
IN ORDER TO MAKE A DRAWING UNDER SUCH LETTER OF CREDIT;

 

(IV)  ANY PAYMENT BY THE RELEVANT L/C ISSUER UNDER SUCH LETTER OF CREDIT AGAINST
PRESENTATION OF A DRAFT OR CERTIFICATE THAT DOES NOT STRICTLY COMPLY WITH THE
TERMS OF SUCH LETTER OF CREDIT; OR ANY PAYMENT MADE BY THE RELEVANT L/C ISSUER
UNDER SUCH LETTER OF CREDIT TO ANY PERSON PURPORTING TO BE A TRUSTEE IN
BANKRUPTCY, DEBTOR-IN-POSSESSION, ASSIGNEE FOR THE BENEFIT OF CREDITORS,
LIQUIDATOR, RECEIVER OR OTHER REPRESENTATIVE OF OR SUCCESSOR TO ANY BENEFICIARY
OR ANY TRANSFEREE OF SUCH LETTER OF CREDIT, INCLUDING ANY ARISING IN CONNECTION
WITH ANY PROCEEDING UNDER ANY DEBTOR RELIEF LAW;

 

(V)  ANY EXCHANGE, RELEASE OR NONPERFECTION OF ANY COLLATERAL, OR ANY RELEASE OR
AMENDMENT OR WAIVER OF OR CONSENT TO DEPARTURE FROM THE GUARANTEE UNDER THE
GUARANTEE AND SECURITY AGREEMENT OR ANY OTHER GUARANTEE, FOR ALL OR ANY OF THE
OBLIGATIONS ANY LOAN PARTY IN RESPECT OF SUCH LETTER OF CREDIT; OR

 

(VI)  ANY OTHER CIRCUMSTANCE OR HAPPENING WHATSOEVER, WHETHER OR NOT SIMILAR TO
ANY OF THE FOREGOING, INCLUDING ANY OTHER CIRCUMSTANCE THAT MIGHT OTHERWISE
CONSTITUTE A DEFENSE AVAILABLE TO, OR A DISCHARGE OF, ANY LOAN PARTY;

 

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provided that the foregoing shall not excuse any L/C Issuer from liability to
the Company to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are waived by the Company to the extent
permitted by applicable Law) suffered by the Company that are caused by such L/C
Issuer’s gross negligence or willful misconduct when determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof.

 

(F)  ROLE OF L/C ISSUERS.  EACH LENDER AND THE COMPANY AGREE THAT, IN PAYING ANY
DRAWING UNDER A LETTER OF CREDIT, THE RELEVANT L/C ISSUER SHALL NOT HAVE ANY
RESPONSIBILITY TO OBTAIN ANY DOCUMENT (OTHER THAN ANY SIGHT DRAFT, CERTIFICATES
AND DOCUMENTS EXPRESSLY REQUIRED BY THE LETTER OF CREDIT) OR TO ASCERTAIN OR
INQUIRE AS TO THE VALIDITY OR ACCURACY OF ANY SUCH DOCUMENT OR THE AUTHORITY OF
THE PERSON EXECUTING OR DELIVERING ANY SUCH DOCUMENT.  NONE OF THE L/C ISSUERS,
ANY AGENT-RELATED PERSON NOR ANY OF THE RESPECTIVE CORRESPONDENTS, PARTICIPANTS
OR ASSIGNEES OF ANY L/C ISSUER SHALL BE LIABLE TO ANY LENDER FOR (I) ANY ACTION
TAKEN OR OMITTED IN CONNECTION HEREWITH AT THE REQUEST OR WITH THE APPROVAL OF
THE LENDERS OR THE REQUIRED LENDERS, AS APPLICABLE; (II) ANY ACTION TAKEN OR
OMITTED IN THE ABSENCE OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; OR (III) THE
DUE EXECUTION, EFFECTIVENESS, VALIDITY OR ENFORCEABILITY OF ANY DOCUMENT OR
INSTRUMENT RELATED TO ANY LETTER OF CREDIT OR LETTER OF CREDIT APPLICATION.  THE
COMPANY HEREBY ASSUMES ALL RISKS OF THE ACTS OR OMISSIONS OF ANY BENEFICIARY OR
TRANSFEREE WITH RESPECT TO ITS USE OF ANY LETTER OF CREDIT; PROVIDED THAT THIS
ASSUMPTION IS NOT INTENDED TO, AND SHALL NOT, PRECLUDE THE COMPANY’S PURSUING
SUCH RIGHTS AND REMEDIES AS IT MAY HAVE AGAINST THE BENEFICIARY OR TRANSFEREE AT
LAW OR UNDER ANY OTHER AGREEMENT.  NONE OF THE L/C ISSUERS, ANY AGENT-RELATED
PERSON, NOR ANY OF THE RESPECTIVE CORRESPONDENTS, PARTICIPANTS OR ASSIGNEES OF
ANY L/C ISSUER, SHALL BE LIABLE OR RESPONSIBLE FOR ANY OF THE MATTERS DESCRIBED
IN CLAUSES (I) THROUGH (VI) OF SECTION 2.03(E); PROVIDED THAT ANYTHING IN SUCH
CLAUSES TO THE CONTRARY NOTWITHSTANDING, THE COMPANY MAY HAVE A CLAIM AGAINST AN
L/C ISSUER, AND SUCH L/C ISSUER MAY BE LIABLE TO THE COMPANY, TO THE EXTENT, BUT
ONLY TO THE EXTENT, OF ANY DIRECT, AS OPPOSED TO CONSEQUENTIAL OR EXEMPLARY,
DAMAGES SUFFERED BY THE COMPANY WHICH THE COMPANY PROVES WERE CAUSED BY SUCH L/C
ISSUER’S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OR SUCH L/C ISSUER’S WILLFUL OR
GROSSLY NEGLIGENT FAILURE TO PAY UNDER ANY LETTER OF CREDIT AFTER THE
PRESENTATION TO IT BY THE BENEFICIARY OF A SIGHT DRAFT AND
CERTIFICATE(S) STRICTLY COMPLYING WITH THE TERMS AND CONDITIONS OF A LETTER OF
CREDIT.  IN FURTHERANCE AND NOT IN LIMITATION OF THE FOREGOING, EACH L/C ISSUER
MAY ACCEPT DOCUMENTS THAT APPEAR ON THEIR FACE TO BE IN ORDER, WITHOUT
RESPONSIBILITY FOR FURTHER INVESTIGATION, REGARDLESS OF ANY NOTICE OR
INFORMATION TO THE CONTRARY, AND NO L/C ISSUER SHALL BE RESPONSIBLE FOR THE
VALIDITY OR SUFFICIENCY OF ANY INSTRUMENT TRANSFERRING OR ASSIGNING OR
PURPORTING TO TRANSFER OR ASSIGN A LETTER OF CREDIT OR THE RIGHTS OR BENEFITS
THEREUNDER OR PROCEEDS THEREOF, IN WHOLE OR IN PART, WHICH MAY PROVE TO BE
INVALID OR INEFFECTIVE FOR ANY REASON.

 

(G)  CASH COLLATERAL.  (I) IF AS OF THE LETTER OF CREDIT EXPIRATION DATE, ANY
LETTER OF CREDIT MAY FOR ANY REASON REMAIN OUTSTANDING AND PARTIALLY OR WHOLLY
UNDRAWN, (II) IF ANY EVENT OF DEFAULT OCCURS AND IS CONTINUING AND THE
ADMINISTRATIVE AGENT OR THE REQUIRED LENDERS, AS APPLICABLE, REQUIRE THE COMPANY
TO CASH COLLATERALIZE THE L/C OBLIGATIONS PURSUANT TO SECTION 8.02(C) OR
(III) AN EVENT OF DEFAULT SET FORTH UNDER SECTION 8.01(F) OCCURS AND IS
CONTINUING, THEN THE COMPANY SHALL CASH COLLATERALIZE THE THEN OUTSTANDING
AMOUNT OF SUCH LETTER OF CREDIT (IN THE CASE OF CLAUSE (I) ABOVE) OR OF ALL L/C
OBLIGATIONS (IN THE CASE OF CLAUSES (II) AND (III) ABOVE) (IN EACH CASE, IN AN
AMOUNT EQUAL TO 102% OF SUCH OUTSTANDING AMOUNT), AND SHALL DO SO NOT LATER THAN
2:00 P.M., NEW YORK CITY TIME, ON (X) IN THE CASE OF THE IMMEDIATELY PRECEDING
CLAUSES (I) AND (II), (1) THE BUSINESS DAY THAT THE COMPANY RECEIVES NOTICE
THEREOF, IF SUCH NOTICE IS RECEIVED ON SUCH DAY PRIOR TO 12:00 NOON, NEW YORK
CITY TIME (WHICH NOTICE, IN THE CASE OF CLAUSE (I) ABOVE, SHALL NOT BE GIVEN
PRIOR TO THE LETTER OF CREDIT EXPIRATION DATE), OR (2) IF CLAUSE (1) ABOVE DOES
NOT APPLY, THE BUSINESS DAY IMMEDIATELY FOLLOWING THE DAY THAT THE COMPANY
RECEIVES SUCH

 

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NOTICE AND (Y) IN THE CASE OF THE IMMEDIATELY PRECEDING CLAUSE (III), THE
BUSINESS DAY ON WHICH AN EVENT OF DEFAULT SET FORTH UNDER SECTION 8.01(F) OCCURS
OR, IF SUCH DAY IS NOT A BUSINESS DAY, THE BUSINESS DAY IMMEDIATELY SUCCEEDING
SUCH DAY.  FOR PURPOSES HEREOF, “CASH COLLATERALIZE” MEANS TO PLEDGE AND DEPOSIT
WITH OR DELIVER TO THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE RELEVANT L/C
ISSUER AND THE LENDERS, AS COLLATERAL FOR THE L/C OBLIGATIONS, CASH OR DEPOSIT
ACCOUNT BALANCES (“CASH COLLATERAL”) PURSUANT TO DOCUMENTATION IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT AND THE RELEVANT
L/C ISSUER (WHICH DOCUMENTS ARE HEREBY CONSENTED TO BY THE LENDERS). 
DERIVATIVES OF SUCH TERM HAVE CORRESPONDING MEANINGS.  THE COMPANY HEREBY GRANTS
TO THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE L/C ISSUERS AND THE LENDERS,
A SECURITY INTEREST IN ALL SUCH CASH, DEPOSIT ACCOUNTS AND ALL BALANCES THEREIN
AND ALL PROCEEDS OF THE FOREGOING.  CASH COLLATERAL SHALL BE MAINTAINED IN
BLOCKED ACCOUNTS AT JPMORGAN CHASE BANK AND MAY BE INVESTED IN READILY AVAILABLE
CASH EQUIVALENTS.  IF AT ANY TIME THE ADMINISTRATIVE AGENT DETERMINES THAT ANY
FUNDS HELD AS CASH COLLATERAL ARE SUBJECT TO ANY RIGHT OR CLAIM OF ANY PERSON
OTHER THAN THE ADMINISTRATIVE AGENT (ON BEHALF OF THE SECURED PARTIES) OR THAT
THE TOTAL AMOUNT OF SUCH FUNDS IS LESS THAN 102% OF THE AGGREGATE OUTSTANDING
AMOUNT OF ALL L/C OBLIGATIONS, THE COMPANY WILL, FORTHWITH UPON DEMAND BY THE
ADMINISTRATIVE AGENT, PAY TO THE ADMINISTRATIVE AGENT, AS ADDITIONAL FUNDS TO BE
DEPOSITED AND HELD IN THE DEPOSIT ACCOUNTS AT JPMORGAN CHASE BANK AS AFORESAID,
AN AMOUNT EQUAL TO THE EXCESS OF (A) 102% OF SUCH AGGREGATE OUTSTANDING AMOUNT
OVER (B) THE TOTAL AMOUNT OF FUNDS, IF ANY, THEN HELD AS CASH COLLATERAL THAT
THE ADMINISTRATIVE AGENT REASONABLY DETERMINES TO BE FREE AND CLEAR OF ANY SUCH
RIGHT AND CLAIM.  UPON THE DRAWING OF ANY LETTER OF CREDIT FOR WHICH FUNDS ARE
ON DEPOSIT AS CASH COLLATERAL, SUCH FUNDS SHALL BE APPLIED, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, TO REIMBURSE THE RELEVANT L/C ISSUER.  TO THE
EXTENT THE AMOUNT OF ANY CASH COLLATERAL EXCEEDS 102% OF THE THEN OUTSTANDING
AMOUNT OF SUCH L/C OBLIGATIONS AND SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING, THE EXCESS SHALL BE REFUNDED TO THE COMPANY.  IF THE COMPANY
IS REQUIRED TO PROVIDE AN AMOUNT OF CASH COLLATERAL HEREUNDER AS A RESULT OF THE
OCCURRENCE OF AN EVENT OF DEFAULT, SUCH AMOUNT PLUS ANY ACCRUED INTEREST OR
REALIZED PROFITS WITH RESPECT TO SUCH AMOUNT (TO THE EXTENT NOT APPLIED AS
AFORESAID) SHALL BE RETURNED TO THE COMPANY WITHIN TWO BUSINESS DAYS AFTER ALL
EVENTS OF DEFAULT HAVE BEEN CURED OR WAIVED.  NOTWITHSTANDING THE OCCURRENCE OF
THE LETTER OF CREDIT EXPIRATION DATE, ANY FULL OR PARTIAL FAILURE BY THE COMPANY
TO CASH COLLATERALIZE THE OUTSTANDING AMOUNT OF ANY LETTER OF CREDIT IN THE CASE
OF CLAUSE (I) ABOVE SHALL OPERATE TO CONTINUE THE SEVERAL OBLIGATIONS OF THE
REVOLVING CREDIT LENDERS TO PARTICIPATE IN SUCH LETTER OF CREDIT (X) TO THE
EXTENT SO NOT CASH COLLATERALIZED AND (Y) TO THE EXTENT ANY SUCH CASH COLLATERAL
IS REQUIRED TO BE RETURNED TO THE COMPANY UNDER ANY OF THE CIRCUMSTANCES
DESCRIBED IN SECTION 10.06 (INCLUDING PURSUANT TO ANY SETTLEMENT ENTERED INTO BY
SUCH L/C ISSUER IN ITS DISCRETION), AND UPON ANY DRAWING UNDER SUCH LETTER OF
CREDIT, SUCH PARTICIPATIONS BY THE REVOLVING CREDIT LENDERS IN ANY UNREIMBURSED
AMOUNT SHALL BE DEEMED TO BE L/C BORROWINGS AND L/C ADVANCES PURSUANT TO THIS
SECTION 2.03.

 

(H)  LETTER OF CREDIT FEES.  THE COMPANY SHALL PAY TO THE ADMINISTRATIVE AGENT
FOR THE ACCOUNT OF EACH REVOLVING CREDIT LENDER IN ACCORDANCE WITH ITS PRO RATA
SHARE A LETTER OF CREDIT FEE FOR EACH LETTER OF CREDIT ISSUED PURSUANT TO THIS
AGREEMENT EQUAL TO THE APPLICABLE RATE TIMES THE DAILY MAXIMUM AMOUNT THEN
AVAILABLE TO BE DRAWN UNDER SUCH LETTER OF CREDIT (WHETHER OR NOT SUCH MAXIMUM
AMOUNT IS THEN IN EFFECT UNDER SUCH LETTER OF CREDIT IF SUCH MAXIMUM AMOUNT
INCREASES PERIODICALLY PURSUANT TO THE TERMS OF SUCH LETTER OF CREDIT).  SUCH
LETTER OF CREDIT FEES SHALL BE COMPUTED ON A QUARTERLY BASIS IN ARREARS.  SUCH
LETTER OF CREDIT FEES SHALL BE DUE AND PAYABLE IN DOLLARS ON THE FIRST BUSINESS
DAY AFTER THE END OF EACH MARCH, JUNE, SEPTEMBER AND DECEMBER, COMMENCING WITH
THE FIRST SUCH DATE TO OCCUR AFTER THE ISSUANCE OF SUCH LETTER OF CREDIT, ON THE
LETTER OF CREDIT EXPIRATION DATE AND THEREAFTER ON DEMAND.  IF THERE IS ANY
CHANGE IN THE APPLICABLE RATE DURING ANY QUARTER, THE DAILY MAXIMUM AMOUNT OF
EACH LETTER OF CREDIT

 

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SHALL BE COMPUTED AND MULTIPLIED BY THE APPLICABLE RATE SEPARATELY FOR EACH
PERIOD DURING SUCH QUARTER THAT SUCH APPLICABLE RATE WAS IN EFFECT.

 

(I)  FRONTING FEE AND DOCUMENTARY AND PROCESSING CHARGES PAYABLE TO L/C
ISSUERS.  THE COMPANY SHALL PAY DIRECTLY TO EACH L/C ISSUER FOR ITS OWN ACCOUNT
A FRONTING FEE WITH RESPECT TO EACH LETTER OF CREDIT ISSUED BY IT EQUAL TO
0.125% PER ANNUM OF THE DAILY MAXIMUM AMOUNT THEN AVAILABLE TO BE DRAWN UNDER
SUCH LETTER OF CREDIT (WHETHER OR NOT SUCH MAXIMUM AMOUNT IS THEN IN EFFECT
UNDER SUCH LETTER OF CREDIT IF SUCH MAXIMUM AMOUNT INCREASES PERIODICALLY
PURSUANT TO THE TERMS OF SUCH LETTER OF CREDIT).  SUCH FRONTING FEES SHALL BE
COMPUTED ON A QUARTERLY BASIS IN ARREARS.  SUCH FRONTING FEES SHALL BE DUE AND
PAYABLE ON THE FIRST BUSINESS DAY AFTER THE END OF EACH MARCH, JUNE,
SEPTEMBER AND DECEMBER, COMMENCING WITH THE FIRST SUCH DATE TO OCCUR AFTER THE
ISSUANCE OF SUCH LETTER OF CREDIT, ON THE LETTER OF CREDIT EXPIRATION DATE AND
THEREAFTER ON DEMAND.  IN ADDITION, THE COMPANY SHALL PAY DIRECTLY TO EACH L/C
ISSUER FOR ITS OWN ACCOUNT THE CUSTOMARY ISSUANCE, PRESENTATION, AMENDMENT AND
OTHER PROCESSING FEES, AND OTHER STANDARD COSTS AND CHARGES, OF SUCH L/C ISSUER
RELATING TO LETTERS OF CREDIT AS FROM TIME TO TIME IN EFFECT.  SUCH CUSTOMARY
FEES AND STANDARD COSTS AND CHARGES ARE DUE AND PAYABLE WITHIN TEN (10) BUSINESS
DAYS OF DEMAND AND ARE NONREFUNDABLE.

 

(J)  CONFLICT WITH LETTER OF CREDIT APPLICATION.  NOTWITHSTANDING ANYTHING ELSE
TO THE CONTRARY IN THIS AGREEMENT, IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS HEREOF AND THE TERMS OF ANY LETTER OF CREDIT APPLICATION, THE TERMS HEREOF
SHALL CONTROL.

 

(K)  ADDITION OF AN L/C ISSUER.  A REVOLVING CREDIT LENDER MAY BECOME AN
ADDITIONAL L/C ISSUER HEREUNDER PURSUANT TO A WRITTEN AGREEMENT AMONG THE
COMPANY, THE ADMINISTRATIVE AGENT AND SUCH REVOLVING CREDIT LENDER.  THE
ADMINISTRATIVE AGENT SHALL NOTIFY THE REVOLVING CREDIT LENDERS OF ANY SUCH
ADDITIONAL L/C ISSUER.

 

(L)  CONTINUING AGREEMENT.  PRIOR TO THE ISSUANCE OR RENEWAL OF ANY LETTER OF
CREDIT FOR WHICH JPMORGAN CHASE BANK WILL ACT AS L/C ISSUER, THE COMPANY SHALL
HAVE EXECUTED AND DELIVERED TO JPMORGAN CHASE BANK THE CONTINUING AGREEMENT.

 

SECTION 2.04.  Swing Line Loans.  (a)  The Swing Line.  Subject to the terms and
conditions set forth herein, the Swing Line Lender agrees to make loans (each
such loan, a “Swing Line Loan”) to the Company from time to time on any Business
Day (other than the Closing Date) until the Maturity Date in an aggregate amount
not to exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Pro Rata Share of the Outstanding Amount of Revolving Credit Loans and L/C
Obligations of the Lender acting as Swing Line Lender, may exceed the amount of
such Lender’s Revolving Credit Commitment; provided that, after giving effect to
any Swing Line Loan, the aggregate Outstanding Amount of the Revolving Credit
Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount
of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Credit
Commitment then in effect; provided further that, the Company shall not use the
proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. 
Within the foregoing limits, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.04, prepay under
Section 2.05, and reborrow under this Section 2.04.  Each Swing Line Loan shall
be a Base Rate Loan.  Immediately upon the making of a Swing Line Loan, each
Revolving Credit Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Lender’s Pro Rata Share times the amount of such Swing Line Loan.

 

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(B)  BORROWING PROCEDURES.  EACH SWING LINE BORROWING SHALL BE MADE UPON THE
COMPANY’S NOTICE TO THE SWING LINE LENDER AND THE ADMINISTRATIVE AGENT, WHICH
MAY BE GIVEN BY TELEPHONE.  EACH SUCH NOTICE MUST BE RECEIVED BY THE SWING LINE
LENDER AND THE ADMINISTRATIVE AGENT NOT LATER THAN 2:00 P.M. ON THE REQUESTED
BORROWING DATE, AND SHALL SPECIFY (I) THE AMOUNT TO BE BORROWED, WHICH SHALL BE
A MINIMUM OF $250,000, AND (II) THE REQUESTED BORROWING DATE, WHICH SHALL BE A
BUSINESS DAY.  EACH SUCH TELEPHONIC NOTICE MUST BE CONFIRMED PROMPTLY BY
DELIVERY TO THE SWING LINE LENDER AND THE ADMINISTRATIVE AGENT OF A WRITTEN
SWING LINE LOAN NOTICE, APPROPRIATELY COMPLETED AND SIGNED BY A RESPONSIBLE
OFFICER OF THE COMPANY.  PROMPTLY AFTER RECEIPT BY THE SWING LINE LENDER OF ANY
TELEPHONIC SWING LINE LOAN NOTICE, THE SWING LINE LENDER WILL CONFIRM WITH THE
ADMINISTRATIVE AGENT (BY TELEPHONE OR IN WRITING) THAT THE ADMINISTRATIVE AGENT
HAS ALSO RECEIVED SUCH SWING LINE LOAN NOTICE AND, IF NOT, THE SWING LINE LENDER
WILL NOTIFY THE ADMINISTRATIVE AGENT (BY TELEPHONE OR IN WRITING) OF THE
CONTENTS THEREOF.  UNLESS (A) THE MAKING OF SUCH SWING LINE LOAN WOULD NOT BE
PERMITTED PURSUANT TO THE PROVISO TO THE FIRST SENTENCE OF SECTION 2.04(A) OR
(B) ONE OR MORE OF THE APPLICABLE CONDITIONS SPECIFIED IN SECTION 4.02 IS NOT
THEN SATISFIED, THEN, SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THE SWING LINE
LENDER WILL, NOT LATER THAN 4:00 P.M. ON THE BORROWING DATE SPECIFIED IN SUCH
SWING LINE LOAN NOTICE, MAKE THE AMOUNT OF ITS SWING LINE LOAN AVAILABLE TO THE
COMPANY.

 

(C)  REFINANCING OF SWING LINE LOANS.  (I)  IN ORDER TO REIMBURSE ANY SUCH SWING
LINE LOANS, THE COMPANY AT ANY TIME MAY REQUEST THAT EACH REVOLVING CREDIT
LENDER MAKE A REVOLVING CREDIT LOAN (WHICH SHALL BE A BASE RATE LOAN) IN AN
AMOUNT EQUAL TO SUCH LENDER’S PRO RATA SHARE OF THE AMOUNT OF SWING LINE LOANS
THEN OUTSTANDING.  SUCH REQUEST SHALL BE MADE IN ACCORDANCE WITH THE
REQUIREMENTS OF SECTION 2.02, WITHOUT REGARD TO THE MINIMUM AND MULTIPLES
SPECIFIED THEREIN FOR THE PRINCIPAL AMOUNT OF BASE RATE LOANS, BUT SUBJECT TO
THE UNUTILIZED PORTION OF THE AGGREGATE REVOLVING CREDIT COMMITMENTS AND THE
CONDITIONS SET FORTH IN SECTION 4.02.  EACH REVOLVING CREDIT LENDER SHALL MAKE
AN AMOUNT EQUAL TO ITS PRO RATA SHARE OF THE AMOUNT SPECIFIED IN SUCH COMMITTED
LOAN NOTICE AVAILABLE TO THE ADMINISTRATIVE AGENT IN IMMEDIATELY AVAILABLE FUNDS
FOR THE ACCOUNT OF THE SWING LINE LENDER AT THE ADMINISTRATIVE AGENT’S OFFICE
NOT LATER THAN 1:00 P.M. ON THE DAY SPECIFIED IN SUCH COMMITTED LOAN NOTICE. 
THE ADMINISTRATIVE AGENT SHALL REMIT THE FUNDS SO RECEIVED TO THE SWING LINE
LENDER.

 

(II)  IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, OR IF FOR ANY
REASON ANY SWING LINE LOAN CANNOT BE REFINANCED BY SUCH A REVOLVING CREDIT
BORROWING IN ACCORDANCE WITH SECTION 2.04(C)(I), THEN UPON NOTICE BY THE
ADMINISTRATIVE AGENT TO THE REVOLVING CREDIT LENDERS EACH OF THE REVOLVING
CREDIT LENDERS SHALL FUND ITS RISK PARTICIPATION IN THE RELEVANT SWING LINE LOAN
BY MAKING AN AMOUNT EQUAL TO ITS PRO RATA SHARE OF THE AMOUNT OF SUCH SWING LINE
LOAN AVAILABLE TO THE ADMINISTRATIVE AGENT IN IMMEDIATELY AVAILABLE FUNDS FOR
THE ACCOUNT OF THE SWING LINE LENDER AT THE ADMINISTRATIVE AGENT’S OFFICE NOT
LATER THAN 1:00 P.M. ON THE DAY SUCH EVENT OF DEFAULT OCCURS OR THE DAY
SPECIFIED IN SUCH COMMITTED LOAN NOTICE, AS THE CASE MAY BE.  THE ADMINISTRATIVE
AGENT SHALL REMIT THE FUNDS SO RECEIVED TO THE SWING LINE LENDER.

 

(III)  IF ANY REVOLVING CREDIT LENDER FAILS TO MAKE AVAILABLE TO THE
ADMINISTRATIVE AGENT FOR THE ACCOUNT OF THE SWING LINE LENDER ANY AMOUNT
REQUIRED TO BE PAID BY SUCH LENDER PURSUANT TO THE FOREGOING PROVISIONS OF THIS
SECTION 2.04(C) BY THE TIME SPECIFIED IN SECTION 2.04(C)(I), THE SWING LINE
LENDER SHALL BE ENTITLED TO RECOVER FROM SUCH LENDER (ACTING THROUGH THE
ADMINISTRATIVE AGENT), ON DEMAND, SUCH AMOUNT WITH INTEREST THEREON FOR THE
PERIOD FROM THE DATE SUCH PAYMENT IS REQUIRED TO THE DATE ON WHICH SUCH PAYMENT
IS IMMEDIATELY AVAILABLE TO THE SWING LINE LENDER AT A RATE PER ANNUM EQUAL TO
THE FEDERAL FUNDS RATE FROM TIME TO TIME IN EFFECT.  A CERTIFICATE OF THE SWING
LINE LENDER SUBMITTED TO ANY LENDER (THROUGH THE ADMINISTRATIVE AGENT) WITH
RESPECT TO ANY AMOUNTS OWING UNDER THIS CLAUSE (III) SHALL BE CONCLUSIVE ABSENT
MANIFEST ERROR.

 

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(IV)  EACH REVOLVING CREDIT LENDER’S OBLIGATION TO MAKE REVOLVING CREDIT LOANS
OR TO PURCHASE AND FUND RISK PARTICIPATIONS IN SWING LINE LOANS PURSUANT TO THIS
SECTION 2.04(C) SHALL BE ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE AFFECTED BY
ANY CIRCUMSTANCE, INCLUDING (A) ANY SETOFF, COUNTERCLAIM, RECOUPMENT, DEFENSE OR
OTHER RIGHT WHICH SUCH LENDER MAY HAVE AGAINST THE SWING LINE LENDER, THE
COMPANY OR ANY OTHER PERSON FOR ANY REASON WHATSOEVER, (B) THE OCCURRENCE OR
CONTINUANCE OF A DEFAULT, OR (C) ANY OTHER OCCURRENCE, EVENT OR CONDITION,
WHETHER OR NOT SIMILAR TO ANY OF THE FOREGOING; PROVIDED THAT EACH REVOLVING
CREDIT LENDER’S OBLIGATION TO MAKE REVOLVING CREDIT LOANS PURSUANT TO THIS
SECTION 2.04(C) IS SUBJECT TO THE CONDITIONS SET FORTH IN SECTION 4.02.  NO SUCH
FUNDING OF RISK PARTICIPATIONS SHALL RELIEVE OR OTHERWISE IMPAIR THE OBLIGATION
OF THE COMPANY TO REPAY SWING LINE LOANS, TOGETHER WITH INTEREST AS PROVIDED
HEREIN.

 

(D)  REPAYMENT OF PARTICIPATIONS.  (I)  AT ANY TIME AFTER ANY REVOLVING CREDIT
LENDER HAS PURCHASED AND FUNDED A RISK PARTICIPATION IN A SWING LINE LOAN, IF
THE SWING LINE LENDER RECEIVES ANY PAYMENT ON ACCOUNT OF SUCH SWING LINE LOAN,
THE SWING LINE LENDER WILL DISTRIBUTE TO SUCH LENDER ITS PRO RATA SHARE OF SUCH
PAYMENT (APPROPRIATELY ADJUSTED, IN THE CASE OF INTEREST PAYMENTS, TO REFLECT
THE PERIOD OF TIME DURING WHICH SUCH LENDER’S RISK PARTICIPATION WAS FUNDED) IN
THE SAME FUNDS AS THOSE RECEIVED BY THE SWING LINE LENDER.

 

(II)  IF ANY PAYMENT RECEIVED BY THE SWING LINE LENDER IN RESPECT OF PRINCIPAL
OR INTEREST ON ANY SWING LINE LOAN IS REQUIRED TO BE RETURNED BY THE SWING LINE
LENDER UNDER ANY OF THE CIRCUMSTANCES DESCRIBED IN SECTION 10.06 (INCLUDING
PURSUANT TO ANY SETTLEMENT ENTERED INTO BY THE SWING LINE LENDER IN ITS
DISCRETION), EACH REVOLVING CREDIT LENDER SHALL PAY TO THE SWING LINE LENDER ITS
PRO RATA SHARE THEREOF ON DEMAND OF THE ADMINISTRATIVE AGENT, PLUS INTEREST
THEREON FROM THE DATE OF SUCH DEMAND TO THE DATE SUCH AMOUNT IS RETURNED, AT A
RATE PER ANNUM EQUAL TO THE FEDERAL FUNDS RATE.  THE ADMINISTRATIVE AGENT WILL
MAKE SUCH DEMAND UPON THE REQUEST OF THE SWING LINE LENDER.

 

(E)  INTEREST FOR ACCOUNT OF SWING LINE LENDER.  THE SWING LINE LENDER SHALL BE
RESPONSIBLE FOR INVOICING THE COMPANY FOR INTEREST ON THE SWING LINE LOANS. 
UNTIL EACH REVOLVING CREDIT LENDER FUNDS ITS BASE RATE LOAN OR RISK
PARTICIPATION PURSUANT TO THIS SECTION 2.04 TO REFINANCE SUCH LENDER’S PRO RATA
SHARE OF ANY SWING LINE LOAN, INTEREST IN RESPECT OF SUCH PRO RATA SHARE SHALL
BE SOLELY FOR THE ACCOUNT OF THE SWING LINE LENDER.

 

(F)  PAYMENTS DIRECTLY TO SWING LINE LENDER.  THE COMPANY SHALL MAKE ALL
PAYMENTS OF PRINCIPAL AND INTEREST IN RESPECT OF THE SWING LINE LOANS DIRECTLY
TO THE SWING LINE LENDER.

 

SECTION 2.05.  Prepayments.  (a)  Optional.  (i)  Any Borrower may, upon notice
to the Administrative Agent, at any time or from time to time voluntarily prepay
Term Loans and Revolving Credit Loans in whole or in part without premium or
penalty; provided that (1) such notice must be received by the Administrative
Agent not later than 12:30 p.m. (New York time or London time in the case of
Loans denominated in an Alternative Currency) (A) three (3) Business Days prior
to any date of prepayment of Eurocurrency Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (2) any prepayment of Eurocurrency Rate Loans
shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof (or comparable amounts determined by the Administrative Agent
in the case of Alternative Currency Loans); and (3) any prepayment of Base Rate
Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$500,000 in excess thereof or, in each case, if less, the entire principal
amount thereof then outstanding.  Each such notice shall specify the date and
amount of such prepayment and the Class(es) and Type(s) of Loans to be prepaid. 
The Administrative Agent will promptly notify each Appropriate Lender of its
receipt of each such notice, and of the amount of such Lender’s Pro Rata Share
of such prepayment.  If such notice is given by a Borrower, such

 

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Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment
of a Eurocurrency Rate Loan shall be accompanied by all accrued interest
thereon, together with any additional amounts required pursuant to
Section 3.05.  Each prepayment of principal of, and interest on, Alternative
Currency Loans shall be made in the relevant Alternative Currency.  Each
prepayment of the Loans pursuant to this Section 2.05(a) shall be paid to the
Appropriate Lenders in accordance with their respective Pro Rata Shares.  Each
prepayment of Term Loans pursuant to this Section 2.05(a) shall be applied to
repayments thereof required pursuant to Section 2.07(a) in the order selected by
the Company.

 

(II)  THE COMPANY MAY, UPON NOTICE TO THE SWING LINE LENDER (WITH A COPY TO THE
ADMINISTRATIVE AGENT), AT ANY TIME OR FROM TIME TO TIME, VOLUNTARILY PREPAY
SWING LINE LOANS IN WHOLE OR IN PART WITHOUT PREMIUM OR PENALTY; PROVIDED THAT
(1) SUCH NOTICE MUST BE RECEIVED BY THE SWING LINE LENDER AND THE ADMINISTRATIVE
AGENT NOT LATER THAN 1:00 P.M. ON THE DATE OF THE PREPAYMENT, AND (2) ANY SUCH
PREPAYMENT SHALL BE IN A MINIMUM PRINCIPAL AMOUNT OF $250,000 OR A WHOLE
MULTIPLE OF $25,000 IN EXCESS THEREOF OR, IF LESS, THE ENTIRE PRINCIPAL AMOUNT
THEREOF THEN OUTSTANDING.  EACH SUCH NOTICE SHALL SPECIFY THE DATE AND AMOUNT OF
SUCH PREPAYMENT.  IF SUCH NOTICE IS GIVEN BY THE COMPANY, THE COMPANY SHALL MAKE
SUCH PREPAYMENT AND THE PAYMENT AMOUNT SPECIFIED IN SUCH NOTICE SHALL BE DUE AND
PAYABLE ON THE DATE SPECIFIED THEREIN.

 

(III)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE
COMPANY MAY RESCIND ANY NOTICE OF PREPAYMENT UNDER SECTION 2.05(A)(I) OR
2.05(A)(II) IF SUCH PREPAYMENT WOULD HAVE RESULTED FROM A REFINANCING OF ALL OR
ANY PORTION OF THE FACILITIES, WHICH REFINANCING SHALL NOT BE CONSUMMATED OR
SHALL OTHERWISE BE DELAYED.

 

(B)  MANDATORY.  (I)  WITHIN TWENTY (20) DAYS AFTER FINANCIAL STATEMENTS ARE
REQUIRED TO BE DELIVERED PURSUANT TO SECTION 6.01(A), THE COMPANY SHALL CAUSE TO
BE PREPAID AN AGGREGATE DOLLAR AMOUNT OF TERM LOANS IN AN AMOUNT EQUAL TO
(A) THE ECF PERCENTAGE OF EXCESS CASH FLOW, IF ANY, FOR THE FISCAL YEAR COVERED
BY SUCH FINANCIAL STATEMENTS (COMMENCING WITH THE FISCAL YEAR ENDED JUNE 30,
2008) MINUS (B) THE SUM OF (I) ALL VOLUNTARY PREPAYMENTS OF TERM LOANS DURING
SUCH FISCAL YEAR AND (II) ALL VOLUNTARY PREPAYMENTS OF REVOLVING CREDIT LOANS
DURING SUCH FISCAL YEAR TO THE EXTENT THE REVOLVING CREDIT COMMITMENTS ARE
PERMANENTLY REDUCED BY THE AMOUNT OF SUCH PAYMENTS.

 

(II)   (A)  IF (X) HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY DISPOSES
OF ANY PROPERTY OR ASSETS (OTHER THAN ANY DISPOSITION OF ANY PROPERTY OR ASSETS
PERMITTED BY SECTION 7.05(A), (B), (C), (D), (E), (F), (G), (H), (I) OR (M)) OR
(Y) ANY CASUALTY EVENT OCCURS, WHICH IN THE AGGREGATE RESULTS IN THE REALIZATION
OR RECEIPT BY HOLDINGS, THE COMPANY OR SUCH RESTRICTED SUBSIDIARY OF NET CASH
PROCEEDS, THE COMPANY SHALL CAUSE TO BE PREPAID ON OR PRIOR TO THE DATE WHICH IS
TEN (10) BUSINESS DAYS AFTER THE DATE OF THE REALIZATION OR RECEIPT OF SUCH NET
CASH PROCEEDS AN AGGREGATE DOLLAR AMOUNT OF TERM LOANS IN AN AMOUNT EQUAL TO
100% OF ALL NET CASH PROCEEDS RECEIVED; PROVIDED THAT NO SUCH PREPAYMENT SHALL
BE REQUIRED PURSUANT TO THIS SECTION 2.05(B)(II)(A) WITH RESPECT TO SUCH PORTION
OF SUCH NET CASH PROCEEDS THAT THE COMPANY SHALL HAVE, ON OR PRIOR TO SUCH DATE,
GIVEN WRITTEN NOTICE TO THE ADMINISTRATIVE AGENT OF ITS INTENT TO REINVEST IN
ACCORDANCE WITH SECTION 2.05(B)(II)(B);

 

(B)  WITH RESPECT TO ANY NET CASH PROCEEDS REALIZED OR RECEIVED WITH RESPECT TO
ANY DISPOSITION (OTHER THAN ANY DISPOSITION SPECIFICALLY EXCLUDED FROM THE
APPLICATION OF SECTION 2.05(B)(II)(A)) OR ANY CASUALTY EVENT, AT THE OPTION OF
THE COMPANY THE COMPANY MAY REINVEST ALL OR ANY PORTION OF SUCH NET CASH
PROCEEDS IN ASSETS USEFUL FOR THE COMPANY’S OR A RESTRICTED SUBSIDIARY’S
BUSINESS (PROVIDED THAT SUCH REINVESTMENT IS

 

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PERMITTED BY SECTION 7.02) WITHIN (X) TWELVE (12) MONTHS FOLLOWING RECEIPT OF
SUCH NET CASH PROCEEDS OR (Y) IF THE COMPANY OR A RESTRICTED SUBSIDIARY ENTERS
INTO A LEGALLY BINDING COMMITMENT TO REINVEST SUCH NET CASH PROCEEDS WITHIN
TWELVE (12) MONTHS FOLLOWING RECEIPT THEREOF, WITHIN TWELVE (12) MONTHS
FOLLOWING THE DATE OF SUCH COMMITMENT; PROVIDED THAT AN AMOUNT EQUAL TO ANY SUCH
NET CASH PROCEEDS SHALL BE APPLIED WITHIN FIVE (5) BUSINESS DAYS AFTER SUCH NET
CASH PROCEEDS CANNOT BE SO REINVESTED OR THE COMPANY REASONABLY DETERMINES THAT
SUCH NET CASH PROCEEDS ARE NO LONGER INTENDED TO BE SO REINVESTED TO THE
PREPAYMENT OF THE TERM LOANS AS SET FORTH IN THIS SECTION 2.05.

 

(III)  IF HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY INCURS OR ISSUES
ANY INDEBTEDNESS NOT EXPRESSLY PERMITTED TO BE INCURRED OR ISSUED PURSUANT TO
SECTION 7.03 (WITHOUT PREJUDICE TO THE RESTRICTIONS THEREIN), THE COMPANY SHALL
CAUSE TO BE PREPAID AN AGGREGATE DOLLAR AMOUNT OF TERM LOANS IN AN AMOUNT EQUAL
TO 100% OF ALL NET CASH PROCEEDS RECEIVED THEREFROM ON OR PRIOR TO THE DATE
WHICH IS FIVE (5) BUSINESS DAYS AFTER THE RECEIPT OF SUCH NET CASH PROCEEDS.  IF
ANY OVERSEAS BORROWER INCURS OR ISSUES ANY INDEBTEDNESS PURSUANT TO
SECTION 2.14(B), THE COMPANY OR SUCH OVERSEAS BORROWER SHALL CAUSE TO BE PREPAID
AN AGGREGATE DOLLAR AMOUNT OF U.S. TERM LOANS IN AN AMOUNT EQUAL TO 100% OF THE
NET CASH PROCEEDS RECEIVED THEREFROM ON THE DATE OF THE RECEIPT OF SUCH NET CASH
PROCEEDS.

 

(IV)  IF FOR ANY REASON THE AGGREGATE REVOLVING CREDIT EXPOSURES AT ANY TIME
EXCEEDS THE AGGREGATE REVOLVING CREDIT COMMITMENTS THEN IN EFFECT, THE COMPANY
SHALL PROMPTLY PREPAY OR CAUSE TO BE PROMPTLY PREPAID REVOLVING CREDIT LOANS AND
SWING LINE LOANS AND/OR CASH COLLATERALIZE THE L/C OBLIGATIONS IN AN AGGREGATE
AMOUNT EQUAL TO SUCH EXCESS; PROVIDED THAT THE COMPANY SHALL NOT BE REQUIRED TO
CASH COLLATERALIZE THE L/C OBLIGATIONS PURSUANT TO THIS
SECTION 2.05(B)(IV) UNLESS AFTER THE PREPAYMENT IN FULL OF THE REVOLVING CREDIT
LOANS AND SWING LINE LOANS SUCH AGGREGATE OUTSTANDING AMOUNT EXCEEDS THE
AGGREGATE REVOLVING CREDIT COMMITMENTS THEN IN EFFECT.  IF THE COMPANY IS
REQUIRED TO PROVIDE AN AMOUNT OF CASH COLLATERAL IN RESPECT OF L/C OBLIGATIONS
PURSUANT TO THIS CLAUSE (IV), SUCH AMOUNT PLUS ANY ACCRUED INTEREST OR REALIZED
PROFITS WITH RESPECT TO SUCH AMOUNT SHALL BE RETURNED TO THE COMPANY AS AND TO
THE EXTENT THAT, AFTER GIVING EFFECT TO SUCH RETURN, THE COMPANY WOULD REMAIN IN
COMPLIANCE WITH THIS CLAUSE (IV) AND NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND
BE CONTINUING.

 

(V)  EACH PREPAYMENT OF TERM LOANS (X) PURSUANT TO CLAUSE (I) OF THIS
SECTION 2.05(B) SHALL BE APPLIED TO REPAYMENTS THEREOF REQUIRED PURSUANT TO
SECTION 2.07 IN THE ORDER SELECTED BY THE COMPANY AND (Y) PURSUANT TO CLAUSES
(II) AND (III) OF THIS SECTION 2.05(B) SHALL BE APPLIED FIRST IN DIRECT ORDER OF
MATURITY TO REPAYMENTS THEREOF REQUIRED PURSUANT TO SECTION 2.07 IN THE 24-MONTH
PERIOD FOLLOWING THE DATE SUCH PREPAYMENT BECOMES PAYABLE AND SECOND RATABLY TO
THE REMAINING REPAYMENTS OF TERM LOANS REQUIRED PURSUANT TO SECTION 2.07; AND
EACH SUCH PREPAYMENT SHALL BE PAID TO THE LENDERS IN ACCORDANCE WITH THEIR
RESPECTIVE PRO RATA SHARES.

 

(VI)  THE COMPANY SHALL NOTIFY THE ADMINISTRATIVE AGENT IN WRITING OF ANY
MANDATORY PREPAYMENT OF TERM LOANS REQUIRED TO BE MADE PURSUANT TO CLAUSES
(I) THROUGH (III) OF THIS SECTION 2.05(B) AT LEAST THREE (3) BUSINESS DAYS PRIOR
TO THE DATE OF SUCH PREPAYMENT.  EACH SUCH NOTICE SHALL SPECIFY THE DATE OF SUCH
PREPAYMENT AND PROVIDE A REASONABLY DETAILED CALCULATION OF THE AMOUNT OF SUCH
PREPAYMENT.  THE ADMINISTRATIVE AGENT WILL PROMPTLY NOTIFY EACH APPROPRIATE
LENDER OF THE CONTENTS OF THE COMPANY’S PREPAYMENT NOTICE AND OF SUCH
APPROPRIATE LENDER’S PRO RATA SHARE OF THE PREPAYMENT.

 

(C)  ALL PREPAYMENTS UNDER THIS SECTION 2.05 SHALL BE MADE TOGETHER WITH, IN THE
CASE OF ANY SUCH PREPAYMENT OF A EUROCURRENCY RATE LOAN ON A DATE OTHER THAN THE
LAST DAY OF AN INTEREST

 

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Period therefor, any amounts owing in respect of such Eurocurrency Rate Loan
pursuant to Section 3.05.  Notwithstanding any of the provisions of
Section 2.05(b), so long as no Event of Default shall have occurred and be
continuing, if any prepayment of Eurocurrency Rate Loans is required to be made
under Section 2.05(b), other than on the last day of the Interest Period
therefor, the relevant Borrower may, in its sole discretion, deposit the amount
of any such prepayment otherwise required to be made thereunder into a Cash
Collateral Account until the last day of such Interest Period, at which time the
Administrative Agent shall be authorized (without any further action by or
notice to or from any Borrower or any other Loan Party) to apply such amount to
the prepayment of such Loans in accordance with Section 2.05(b).  Upon the
occurrence and during the continuance of any Event of Default, the
Administrative Agent shall also be authorized (without any further action by or
notice to or from any Borrower or any other Loan Party) to apply such amount to
the prepayment of the outstanding Loans in accordance with Section 2.05(b).

 

SECTION 2.06.  Termination or Reduction of Commitments.  (a)  Optional.  The
Company may, upon written notice to the Administrative Agent, terminate the
unused Commitments of any Class, or from time to time permanently reduce the
unused Commitments of any Class; provided that (i) any such notice shall be
received by the Administrative Agent three (3) Business Days prior to the date
of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $1,000,000 or any whole multiple of $500,000 in excess
thereof (or, if less, the remaining amount of such Commitments) and (iii) if,
after giving effect to any reduction of the Commitments, the Letter of Credit
Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit
Facility, such sublimit shall be automatically reduced by the amount of such
excess.  The amount of any such Commitment reduction shall not be applied to the
Letter of Credit Sublimit or the Swing Line Sublimit unless otherwise specified
by the Company.  Notwithstanding the foregoing, the Company may rescind or
postpone any notice of termination or reduction of the Commitments if such
termination or reduction would have resulted from a refinancing of all or any
portion of the Facilities, which refinancing shall not be consummated or
otherwise shall be delayed.

 

(B)  MANDATORY.  THE U.S. TERM COMMITMENT OF EACH U.S. TERM LENDER SHALL BE
AUTOMATICALLY AND PERMANENTLY REDUCED TO $0 UPON THE MAKING OF SUCH U.S. TERM
LENDER’S U.S. TERM LOANS PURSUANT TO SECTION 2.01(A).  THE EURO TERM COMMITMENT
OF EACH EURO TERM LENDER SHALL BE AUTOMATICALLY AND PERMANENTLY REDUCED TO $0
UPON THE MAKING OF SUCH EURO TERM LENDER’S EURO TERM LOANS PURSUANT TO
SECTION 2.01(C).  IN ADDITION, IF ANY EXISTING NOTES REMAIN OUTSTANDING ON THE
CLOSING DATE (IN RESPECT OF WHICH A DEFEASANCE HAS NOT BEEN CONSUMMATED, OR IN
RESPECT OF WHICH FUNDS HAVE NOT BEEN PLACED IN ESCROW FOR THE REDEMPTION OR
REPAYMENT THEREOF IN A MANNER REASONABLY SATISFACTORY TO THE ADMINISTRATIVE
AGENT, AS OF THE CLOSING DATE), THE TERM COMMITMENT OF EACH TERM LENDER SHALL BE
AUTOMATICALLY AND PERMANENTLY REDUCED (EFFECTIVE PRIOR TO THE BORROWING OF TERM
LOANS ON THE CLOSING DATE) BY THE AMOUNT OF SUCH TERM LENDER’S PRO RATA SHARE OF
THE AMOUNT THAT WOULD HAVE BEEN USED TO PURCHASE SUCH EXISTING NOTES IF THEY HAD
BEEN TENDERED AND PURCHASED ON THE CLOSING DATE PURSUANT TO THE EXISTING NOTE
INDENTURE.

 

(C)  APPLICATION OF COMMITMENT REDUCTIONS; PAYMENT OF FEES.  THE ADMINISTRATIVE
AGENT WILL PROMPTLY NOTIFY THE LENDERS OF ANY TERMINATION OR REDUCTION OF UNUSED
PORTIONS OF THE LETTER OF CREDIT SUBLIMIT, OR THE SWING LINE SUBLIMIT OR THE
UNUSED COMMITMENTS OF ANY CLASS UNDER THIS SECTION 2.06.  UPON ANY REDUCTION OF
UNUSED COMMITMENTS OF ANY CLASS, THE COMMITMENT OF EACH LENDER OF SUCH
CLASS SHALL BE REDUCED BY SUCH LENDER’S PRO RATA SHARE OF THE AMOUNT BY WHICH
SUCH COMMITMENTS ARE REDUCED (OTHER THAN THE TERMINATION OF THE COMMITMENT OF
ANY LENDER AS PROVIDED IN SECTION 3.07).  ALL COMMITMENT FEES ACCRUED UNTIL THE
EFFECTIVE DATE OF ANY

 

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termination of the Aggregate Commitments shall be paid on the effective date of
such termination.

 

SECTION 2.07.  Repayment of Loans.  (a)  U.S. Term Loans.  The Company shall
repay to the Administrative Agent for the ratable account of the U.S. Term
Lenders (i) on the last Business Day of each March, June, September and
December, commencing with the second such date to occur after the Closing Date,
an aggregate Dollar Amount equal to 0.25% of the aggregate amount of all U.S.
Term Loans outstanding on the Closing Date (which payments shall be reduced as a
result of the application of prepayments in accordance with the order of
priority set forth in Section 2.05) and (ii) on the Maturity Date for the Term
Loans, the aggregate principal amount of all U.S. Term Loans outstanding on such
date.

 

(B)  EURO TERM LOANS.  THE GERMAN BORROWER SHALL REPAY TO THE ADMINISTRATIVE
AGENT FOR THE RATABLE ACCOUNT OF THE EURO TERM LENDERS (I) ON THE LAST BUSINESS
DAY OF EACH MARCH, JUNE, SEPTEMBER AND DECEMBER, COMMENCING WITH THE SECOND SUCH
DATE TO OCCUR AFTER THE CLOSING DATE, AN AGGREGATE DOLLAR AMOUNT EQUAL TO 0.25%
OF THE AGGREGATE DOLLAR AMOUNT OF ALL EURO TERM LOANS OUTSTANDING ON THE CLOSING
DATE (WHICH PAYMENTS SHALL BE REDUCED AS A RESULT OF THE APPLICATION OF
PREPAYMENTS IN ACCORDANCE WITH THE ORDER OF PRIORITY SET FORTH IN SECTION 2.05)
AND (II) ON THE MATURITY DATE FOR THE TERM LOANS, THE AGGREGATE PRINCIPAL AMOUNT
OF ALL EURO TERM LOANS OUTSTANDING ON SUCH DATE.

 

(C)  REVOLVING CREDIT LOANS.  THE COMPANY SHALL REPAY TO THE ADMINISTRATIVE
AGENT FOR THE RATABLE ACCOUNT OF THE REVOLVING CREDIT LENDERS ON THE MATURITY
DATE FOR THE REVOLVING CREDIT FACILITY THE AGGREGATE PRINCIPAL AMOUNT OF ALL OF
ITS REVOLVING CREDIT LOANS OUTSTANDING ON SUCH DATE.

 

(D)  SWING LINE LOANS.  THE COMPANY SHALL REPAY ITS SWING LINE LOANS ON THE
MATURITY DATE FOR THE REVOLVING CREDIT FACILITY; PROVIDED THAT ON EACH DATE THAT
A REVOLVING CREDIT LOAN IS BORROWED, THE COMPANY SHALL REPAY ALL SWING LINE
LOANS THEN OUTSTANDING.

 

SECTION 2.08.  Interest.  (a)  Subject to the provisions of Section 2.08(b),
(i) each Eurocurrency Rate Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period at a rate per annum equal to the
Eurocurrency Rate for such Interest Period plus the Applicable Rate plus (in the
case of a Eurocurrency Rate Loan denominated in an Alternative Currency of any
Lender which is lent from a Lending Office in the United Kingdom or a
Participating Member State) the Mandatory Cost; (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate and (iii) each Swing Line Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the Base Rate plus the Applicable Rate for Revolving Credit Loans.

 

(B)  EACH BORROWER SHALL PAY INTEREST ON PAST DUE AMOUNTS OWED BY IT HEREUNDER
AT A FLUCTUATING INTEREST RATE PER ANNUM AT ALL TIMES EQUAL TO THE DEFAULT RATE
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS.  ACCRUED AND UNPAID INTEREST
ON PAST DUE AMOUNTS (INCLUDING INTEREST ON PAST DUE INTEREST) SHALL BE DUE AND
PAYABLE UPON DEMAND.

 

(C)  INTEREST ON EACH LOAN SHALL BE DUE AND PAYABLE IN ARREARS ON EACH INTEREST
PAYMENT DATE APPLICABLE THERETO AND AT SUCH OTHER TIMES AS MAY BE SPECIFIED
HEREIN.  INTEREST HEREUNDER SHALL BE DUE AND PAYABLE IN ACCORDANCE WITH THE
TERMS HEREOF BEFORE AND AFTER JUDGMENT, AND BEFORE AND AFTER THE COMMENCEMENT OF
ANY PROCEEDING UNDER ANY DEBTOR RELIEF LAW.

 

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SECTION 2.09.  Fees.  In addition to certain fees described in Sections
2.03(h) and (i):

 

(A)  COMMITMENT FEE.  THE COMPANY SHALL PAY TO THE ADMINISTRATIVE AGENT FOR THE
ACCOUNT OF EACH REVOLVING CREDIT LENDER IN ACCORDANCE WITH ITS PRO RATA SHARE, A
COMMITMENT FEE EQUAL TO THE APPLICABLE RATE WITH RESPECT TO COMMITMENT FEES
TIMES THE AVERAGE DAILY AMOUNT BY WHICH THE AGGREGATE REVOLVING CREDIT
COMMITMENT EXCEEDS THE SUM OF (A) THE OUTSTANDING AMOUNT OF REVOLVING CREDIT
LOANS (EXCLUDING ANY SWING LINE LOANS) AND (B) THE OUTSTANDING AMOUNT OF L/C
OBLIGATIONS; PROVIDED THAT ANY COMMITMENT FEE ACCRUED WITH RESPECT TO ANY OF THE
COMMITMENTS OF A DEFAULTING LENDER DURING THE PERIOD PRIOR TO THE TIME SUCH
LENDER BECAME A DEFAULTING LENDER AND UNPAID AT SUCH TIME SHALL NOT BE PAYABLE
BY THE COMPANY SO LONG AS SUCH LENDER SHALL BE A DEFAULTING LENDER EXCEPT TO THE
EXTENT THAT SUCH COMMITMENT FEE SHALL OTHERWISE HAVE BEEN DUE AND PAYABLE BY THE
COMPANY PRIOR TO SUCH TIME; AND PROVIDED FURTHER THAT NO COMMITMENT FEE SHALL
ACCRUE ON ANY OF THE COMMITMENTS OF A DEFAULTING LENDER SO LONG AS SUCH LENDER
SHALL BE A DEFAULTING LENDER.  THE COMMITMENT FEE SHALL ACCRUE AT ALL TIMES FROM
THE CLOSING DATE UNTIL THE MATURITY DATE FOR THE REVOLVING CREDIT FACILITY OR
SUCH EARLIER DATE AS THE REVOLVING CREDIT COMMITMENTS SHALL BE TERMINATED
HEREUNDER, INCLUDING AT ANY TIME DURING WHICH ONE OR MORE OF THE CONDITIONS IN
ARTICLE IV IS NOT MET, AND SHALL BE DUE AND PAYABLE QUARTERLY IN ARREARS ON THE
LAST BUSINESS DAY OF EACH MARCH, JUNE, SEPTEMBER AND DECEMBER, COMMENCING WITH
THE FIRST SUCH DATE TO OCCUR AFTER THE CLOSING DATE, AND ON THE MATURITY DATE
FOR THE REVOLVING CREDIT FACILITY.  THE COMMITMENT FEE SHALL BE CALCULATED
QUARTERLY IN ARREARS, AND IF THERE IS ANY CHANGE IN THE APPLICABLE RATE DURING
ANY QUARTER, THE AVERAGE DAILY AMOUNT SHALL BE COMPUTED AND MULTIPLIED BY THE
APPLICABLE RATE SEPARATELY FOR EACH PERIOD DURING SUCH QUARTER THAT SUCH
APPLICABLE RATE WAS IN EFFECT.

 

(B)  OTHER FEES.  THE COMPANY SHALL PAY TO THE AGENTS SUCH FEES AS SHALL HAVE
BEEN SEPARATELY AGREED UPON IN WRITING IN THE AMOUNTS AND AT THE TIMES SO
SPECIFIED.  SUCH FEES SHALL BE FULLY EARNED WHEN PAID AND SHALL NOT BE
REFUNDABLE FOR ANY REASON WHATSOEVER (EXCEPT AS EXPRESSLY AGREED BETWEEN THE
COMPANY AND THE APPLICABLE AGENT).

 

SECTION 2.10.  Computation of Interest and Fees.  All computations of interest
for Base Rate Loans when the Base Rate is determined by JPMorgan Chase Bank’s
“prime rate” and for Alternative Currency Loans denominated in Sterling shall be
made on the basis of a year of three hundred and sixty-five (365) or three
hundred and sixty-six (366) days, as the case may be, and actual days elapsed. 
All other computations of fees and interest shall be made on the basis of a
three hundred and sixty (360) day year and actual days elapsed.  Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue
on a Loan, or any portion thereof, for the day on which the Loan or such portion
is paid; provided that any Loan that is repaid on the same day on which it is
made shall, subject to Section 2.12(a), bear interest for one (1) day.  Each
determination by the Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.  The
Administrative Agent shall, upon the reasonable request of the Company, deliver
to the Company a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 2.08(a).

 

SECTION 2.11.  Evidence of Indebtedness.  (a)  The Credit Extensions made by
each Lender shall be evidenced by one or more accounts or records maintained by
such Lender and evidenced by one or more entries in the Register maintained by
the Administrative Agent, acting solely for purposes of Treasury Regulation
Section 5f.103-1(c), as agent for the Borrowers, in each case in the ordinary
course of business.  The accounts or records maintained by the Administrative
Agent and each Lender shall be prima facie evidence absent manifest error of the
amount of the Credit Extensions made by the Lenders to the Borrowers and the
interest and

 

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payments thereon.  Any failure to so record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Borrowers hereunder to
pay any amount owing with respect to the Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence of
manifest error.  Upon the request of any Lender made through the Administrative
Agent, the Borrowers shall execute and deliver to such Lender (through the
Administrative Agent) a Note payable to such Lender, which shall evidence such
Lender’s Loans in addition to such accounts or records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable), amount
and maturity of its Loans and payments with respect thereto.

 

(B)  IN ADDITION TO THE ACCOUNTS AND RECORDS REFERRED TO IN SECTION 2.11(A),
EACH LENDER AND THE ADMINISTRATIVE AGENT SHALL MAINTAIN IN ACCORDANCE WITH ITS
USUAL PRACTICE ACCOUNTS OR RECORDS AND, IN THE CASE OF THE ADMINISTRATIVE AGENT,
ENTRIES IN THE REGISTER, EVIDENCING THE PURCHASES AND SALES BY SUCH LENDER OF
PARTICIPATIONS IN LETTERS OF CREDIT AND SWING LINE LOANS.  IN THE EVENT OF ANY
CONFLICT BETWEEN THE ACCOUNTS AND RECORDS MAINTAINED BY THE ADMINISTRATIVE AGENT
AND THE ACCOUNTS AND RECORDS OF ANY LENDER IN RESPECT OF SUCH MATTERS, THE
ACCOUNTS AND RECORDS OF THE ADMINISTRATIVE AGENT SHALL CONTROL IN THE ABSENCE OF
MANIFEST ERROR.

 

(C)  ENTRIES MADE IN GOOD FAITH BY THE ADMINISTRATIVE AGENT IN THE REGISTER
PURSUANT TO SECTIONS 2.11(A) AND (B), AND BY EACH LENDER IN ITS ACCOUNT OR
ACCOUNTS PURSUANT TO SECTIONS 2.11(A) AND (B), SHALL BE PRIMA FACIE EVIDENCE OF
THE AMOUNT OF PRINCIPAL AND INTEREST DUE AND PAYABLE OR TO BECOME DUE AND
PAYABLE FROM THE BORROWERS TO, IN THE CASE OF THE REGISTER, EACH LENDER AND, IN
THE CASE OF SUCH ACCOUNT OR ACCOUNTS, SUCH LENDER, UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, ABSENT MANIFEST ERROR; PROVIDED THAT THE FAILURE OF THE
ADMINISTRATIVE AGENT OR SUCH LENDER TO MAKE AN ENTRY, OR ANY FINDING THAT AN
ENTRY IS INCORRECT, IN THE REGISTER OR SUCH ACCOUNT OR ACCOUNTS SHALL NOT LIMIT
OR OTHERWISE AFFECT THE OBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

 

SECTION 2.12.  Payments Generally.  (a)  All payments to be made by the
Borrowers shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.  Except as otherwise expressly provided herein,
all payments by the Company hereunder shall be made to the Administrative Agent,
for the account of the respective Lenders to which such payment is owed, at the
applicable Administrative Agent’s Office in Dollars and in Same Day Funds not
later than 2:00 p.m. on the date specified herein.  Except as otherwise
expressly provided herein, all payments by the Borrowers hereunder with respect
to principal and interest on Loans denominated in an Alternative Currency shall
be made to the Administrative Agent, for the account of the respective Lenders
to which such payment is owed, at the applicable Administrative Agent’s Office
in such Alternative Currency and in Same Day Funds not later than 2:00 p.m.
(London time) on the dates specified herein.  If, for any reason, any Borrower
is prohibited by any Law from making any required payment hereunder in an
Alternative Currency, such Borrower shall make such payment in Dollars in the
Dollar Amount of the Alternative Currency payment amount.  The Administrative
Agent will promptly distribute to each Lender its Pro Rata Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office.  All payments received by the
Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or
(ii) after 2:00 p.m. (London time) in the case of payments in an Alternative
Currency, shall in each case be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.

 

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(B)  IF ANY PAYMENT TO BE MADE BY ANY BORROWER SHALL COME DUE ON A DAY OTHER
THAN A BUSINESS DAY, PAYMENT SHALL BE MADE ON THE NEXT FOLLOWING BUSINESS DAY,
AND SUCH EXTENSION OF TIME SHALL BE REFLECTED IN COMPUTING INTEREST OR FEES, AS
THE CASE MAY BE; PROVIDED THAT, IF SUCH EXTENSION WOULD CAUSE PAYMENT OF
INTEREST ON OR PRINCIPAL OF EUROCURRENCY RATE LOANS TO BE MADE IN THE NEXT
SUCCEEDING CALENDAR MONTH, SUCH PAYMENT SHALL BE MADE ON THE IMMEDIATELY
PRECEDING BUSINESS DAY.

 

(C)  UNLESS ANY BORROWER OR ANY LENDER HAS NOTIFIED THE ADMINISTRATIVE AGENT,
PRIOR TO THE TIME ANY PAYMENT IS REQUIRED TO BE MADE BY IT TO THE ADMINISTRATIVE
AGENT HEREUNDER, THAT SUCH BORROWER OR SUCH LENDER, AS THE CASE MAY BE, WILL NOT
MAKE SUCH PAYMENT, THE ADMINISTRATIVE AGENT MAY ASSUME THAT SUCH BORROWER OR
SUCH LENDER, AS THE CASE MAY BE, HAS TIMELY MADE SUCH PAYMENT AND MAY (BUT SHALL
NOT BE SO REQUIRED TO), IN RELIANCE THEREON, MAKE AVAILABLE A CORRESPONDING
AMOUNT TO THE PERSON ENTITLED THERETO.  IF AND TO THE EXTENT THAT SUCH PAYMENT
WAS NOT IN FACT MADE TO THE ADMINISTRATIVE AGENT IN SAME DAY FUNDS, THEN:

 

(I)  IF ANY BORROWER FAILED TO MAKE SUCH PAYMENT, EACH LENDER SHALL FORTHWITH ON
DEMAND REPAY TO THE ADMINISTRATIVE AGENT THE PORTION OF SUCH ASSUMED PAYMENT
THAT WAS MADE AVAILABLE TO SUCH LENDER IN SAME DAY FUNDS, TOGETHER WITH INTEREST
THEREON IN RESPECT OF EACH DAY FROM AND INCLUDING THE DATE SUCH AMOUNT WAS MADE
AVAILABLE BY THE ADMINISTRATIVE AGENT TO SUCH LENDER TO THE DATE SUCH AMOUNT IS
REPAID TO THE ADMINISTRATIVE AGENT IN SAME DAY FUNDS AT THE APPLICABLE OVERNIGHT
RATE FROM TIME TO TIME IN EFFECT; AND

 

(II)  IF ANY LENDER FAILED TO MAKE SUCH PAYMENT, SUCH LENDER SHALL FORTHWITH ON
DEMAND PAY TO THE ADMINISTRATIVE AGENT THE AMOUNT THEREOF IN SAME DAY FUNDS,
TOGETHER WITH INTEREST THEREON FOR THE PERIOD FROM THE DATE SUCH AMOUNT WAS MADE
AVAILABLE BY THE ADMINISTRATIVE AGENT TO THE RELEVANT BORROWER TO THE DATE SUCH
AMOUNT IS RECOVERED BY THE ADMINISTRATIVE AGENT (THE “COMPENSATION PERIOD”) AT A
RATE PER ANNUM EQUAL TO THE APPLICABLE OVERNIGHT RATE FROM TIME TO TIME IN
EFFECT.  WHEN SUCH LENDER MAKES PAYMENT TO THE ADMINISTRATIVE AGENT (TOGETHER
WITH ALL ACCRUED INTEREST THEREON), THEN SUCH PAYMENT AMOUNT (EXCLUDING THE
AMOUNT OF ANY INTEREST WHICH MAY HAVE ACCRUED AND BEEN PAID IN RESPECT OF SUCH
LATE PAYMENT) SHALL CONSTITUTE SUCH LENDER’S LOAN INCLUDED IN THE APPLICABLE
BORROWING.  IF SUCH LENDER DOES NOT PAY SUCH AMOUNT FORTHWITH UPON THE
ADMINISTRATIVE AGENT’S DEMAND THEREFOR, THE ADMINISTRATIVE AGENT MAY MAKE A
DEMAND THEREFOR UPON THE RELEVANT BORROWER, AND THE RELEVANT BORROWER SHALL PAY
SUCH AMOUNT TO THE ADMINISTRATIVE AGENT, TOGETHER WITH INTEREST THEREON FOR THE
COMPENSATION PERIOD AT A RATE PER ANNUM EQUAL TO THE RATE OF INTEREST APPLICABLE
TO THE APPLICABLE BORROWING.  NOTHING HEREIN SHALL BE DEEMED TO RELIEVE ANY
LENDER FROM ITS OBLIGATION TO FULFILL ITS COMMITMENT OR TO PREJUDICE ANY RIGHTS
WHICH THE ADMINISTRATIVE AGENT OR ANY BORROWER MAY HAVE AGAINST ANY LENDER AS A
RESULT OF ANY DEFAULT BY SUCH LENDER HEREUNDER.

 

A notice of the Administrative Agent to any Lender or the relevant Borrower with
respect to any amount owing under this Section 2.12(c) shall be conclusive,
absent manifest error.

 

(D)  IF ANY LENDER MAKES AVAILABLE TO THE ADMINISTRATIVE AGENT FUNDS FOR ANY
LOAN TO BE MADE BY SUCH LENDER AS PROVIDED IN THE FOREGOING PROVISIONS OF THIS
ARTICLE II, AND SUCH FUNDS ARE NOT MADE AVAILABLE TO THE RELEVANT BORROWER BY
THE ADMINISTRATIVE AGENT BECAUSE THE CONDITIONS TO THE APPLICABLE CREDIT
EXTENSION SET FORTH IN ARTICLE IV ARE NOT SATISFIED OR WAIVED IN ACCORDANCE WITH
THE TERMS HEREOF, THE ADMINISTRATIVE AGENT SHALL RETURN SUCH FUNDS (IN LIKE
FUNDS AS RECEIVED FROM SUCH LENDER) TO SUCH LENDER, WITHOUT INTEREST.

 

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(E)  THE OBLIGATIONS OF THE LENDERS HEREUNDER TO MAKE LOANS AND TO FUND
PARTICIPATIONS IN LETTERS OF CREDIT AND SWING LINE LOANS ARE SEVERAL AND NOT
JOINT.  THE FAILURE OF ANY LENDER TO MAKE ANY LOAN OR TO FUND ANY SUCH
PARTICIPATION ON ANY DATE REQUIRED HEREUNDER SHALL NOT RELIEVE ANY OTHER LENDER
OF ITS CORRESPONDING OBLIGATION TO DO SO ON SUCH DATE, AND NO LENDER SHALL BE
RESPONSIBLE FOR THE FAILURE OF ANY OTHER LENDER TO SO MAKE ITS LOAN OR PURCHASE
ITS PARTICIPATION.

 

(F)  NOTHING HEREIN SHALL BE DEEMED TO OBLIGATE ANY LENDER TO OBTAIN THE FUNDS
FOR ANY LOAN IN ANY PARTICULAR PLACE OR MANNER OR TO CONSTITUTE A REPRESENTATION
BY ANY LENDER THAT IT HAS OBTAINED OR WILL OBTAIN THE FUNDS FOR ANY LOAN IN ANY
PARTICULAR PLACE OR MANNER.

 

(G)  WHENEVER ANY PAYMENT RECEIVED BY THE ADMINISTRATIVE AGENT UNDER THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IS INSUFFICIENT TO PAY IN FULL ALL
AMOUNTS DUE AND PAYABLE TO THE ADMINISTRATIVE AGENT AND THE LENDERS UNDER OR IN
RESPECT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON ANY DATE, SUCH PAYMENT
SHALL BE DISTRIBUTED BY THE ADMINISTRATIVE AGENT AND APPLIED BY THE
ADMINISTRATIVE AGENT AND THE LENDERS IN THE ORDER OF PRIORITY SET FORTH IN
SECTION 8.04.  IF THE ADMINISTRATIVE AGENT RECEIVES FUNDS FOR APPLICATION TO THE
OBLIGATIONS OF THE LOAN PARTIES UNDER OR IN RESPECT OF THE LOAN DOCUMENTS UNDER
CIRCUMSTANCES FOR WHICH THE LOAN DOCUMENTS DO NOT SPECIFY THE MANNER IN WHICH
SUCH FUNDS ARE TO BE APPLIED, THE ADMINISTRATIVE AGENT MAY, BUT AT THE DIRECTION
OF REQUIRED LENDERS SHALL, ELECT TO DISTRIBUTE SUCH FUNDS TO EACH OF THE LENDERS
IN ACCORDANCE WITH SUCH LENDER’S PRO RATA SHARE OF THE SUM OF (A) THE
OUTSTANDING AMOUNT OF ALL LOANS OUTSTANDING AT SUCH TIME AND (B) THE OUTSTANDING
AMOUNT OF ALL L/C OBLIGATIONS OUTSTANDING AT SUCH TIME, IN REPAYMENT OR
PREPAYMENT OF SUCH OF THE OUTSTANDING LOANS OR OTHER OBLIGATIONS THEN OWING TO
SUCH LENDER.

 

SECTION 2.13.  Sharing of Payments.  If, other than as expressly provided
elsewhere herein, any Lender shall obtain on account of the Loans made by it, or
the participations in L/C Obligations and Swing Line Loans held by it, any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Loans made by them and/or such subparticipations in the
participations in L/C Obligations or Swing Line Loans held by them, as the case
may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Loans or such participations, as the case may
be, pro rata with each of them; provided that if all or any portion of such
excess payment is thereafter recovered from the purchasing Lender under any of
the circumstances described in Section 10.06 (including pursuant to any
settlement entered into by the purchasing Lender in its discretion), such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender’s ratable share (according to the proportion of
(i) the amount of such paying Lender’s required repayment to (ii) the total
amount so recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered, without further interest thereon.  Each Borrower agrees that any
Lender so purchasing a participation from another Lender may, to the fullest
extent permitted by applicable Law, exercise all its rights of payment
(including the right of setoff, but subject to Section 10.09) with respect to
such participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation.  The Administrative Agent will
keep records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section 2.13 and will in each case
notify the Lenders following any such purchases or repayments.  Each Lender that
purchases a participation pursuant to this Section 2.13 shall from and after
such purchase have the right to give all notices, requests, demands, directions
and other communications under this Agreement with respect to the portion

 

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of the Obligations purchased to the same extent as though the purchasing Lender
were the original owner of the Obligations purchased.

 

SECTION 2.14.  Incremental Credit Extensions.  (a)  The Company may at any time
or from time to time after the Closing Date, by notice to the Administrative
Agent (whereupon the Administrative Agent shall promptly deliver a copy to each
of the Lenders), request (a) one or more additional tranches of term loans
denominated in Dollars (the “Incremental U.S. Term Loans”) or (b) one or more
increases in the amount of the Revolving Credit Commitments on the same terms
and conditions as are then applicable to the Revolving Credit Commitments (each
such increase, a “Revolving Commitment Increase”); provided that (i) both at the
time of any such request and upon the effectiveness of any Incremental U.S.
Amendment referred to below, no Default or Event of Default shall exist and at
the time that any such Incremental U.S. Term Loan is made or any such Revolving
Commitment Increase becomes effective (and after giving effect thereto) no
Default or Event of Default shall exist and (ii) the Company shall be in
compliance with the covenant set forth in Section 7.10 determined on a Pro Forma
Basis as of the date of such Incremental U.S. Term Loan or Revolving Commitment
Increase and the last day of the most recent Test Period, in each case, as if
such Incremental U.S. Term Loans or Revolving Commitment Increases, as
applicable, had been outstanding on the last day of such fiscal quarter of the
Company for testing compliance therewith.  Each tranche of Incremental U.S. Term
Loans and each Revolving Commitment Increase shall be in an aggregate Dollar
Amount that is not less than $50,000,000 (provided that such amount may be less
than $50,000,000 if such amount represents all remaining availability under the
limit set forth in the next sentence).  Notwithstanding anything to the contrary
herein, the aggregate Dollar Amount of the Incremental U.S. Term Loans and the
Revolving Commitment Increases shall not exceed $200,000,000.  The Incremental
U.S. Term Loans and any Revolving Credit Exposure under any such Revolving
Commitment Increase (a) shall rank pari passu in right of payment and of
security with the other Revolving Credit Exposure and the U.S. Term Loans,
(b) in the case of Incremental U.S. Term Loans, shall not mature earlier than
the Maturity Date with respect to the U.S. Term Loans, (c) in the case of
Incremental U.S. Term Loans, shall not have a Weighted Average Life to Maturity
that is shorter than the Weighted Average Life to Maturity with respect to the
U.S. Term Loans, (d) in the case of Incremental U.S. Term Loans, will accrue
interest at rates determined by the Company and the lenders providing such
Incremental U.S. Term Loans, which rates may be higher or lower than the rates
applicable to the U.S. Term Loans, and (e) in the case of Incremental U.S. Term
Loans, except as set forth above, shall be treated substantially the same as, or
less favorably to the lenders thereof than, the U.S. Term Loans (in each case,
including with respect to mandatory and voluntary prepayments), provided that
(i) the terms and conditions applicable to Incremental U.S. Term Loans may be
materially different from those of the U.S. Term Loans to the extent such
differences are reasonably acceptable to the Administrative Agent and
(ii) subject to clauses (b), (c) and (d) above, the interest rates, maturity and
amortization schedule applicable to the Incremental U.S. Term Loans shall be
determined by the Company and the lenders thereof.  Each notice from the Company
pursuant to this Section shall set forth the requested amount and proposed terms
of the relevant Incremental U.S. Term Loans or Revolving Commitment Increases. 
Incremental U.S. Term Loans may be made, and Revolving Commitment Increases may
be provided, by any existing Lender or by any other bank or other financial
institution (any such other bank or other financial institution being called an
“Additional Lender”), in each case as designated by the Company, provided that
the Administrative Agent, each L/C Issuer and the Swing Line Lender shall have
consented (not to be unreasonably withheld) to such Lender’s or Additional
Lender’s making such Incremental U.S. Term Loans or providing such Revolving
Commitment Increases if such consent would be required under
Section 10.07(b) for an assignment of Loans or Revolving Credit Commitments, as
applicable, to such Lender or Additional Lender.  Commitments in respect of
Incremental U.S.

 

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Term Loans and Revolving Commitment Increases shall become Commitments (or in
the case of a Revolving Commitment Increase to be provided by an existing
Revolving Credit Lender, an increase in such Lender’s applicable Revolving
Credit Commitment) under this Agreement pursuant to an amendment (an
“Incremental Amendment”) to this Agreement and, as appropriate, the other Loan
Documents, executed by Holdings, the Company, each Lender agreeing to provide
such Commitment, if any, each Additional Lender, if any, and the Administrative
Agent.  The Incremental Amendment may, without the consent of any other Lenders,
effect such amendments to this Agreement and the other Loan Documents as may be
necessary or appropriate, in the reasonable opinion of the Administrative Agent
and the Company, to effect the provisions of this Section.  The effectiveness of
any Incremental Amendment shall be subject to the satisfaction on the date
thereof (each, an “Incremental Facility Closing Date”) of each of the conditions
set forth in Section 4.02 (it being understood that all references to “the date
of such Credit Extension” or similar language in such Section 4.02 shall be
deemed to refer to the effective date of such Incremental Amendment) and such
other conditions as the parties thereto shall agree.  The Company will use the
proceeds of the Incremental U.S. Term Loans and Revolving Commitment Increases
for any purpose not prohibited by this Agreement.  No Lender shall be obligated
to provide any Incremental U.S. Term Loans or Revolving Commitment Increases
unless it so agrees.  Upon each increase in the Revolving Credit Commitments
pursuant to this Section, each Revolving Credit Lender immediately prior to such
increase will automatically and without further act be deemed to have assigned
to each Lender providing a portion of the Revolving Commitment Increase (each a
“Revolving Commitment Increase Lender”) in respect of such increase, and each
such Revolving Commitment Increase Lender will automatically and without further
act be deemed to have assumed, a portion of such Revolving Credit Lender’s
participations hereunder in outstanding Letters of Credit and Swing Line Loans
such that, after giving effect to each such deemed assignment and assumption of
participations, the percentage of the aggregate outstanding (i) participations
hereunder in Letters of Credit and (ii) participations hereunder in Swing Line
Loans held by each Revolving Credit Lender (including each such Revolving
Commitment Increase Lender) will equal the percentage of the aggregate Revolving
Credit Commitments of all Revolving Credit Lenders represented by such Revolving
Credit Lender’s Revolving Credit Commitment and (b) if, on the date of such
increase, there are any Revolving Credit Loans outstanding, such Revolving
Credit Loans shall on or prior to the effectiveness of such Revolving Commitment
Increase be prepaid from the proceeds of additional Revolving Credit Loans made
hereunder (reflecting such increase in Revolving Credit Commitments), which
prepayment shall be accompanied by accrued interest on the Revolving Credit
Loans being prepaid and any costs incurred by any Lender in accordance with
Section 3.05.  The Administrative Agent and the Lenders hereby agree that the
minimum borrowing, pro rata borrowing and pro rata payment requirements
contained elsewhere in this Agreement shall not apply to the transactions
effected pursuant to the immediately preceding sentence.

 

(B)  THE COMPANY MAY FROM TIME TO TIME DESIGNATE ANY FOREIGN SUBSIDIARY
ORGANIZED UNDER THE LAWS OF AUSTRALIA, CANADA OR THE UNITED KINGDOM AS AN
ADDITIONAL OVERSEAS BORROWER FOR PURPOSES OF THIS AGREEMENT BY DELIVERING
WRITTEN NOTICE THEREOF TO THE ADMINISTRATIVE AGENT DULY EXECUTED ON BEHALF OF
SUCH FOREIGN SUBSIDIARY AND THE COMPANY.  ANY SUCH OVERSEAS BORROWER ORGANIZED
UNDER THE LAWS OF AUSTRALIA MAY, ON ANY ONE DATE AFTER THE CLOSING DATE, BY
NOTICE TO THE ADMINISTRATIVE AGENT (WHEREUPON THE ADMINISTRATIVE AGENT SHALL
PROMPTLY DELIVER A COPY TO EACH OF THE LENDERS), REQUEST A TRANCHE OF TERM LOANS
DENOMINATED IN AUSTRALIAN DOLLARS, ANY SUCH OVERSEAS BORROWER ORGANIZED UNDER
THE LAWS OF CANADA MAY, ON ANY ONE DATE AFTER THE CLOSING DATE, BY NOTICE TO THE
ADMINISTRATIVE AGENT (WHEREUPON THE ADMINISTRATIVE AGENT SHALL PROMPTLY DELIVER
A COPY TO EACH OF THE LENDERS), REQUEST A TRANCHE OF TERM LOANS DENOMINATED IN
CANADIAN DOLLARS, AND ANY SUCH OVERSEAS BORROWER ORGANIZED UNDER THE LAWS OF THE
UNITED

 

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Kingdom may, on any one date after the Closing Date, by notice to the
Administrative Agent (whereupon the Administrative Agent shall promptly deliver
a copy to each of the Lenders), request a tranche of term loans denominated in
Sterling or Euros (any and all such term loans, the “Incremental Overseas Term
Loans”); provided that both at the time of any such request and upon the
effectiveness of any Incremental Overseas Amendment referred to below, no
Default or Event of Default shall exist and at the time that any such
Incremental Overseas Term Loan is made (and after giving effect thereto) no
Default or Event of Default shall exist.  Each tranche of Incremental Overseas
Term Loans shall be in an aggregate initial Dollar Amount of not more than
$150,000,000 as of the relevant Incremental Overseas Facility Closing Date;
provided that the aggregate initial Dollar Amount of the Incremental Overseas
Term Loans shall not exceed $300,000,000.  The Incremental Overseas Term Loans
(a) shall rank pari passu in right of payment and of security with the U.S. Term
Loans, but may have additional security or Guarantees or limits on security or
Guarantees to the extent required by the Collateral and Guarantee Requirement,
(b) shall not mature earlier than the Maturity Date with respect to the U.S.
Term Loans, (c) shall not have a Weighted Average Life to Maturity that is
shorter than the Weighted Average Life to Maturity with respect to the U.S. Term
Loans, (d) will accrue interest at rates determined by the applicable Overseas
Borrower and the lenders providing such Incremental Overseas Term Loans, which
rates may be higher or lower than the rates applicable to the U.S. Term Loans,
and (e) except as set forth above, shall be treated substantially the same as,
or less favorably to the lenders thereof than, the U.S. Term Loans (in each
case, including with respect to mandatory and voluntary prepayments), provided
that (i) the terms and conditions applicable to Incremental Overseas Term Loans
may be materially different from those of the U.S. Term Loans to the extent such
differences are reasonably acceptable to the Administrative Agent and
(ii) subject to clauses (b), (c) and (d) above, the interest rates, maturity and
amortization schedule applicable to the Incremental Overseas Term Loans shall be
determined by the applicable Overseas Borrower and the lenders thereof.  Each
notice from an Overseas Borrower pursuant to this Section shall set forth the
requested amount and proposed terms of the relevant Incremental Overseas Term
Loans.  Incremental Overseas Term Loans may be made by any existing Lender or by
any other bank or other financial institution (any such other bank or other
financial institution being called an “Additional Overseas Lender”), in each
case as designated by the applicable Overseas Borrower, provided that the
Administrative Agent shall have consented (not to be unreasonably withheld) to
such Lender’s or Additional Overseas Lender’s making such Incremental Overseas
Term Loans if such consent would be required under Section 10.07(b) for an
assignment of Loans to such Lender or Additional Overseas Lender.  Commitments
in respect of Incremental Overseas Term Loans shall become Commitments under
this Agreement pursuant to an amendment (an “Incremental Overseas Amendment”) to
this Agreement and, as appropriate, the other Loan Documents, executed by
Holdings, the Company, the applicable Overseas Borrower, each Lender agreeing to
provide such Commitment, if any, each Additional Overseas Lender, if any, and
the Administrative Agent.  The Incremental Overseas Amendment may, without the
consent of any other Lenders, effect such amendments to this Agreement and the
other Loan Documents as may be necessary or appropriate, in the reasonable
opinion of the Administrative Agent and the applicable Overseas Borrower, to
effect the provisions of this Section.  The effectiveness of any Incremental
Overseas Amendment shall be subject to the satisfaction on the date thereof
(each, an “Incremental Overseas Facility Closing Date”) of each of the
conditions set forth in Section 4.03 and such other conditions as the parties
thereto shall agree.  The proceeds of the Incremental Overseas Term Loans shall
be applied to the prepayment of the U.S. Term Loans pursuant to
Section 2.05(b)(iii).  No Lender shall be obligated to provide any Incremental
Overseas Term Loans unless it so agrees.  The Administrative Agent and the
Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata
payment requirements contained elsewhere in this Agreement shall not apply to
the transactions effected pursuant to this Section 2.14(b).

 

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(C)  THIS SECTION 2.14 SHALL SUPERSEDE ANY PROVISIONS IN SECTION 2.13 OR 10.01
TO THE CONTRARY.

 

SECTION 2.15.  Overseas Borrower Costs.  (a)  If as a result of the introduction
of or any change in or in the interpretation of any Law, in each case after the
date any Lender makes any Euro Term Loan or Incremental Overseas Term Loan to
the applicable Overseas Borrower, or such Lender’s compliance therewith, the
cost to such Lender of making or maintaining such Loan to such Overseas Borrower
is increased (or the amount of any sum received or receivable by such Lender or
its Lending Office is reduced) by an amount deemed by such Lender to be
material, by reason of the fact that such Overseas Borrower is incorporated in,
or conducts business in, a jurisdiction outside the United States, such Overseas
Borrower shall indemnify such Lender for such increased cost or reduction within
fifteen (15) days after demand by such Lender (with a copy to the Administrative
Agent) (excluding for purposes of this Section 2.15 any such increased costs
resulting from (i) Taxes or Other Taxes (as to which Section 3.01 and
Section 10.15 shall govern), (ii) changes in the basis of taxation of overall
net income or overall gross income (including branch profits), and franchise
(and similar) taxes imposed in lieu of net income taxes, by the United States or
any foreign jurisdiction or any political subdivision of either thereof under
the Laws of which such Lender is organized or maintains a Lending Office,
(iii) reserve requirements contemplated by Section 3.04(c) (as to which
Section 3.04(c) shall govern) and (iv) the requirements of the Bank of England
and the Financial Services Authority or the European Central Bank reflected in
the Mandatory Cost (as to which Section 3.04(a) shall govern).  A certificate of
such Lender claiming compensation under this Section 2.15 and setting forth the
additional amount or amounts to be paid to it hereunder in reasonable detail
shall be conclusive in the absence of manifest error.

 

(B)  EACH LENDER WILL PROMPTLY NOTIFY THE COMPANY, THE RELEVANT OVERSEAS
BORROWER AND THE ADMINISTRATIVE AGENT OF ANY EVENT OR CIRCUMSTANCE OF WHICH IT
HAS KNOWLEDGE THAT WILL ENTITLE SUCH LENDER TO COMPENSATION PURSUANT TO THIS
SECTION 2.15.  IF ANY LENDER REQUESTS COMPENSATION UNDER THIS SECTION 2.15, THEN
SUCH LENDER WILL, IF REQUESTED BY THE COMPANY, USE COMMERCIALLY REASONABLE
EFFORTS TO DESIGNATE ANOTHER LENDING OFFICE FOR ANY LOAN AFFECTED BY SUCH EVENT;
PROVIDED THAT SUCH EFFORTS ARE MADE ON TERMS THAT, IN THE REASONABLE JUDGMENT OF
SUCH LENDER, CAUSE SUCH LENDER AND ITS LENDING OFFICE(S) TO SUFFER NO MATERIAL
ECONOMIC, LEGAL OR REGULATORY DISADVANTAGE.

 

ARTICLE III

TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY

 

SECTION 3.01.  Taxes.  (a)  Except as provided in this Section 3.01 and
Section 10.15, any and all payments by any Borrower (the term Borrower under
Article III being deemed to include any Subsidiary for whose account a Letter of
Credit is issued) to or for the account of any Agent or any Lender under any
Loan Document shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and all liabilities (including additions
to tax, penalties and interest) with respect thereto, excluding in the case of
each Agent and each Lender, (x) taxes imposed on or measured by its net income
or overall gross income (including branch profits), and franchise (and similar)
taxes imposed on it in lieu of net income taxes, by the jurisdiction (or any
political subdivision thereof) under the Laws of which such Agent or such
Lender, as the case may be, is organized, managed or controlled or maintains a
Lending Office or, in the case of Germany, a permanent establishment for tax
purposes, and all liabilities (including additions to tax, penalties and
interest) with respect thereto and (y) any limited German income tax liability

 

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pursuant to § 49 para. 1 no. 5 lit. c) aa) German Income Tax Act imposed on such
Agent or such Lender (including any withholding obligation of the German
Borrower on behalf of such Agent or such Lender pursuant to § 50a para. 7 German
Income Tax Act) due to the fact that the Euro Term Loans are secured by German
real property or by any rights treated as German real property under German
Civil Law, and all liabilities (including additions to tax, penalties and
interest) with respect thereto; provided that the exclusion set forth in clause
(y) above shall be inapplicable for so long as the Euro Term Loans are secured
by German real property or by any rights treated as German real property under
German Civil Law the aggregate fair market value of which real property and
rights exceeds 10% of the consolidated total assets of the German Borrower and
its Subsidiaries.  All non-excluded taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and liabilities described in
the immediately preceding sentence are hereinafter referred to as “Taxes”.  If
any Borrower shall be required by any Laws to deduct any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to any Agent or
any Lender, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 3.01), each of such Agent and such Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions, (iii) such
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable Laws, and (iv) within thirty
(30) days after the date of such payment (or, if receipts or evidence are not
available within thirty (30) days, as soon as possible thereafter), such
Borrower shall furnish to such Agent or Lender (as the case may be) the original
or a certified copy of a receipt evidencing payment thereof to the extent such a
receipt is issued therefor, or other written proof of payment thereof that is
reasonably satisfactory to the Administrative Agent.  If such Borrower fails to
pay any Taxes or Other Taxes when due to the appropriate taxing authority or
fails to remit to any Agent or any Lender the required receipts or other
required documentary evidence, such Borrower shall indemnify such Agent and such
Lender for any incremental taxes, interest or penalties that may become payable
by such Agent or such Lender arising out of such failure.

 

(B)  IN ADDITION, EACH BORROWER AGREES TO PAY ANY AND ALL PRESENT OR FUTURE
STAMP, COURT OR DOCUMENTARY TAXES AND ANY OTHER EXCISE, PROPERTY, INTANGIBLE OR
MORTGAGE RECORDING TAXES OR CHARGES OR SIMILAR LEVIES WHICH ARISE FROM ANY
PAYMENT MADE UNDER ANY LOAN DOCUMENT OR FROM THE EXECUTION, DELIVERY,
PERFORMANCE, ENFORCEMENT OR REGISTRATION OF, OR OTHERWISE WITH RESPECT TO, ANY
LOAN DOCUMENT (HEREINAFTER REFERRED TO AS “OTHER TAXES”).

 

(C)  EACH BORROWER AGREES TO INDEMNIFY EACH AGENT AND EACH LENDER FOR (I) THE
FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING ANY TAXES OR OTHER TAXES IMPOSED
OR ASSERTED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 3.01) PAID
BY SUCH AGENT AND SUCH LENDER AND (II) ANY LIABILITY (INCLUDING ADDITIONS TO
TAX, PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT
THERETO, IN EACH CASE WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR
LEGALLY IMPOSED OR ASSERTED BY THE RELEVANT GOVERNMENTAL AUTHORITY; PROVIDED
SUCH AGENT OR LENDER, AS THE CASE MAY BE, PROVIDES SUCH BORROWER WITH A WRITTEN
STATEMENT THEREOF SETTING FORTH IN REASONABLE DETAIL THE BASIS AND CALCULATION
OF SUCH AMOUNTS.  PAYMENT UNDER THIS SECTION 3.01(C) SHALL BE MADE WITHIN THIRTY
(30) DAYS AFTER THE DATE SUCH LENDER OR SUCH AGENT MAKES A DEMAND THEREFOR.

 

(D)  NO BORROWER SHALL BE REQUIRED PURSUANT TO THIS SECTION 3.01 TO PAY ANY
ADDITIONAL AMOUNT TO, OR TO INDEMNIFY, ANY LENDER OR AGENT, AS THE CASE MAY BE,
TO THE EXTENT THAT SUCH LENDER OR SUCH AGENT BECOMES SUBJECT TO TAXES SUBSEQUENT
TO THE CLOSING DATE (OR, IF LATER, THE DATE SUCH LENDER OR AGENT BECOMES A PARTY
TO THIS AGREEMENT) AS A RESULT OF A CHANGE IN THE PLACE OF ORGANIZATION OF SUCH
LENDER OR AGENT OR A CHANGE IN THE LENDING OFFICE OF SUCH LENDER, EXCEPT

 

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to the extent that any such change is requested or required in writing by any
Borrower (and provided that nothing in this clause (d) shall be construed as
relieving any Borrower from any obligation to make such payments or
indemnification in the event of a change in lending office or place of
organization that precedes a change in Law to the extent such Taxes result from
a change in Law).

 

(E)  NOTWITHSTANDING ANYTHING ELSE HEREIN TO THE CONTRARY, IF A LENDER OR AN
AGENT IS SUBJECT TO WITHHOLDING TAX IMPOSED BY ANY JURISDICTION IN WHICH ANY
BORROWER IS FORMED OR ORGANIZED AT A RATE IN EXCESS OF ZERO PERCENT AT THE TIME
SUCH LENDER OR SUCH AGENT, AS THE CASE MAY BE, FIRST BECOMES A PARTY TO THIS
AGREEMENT (OR, IF LATER, THE DATE SUCH LENDER OR AGENT MAKES AN INCREMENTAL
OVERSEAS TERM LOAN TO ANY BORROWER), WITHHOLDING TAX IMPOSED BY SUCH
JURISDICTION AT SUCH RATE SHALL BE CONSIDERED EXCLUDED FROM TAXES UNLESS AND
UNTIL SUCH LENDER OR AGENT, AS THE CASE MAY BE, PROVIDES THE APPROPRIATE FORMS
REQUIRED OR PRESCRIBED BY APPLICABLE LAW CERTIFYING THAT A LESSER RATE APPLIES,
WHEREUPON WITHHOLDING TAX AT SUCH LESSER RATE ONLY SHALL BE CONSIDERED EXCLUDED
FROM TAXES FOR PERIODS GOVERNED BY SUCH FORMS; PROVIDED THAT, IF AT THE DATE OF
THE ASSIGNMENT AND ASSUMPTION PURSUANT TO WHICH A LENDER BECOMES A PARTY TO THIS
AGREEMENT, THE LENDER ASSIGNOR WAS ENTITLED TO PAYMENTS UNDER CLAUSE (A) OF THIS
SECTION 3.01 IN RESPECT OF WITHHOLDING TAX WITH RESPECT TO INTEREST PAID AT SUCH
DATE, THEN, TO SUCH EXTENT, THE TERM TAXES SHALL INCLUDE (IN ADDITION TO
WITHHOLDING TAXES THAT MAY BE IMPOSED IN THE FUTURE OR OTHER AMOUNTS OTHERWISE
INCLUDABLE IN TAXES) WITHHOLDING TAX, IF ANY, APPLICABLE WITH RESPECT TO THE
LENDER ASSIGNEE ON SUCH DATE.

 

(F)  IF ANY LENDER OR AGENT DETERMINES, IN ITS REASONABLE DISCRETION, THAT IT
HAS RECEIVED A REFUND IN RESPECT OF ANY TAXES OR OTHER TAXES AS TO WHICH
INDEMNIFICATION OR ADDITIONAL AMOUNTS HAVE BEEN PAID TO IT BY ANY BORROWER
PURSUANT TO THIS SECTION 3.01, IT SHALL PROMPTLY REMIT SUCH REFUND (BUT ONLY TO
THE EXTENT OF INDEMNITY PAYMENTS MADE, OR ADDITIONAL AMOUNTS PAID, BY ANY
BORROWER UNDER THIS SECTION 3.01 WITH RESPECT TO THE TAXES OR OTHER TAXES GIVING
RISE TO SUCH REFUND PLUS ANY INTEREST INCLUDED IN SUCH REFUND BY THE RELEVANT
TAXING AUTHORITY ATTRIBUTABLE THERETO) TO SUCH BORROWER, NET OF ALL
OUT-OF-POCKET EXPENSES OF THE LENDER OR AGENT, AS THE CASE MAY BE AND WITHOUT
INTEREST (OTHER THAN ANY INTEREST PAID BY THE RELEVANT TAXING AUTHORITY WITH
RESPECT TO SUCH REFUND); PROVIDED THAT SUCH BORROWER, UPON THE REQUEST OF THE
LENDER OR AGENT, AS THE CASE MAY BE, AGREES PROMPTLY TO RETURN SUCH REFUND TO
SUCH PARTY IN THE EVENT SUCH PARTY IS REQUIRED TO REPAY SUCH REFUND TO THE
RELEVANT TAXING AUTHORITY.  SUCH LENDER OR AGENT, AS THE CASE MAY BE, SHALL, AT
SUCH BORROWER’S REQUEST, PROVIDE SUCH BORROWER WITH A COPY OF ANY NOTICE OF
ASSESSMENT OR OTHER EVIDENCE OF THE REQUIREMENT TO REPAY SUCH REFUND RECEIVED
FROM THE RELEVANT TAXING AUTHORITY (PROVIDED THAT SUCH LENDER OR AGENT MAY
DELETE ANY INFORMATION THEREIN THAT SUCH LENDER OR AGENT DEEMS CONFIDENTIAL). 
NOTHING HEREIN CONTAINED SHALL INTERFERE WITH THE RIGHT OF A LENDER OR AGENT TO
ARRANGE ITS TAX AFFAIRS IN WHATEVER MANNER IT THINKS FIT NOR OBLIGE ANY LENDER
OR AGENT TO CLAIM ANY TAX REFUND OR TO MAKE AVAILABLE ITS TAX RETURNS OR
DISCLOSE ANY INFORMATION RELATING TO ITS TAX AFFAIRS OR ANY COMPUTATIONS IN
RESPECT THEREOF OR REQUIRE ANY LENDER OR AGENT TO DO ANYTHING THAT WOULD
PREJUDICE ITS ABILITY TO BENEFIT FROM ANY OTHER REFUNDS, CREDITS, RELIEFS,
REMISSIONS OR REPAYMENTS TO WHICH IT MAY BE ENTITLED.

 

(G)  EACH LENDER AGREES THAT, UPON THE OCCURRENCE OF ANY EVENT GIVING RISE TO
THE OPERATION OF SECTION 3.01(A) OR (C) WITH RESPECT TO SUCH LENDER IT WILL, IF
REQUESTED BY THE COMPANY, USE COMMERCIALLY REASONABLE EFFORTS TO DESIGNATE
ANOTHER LENDING OFFICE FOR ANY LOAN OR LETTER OF CREDIT AFFECTED BY SUCH EVENT;
PROVIDED THAT SUCH EFFORTS ARE MADE ON TERMS THAT, IN THE SOLE JUDGMENT
EXERCISED IN GOOD FAITH OF SUCH LENDER, CAUSE SUCH LENDER AND ITS LENDING
OFFICE(S) TO SUFFER NO ECONOMIC, LEGAL OR REGULATORY DISADVANTAGE, AND PROVIDED
FURTHER THAT NOTHING IN THIS SECTION 3.01(G) SHALL AFFECT OR POSTPONE ANY OF THE
OBLIGATIONS OF ANY BORROWER OR THE RIGHTS OF SUCH LENDER PURSUANT TO
SECTION 3.01(A) OR (C).

 

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SECTION 3.02.  Illegality.  If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurocurrency Rate Loans, or to determine or charge interest rates based upon the
Eurocurrency Rate, then, on notice thereof by such Lender to the Borrowers
through the Administrative Agent, any obligation of such Lender to make or
continue Eurocurrency Rate Loans or to convert Base Rate Loans to Eurocurrency
Rate Loans shall be suspended until such Lender notifies the Administrative
Agent and the relevant Borrowers that the circumstances giving rise to such
determination no longer exist.  Upon receipt of such notice, the relevant
Borrowers shall upon demand from such Lender (with a copy to the Administrative
Agent), prepay or, if applicable, convert all Eurocurrency Rate Loans of such
Lender to Base Rate Loans, either on the last day of the Interest Period
therefor, if such Lender may lawfully continue to maintain such Eurocurrency
Rate Loans to such day, or promptly, if such Lender may not lawfully continue to
maintain such Eurocurrency Rate Loans.  Upon any such prepayment or conversion,
each relevant Borrower shall also pay accrued interest on the amount so prepaid
or converted and all amounts due, if any, in connection with such prepayment or
conversion under Section 3.05.  Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

 

SECTION 3.03.  Inability to Determine Rates.  If the Required Lenders determine
that for any reason adequate and reasonable means do not exist for determining
the Eurocurrency Rate for any requested Interest Period with respect to a
proposed Eurocurrency Rate Loan, or that the Eurocurrency Rate for any requested
Interest Period with respect to a proposed Eurocurrency Rate Loan does not
adequately and fairly reflect the cost to such Lenders of funding such Loan, or
that Dollar deposits are not being offered to banks in the London interbank
eurodollar market for the applicable amount and the Interest Period of such
Eurocurrency Rate Loan, the Administrative Agent will promptly so notify each
relevant Borrower and each Lender.  Thereafter, the obligation of the Lenders to
make or maintain Eurocurrency Rate Loans shall be suspended until the
Administrative Agent (upon the instruction of the Required Lenders, which
instruction shall be given promptly upon such condition’s ceasing to exist)
revokes such notice.  Upon receipt of such notice, each relevant Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurocurrency Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Borrowing of Base Rate Loans in the amount
specified therein.

 

SECTION 3.04.  Increased Cost and Reduced Return; Capital Adequacy; Reserves on
Eurocurrency Rate Loans.  (a)  If any Lender determines (in good faith) that as
a result of the introduction of or any change in or in the interpretation of any
Law, in each case after the date hereof, or such Lender’s compliance therewith,
there shall be any increase in the cost to such Lender of agreeing to make or
making, funding or maintaining Eurocurrency Rate Loans or (as the case may be)
issuing or participating in Letters of Credit, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this Section 3.04(a) any such increased costs or
reduction in amount covered by Section 2.15 or resulting from (i) Taxes or Other
Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of
taxation of overall net income or overall gross income (including branch
profits), and franchise (and similar) taxes imposed in lieu of net income taxes,
by the United States or any foreign jurisdiction or any political subdivision of
either thereof under the Laws of which such Lender is organized or maintains a
Lending Office, (iii) reserve requirements contemplated by Section 3.04(c) and
(iv) in the case of Eurocurrency Rate Loans denominated in an Alternative
Currency, the requirements of the Bank of England and the Financial Services
Authority or the European Central Bank reflected in the Mandatory Cost, other
than as set forth

 

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below) or the Mandatory Cost, as calculated hereunder, does not represent the
cost to such Lender of complying with the requirements of the Bank of England
and/or the Financial Services Authority or the European Central Bank in relation
to its making, funding or maintaining of such Eurocurrency Rate Loans, then from
time to time within fifteen (15) days after demand by such Lender setting forth
in reasonable detail such increased costs (with a copy of such demand to the
Administrative Agent given in accordance with Section 3.06), the Company shall
pay to such Lender such additional amounts as will compensate such Lender for
such increased cost or reduction or, if applicable, the portion of such cost
that is not represented by the Mandatory Cost.

 

(B)  IF ANY LENDER DETERMINES (IN GOOD FAITH) THAT THE INTRODUCTION OF ANY LAW
REGARDING CAPITAL ADEQUACY OR ANY CHANGE THEREIN OR IN THE INTERPRETATION
THEREOF, IN EACH CASE AFTER THE DATE HEREOF, OR COMPLIANCE BY SUCH LENDER OR
SUCH LENDER’S HOLDING COMPANY THEREWITH, HAS THE EFFECT OF REDUCING THE RATE OF
RETURN ON THE CAPITAL OF SUCH LENDER OR SUCH LENDER’S HOLDING COMPANY (OR ITS
LENDING OFFICE) AS A CONSEQUENCE OF ITS OBLIGATIONS HEREUNDER TO A LEVEL BELOW
THAT WHICH SUCH LENDER OR SUCH LENDER’S HOLDING COMPANY COULD HAVE ACHIEVED BUT
FOR SUCH INTRODUCTION, CHANGE OR COMPLIANCE (TAKING INTO CONSIDERATION ITS
POLICIES WITH RESPECT TO CAPITAL ADEQUACY, BY AN AMOUNT DEEMED BY SUCH LENDER TO
BE MATERIAL, THEN FROM TIME TO TIME UPON DEMAND OF SUCH LENDER SETTING FORTH IN
REASONABLE DETAIL THE CHARGE AND THE CALCULATION OF SUCH REDUCED RATE OF RETURN
(WITH A COPY OF SUCH DEMAND TO THE ADMINISTRATIVE AGENT GIVEN IN ACCORDANCE WITH
SECTION 3.06), THE COMPANY SHALL PAY TO SUCH LENDER SUCH ADDITIONAL AMOUNTS AS
WILL COMPENSATE SUCH LENDER OR SUCH LENDER’S HOLDING COMPANY FOR SUCH REDUCTION
WITHIN FIFTEEN (15) DAYS AFTER RECEIPT OF SUCH DEMAND.

 

(C)  THE COMPANY SHALL PAY TO EACH LENDER, (I) AS LONG AS SUCH LENDER SHALL BE
REQUIRED TO MAINTAIN RESERVES WITH RESPECT TO LIABILITIES OR ASSETS CONSISTING
OF OR INCLUDING EUROCURRENCY FUNDS OR DEPOSITS, ADDITIONAL INTEREST ON THE
UNPAID PRINCIPAL AMOUNT OF EACH EUROCURRENCY RATE LOAN EQUAL TO THE ACTUAL COSTS
OF SUCH RESERVES ALLOCATED TO SUCH LOAN BY SUCH LENDER (AS DETERMINED BY SUCH
LENDER IN GOOD FAITH, WHICH DETERMINATION SHALL BE CONCLUSIVE IN THE ABSENCE OF
MANIFEST ERROR), AND (II) AS LONG AS SUCH LENDER SHALL BE REQUIRED TO COMPLY
WITH ANY RESERVE RATIO REQUIREMENT OR ANALOGOUS REQUIREMENT OF ANY OTHER CENTRAL
BANKING OR FINANCIAL REGULATORY AUTHORITY IMPOSED IN RESPECT OF THE MAINTENANCE
OF THE COMMITMENTS OR THE FUNDING OF THE EUROCURRENCY RATE LOANS, SUCH
ADDITIONAL COSTS (EXPRESSED AS A PERCENTAGE PER ANNUM AND ROUNDED UPWARDS, IF
NECESSARY, TO THE NEAREST FIVE DECIMAL PLACES) EQUAL TO THE ACTUAL COSTS
ALLOCATED TO SUCH COMMITMENT OR LOAN BY SUCH LENDER (AS DETERMINED BY SUCH
LENDER IN GOOD FAITH, WHICH DETERMINATION SHALL BE CONCLUSIVE ABSENT MANIFEST
ERROR) WHICH IN EACH CASE SHALL BE DUE AND PAYABLE ON EACH DATE ON WHICH
INTEREST IS PAYABLE ON SUCH LOAN, PROVIDED THE COMPANY SHALL HAVE RECEIVED AT
LEAST FIFTEEN (15) DAYS’ PRIOR NOTICE (WITH A COPY TO THE ADMINISTRATIVE AGENT,
AND WHICH NOTICE SHALL SPECIFY THE STATUTORY RESERVE RATE, IF ANY, APPLICABLE TO
SUCH LENDER) OF SUCH ADDITIONAL INTEREST OR COST FROM SUCH LENDER.  IF A LENDER
FAILS TO GIVE NOTICE FIFTEEN (15) DAYS PRIOR TO THE RELEVANT INTEREST PAYMENT
DATE, SUCH ADDITIONAL INTEREST OR COST SHALL BE DUE AND PAYABLE FIFTEEN (15)
DAYS FROM RECEIPT OF SUCH NOTICE.

 

(D)  FAILURE OR DELAY ON THE PART OF ANY LENDER TO DEMAND COMPENSATION PURSUANT
TO THIS SECTION 3.04 SHALL NOT CONSTITUTE A WAIVER OF SUCH LENDER’S RIGHT TO
DEMAND SUCH COMPENSATION, PROVIDED THAT THE COMPANY SHALL NOT BE REQUIRED TO
COMPENSATE A LENDER PURSUANT TO SECTION 3.04(A), (B) OR (C) FOR ANY SUCH
INCREASED COST OR REDUCTION INCURRED MORE THAN NINETY (90) DAYS PRIOR TO THE
DATE THAT SUCH LENDER DEMANDS, OR NOTIFIES THE COMPANY OF ITS INTENTION TO
DEMAND, COMPENSATION THEREFOR, PROVIDED FURTHER THAT, IF THE CIRCUMSTANCE GIVING
RISE TO SUCH INCREASED COST OR REDUCTION IS RETROACTIVE, THEN SUCH 90-DAY PERIOD
REFERRED TO ABOVE SHALL BE EXTENDED TO INCLUDE THE PERIOD OF RETROACTIVE EFFECT
THEREOF.

 

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(E)  IF ANY LENDER REQUESTS COMPENSATION UNDER THIS SECTION 3.04, THEN SUCH
LENDER WILL, IF REQUESTED BY THE COMPANY, USE COMMERCIALLY REASONABLE EFFORTS TO
DESIGNATE ANOTHER LENDING OFFICE FOR ANY LOAN OR LETTER OF CREDIT AFFECTED BY
SUCH EVENT; PROVIDED THAT SUCH EFFORTS ARE MADE ON TERMS THAT, IN THE REASONABLE
JUDGMENT OF SUCH LENDER, CAUSE SUCH LENDER AND ITS LENDING OFFICE(S) TO SUFFER
NO MATERIAL ECONOMIC, LEGAL OR REGULATORY DISADVANTAGE, AND PROVIDED FURTHER
THAT NOTHING IN THIS SECTION 3.04(E) SHALL AFFECT OR POSTPONE ANY OF THE
OBLIGATIONS OF ANY BORROWER OR THE RIGHTS OF SUCH LENDER PURSUANT TO
SECTION 3.04(A), (B), (C) OR (D) OR ANY RIGHTS OF THE COMPANY PURSUANT TO
SECTION 3.07.

 

SECTION 3.05.  Funding Losses.  Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Company shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
(excluding loss of profit) incurred by it as a result of:

 

(A)  (I) ANY CONTINUATION, CONVERSION, PAYMENT OR PREPAYMENT OF ANY EUROCURRENCY
RATE LOAN ON A DAY OTHER THAN THE LAST DAY OF THE INTEREST PERIOD FOR SUCH LOAN
OR (II) THE CAM EXCHANGE (IN EACH CASE, WHETHER VOLUNTARY, MANDATORY, AUTOMATIC,
BY REASON OF ACCELERATION, OR OTHERWISE); OR

 

(B)  ANY FAILURE BY ANY BORROWER (FOR A REASON OTHER THAN THE FAILURE OF SUCH
LENDER TO MAKE A LOAN) TO PREPAY, BORROW, CONTINUE OR CONVERT ANY EUROCURRENCY
RATE LOAN ON THE DATE OR IN THE AMOUNT NOTIFIED BY SUCH BORROWER;

 

including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained.

 

SECTION 3.06.  Matters Applicable to All Requests for Compensation.  (a)  Any
Agent or any Lender claiming compensation under this Article III shall deliver a
certificate to the Company setting forth the additional amount or amounts to be
paid to it hereunder which shall be conclusive in the absence of manifest error.

 

(B)  WITH RESPECT TO ANY LENDER’S CLAIM FOR COMPENSATION UNDER SECTION 2.15,
3.01, 3.02, 3.03 OR 3.04, NO BORROWER SHALL BE REQUIRED TO COMPENSATE SUCH
LENDER FOR ANY AMOUNT INCURRED MORE THAN NINETY (90) DAYS PRIOR TO THE DATE THAT
SUCH LENDER NOTIFIES THE RELEVANT BORROWERS OF THE EVENT THAT GIVES RISE TO SUCH
CLAIM; PROVIDED THAT, IF THE CIRCUMSTANCE GIVING RISE TO SUCH CLAIM IS
RETROACTIVE, THEN SUCH 90-DAY PERIOD REFERRED TO ABOVE SHALL BE EXTENDED TO
INCLUDE THE PERIOD OF RETROACTIVE EFFECT THEREOF.  IF ANY LENDER REQUESTS
COMPENSATION BY THE COMPANY UNDER SECTION 2.15 OR 3.04, THE COMPANY MAY, BY
NOTICE TO SUCH LENDER (WITH A COPY TO THE ADMINISTRATIVE AGENT), SUSPEND THE
OBLIGATION OF SUCH LENDER TO MAKE OR CONTINUE FROM ONE INTEREST PERIOD TO
ANOTHER EUROCURRENCY RATE LOANS, OR TO CONVERT BASE RATE LOANS INTO EUROCURRENCY
RATE LOANS, UNTIL THE EVENT OR CONDITION GIVING RISE TO SUCH REQUEST CEASES TO
BE IN EFFECT (IN WHICH CASE THE PROVISIONS OF SECTION 3.06(C) SHALL BE
APPLICABLE); PROVIDED THAT SUCH SUSPENSION SHALL NOT AFFECT THE RIGHT OF SUCH
LENDER TO RECEIVE THE COMPENSATION SO REQUESTED.

 

(C)  IF THE OBLIGATION OF ANY LENDER TO MAKE OR CONTINUE FROM ONE INTEREST
PERIOD TO ANOTHER ANY EUROCURRENCY RATE LOAN, OR TO CONVERT BASE RATE LOANS INTO
EUROCURRENCY RATE LOANS SHALL BE SUSPENDED PURSUANT TO SECTION 3.06(B) HEREOF,
SUCH LENDER’S EUROCURRENCY RATE LOANS SHALL BE AUTOMATICALLY CONVERTED INTO BASE
RATE LOANS ON THE LAST DAY(S) OF THE THEN CURRENT INTEREST PERIOD(S) FOR SUCH
EUROCURRENCY RATE LOANS (OR, IN THE CASE OF AN IMMEDIATE CONVERSION REQUIRED BY
SECTION 3.02, ON SUCH EARLIER DATE AS REQUIRED BY LAW) AND, UNLESS AND UNTIL
SUCH

 

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Lender gives notice as provided below that the circumstances specified in
Section 2.15, 3.01, 3.02, 3.03 or 3.04 hereof that gave rise to such conversion
no longer exist:

 

(I)  TO THE EXTENT THAT SUCH LENDER’S EUROCURRENCY RATE LOANS HAVE BEEN SO
CONVERTED, ALL PAYMENTS AND PREPAYMENTS OF PRINCIPAL THAT WOULD OTHERWISE BE
APPLIED TO SUCH LENDER’S EUROCURRENCY RATE LOANS SHALL BE APPLIED INSTEAD TO ITS
BASE RATE LOANS; AND

 

(II)  ALL LOANS THAT WOULD OTHERWISE BE MADE OR CONTINUED FROM ONE INTEREST
PERIOD TO ANOTHER BY SUCH LENDER AS EUROCURRENCY RATE LOANS SHALL BE MADE OR
CONTINUED INSTEAD AS BASE RATE LOANS, AND ALL BASE RATE LOANS OF SUCH LENDER
THAT WOULD OTHERWISE BE CONVERTED INTO EUROCURRENCY RATE LOANS SHALL REMAIN AS
BASE RATE LOANS.

 

(D)  IF ANY LENDER GIVES NOTICE TO THE COMPANY (WITH A COPY TO THE AGENT) THAT
THE CIRCUMSTANCES SPECIFIED IN SECTION 2.15, 3.01, 3.02, 3.03 OR 3.04 HEREOF
THAT GAVE RISE TO THE CONVERSION OF SUCH LENDER’S EUROCURRENCY RATE LOANS
PURSUANT TO THIS SECTION 3.06 NO LONGER EXIST (WHICH SUCH LENDER AGREES TO DO
PROMPTLY UPON SUCH CIRCUMSTANCES CEASING TO EXIST) AT A TIME WHEN EUROCURRENCY
RATE LOANS MADE BY OTHER LENDERS ARE OUTSTANDING, SUCH LENDER’S BASE RATE LOANS
SHALL BE AUTOMATICALLY CONVERTED, ON THE FIRST DAY(S) OF THE NEXT SUCCEEDING
INTEREST PERIOD(S) FOR SUCH OUTSTANDING EUROCURRENCY RATE LOANS, TO THE EXTENT
NECESSARY SO THAT, AFTER GIVING EFFECT THERETO, ALL LOANS HELD BY THE LENDERS
HOLDING EUROCURRENCY RATE LOANS AND BY SUCH LENDER ARE HELD PRO RATA (AS TO
PRINCIPAL AMOUNTS, INTEREST RATE BASIS, AND INTEREST PERIODS) IN ACCORDANCE WITH
THEIR RESPECTIVE COMMITMENTS.

 

SECTION 3.07.  Replacement of Lenders under Certain Circumstances.  (a)  If at
any time (i) any Borrower becomes obligated to pay additional amounts or
indemnity payments described in Section 2.15, 3.01 or 3.04 as a result of any
condition described in such Sections or any Lender ceases to make Eurocurrency
Rate Loans as a result of any condition described in Section 3.02 or
Section 3.04, (ii) any Lender becomes a Defaulting Lender or (iii) any Lender
becomes a Non-Consenting Lender, then the Company may, upon prior written notice
to the Administrative Agent and such Lender, replace such Lender by causing such
Lender to (and such Lender shall be obligated to) assign pursuant to
Section 10.07(b) (with the assignment fee to be paid by the Company in such
instance) all of its rights and obligations under this Agreement to one or more
Eligible Assignees; provided that neither the Administrative Agent nor any
Lender shall have any obligation to the Company to find a replacement Lender or
other such Person.

 

(B)  ANY LENDER BEING REPLACED PURSUANT TO SECTION 3.07(A) ABOVE SHALL
(I) EXECUTE AND DELIVER AN ASSIGNMENT AND ASSUMPTION WITH RESPECT TO SUCH
LENDER’S COMMITMENT AND OUTSTANDING LOANS AND PARTICIPATIONS IN L/C OBLIGATIONS
AND SWING LINE LOANS, AND (II) DELIVER ANY NOTES EVIDENCING SUCH LOANS TO THE
COMPANY OR ADMINISTRATIVE AGENT.  PURSUANT TO SUCH ASSIGNMENT AND ASSUMPTION,
(A) THE ASSIGNEE LENDER SHALL ACQUIRE ALL OR A PORTION, AS THE CASE MAY BE, OF
THE ASSIGNING LENDER’S COMMITMENT AND OUTSTANDING LOANS AND PARTICIPATIONS IN
L/C OBLIGATIONS AND SWING LINE LOANS, (B) ALL OBLIGATIONS OF THE BORROWERS OWING
TO THE ASSIGNING LENDER RELATING TO THE LOANS AND PARTICIPATIONS SO ASSIGNED
SHALL BE PAID IN FULL BY THE ASSIGNEE LENDER TO SUCH ASSIGNING LENDER
CONCURRENTLY WITH SUCH ASSIGNMENT AND ASSUMPTION AND (C) UPON SUCH PAYMENT AND,
IF SO REQUESTED BY THE ASSIGNEE LENDER, DELIVERY TO THE ASSIGNEE LENDER OF THE
APPROPRIATE NOTE OR NOTES EXECUTED BY THE RELEVANT BORROWERS, THE ASSIGNEE
LENDER SHALL BECOME A LENDER HEREUNDER AND THE ASSIGNING LENDER SHALL CEASE TO
CONSTITUTE A LENDER HEREUNDER WITH RESPECT TO SUCH ASSIGNED LOANS, COMMITMENTS
AND PARTICIPATIONS, EXCEPT WITH RESPECT TO INDEMNIFICATION PROVISIONS UNDER THIS
AGREEMENT, WHICH SHALL SURVIVE AS TO SUCH ASSIGNING LENDER.

 

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(C)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED ABOVE, ANY LENDER THAT
ACTS AS AN L/C ISSUER MAY NOT BE REPLACED HEREUNDER AT ANY TIME THAT IT HAS ANY
LETTER OF CREDIT OUTSTANDING HEREUNDER UNLESS ARRANGEMENTS REASONABLY
SATISFACTORY TO SUCH L/C ISSUER (INCLUDING THE FURNISHING OF A BACK-UP STANDBY
LETTER OF CREDIT IN FORM AND SUBSTANCE, AND ISSUED BY AN ISSUER REASONABLY
SATISFACTORY TO SUCH L/C ISSUER OR THE DEPOSITING OF CASH COLLATERAL INTO A CASH
COLLATERAL ACCOUNT IN AMOUNTS AND PURSUANT TO ARRANGEMENTS REASONABLY
SATISFACTORY TO SUCH L/C ISSUER) HAVE BEEN MADE WITH RESPECT TO EACH SUCH
OUTSTANDING LETTER OF CREDIT AND THE LENDER THAT ACTS AS THE ADMINISTRATIVE
AGENT MAY NOT BE REPLACED HEREUNDER EXCEPT IN ACCORDANCE WITH THE TERMS OF
SECTION 9.09.

 

(D)  IN THE EVENT THAT (I) THE COMPANY OR THE ADMINISTRATIVE AGENT HAS REQUESTED
THAT THE LENDERS CONSENT TO A DEPARTURE OR WAIVER OF ANY PROVISIONS OF THE LOAN
DOCUMENTS OR AGREE TO ANY AMENDMENT THERETO, (II) THE CONSENT, WAIVER OR
AMENDMENT IN QUESTION REQUIRES THE AGREEMENT OF ALL AFFECTED LENDERS IN
ACCORDANCE WITH THE TERMS OF SECTION 10.01 OR ALL THE LENDERS WITH RESPECT TO A
CERTAIN CLASS OF THE LOANS AND (III) THE REQUIRED LENDERS HAVE AGREED TO SUCH
CONSENT, WAIVER OR AMENDMENT, THEN ANY LENDER WHO DOES NOT AGREE TO SUCH
CONSENT, WAIVER OR AMENDMENT SHALL BE DEEMED A “NON-CONSENTING LENDER.”

 

SECTION 3.08.  Survival.  All of the Borrowers’ obligations under this
Article III shall survive termination of the Aggregate Commitments and repayment
of all other Obligations hereunder.

 

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

SECTION 4.01.  Conditions of Initial Credit Extension.  The obligation of each
Lender to make its initial Credit Extension hereunder is subject to satisfaction
or waiver of the following conditions on or prior to the Closing Date:

 

(A)  THE ADMINISTRATIVE AGENT’S RECEIPT OF THE FOLLOWING, EACH OF WHICH SHALL BE
ORIGINALS OR FACSIMILES (FOLLOWED PROMPTLY BY ORIGINALS) UNLESS OTHERWISE
SPECIFIED, EACH PROPERLY EXECUTED BY A RESPONSIBLE OFFICER OF THE SIGNING LOAN
PARTY, EACH IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ADMINISTRATIVE
AGENT:

 

(I)  EXECUTED COUNTERPARTS OF THIS AGREEMENT;

 

(II)  A NOTE EXECUTED BY THE COMPANY IN FAVOR OF EACH LENDER THAT HAS REQUESTED
A NOTE AT LEAST TWO BUSINESS DAYS IN ADVANCE OF THE CLOSING DATE;

 

(III)  EACH COLLATERAL DOCUMENT SET FORTH ON SCHEDULE 1.01A, DULY EXECUTED BY
EACH LOAN PARTY THERETO, TOGETHER WITH:

 

(A)  CERTIFICATES, IF ANY, REPRESENTING THE PLEDGED EQUITY REFERRED TO THEREIN
ACCOMPANIED BY UNDATED STOCK POWERS EXECUTED IN BLANK AND INSTRUMENTS EVIDENCING
THE PLEDGED DEBT INDORSED IN BLANK;

 

(B)  TO THE EXTENT REQUIRED UNDER THE COLLATERAL AND GUARANTEE REQUIREMENT, AN
OPINION OF LOCAL COUNSEL FOR THE LOAN PARTIES IN IOWA WITH RESPECT TO THE
ENFORCEABILITY AND PERFECTION OF THE MORTGAGE WITH RESPECT TO THE MORTGAGED
PROPERTY IN IOWA AND ANY

 

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RELATED FIXTURE FILINGS IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
ADMINISTRATIVE AGENT;

 

(C)  EVIDENCE THAT ALL OTHER ACTIONS, RECORDINGS AND FILINGS THAT THE
ADMINISTRATIVE AGENT MAY DEEM REASONABLY NECESSARY TO SATISFY THE COLLATERAL AND
GUARANTEE REQUIREMENT SHALL HAVE BEEN TAKEN, COMPLETED OR OTHERWISE PROVIDED FOR
IN A MANNER REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT; AND

 

(D)  A COMPLETED PERFECTION CERTIFICATE DATED THE CLOSING DATE AND SIGNED BY THE
ASSOCIATE GENERAL COUNSEL OR THE CHIEF LEGAL OFFICER OF THE COMPANY, TOGETHER
WITH ALL ATTACHMENTS CONTEMPLATED THEREBY;

 

(IV)  SUCH CERTIFICATES OF RESOLUTIONS OR OTHER ACTION, INCUMBENCY CERTIFICATES
AND/OR OTHER CERTIFICATES OF RESPONSIBLE OFFICERS OF EACH LOAN PARTY AS THE
ADMINISTRATIVE AGENT MAY REASONABLY REQUIRE EVIDENCING THE IDENTITY, AUTHORITY
AND CAPACITY OF EACH RESPONSIBLE OFFICER THEREOF AUTHORIZED TO ACT AS A
RESPONSIBLE OFFICER IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH SUCH LOAN PARTY IS A PARTY OR IS TO BE A PARTY ON THE CLOSING
DATE;

 

(V)  OPINION FROM (U) CRAVATH, SWAINE & MOORE LLP, SPECIAL NEW YORK COUNSEL TO
HOLDINGS SUBSTANTIALLY IN THE FORM OF EXHIBIT H-1, (V) LOCAL COUNSEL IN EACH OF
IOWA AND WASHINGTON AS MAY BE REASONABLY REQUIRED BY THE ADMINISTRATIVE AGENT,
(W) RICHARDS, LAYTON & FINGER, SPECIAL DELAWARE COUNSEL TO THE LOAN PARTIES
SUBSTANTIALLY IN THE FORM OF EXHIBIT H-2, AND (X) CLIFFORD H.R. DUPREE,
ASSOCIATE GENERAL COUNSEL TO THE COMPANY SUBSTANTIALLY IN THE FORM OF
EXHIBIT H-3, (Y) KAREN E. ANDREWS, GENERAL COUNSEL TO WRC MEDIA SUBSTANTIALLY IN
THE FORM OF EXHIBIT H-4, AND (Z) RANDOLPH H. ELKINS, GENERAL COUNSEL TO DIRECT
HOLDINGS SUBSTANTIALLY IN THE FORM OF EXHIBIT H-5;

 

(VI)  A CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER OF HOLDINGS CERTIFYING THAT
(A) EXCEPT AS SET FORTH (X) IN THE COMPANY DISCLOSURE LETTER (AS DEFINED IN THE
PURCHASE AGREEMENT) OR (Y) IN READER’S DIGEST’S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED JUNE 30, 2006, FILED WITH THE SEC ON AUGUST 21, 2006,
READER’S DIGEST’S CURRENT REPORTS ON FORMS 8-K FILED WITH THE SEC ON OCTOBER 4,
2006 AND OCTOBER 5, 2006, READER’S DIGEST’S PROXY STATEMENT ON SCHEDULE 14A
FILED WITH THE SEC ON SEPTEMBER 29, 2006, READER’S DIGEST’S REGISTRATION
STATEMENT ON FORM S-8 FILED WITH THE SEC ON AUGUST 21, 2006, AND POST-EFFECTIVE
AMENDMENT THERETO DATED AUGUST 22, 2006, BUT EXCLUDING IN EACH CASE UNDER THIS
CLAUSE (Y) ANY RISK FACTOR DISCLOSURES OR OTHER CAUTIONARY, PREDICTIVE AND
FORWARD LOOKING DISCLOSURES CONTAINED IN ANY SUCH DOCUMENT UNDER THE HEADING
“RISK FACTORS” OR “FORWARD LOOKING STATEMENTS” OR UNDER ANY OTHER HEADING, FROM
JUNE 30, 2006 TO NOVEMBER 16, 2006, THERE HAS BEEN NO STATE OF FACTS, EVENT,
CHANGE, EFFECT, DEVELOPMENT, CONDITION OR OCCURRENCE THAT, INDIVIDUALLY OR IN
THE AGGREGATE, HAS HAD OR COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE CHANGE, AND (B) EXCEPT AS SET FORTH IN THE COMPANY DISCLOSURE LETTER,
SINCE NOVEMBER 16, 2006, THERE HAS BEEN NO EVENT, CHANGE, EFFECT, DEVELOPMENT,
CONDITION OR OCCURRENCE THAT, INDIVIDUALLY OR IN THE AGGREGATE, HAS HAD OR COULD
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE;

 

(VII)  A CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER OF HOLDINGS CERTIFYING THAT
SINCE JUNE 30, 2006 THERE HAS BEEN NO EVENT, CHANGE, EFFECT, DEVELOPMENT,
CONDITION OR OCCURRENCE WITH RESPECT TO WRC MEDIA, DIRECT HOLDINGS OR ANY OF
THEIR RESPECTIVE SUBSIDIARIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, HAS HAD,
OR WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE
BUSINESS, OPERATIONS, PROPERTY OR FINANCIAL CONDITION OF READER’S DIGEST, WRC
MEDIA, DIRECT HOLDINGS AND THEIR RESPECTIVE SUBSIDIARIES, TAKEN AS A WHOLE.

 

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(VIII)  A CERTIFICATE (WHICH SHALL BE REASONABLY SATISFACTORY TO THE
ADMINISTRATIVE AGENT) ATTESTING TO THE SOLVENCY OF THE LOAN PARTIES (TAKEN AS A
WHOLE) AFTER GIVING EFFECT TO THE TRANSACTION, FROM THE TREASURER OF HOLDINGS;

 

(IX)  EXCEPT AS SET FORTH IN SECTION 6.17, EVIDENCE THAT ALL INSURANCE
(INCLUDING TITLE INSURANCE) REQUIRED TO BE MAINTAINED PURSUANT TO THE LOAN
DOCUMENTS HAS BEEN OBTAINED AND IS IN EFFECT AND THAT THE ADMINISTRATIVE AGENT
HAS BEEN NAMED AS LOSS PAYEE OR ADDITIONAL INSURED, AS APPROPRIATE, UNDER EACH
INSURANCE POLICY WITH RESPECT TO SUCH LIABILITY AND PROPERTY INSURANCE AS TO
WHICH THE ADMINISTRATIVE AGENT SHALL HAVE REASONABLY REQUESTED TO BE SO NAMED;

 

(X)  A COMMITTED LOAN NOTICE OR LETTER OF CREDIT APPLICATION, AS APPLICABLE,
RELATING TO THE INITIAL CREDIT EXTENSION; AND

 

(XI)  A CERTIFICATE SIGNED BY A RESPONSIBLE OFFICER OF THE COMPANY CERTIFYING
COMPLIANCE WITH THE CONDITIONS SET FORTH IN PARAGRAPHS (A) AND (B) OF
SECTION 4.02.

 

(B)  ALL FEES AND EXPENSES REQUIRED TO BE PAID HEREUNDER AND INVOICED BEFORE THE
CLOSING DATE SHALL HAVE BEEN PAID IN FULL IN CASH.

 

(C)  PRIOR TO OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE INITIAL CREDIT
EXTENSION, (I) THE SPONSOR EQUITY CONTRIBUTIONS SHALL HAVE BEEN FUNDED IN FULL
IN CASH; AND (II) ACQUISITION CO SHALL HAVE RECEIVED (AS A COMMON EQUITY CAPITAL
CONTRIBUTION OR, IF OTHERWISE, ON TERMS AND CONDITIONS REASONABLY SATISFACTORY
IN ALL MATERIAL RESPECTS TO THE ADMINISTRATIVE AGENT) CASH PROCEEDS FROM THE
EQUITY CONTRIBUTION IN AN AGGREGATE AMOUNT, WHEN COMBINED WITH (X) THE AGGREGATE
VALUE OF THE COMPANY PREFERRED STOCK THAT IS ROLLED OVER IN CONNECTION WITH THE
TRANSACTIONS AND (Y) THE VALUE (WHICH SHALL BE CALCULATED NET OF THE FEES AND
EXPENSES OF THE COMPANY IN CONNECTION WITH THE WRC ACQUISITION AND THE DH
ACQUISITION IN EXCESS OF $15,000,000) OF THE EQUITY INTERESTS ISSUED BY HOLDINGS
TO THE SHAREHOLDERS OF WRC MEDIA AND DIRECT HOLDINGS AS CONSIDERATION FOR THE
WRC ACQUISITION AND THE DH ACQUISITION, RESPECTIVELY) IS EQUAL TO AT LEAST 29%
OF THE TOTAL CAPITALIZATION OF THE COMPANY.

 

(D)  THE ACQUISITION AND THE MERGER SHALL BE CONSUMMATED IN ACCORDANCE WITH THE
TERMS OF THE PURCHASE AGREEMENT WITHOUT WAIVER OR AMENDMENT OF ANY MATERIAL
PROVISIONS THEREOF (OTHER THAN ANY SUCH WAIVERS OR AMENDMENTS AS ARE NOT, TAKEN
AS A WHOLE, MATERIALLY ADVERSE TO THE LENDERS) UNLESS CONSENTED TO BY THE
ADMINISTRATIVE AGENT, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD,
CONDITIONED OR DELAYED.

 

(E)  THE DH ACQUISITION SHALL BE CONSUMMATED IN ACCORDANCE WITH THE TERMS OF THE
DH ACQUISITION AGREEMENT WITHOUT WAIVER OR AMENDMENT OF ANY MATERIAL PROVISIONS
THEREOF (OTHER THAN ANY SUCH WAIVERS OR AMENDMENTS AS ARE NOT, TAKEN AS A WHOLE,
MATERIALLY ADVERSE TO THE LENDERS) UNLESS CONSENTED TO BY THE ADMINISTRATIVE
AGENT, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, CONDITIONED OR
DELAYED.  HOLDINGS SHALL HAVE CONTRIBUTED ALL OF THE EQUITY INTERESTS OF DIRECT
HOLDINGS TO THE COMPANY.

 

(F)  THE WRC ACQUISITION SHALL BE CONSUMMATED IN ACCORDANCE WITH THE TERMS OF
THE WRC ACQUISITION AGREEMENT WITHOUT WAIVER OR AMENDMENT OF ANY MATERIAL
PROVISIONS THEREOF (OTHER THAN ANY SUCH WAIVERS OR AMENDMENTS AS ARE NOT, TAKEN
AS A WHOLE, MATERIALLY ADVERSE TO THE LENDERS) UNLESS CONSENTED TO BY THE
ADMINISTRATIVE AGENT, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD,
CONDITIONED OR DELAYED.  HOLDINGS SHALL HAVE CONTRIBUTED ALL OF THE EQUITY
INTERESTS OF WRC MEDIA TO THE COMPANY.

 

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(G)  PRIOR TO OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE INITIAL CREDIT
EXTENSIONS, THE COMPANY SHALL HAVE RECEIVED AT LEAST $600,000,000 IN GROSS CASH
PROCEEDS FROM THE ISSUANCE OF THE SENIOR SUBORDINATED NOTES.

 

(H)  PRIOR TO OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE INITIAL CREDIT
EXTENSIONS, HOLDINGS SHALL HAVE RECEIVED AT LEAST $274,000,000 IN GROSS CASH
PROCEEDS FROM THE ISSUANCE OF THE HOLDINGS SENIOR PIK PREFERRED.

 

(I)  PRIOR TO OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE INITIAL CREDIT
EXTENSIONS, HOLDINGS SHALL HAVE RECEIVED AT LEAST $91,333,333.33 IN GROSS CASH
PROCEEDS FROM THE ISSUANCE OF THE HOLDINGS COMMON EQUITY.

 

(J)  THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE REASONABLY
SATISFACTORY TO IT THAT ALL LOANS OUTSTANDING UNDER THE EXISTING CREDIT
AGREEMENT AND THE EXISTING DH/WRC DEBT AGREEMENTS AND ALL ACCRUED AND UNPAID
INTEREST, FEES AND OTHER AMOUNTS OWING THEREUNDER SHALL HAVE BEEN PAID IN FULL,
ALL COMMITMENTS TO EXTEND CREDIT THEREUNDER SHALL HAVE TERMINATED, AND ALL LIENS
SECURING OBLIGATIONS THEREUNDER SHALL HAVE BEEN RELEASED.  A SUCCESSFUL CONSENT
SOLICITATION OR A DEFEASANCE SHALL HAVE BEEN CONSUMMATED.  EXCEPT FOR (A) ANY
EXISTING NOTES NOT REPURCHASED OR REDEEMED ON OR PRIOR TO THE CLOSING DATE,
(B) INDEBTEDNESS LISTED ON SCHEDULE 7.03(B), (C) THE COMPANY PREFERRED STOCK,
(D) THE LOANS AND L/C OBLIGATIONS, (E) THE SENIOR SUBORDINATED NOTES AND (F) THE
HOLDINGS PIK PREFERRED, HOLDINGS, THE COMPANY AND ITS SUBSIDIARIES SHALL HAVE NO
INDEBTEDNESS OR PREFERRED EQUITY INTERESTS OUTSTANDING AFTER GIVING EFFECT TO
THE TRANSACTION.

 

(K)  THE ARRANGERS AND THE LENDERS SHALL HAVE RECEIVED (I) THE AUDITED FINANCIAL
STATEMENTS, (II) THE UNAUDITED FINANCIAL STATEMENTS AND (III) TO THE EXTENT MADE
AVAILABLE BY EACH OF READER’S DIGEST, DIRECT HOLDINGS AND WRC MEDIA, MONTHLY
FINANCIAL DATA GENERATED BY EACH OF READER’S DIGEST’S, DIRECT HOLDINGS’, AND WRC
MEDIA’S INTERNAL ACCOUNTING SYSTEMS FOR USE BY SENIOR MANAGEMENT FOR EACH MONTH
ENDED AFTER THE LATEST FISCAL QUARTER FOR WHICH UNAUDITED FINANCIAL STATEMENTS
ARE DELIVERED PURSUANT TO CLAUSE (II) ABOVE AND AT LEAST 30 DAYS BEFORE THE
CLOSING DATE.

 

(L)  THE ARRANGERS AND THE LENDERS SHALL HAVE RECEIVED THE PRO FORMA BALANCE
SHEET.

 

NOTWITHSTANDING ANYTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO THE
CONTRARY, (I) THE ONLY REPRESENTATIONS AND WARRANTIES (AND RELATED DEFAULTS)
MADE BY THE LOAN PARTIES RELATING TO READER’S DIGEST, ITS SUBSIDIARIES AND THEIR
BUSINESSES THE MAKING OF WHICH SHALL BE A CONDITION TO AVAILABILITY OF THE
FACILITIES ON THE CLOSING DATE SHALL BE SUCH OF THE REPRESENTATIONS MADE BY
READER’S DIGEST IN THE PURCHASE AGREEMENT AS ARE MATERIAL TO THE INTERESTS OF
THE LENDERS, BUT ONLY TO THE EXTENT THAT HOLDINGS AND ACQUISITION CO HAVE THE
RIGHT TO TERMINATE THEIR OBLIGATIONS UNDER THE PURCHASE AGREEMENT AS A RESULT OF
A BREACH OF SUCH REPRESENTATIONS IN THE PURCHASE AGREEMENT (DETERMINED WITHOUT
REGARD TO WHETHER ANY NOTICE IS REQUIRED TO BE DELIVERED BY HOLDINGS OR
ACQUISITION CO), AND (II) THE ONLY OTHER REPRESENTATIONS AND WARRANTIES (AND
RELATED DEFAULTS) MADE BY THE LOAN PARTIES THE MAKING OF WHICH SHALL BE A
CONDITION TO AVAILABILITY OF THE FACILITIES ON THE CLOSING DATE SHALL BE THE
SPECIFIED REPRESENTATIONS (AS DEFINED BELOW).  FOR PURPOSES HEREOF, “SPECIFIED
REPRESENTATIONS” MEANS THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS
5.01(A), 5.01(B), 5.02, 5.04, 5.13, 5.16 AND 5.18.

 

SECTION 4.02.  Conditions to All Credit Extensions.  Subject to the last
paragraph of Section 4.01, the obligation of each Lender to honor any Request
for Credit Extension (other than

 

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a Committed Loan Notice requesting only a conversion or a continuation of Loans)
is subject to the following conditions precedent:

 

(A)  THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND EACH OTHER LOAN PARTY
CONTAINED IN ARTICLE V OR ANY OTHER LOAN DOCUMENT SHALL BE TRUE AND CORRECT IN
ALL MATERIAL RESPECTS ON AND AS OF THE DATE OF SUCH CREDIT EXTENSION; PROVIDED
THAT, TO THE EXTENT THAT SUCH REPRESENTATIONS AND WARRANTIES SPECIFICALLY REFER
TO AN EARLIER DATE, THEY SHALL BE TRUE AND CORRECT IN ALL MATERIAL RESPECTS AS
OF SUCH EARLIER DATE; PROVIDED, FURTHER THAT, ANY REPRESENTATION AND WARRANTY
THAT IS QUALIFIED AS TO “MATERIALITY,” “MATERIAL ADVERSE EFFECT” OR SIMILAR
LANGUAGE SHALL BE TRUE AND CORRECT IN ALL RESPECTS ON SUCH RESPECTIVE DATES.

 

(B)  NO DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING AT THE TIME OF OR
IMMEDIATELY AFTER GIVING EFFECT TO SUCH PROPOSED CREDIT EXTENSION.

 

(C)  THE ADMINISTRATIVE AGENT AND, IF APPLICABLE, THE RELEVANT L/C ISSUER OR THE
SWING LINE LENDER SHALL HAVE RECEIVED A REQUEST FOR CREDIT EXTENSION IN
ACCORDANCE WITH THE REQUIREMENTS HEREOF.

 

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion or a continuation of Loans) submitted by the Company shall be
deemed to be a representation and warranty that the conditions specified in
Sections 4.02(a) and (b) have been satisfied on and as of the date of the
applicable Credit Extension.

 

SECTION 4.03.  Conditions of Initial Credit Extension to Overseas Borrower. 
Subject to the last paragraph of Section 4.01, the obligation of each Lender to
make any Euro Term Loan or Incremental Overseas Term Loan to any Overseas
Borrower is subject to satisfaction or waiver of the following further
conditions:

 

(A)  RECEIPT BY THE ADMINISTRATIVE AGENT OF AN OPINION OF COUNSEL FOR SUCH
OVERSEAS BORROWER REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT, COVERING
SUCH CUSTOMARY MATTERS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY AS THE
ADMINISTRATIVE AGENT MAY REASONABLY REQUEST;

 

(B)  RECEIPT BY THE ADMINISTRATIVE AGENT OF ALL DOCUMENTS WITH RESPECT TO SUCH
OVERSEAS BORROWER SATISFYING THE REQUIREMENTS SET FORTH IN
SECTION 4.01(A)(IV) WITH RESPECT THERETO;

 

(C)  TO THE EXTENT REQUIRED BY THE COLLATERAL AND GUARANTEE REQUIREMENT, ALL
OVERSEAS OBLIGATIONS SHALL HAVE BEEN (I) UNCONDITIONALLY GUARANTEED BY EACH
REQUIRED GUARANTOR AND (II) SECURED BY A SECURITY INTEREST IN THE REQUIRED
COLLATERAL WITH THE PRIORITY REQUIRED BY THE COLLATERAL DOCUMENTS, AND THE
ADMINISTRATIVE AGENT SHALL HAVE RECEIVED EVIDENCE THAT ALL OTHER ACTIONS,
RECORDINGS AND FILINGS THAT THE ADMINISTRATIVE AGENT MAY DEEM REASONABLY
NECESSARY TO SATISFY THE COLLATERAL AND GUARANTEE REQUIREMENT SHALL HAVE BEEN
TAKEN, COMPLETED OR OTHERWISE PROVIDED FOR IN A MANNER REASONABLY SATISFACTORY
TO THE ADMINISTRATIVE AGENT;

 

(D)  RECEIPT BY THE ADMINISTRATIVE AGENT OF A NOTE EXECUTED BY SUCH OVERSEAS
BORROWER IN FAVOR OF EACH LENDER THAT HAS REQUESTED A NOTE AT LEAST TWO BUSINESS
DAYS IN ADVANCE OF DATE OF THE RELEVANT CREDIT EXTENSION;

 

(E)  RECEIPT BY THE ADMINISTRATIVE AGENT OF A CERTIFICATE SIGNED BY A
RESPONSIBLE OFFICER OF THE COMPANY CERTIFYING COMPLIANCE WITH THE CONDITIONS SET
FORTH IN PARAGRAPHS (A) AND (B) OF SECTION 4.02; AND

 

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(F)  RECEIPT BY THE ADMINISTRATIVE AGENT OF A CERTIFICATE SIGNED BY A
RESPONSIBLE OFFICER OF SUCH OVERSEAS BORROWER CERTIFYING THAT THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTIONS 5.01, 5.02, 5.03 AND 5.04
ARE TRUE AND CORRECT IN ALL MATERIAL RESPECTS AS TO SUCH OVERSEAS BORROWER AND
ANY LOAN DOCUMENT TO WHICH SUCH OVERSEAS BORROWER IS A PARTY ON AND AS OF THE
DATE OF SUCH CREDIT EXTENSION; PROVIDED THAT ANY REPRESENTATION AND WARRANTY
THAT IS QUALIFIED AS TO “MATERIALITY,” “MATERIAL ADVERSE EFFECT” OR SIMILAR
LANGUAGE SHALL BE TRUE AND CORRECT IN ALL RESPECTS ON SUCH DATE.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

The Company represents and warrants (provided that, on the Closing Date, only
the Specified Representations shall be made as to the Company and its
Subsidiaries, and the Specified Representations shall be made by Acquisition Co
only) to the Agents and the Lenders that:

 

SECTION 5.01.  Existence, Qualification and Power; Compliance with Laws.  Each
Loan Party and each of its Subsidiaries (a) is a Person duly organized or
formed, validly existing and in good standing (to the extent such concept is
applicable in the applicable jurisdiction) under the Laws of the jurisdiction of
its incorporation or organization, (b) has all requisite power and authority to
(i) own or lease its assets and carry on its business and (ii) execute, deliver
and perform its obligations under the Loan Documents to which it is a party,
(c) is duly qualified and in good standing (to the extent such concept is
applicable in the applicable jurisdiction) under the Laws of each jurisdiction
where its ownership, lease or operation of properties or the conduct of its
business requires such qualification, (d) is in compliance with all Laws,
orders, writs, injunctions and orders and (e) has all requisite governmental
licenses, authorizations, consents and approvals to operate its business as
currently conducted; except in each case referred to in clause (c), (d) or (e),
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

SECTION 5.02.  Authorization; No Contravention.  The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is a
party, and the consummation of the Transaction, are within such Loan Party’s
corporate or other powers, have been duly authorized by all necessary corporate
or other organizational action, and do not and will not (a) violate the terms of
any of such Person’s Organization Documents, (b) violate or result in any breach
of, or the creation of any Lien under (other than Liens created by the Loan
Documents and other Liens permitted by Section 7.01), or require any payment to
be made under (i) any Contractual Obligation to which such Person is a party or
which is binding upon such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is subject;
or (c) violate any Law; except with respect to any violation or breach (but not
creation of Liens) referred to in clause (b) and (c) above, to the extent that
such violation or breach could not reasonably be expected to have a Material
Adverse Effect.

 

SECTION 5.03.  Governmental Authorization; Other Consents.  No approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority is necessary or required in connection with
(a) the execution, delivery or performance by any Loan Party of this Agreement
or any other Loan Document, or for the consummation of the Transaction, (b) the
grant by any Loan Party of the Liens granted by it pursuant to the Collateral
Documents or (c) the perfection or maintenance of the Liens created under the

 

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Collateral Documents (including the priority thereof), except for (i) filings
necessary to perfect or maintain the perfection of the Liens on the Collateral
granted by the Loan Parties in favor of the Secured Parties, (ii) the approvals,
consents, exemptions, authorizations, actions, notices and filings which have
been duly obtained, taken, given or made and are in full force and effect and
(iii) those approvals, consents, exemptions, authorizations or other actions,
notices or filings, the failure of which to obtain or make could not reasonably
be expected to have a Material Adverse Effect.

 

SECTION 5.04.  Binding Effect.  This Agreement and each other Loan Document has
been duly executed and delivered by each Loan Party that is party thereto.  This
Agreement and each other Loan Document constitutes a legal, valid and binding
obligation of each Loan Party that is party thereto, enforceable against such
Loan Party in accordance with its terms, except as such enforceability may be
limited by Debtor Relief Laws and by general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

 

SECTION 5.05.  Financial Statements; No Material Adverse Effect.  (a)  (i)  The
Audited Financial Statements and the Unaudited Financial Statements fairly
present in all material respects the consolidated financial condition of
Reader’s Digest, WRC Media, Direct Holdings and their respective Subsidiaries as
of the dates thereof and their results of operations for the period covered
thereby in accordance with GAAP consistently applied throughout the periods
covered thereby, except as otherwise expressly noted therein and, in the case of
the Unaudited Financial Statements, subject to normal year-end audit adjustments
and the absence of footnotes.

 

(II)  THE UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET OF THE COMPANY AND ITS
SUBSIDIARIES AS AT DECEMBER 31, 2006 (INCLUDING THE NOTES THERETO) (THE “PRO
FORMA BALANCE SHEET”) HAS BEEN PREPARED GIVING EFFECT (AS IF SUCH EVENTS HAD
OCCURRED ON SUCH DATE) TO THE TRANSACTION, EACH MATERIAL ACQUISITION BY READER’S
DIGEST, WRC MEDIA, DIRECT HOLDINGS OR ANY OF THEIR RESPECTIVE SUBSIDIARIES
CONSUMMATED AFTER JUNE 30, 2006 (AND, WITH RESPECT TO WRC MEDIA, AFTER
DECEMBER 31, 2005) AND PRIOR TO THE CLOSING DATE AND ALL OTHER TRANSACTIONS THAT
WOULD BE REQUIRED TO BE GIVEN PRO FORMA EFFECT BY REGULATION S-X PROMULGATED
UNDER THE EXCHANGE ACT.  THE PRO FORMA BALANCE SHEET HAS BEEN PREPARED IN GOOD
FAITH, BASED ON ASSUMPTIONS BELIEVED BY THE COMPANY TO BE REASONABLE AS OF THE
DATE OF DELIVERY THEREOF, AND PRESENTS FAIRLY IN ALL MATERIAL RESPECTS IN
ACCORDANCE WITH GAAP THE PRO FORMA FINANCIAL POSITION OF THE COMPANY AND ITS
SUBSIDIARIES AS AT DECEMBER 31, 2006 AND THEIR PRO FORMA RESULTS OF OPERATIONS
FOR THE PERIODS COVERED THEREBY, ASSUMING THAT THE EVENTS SPECIFIED IN THE
PRECEDING SENTENCE HAD ACTUALLY OCCURRED AT SUCH DATE.

 

(B)  SINCE JUNE 30, 2006, THERE HAS BEEN NO EVENT OR CIRCUMSTANCE, EITHER
INDIVIDUALLY OR IN THE AGGREGATE, THAT HAS HAD OR COULD REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

 

(C)  THE FORECASTS OF CONSOLIDATED BALANCE SHEETS, INCOME STATEMENTS AND CASH
FLOW STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES FOR EACH FISCAL YEAR THROUGH
2013, COPIES OF WHICH HAVE BEEN FURNISHED TO THE ADMINISTRATIVE AGENT PRIOR TO
THE CLOSING DATE, HAVE BEEN PREPARED IN GOOD FAITH ON THE BASIS OF ASSUMPTIONS
BELIEVED TO BE REASONABLE AT THE TIME MADE, IT BEING UNDERSTOOD THAT FORECASTS
ARE, BY THEIR NATURE, INHERENTLY UNCERTAIN AND ACTUAL RESULTS MAY VARY FROM SUCH
FORECASTS AND THAT SUCH VARIATIONS MAY BE MATERIAL.

 

(D)  AS OF THE CLOSING DATE, EXCEPT AS DISCLOSED IN ANY SCHEDULE TO THIS
AGREEMENT, NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS ANY INDEBTEDNESS OR OTHER
OBLIGATIONS OR LIABILITIES, DIRECT OR CONTINGENT (OTHER THAN (I) THE
INDEBTEDNESS, OBLIGATIONS AND LIABILITIES REFLECTED ON SCHEDULE 5.05,
(II) OBLIGATIONS ARISING UNDER THIS AGREEMENT, THE SENIOR SUBORDINATED NOTE

 

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Indenture, the Company Preferred Stock and the Holdings PIK Preferred,
(iii) liabilities arising as a result of the Transaction and (iv) liabilities
incurred in the ordinary course of business) that, either individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect.

 

SECTION 5.06.  Litigation.  As of the Closing Date, there are no actions, suits,
proceedings, claims, investigations or disputes pending or, to the knowledge of
the Company, threatened in writing or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against the Company or
any of its Subsidiaries or against any of their properties or revenues that,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

SECTION 5.07.  No Default.  Neither the Company nor any Subsidiary is in default
under or with respect to any Contractual Obligation (other than any Contractual
Obligation pursuant to which the Company or such Subsidiary has issued or
incurred Indebtedness) that, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.08.  Ownership of Property; Liens.  Each Loan Party (other than any
Immaterial Subsidiary) and each of its Subsidiaries (other than any Immaterial
Subsidiary) has good title to, or valid leasehold interests in, or easements or
other limited property interests in, all its properties and assets material to
the ordinary conduct of its business (including all Material Real Property),
free and clear of all Liens except for minor defects in title that do not
materially interfere with its ability to conduct its business or to utilize such
assets for their intended purposes and Liens permitted by Section 7.01.  Each
Immaterial Subsidiary has good title to, or valid leasehold interests in, or
easements or other limited property interests in, all its properties and assets
material to the ordinary conduct of the business of the Company and the
Subsidiaries taken as a whole (including all Material Real Property), free and
clear of all Liens except for minor defects in title that do not materially
interfere with its ability to conduct its business or to utilize such assets for
their intended purposes and Liens permitted by Section 7.01.

 

SECTION 5.09.  Environmental Compliance.  (a)  There are no claims, actions,
suits, or proceedings alleging potential liability or responsibility for
violation of, or otherwise relating to, any Environmental Law that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(B)  EXCEPT AS SPECIFICALLY DISCLOSED IN SCHEDULE 5.09 OR EXCEPT AS COULD NOT
REASONABLY BE EXPECTED TO HAVE, INDIVIDUALLY OR IN THE AGGREGATE, A MATERIAL
ADVERSE EFFECT, (I) NONE OF THE PROPERTIES CURRENTLY OR, TO THE KNOWLEDGE OF THE
COMPANY, FORMERLY OWNED, LEASED OR OPERATED BY ANY LOAN PARTY OR ANY OF ITS
SUBSIDIARIES IS LISTED OR PROPOSED FOR LISTING ON THE NPL OR ON THE CERCLIS OR
ANY ANALOGOUS FOREIGN, STATE OR LOCAL LIST OR, TO THE KNOWLEDGE OF THE COMPANY,
IS ADJACENT TO ANY SUCH PROPERTY; AND (II) HAZARDOUS MATERIALS HAVE NOT BEEN
RELEASED, DISCHARGED OR DISPOSED OF BY ANY PERSON ON ANY PROPERTY CURRENTLY OR,
TO THE KNOWLEDGE OF THE COMPANY, FORMERLY OWNED, LEASED OR OPERATED BY ANY LOAN
PARTY OR ANY OF ITS SUBSIDIARIES AND HAZARDOUS MATERIALS HAVE NOT OTHERWISE BEEN
RELEASED, DISCHARGED OR DISPOSED OF BY ANY OF THE LOAN PARTIES AND THEIR
SUBSIDIARIES AT ANY OTHER LOCATION, IN EACH CASE IN A MANNER THAT COULD
REASONABLY BE EXPECTED TO RESULT IN ENVIRONMENTAL LIABILITY.

 

(C)  THE PROPERTIES OWNED, LEASED OR OPERATED BY THE COMPANY AND THE
SUBSIDIARIES DO NOT CONTAIN ANY HAZARDOUS MATERIALS IN AMOUNTS OR CONCENTRATIONS
WHICH (I) CONSTITUTE A VIOLATION OF, (II) REQUIRE REMEDIAL ACTION UNDER, OR
(III) COULD GIVE RISE TO LIABILITY UNDER, ENVIRONMENTAL

 

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Laws, which violations, remedial actions and liabilities, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

(D)  EXCEPT AS SPECIFICALLY DISCLOSED IN SCHEDULE 5.09, NEITHER THE COMPANY NOR
ANY OF ITS SUBSIDIARIES IS UNDERTAKING, EITHER INDIVIDUALLY OR TOGETHER WITH
OTHER POTENTIALLY RESPONSIBLE PARTIES, ANY INVESTIGATION OR ASSESSMENT OR
REMEDIAL OR RESPONSE ACTION RELATING TO ANY ACTUAL OR THREATENED RELEASE,
DISCHARGE OR DISPOSAL OF HAZARDOUS MATERIALS AT ANY SITE, LOCATION OR OPERATION,
EITHER VOLUNTARILY OR PURSUANT TO THE ORDER OF ANY GOVERNMENTAL AUTHORITY OR THE
REQUIREMENTS OF ANY ENVIRONMENTAL LAW, EXCEPT FOR SUCH INVESTIGATION OR
ASSESSMENT OR REMEDIAL OR RESPONSE ACTION THAT, INDIVIDUALLY OR IN THE
AGGREGATE, COULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.

 

(E)  ALL HAZARDOUS MATERIALS GENERATED, USED, TREATED, HANDLED OR STORED AT, OR
TRANSPORTED TO OR FROM, BY ANY LOAN PARTY OR ANY OF ITS SUBSIDIARIES, ANY
PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY ANY LOAN PARTY OR ANY OF ITS
SUBSIDIARIES HAVE BEEN DISPOSED OF IN A MANNER NOT REASONABLY EXPECTED TO
RESULT, INDIVIDUALLY OR IN THE AGGREGATE, IN A MATERIAL ADVERSE EFFECT.

 

(F)  EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO RESULT, INDIVIDUALLY OR IN
THE AGGREGATE, IN A MATERIAL ADVERSE EFFECT, NONE OF THE LOAN PARTIES AND THEIR
SUBSIDIARIES HAS CONTRACTUALLY ASSUMED ANY LIABILITY OR OBLIGATION UNDER OR
RELATING TO ANY ENVIRONMENTAL LAW.

 

SECTION 5.10.  Taxes.  The Company and its Subsidiaries have filed all Federal
and state and other tax returns and reports required to be filed, and have paid
all Federal and state and other taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those (a) which are not overdue by more than
thirty (30) days, (b) which are being contested in good faith by appropriate
proceedings diligently conducted and for which reserves have been provided to
the extent required by GAAP or (c) set forth in Schedule 5.10 and except as the
failure to do any of the foregoing could not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.11.  ERISA Compliance.  (a)  Except as set forth in Schedule 5.11 or
as could not, either individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect, each Plan is in compliance with the
applicable provisions of ERISA, the Code and other Federal or state Laws.

 

(B)  (I) NO ERISA EVENT HAS OCCURRED DURING THE FIVE YEAR PERIOD PRIOR TO THE
DATE ON WHICH THIS REPRESENTATION IS MADE OR DEEMED MADE WITH RESPECT TO ANY
PENSION PLAN; (II) NEITHER ANY LOAN PARTY NOR ANY ERISA AFFILIATE HAS INCURRED,
OR REASONABLY EXPECTS TO INCUR, ANY LIABILITY UNDER TITLE IV OF ERISA WITH
RESPECT TO ANY PENSION PLAN (OTHER THAN PREMIUMS DUE AND NOT DELINQUENT UNDER
SECTION 4007 OF ERISA); (III) NEITHER ANY LOAN PARTY NOR ANY ERISA AFFILIATE HAS
INCURRED, OR REASONABLY EXPECTS TO INCUR, ANY LIABILITY (AND NO EVENT HAS
OCCURRED WHICH, WITH THE GIVING OF NOTICE UNDER SECTION 4219 OF ERISA, WOULD
RESULT IN SUCH LIABILITY) UNDER SECTIONS 4201 OR 4243 OF ERISA WITH RESPECT TO A
MULTIEMPLOYER PLAN; (IV) NEITHER ANY LOAN PARTY NOR ANY ERISA AFFILIATE HAS
ENGAGED IN A TRANSACTION THAT COULD BE SUBJECT TO SECTIONS 4069 OR 4212(C) OF
ERISA; AND (V) THE PRESENT VALUE OF ALL BENEFIT LIABILITIES UNDER EACH PENSION
PLAN DOES NOT EXCEED THE AGGREGATE CURRENT VALUE OF THE ASSETS OF SUCH PENSION
PLAN (BASED ON THOSE ASSUMPTIONS USED TO FUND THE PENSION PLANS); EXCEPT, WITH
RESPECT TO EACH OF THE FOREGOING CLAUSES OF THIS SECTION 5.11(B), AS COULD NOT
REASONABLY BE EXPECTED, INDIVIDUALLY OR IN THE AGGREGATE, TO RESULT IN A
MATERIAL ADVERSE EFFECT.

 

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SECTION 5.12.  Subsidiaries; Equity Interests.  As of the Closing Date, neither
Holdings nor any Loan Party has any Subsidiaries other than those specifically
disclosed in Schedule 5.12, and all of the outstanding Equity Interests in
material Subsidiaries have been validly issued, are fully paid and nonassessable
and all Equity Interests owned by Holdings or a Loan Party that are required to
be pledged on the Closing Date pursuant to the Collateral and Guarantee
Requirement are owned free and clear of all Liens except (i) those created under
the Collateral Documents and (ii) any nonconsensual Lien that is permitted under
Section 7.01.  As of the Closing Date, Schedule 5.12 (a) sets forth the name and
jurisdiction of each Subsidiary, (b) sets forth the ownership interest of
Holdings, the Company and any other Subsidiary in each Subsidiary, including the
percentage of such ownership and (c) identifies each Subsidiary that is a
Subsidiary the Equity Interests of which are required to be pledged on the
Closing Date pursuant to the Collateral and Guarantee Requirement.

 

SECTION 5.13.  Margin Regulations; Investment Company Act.  (a)  The Company is
not engaged nor will it engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the Board), or extending credit for the
purpose of purchasing or carrying margin stock, and no proceeds of any
Borrowings or drawings under any Letter of Credit will be used for any purpose
that violates Regulation U.

 

(B)  NONE OF THE COMPANY, ANY PERSON CONTROLLING THE COMPANY, OR ANY SUBSIDIARY
IS REQUIRED TO BE REGISTERED AS AN “INVESTMENT COMPANY” UNDER THE INVESTMENT
COMPANY ACT OF 1940.

 

SECTION 5.14.  Disclosure.  No report, financial statement, certificate or other
written information furnished by or on behalf of any Loan Party to any Agent or
any Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or any other Loan Document
(as modified or supplemented by other information so furnished) when taken as a
whole contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not materially misleading; provided that, with
respect to projected financial information and pro forma financial information,
the Company represents only that such information was prepared in good faith
based upon assumptions believed to be reasonable at the time made; it being
understood that projections are, by their nature, inherently uncertain and such
projections may vary from actual results and that such variances may be
material.

 

SECTION 5.15.  Intellectual Property; Licenses, Etc.  Each of the Loan Parties
and their Subsidiaries owns, licenses or possesses the right to use, all of the
United States and foreign trademarks, service marks, logos, trade names, domain
names, copyrights, patents, patent rights, licenses, trade secrets, proprietary
information, technology, software, know-how database rights, design rights and
other intellectual property rights (collectively, “IP Rights”) that are material
to the operation of the business of the Company and its Subsidiaries, taken as a
whole, as currently conducted, and, without conflict with the rights of any
Person, except to the extent such conflicts, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect. 
To the knowledge of the Company, the business of the Company and its
Subsidiaries, taken as a whole, as currently conducted, does not infringe upon
any IP Rights held by any Person and no Person infringes upon any IP Rights of
the Company and its Subsidiaries, except in each case as could not reasonably be
expected to have a Material Adverse Effect.  No claim or litigation regarding
any of the IP Rights is pending or, to the knowledge of any

 

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Borrower, threatened against any Loan Party or Subsidiary, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

SECTION 5.16.  Solvency.  On the Closing Date after giving effect to the
Transaction, the Company and its Subsidiaries, on a consolidated basis, are
Solvent.

 

SECTION 5.17.  Labor Matters.  Except as, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect, (a) there are no strikes or other
labor disputes against any of Holdings, the Company or any Subsidiary pending
or, to the knowledge of Holdings or the Company, threatened; (b) hours worked by
and payment made to employees of each of Holdings, the Company or any Subsidiary
have not been in violation of the Fair Labor Standards Act or any other
applicable Laws dealing with such matters; and (c) all payments due from any of
Holdings, the Company or any Subsidiary on account of employee health and
welfare insurance have been paid or accrued as a liability on the books of the
relevant party.  The consummation of the Transaction will not give rise to any
right of termination or right of renegotiation on the part of any union under
any collective bargaining agreement to which Holdings, the Company or any
Subsidiary is bound, except as could not reasonably be expected to have a
Material Adverse Effect.

 

SECTION 5.18.  Collateral.  (a)   The Guarantee and Security Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, legal, valid and enforceable (subject to the effect of Debtor Relief
Laws and subject to general principles of equity) security interests in the
Collateral described therein and proceeds thereof to the extent governed by the
Uniform Commercial Code.  In the case of the Pledged Equity or Pledged Debt
described in any of the Collateral Documents, when stock certificates
representing such Pledged Equity or promissory notes representing such Pledged
Debt are delivered to the Administrative Agent together with the necessary
endorsements (provided that stock certificates representing the Pledged Equity
of any Foreign Immaterial Subsidiary need not be delivered to the Administrative
Agent for so long as such Foreign Immaterial Subsidiary remains a Foreign
Immaterial Subsidiary), and in the case of the other Collateral described in any
of the Collateral Documents, when financing statements and other filings
specified on Schedule 5.18 in appropriate form are filed in the offices
specified on Schedule 5.18, the Guarantee and Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral and the proceeds thereof, as
security for their respective Obligations to the extent a Lien on such
Collateral can be perfected by the filing of a financing statement, by filings
to be made in respect of Intellectual Property in the United States Patent and
Trademark Office and the United States Copyright Office or, in the case of the
Pledged Equity and Pledged Debt, by possession or control, in each case prior
and superior in right to any other Person (except (x) in the case of Collateral
constituting Pledged Equity and Pledged Debt, nonconsensual Liens permitted by
Section 7.01 and (y) in the case of Collateral other than Pledged Equity and
Pledged Debt, Liens permitted by Section 7.01).

 

(B)  EACH OF THE MORTGAGES IS EFFECTIVE TO CREATE IN FAVOR OF THE ADMINISTRATIVE
AGENT, FOR THE BENEFIT OF THE LENDERS, A LEGAL, VALID AND ENFORCEABLE (SUBJECT
TO THE EFFECT OF DEBTOR RELIEF LAWS AND SUBJECT TO GENERAL PRINCIPLES OF EQUITY)
LIEN ON THE MORTGAGED PROPERTIES DESCRIBED THEREIN AND PROCEEDS THEREOF, AND
WHEN THE MORTGAGES ARE FILED IN THE APPROPRIATE RECORDING OFFICES, EACH SUCH
MORTGAGE SHALL CONSTITUTE A FULLY PERFECTED LIEN ON, AND SECURITY INTEREST IN,
ALL RIGHT, TITLE AND INTEREST OF THE LOAN PARTIES IN THE MORTGAGED PROPERTIES
AND THE PROCEEDS THEREOF, AS SECURITY FOR THE OBLIGATIONS (AS DEFINED IN THE
RELEVANT MORTGAGE), IN EACH CASE PRIOR AND SUPERIOR IN RIGHT TO ANY OTHER PERSON
(EXCEPT THAT THE SECURITY INTEREST CREATED IN SUCH REAL PROPERTY AND THE
MORTGAGED PROPERTY MAY BE SUBJECT TO THE LIENS PERMITTED BY SECTION 7.01).

 

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ARTICLE VI

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, each of Holdings
and the Company shall, and shall (except in the case of the covenants set forth
in Sections 6.01, 6.02 and 6.03) cause each Restricted Subsidiary to:

 

SECTION 6.01.  Financial Statements.  Deliver to the Administrative Agent for
prompt further distribution to each Lender:

 

(A)  AS SOON AS AVAILABLE, BUT IN ANY EVENT WITHIN NINETY (90) DAYS (OR, IN THE
CASE OF THE FISCAL YEAR ENDING JUNE 30, 2007, ONE HUNDRED TWENTY (120) DAYS)
AFTER THE END OF EACH FISCAL YEAR OF THE COMPANY BEGINNING WITH THE FISCAL YEAR
ENDING JUNE 30, 2007, A CONSOLIDATED BALANCE SHEET OF THE COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES AS AT THE END OF SUCH FISCAL YEAR, AND THE RELATED
CONSOLIDATED STATEMENTS OF INCOME OR OPERATIONS, STOCKHOLDERS’ EQUITY AND CASH
FLOWS FOR SUCH FISCAL YEAR, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE
FIGURES FOR THE PREVIOUS FISCAL YEAR, ALL PREPARED IN ACCORDANCE WITH GAAP,
AUDITED AND ACCOMPANIED BY A REPORT AND OPINION OF AN INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM OF NATIONALLY RECOGNIZED STANDING, WHICH REPORT AND
OPINION SHALL BE PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS AND SHALL NOT BE SUBJECT TO ANY “GOING CONCERN” OR LIKE QUALIFICATION
OR EXCEPTION OR ANY QUALIFICATION OR EXCEPTION AS TO THE SCOPE OF SUCH AUDIT;

 

(B)  AS SOON AS AVAILABLE, BUT IN ANY EVENT WITHIN FORTY-FIVE (45) DAYS (OR, IN
THE CASE OF THE FISCAL QUARTER ENDING MARCH 31, 2007, NINETY (90) DAYS) AFTER
THE END OF EACH OF THE FIRST THREE (3) FISCAL QUARTERS OF EACH FISCAL YEAR OF
THE COMPANY, AN UNAUDITED CONSOLIDATED BALANCE SHEET OF THE COMPANY AND ITS
CONSOLIDATED SUBSIDIARIES (OR, AT THE COMPANY’S OPTION, WITH RESPECT TO THE
FISCAL QUARTER OF THE COMPANY ENDING MARCH 31, 2007, OF EACH OF READER’S DIGEST
AND ITS CONSOLIDATED SUBSIDIARIES, WRC MEDIA AND ITS CONSOLIDATED SUBSIDIARIES
AND DIRECT HOLDINGS AND ITS CONSOLIDATED SUBSIDIARIES) AS AT THE END OF SUCH
FISCAL QUARTER, AND THE RELATED UNAUDITED (I) CONSOLIDATED STATEMENTS OF INCOME
OR OPERATIONS FOR SUCH FISCAL QUARTER AND FOR THE PORTION OF THE FISCAL YEAR
THEN ENDED AND (II) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PORTION OF THE
FISCAL YEAR THEN ENDED, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE
FIGURES FOR THE CORRESPONDING FISCAL QUARTER OF THE PREVIOUS FISCAL YEAR FOR THE
APPLICABLE ENTITIES AND THE CORRESPONDING PORTION OF THE PREVIOUS FISCAL YEAR
FOR THE APPLICABLE ENTITIES, ALL CERTIFIED BY A RESPONSIBLE OFFICER OF THE
COMPANY AS FAIRLY PRESENTING IN ALL MATERIAL RESPECTS THE CONSOLIDATED FINANCIAL
CONDITION, RESULTS OF OPERATIONS, STOCKHOLDERS’ EQUITY AND CASH FLOWS OF THE
COMPANY AND ITS CONSOLIDATED SUBSIDIARIES (OR, AT THE COMPANY’S OPTION, WITH
RESPECT TO THE FISCAL QUARTER OF THE COMPANY ENDING MARCH 31, 2007 OR THE
CORRESPONDING FISCAL QUARTER ENDED MARCH 31, 2006, OF EACH OF READER’S DIGEST
AND ITS CONSOLIDATED SUBSIDIARIES, WRC MEDIA AND ITS CONSOLIDATED SUBSIDIARIES
AND DIRECT HOLDINGS AND ITS CONSOLIDATED SUBSIDIARIES) IN ACCORDANCE WITH GAAP
(OTHER THAN THE COMPARATIVE FINANCIAL STATEMENTS FOR THE FISCAL QUARTER ENDED
MARCH 31, 2006 AND THE FISCAL YEAR ENDED JUNE 30, 2006), SUBJECT ONLY TO NORMAL
YEAR-END AUDIT ADJUSTMENTS AND THE ABSENCE OF FOOTNOTES;

 

(C)  AS SOON AS AVAILABLE, AND IN ANY EVENT NO LATER THAN NINETY (90) DAYS AFTER
THE END OF EACH FISCAL YEAR OF THE COMPANY BEGINNING WITH THE FISCAL YEAR ENDING
JUNE 30, 2007, A REASONABLY DETAILED CONSOLIDATED BUDGET FOR THE FOLLOWING
FISCAL YEAR (INCLUDING A PROJECTED CONSOLIDATED BALANCE SHEET OF THE COMPANY AND
ITS CONSOLIDATED SUBSIDIARIES AS OF THE END OF THE

 

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following fiscal year, the related consolidated statements of projected cash
flow and projected income and a summary of the material underlying assumptions
applicable thereto) (collectively, the “Projections”); and

 

(D)  SIMULTANEOUSLY WITH THE DELIVERY OF EACH SET OF CONSOLIDATED FINANCIAL
STATEMENTS REFERRED TO IN SECTIONS 6.01(A) AND 6.01(B) ABOVE, THE RELATED
CONSOLIDATING FINANCIAL STATEMENTS REFLECTING THE ADJUSTMENTS NECESSARY TO
ELIMINATE THE ACCOUNTS OF UNRESTRICTED SUBSIDIARIES (IF ANY) FROM SUCH
CONSOLIDATED FINANCIAL STATEMENTS.

 

NOTWITHSTANDING THE FOREGOING, THE OBLIGATIONS IN PARAGRAPHS (A) AND (B) OF THIS
SECTION 6.01 MAY BE SATISFIED WITH RESPECT TO FINANCIAL INFORMATION OF THE
COMPANY AND THE RESTRICTED SUBSIDIARIES BY FURNISHING (A) THE APPLICABLE
FINANCIAL STATEMENTS OF HOLDINGS (OR ANY DIRECT OR INDIRECT PARENT OF HOLDINGS)
OR (B) THE COMPANY’S OR HOLDINGS’ (OR ANY DIRECT OR INDIRECT PARENT THEREOF), AS
APPLICABLE, FORM 10-K OR 10-Q, AS APPLICABLE, FILED WITH THE SEC; PROVIDED THAT,
WITH RESPECT TO EACH OF CLAUSES (A) AND (B), (I) TO THE EXTENT SUCH INFORMATION
RELATES TO HOLDINGS (OR A PARENT THEREOF), SUCH INFORMATION IS ACCOMPANIED BY
CONSOLIDATING INFORMATION THAT EXPLAINS IN REASONABLE DETAIL THE DIFFERENCES
BETWEEN THE INFORMATION RELATING TO HOLDINGS (OR SUCH PARENT), ON THE ONE HAND,
AND THE INFORMATION RELATING TO THE COMPANY AND THE RESTRICTED SUBSIDIARIES ON A
STANDALONE BASIS, ON THE OTHER HAND AND (II) TO THE EXTENT SUCH INFORMATION IS
IN LIEU OF INFORMATION REQUIRED TO BE PROVIDED UNDER SECTION 6.01(A), SUCH
MATERIALS ARE ACCOMPANIED BY A REPORT AND OPINION OF AN INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM OF NATIONALLY RECOGNIZED STANDING, WHICH REPORT AND
OPINION SHALL BE PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS AND SHALL NOT BE SUBJECT TO ANY “GOING CONCERN” OR LIKE QUALIFICATION
OR EXCEPTION OR ANY QUALIFICATION OR EXCEPTION AS TO THE SCOPE OF SUCH AUDIT.

 

SECTION 6.02.  Certificates; Other Information.  Deliver to the Administrative
Agent for prompt further distribution to each Lender:

 

(A)  SIMULTANEOUSLY WITH THE DELIVERY OF THE FINANCIAL STATEMENTS REFERRED TO IN
SECTION 6.01(A), A CERTIFICATE OF ITS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM CERTIFYING SUCH FINANCIAL STATEMENTS AND STATING THAT IN MAKING THE
EXAMINATION NECESSARY THEREFOR NO KNOWLEDGE WAS OBTAINED OF ANY EVENT OF DEFAULT
UNDER SECTION 7.10 OR, IF ANY SUCH EVENT OF DEFAULT SHALL EXIST, STATING THE
NATURE AND STATUS OF SUCH EVENT (WHICH CERTIFICATE MAY BE LIMITED TO THE EXTENT
REQUIRED BY SUCH FIRM’S GENERAL ACCOUNTING AND AUDITING RULES, POLICIES OR
GUIDELINES);

 

(B)  SIMULTANEOUSLY WITH THE DELIVERY OF THE FINANCIAL STATEMENTS REFERRED TO IN
SECTION 6.01(A) AND (B), A DULY COMPLETED COMPLIANCE CERTIFICATE SIGNED BY A
RESPONSIBLE OFFICER OF THE COMPANY AND, IF SUCH COMPLIANCE CERTIFICATE
DEMONSTRATES AN EVENT OF DEFAULT OF ANY COVENANT UNDER SECTION 7.10, ANY OF THE
EQUITY INVESTORS MAY DELIVER, TOGETHER WITH SUCH COMPLIANCE CERTIFICATE OR AT
ANY TIME PRIOR TO THE END OF THE APPLICABLE CURE PERIOD, NOTICE OF THEIR INTENT
TO CURE (A “NOTICE OF INTENT TO CURE”) SUCH EVENT OF DEFAULT PURSUANT TO
SECTION 8.05; PROVIDED THAT THE DELIVERY OF A NOTICE OF INTENT TO CURE SHALL IN
NO WAY AFFECT OR ALTER THE OCCURRENCE, EXISTENCE OR CONTINUATION OF ANY SUCH
EVENT OF DEFAULT OR THE RIGHTS, BENEFITS, POWERS AND REMEDIES OF THE
ADMINISTRATIVE AGENT AND THE LENDERS UNDER ANY LOAN DOCUMENT;

 

(C)  PROMPTLY AFTER THE SAME ARE PUBLICLY AVAILABLE, COPIES OF ALL ANNUAL,
QUARTERLY AND CURRENT REPORTS AND REGISTRATION STATEMENTS WHICH THE COMPANY
FILES WITH THE SEC OR WITH ANY GOVERNMENTAL AUTHORITY THAT MAY BE SUBSTITUTED
THEREFOR (OTHER THAN AMENDMENTS TO ANY REGISTRATION STATEMENT (TO THE EXTENT
SUCH REGISTRATION STATEMENT, IN THE FORM IT BECAME EFFECTIVE, IS DELIVERED),
EXHIBITS TO ANY REGISTRATION STATEMENT AND, IF APPLICABLE, ANY REGISTRATION
STATEMENT ON

 

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Form S-8) and in any case not otherwise required to be delivered to the
Administrative Agent pursuant hereto;

 

(D)  PROMPTLY AFTER THE FURNISHING THEREOF, COPIES OF ANY MATERIAL REQUESTS OR
MATERIAL NOTICES RECEIVED BY ANY LOAN PARTY (OTHER THAN IN THE ORDINARY COURSE
OF BUSINESS) OR MATERIAL STATEMENTS OR MATERIAL REPORTS FURNISHED TO ANY HOLDER
OF DEBT SECURITIES OF ANY LOAN PARTY OR OF ANY OF ITS SUBSIDIARIES PURSUANT TO
THE TERMS OF THE SENIOR SUBORDINATED NOTE INDENTURE OR ANY OTHER JUNIOR
FINANCING DOCUMENTATION IN A PRINCIPAL AMOUNT GREATER THAN THE THRESHOLD AMOUNT
OR TO ANY HOLDER OF PREFERRED EQUITY SECURITIES OF ANY LOAN PARTY AND NOT
OTHERWISE REQUIRED TO BE FURNISHED TO THE LENDERS PURSUANT TO ANY OTHER CLAUSE
OF THIS SECTION 6.02;

 

(E)  TOGETHER WITH THE DELIVERY OF EACH COMPLIANCE CERTIFICATE PURSUANT TO
SECTION 6.02(B) REQUIRED TO BE DELIVERED CONCURRENTLY WITH THE DELIVERY OF
FINANCIAL STATEMENTS REFERRED TO IN SECTION 6.01(A), (I) A CERTIFICATE OF A
RESPONSIBLE OFFICER OF THE COMPANY (X) SETTING FORTH THE INFORMATION REQUIRED
PURSUANT TO THE PERFECTION CERTIFICATE OR CONFIRMING THAT THERE HAS BEEN NO
CHANGE IN SUCH INFORMATION SINCE THE DATE OF THE PERFECTION CERTIFICATE
DELIVERED ON THE CLOSING DATE OR THE DATE OF THE MOST RECENT CERTIFICATE
DELIVERED PURSUANT TO THIS SECTION AND (Y) IDENTIFYING, BASED ON COLLATERAL
OWNED, AND LAWS IN EFFECT, AS OF THE DATE OF SUCH CERTIFICATE, ALL UNIFORM
COMMERCIAL CODE FINANCING STATEMENTS (INCLUDING FIXTURE FILINGS, AS APPLICABLE)
OR OTHER APPROPRIATE FILINGS, RECORDINGS OR REGISTRATIONS, INCLUDING ALL
REFILINGS, RERECORDINGS AND REREGISTRATIONS, CONTAINING A DESCRIPTION OF THE
COLLATERAL THAT WILL BE REQUIRED TO BE FILED OF RECORD WITHIN THE 18 MONTHS
FOLLOWING THE DATE OF SUCH CERTIFICATE, IN EACH GOVERNMENTAL, MUNICIPAL OR OTHER
APPROPRIATE OFFICE IN EACH JURISDICTION IDENTIFIED PURSUANT TO CLAUSE (X) ABOVE
TO THE EXTENT NECESSARY AND REQUIRED UNDER THE COLLATERAL DOCUMENTS TO PROTECT
AND PERFECT THE SECURITY INTERESTS UNDER THE COLLATERAL DOCUMENTS FOR A PERIOD
OF NOT LESS THAN 18 MONTHS AFTER THE DATE OF SUCH CERTIFICATE (EXCEPT AS NOTED
THEREIN WITH RESPECT TO ANY CONTINUATION STATEMENTS TO BE FILED WITHIN SUCH
PERIOD), (II) A REASONABLY DETAILED CALCULATION OF EXCESS CASH FLOW FOR SUCH
FISCAL YEAR, (III) A DESCRIPTION OF ANY CHANGE IN THE STATUS OF A SUBSIDIARY AS
A RESTRICTED OR AN UNRESTRICTED SUBSIDIARY AS OF THE DATE OF DELIVERY OF SUCH
COMPLIANCE CERTIFICATE AND (IV) A DESCRIPTION OF ANY CHANGE IN THE STATUS OF ANY
SUBSIDIARY AS A FOREIGN IMMATERIAL SUBSIDIARY AS OF THE DATE OF DELIVERY OF SUCH
COMPLIANCE CERTIFICATE; AND

 

(F)  PROMPTLY, SUCH ADDITIONAL INFORMATION REGARDING THE BUSINESS, LEGAL,
FINANCIAL OR CORPORATE AFFAIRS OF ANY LOAN PARTY OR ANY SUBSIDIARY, OR
COMPLIANCE WITH THE TERMS OF THE LOAN DOCUMENTS, AS THE ADMINISTRATIVE AGENT OR
ANY LENDER THROUGH THE ADMINISTRATIVE AGENT MAY FROM TIME TO TIME REASONABLY
REQUEST.

 

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) or (d) (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date (i) on which
the Company posts such documents, or provides a link thereto on the Company’s
website on the Internet at the website address listed on Schedule 10.02; (ii) on
which such documents are posted on the Company’s behalf on
IntraLinks/IntraAgency or another relevant website, if any, to which each Lender
and the Administrative Agent have access (whether a commercial, third-party
website or whether sponsored by the Administrative Agent); or (iii) such
documents are publicly available on the SEC’s website pursuant to the SEC’s
EDGAR system; provided that:  (i) upon written request by the Administrative
Agent, the Company shall deliver paper copies of such documents to the
Administrative Agent for further distribution to each Lender until a written
request to cease delivering paper copies is given by the Administrative Agent
and (ii) the Company shall notify (which may be by facsimile or electronic mail)
the Administrative Agent of the posting of any such documents and provide to the

 

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Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents.  Notwithstanding anything contained herein, in every instance
the Company shall be required to provide paper copies of the Compliance
Certificates required by Section 6.02(b) to the Administrative Agent.  Each
Lender shall be solely responsible for timely accessing posted documents or
requesting delivery of paper copies of such documents from the Administrative
Agent and maintaining its copies of such documents.

 

SECTION 6.03.  Notices.  Promptly (but in any event within five Business Days)
after any Responsible Officer of the Company obtains knowledge thereof, notify
the Administrative Agent (for prompt notification to each Lender):

 

(A)  OF THE OCCURRENCE OF ANY CONTINUING DEFAULT; AND

 

(B)  OF ANY DISPUTE, LITIGATION, INVESTIGATION OR PROCEEDING BETWEEN ANY LOAN
PARTY OR ANY SUBSIDIARY AND ANY GOVERNMENTAL AUTHORITY OR OTHER PERSON THAT
COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

 

Each notice pursuant to this Section shall be accompanied by a written statement
of a Responsible Officer of the Company (x) that such notice is being delivered
pursuant to Section 6.03(a) or (b) (as applicable) and (y) setting forth details
of the occurrence referred to therein and stating what action the Company has
taken and proposes to take with respect thereto.

 

SECTION 6.04.  Payment of Obligations.  Pay, discharge or otherwise satisfy as
the same shall become due and payable, all its obligations and liabilities
(other than Indebtedness), including in respect of taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property before the same shall become delinquent or in
default; provided, however, that such payment, discharge or satisfaction shall
not be required hereunder with respect to any such obligation, liability, tax,
assessment, charge or levy (i) so long as the validity or amount thereof shall
be contested in good faith by appropriate proceedings and the applicable Company
or Subsidiary shall have set aside on its books reserves with respect thereto to
the extent required by and in accordance with GAAP and such contest operates to
suspend collection of the contested obligation, tax, assessment or charge or
(ii) to the extent the failure to pay or discharge the same could not reasonably
be expected to have a Material Adverse Effect.

 

SECTION 6.05.  Preservation of Existence, Etc.  (a) Preserve, renew and maintain
in full force and effect its legal existence under the Laws of the jurisdiction
of its organization except (i) in the case of any Subsidiary of the Company,
where the failure to perform such obligations, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, or (ii) in a
transaction permitted by Section 7.04 or 7.05, and (b) take all reasonable
action to maintain all privileges (including its good standing), material
rights, material permits, material licenses and material franchises necessary or
desirable in the normal conduct of its business, except (i) to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect or (ii) pursuant to a transaction permitted by Section 7.04 or 7.05.

 

SECTION 6.06.  Maintenance of Properties.  Except if the failure to do so could
not reasonably be expected to have a Material Adverse Effect, (a) maintain,
preserve and protect all of its properties and equipment material to the
operation of its business in good working order, repair and condition, ordinary
wear and tear excepted and casualty or condemnation excepted, and (b) make all
necessary renewals, replacements, modifications, improvements, upgrades,
extensions and additions thereof or thereto in accordance with prudent industry
practice.

 

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SECTION 6.07.  Maintenance of Insurance.  Maintain with financially sound and
reputable insurance companies, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts (after giving effect to any self-insurance reasonable and customary for
similarly situated Persons engaged in the same or similar businesses as the
Company and the Restricted Subsidiaries) and with deductible levels as are
customarily carried under similar circumstances by such other Persons and ensure
that the Administrative Agent is an additional insured and/or loss payee under
such liability and property insurance as reasonably requested by the
Administrative Agent.

 

SECTION 6.08.  Compliance with Laws.  Comply with the requirements of all Laws
and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except if the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.09.  Inspection Rights.  Permit representatives and independent
contractors of the Administrative Agent and each Lender to (a) visit and inspect
any of its properties, (b) examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and (c) discuss its
affairs, finances and accounts with its directors, officers, and independent
public accountants, all at the reasonable expense of the Company and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Company, in all cases subject to
applicable Law and the terms of any applicable confidentiality agreements not
entered into for purposes of obstructing the operation of this Section 6.09;
provided that, excluding any such visits and inspections during the continuation
of an Event of Default, only the Administrative Agent on behalf of the Lenders
may exercise rights of the Administrative Agent and the Lenders under this
Section 6.09 and the Administrative Agent shall not exercise such rights more
often than two (2) times during any calendar year absent the continuation of an
Event of Default and only one (1) such time shall be at the Company’s expense;
provided further that when an Event of Default shall have occurred and be
continuing, the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Company at any time during normal business hours and upon
reasonable advance notice.  The Administrative Agent and the Lenders shall give
the Company the opportunity to participate in any discussions with the Company’s
independent public accountants.

 

SECTION 6.10.  Covenant to Guarantee Obligations and Give Security.  At the
Company’s expense, take all action reasonably requested by the Administrative
Agent to ensure that the Collateral and Guarantee Requirement continues to be
satisfied, including:

 

(A)  UPON THE FORMATION OR ACQUISITION OF ANY NEW DIRECT OR INDIRECT RESTRICTED
SUBSIDIARY (IN EACH CASE, OTHER THAN AN EXCLUDED SUBSIDIARY) BY ANY LOAN PARTY
OR THE DESIGNATION IN ACCORDANCE WITH SECTION 6.15 OF ANY EXISTING DIRECT OR
INDIRECT SUBSIDIARY AS A RESTRICTED SUBSIDIARY (OTHER THAN AN EXCLUDED
SUBSIDIARY):

 

(I)  WITHIN (X) THIRTY (30) DAYS AFTER THE FORMATION, ACQUISITION OR DESIGNATION
OF ANY SUCH DOMESTIC SUBSIDIARY OR SUCH LONGER PERIOD AS MAY BE REASONABLY
ACCEPTABLE TO THE ADMINISTRATIVE AGENT AND (Y) NINETY (90) DAYS AFTER THE
FORMATION, ACQUISITION OR DESIGNATION OF ANY SUCH FOREIGN SUBSIDIARY OR SUCH
LONGER PERIOD AS MAY BE REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT:

 

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(A)  CAUSE EACH SUCH RESTRICTED SUBSIDIARY THAT IS REQUIRED TO BECOME A
GUARANTOR UNDER THE COLLATERAL AND GUARANTEE REQUIREMENT OR BECOMES A GUARANTOR
TO FURNISH TO THE ADMINISTRATIVE AGENT A DESCRIPTION OF THE MATERIAL REAL
PROPERTY OWNED BY SUCH RESTRICTED SUBSIDIARY, IN DETAIL REASONABLY SATISFACTORY
TO THE ADMINISTRATIVE AGENT;

 

(B)  CAUSE (X) EACH SUCH RESTRICTED SUBSIDIARY THAT IS REQUIRED TO BECOME A
GUARANTOR PURSUANT TO THE COLLATERAL AND GUARANTEE REQUIREMENT OR BECOMES A
GUARANTOR TO DULY EXECUTE AND DELIVER TO THE ADMINISTRATIVE AGENT MORTGAGES,
SECURITY AGREEMENT SUPPLEMENTS AND OTHER SECURITY AGREEMENTS AND DOCUMENTS AND
TO EXECUTE, DELIVER, FILE AND RECORD ANY SUCH OTHER DOCUMENTS, STATEMENTS,
ASSIGNMENTS, INSTRUMENTS, AGREEMENTS OR OTHER PAPERS AND TAKE ALL OTHER ACTIONS
REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT IN ORDER TO CREATE A PERFECTED
SECURITY INTEREST WITH THE PRIORITY REQUIRED BY THE COLLATERAL DOCUMENTS IN ALL
OF ITS ASSETS REQUIRED TO CONSTITUTE COLLATERAL UNDER THE LOAN DOCUMENTS
(INCLUDING, WITH RESPECT TO MORTGAGES, THE DOCUMENTS LISTED IN SECTION 6.12(B)),
AS REASONABLY REQUESTED BY AND IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE ADMINISTRATIVE AGENT (CONSISTENT WITH THE MORTGAGES, GUARANTEE AND SECURITY
AGREEMENT AND OTHER SECURITY AGREEMENTS IN EFFECT ON THE CLOSING DATE), AND
(Y) EACH DIRECT PARENT OF EACH SUCH RESTRICTED SUBSIDIARY (IF SUCH PARENT IS A
BORROWER OR IS REQUIRED TO BE A GUARANTOR PURSUANT TO THE COLLATERAL AND
GUARANTEE REQUIREMENT OR BECOMES A GUARANTOR) TO DULY EXECUTE AND DELIVER TO THE
ADMINISTRATIVE AGENT SUCH SECURITY AGREEMENT SUPPLEMENTS AND OTHER SECURITY
AGREEMENTS AND TO EXECUTE, DELIVER, FILE AND RECORD ANY SUCH OTHER DOCUMENTS,
STATEMENTS, ASSIGNMENTS, INSTRUMENTS, AGREEMENTS OR OTHER PAPERS AND TAKE ALL
OTHER ACTIONS REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT IN ORDER TO
CREATE A PERFECTED SECURITY INTEREST WITH THE PRIORITY REQUIRED BY THE
COLLATERAL DOCUMENTS IN ANY UNCERTIFICATED EQUITY INTERESTS OF SUCH RESTRICTED
SUBSIDIARY THAT ARE REQUIRED TO CONSTITUTE COLLATERAL UNDER THE LOAN DOCUMENTS,
AS REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT AND IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT (CONSISTENT WITH THE
GUARANTEE AND SECURITY AGREEMENT IN EFFECT ON THE CLOSING DATE);

 

(C)  (X) CAUSE EACH SUCH RESTRICTED SUBSIDIARY THAT IS REQUIRED TO BECOME A
GUARANTOR PURSUANT TO THE COLLATERAL AND GUARANTEE REQUIREMENT OR BECOMES A
GUARANTOR TO DELIVER ANY AND ALL CERTIFICATES REPRESENTING EQUITY INTERESTS (TO
THE EXTENT CERTIFICATED) THAT ARE REQUIRED TO BE PLEDGED PURSUANT TO THE
COLLATERAL AND GUARANTEE REQUIREMENT, ACCOMPANIED BY UNDATED STOCK POWERS OR
OTHER APPROPRIATE INSTRUMENTS OF TRANSFER EXECUTED IN BLANK AND ANY INSTRUMENTS
EVIDENCING THE INTERCOMPANY INDEBTEDNESS HELD BY SUCH RESTRICTED SUBSIDIARY AND
REQUIRED TO BE PLEDGED PURSUANT TO THE COLLATERAL DOCUMENTS, INDORSED IN BLANK
TO THE ADMINISTRATIVE AGENT AND (Y) CAUSE EACH DIRECT PARENT OF SUCH RESTRICTED
SUBSIDIARY (IF SUCH PARENT IS A BORROWER OR IS REQUIRED TO BE A GUARANTOR
PURSUANT TO THE COLLATERAL AND GUARANTEE REQUIREMENT OR BECOMES A GUARANTOR) TO
DELIVER ANY AND ALL CERTIFICATES REPRESENTING THE OUTSTANDING EQUITY INTERESTS
(TO THE EXTENT CERTIFICATED) OF SUCH RESTRICTED SUBSIDIARY THAT ARE REQUIRED TO
BE PLEDGED PURSUANT TO THE COLLATERAL AND GUARANTEE REQUIREMENT, ACCOMPANIED BY
UNDATED STOCK POWERS OR OTHER APPROPRIATE INSTRUMENTS OF TRANSFER EXECUTED IN
BLANK AND ANY INSTRUMENTS EVIDENCING THE INTERCOMPANY INDEBTEDNESS ISSUED BY
SUCH RESTRICTED SUBSIDIARY AND REQUIRED TO BE PLEDGED IN

 

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ACCORDANCE WITH THE COLLATERAL DOCUMENTS, INDORSED IN BLANK TO THE
ADMINISTRATIVE AGENT;

 

(D)  TAKE AND CAUSE SUCH RESTRICTED SUBSIDIARY AND EACH DIRECT OR INDIRECT
PARENT OF SUCH RESTRICTED SUBSIDIARY TO TAKE WHATEVER ACTION (INCLUDING THE
RECORDING OF MORTGAGES, THE FILING OF UNIFORM COMMERCIAL CODE FINANCING
STATEMENTS, DELIVERY OF STOCK AND MEMBERSHIP INTEREST CERTIFICATES, DELIVERY OF
PROMISSORY NOTES DULY ENDORSED IN FAVOR OF THE ADMINISTRATIVE AGENT, AND THE
EXECUTION, DELIVERY, FILING AND RECORDING OF ANY SUCH OTHER DOCUMENTS,
STATEMENTS, ASSIGNMENTS, INSTRUMENTS, AGREEMENTS OR OTHER PAPERS) MAY BE
REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT TO VEST IN THE ADMINISTRATIVE
AGENT (OR IN ANY REPRESENTATIVE OF THE ADMINISTRATIVE AGENT DESIGNATED BY IT)
VALID LIENS REQUIRED BY THE COLLATERAL AND GUARANTEE REQUIREMENT, ENFORCEABLE
AGAINST ALL THIRD PARTIES IN ACCORDANCE WITH THEIR TERMS, EXCEPT AS SUCH
ENFORCEABILITY MAY BE LIMITED BY DEBTOR RELIEF LAWS AND BY GENERAL PRINCIPLES OF
EQUITY;

 

(E)  CAUSE EACH SUCH RESTRICTED SUBSIDIARY THAT IS REQUIRED TO BECOME A
GUARANTOR UNDER THE COLLATERAL AND GUARANTEE REQUIREMENT TO GUARANTEE THE
OBLIGATIONS; AND

 

(F)  CAUSE EACH SUCH RESTRICTED SUBSIDIARY TO DELIVER TO THE ADMINISTRATIVE
AGENT COPIES OF ITS ORGANIZATION DOCUMENTS,

 

(II)  WITHIN THIRTY (30) DAYS (WITH RESPECT TO ANY DOMESTIC SUBSIDIARY) OR
NINETY (90) DAYS (WITH RESPECT TO ANY FOREIGN SUBSIDIARY) AFTER THE REQUEST
THEREFOR BY THE ADMINISTRATIVE AGENT (OR SUCH LONGER PERIOD AS MAY BE REASONABLY
ACCEPTABLE TO THE ADMINISTRATIVE AGENT), DELIVER TO THE ADMINISTRATIVE AGENT A
SIGNED COPY OF AN OPINION, ADDRESSED TO THE ADMINISTRATIVE AGENT, THE OTHER
AGENTS AND THE LENDERS, OF COUNSEL FOR THE LOAN PARTIES REASONABLY ACCEPTABLE TO
THE ADMINISTRATIVE AGENT AS TO SUCH MATTERS SET FORTH IN THIS SECTION 6.10(A) AS
THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST, AND

 

(III)  AS PROMPTLY AS PRACTICABLE AFTER THE REQUEST THEREFOR BY THE
ADMINISTRATIVE AGENT, DELIVER TO THE ADMINISTRATIVE AGENT, WITH RESPECT TO EACH
PARCEL OF MATERIAL REAL PROPERTY THAT IS OWNED BY SUCH RESTRICTED SUBSIDIARY,
ANY EXISTING TITLE REPORTS, EXISTING SURVEYS OR EXISTING ENVIRONMENTAL
ASSESSMENT REPORTS; AND

 

(B)  AFTER THE CLOSING DATE, CONCURRENTLY WITH THE ACQUISITION OF ANY MATERIAL
REAL PROPERTY BY ANY LOAN PARTY AND SUCH MATERIAL REAL PROPERTY SHALL NOT
ALREADY BE SUBJECT TO A PERFECTED LIEN PURSUANT TO THE COLLATERAL AND GUARANTEE
REQUIREMENT, THE COMPANY SHALL GIVE NOTICE THEREOF TO THE ADMINISTRATIVE AGENT
AND PROMPTLY THEREAFTER SHALL CAUSE SUCH ASSETS TO BE SUBJECTED TO A LIEN TO THE
EXTENT AND AT SUCH TIMES AS SHALL BE REQUIRED BY THE COLLATERAL AND GUARANTEE
REQUIREMENT AND THE COLLATERAL DOCUMENTS, AS THE CASE MAY BE, AND WILL TAKE, OR
CAUSE THE RELEVANT LOAN PARTY TO TAKE, SUCH ACTIONS AND AT SUCH TIMES AS SHALL
BE REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT TO GRANT AND PERFECT OR
RECORD SUCH LIEN, INCLUDING, AS APPLICABLE, THE ACTIONS REFERRED TO IN
SECTION 6.12(B).

 

SECTION 6.11.  Compliance with Environmental Laws.  Except, in each case, to the
extent that the failure to do so could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect:  (a) comply, and
take all reasonable actions to cause all lessees and other Persons operating or
occupying its properties to comply, with all applicable

 

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Environmental Laws and Environmental Permits; (b) obtain and renew all
Environmental Permits necessary for its operations and properties; and (c) in
each case to the extent required by Environmental Laws, conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Hazardous
Materials from any of its properties, in accordance with the requirements of all
Environmental Laws.

 

SECTION 6.12.  Further Assurances.  (a)  Promptly upon reasonable request by the
Administrative Agent (i) correct any material defect or error that may be
discovered in the execution, acknowledgment, filing or recordation of any
Collateral Document or other document or instrument relating to any Collateral,
and (ii) do, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register any and all such further acts, deeds, certificates,
assurances and other instruments as the Administrative Agent may reasonably
request from time to time in order to carry out more effectively the purposes of
the Collateral Documents.

 

(B)  IN THE CASE OF ANY MATERIAL REAL PROPERTY REFERRED TO IN SECTION 6.10(B),
PROVIDE THE ADMINISTRATIVE AGENT WITH MORTGAGES WITH RESPECT TO SUCH MATERIAL
REAL PROPERTY WITHIN SIXTY (60) DAYS OF THE ACQUISITION OF SUCH REAL PROPERTY
(OR SUCH LONGER PERIOD AS MAY BE REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE
AGENT) TOGETHER WITH:

 

(I)  EVIDENCE THAT COUNTERPARTS OF ANY SUCH MORTGAGE HAS BEEN DULY EXECUTED,
ACKNOWLEDGED AND DELIVERED AND IS IN FORM SUITABLE FOR FILING OR RECORDING IN
ALL FILING OR RECORDING OFFICES THAT THE ADMINISTRATIVE AGENT MAY DEEM
REASONABLY NECESSARY OR DESIRABLE IN ORDER TO CREATE A VALID AND SUBSISTING
PERFECTED LIEN ON THE PROPERTY AND/OR RIGHTS DESCRIBED THEREIN IN FAVOR OF THE
ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE SECURED PARTIES AND THAT ALL FILING
AND RECORDING TAXES AND FEES HAVE BEEN PAID OR OTHERWISE PROVIDED FOR IN A
MANNER REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT;

 

(II)  FULLY PAID AMERICAN LAND TITLE ASSOCIATION LENDER’S EXTENDED COVERAGE
TITLE INSURANCE POLICIES OR THE EQUIVALENT OR OTHER FORM AVAILABLE IN EACH
APPLICABLE JURISDICTION (THE “MORTGAGE POLICIES”) IN FORM AND SUBSTANCE, WITH
ENDORSEMENTS AND IN AMOUNT, REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT
(NOT TO EXCEED THE VALUE OF THE REAL PROPERTIES COVERED THEREBY), ISSUED,
COINSURED AND REINSURED BY TITLE INSURERS REASONABLY ACCEPTABLE TO THE
ADMINISTRATIVE AGENT, INSURING THE MORTGAGES TO BE VALID SUBSISTING LIENS ON THE
PROPERTY DESCRIBED THEREIN, FREE AND CLEAR OF ALL DEFECTS AND ENCUMBRANCES
EXCEPT FOR MINOR DEFECTS IN TITLE THAT DO NOT MATERIALLY INTERFERE WITH THE LOAN
PARTY’S ABILITY TO CONDUCT BUSINESS AND SUBJECT TO LIENS PERMITTED BY
SECTION 7.01, AND PROVIDING FOR SUCH OTHER AFFIRMATIVE INSURANCE (INCLUDING
ENDORSEMENTS FOR FUTURE ADVANCES UNDER THE LOAN DOCUMENTS) AND SUCH COINSURANCE
AND DIRECT ACCESS REINSURANCE AS THE ADMINISTRATIVE AGENT MAY REASONABLY
REQUEST;

 

(III)  OPINIONS OF LOCAL COUNSEL FOR THE LOAN PARTIES IN STATES IN WHICH THE
REAL PROPERTIES ARE LOCATED, WITH RESPECT TO THE ENFORCEABILITY AND PERFECTION
OF ANY SUCH MORTGAGE AND ANY RELATED FIXTURE FILINGS IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT; AND

 

(IV)  SUCH OTHER EVIDENCE THAT ALL OTHER ACTIONS THAT THE ADMINISTRATIVE AGENT
MAY REASONABLY DEEM NECESSARY OR DESIRABLE IN ORDER TO CREATE VALID AND
SUBSISTING LIENS ON THE PROPERTY DESCRIBED IN EACH SUCH MORTGAGE HAS BEEN TAKEN.

 

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SECTION 6.13.  Use of Proceeds.  Apply the proceeds of the Term Loans, Revolving
Credit Loans and Swing Line Loans and the Letters of Credit solely to the uses
described in the fourth paragraph of the preliminary statements to this
Agreement and in the last sentence of Section 2.05(b)(iii).

 

SECTION 6.14.  Interest Rate Protection.  Within 180 days after the Closing Date
(or such longer period as may be reasonably acceptable to the Administrative
Agent), enter into, and thereafter maintain, Swap Contracts to the extent
necessary to provide that at least 50% of the aggregate principal amount of the
Funded Debt of the Company and the Restricted Subsidiaries is subject to either
a fixed interest rate or interest rate protection for a minimum of three years,
which Swap Contracts shall have terms and conditions reasonably satisfactory to
the Administrative Agent.

 

SECTION 6.15.  Designation of Subsidiaries.  The board of directors of Holdings
may at any time designate any Restricted Subsidiary as an Unrestricted
Subsidiary or any Unrestricted Subsidiary as a Restricted Subsidiary; provided
that (i) immediately before and after such designation, no Default shall have
occurred and be continuing, (ii) immediately after giving effect to such
designation, the Company and the Restricted Subsidiaries shall be in compliance,
on a Pro Forma Basis, with the covenants set forth in Section 7.10 (and, as a
condition precedent to the effectiveness of any such designation, the Company
shall deliver to the Administrative Agent a certificate setting forth in
reasonable detail the calculations demonstrating such compliance), (iii) no
Subsidiary may be designated as an Unrestricted Subsidiary if it is a
“Restricted Subsidiary” for the purpose of the Senior Subordinated Notes or any
other Junior Financing, as applicable, (iv) no Restricted Subsidiary may be
designated as an Unrestricted Subsidiary if it was previously designated an
Unrestricted Subsidiary and (v) no Subsidiary may be designated as an
Unrestricted Subsidiary if such Subsidiary is a Borrower.  The designation of
any Subsidiary that is a Loan Party as an Unrestricted Subsidiary shall
constitute an Investment by the Company therein at the date of designation in an
amount equal to the net book value of the applicable Loan Party’s investment
therein.  The designation of any Unrestricted Subsidiary as a Restricted
Subsidiary shall constitute the incurrence at the time of designation of any
Indebtedness or Liens of such Subsidiary existing at such time.

 

SECTION 6.16.  Ownership of Overseas Borrowers.  Each of the Overseas Borrowers
shall, at all times, be a direct or indirect Subsidiary of the Company.

 

SECTION 6.17.  Post-Closing Covenants.  (a)  Within 90 days following the
Closing Date (or such longer period as may be reasonably acceptable to the
Administrative Agent), (i) the Company will enter into, and cause W.A.
Publications, LLC to enter into, a pledge agreement under the laws of Australia
in form and substance reasonably satisfactory to the Administrative Agent and
provide legal opinions reasonably satisfactory to the Administrative Agent with
respect to the pledge of the outstanding Equity Interests (limited, with respect
to outstanding voting Equity Interests, to 65%) in The Reader’s Digest Assoc.
Pty. Limited and (ii) the Company will enter into a pledge agreement under the
laws of France in form and substance reasonably satisfactory to the
Administrative Agent and provide legal opinions reasonably satisfactory to the
Administrative Agent with respect to the pledge of the outstanding Equity
Interests (limited, with respect to outstanding voting Equity Interests, to 65%)
in Selection du Reader’s Digest S.A.

 

(B)  WITHIN 90 DAYS FOLLOWING THE CLOSING DATE (OR SUCH LONGER PERIOD AS MAY BE
REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT), (I) THE GERMAN BORROWER WILL
ENTER INTO, AND CAUSE EACH OF ITS OVERSEAS GUARANTORS TO ENTER INTO (AND THE
COMPANY SHALL CAUSE THE DIRECT PARENT ENTITY OF THE GERMAN BORROWER TO ENTER
INTO, IF SUCH DIRECT PARENT ENTITY IS A FOREIGN SUBSIDIARY),

 

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foreign law security agreements and pledge agreements and (in the case of such
Overseas Guarantors and the direct parent entity of the German Borrower, if such
Person is a Foreign Subsidiary) Overseas Guarantees, in each case in form and
substance reasonably satisfactory to the Administrative Agent, and provide legal
opinions reasonably satisfactory to the Administrative Agent with respect
thereto, in each case to the extent required to satisfy the Collateral and
Guarantee Requirement under clauses (c), (e) and (f) thereof, and (ii) each of
the Company and any U.S. Guarantor that directly owns Equity Interests in a
Subsidiary organized under the laws of Germany (other than the German Borrower)
will enter into a foreign law pledge agreement with respect to such Equity
Interests, in each case in form and substance reasonably satisfactory to the
Administrative Agent, and provide legal opinions reasonably satisfactory to the
Administrative Agent with respect thereto, in each case to the extent required
to satisfy the Collateral and Guarantee Requirement under clauses (d) and
(f) thereof.

 

(C)  WITHIN 30 DAYS FOLLOWING THE CLOSING DATE (OR SUCH LONGER PERIOD AS MAY BE
REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT), THE COMPANY WILL ENTER INTO
A PLEDGE AGREEMENT UNDER THE LAWS OF THE UNITED KINGDOM IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT AND PROVIDE LEGAL OPINIONS
REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT WITH RESPECT TO THE PLEDGE
OF THE OUTSTANDING EQUITY INTERESTS (LIMITED, WITH RESPECT TO OUTSTANDING VOTING
EQUITY INTERESTS, TO 65%) IN THE READER’S DIGEST ASSOCIATION LIMITED.

 

(D)  WITHIN 60 DAYS FOLLOWING THE CLOSING DATE (OR SUCH LONGER PERIOD AS MAY BE
REASONABLY ACCEPTABLE TO THE ADMINISTRATIVE AGENT), DELIVER TO THE
ADMINISTRATIVE AGENT ANY AND ALL CERTIFICATES REPRESENTING EQUITY INTERESTS OF
DAS BESTE AUS READER’S DIGEST AG, ACCOMPANIED BY UNDATED STOCK POWERS OR OTHER
APPROPRIATE INSTRUMENTS OF TRANSFER EXECUTED IN BLANK, IN EACH CASE TO THE
EXTENT REQUIRED TO SATISFY THE COLLATERAL AND GUARANTEE REQUIREMENT UNDER CLAUSE
(D) THEREOF.

 

ARTICLE VII

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, Holdings and the
Company shall not, nor shall they permit any of their Restricted Subsidiaries
to, directly or indirectly:

 

SECTION 7.01.  Liens.  Create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than the following:

 

(A)  LIENS PURSUANT TO ANY LOAN DOCUMENT;

 

(B)  LIENS EXISTING ON THE DATE HEREOF AND LISTED ON SCHEDULE 7.01(B) AND ANY
MODIFICATIONS, REPLACEMENTS, RENEWALS OR EXTENSIONS THEREOF; PROVIDED THAT
(I) THE LIEN DOES NOT EXTEND TO ANY ADDITIONAL PROPERTY OTHER THAN
(A) AFTER-ACQUIRED PROPERTY THAT IS AFFIXED OR INCORPORATED INTO THE PROPERTY
COVERED BY SUCH LIEN OR FINANCED BY INDEBTEDNESS PERMITTED UNDER SECTION 7.03,
AND (B) PROCEEDS AND PRODUCTS THEREOF, AND (II) THE RENEWAL, EXTENSION OR
REFINANCING OF THE OBLIGATIONS SECURED OR BENEFITED BY SUCH LIENS IS PERMITTED
BY SECTION 7.03;

 

(C)  LIENS FOR TAXES, ASSESSMENTS OR GOVERNMENTAL CHARGES WHICH ARE NOT OVERDUE
FOR A PERIOD OF MORE THAN THIRTY (30) DAYS OR WHICH ARE BEING CONTESTED IN GOOD
FAITH AND BY APPROPRIATE

 

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proceedings diligently conducted, if reserves with respect thereto are
maintained on the books of the applicable Person to the extent required by and
in accordance with GAAP;

 

(D)  STATUTORY LIENS OF LANDLORDS, CARRIERS, WAREHOUSEMEN, MECHANICS,
MATERIALMEN, REPAIRMEN, WORKMEN, SUPPLIERS, CONSTRUCTION CONTRACTORS OR OTHER
LIKE LIENS ARISING IN THE ORDINARY COURSE OF BUSINESS WHICH SECURE AMOUNTS NOT
OVERDUE FOR A PERIOD OF MORE THAN THIRTY (30) DAYS OR IF MORE THAN THIRTY (30)
DAYS OVERDUE, ARE UNFILED AND NO OTHER ACTION HAS BEEN TAKEN TO ENFORCE SUCH
LIEN OR WHICH ARE BEING CONTESTED IN GOOD FAITH AND BY APPROPRIATE PROCEEDINGS
DILIGENTLY CONDUCTED, IF RESERVES WITH RESPECT THERETO ARE MAINTAINED ON THE
BOOKS OF THE APPLICABLE PERSON TO THE EXTENT REQUIRED BY AND IN ACCORDANCE WITH
GAAP;

 

(E)  (I) LIENS, PLEDGES OR DEPOSITS IN THE ORDINARY COURSE OF BUSINESS IN
CONNECTION WITH WORKERS’ COMPENSATION, UNEMPLOYMENT INSURANCE AND OTHER SOCIAL
SECURITY LEGISLATION AND (II) LIENS, PLEDGES AND DEPOSITS IN THE ORDINARY COURSE
OF BUSINESS SECURING LIABILITY FOR PREMIUMS OR REIMBURSEMENT OR INDEMNIFICATION
OBLIGATIONS OF (INCLUDING OBLIGATIONS IN RESPECT OF LETTERS OF CREDIT OR BANK
GUARANTEES FOR THE BENEFIT OF) INSURANCE CARRIERS PROVIDING INSURANCE TO
HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY;

 

(F)  LIENS OR DEPOSITS (INCLUDING DEPOSITS MADE TO SATISFY STATUTORY OR OTHER
LEGAL OBLIGATIONS IN CONNECTION WITH SWEEPSTAKES OR SIMILAR CONTESTS) TO SECURE
THE PERFORMANCE OF BIDS, TRADE CONTRACTS, GOVERNMENTAL CONTRACTS, TENDERS,
STATUTORY BONDS AND LEASES (OTHER THAN INDEBTEDNESS FOR BORROWED MONEY AND
CAPITALIZED LEASES), STATUTORY OBLIGATIONS, SURETY, STAY, CUSTOMS AND APPEAL
BONDS, PERFORMANCE BONDS AND OTHER OBLIGATIONS OF A LIKE NATURE (INCLUDING THOSE
TO SECURE HEALTH, SAFETY AND ENVIRONMENTAL OBLIGATIONS) INCURRED IN THE ORDINARY
COURSE OF BUSINESS;

 

(G)  EASEMENTS, RIGHTS-OF-WAY, RESTRICTIONS (INCLUDING ZONING RESTRICTIONS),
COVENANTS, LICENSES, ENCROACHMENTS, PROTRUSIONS AND OTHER SIMILAR ENCUMBRANCES
AND MINOR TITLE DEFECTS AFFECTING REAL PROPERTY WHICH, IN THE AGGREGATE, DO NOT
IN ANY CASE MATERIALLY INTERFERE WITH THE ORDINARY CONDUCT OF THE BUSINESS OF
THE COMPANY OR ANY SUBSIDIARY;

 

(H)  LIENS SECURING JUDGMENTS, DECREES, ATTACHMENTS OR AWARDS FOR THE PAYMENT OF
MONEY NOT CONSTITUTING AN EVENT OF DEFAULT UNDER SECTION 8.01(H);

 

(I)  LIENS SECURING INDEBTEDNESS PERMITTED UNDER SECTION 7.03(E); PROVIDED THAT
(I) SUCH LIENS ATTACH CONCURRENTLY WITH OR WITHIN TWO HUNDRED AND SEVENTY (270)
DAYS AFTER THE ACQUISITION, REPAIR, REPLACEMENT, CONSTRUCTION OR IMPROVEMENT (AS
APPLICABLE) OF THE PROPERTY SUBJECT TO SUCH LIENS, (II) SUCH LIENS DO NOT AT ANY
TIME ENCUMBER ANY PROPERTY EXCEPT FOR ACCESSIONS TO SUCH PROPERTY OTHER THAN THE
PROPERTY FINANCED BY SUCH INDEBTEDNESS AND THE PROCEEDS AND THE PRODUCTS THEREOF
AND (III) WITH RESPECT TO CAPITALIZED LEASES, SUCH LIENS DO NOT AT ANY TIME
EXTEND TO OR COVER ANY ASSETS (EXCEPT FOR ACCESSIONS TO SUCH ASSETS) OTHER THAN
THE ASSETS SUBJECT TO SUCH CAPITALIZED LEASES; PROVIDED FURTHER THAT INDIVIDUAL
FINANCINGS OF EQUIPMENT PROVIDED BY ONE LENDER MAY BE CROSS COLLATERALIZED TO
OTHER FINANCINGS OF EQUIPMENT PROVIDED BY SUCH LENDER;

 

(J)  LEASES, LICENSES, SUBLEASES OR SUBLICENSES GRANTED TO OTHERS IN THE
ORDINARY COURSE OF BUSINESS WHICH DO NOT (I) INTERFERE IN ANY MATERIAL RESPECT
WITH THE BUSINESS OF THE COMPANY OR ANY SUBSIDIARY OR (II) SECURE
ANY INDEBTEDNESS;

 

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(K)  LIENS IN FAVOR OF CUSTOMS AND REVENUE AUTHORITIES ARISING AS A MATTER OF
LAW TO SECURE PAYMENT OF CUSTOMS DUTIES IN CONNECTION WITH THE IMPORTATION OF
GOODS IN THE ORDINARY COURSE OF BUSINESS;

 

(L)  LIENS (I) OF A COLLECTION BANK ARISING UNDER SECTION 4-210 OF THE UNIFORM
COMMERCIAL CODE ON ITEMS IN THE COURSE OF COLLECTION, (II) ATTACHING TO
COMMODITY TRADING ACCOUNTS OR OTHER COMMODITIES BROKERAGE ACCOUNTS INCURRED IN
THE ORDINARY COURSE OF BUSINESS; AND (III) IN FAVOR OF A BANKING INSTITUTION
ARISING AS A MATTER OF LAW ENCUMBERING DEPOSITS (INCLUDING THE RIGHT OF
SET-OFF);

 

(M)  LIENS (I) ON CASH ADVANCES IN FAVOR OF THE SELLER OF ANY PROPERTY TO BE
ACQUIRED IN AN INVESTMENT PERMITTED PURSUANT TO SECTIONS 7.02(F), (I) AND (N) TO
BE APPLIED AGAINST THE PURCHASE PRICE FOR SUCH INVESTMENT, AND (II) CONSISTING
OF AN AGREEMENT TO DISPOSE OF ANY PROPERTY IN A DISPOSITION PERMITTED UNDER
SECTION 7.05, IN EACH CASE, SOLELY TO THE EXTENT SUCH INVESTMENT OR DISPOSITION,
AS THE CASE MAY BE, WOULD HAVE BEEN PERMITTED ON THE DATE OF THE CREATION OF
SUCH LIEN;

 

(N)  LIENS ON PROPERTY OR EQUITY INTERESTS OF ANY FOREIGN SUBSIDIARY (OTHER THAN
A BORROWER) (I) THAT IS NOT A LOAN PARTY AND (II) WHICH PROPERTY OR EQUITY
INTERESTS DO NOT CONSTITUTE COLLATERAL, WHICH LIENS SECURE INDEBTEDNESS OF SUCH
FOREIGN SUBSIDIARY PERMITTED UNDER SECTION 7.03;

 

(O)  LIENS SECURING INDEBTEDNESS PERMITTED UNDER SECTION 7.03(D) (I) OF THE
COMPANY OR A RESTRICTED SUBSIDIARY IN FAVOR OF A LOAN PARTY AND (II) OF ANY
RESTRICTED SUBSIDIARY THAT IS NOT A LOAN PARTY IN FAVOR OF ANY OTHER RESTRICTED
SUBSIDIARY THAT IS NOT A LOAN PARTY;

 

(P)  LIENS EXISTING ON PROPERTY AT THE TIME OF ITS ACQUISITION OR EXISTING ON
THE PROPERTY OF ANY PERSON AT THE TIME SUCH PERSON BECOMES A RESTRICTED
SUBSIDIARY (OTHER THAN BY DESIGNATION AS A RESTRICTED SUBSIDIARY PURSUANT TO
SECTION 6.15), IN EACH CASE AFTER THE DATE HEREOF (OTHER THAN LIENS ON THE
EQUITY INTERESTS OF ANY PERSON THAT BECOMES A RESTRICTED SUBSIDIARY); PROVIDED
THAT (I) SUCH LIEN WAS NOT CREATED IN CONTEMPLATION OF SUCH ACQUISITION OR SUCH
PERSON BECOMING A RESTRICTED SUBSIDIARY, (II) SUCH LIEN DOES NOT EXTEND TO OR
COVER ANY OTHER ASSETS OR PROPERTY (OTHER THAN THE PROCEEDS OR PRODUCTS THEREOF
AND OTHER THAN IMPROVEMENTS AND AFTER-ACQUIRED PROPERTY SUBJECTED TO A LIEN
SECURING INDEBTEDNESS AND OTHER OBLIGATIONS INCURRED PRIOR TO SUCH TIME AND
WHICH INDEBTEDNESS AND OTHER OBLIGATIONS ARE PERMITTED HEREUNDER THAT REQUIRE,
PURSUANT TO THEIR TERMS AT SUCH TIME, A PLEDGE OF AFTER-ACQUIRED PROPERTY, IT
BEING UNDERSTOOD THAT SUCH REQUIREMENT SHALL NOT BE PERMITTED TO APPLY TO ANY
PROPERTY TO WHICH SUCH REQUIREMENT WOULD NOT HAVE APPLIED BUT FOR SUCH
ACQUISITION), AND (III) THE INDEBTEDNESS SECURED THEREBY IS PERMITTED UNDER
SECTION 7.03(E), (G), (H) OR (K);

 

(Q)  ANY INTEREST OR TITLE OF A LESSOR UNDER LEASES ENTERED INTO BY THE COMPANY
OR ANY OF THE RESTRICTED SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS;

 

(R)  LIENS ARISING OUT OF CONDITIONAL SALE, TITLE RETENTION, CONSIGNMENT OR
SIMILAR ARRANGEMENTS FOR SALE OF GOODS ENTERED INTO BY THE COMPANY OR ANY OF THE
RESTRICTED SUBSIDIARIES IN THE ORDINARY COURSE OF BUSINESS PERMITTED BY THIS
AGREEMENT;

 

(S)  LIENS DEEMED TO EXIST IN CONNECTION WITH INVESTMENTS IN REPURCHASE
AGREEMENTS UNDER SECTION 7.02;

 

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(T)  LIENS ENCUMBERING REASONABLE CUSTOMARY INITIAL DEPOSITS AND MARGIN DEPOSITS
AND SIMILAR LIENS ATTACHING TO COMMODITY TRADING ACCOUNTS OR OTHER BROKERAGE
ACCOUNTS INCURRED IN THE ORDINARY COURSE OF BUSINESS AND NOT FOR SPECULATIVE
PURPOSES;

 

(U)  LIENS THAT ARE CONTRACTUAL RIGHTS OF SET-OFF OR, IN THE CASE OF CLAUSE
(I) OR (II) BELOW, OTHER BANKERS’ LIENS (I) RELATING TO CASH MANAGEMENT
OBLIGATIONS OR TO THE ESTABLISHMENT OF DEPOSITORY RELATIONS WITH BANKS NOT GIVEN
IN CONNECTION WITH THE ISSUANCE OF INDEBTEDNESS, (II) RELATING TO POOLED DEPOSIT
OR SWEEP ACCOUNTS OF HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY TO
PERMIT SATISFACTION OF OVERDRAFT OR SIMILAR OBLIGATIONS INCURRED IN THE ORDINARY
COURSE OF BUSINESS OF HOLDINGS, THE COMPANY AND THE RESTRICTED SUBSIDIARIES OR
(III) RELATING TO PURCHASE ORDERS AND OTHER AGREEMENTS ENTERED INTO WITH
CUSTOMERS OF THE COMPANY OR ANY RESTRICTED SUBSIDIARY IN THE ORDINARY COURSE OF
BUSINESS;

 

(V)  LIENS SOLELY ON ANY CASH EARNEST MONEY DEPOSITS MADE BY THE COMPANY OR ANY
OF THE RESTRICTED SUBSIDIARIES IN CONNECTION WITH ANY LETTER OF INTENT OR
PURCHASE AGREEMENT PERMITTED HEREUNDER;

 

(W)  (I) LIENS PLACED UPON THE EQUITY INTERESTS OF ANY RESTRICTED SUBSIDIARY
ACQUIRED PURSUANT TO A PERMITTED ACQUISITION TO SECURE INDEBTEDNESS INCURRED
PURSUANT TO SECTION 7.03(G) IN CONNECTION WITH SUCH PERMITTED ACQUISITION AND
(II) LIENS PLACED UPON THE ASSETS OF SUCH RESTRICTED SUBSIDIARY AND ANY OF ITS
SUBSIDIARIES TO SECURE A GUARANTEE BY SUCH RESTRICTED SUBSIDIARY AND ITS
SUBSIDIARIES OF ANY SUCH INDEBTEDNESS INCURRED PURSUANT TO SECTION 7.03(G);

 

(X)  GROUND LEASES IN RESPECT OF REAL PROPERTY ON WHICH FACILITIES OWNED OR
LEASED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES ARE LOCATED AND OTHER LIENS
AFFECTING THE INTEREST OF ANY LANDLORD (AND ANY UNDERLYING LANDLORD) OF ANY REAL
PROPERTY LEASED BY THE COMPANY OR ANY RESTRICTED SUBSIDIARY;

 

(Y)  LIENS ON EQUIPMENT (INCLUDING PRINTING PRESSES AND DATA-PROCESSING
EQUIPMENT) OWNED BY THE COMPANY OR ANY RESTRICTED SUBSIDIARY AND LOCATED ON THE
PREMISES OF ANY SUPPLIER AND USED IN THE ORDINARY COURSE OF BUSINESS; AND

 

(Z)  OTHER LIENS SECURING OBLIGATIONS, INCLUDING INDEBTEDNESS, OUTSTANDING IN AN
AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $100,000,000.

 

SECTION 7.02.  Investments.  Make or hold any Investments, except:

 

(A)  INVESTMENTS BY THE COMPANY OR A RESTRICTED SUBSIDIARY IN CASH AND ASSETS
THAT WERE CASH EQUIVALENTS WHEN SUCH INVESTMENT WAS MADE;

 

(B)  LOANS OR ADVANCES TO OFFICERS, DIRECTORS AND EMPLOYEES OF HOLDINGS, THE
COMPANY AND THE RESTRICTED SUBSIDIARIES (I) FOR REASONABLE AND CUSTOMARY
BUSINESS-RELATED TRAVEL, ENTERTAINMENT, RELOCATION AND ANALOGOUS ORDINARY
BUSINESS PURPOSES, (II) IN CONNECTION WITH SUCH PERSON’S PURCHASE OF EQUITY
INTERESTS OF HOLDINGS (OR ANY DIRECT OR INDIRECT PARENT THEREOF) (PROVIDED THAT
THE AMOUNT OF SUCH LOANS AND ADVANCES SHALL BE CONTRIBUTED TO THE COMPANY IN
CASH AS COMMON EQUITY) AND (III) FOR PURPOSES NOT DESCRIBED IN THE FOREGOING
CLAUSES (I) AND (II), IN AN AGGREGATE PRINCIPAL AMOUNT OUTSTANDING NOT TO EXCEED
$5,000,000;

 

(C)  INVESTMENTS (I) BY HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY IN
THE COMPANY OR ANY SUBSIDIARY THAT IS A LOAN PARTY, (II) BY ANY RESTRICTED
SUBSIDIARY THAT IS NOT A LOAN PARTY IN ANY OTHER SUCH RESTRICTED SUBSIDIARY THAT
IS ALSO NOT A LOAN PARTY, AND (III) BY THE

 

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COMPANY OR ANY RESTRICTED SUBSIDIARY (A) IN ANY RESTRICTED SUBSIDIARY; PROVIDED
THAT THE AGGREGATE AMOUNT OF SUCH INVESTMENTS IN RESTRICTED SUBSIDIARIES THAT
ARE NOT LOAN PARTIES (TOGETHER WITH THE AGGREGATE CONSIDERATION PAID IN RESPECT
OF PERMITTED ACQUISITIONS OF PERSONS THAT DO NOT BECOME LOAN PARTIES PURSUANT TO
SECTION 7.02(I)(B)) SHALL NOT EXCEED (X) $350,000,000 FOR THE PERIOD FROM THE
CLOSING DATE TO THE FIRST ANNIVERSARY OF THE CLOSING DATE, (Y) $400,000,000 FOR
THE PERIOD FROM THE CLOSING DATE TO THE SECOND ANNIVERSARY OF THE CLOSING DATE
AND (Z) $500,000,000 FOR THE PERIOD FROM THE CLOSING DATE TO THE MATURITY DATE
WITH RESPECT TO THE TERM LOANS (IN EACH CASE, NET OF ANY RETURN REPRESENTING A
RETURN OF CAPITAL IN RESPECT OF ANY SUCH INVESTMENT), (B) IN ANY FOREIGN
SUBSIDIARY THAT IS A LOAN PARTY, CONSISTING OF THE CONTRIBUTION OF EQUITY
INTERESTS OF ANY OTHER FOREIGN SUBSIDIARY HELD DIRECTLY BY THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY IN EXCHANGE FOR INDEBTEDNESS, EQUITY INTERESTS OR A
COMBINATION THEREOF OF THE FOREIGN SUBSIDIARY TO WHICH SUCH CONTRIBUTION IS
MADE, (C) IN ANY FOREIGN SUBSIDIARY, CONSTITUTING AN EXCHANGE OF EQUITY
INTERESTS OF SUCH FOREIGN SUBSIDIARY FOR INDEBTEDNESS OF SUCH FOREIGN SUBSIDIARY
OR (D) CONSTITUTING GUARANTEES OF INDEBTEDNESS OR OTHER MONETARY OBLIGATIONS OF
FOREIGN SUBSIDIARIES OWING TO ANY LOAN PARTY; PROVIDED THAT ANY INDEBTEDNESS
INCURRED BY A LOAN PARTY PURSUANT TO SECTION 7.03(H)(I)(B) TO FINANCE A
PERMITTED ACQUISITION AND LOANED, ADVANCED OR CONTRIBUTED TO A RESTRICTED
SUBSIDIARY THAT IS NOT A LOAN PARTY TO CONSUMMATE SUCH PERMITTED ACQUISITION
(WHICH, BUT FOR THE OPERATION OF THIS PROVISO, WOULD HAVE BEEN TREATED AS AN
INVESTMENT BY SUCH LOAN PARTY PURSUANT TO THIS CLAUSE (C) AND A SUBSEQUENT
INVESTMENT BY SUCH RESTRICTED SUBSIDIARY THAT IS NOT A LOAN PARTY PURSUANT TO
SECTION 7.02(I)) SHALL BE TREATED AS A SINGLE INVESTMENT BY SUCH RESTRICTED
SUBSIDIARY THAT IS NOT A LOAN PARTY PURSUANT TO SECTION 7.02(I);

 

(D)  INVESTMENTS CONSISTING OF EXTENSIONS OF CREDIT IN THE NATURE OF ACCOUNTS
RECEIVABLE OR NOTES RECEIVABLE ARISING FROM THE GRANT OF TRADE CREDIT IN THE
ORDINARY COURSE OF BUSINESS, AND INVESTMENTS RECEIVED IN SATISFACTION OR PARTIAL
SATISFACTION THEREOF FROM FINANCIALLY TROUBLED ACCOUNT DEBTORS AND OTHER CREDITS
TO SUPPLIERS IN THE ORDINARY COURSE OF BUSINESS;

 

(E)  INVESTMENTS (I) RESULTING FROM THE CREATION OF A LIEN PERMITTED UNDER
SECTION 7.01, (II) RESULTING FROM THE INCURRENCE OF INDEBTEDNESS PERMITTED UNDER
SECTION 7.03, (III) MADE TO EFFECT DISPOSITIONS PERMITTED UNDER SECTION 7.04 OR
SECTION 7.05 (OTHER THAN SECTION 7.05(E)) OR (IV) MADE TO EFFECT RESTRICTED
PAYMENTS PERMITTED UNDER SECTION 7.06;

 

(F)  (I) INVESTMENTS EXISTING OR CONTEMPLATED ON THE DATE HEREOF AND SET FORTH
ON SCHEDULE 7.02(F) AND ANY MODIFICATION, REPLACEMENT, RENEWAL, REINVESTMENT OR
EXTENSION THEREOF AND (II) INVESTMENTS EXISTING ON THE DATE HEREOF BY THE
COMPANY OR ANY RESTRICTED SUBSIDIARY IN THE COMPANY OR ANY OTHER RESTRICTED
SUBSIDIARY AND ANY MODIFICATION, RENEWAL OR EXTENSION THEREOF; PROVIDED THAT THE
AMOUNT OF THE ORIGINAL INVESTMENT IS NOT INCREASED EXCEPT BY THE TERMS OF SUCH
INVESTMENT OR AS OTHERWISE PERMITTED BY THIS SECTION 7.02;

 

(G)  INVESTMENTS IN SWAP CONTRACTS PERMITTED UNDER SECTION 7.03;

 

(H)  PROMISSORY NOTES AND OTHER NON-CASH CONSIDERATION RECEIVED IN CONNECTION
WITH DISPOSITIONS PERMITTED BY SECTION 7.05;

 

(I)  THE PURCHASE OR OTHER ACQUISITION OF PROPERTY AND ASSETS OR BUSINESSES OF
ANY PERSON OR OF ASSETS CONSTITUTING A BUSINESS UNIT, A LINE OF BUSINESS OR
DIVISION OF SUCH PERSON, OR EQUITY INTERESTS IN A PERSON THAT, UPON THE
CONSUMMATION THEREOF, WILL BE A SUBSIDIARY OF THE COMPANY (INCLUDING AS A RESULT
OF A MERGER OR CONSOLIDATION); PROVIDED THAT, WITH RESPECT TO EACH PURCHASE OR
OTHER ACQUISITION MADE PURSUANT TO THIS SECTION 7.02(I) (EACH, A “PERMITTED
ACQUISITION”):

 

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(A)  SUBJECT TO CLAUSE (B) BELOW, EACH APPLICABLE LOAN PARTY AND ANY SUCH NEWLY
CREATED OR ACQUIRED SUBSIDIARY (AND, TO THE EXTENT REQUIRED UNDER THE COLLATERAL
AND GUARANTEE REQUIREMENT, THE SUBSIDIARIES OF SUCH CREATED OR ACQUIRED
SUBSIDIARY) SHALL BE A GUARANTOR AND SHALL HAVE COMPLIED WITH THE REQUIREMENTS
OF AND GRANTED THE SECURITY INTERESTS REQUIRED BY SECTION 6.10 WITHIN THE TIMES
SPECIFIED THEREIN;

 

(B)  THE AGGREGATE AMOUNT OF CONSIDERATION (CASH AND NON-CASH (OTHER THAN
QUALIFIED EQUITY INTERESTS OF HOLDINGS AND THE NET CASH PROCEEDS OF PERMITTED
EQUITY ISSUANCES AFTER THE CLOSING DATE NOT OTHERWISE APPLIED), INCLUDING
(I) THE FAIR MARKET VALUE (ON THE DATE OF SUCH PERMITTED ACQUISITION) OF ALL
EQUITY INTERESTS ISSUED OR TRANSFERRED TO THE SELLERS THEREOF AND (II) ALL
INDEMNITIES, EARNOUTS AND OTHER CONTINGENT PAYMENT OBLIGATIONS TO, AND THE
AGGREGATE AMOUNTS PAID OR TO BE PAID UNDER NONCOMPETE, CONSULTING AND OTHER
AFFILIATED AGREEMENTS WITH, THE SELLERS THEREOF, ALL WRITE-DOWNS OF PROPERTY AND
RESERVES FOR LIABILITIES WITH RESPECT THERETO AND ALL ASSUMPTIONS OF DEBT,
LIABILITIES AND OTHER OBLIGATIONS IN CONNECTION THEREWITH; PROVIDED THAT ANY
SUCH LIABILITY OR FUTURE PAYMENT PURSUANT TO CLAUSE (II) ABOVE THAT IS SUBJECT
TO A CONTINGENCY SHALL BE CONSIDERED CONSIDERATION FOR A PERMITTED ACQUISITION
FOR PURPOSES OF THIS CLAUSE (B) ONLY TO THE EXTENT OF THE AMOUNT OF SUCH
LIABILITY OR PAYMENT, IF ANY, REQUIRED UNDER GAAP TO BE REFLECTED ON THE FACE OF
A CONSOLIDATED BALANCE SHEET OF THE COMPANY OR THE RESERVE, IF ANY, REQUIRED
UNDER GAAP TO BE ESTABLISHED IN RESPECT THEREOF BY THE COMPANY OR ANY OF ITS
RESTRICTED SUBSIDIARIES, IN EACH CASE AT THE TIME SUCH PERMITTED ACQUISITION IS
CONSUMMATED) PAID IN RESPECT OF ACQUISITIONS OF PERSONS THAT DO NOT BECOME LOAN
PARTIES (TOGETHER WITH THE AGGREGATE AMOUNT OF ALL INVESTMENTS IN RESTRICTED
SUBSIDIARIES THAT ARE NOT LOAN PARTIES PURSUANT TO SECTION 7.02(C)(III)) SHALL
NOT EXCEED (X) $350,000,000 FOR THE PERIOD FROM THE CLOSING DATE TO THE FIRST
ANNIVERSARY OF THE CLOSING DATE, (Y) $400,000,000 FOR THE PERIOD FROM THE
CLOSING DATE TO THE SECOND ANNIVERSARY OF THE CLOSING DATE AND (Z) $500,000,000
FOR THE PERIOD FROM THE CLOSING DATE TO THE MATURITY DATE WITH RESPECT TO THE
TERM LOANS (IN EACH CASE, NET OF ANY RETURN REPRESENTING A RETURN OF CAPITAL IN
RESPECT OF ANY SUCH INVESTMENT);

 

(C)   (1) IMMEDIATELY BEFORE AND IMMEDIATELY AFTER GIVING PRO FORMA EFFECT TO
ANY SUCH PURCHASE OR OTHER ACQUISITION (INCLUDING ANY INDEBTEDNESS INCURRED
PURSUANT THERETO AS PERMITTED UNDER SECTIONS 7.03(E), (G) AND (H)), NO EVENT OF
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING AND (2) IMMEDIATELY AFTER GIVING
EFFECT TO SUCH PURCHASE OR OTHER ACQUISITION, THE COMPANY AND THE RESTRICTED
SUBSIDIARIES SHALL BE IN PRO FORMA COMPLIANCE WITH ALL OF THE COVENANTS SET
FORTH IN SECTION 7.10, SUCH COMPLIANCE TO BE DETERMINED ON THE BASIS OF THE
FINANCIAL INFORMATION MOST RECENTLY DELIVERED TO THE ADMINISTRATIVE AGENT AND
THE LENDERS PURSUANT TO SECTION 6.01(A) OR (B) AS THOUGH SUCH PURCHASE OR OTHER
ACQUISITION HAD BEEN CONSUMMATED AS OF THE FIRST DAY OF THE FISCAL PERIOD
COVERED THEREBY AND EVIDENCED BY A CERTIFICATE FROM THE CHIEF FINANCIAL OFFICER
OF THE COMPANY DEMONSTRATING SUCH COMPLIANCE CALCULATION IN REASONABLE DETAIL;
AND

 

(D)  THE COMPANY SHALL HAVE DELIVERED TO THE ADMINISTRATIVE AGENT, ON BEHALF OF
THE LENDERS, NO LATER THAN FIVE (5) BUSINESS DAYS AFTER THE DATE ON WHICH ANY
SUCH PURCHASE OR OTHER ACQUISITION IS CONSUMMATED, A CERTIFICATE OF A
RESPONSIBLE OFFICER, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
ADMINISTRATIVE AGENT, CERTIFYING THAT ALL OF THE REQUIREMENTS SET FORTH IN THIS
CLAUSE (I) HAVE BEEN SATISFIED OR WILL BE SATISFIED ON OR PRIOR TO THE
CONSUMMATION OF SUCH PURCHASE OR OTHER ACQUISITION;

 

(J)  THE TRANSACTION;

 

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(K)  INVESTMENTS IN THE ORDINARY COURSE OF BUSINESS CONSISTING OF ARTICLE 3
ENDORSEMENTS FOR COLLECTION OR DEPOSIT AND ARTICLE 4 CUSTOMARY TRADE
ARRANGEMENTS WITH CUSTOMERS CONSISTENT WITH PAST PRACTICES;

 

(L)  INVESTMENTS (INCLUDING DEBT OBLIGATIONS AND EQUITY INTERESTS) RECEIVED IN
CONNECTION WITH THE BANKRUPTCY OR REORGANIZATION OF SUPPLIERS AND CUSTOMERS OR
IN SETTLEMENT OF DELINQUENT OBLIGATIONS OF, OR OTHER DISPUTES WITH, CUSTOMERS
AND SUPPLIERS ARISING IN THE ORDINARY COURSE OF BUSINESS OR UPON THE FORECLOSURE
WITH RESPECT TO ANY SECURED INVESTMENT OR OTHER TRANSFER OF TITLE WITH RESPECT
TO ANY SECURED INVESTMENT;

 

(M)  LOANS AND ADVANCES TO HOLDINGS (OR ANY DIRECT OR INDIRECT PARENT THEREOF)
IN LIEU OF, AND NOT IN EXCESS OF THE AMOUNT OF (AFTER GIVING EFFECT TO ANY OTHER
LOANS, ADVANCES OR RESTRICTED PAYMENTS IN RESPECT THEREOF), RESTRICTED PAYMENTS
TO THE EXTENT PERMITTED TO BE MADE TO HOLDINGS (OR SUCH PARENT) IN ACCORDANCE
WITH SECTIONS 7.06(F) OR (G);

 

(N)  INVESTMENTS THAT DO NOT EXCEED THE SUM OF (I) $200,000,000 PLUS (II) THE
AGGREGATE AMOUNT OF THE NET CASH PROCEEDS OF PERMITTED EQUITY ISSUANCES AFTER
THE CLOSING DATE (OTHER THAN PERMITTED EQUITY ISSUANCES MADE PURSUANT TO
SECTION 8.05) THAT HAVE BEEN CONTRIBUTED TO THE COMPANY AS COMMON EQUITY AND NOT
OTHERWISE APPLIED PLUS (III) IF, AS OF THE LAST DAY OF THE IMMEDIATELY PRECEDING
TEST PERIOD (AFTER GIVING PRO FORMA EFFECT TO SUCH INVESTMENTS) THE TOTAL
LEVERAGE RATIO IS LESS THAN 4.00:1.00, THE AMOUNT OF CUMULATIVE EXCESS CASH FLOW
THAT IS NOT OTHERWISE APPLIED;

 

(O)  ADVANCES OF PAYROLL PAYMENTS TO EMPLOYEES AND ADVANCES TO AUTHORS IN THE
ORDINARY COURSE OF BUSINESS;

 

(P)  INVESTMENTS TO THE EXTENT THAT PAYMENT FOR SUCH INVESTMENTS IS MADE SOLELY
WITH QUALIFIED EQUITY INTERESTS OF HOLDINGS;

 

(Q)  EXISTING INVESTMENTS OF A RESTRICTED SUBSIDIARY ACQUIRED AFTER THE CLOSING
DATE OR OF A CORPORATION MERGED INTO THE COMPANY OR MERGED OR CONSOLIDATED WITH
A RESTRICTED SUBSIDIARY IN ACCORDANCE WITH SECTION 7.04 AFTER THE CLOSING DATE
TO THE EXTENT THAT SUCH INVESTMENTS WERE NOT MADE IN CONTEMPLATION OF OR IN
CONNECTION WITH SUCH ACQUISITION, MERGER OR CONSOLIDATION AND WERE IN EXISTENCE
ON THE DATE OF SUCH ACQUISITION, MERGER OR CONSOLIDATION;

 

(R)  GUARANTEES BY HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY OF LEASES
(OTHER THAN CAPITALIZED LEASES) OR OF OTHER OBLIGATIONS THAT DO NOT CONSTITUTE
INDEBTEDNESS, IN EACH CASE ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS;

 

(S)  LEASE, UTILITY AND OTHER SIMILAR DEPOSITS IN THE ORDINARY COURSE OF
BUSINESS; AND

 

(T)  LOANS BY ANY RESTRICTED SUBSIDIARY TO ANY OTHER RESTRICTED SUBSIDIARY OF
THE PROCEEDS OF INCREMENTAL OVERSEAS TERM LOANS PROVIDED THAT SUCH PROCEEDS ARE
ULTIMATELY RECEIVED BY THE COMPANY AND APPLIED IN ACCORDANCE WITH
SECTION 2.05(B)(III);

 

provided that no Investment in an Unrestricted Subsidiary that would otherwise
be permitted under this Section 7.02 shall be permitted hereunder to the extent
that any portion of such Investment is used to make any prepayments,
redemptions, purchases, defeasances and other payments in respect of Junior
Financings that would not be permitted by this Agreement if made by the Company.

 

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SECTION 7.03.  Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:

 

(A)  INDEBTEDNESS OF HOLDINGS, THE COMPANY AND ANY OF ITS SUBSIDIARIES UNDER THE
LOAN DOCUMENTS;

 

(B)  (I)(X) INDEBTEDNESS OUTSTANDING ON THE DATE HEREOF AND LISTED ON SCHEDULE
7.03(B) AND (Y) ANY PERMITTED REFINANCING THEREOF (TO THE EXTENT (A) SUCH
PERMITTED REFINANCING IS INCURRED BY THE PERSON WHO IS THE OBLIGOR OF THE
INDEBTEDNESS SUBJECT TO SUCH PERMITTED REFINANCING, (B) SUCH PERMITTED
REFINANCING, IF INCURRED BY A PERSON WHO IS NOT A LOAN PARTY, IS IN RESPECT OF
INDEBTEDNESS ORIGINALLY INCURRED BY A PERSON WHO IS NOT A LOAN PARTY, OR
(C) SUCH INCURRENCE IS OTHERWISE PERMITTED UNDER THIS SECTION 7.03) AND
(II) INTERCOMPANY INDEBTEDNESS OUTSTANDING ON THE CLOSING DATE;

 

(C)  GUARANTEES BY HOLDINGS, THE COMPANY AND THE RESTRICTED SUBSIDIARIES IN
RESPECT OF INDEBTEDNESS OTHERWISE PERMITTED HEREUNDER OF THE COMPANY OR ANY
RESTRICTED SUBSIDIARY TO THE EXTENT CONSTITUTING AN INVESTMENT PERMITTED UNDER
SECTION 7.02; PROVIDED THAT (A) NO GUARANTEE BY ANY RESTRICTED SUBSIDIARY OF THE
SENIOR SUBORDINATED NOTES OR ANY OTHER JUNIOR FINANCING SHALL BE PERMITTED
UNLESS SUCH RESTRICTED SUBSIDIARY SHALL HAVE ALSO PROVIDED A GUARANTEE OF THE
OBLIGATIONS SUBSTANTIALLY ON THE TERMS SET FORTH IN THE GUARANTEE AND SECURITY
AGREEMENT, (B) IF THE INDEBTEDNESS BEING GUARANTEED IS SUBORDINATED TO THE
OBLIGATIONS, SUCH GUARANTEE SHALL BE SUBORDINATED TO THE GUARANTEE OF THE
OBLIGATIONS ON TERMS AT LEAST AS FAVORABLE TO THE LENDERS (IN THE REASONABLE
GOOD FAITH DETERMINATION OF THE COMPANY) AS THOSE CONTAINED IN THE SUBORDINATION
OF SUCH INDEBTEDNESS AND (C) A LOAN PARTY MAY NOT GUARANTEE INDEBTEDNESS OF A
RESTRICTED SUBSIDIARY THAT IS NOT A LOAN PARTY UNLESS SUCH LOAN PARTY COULD HAVE
INCURRED SUCH INDEBTEDNESS OR SUCH GUARANTEE IS SUBORDINATED TO THE OBLIGATIONS
ON THE TERMS SET FORTH IN SECTION 5.1(B) OF THE GUARANTEE AND SECURITY
AGREEMENT;

 

(D)  INDEBTEDNESS OF THE COMPANY OR ANY RESTRICTED SUBSIDIARY OWING TO THE
COMPANY OR ANY OTHER RESTRICTED SUBSIDIARY TO THE EXTENT CONSTITUTING AN
INVESTMENT PERMITTED BY SECTION 7.02; PROVIDED THAT, ALL SUCH INDEBTEDNESS OF
ANY LOAN PARTY OWED TO ANY PERSON THAT IS NOT A LOAN PARTY SHALL BE SUBJECT TO
THE SUBORDINATION TERMS SET FORTH IN SECTION 5.1(B) OF THE GUARANTEE AND
SECURITY AGREEMENT;

 

(E)  (I) ATTRIBUTABLE INDEBTEDNESS AND OTHER INDEBTEDNESS (INCLUDING CAPITALIZED
LEASES) FINANCING THE ACQUISITION, CONSTRUCTION, REPAIR, REPLACEMENT OR
IMPROVEMENT OF FIXED OR CAPITAL ASSETS; PROVIDED THAT SUCH INDEBTEDNESS IS
INCURRED CONCURRENTLY WITH OR WITHIN TWO HUNDRED AND SEVENTY (270) DAYS AFTER
THE APPLICABLE ACQUISITION, CONSTRUCTION, REPAIR, REPLACEMENT OR IMPROVEMENT,
AND (II) ANY PERMITTED REFINANCING OF ANY INDEBTEDNESS SET FORTH IN THE
IMMEDIATELY PRECEDING CLAUSE (I); PROVIDED THAT THE AGGREGATE PRINCIPAL AMOUNT
OF ALL INDEBTEDNESS PERMITTED UNDER THIS SECTION 7.03(E) SHALL NOT EXCEED
$50,000,000 AT ANY TIME OUTSTANDING;

 

(F)  INDEBTEDNESS IN RESPECT OF SWAP CONTRACTS INCURRED IN THE ORDINARY COURSE
OF BUSINESS AND NOT FOR SPECULATIVE PURPOSES;

 

(G)  INDEBTEDNESS OF THE COMPANY OR ANY RESTRICTED SUBSIDIARY (I) ASSUMED IN
CONNECTION WITH ANY PERMITTED ACQUISITION; PROVIDED THAT SUCH INDEBTEDNESS IS
NOT INCURRED IN CONTEMPLATION OF SUCH PERMITTED ACQUISITION OR (II) INCURRED TO
FINANCE A PERMITTED ACQUISITION, IN EACH CASE, THAT IS SECURED ONLY BY THE
ASSETS OR BUSINESS (INCLUDING ANY EQUITY INTERESTS) ACQUIRED IN THE APPLICABLE
PERMITTED ACQUISITION AND SO LONG AS BOTH IMMEDIATELY PRIOR AND AFTER GIVING
EFFECT THERETO, (A) NO EVENT OF DEFAULT SHALL EXIST OR RESULT THEREFROM, (B) THE
COMPANY AND THE

 

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RESTRICTED SUBSIDIARIES WILL BE IN PRO FORMA COMPLIANCE WITH THE COVENANTS SET
FORTH IN SECTION 7.10, SUCH COMPLIANCE TO BE DETERMINED ON THE BASIS OF THE
FINANCIAL INFORMATION MOST RECENTLY DELIVERED TO THE ADMINISTRATIVE AGENT AND
THE LENDERS PURSUANT TO SECTION 6.01(A) OR (B) AS THOUGH SUCH INDEBTEDNESS HAD
BEEN ASSUMED OR INCURRED AS OF THE FIRST DAY OF THE FISCAL PERIOD COVERED
THEREBY AND EVIDENCED BY A CERTIFICATE FROM THE CHIEF FINANCIAL OFFICER OF THE
COMPANY DEMONSTRATING SUCH COMPLIANCE CALCULATION IN REASONABLE DETAIL, (C) THE
AGGREGATE PRINCIPAL AMOUNT OF SUCH INDEBTEDNESS AND ALL INDEBTEDNESS RESULTING
FROM ANY PERMITTED REFINANCING THEREOF AT ANY TIME OUTSTANDING PURSUANT TO THIS
PARAGRAPH (G) (TOGETHER WITH THE AGGREGATE PRINCIPAL AMOUNT OF INDEBTEDNESS
INCURRED PURSUANT TO SECTION 7.03(H)(Y)) DOES NOT EXCEED $150,000,000, AND
(D) THE AGGREGATE PRINCIPAL AMOUNT OF INDEBTEDNESS PURSUANT TO THIS CLAUSE
(G) AND CLAUSE (H) BELOW ASSUMED BY RESTRICTED SUBSIDIARIES THAT ARE NOT LOAN
PARTIES IN CONNECTION WITH OR INCURRED BY RESTRICTED SUBSIDIARIES THAT ARE NOT
LOAN PARTIES TO FINANCE PERMITTED ACQUISITIONS OF PERSONS THAT DO NOT BECOME
LOAN PARTIES AND ALL INDEBTEDNESS RESULTING FROM ANY PERMITTED REFINANCING
THEREOF SHALL NOT EXCEED (I) WITH RESPECT TO ANY SUCH PERMITTED ACQUISITION, 65%
OF THE AGGREGATE AMOUNT OF CONSIDERATION PAID IN RESPECT THEREOF PURSUANT TO
SECTION 7.02(I)(B), AND (II) WITH RESPECT TO ALL SUCH PERMITTED ACQUISITIONS,
(A) $175,000,000 FOR THE PERIOD FROM THE CLOSING DATE TO THE FIRST ANNIVERSARY
OF THE CLOSING DATE, (B) $200,000,000 FOR THE PERIOD FROM THE CLOSING DATE TO
THE SECOND ANNIVERSARY OF THE CLOSING DATE AND (C) $250,000,000 FOR THE PERIOD
FROM THE CLOSING DATE TO THE MATURITY DATE WITH RESPECT TO THE TERM LOANS;

 

(H)  (I) INDEBTEDNESS OF THE COMPANY AND THE RESTRICTED SUBSIDIARIES (A) ASSUMED
IN CONNECTION WITH ANY PERMITTED ACQUISITION; PROVIDED THAT SUCH INDEBTEDNESS IS
NOT INCURRED IN CONTEMPLATION OF SUCH PERMITTED ACQUISITION, OR (B) INCURRED TO
FINANCE A PERMITTED ACQUISITION AND (II) ANY PERMITTED REFINANCING OF THE
FOREGOING; PROVIDED, IN EACH CASE THAT SUCH INDEBTEDNESS AND ALL INDEBTEDNESS
RESULTING FROM ANY PERMITTED REFINANCING THEREOF (T) IS UNSECURED, (U) BOTH
IMMEDIATELY PRIOR AND AFTER GIVING EFFECT THERETO, (1) NO EVENT OF DEFAULT SHALL
EXIST OR RESULT THEREFROM AND (2) THE COMPANY AND THE RESTRICTED SUBSIDIARIES
WILL BE IN PRO FORMA COMPLIANCE WITH THE COVENANTS SET FORTH IN SECTION 7.10,
SUCH COMPLIANCE TO BE DETERMINED ON THE BASIS OF THE FINANCIAL INFORMATION MOST
RECENTLY DELIVERED TO THE ADMINISTRATIVE AGENT AND THE LENDERS PURSUANT TO
SECTION 6.01(A) OR (B) AS THOUGH SUCH INDEBTEDNESS HAD BEEN ASSUMED OR INCURRED
AS OF THE FIRST DAY OF THE FISCAL PERIOD COVERED THEREBY AND EVIDENCED BY A
CERTIFICATE FROM THE CHIEF FINANCIAL OFFICER OF THE COMPANY DEMONSTRATING SUCH
COMPLIANCE CALCULATION IN REASONABLE DETAIL, (V) SUBJECT TO CLAUSE (Y) BELOW,
MATURES AFTER, AND DOES NOT REQUIRE ANY SCHEDULED AMORTIZATION OR OTHER
SCHEDULED PAYMENTS OF PRINCIPAL PRIOR TO, THE MATURITY DATE OF THE TERM LOANS
(IT BEING UNDERSTOOD THAT SUCH INDEBTEDNESS MAY HAVE MANDATORY PREPAYMENT,
REPURCHASE OR REDEMPTIONS PROVISIONS SATISFYING THE REQUIREMENT OF CLAUSE
(W) HEREOF), (W) SUBJECT TO CLAUSE (Y) BELOW, HAS TERMS AND CONDITIONS (OTHER
THAN INTEREST RATE AND OTHER PRICING TERMS, REDEMPTION AND PREPAYMENT PREMIUMS
AND SUBORDINATION TERMS) WHICH, WHEN TAKEN AS A WHOLE, ARE NOT MATERIALLY LESS
FAVORABLE TO THE LENDERS (IN THE REASONABLE GOOD FAITH DETERMINATION OF THE
COMPANY) THAN THE TERMS AND CONDITIONS OF THE SENIOR SUBORDINATED NOTE INDENTURE
AS OF THE CLOSING DATE; PROVIDED THAT THE COMPANY SHALL DELIVER TO THE
ADMINISTRATIVE AGENT, AT LEAST FIVE BUSINESS DAYS PRIOR TO THE INCURRENCE OF
SUCH INDEBTEDNESS, A CERTIFICATE OF A RESPONSIBLE OFFICER, TOGETHER WITH A
REASONABLY DETAILED DESCRIPTION OF THE MATERIAL TERMS AND CONDITIONS OF SUCH
INDEBTEDNESS OR DRAFTS OF THE DOCUMENTATION RELATING THERETO, STATING THAT THE
COMPANY HAS DETERMINED IN GOOD FAITH THAT SUCH TERMS AND CONDITIONS SATISFY THE
FOREGOING REQUIREMENT; (X) SUBJECT TO CLAUSE (Y) BELOW, WITH RESPECT TO SUCH
INDEBTEDNESS DESCRIBED IN THE IMMEDIATELY PRECEDING CLAUSE (B), IS INCURRED BY
THE COMPANY OR A SUBSIDIARY THAT IS A LOAN PARTY; (Y) THE AGGREGATE PRINCIPAL
AMOUNT OF SUCH INDEBTEDNESS INCURRED PURSUANT TO CLAUSE (B) AND ALL INDEBTEDNESS
RESULTING FROM ANY PERMITTED REFINANCING THEREOF, IN EACH CASE WHICH
INDEBTEDNESS OR REFINANCING INDEBTEDNESS WOULD

 

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OTHERWISE NOT BE PERMITTED BY CLAUSES (V), (W) OR (X) ABOVE, AT ANY TIME
OUTSTANDING PURSUANT TO THIS PARAGRAPH (H) (TOGETHER WITH THE AGGREGATE
PRINCIPAL AMOUNT OF INDEBTEDNESS INCURRED PURSUANT TO SECTION 7.03(G) AND ALL
INDEBTEDNESS RESULTING FROM ANY PERMITTED REFINANCING THEREOF) DOES NOT EXCEED
$150,000,000, AND (Z) THE AGGREGATE PRINCIPAL AMOUNT OF INDEBTEDNESS PURSUANT TO
CLAUSE (G) ABOVE AND THIS CLAUSE (H) ASSUMED BY RESTRICTED SUBSIDIARIES THAT ARE
NOT LOAN PARTIES IN CONNECTION WITH OR INCURRED BY RESTRICTED SUBSIDIARIES THAT
ARE NOT LOAN PARTIES TO FINANCE PERMITTED ACQUISITIONS OF PERSONS THAT DO NOT
BECOME LOAN PARTIES AND ALL INDEBTEDNESS RESULTING FROM ANY PERMITTED
REFINANCING THEREOF SHALL NOT EXCEED (I) WITH RESPECT TO ANY SUCH PERMITTED
ACQUISITION, 65% OF THE AGGREGATE AMOUNT OF CONSIDERATION PAID IN RESPECT
THEREOF PURSUANT TO SECTION 7.02(I)(B), AND (II) WITH RESPECT TO ALL SUCH
PERMITTED ACQUISITIONS, (A) $175,000,000 FOR THE PERIOD FROM THE CLOSING DATE TO
THE FIRST ANNIVERSARY OF THE CLOSING DATE, (B) $200,000,000 FOR THE PERIOD FROM
THE CLOSING DATE TO THE SECOND ANNIVERSARY OF THE CLOSING DATE AND
(C) $250,000,000 FOR THE PERIOD FROM THE CLOSING DATE TO THE MATURITY DATE WITH
RESPECT TO THE TERM LOANS;

 

(I)  INDEBTEDNESS REPRESENTING DEFERRED COMPENSATION TO EMPLOYEES OF THE COMPANY
AND THE RESTRICTED SUBSIDIARIES INCURRED IN THE ORDINARY COURSE OF BUSINESS;

 

(J)  INDEBTEDNESS CONSISTING OF PROMISSORY NOTES ISSUED BY ANY LOAN PARTY TO
CURRENT OR FORMER OFFICERS, DIRECTORS AND EMPLOYEES, THEIR RESPECTIVE ESTATES,
SPOUSES OR FORMER SPOUSES TO FINANCE THE PURCHASE OR REDEMPTION OF EQUITY
INTERESTS OF HOLDINGS PERMITTED BY SECTION 7.06;

 

(K)  INDEBTEDNESS INCURRED BY THE COMPANY OR THE RESTRICTED SUBSIDIARIES IN A
PERMITTED ACQUISITION, ANY OTHER INVESTMENT EXPRESSLY PERMITTED HEREUNDER OR ANY
DISPOSITION, IN EACH CASE CONSTITUTING INDEMNIFICATION OBLIGATIONS OR
OBLIGATIONS IN RESPECT OF PURCHASE PRICE OR OTHER SIMILAR ADJUSTMENTS;

 

(L)  INDEBTEDNESS CONSISTING OF (I) OBLIGATIONS OF HOLDINGS, THE COMPANY OR THE
RESTRICTED SUBSIDIARIES UNDER DEFERRED COMPENSATION OR OTHER SIMILAR
ARRANGEMENTS INCURRED BY SUCH PERSON IN CONNECTION WITH THE TRANSACTION AND
PERMITTED ACQUISITIONS OR ANY OTHER INVESTMENT EXPRESSLY PERMITTED HEREUNDER OR
(II) UNSECURED INDEBTEDNESS AT ANY TIME OUTSTANDING THAT IS OWED TO THE SELLER
OF A BUSINESS IN A PERMITTED ACQUISITION TO THE EXTENT CONSTITUTING
CONSIDERATION FOR SUCH PERMITTED ACQUISITION, PROVIDED THAT (X) SUCH
INDEBTEDNESS SHALL NOT MATURE OR AMORTIZE ANY PRINCIPAL PRIOR TO THE DATE THAT
IS 91 DAYS AFTER THE MATURITY DATE WITH RESPECT TO THE TERM LOANS, (Y) UNLESS,
AS OF THE LAST DAY OF THE IMMEDIATELY PRECEDING TEST PERIOD (AFTER GIVING PRO
FORMA EFFECT TO THE INCURRENCE OF SUCH INDEBTEDNESS) THE TOTAL LEVERAGE RATIO IS
LESS THAN 4.00:1.00, THE AGGREGATE AMOUNT OF SUCH INDEBTEDNESS SHALL NOT EXCEED
$25,000,000 OUTSTANDING AT ANY TIME AND (Z) SUCH INDEBTEDNESS SHALL NOT BE
INCURRED IN CONTEMPLATION OF THE TRANSFER BY SUCH SELLER TO ONE OR MORE
FINANCIAL INSTITUTIONS;

 

(M)  CASH MANAGEMENT OBLIGATIONS AND OTHER INDEBTEDNESS IN RESPECT OF NETTING
SERVICES, OVERDRAFT PROTECTIONS AND SIMILAR ARRANGEMENTS IN EACH CASE IN
CONNECTION WITH DEPOSIT ACCOUNTS INCURRED IN THE ORDINARY COURSE OF BUSINESS IN
CONNECTION WITH CASH MANAGEMENT ACTIVITIES;

 

(N)  INDEBTEDNESS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $200,000,000 AT
ANY TIME OUTSTANDING;

 

(O)  INDEBTEDNESS CONSISTING OF (A) THE FINANCING OF INSURANCE PREMIUMS WITH THE
PROVIDERS OF SUCH INSURANCE OR THEIR AFFILIATES OR (B) TAKE-OR-PAY OBLIGATIONS
CONTAINED IN SUPPLY ARRANGEMENTS, IN EACH CASE, IN THE ORDINARY COURSE OF
BUSINESS;

 

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(P)  INDEBTEDNESS INCURRED BY THE COMPANY OR ANY OF THE RESTRICTED SUBSIDIARIES
IN RESPECT OF LETTERS OF CREDIT, BANK GUARANTEES, BANKERS’ ACCEPTANCES OR
SIMILAR INSTRUMENTS ISSUED OR CREATED IN THE ORDINARY COURSE OF BUSINESS,
INCLUDING IN RESPECT OF WORKERS COMPENSATION CLAIMS, HEALTH, DISABILITY OR OTHER
EMPLOYEE BENEFITS OR PROPERTY, CASUALTY OR LIABILITY INSURANCE OR SELF-INSURANCE
OR OTHER INDEBTEDNESS WITH RESPECT TO REIMBURSEMENT-TYPE OBLIGATIONS REGARDING
WORKERS COMPENSATION CLAIMS; PROVIDED THAT ANY REIMBURSEMENT OBLIGATIONS IN
RESPECT THEREOF ARE REIMBURSED WITHIN 30 DAYS FOLLOWING THE INCURRENCE THEREOF;

 

(Q)  OBLIGATIONS IN RESPECT OF PERFORMANCE, BID, APPEAL AND SURETY BONDS AND
PERFORMANCE AND COMPLETION GUARANTEES AND SIMILAR OBLIGATIONS PROVIDED BY THE
COMPANY OR ANY OF THE RESTRICTED SUBSIDIARIES OR OBLIGATIONS IN RESPECT OF
LETTERS OF CREDIT, BANK GUARANTEES OR SIMILAR INSTRUMENTS RELATED THERETO, IN
EACH CASE IN THE ORDINARY COURSE OF BUSINESS OR CONSISTENT WITH PAST PRACTICE;

 

(R)  INDEBTEDNESS SUPPORTED BY A LETTER OF CREDIT, IN A PRINCIPAL AMOUNT NOT TO
EXCEED THE FACE AMOUNT OF SUCH LETTER OF CREDIT;

 

(S)  ANY EXISTING NOTES NOT TENDERED AND PURCHASED ON THE CLOSING DATE PURSUANT
TO THE EXISTING NOTE INDENTURE;

 

(T)  INDEBTEDNESS IN RESPECT OF THE SENIOR SUBORDINATED NOTES AND ANY PERMITTED
REFINANCING THEREOF;

 

(U)  FOREIGN JURISDICTION DEPOSITS;

 

(V)  INDEBTEDNESS OF HOLDINGS REPRESENTED BY THE OBLIGATIONS OF HOLDINGS TO MAKE
PAYMENTS WITH RESPECT TO THE CANCELLATION OR REPURCHASE OF ITS COMMON STOCK OR
STOCK OPTIONS OR WARRANTS IN RESPECT OF ITS COMMON STOCK GRANTED TO MANAGEMENT
INVESTORS; PROVIDED THAT ANY PAYMENTS WITH RESPECT TO SUCH OBLIGATIONS SHALL BE
SUBJECT TO SECTION 7.06;

 

(W)  TO THE EXTENT CONSTITUTING INDEBTEDNESS, JUDGMENTS, DECREES, ATTACHMENTS OR
AWARDS NOT CONSTITUTING AN EVENT OF DEFAULT UNDER SECTION 8.01(H);

 

(X)  TO THE EXTENT CONSTITUTING INDEBTEDNESS, INDEBTEDNESS IN RESPECT OF THE
HOLDINGS PIK PREFERRED;

 

(Y)  INDEBTEDNESS RESULTING FROM AN INVESTMENT PERMITTED BY CLAUSES (E)(I),
(M) OR (P) OF SECTION 7.02; AND

 

(Z)  ALL PREMIUMS (IF ANY), INTEREST (INCLUDING POST-PETITION INTEREST), FEES,
EXPENSES, CHARGES AND ADDITIONAL OR CONTINGENT INTEREST ON OBLIGATIONS DESCRIBED
IN CLAUSES (A) THROUGH (Y) ABOVE.

 

SECTION 7.04.  Fundamental Changes.  Merge, dissolve, liquidate, consolidate
with or into another Person, or Dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except that:

 

(A)  ANY RESTRICTED SUBSIDIARY MAY MERGE WITH (I) THE COMPANY; PROVIDED THAT THE
COMPANY SHALL BE THE CONTINUING OR SURVIVING PERSON, OR (II) ANY ONE OR MORE
OTHER RESTRICTED SUBSIDIARIES; PROVIDED THAT WHEN ANY RESTRICTED SUBSIDIARY THAT
IS A BORROWER OR A LOAN PARTY IS

 

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MERGING WITH ANOTHER RESTRICTED SUBSIDIARY, A BORROWER OR A LOAN PARTY SHALL BE
THE CONTINUING OR SURVIVING PERSON;

 

(B)  (I) ANY SUBSIDIARY (OTHER THAN A BORROWER) THAT IS NOT A LOAN PARTY MAY
MERGE OR CONSOLIDATE WITH OR INTO ANY OTHER SUBSIDIARY (OTHER THAN A BORROWER)
THAT IS NOT A LOAN PARTY, (II) ANY OVERSEAS GUARANTOR MAY MERGE OR CONSOLIDATE
WITH OR INTO THE APPLICABLE OVERSEAS BORROWER, PROVIDED THAT THE OVERSEAS
BORROWER SHALL BE THE CONTINUING OR SURVIVING PERSON, AND (III) ANY SUBSIDIARY
(OTHER THAN A BORROWER) MAY LIQUIDATE OR DISSOLVE OR CHANGE ITS LEGAL FORM IF
THE COMPANY DETERMINES IN GOOD FAITH THAT SUCH ACTION IS IN THE BEST INTERESTS
OF THE COMPANY AND ITS SUBSIDIARIES AND IS NOT MATERIALLY DISADVANTAGEOUS TO THE
LENDERS;

 

(C)  ANY RESTRICTED SUBSIDIARY MAY DISPOSE OF ALL OR SUBSTANTIALLY ALL OF ITS
ASSETS (UPON VOLUNTARY LIQUIDATION OR OTHERWISE) TO THE COMPANY OR TO ANOTHER
RESTRICTED SUBSIDIARY; PROVIDED THAT IF THE TRANSFEROR IN SUCH A TRANSACTION IS
A GUARANTOR OR A BORROWER, THEN EITHER (I) THE TRANSFEREE MUST EITHER BE THE
COMPANY OR A U.S. GUARANTOR, (II) IN THE CASE OF A TRANSFER BY AN OVERSEAS
GUARANTOR, THE TRANSFEREE MUST BE THE APPLICABLE OVERSEAS BORROWER OR ANOTHER
OVERSEAS GUARANTOR OF SUCH OVERSEAS BORROWER, OR (III) TO THE EXTENT
CONSTITUTING AN INVESTMENT, SUCH INVESTMENT MUST BE A PERMITTED INVESTMENT IN OR
INDEBTEDNESS OF A RESTRICTED SUBSIDIARY WHICH IS NOT A LOAN PARTY IN ACCORDANCE
WITH SECTIONS 7.02 AND 7.03, RESPECTIVELY;

 

(D)  SO LONG AS NO EVENT OF DEFAULT EXISTS OR WOULD RESULT THEREFROM, THE
COMPANY MAY MERGE WITH ANY OTHER PERSON; PROVIDED THAT (I) THE COMPANY SHALL BE
THE CONTINUING OR SURVIVING CORPORATION OR (II) IF THE PERSON FORMED BY OR
SURVIVING ANY SUCH MERGER OR CONSOLIDATION IS NOT THE COMPANY (ANY SUCH PERSON,
THE “SUCCESSOR COMPANY”), (A) THE SUCCESSOR COMPANY SHALL BE AN ENTITY ORGANIZED
OR EXISTING UNDER THE LAWS OF THE UNITED STATES, ANY STATE THEREOF, THE DISTRICT
OF COLUMBIA OR ANY TERRITORY THEREOF, (B) THE SUCCESSOR COMPANY SHALL EXPRESSLY
ASSUME ALL THE OBLIGATIONS OF THE COMPANY UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS TO WHICH THE COMPANY IS A PARTY PURSUANT TO A SUPPLEMENT HERETO
OR THERETO IN FORM REASONABLY SATISFACTORY TO THE ADMINISTRATIVE AGENT, (C) EACH
U.S. GUARANTOR, UNLESS IT IS THE OTHER PARTY TO SUCH MERGER OR CONSOLIDATION,
SHALL HAVE BY A SUPPLEMENT TO THE GUARANTEE AND SECURITY AGREEMENT CONFIRMED
THAT ITS OBLIGATIONS THEREUNDER SHALL APPLY TO THE SUCCESSOR COMPANY’S
OBLIGATIONS UNDER THIS AGREEMENT, (D) EACH MORTGAGOR OF A MORTGAGED PROPERTY,
UNLESS IT IS THE OTHER PARTY TO SUCH MERGER OR CONSOLIDATION, SHALL HAVE BY AN
AMENDMENT TO OR RESTATEMENT OF THE APPLICABLE MORTGAGE CONFIRMED THAT ITS
OBLIGATIONS THEREUNDER SHALL APPLY TO THE SUCCESSOR COMPANY’S OBLIGATIONS UNDER
THIS AGREEMENT, AND (E) THE COMPANY SHALL HAVE DELIVERED TO THE ADMINISTRATIVE
AGENT AN OFFICER’S CERTIFICATE AND AN OPINION OF COUNSEL, EACH STATING THAT SUCH
MERGER OR CONSOLIDATION AND SUCH SUPPLEMENT TO THIS AGREEMENT OR ANY COLLATERAL
DOCUMENT COMPLY WITH THIS AGREEMENT; PROVIDED, FURTHER, THAT IF THE FOREGOING
ARE SATISFIED, THE SUCCESSOR COMPANY WILL SUCCEED TO, AND BE SUBSTITUTED FOR,
THE COMPANY UNDER THIS AGREEMENT;

 

(E)  ANY RESTRICTED SUBSIDIARY MAY MERGE WITH ANY OTHER PERSON IN ORDER TO
EFFECT AN INVESTMENT PERMITTED PURSUANT TO SECTION 7.02; PROVIDED THAT THE
CONTINUING OR SURVIVING PERSON SHALL BE A RESTRICTED SUBSIDIARY, WHICH TOGETHER
WITH EACH OF ITS RESTRICTED SUBSIDIARIES, SHALL HAVE COMPLIED WITH THE
REQUIREMENTS OF SECTION 6.10;

 

(F)  THE COMPANY AND THE RESTRICTED SUBSIDIARIES MAY CONSUMMATE THE ACQUISITIONS
AND MERGER AND ANY PERMITTED ACQUISITION; AND

 

(G)  A MERGER, DISSOLUTION, LIQUIDATION, CONSOLIDATION OR DISPOSITION, THE
PURPOSE OF WHICH IS TO EFFECT A DISPOSITION PERMITTED PURSUANT TO SECTION 7.05.

 

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SECTION 7.05.  Dispositions.  Make any Disposition or enter into any agreement
to make any Disposition, except:

 

(A)  DISPOSITIONS OF OBSOLETE OR WORN OUT PROPERTY, WHETHER NOW OWNED OR
HEREAFTER ACQUIRED, IN THE ORDINARY COURSE OF BUSINESS AND DISPOSITIONS OF
PROPERTY NO LONGER USED OR USEFUL IN THE CONDUCT OF THE BUSINESS OF THE COMPANY
AND THE RESTRICTED SUBSIDIARIES;

 

(B)  DISPOSITIONS OF INVENTORY AND IMMATERIAL ASSETS IN THE ORDINARY COURSE OF
BUSINESS;

 

(C)  DISPOSITIONS OF PROPERTY TO THE EXTENT THAT (I) SUCH PROPERTY IS EXCHANGED
FOR CREDIT AGAINST THE PURCHASE PRICE OF SIMILAR REPLACEMENT PROPERTY OR
(II) THE PROCEEDS OF SUCH DISPOSITION ARE PROMPTLY APPLIED TO THE PURCHASE PRICE
OF SUCH REPLACEMENT PROPERTY;

 

(D)  DISPOSITIONS OF PROPERTY (I) TO THE COMPANY OR TO A RESTRICTED SUBSIDIARY;
PROVIDED THAT IF THE TRANSFEROR OF SUCH PROPERTY IS A GUARANTOR OR THE COMPANY,
THE TRANSFEREE THEREOF MUST EITHER BE THE COMPANY OR A GUARANTOR, OR IN THE CASE
OF A TRANSFER BY AN OVERSEAS GUARANTOR, THE APPLICABLE OVERSEAS BORROWER,
(II) TO THE EXTENT SUCH TRANSACTION CONSTITUTES AN INVESTMENT PERMITTED UNDER
SECTION 7.02, OR (III) CONSISTING OF EQUITY INTERESTS OF FOREIGN SUBSIDIARIES TO
OTHER FOREIGN SUBSIDIARIES;

 

(E)  DISPOSITIONS PERMITTED BY SECTIONS 7.04 AND 7.06 AND LIENS PERMITTED BY
SECTION 7.01;

 

(F)  DISPOSITIONS OF CASH AND CASH EQUIVALENTS;

 

(G)  DISPOSITIONS OF ACCOUNTS RECEIVABLE IN CONNECTION WITH THE COLLECTION OR
COMPROMISE THEREOF;

 

(H)   LEASES, SUBLEASES, LICENSES OR SUBLICENSES (INCLUDING THE PROVISION OF
SOFTWARE UNDER AN OPEN SOURCE LICENSE), IN EACH CASE IN THE ORDINARY COURSE OF
BUSINESS AND WHICH DO NOT MATERIALLY INTERFERE WITH THE BUSINESS OF HOLDINGS,
THE COMPANY AND THE RESTRICTED SUBSIDIARIES;

 

(I)  TRANSFERS OF PROPERTY TO THE EXTENT SUBJECT TO CASUALTY EVENTS;

 

(J)  DISPOSITIONS OF PROPERTY NOT OTHERWISE PERMITTED UNDER THIS SECTION 7.05;
PROVIDED THAT (I) AT THE TIME OF SUCH DISPOSITION (OTHER THAN ANY SUCH
DISPOSITION MADE PURSUANT TO A LEGALLY BINDING COMMITMENT ENTERED INTO AT A TIME
WHEN NO EVENT OF DEFAULT EXISTS), NO EVENT OF DEFAULT SHALL EXIST OR WOULD
RESULT FROM SUCH DISPOSITION, (II) THE AGGREGATE BOOK VALUE OF ALL PROPERTY
DISPOSED OF IN RELIANCE ON THIS CLAUSE (J) SHALL NOT EXCEED $300,000,000 IN THE
AGGREGATE AND (III) WITH RESPECT TO ANY DISPOSITION PURSUANT TO THIS CLAUSE
(J) FOR A PURCHASE PRICE IN EXCESS OF $25,000,000, THE COMPANY OR A RESTRICTED
SUBSIDIARY SHALL RECEIVE NOT LESS THAN 75% OF SUCH CONSIDERATION IN THE FORM OF
CASH OR CASH EQUIVALENTS (IN EACH CASE, FREE AND CLEAR OF ALL LIENS AT THE TIME
RECEIVED, OTHER THAN NONCONSENSUAL LIENS PERMITTED BY SECTION 7.01 AND LIENS
PERMITTED BY SECTION 7.01(S) AND CLAUSES (I) AND (II) OF SECTION 7.01(U));
PROVIDED, HOWEVER, THAT FOR THE PURPOSES OF THIS CLAUSE (III), EACH OF THE
FOLLOWING SHALL BE DEEMED TO BE CASH:  (A) ANY LIABILITIES (AS SHOWN ON THE
COMPANY’S OR SUCH RESTRICTED SUBSIDIARY’S MOST RECENT BALANCE SHEET PROVIDED
HEREUNDER OR IN THE FOOTNOTES THERETO) OF THE COMPANY OR SUCH RESTRICTED
SUBSIDIARY, OTHER THAN LIABILITIES THAT ARE BY THEIR TERMS SUBORDINATED TO THE
PAYMENT IN CASH OF THE OBLIGATIONS, THAT ARE ASSUMED BY THE TRANSFEREE WITH
RESPECT TO THE APPLICABLE DISPOSITION AND FOR WHICH THE COMPANY AND ALL OF THE
RESTRICTED SUBSIDIARIES SHALL HAVE BEEN VALIDLY RELEASED BY ALL APPLICABLE
CREDITORS IN WRITING AND (B) ANY SECURITIES RECEIVED BY THE COMPANY OR SUCH
RESTRICTED SUBSIDIARY FROM

 

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SUCH TRANSFEREE THAT ARE CONVERTED BY THE COMPANY OR SUCH RESTRICTED SUBSIDIARY
INTO CASH (TO THE EXTENT OF THE CASH RECEIVED) WITHIN 180 DAYS FOLLOWING THE
CLOSING OF THE APPLICABLE DISPOSITION;

 

(K)  DISPOSITIONS LISTED ON SCHEDULE 7.05(K);

 

(L)  DISPOSITIONS OF INVESTMENTS IN JOINT VENTURES TO THE EXTENT REQUIRED BY, OR
MADE PURSUANT TO CUSTOMARY BUY/SELL ARRANGEMENTS BETWEEN, THE JOINT VENTURE
PARTIES SET FORTH IN JOINT VENTURE ARRANGEMENTS AND SIMILAR BINDING
ARRANGEMENTS; AND

 

(M)  THE DISPOSITION FOR CONSIDERATION NOT IN EXCESS OF €15,000,000 OF THE
BUILDING OWNED BY VERLAG DAS BESTE GMBH LOCATED AT AUGUSTENSTRASSE 1, STUTTGART
70178.

 

provided that any Disposition of any property pursuant to this Section 7.05(j),
(k) and (m) shall be for no less than the fair market value of such property at
the time of such Disposition.  To the extent any Collateral is Disposed of as
expressly permitted by this Section 7.05 to any Person other than Holdings, the
Company or any Restricted Subsidiary, such Collateral shall be sold free and
clear of the Liens created by the Loan Documents without further action by the
Administrative Agent, and the Administrative Agent shall be authorized to take
any actions deemed appropriate in order to effect the foregoing.

 

SECTION 7.06.  Restricted Payments.  Declare or make, directly or indirectly,
any Restricted Payment, except:

 

(A)  EACH RESTRICTED SUBSIDIARY MAY MAKE RESTRICTED PAYMENTS TO THE COMPANY AND
TO OTHER RESTRICTED SUBSIDIARIES (AND, IN THE CASE OF A RESTRICTED PAYMENT BY A
NON-WHOLLY OWNED RESTRICTED SUBSIDIARY, TO THE COMPANY AND ANY OTHER RESTRICTED
SUBSIDIARY AND TO EACH OTHER OWNER OF EQUITY INTERESTS OF SUCH RESTRICTED
SUBSIDIARY BASED ON THEIR RELATIVE OWNERSHIP INTERESTS OF THE RELEVANT CLASS OF
EQUITY INTERESTS);

 

(B)  HOLDINGS, THE COMPANY AND EACH RESTRICTED SUBSIDIARY MAY DECLARE AND MAKE
DIVIDEND PAYMENTS OR OTHER DISTRIBUTIONS TO THE EXTENT PAYABLE IN THE EQUITY
INTERESTS (OTHER THAN DISQUALIFIED EQUITY INTERESTS NOT OTHERWISE PERMITTED BY
SECTION 7.03 OR SUCH DIVIDEND PAYMENTS OR DISTRIBUTIONS THAT WOULD CAUSE A
CHANGE OF CONTROL) OF SUCH PERSON;

 

(C)  RESTRICTED PAYMENTS MADE TO CONSUMMATE THE TRANSACTION;

 

(D)  TO THE EXTENT CONSTITUTING RESTRICTED PAYMENTS, HOLDINGS, THE COMPANY AND
THE RESTRICTED SUBSIDIARIES MAY ENTER INTO AND CONSUMMATE TRANSACTIONS EXPRESSLY
PERMITTED BY ANY PROVISION OF SECTION 7.04 OR 7.08;

 

(E)  REPURCHASES OF EQUITY INTERESTS IN HOLDINGS, THE COMPANY OR ANY RESTRICTED
SUBSIDIARY DEEMED TO OCCUR UPON EXERCISE OF STOCK OPTIONS OR WARRANTS IF SUCH
EQUITY INTERESTS REPRESENT A PORTION OF THE EXERCISE PRICE OF SUCH OPTIONS OR
WARRANTS;

 

(F)  HOLDINGS MAY PAY (OR MAKE RESTRICTED PAYMENTS TO ALLOW ANY DIRECT OR
INDIRECT PARENT THEREOF TO PAY) FOR THE REPURCHASE, RETIREMENT OR OTHER
ACQUISITION OR RETIREMENT FOR VALUE OF EQUITY INTERESTS OF HOLDINGS (OR OF ANY
SUCH PARENT OF HOLDINGS) BY ANY FUTURE, PRESENT OR FORMER EMPLOYEE OR DIRECTOR
OF HOLDINGS (OR ANY DIRECT OR INDIRECT PARENT OF HOLDINGS) OR ANY OF ITS
SUBSIDIARIES PURSUANT TO ANY EMPLOYEE OR DIRECTOR EQUITY PLAN, EMPLOYEE OR
DIRECTOR STOCK OPTION PLAN OR ANY OTHER EMPLOYEE OR DIRECTOR BENEFIT PLAN OR ANY
AGREEMENT (INCLUDING ANY STOCK SUBSCRIPTION OR SHAREHOLDER AGREEMENT) WITH ANY
EMPLOYEE OR DIRECTOR OF HOLDINGS OR ANY OF ITS

 

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SUBSIDIARIES; PROVIDED THAT THE AGGREGATE AMOUNT OF PAYMENTS UNDER THIS CLAUSE
(F) SHALL NOT EXCEED $16,000,000 IN ANY FISCAL YEAR OF THE COMPANY;

 

(G)  THE COMPANY AND ITS RESTRICTED SUBSIDIARIES MAY MAKE RESTRICTED PAYMENTS TO
HOLDINGS:

 

(I)  THE PROCEEDS OF WHICH WILL BE USED TO PAY (OR TO MAKE RESTRICTED PAYMENTS
TO ALLOW ANY DIRECT OR INDIRECT PARENT OF HOLDINGS TO PAY) THE TAX LIABILITY TO
EACH RELEVANT JURISDICTION IN RESPECT OF CONSOLIDATED, COMBINED, UNITARY OR
AFFILIATED RETURNS FOR THE RELEVANT JURISDICTION OF HOLDINGS (OR SUCH PARENT)
ATTRIBUTABLE TO HOLDINGS, THE COMPANY OR ITS SUBSIDIARIES;

 

(II)  CONSISTING OF PERMITTED HOLDINGS DISTRIBUTIONS PLUS AN ADDITIONAL AMOUNT
OF $500,000 PER FISCAL YEAR (WHICH AMOUNT SHALL BE AVAILABLE ONLY TO PAY
HOLDINGS OPERATING EXPENSES);

 

(III)  THE PROCEEDS OF WHICH SHALL BE USED BY HOLDINGS TO MAKE RESTRICTED
PAYMENTS PERMITTED BY SECTION 7.06(C), (D) OR (F);

 

(IV)  TO FINANCE ANY INVESTMENT PERMITTED TO BE MADE PURSUANT TO SECTION 7.02;
PROVIDED THAT (A) SUCH RESTRICTED PAYMENT SHALL BE MADE SUBSTANTIALLY
CONCURRENTLY WITH THE CLOSING OF SUCH INVESTMENT AND (B) HOLDINGS SHALL,
IMMEDIATELY FOLLOWING THE CLOSING THEREOF, CAUSE (1) ALL PROPERTY ACQUIRED
(WHETHER ASSETS OR EQUITY INTERESTS) TO BE CONTRIBUTED TO THE COMPANY OR ITS
RESTRICTED SUBSIDIARIES OR (2) THE MERGER (TO THE EXTENT PERMITTED IN
SECTION 7.04) OF THE PERSON FORMED OR ACQUIRED INTO THE COMPANY OR ITS
RESTRICTED SUBSIDIARIES IN ORDER TO CONSUMMATE SUCH PERMITTED ACQUISITION, IN
EACH CASE, IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 6.10;

 

(H)  SO LONG AS IMMEDIATELY BEFORE AND AFTER GIVING EFFECT TO ANY SUCH
RESTRICTED PAYMENT, NO DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING OR WOULD
RESULT THEREFROM, THE COMPANY MAY MAKE ADDITIONAL RESTRICTED PAYMENTS TO
HOLDINGS THE PROCEEDS OF WHICH MAY BE UTILIZED BY HOLDINGS TO MAKE ADDITIONAL
RESTRICTED PAYMENTS, IN AN AGGREGATE AMOUNT NOT TO EXCEED THE SUM OF
(I) $100,000,000 PLUS (II) THE AGGREGATE AMOUNT OF THE NET CASH PROCEEDS OF
PERMITTED EQUITY ISSUANCES AFTER THE CLOSING DATE (OTHER THAN PERMITTED EQUITY
ISSUANCES MADE PURSUANT TO SECTION 8.05) THAT HAVE BEEN CONTRIBUTED TO THE
COMPANY AS COMMON EQUITY AND NOT OTHERWISE APPLIED PLUS (III) IF, AS OF THE LAST
DAY OF THE IMMEDIATELY PRECEDING TEST PERIOD (AFTER GIVING PRO FORMA EFFECT TO
SUCH RESTRICTED PAYMENT) THE TOTAL LEVERAGE RATIO IS LESS THAN 4.00:1.00, THE
AMOUNT OF CUMULATIVE EXCESS CASH FLOW THAT IS NOT OTHERWISE APPLIED;

 

(I)  SO LONG AS IMMEDIATELY BEFORE AND AFTER GIVING EFFECT TO ANY SUCH
RESTRICTED PAYMENT, NO DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING OR WOULD
RESULT THEREFROM, THE COMPANY MAY MAKE ADDITIONAL RESTRICTED PAYMENTS IN CASH TO
HOLDINGS THE PROCEEDS OF WHICH MAY BE UTILIZED BY HOLDINGS TO MAKE ADDITIONAL
RESTRICTED PAYMENTS IN CASH IF, AS OF THE LAST DAY OF THE IMMEDIATELY PRECEDING
TEST PERIOD (AFTER GIVING PRO FORMA EFFECT TO SUCH RESTRICTED PAYMENT) THE TOTAL
LEVERAGE RATIO IS LESS THAN 4.00:1.00;

 

(J)  HOLDINGS MAY DECLARE AND PAY DIVIDEND PAYMENTS OR OTHER DISTRIBUTIONS IN
RESPECT OF (I) HOLDINGS SENIOR PIK PREFERRED TO THE EXTENT PAYABLE IN ADDITIONAL
SHARES OF HOLDINGS SENIOR PIK PREFERRED OR ACCRUED AND ADDED TO THE LIQUIDATION
PREFERENCE THEREOF AND (II) HOLDINGS JUNIOR PIK PREFERRED TO THE EXTENT PAYABLE
IN ADDITIONAL SHARES OF HOLDINGS JUNIOR PIK PREFERRED OR ACCRUED AND ADDED TO
THE LIQUIDATION PREFERENCE THEREOF; AND

 

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(K)  THE COMPANY MAY (I) DECLARE AND PAY REGULAR QUARTERLY DIVIDENDS REQUIRED
PURSUANT TO THE TERMS OF THE COMPANY PREFERRED STOCK AND (II) TO THE EXTENT ANY
HOLDER OF COMPANY PREFERRED STOCK EXERCISES APPRAISAL RIGHTS IN RESPECT OF ITS
SHARES OF COMPANY PREFERRED STOCK AS A RESULT OF THE TRANSACTION, PAY AMOUNTS
REQUIRED TO BE PAID WITH RESPECT THERETO.

 

SECTION 7.07.  Change in Nature of Business.  Engage to any material extent in a
line of business substantially different from those lines of business conducted
by the Company and the Restricted Subsidiaries on the date hereof or any
business reasonably related, ancillary or complementary thereto.

 

SECTION 7.08.  Transactions with Affiliates.  Enter into any transaction of any
kind with any Affiliate of the Company, whether or not in the ordinary course of
business, other than (a) transactions among Loan Parties or any Restricted
Subsidiary or any entity that becomes a Restricted Subsidiary as a result of
such transaction, (b) on terms substantially as favorable to Holdings, the
Company or such Restricted Subsidiary (in the reasonable good faith
determination of the Company) as would be obtainable by Holdings, the Company or
such Restricted Subsidiary at the time in a comparable arm’s-length transaction
with a Person other than an Affiliate, (c) the Transaction and the payment of
fees and expenses related to the Transaction, (d) the issuance of Qualified
Equity Interests of Holdings and the granting of registration or other customary
rights in connection therewith, (e) so long as immediately before and after
giving effect thereto, no Event of Default shall have occurred and be continuing
or would result therefrom, the payment of management fees to the Sponsors in an
aggregate amount in any fiscal quarter not to exceed $1,875,000,
(f) reimbursement of out-of-pocket costs and expenses to the Sponsors and their
Affiliates, (g) loans, Investments, Restricted Payments and other transactions
to the extent otherwise permitted under this Article VII, (h) employment,
incentive, benefit and severance arrangements between Holdings, the Company and
the Restricted Subsidiaries and their respective officers and employees in the
ordinary course of business, (i) payments by Holdings (and any direct or
indirect parent thereof), the Company and the Restricted Subsidiaries pursuant
to the tax sharing agreements among Holdings (and any such parent thereof), the
Company and the Restricted Subsidiaries on customary terms to the extent
attributable to the ownership or operation of the Company and the Restricted
Subsidiaries, (j) customary compensation and benefits and reimbursement of
reasonable out-of-pocket costs to, and indemnities provided on behalf of,
directors, officers and employees of Holdings, the Company and the Restricted
Subsidiaries in the ordinary course of business to the extent attributable to
the ownership or operation of Holdings, the Company and the Restricted
Subsidiaries, (k) transactions pursuant to permitted agreements in existence on
the Closing Date and set forth on Schedule 7.08 or any amendment thereto to the
extent such an amendment is not adverse to the Lenders in any material respect,
(l) dividends, redemptions and repurchases permitted under Section 7.06,
(m) customary payments by Holdings, the Company and any Restricted Subsidiaries
to the Sponsors or their Affiliates made for any financial advisory, financing,
underwriting or placement services or in respect of other investment banking
activities (including in connection with acquisitions or divestitures) up to
5.0% of the value of transactions with respect to which such services are
provided, (n) the existence of, and the performance by Holdings, the Company or
any Restricted Subsidiary of its obligations under the terms of, any limited
liability company agreement, limited partnership or other organizational
document or securityholders agreement (including any registration rights
agreement or purchase agreement related thereto) to which it is a party on the
Closing Date and which has been disclosed to the Lenders as in effect on the
Closing Date, and similar organizational agreements (including any registration
rights agreements or purchase agreements related thereto) it may enter into
thereafter, provided that the existence of, or the performance by Holdings, the
Company or any Restricted Subsidiary of obligations under, any amendment to any
such existing agreement or any such similar agreement (including any

 

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registration rights agreements or purchase agreements related thereto) entered
into after the Closing Date shall only be permitted by this Section 7.08(n) to
the extent not more adverse to the interest of the Lenders in any material
respect when taken as a whole (in the reasonable good faith determination of the
Company) than any of such documents and agreements as in effect on the Closing
Date, and (o) transactions with landlords, customers, clients, suppliers,
authors, joint venture partners or purchasers or sellers of goods and services,
in each case in the ordinary course of business and not otherwise prohibited by
this Agreement.

 

SECTION 7.09.  Burdensome Agreements.  Enter into or permit to exist any
Contractual Obligation (other than this Agreement or any other Loan Document)
that limits the ability of any Restricted Subsidiary of the Company that is not
a U.S. Guarantor to make Restricted Payments to the Company or any U.S.
Guarantor; provided that the foregoing shall not apply to Contractual
Obligations which (i)(x) exist on the date hereof and (to the extent not
otherwise permitted by this Section 7.09) are listed on Schedule 7.09 hereto or
(y) are set forth in any agreement evidencing any permitted amendment, renewal,
extension or refinancing of any Contractual Obligation permitted by clause
(x) so long as such amendment, renewal, extension or refinancing is not
materially more restrictive (in the reasonable good faith determination of the
Company) than such Contractual Obligation, (ii) are binding on a Restricted
Subsidiary at the time such Restricted Subsidiary first becomes a Restricted
Subsidiary of the Company, so long as such Contractual Obligations were not
entered into solely in contemplation of such Person becoming a Restricted
Subsidiary of the Company, or are imposed by any permitted amendment, renewal,
extension or refinancing of any such Contractual Obligation so long as the terms
of any such amendment, renewal, extension or refinancing, taken as a whole, are
not materially more restrictive (in the reasonable good faith determination of
the Company) than such Contractual Obligation; provided further that this clause
(ii) shall not apply to Contractual Obligations that are binding on a Person
that becomes a Restricted Subsidiary pursuant to Section 6.15, (iii) represent
Indebtedness of a Restricted Subsidiary of the Company which is not a Loan Party
which is permitted by Section 7.03, (iv) arise in connection with any
Disposition permitted by Section 7.05, (v) are customary provisions in joint
venture agreements and other similar agreements applicable to joint ventures
permitted under Section 7.02 and applicable solely to such joint venture entered
into in the ordinary course of business, (vi) are customary restrictions in
leases, subleases, licenses or asset sale agreements otherwise permitted hereby
so long as such restrictions relate to the assets subject thereto,
(vii) comprise restrictions imposed by any agreement relating to secured
Indebtedness permitted pursuant to 7.03(g) to the extent that such restrictions
apply only to the Restricted Subsidiaries incurring or guaranteeing such
Indebtedness, (viii) are customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Company or any
Restricted Subsidiary, (ix) are customary provisions restricting assignment of
any agreement entered into in the ordinary course of business, (x) are
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business, and (xi) comprise
restrictions imposed by a Lien permitted by Section 7.01 restricting the
transfer of the property subject thereto.

 

SECTION 7.10.  Financial Covenant.  Permit the Total Leverage Ratio as of the
last day of any Test Period (beginning with the Test Period ending on March 31,
2008) to be greater than the ratio set forth below opposite the last day of such
Test Period:

 

Year

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

 

 

 

 

 

 

 

 

2008

 

8.75:1.00

 

8.75:1.00

 

8.75:1.00

 

8.75:1.00

 

2009

 

8.75:1.00

 

8.00:1.00

 

8.00:1.00

 

8.00:1.00

 

2010

 

8.00:1.00

 

6.50:1.00

 

6.50:1.00

 

6.50:1.00

 

 

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Year

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

 

 

 

 

 

 

 

 

2011

 

6.50:1.00

 

5.75:1.00

 

5.75:1.00

 

5.75:1.00

 

2012

 

5.75:1.00

 

5.00:1.00

 

5.00:1.00

 

5.00:1.00

 

2013

 

5.00:1.00

 

5.00:1.00

 

5.00:1.00

 

5.00:1.00

 

 

SECTION 7.11.  Accounting Changes.  Make any change in fiscal year; provided,
however, that (i) each of WRC Media and its Subsidiaries may change its fiscal
year to June 30 and (ii) each of the Company and its Subsidiaries may, upon
written notice to the Administrative Agent, change its fiscal year to a calendar
year or to any other fiscal year reasonably acceptable to the Administrative
Agent, in which case, the Company and the Administrative Agent will, and are
hereby authorized by the Lenders to, make any adjustments to this Agreement that
are necessary to reflect such change in fiscal year.

 

SECTION 7.12.  Prepayments, Etc. of Indebtedness.  (a)  Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner (it being understood that payments of regularly scheduled interest
shall be permitted) the Senior Subordinated Notes, any other Indebtedness that
is required to be subordinated to the Obligations pursuant to the terms of the
Loan Documents (collectively, “Junior Financing”) or the Holdings PIK Preferred
or make any payment in violation of any subordination terms of any Junior
Financing Documentation, except (i) the refinancing thereof with the Net Cash
Proceeds of any Indebtedness (to the extent such Indebtedness constitutes a
Permitted Refinancing), to the extent not required to prepay any Loans or
Facility pursuant to Section 2.05(b), (ii) the conversion of any Junior
Financing to Equity Interests (other than Disqualified Equity Interests) of
Holdings or any of its direct or indirect parents, (iii) the prepayment of
Indebtedness of the Company or any Restricted Subsidiary to the Company or any
Restricted Subsidiary to the extent permitted by the Collateral Documents, and
(iv) so long as immediately before and after giving effect thereto, no Default
shall have occurred and be continuing or would result therefrom, prepayments,
redemptions, purchases, defeasances and other payments in respect of Junior
Financings or the Holdings PIK Preferred prior to their scheduled maturity in an
aggregate amount not to exceed the sum of (x) $100,000,000 plus (y) the
aggregate amount of the Net Cash Proceeds of Permitted Equity Issuances after
the Closing Date (other than Permitted Equity Issuances made pursuant to
Section 8.05) that (other than with respect to any prepayment, redemption,
purchase, defeasance or other payment of the Holdings PIK Preferred) have been
contributed to the Company as common equity and Not Otherwise Applied plus
(z) if, as of the last day of the immediately preceding Test Period (after
giving Pro Forma Effect to such prepayment, redemption, purchase, defeasance or
other payment) the Total Leverage Ratio is less than 4.00:1.00, the amount of
Cumulative Excess Cash Flow that is Not Otherwise Applied.

 

(B)  AMEND, MODIFY OR CHANGE IN ANY MANNER MATERIALLY ADVERSE TO THE INTERESTS
OF THE LENDERS (I) ANY TERM OR CONDITION OF ANY JUNIOR FINANCING DOCUMENTATION,
(II) ANY TERM OR CONDITION OF THE COMPANY PREFERRED STOCK OR (III) ANY
ORGANIZATION DOCUMENT OF HOLDINGS, THE COMPANY OR ANY RESTRICTED SUBSIDIARY, IN
ANY CASE WITHOUT THE CONSENT OF THE ADMINISTRATIVE AGENT.

 

SECTION 7.13.  Holding Company.  In the case of Holdings, conduct, transact or
otherwise engage in any business or operations other than those incidental to
(i) its ownership of the Equity Interests in, and its management of, the
Company, (ii) the maintenance of its legal existence and its compliance with
applicable Laws, (iii) the performance of the Loan Documents, the documents in
respect of the Holdings PIK Preferred, the Purchase Agreement, the DH

 

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Acquisition Agreement, the WRC Acquisition Agreement and the other agreements
contemplated by the Purchase Agreement, the DH Acquisition Agreement or the WRC
Acquisition Agreement, (iv) any public offering of its common stock or any other
issuance of its Equity Interests not prohibited by Article VII, and (v) the
issuance, acquisition or maintenance of any Indebtedness or Investments, or the
making of any Restricted Payments, that Holdings is expressly permitted to enter
into or consummate under this Article VII; provided that, notwithstanding the
foregoing, Holdings shall not own, lease, manage, acquire or otherwise operate
any properties or assets (other than the ownership of Equity Interests in, and
its management of, the Company, cash and Cash Equivalents and de minimis amounts
of other assets incidental to the conduct of its business) or incur any material
consensual liabilities (other than liabilities related to its existence and
permitted business and activities specified above).

 

SECTION 7.14.  Capital Expenditures.  (a)   Commencing with the fiscal year
ending June 30, 2008, make any Capital Expenditure except for Capital
Expenditures not exceeding, in the aggregate for the Company and the Restricted
Subsidiaries during each fiscal year set forth below, the amount set forth
opposite such fiscal year:

 

Fiscal Year

 

Amount

 

 

 

 

 

2008

 

$

40,000,000

 

2009

 

$

40,000,000

 

2010

 

$

40,000,000

 

2011

 

$

45,000,000

 

2012

 

$

45,000,000

 

2013

 

$

45,000,000

 

2014

 

$

45,000,000

 

 

; provided that the amount of Capital Expenditures permitted to be made in
respect of any fiscal year shall be increased (i) after the consummation of any
Permitted Acquisition in an amount equal to 10% of the pro forma aggregate
consolidated revenues of the Acquired Entity or Business so acquired during the
fiscal year of such Acquired Entity or Business beginning after such Permitted
Acquisition and (ii) by an amount equal to the sum of (x) the aggregate amount
of the Net Cash Proceeds of Permitted Equity Issuances after the Closing Date
(other than Permitted Equity Issuances made pursuant to Section 8.05) that have
been contributed to the Company as common equity and Not Otherwise Applied plus
(y) if, as of the last day of the immediately preceding Test Period (after
giving Pro Forma Effect to such Capital Expenditure) the Total Leverage Ratio is
less than 4.00:1.00, the amount of Cumulative Excess Cash Flow that is Not
Otherwise Applied.

 

(B)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN CLAUSE (A) ABOVE, TO
THE EXTENT THAT THE AGGREGATE AMOUNT OF CAPITAL EXPENDITURES MADE BY THE COMPANY
AND THE RESTRICTED SUBSIDIARIES IN ANY FISCAL YEAR PURSUANT TO
SECTION 7.14(A) IS LESS THAN THE MAXIMUM AMOUNT OF CAPITAL EXPENDITURES
PERMITTED BY SECTION 7.14(A) WITH RESPECT TO SUCH FISCAL YEAR (WITHOUT TAKING
INTO CONSIDERATION ANY AMOUNTS AVAILABLE PURSUANT TO CLAUSE (II) OF THE PROVISO
THERETO), THE AMOUNT OF SUCH DIFFERENCE (THE “ROLLOVER AMOUNT”) MAY BE CARRIED
FORWARD AND USED TO MAKE CAPITAL EXPENDITURES IN THE NEXT SUCCEEDING FISCAL
YEAR; PROVIDED THAT CAPITAL EXPENDITURES IN ANY FISCAL YEAR SHALL BE COUNTED
AGAINST THE BASE AMOUNT SET FORTH IN SECTION 7.14(A) (WITHOUT TAKING INTO
CONSIDERATION ANY AMOUNTS AVAILABLE PURSUANT TO CLAUSE (II) OF THE PROVISO
THERETO) WITH RESPECT TO SUCH FISCAL YEAR PRIOR TO BEING COUNTED AGAINST ANY
ROLLOVER AMOUNT AVAILABLE WITH RESPECT TO SUCH FISCAL YEAR.

 

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ARTICLE VIII

 

EVENTS OF DEFAULT AND REMEDIES

 

SECTION 8.01.  Events of Default.  Any of the following shall constitute an
Event of Default:

 

(A)  NON-PAYMENT.  ANY BORROWER OR ANY OTHER LOAN PARTY FAILS TO PAY (I) WHEN
AND AS REQUIRED TO BE PAID HEREIN, ANY AMOUNT OF PRINCIPAL OF ANY LOAN, OR
(II) WITHIN FIVE (5) BUSINESS DAYS AFTER THE SAME BECOMES DUE, ANY INTEREST OR
ANY OTHER AMOUNT (INCLUDING CASH COLLATERAL) PAYABLE HEREUNDER OR WITH RESPECT
TO ANY OTHER LOAN DOCUMENT; OR

 

(B)  SPECIFIC COVENANTS.  (I) ANY GROUP MEMBER FAILS TO PERFORM OR OBSERVE (OR
TO CAUSE THE PERFORMANCE OR OBSERVANCE OF) ANY TERM, COVENANT OR AGREEMENT
CONTAINED IN ANY OF SECTIONS 6.03(A), 6.05(A) (SOLELY WITH RESPECT TO THE
EXISTENCE OF HOLDINGS AND THE COMPANY), 6.17 OR ARTICLE VII OR (II) HOLDINGS
FAILS TO OBSERVE ANY TERM, COVENANT OR AGREEMENT CONTAINED IN SECTION 7.13;
PROVIDED THAT ANY EVENT OF DEFAULT UNDER SECTION 7.10 IS SUBJECT TO CURE AS
CONTEMPLATED BY SECTION 8.05; OR

 

(C)  OTHER DEFAULTS.  ANY GROUP MEMBER FAILS TO PERFORM OR OBSERVE (OR TO CAUSE
THE PERFORMANCE OR OBSERVANCE OF) ANY OTHER COVENANT OR AGREEMENT (NOT SPECIFIED
IN SECTION 8.01(A) OR (B) ABOVE) CONTAINED IN ANY LOAN DOCUMENT ON ITS PART TO
BE PERFORMED OR OBSERVED AND SUCH FAILURE CONTINUES FOR THIRTY (30) DAYS AFTER
WRITTEN NOTICE THEREOF BY THE ADMINISTRATIVE AGENT TO THE COMPANY; OR

 

(D)  REPRESENTATIONS AND WARRANTIES.  ANY REPRESENTATION, WARRANTY,
CERTIFICATION OR STATEMENT OF FACT MADE OR DEEMED MADE BY OR ON BEHALF OF THE
COMPANY OR ANY OTHER LOAN PARTY HEREIN, IN ANY OTHER LOAN DOCUMENT, OR IN ANY
DOCUMENT REQUIRED TO BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH SHALL BE
INCORRECT OR MISLEADING IN ANY MATERIAL RESPECT WHEN MADE OR DEEMED MADE; OR

 

(E)  CROSS-DEFAULT.  ANY LOAN PARTY OR ANY RESTRICTED SUBSIDIARY (A) FAILS TO
MAKE ANY PAYMENT BEYOND THE APPLICABLE GRACE PERIOD WITH RESPECT THERETO, IF ANY
(WHETHER BY SCHEDULED MATURITY, REQUIRED PREPAYMENT, ACCELERATION, DEMAND, OR
OTHERWISE) IN RESPECT OF ANY INDEBTEDNESS (OTHER THAN INDEBTEDNESS HEREUNDER)
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN THE THRESHOLD AMOUNT, OR
(B) FAILS TO OBSERVE OR PERFORM ANY OTHER AGREEMENT OR CONDITION CONTAINED IN
ANY INSTRUMENT OR AGREEMENT EVIDENCING OR GOVERNING ANY SUCH INDEBTEDNESS, OR
ANY OTHER “DEFAULT” (OR LIKE TERM) OCCURS, THE EFFECT OF WHICH FAILURE OR OTHER
“DEFAULT” IS TO CAUSE, OR TO PERMIT THE HOLDER OR HOLDERS OF SUCH INDEBTEDNESS
(OR A TRUSTEE OR AGENT ON BEHALF OF SUCH HOLDER OR HOLDERS OR BENEFICIARY OR
BENEFICIARIES) TO CAUSE, WITH THE GIVING OF NOTICE IF REQUIRED, SUCH
INDEBTEDNESS TO BECOME DUE (AUTOMATICALLY OR OTHERWISE) PRIOR TO ITS STATED
MATURITY; PROVIDED THAT THIS CLAUSE (E)(B) SHALL NOT APPLY TO SECURED
INDEBTEDNESS THAT BECOMES DUE AS A RESULT OF THE VOLUNTARY SALE OR TRANSFER OF
THE PROPERTY OR ASSETS SECURING SUCH INDEBTEDNESS, IF SUCH SALE OR TRANSFER IS
PERMITTED HEREUNDER AND UNDER THE DOCUMENTS PROVIDING FOR SUCH INDEBTEDNESS; OR

 

(F)  INSOLVENCY PROCEEDINGS, ETC.  ANY LOAN PARTY OR ANY OF THE RESTRICTED
SUBSIDIARIES INSTITUTES OR CONSENTS TO THE INSTITUTION OF ANY PROCEEDING UNDER
ANY DEBTOR RELIEF LAW, OR MAKES AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR
APPLIES FOR OR CONSENTS TO THE APPOINTMENT OF ANY RECEIVER, TRUSTEE, CUSTODIAN,
CONSERVATOR, LIQUIDATOR, REHABILITATOR, ADMINISTRATOR, ADMINISTRATIVE RECEIVER
OR SIMILAR OFFICER FOR IT OR FOR ALL OR ANY MATERIAL PART OF ITS PROPERTY; OR
ANY RECEIVER,

 

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TRUSTEE, CUSTODIAN, CONSERVATOR, LIQUIDATOR, REHABILITATOR, ADMINISTRATOR,
ADMINISTRATIVE RECEIVER OR SIMILAR OFFICER IS APPOINTED WITHOUT THE APPLICATION
OR CONSENT OF SUCH PERSON AND THE APPOINTMENT CONTINUES UNDISCHARGED OR UNSTAYED
FOR SIXTY (60) CALENDAR DAYS; OR ANY PROCEEDING UNDER ANY DEBTOR RELIEF LAW
RELATING TO ANY SUCH PERSON OR TO ALL OR ANY MATERIAL PART OF ITS PROPERTY IS
INSTITUTED WITHOUT THE CONSENT OF SUCH PERSON AND CONTINUES UNDISMISSED OR
UNSTAYED FOR SIXTY (60) CALENDAR DAYS, OR AN ORDER FOR RELIEF APPROVING OR
ORDERING ANY OF THE FOREGOING IS ENTERED IN ANY SUCH PROCEEDING; OR

 

(G)  INABILITY TO PAY DEBTS; ATTACHMENT.  (I) ANY LOAN PARTY OR ANY RESTRICTED
SUBSIDIARY BECOMES GENERALLY UNABLE OR ADMITS IN WRITING ITS INABILITY GENERALLY
OR FAILS GENERALLY TO PAY ITS DEBTS IN EXCESS OF THE THRESHOLD AMOUNT AS THEY
BECOME DUE, OR (II) ANY WRIT OR WARRANT OF ATTACHMENT OR EXECUTION OR SIMILAR
PROCESS IS ISSUED OR LEVIED AGAINST ALL OR ANY MATERIAL PART OF THE PROPERTY OF
THE LOAN PARTIES, TAKEN AS A WHOLE, AND IS NOT RELEASED, VACATED OR FULLY BONDED
WITHIN SIXTY (60) DAYS AFTER ITS ISSUE OR LEVY; OR

 

(H)  JUDGMENTS.  THERE IS ENTERED AGAINST ANY LOAN PARTY OR ANY RESTRICTED
SUBSIDIARY A FINAL JUDGMENT OR ORDER FOR THE PAYMENT OF MONEY IN AN AGGREGATE
AMOUNT EXCEEDING THE THRESHOLD AMOUNT (TO THE EXTENT DUE AND PAYABLE AND NOT
COVERED BY INDEPENDENT THIRD-PARTY INSURANCE AS TO WHICH THE INSURER HAS BEEN
NOTIFIED OF SUCH JUDGMENT OR ORDER AND HAS NOT DISPUTED COVERAGE) AND SUCH
JUDGMENT OR ORDER SHALL NOT HAVE BEEN SATISFIED, VACATED, DISCHARGED OR STAYED
OR BONDED PENDING AN APPEAL FOR A  PERIOD OF SIXTY (60) CONSECUTIVE DAYS; OR

 

(I)  ERISA.  (I) AN ERISA EVENT OCCURS WITH RESPECT TO A PENSION PLAN OR
MULTIEMPLOYER PLAN WHICH HAS RESULTED OR COULD REASONABLY BE EXPECTED TO RESULT
IN LIABILITY OF ANY LOAN PARTY UNDER TITLE IV OF ERISA IN AN AGGREGATE AMOUNT
WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT,
(II) ANY LOAN PARTY OR ANY ERISA AFFILIATE FAILS TO PAY WHEN DUE, AFTER THE
EXPIRATION OF ANY APPLICABLE GRACE PERIOD, ANY INSTALLMENT PAYMENT WITH RESPECT
TO ITS WITHDRAWAL LIABILITY UNDER SECTION 4201 OF ERISA UNDER A MULTIEMPLOYER
PLAN IN AN AGGREGATE AMOUNT WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT, (III) ANY LOAN PARTY OR ANY OF ITS SUBSIDIARIES OR
ERISA AFFILIATES SHALL ENGAGE IN ANY “PROHIBITED TRANSACTION” (AS DEFINED IN
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE) INVOLVING ANY PENSION PLAN
WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, OR
(IV) ANY OTHER EVENT OR CONDITION SHALL OCCUR OR EXIST WITH RESPECT TO A PENSION
PLAN WHICH HAS RESULTED OR COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT; OR

 

(J)  INVALIDITY OF COLLATERAL DOCUMENTS.  ANY MATERIAL PROVISION OF ANY
COLLATERAL DOCUMENT, AT ANY TIME AFTER ITS EXECUTION AND DELIVERY AND FOR ANY
REASON OTHER THAN AS EXPRESSLY PERMITTED HEREUNDER OR THEREUNDER (INCLUDING AS A
RESULT OF A TRANSACTION PERMITTED UNDER SECTION 7.04 OR 7.05) OR AS A RESULT OF
ACTS OR OMISSIONS BY THE ADMINISTRATIVE AGENT OR ANY LENDER OR THE SATISFACTION
IN FULL OF ALL THE OBLIGATIONS, CEASES TO BE IN FULL FORCE AND EFFECT; OR ANY
LOAN PARTY CONTESTS IN WRITING THE VALIDITY OR ENFORCEABILITY OF ANY PROVISION
OF ANY COLLATERAL DOCUMENT; OR ANY LOAN PARTY DENIES IN WRITING THAT IT HAS ANY
OR FURTHER LIABILITY OR OBLIGATION UNDER ANY COLLATERAL DOCUMENT (OTHER THAN AS
A RESULT OF REPAYMENT IN FULL OF THE OBLIGATIONS AND TERMINATION OF THE
AGGREGATE COMMITMENTS), OR PURPORTS IN WRITING TO REVOKE OR RESCIND ANY
COLLATERAL DOCUMENT; OR

 

(K)  CHANGE OF CONTROL.  THERE OCCURS ANY CHANGE OF CONTROL; OR

 

(L)  LIENS ON COLLATERAL.  ANY COLLATERAL DOCUMENT SHALL FOR ANY REASON (OTHER
THAN PURSUANT TO THE TERMS THEREOF INCLUDING AS A RESULT OF A TRANSACTION
PERMITTED UNDER SECTION 7.04 OR 7.05) CEASE TO CREATE A VALID AND PERFECTED
LIEN, WITH THE PRIORITY REQUIRED BY THE COLLATERAL

 

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DOCUMENTS, (OR OTHER SECURITY PURPORTED TO BE CREATED ON THE APPLICABLE
COLLATERAL) ON AND SECURITY INTEREST IN ANY MATERIAL PORTION OF THE COLLATERAL
PURPORTED TO BE COVERED THEREBY, SUBJECT TO LIENS PERMITTED UNDER SECTION 7.01,
OR ANY LOAN PARTY OR AFFILIATE THEREOF SHALL SO ASSERT IN WRITING, EXCEPT TO THE
EXTENT THAT ANY SUCH LOSS OF PERFECTION OR PRIORITY RESULTS FROM THE FAILURE OF
THE ADMINISTRATIVE AGENT TO MAINTAIN POSSESSION OF CERTIFICATES ACTUALLY
DELIVERED TO IT REPRESENTING SECURITIES PLEDGED UNDER THE COLLATERAL DOCUMENTS
OR TO FILE UNIFORM COMMERCIAL CODE CONTINUATION STATEMENTS AND EXCEPT AS TO
COLLATERAL CONSISTING OF REAL PROPERTY TO THE EXTENT THAT SUCH LOSSES ARE
COVERED BY A LENDER’S TITLE INSURANCE POLICY AND SUCH INSURER HAS NOT DISPUTED
COVERAGE; OR

 

(M)  JUNIOR FINANCING DOCUMENTATION.  ANY OF THE OBLIGATIONS OF THE LOAN PARTIES
UNDER THE LOAN DOCUMENTS FOR ANY REASON SHALL CEASE TO BE “SENIOR INDEBTEDNESS”
(OR ANY COMPARABLE TERM) OR “SENIOR SECURED FINANCING” (OR ANY COMPARABLE TERM)
UNDER, AND AS DEFINED IN THE SENIOR SUBORDINATED NOTE INDENTURE OR IN ANY OTHER
JUNIOR FINANCING DOCUMENTATION.

 

SECTION 8.02.  Remedies Upon Event of Default.  If any Event of Default occurs
and is continuing, the Administrative Agent may and, at the request of the
Required Lenders, shall take any or all of the following actions:

 

(A)  DECLARE THE COMMITMENT OF EACH LENDER TO MAKE LOANS AND ANY OBLIGATION OF
THE L/C ISSUERS TO MAKE L/C CREDIT EXTENSIONS TO BE TERMINATED, WHEREUPON SUCH
COMMITMENTS AND OBLIGATION SHALL BE TERMINATED;

 

(B)  DECLARE THE UNPAID PRINCIPAL AMOUNT OF ALL OUTSTANDING LOANS, ALL INTEREST
ACCRUED AND UNPAID THEREON, AND ALL OTHER AMOUNTS OWING OR PAYABLE HEREUNDER OR
UNDER ANY OTHER LOAN DOCUMENT TO BE IMMEDIATELY DUE AND PAYABLE, WITHOUT
PRESENTMENT, DEMAND, PROTEST OR OTHER NOTICE OF ANY KIND, ALL OF WHICH ARE
HEREBY EXPRESSLY WAIVED BY THE BORROWERS;

 

(C)  REQUIRE THAT THE COMPANY CASH COLLATERALIZE THE L/C OBLIGATIONS (IN AN
AMOUNT EQUAL TO THE THEN OUTSTANDING AMOUNT THEREOF); AND

 

(D)  EXERCISE ON BEHALF OF ITSELF AND THE LENDERS ALL RIGHTS AND REMEDIES
AVAILABLE TO IT AND THE LENDERS UNDER THE LOAN DOCUMENTS OR APPLICABLE LAW;

 

provided that upon the occurrence of an actual or deemed entry of an order for
relief with respect to the Company under the Bankruptcy Code of the United
States, the obligation of each Lender to make Loans and any obligation of the
L/C Issuers to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Company to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, in each case without further act of the
Administrative Agent or any Lender.

 

SECTION 8.03.  Exclusion of Immaterial Subsidiaries.  Solely for the purpose of
determining whether a Default has occurred under clause (f) or (g) of
Section 8.01, any reference in any such clause to any Restricted Subsidiary or
Loan Party shall be deemed not to include any Restricted Subsidiary affected by
any event or circumstances referred to in any such clause that did not, as of
the last day of the most recent completed fiscal quarter of the Company, have
assets with a value in excess of 5% of the consolidated total assets of the
Company and the Restricted Subsidiaries and did not, as of the four quarter
period ending on the last day of such fiscal quarter, have revenues exceeding 5%
of the total revenues of the Company and the Restricted Subsidiaries (it being
agreed that all Restricted Subsidiaries affected by any event or circumstance
referred to

 

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in any such clause shall be considered together, as a single consolidated
Restricted Subsidiary, for purposes of determining whether the condition
specified above is satisfied).

 

SECTION 8.04.  Application of Funds.  After the exercise of remedies provided
for in Section 8.02 (or after the Loans have automatically become immediately
due and payable and the L/C Obligations have automatically been required to be
Cash Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (other than principal and interest, but
including Attorney Costs payable under Section 10.04 and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Lenders (including Attorney Costs payable under Section 10.04 and amounts
payable under Article III), ratably among them in proportion to the amounts
described in this clause Second payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loans and L/C Borrowings, ratably among the holders of
such Obligations in proportion to the respective amounts described in this
clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings, the termination value under Secured
Hedge Obligations and Cash Management Obligations and to Cash Collateralize the
portion of the L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit, ratably among the holders of such Obligations in proportion
to the respective amounts described in this clause Fourth held by them;

 

Fifth, to the payment of all other Obligations of the Loan Parties that are due
and payable to the Administrative Agent and the other Secured Parties on such
date, ratably based upon the respective aggregate amounts of all such
Obligations owing to the Administrative Agent and the other Secured Parties on
such date; and

 

Last, the balance, if any, after all of the Obligations have been paid in full,
to the Company or as otherwise required by Law.

 

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fourth above shall be
applied to satisfy drawings under such Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above and, if no
Obligations remain outstanding, to the Company.

 

Notwithstanding anything to the contrary in this Agreement, amounts received
from any Foreign Subsidiary on account of the Obligations of any Foreign
Subsidiary shall be applied solely to the payment of Obligations of Foreign
Subsidiaries.

 

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SECTION 8.05.  Company’s Right to Cure.  (a)   Notwithstanding anything to the
contrary contained in Section 8.01, in the event that Holdings and the Company
fail to comply with the requirements of Section 7.10 at the end of any fiscal
quarter, at any time during the period beginning with the first day of such
fiscal quarter and ending on the expiration of the twentieth (20th) day after
the date on which financial statements are required to be delivered with respect
to the applicable fiscal quarter hereunder (the “Cure Period”), Holdings shall
have the right to engage in a Permitted Equity Issuance for cash or otherwise
receive cash contributions to the capital of Holdings (which, or the cash
proceeds of which, shall be contributed to the Company prior to the end of the
Cure Period), and upon receipt by the Company of such amount in cash (the “Cure
Amount”) to the extent Not Otherwise Applied, (i) to the extent the Cure Amount
is applied to prepay Term Loans on or prior to the last day of the Cure Period,
such prepayment shall be deemed to have occurred prior to the end of such fiscal
quarter and (ii) the Cure Amount shall be added to Consolidated EBITDA for
purposes of determining compliance with Section 7.10 for the last fiscal quarter
of the four fiscal quarter period for which such failure to comply would have
otherwise occurred (and future four fiscal quarter periods which include such
fiscal quarter).  If, after giving effect to the foregoing recalculation, the
Company shall then be in compliance with the requirements of Section 7.10, the
Company shall be deemed to have satisfied the requirements of Section 7.10 as of
the relevant date of determination with the same effect as though there had been
no failure to comply therewith at such date, and the applicable breach or
default of Section 7.10 that would have otherwise occurred but for the
prepayment of the Term Loans pursuant to clause (i) above and/or the receipt by
the Company of the Cure Amount and the addition thereof to Consolidated EBITDA
pursuant to clause (ii) above shall be deemed not to have occurred for the
purposes of the Loan Documents.  The parties hereby acknowledge that, other than
as set forth in clause (i) above, this Section 8.05(a) may not be relied on for
purposes of calculating any financial ratios other than as applicable to
Section 7.10 and shall not result in any adjustment to any amounts other than
the amount of the Consolidated EBITDA as referred to in this Section 8.05(a).

 

(B)  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, (I) IN EACH PERIOD OF FOUR
FISCAL QUARTERS, THERE SHALL BE AT LEAST TWO (2) FISCAL QUARTERS IN WHICH NO
CURE SET FORTH IN SECTION 8.05(A) IS MADE AND (II) THE CURE AMOUNT SHALL BE NO
GREATER THAN THE AMOUNT REQUIRED FOR PURPOSES OF COMPLYING WITH SECTION 7.10 FOR
THE MOST RECENTLY COMPLETED FOUR FISCAL QUARTER PERIOD.

 

SECTION 8.06.  CAM Exchange.  On the CAM Exchange Date, (i) the Commitments
shall automatically and without further act be terminated in accordance with
Section 8.02, (ii) the Lenders shall automatically and without further act be
deemed to have exchanged interests in the Designated Obligations such that, in
lieu of the interests of each Lender in the Designated Obligations under each
Tranche in which it shall participate as of such date, such Lender shall own an
interest equal to such Lender’s CAM Percentage in the Designated Obligations
under each of the Tranches and (iii) simultaneously with the deemed exchange of
interests pursuant to clause (ii) above, the interests in the Designated
Obligations to be received in such deemed exchange shall, automatically and with
no further action required, be converted into the Dollar Amount, determined
using the Exchange Rate calculated as of such date, of such amount and on and
after such date all amounts accruing and owed to the Lenders in respect of such
Designated Obligations shall accrue and be payable in Dollars at the rate
otherwise applicable hereunder.  Each Lender, each person acquiring a
participation from any Lender as contemplated by Section 10.07 and each Borrower
hereby consents and agrees to the CAM Exchange.  Each of the Borrowers and the
Lenders agrees from time to time to execute and deliver to the Administrative
Agent all such promissory notes and other instruments and documents as the
Administrative Agent shall reasonably request to evidence and confirm the
respective interests and obligations of the Lenders after giving effect to the
CAM Exchange, and each Lender agrees to surrender any

 

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promissory notes originally received by it in connection with its Loans
hereunder to the Administrative Agent against delivery of any promissory notes
so executed and delivered; provided that the failure of any Borrower to execute
or deliver or of any Lender to accept any such promissory note, instrument or
document shall not affect the validity or effectiveness of the CAM Exchange.

 

As a result of the CAM Exchange, on and after the CAM Exchange Date, each
payment received by the Administrative Agent pursuant to any Loan Document in
respect of the Designated Obligations shall be distributed to the Lenders pro
rata in accordance with their respective CAM Percentages (to be redetermined as
of each such date of payment or distribution to the extent required by the next
paragraph below).

 

In the event that, on or after the CAM Exchange Date, the aggregate amount of
the Designated Obligations shall change as a result of the making of a
disbursement under a Letter of Credit by an L/C Issuer that is not reimbursed by
the Company, then (i) each Revolving Lender shall, in accordance with
Section 2.03(c), promptly make its L/C Advance in respect of such Unreimbursed
Amount (without giving effect to the CAM Exchange), (ii) the Administrative
Agent shall redetermine the CAM Percentages after giving effect to such
disbursement and the making of such L/C Advances and the Lenders shall
automatically and without further act be deemed to have exchanged interests in
the Designated Obligations such that each Lender shall own an interest equal to
such Lender’s CAM Percentage in the Designated Obligations under each of the
Tranches (and the interests in the Designated Obligations to be received in such
deemed exchange shall, automatically and with no further action required, be
converted into the Dollar Amount of such amount in accordance with the first
sentence of this Section 8.06), and (iii) in the event distributions shall have
been made in accordance with clause (i) of the preceding paragraph, the Lenders
shall make such payments to one another as shall be necessary in order that the
amounts received by them shall be equal to the amounts they would have received
had each such disbursement and L/C Advance been outstanding on the CAM Exchange
Date.  Each such redetermination shall be binding on each of the Lenders and
their successors and assigns and shall be conclusive, absent manifest error.

 

ARTICLE IX

ADMINISTRATIVE AGENT AND OTHER AGENTS

 

Section 9.01.  Appointment and Authorization of Agents.  (a)  Each Lender hereby
irrevocably appoints, designates and authorizes the Administrative Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. 
Notwithstanding any provision to the contrary contained elsewhere herein or in
any other Loan Document, the Administrative Agent shall have no duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.  Without limiting the generality of the foregoing
sentence, the use of the term “agent” herein and in the other Loan Documents
with reference to any Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
Law.  Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

 

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(B)  EACH L/C ISSUER SHALL ACT ON BEHALF OF THE LENDERS WITH RESPECT TO ANY
LETTERS OF CREDIT ISSUED BY IT AND THE DOCUMENTS ASSOCIATED THEREWITH, AND EACH
SUCH L/C ISSUER SHALL HAVE ALL OF THE BENEFITS AND IMMUNITIES (I) PROVIDED TO
THE AGENTS IN THIS ARTICLE IX WITH RESPECT TO ANY ACTS TAKEN OR OMISSIONS
SUFFERED BY SUCH L/C ISSUER IN CONNECTION WITH LETTERS OF CREDIT ISSUED BY IT OR
PROPOSED TO BE ISSUED BY IT AND THE APPLICATIONS AND AGREEMENTS FOR LETTERS OF
CREDIT PERTAINING TO SUCH LETTERS OF CREDIT AS FULLY AS IF THE TERM “AGENT” AS
USED IN THIS ARTICLE IX AND IN THE DEFINITION OF “AGENT-RELATED PERSON” INCLUDED
SUCH L/C ISSUER WITH RESPECT TO SUCH ACTS OR OMISSIONS, AND (II) AS ADDITIONALLY
PROVIDED HEREIN WITH RESPECT TO SUCH L/C ISSUER.

 

(C)  THE ADMINISTRATIVE AGENT SHALL ALSO ACT AS THE “COLLATERAL AGENT” UNDER THE
LOAN DOCUMENTS, AND EACH OF THE LENDERS (IN ITS CAPACITIES AS A LENDER, SWING
LINE LENDER (IF APPLICABLE), L/C ISSUER (IF APPLICABLE) AND A POTENTIAL HEDGE
BANK) HEREBY IRREVOCABLY APPOINTS AND AUTHORIZES THE ADMINISTRATIVE AGENT TO ACT
AS THE AGENT OF (AND TO HOLD ANY SECURITY INTEREST CREATED BY THE COLLATERAL
DOCUMENTS FOR AND ON BEHALF OF OR ON TRUST FOR) SUCH LENDER FOR PURPOSES OF
ACQUIRING, HOLDING AND ENFORCING ANY AND ALL LIENS ON COLLATERAL GRANTED BY ANY
OF THE LOAN PARTIES TO SECURE ANY OF THE SECURED OBLIGATIONS, TOGETHER WITH SUCH
POWERS AND DISCRETION AS ARE REASONABLY INCIDENTAL THERETO.  IN THIS CONNECTION,
THE ADMINISTRATIVE AGENT, AS “COLLATERAL AGENT” (AND ANY CO-AGENTS, SUB-AGENTS
AND ATTORNEYS-IN-FACT APPOINTED BY THE ADMINISTRATIVE AGENT PURSUANT TO
SECTION 9.02 FOR PURPOSES OF HOLDING OR ENFORCING ANY LIEN ON THE COLLATERAL (OR
ANY PORTION THEREOF) GRANTED UNDER THE COLLATERAL DOCUMENTS, OR FOR EXERCISING
ANY RIGHTS AND REMEDIES THEREUNDER AT THE DIRECTION OF THE ADMINISTRATIVE
AGENT), SHALL BE ENTITLED TO THE BENEFITS OF ALL PROVISIONS OF THIS ARTICLE IX
(INCLUDING, SECTION 9.07, AS THOUGH SUCH CO-AGENTS, SUB-AGENTS AND
ATTORNEYS-IN-FACT WERE THE “COLLATERAL AGENT” UNDER THE LOAN DOCUMENTS) AS IF
SET FORTH IN FULL HEREIN WITH RESPECT THERETO.

 

Section 9.02.  Delegation of Duties.  The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document (including for
purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents or of exercising any rights and
remedies thereunder) by or through agents, employees or attorneys-in-fact
including for the purpose of any Borrowings or payments in Alternative
Currencies, such sub-agents as shall be deemed necessary by the Administrative
Agent and shall be entitled to advice of counsel and other consultants or
experts concerning all matters pertaining to such duties.  The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
sub-agent or attorney-in-fact that it selects in the absence of gross negligence
or willful misconduct (as determined in the final non-appealable judgment of a
court of competent jurisdiction).

 

Section 9.03.  Liability of Agents.  No Agent-Related Person shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct,
as determined by the final judgment of a court of competent jurisdiction, in
connection with its duties expressly set forth herein), or (b) be responsible in
any manner to any Lender or participant for any recital, statement,
representation or warranty made by any Loan Party or any officer thereof,
contained herein or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or the perfection or
priority of any Lien or security interest created or purported to be created
under the Collateral Documents, or for any failure of any Loan Party or any
other party to any Loan Document to perform its obligations hereunder or
thereunder.  No Agent-Related Person shall be under any obligation to any Lender
or participant

 

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to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party or
any Affiliate thereof.

 

Section 9.04.  Reliance by Agents.  (a)  Each Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, communication,
signature, resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, electronic mail
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to any Loan Party), independent accountants and other experts selected by such
Agent.  Each Agent shall be fully justified in failing or refusing to take any
action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.  Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Required Lenders (or such greater number of Lenders as may be expressly required
hereby in any instance) and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

 

(B)  FOR PURPOSES OF DETERMINING COMPLIANCE WITH THE CONDITIONS SPECIFIED IN
SECTION 4.01, EACH LENDER THAT HAS SIGNED THIS AGREEMENT SHALL BE DEEMED TO HAVE
CONSENTED TO, APPROVED OR ACCEPTED OR TO BE SATISFIED WITH, EACH DOCUMENT OR
OTHER MATTER REQUIRED THEREUNDER TO BE CONSENTED TO OR APPROVED BY OR ACCEPTABLE
OR SATISFACTORY TO A LENDER UNLESS THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED
NOTICE FROM SUCH LENDER PRIOR TO THE PROPOSED CLOSING DATE SPECIFYING ITS
OBJECTION THERETO.

 

Section 9.05.  Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Company referring to this Agreement, describing such Default and stating that
such notice is a “notice of default.”  The Administrative Agent will notify the
Lenders of its receipt of any such notice.  The Administrative Agent shall take
such action with respect to any Event of Default as may be directed by the
Required Lenders in accordance with Article VIII; provided that unless and until
the Administrative Agent has received any such direction, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default as it shall deem
advisable or in the best interest of the Lenders.

 

Section 9.06.  Credit Decision; Disclosure of Information by Agents.  Each
Lender acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by any Agent hereafter taken, including any
consent to and acceptance of any assignment or review of the affairs of any Loan
Party or any Affiliate thereof, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender as to any matter,
including whether Agent-Related Persons have disclosed material information in
their possession.  Each Lender represents to each Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties
and their

 

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respective Subsidiaries, and all applicable bank or other regulatory Laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Company and the other Loan
Parties hereunder.  Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
the other Loan Parties.  Except for notices, reports and other documents
expressly required to be furnished to the Lenders by any Agent herein, such
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of any of the Loan
Parties or any of their respective Affiliates which may come into the possession
of any Agent-Related Person.

 

Section 9.07.  Indemnification of Agents.  Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any
Loan Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided that no Lender shall be liable
for the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting from such Agent-Related Person’s own gross negligence or
willful misconduct, as determined by the final non-appealable judgment of a
court of competent jurisdiction; provided that no action taken in accordance
with the directions of the Required Lenders (or such other number or percentage
of the Lenders as shall be required by the Loan Documents) shall be deemed to
constitute gross negligence or willful misconduct for purposes of this
Section 9.07; and provided, further, that to the extent the indemnification of
the L/C Issuer is required hereunder, such obligation shall be limited solely to
the Revolving Credit Lenders.  In the case of any investigation, litigation or
proceeding giving rise to any Indemnified Liabilities, this Section 9.07 applies
whether any such investigation, litigation or proceeding is brought by any
Lender or any other Person.  Without limitation of the foregoing, each Lender
shall reimburse the Administrative Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including Attorney Costs) 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, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Company.  The undertaking in this Section 9.07 shall survive termination of the
Aggregate Commitments, the payment of all other Obligations and the resignation
of the Administrative Agent.

 

Section 9.08.  Agents in their Individual Capacities.  JPMorgan Chase Bank and
its Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire Equity Interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
each of the Loan Parties and their respective Affiliates as though JPMorgan
Chase Bank were not the Administrative Agent or an L/C Issuer hereunder and
without notice to or consent of the Lenders.  The Lenders acknowledge that,
pursuant to such activities, JPMorganChase Bank or its Affiliates may receive
information regarding any Loan Party or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Loan Party
or such Affiliate) and acknowledge that the Administrative Agent shall be under
no obligation to provide such information to them.  With respect to its
Loans,JPMorgan

 

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Chase Bank shall have the same rights and powers under this Agreement as any
other Lender and may exercise such rights and powers as though it were not the
Administrative Agent or an L/C Issuer, and the terms “Lender” and “Lenders”
include JPMorgan Chase Bank in its individual capacity.

 

SECTION 9.09.  Successor Agents.  The Administrative Agent may resign as the
Administrative Agent upon thirty (30) days’ notice to the Lenders and the
Company.  If the Administrative Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall be consented to by the Company at all times other
than during the existence of an Event of Default under Section 8.01(f) or
(g) (which consent of the Company shall not be unreasonably withheld or
delayed).  If no successor agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint,
after consulting with the Lenders and the Company, a successor agent, which
shall be a Lender or a bank with an office in New York, New York or an Affiliate
of such Lender or bank, and which successor agent shall be consented to by the
Company at all times other than during the existence of an Event of Default
under Section 8.01(f) or (g) (which consent of the Company shall not be
unreasonably withheld).  Upon the acceptance of its appointment as successor
agent hereunder, the Person acting as such successor agent shall succeed to all
the rights, powers and duties of the retiring Administrative Agent and the term
“Administrative Agent,” shall mean such successor administrative agent and/or
supplemental administrative agent, as the case may be, and the retiring
Administrative Agent’s appointment, powers and duties as the Administrative
Agent shall be terminated.  After the retiring Administrative Agent’s
resignation hereunder as the Administrative Agent, the provisions of this
Article IX and Sections 10.04 and 10.05 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.  If no successor agent has accepted appointment as the
Administrative Agent by the date which is thirty (30) days following the
retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.  Upon the acceptance of any appointment as the
Administrative Agent hereunder by a successor and upon the execution and filing
or recording of such financing statements, or amendments thereto, and such
amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to (a) continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents or (b) otherwise ensure that
the Collateral and Guarantee Requirement is satisfied, the Administrative Agent
shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents.  After the retiring Administrative Agent’s
resignation hereunder as the Administrative Agent, the provisions of this
Article IX shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the
Administrative Agent.

 

Section 9.10.  Administrative Agent May File Proofs of Claim.  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on any Borrower)
shall be entitled and empowered, by intervention in such proceeding or
otherwise:

 

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(A)  TO FILE AND PROVE A CLAIM FOR THE WHOLE AMOUNT OF THE PRINCIPAL AND
INTEREST OWING AND UNPAID IN RESPECT OF THE LOANS, L/C OBLIGATIONS AND ALL OTHER
OBLIGATIONS THAT ARE OWING AND UNPAID AND TO FILE SUCH OTHER DOCUMENTS AS MAY BE
NECESSARY OR ADVISABLE IN ORDER TO HAVE THE CLAIMS OF THE LENDERS AND THE
ADMINISTRATIVE AGENT (INCLUDING ANY CLAIM FOR THE REASONABLE COMPENSATION,
EXPENSES, DISBURSEMENTS AND ADVANCES OF THE LENDERS AND THE ADMINISTRATIVE AGENT
AND THEIR RESPECTIVE AGENTS AND COUNSEL AND ALL OTHER AMOUNTS DUE THE LENDERS
AND THE ADMINISTRATIVE AGENT UNDER SECTIONS 2.03(H) AND (I), 2.09 AND 10.04)
ALLOWED IN SUCH JUDICIAL PROCEEDING; AND

 

(B)  TO COLLECT AND RECEIVE ANY MONIES OR OTHER PROPERTY PAYABLE OR DELIVERABLE
ON ANY SUCH CLAIMS AND TO DISTRIBUTE THE SAME;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the Agents
and their respective agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.09 and 10.04.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender any plan
of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.

 

Section 9.11.  Collateral and Guarantee Matters.  The Lenders irrevocably agree:

 

(A)  THAT ANY LIEN ON ANY PROPERTY GRANTED TO OR HELD BY THE ADMINISTRATIVE
AGENT UNDER ANY LOAN DOCUMENT SHALL BE AUTOMATICALLY RELEASED (I) UPON
TERMINATION OF THE AGGREGATE COMMITMENTS AND PAYMENT IN FULL OF ALL OBLIGATIONS
(OTHER THAN (X) OBLIGATIONS UNDER SECURED HEDGE AGREEMENTS, (Y) CASH MANAGEMENT
OBLIGATIONS AND (Z) CONTINGENT REIMBURSEMENT AND INDEMNIFICATION OBLIGATIONS NOT
YET ACCRUED AND PAYABLE) AND THE EXPIRATION OR TERMINATION OF ALL LETTERS OF
CREDIT, (II) AT THE TIME THE PROPERTY SUBJECT TO SUCH LIEN IS TRANSFERRED OR TO
BE TRANSFERRED AS PART OF OR IN CONNECTION WITH ANY TRANSFER PERMITTED HEREUNDER
OR UNDER ANY OTHER LOAN DOCUMENT TO ANY PERSON OTHER THAN HOLDINGS, THE COMPANY
OR ANY OF ITS DOMESTIC SUBSIDIARIES THAT ARE RESTRICTED SUBSIDIARIES,
(III) SUBJECT TO SECTION 10.01, IF THE RELEASE OF SUCH LIEN IS APPROVED,
AUTHORIZED OR RATIFIED IN WRITING BY THE REQUIRED LENDERS (OR SUCH GREATER
NUMBER OF LENDERS AS MAY BE REQUIRED PURSUANT TO SECTION 10.01), (IV) IF THE
PROPERTY SUBJECT TO SUCH LIEN IS OWNED BY A GUARANTOR, UPON RELEASE OF SUCH
GUARANTOR FROM ITS OBLIGATIONS UNDER ITS GUARANTEE UNDER THE GUARANTEE AND
SECURITY AGREEMENT PURSUANT TO CLAUSE (C) BELOW, OR (V) AT THE TIME SUCH
PROPERTY SUBJECT TO SUCH LIEN BECOMES A SPECIFIED ASSET (AS DEFINED IN THE
GUARANTEE AND SECURITY AGREEMENT) DESCRIBED IN CLAUSE (B) OF THE DEFINITION
THEREOF (TAKING INTO ACCOUNT THE PROVISO THERETO);

 

(B)  (I) TO RELEASE OR SUBORDINATE ANY LIEN ON ANY PROPERTY GRANTED TO OR HELD
BY THE ADMINISTRATIVE AGENT UNDER ANY LOAN DOCUMENT TO THE HOLDER OF ANY LIEN ON
SUCH PROPERTY THAT IS PERMITTED BY SECTION 7.01(I) AND (II) THAT THE
ADMINISTRATIVE AGENT IS AUTHORIZED (BUT NOT REQUIRED) TO RELEASE OR SUBORDINATE
ANY LIEN ON ANY PROPERTY GRANTED TO OR HELD BY THE ADMINISTRATIVE AGENT UNDER
ANY LOAN DOCUMENT TO THE HOLDER OF ANY LIEN ON SUCH PROPERTY THAT IS PERMITTED
BY ANY OTHER CLAUSE OF SECTION 7.01; AND

 

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(C)  THAT ANY GUARANTOR SHALL BE AUTOMATICALLY RELEASED FROM ITS OBLIGATIONS
UNDER THE GUARANTEE AND SECURITY AGREEMENT IF SUCH PERSON CEASES TO BE A
RESTRICTED SUBSIDIARY AS A RESULT OF A TRANSACTION OR DESIGNATION PERMITTED
HEREUNDER; PROVIDED THAT NO SUCH RELEASE SHALL OCCUR IF SUCH GUARANTOR CONTINUES
TO BE A GUARANTOR IN RESPECT OF ANY JUNIOR FINANCING.

 

Upon request by the Administrative Agent at any time, the Required Lenders (or
such greater number of Lenders as may be required pursuant to Section 10.01)
will confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under the Guarantee and Security Agreement
pursuant to this Section 9.11.  In each case as specified in this Section 9.11,
the Administrative Agent will (and each Lender irrevocably authorizes the
Administrative Agent to), at the Company’s expense, execute and deliver to the
applicable Loan Party such documents as such Loan Party may reasonably request
to evidence the release or subordination of such item of Collateral from the
assignment and security interest granted under the Collateral Documents, or to
evidence the release of such Guarantor from its obligations under the Guarantee
and Security Agreement, in each case in accordance with the terms of the Loan
Documents and this Section 9.11.

 

Section 9.12.  Other Agents; Arrangers and Managers.  None of the Lenders or
other Persons identified on the facing page or signature pages of this Agreement
as a “co-syndication agent,” “documentation agent”, “joint bookrunner” or
“co-lead arranger” shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such.  Without limiting the foregoing, none of the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary relationship
with any Lender.  Each Lender acknowledges that it has not relied, and will not
rely, on any of the Lenders or other Persons so identified in deciding to enter
into this Agreement or in taking or not taking action hereunder.

 

Section 9.13.  Appointment of Supplemental Administrative Agents.  (a)  It is
the purpose of this Agreement and the other Loan Documents that there shall be
no violation of any Law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction.  It is recognized that in case of litigation under this
Agreement or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case the Administrative Agent
deems that by reason of any present or future Law of any jurisdiction it may not
exercise any of the rights, powers or remedies granted herein or in any of the
other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, the Administrative Agent is hereby authorized
to appoint an additional individual or institution selected by the
Administrative Agent in its sole discretion as a separate trustee, co-trustee,
administrative agent, collateral agent, administrative sub-agent or
administrative co-agent (any such additional individual or institution being
referred to herein individually as a “Supplemental Administrative Agent” and
collectively as “Supplemental Administrative Agents”).

 

(B)  IN THE EVENT THAT THE ADMINISTRATIVE AGENT APPOINTS A SUPPLEMENTAL
ADMINISTRATIVE AGENT WITH RESPECT TO ANY COLLATERAL, (I) EACH AND EVERY RIGHT,
POWER, PRIVILEGE OR DUTY EXPRESSED OR INTENDED BY THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS TO BE EXERCISED BY OR VESTED IN OR CONVEYED TO THE
ADMINISTRATIVE AGENT WITH RESPECT TO SUCH COLLATERAL SHALL BE EXERCISABLE BY AND
VEST IN SUCH SUPPLEMENTAL ADMINISTRATIVE AGENT TO THE EXTENT, AND ONLY TO THE
EXTENT, NECESSARY TO ENABLE SUCH SUPPLEMENTAL ADMINISTRATIVE AGENT TO EXERCISE
SUCH RIGHTS, POWERS AND PRIVILEGES WITH RESPECT TO SUCH COLLATERAL AND TO
PERFORM SUCH DUTIES WITH RESPECT TO SUCH COLLATERAL, AND EVERY COVENANT AND
OBLIGATION CONTAINED IN THE LOAN DOCUMENTS AND NECESSARY TO

 

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THE EXERCISE OR PERFORMANCE THEREOF BY SUCH SUPPLEMENTAL ADMINISTRATIVE AGENT
SHALL RUN TO AND BE ENFORCEABLE BY EITHER THE ADMINISTRATIVE AGENT OR SUCH
SUPPLEMENTAL ADMINISTRATIVE AGENT, AND (II) THE PROVISIONS OF THIS ARTICLE IX
AND OF SECTIONS 10.04 AND 10.05 THAT REFER TO THE ADMINISTRATIVE AGENT SHALL
INURE TO THE BENEFIT OF SUCH SUPPLEMENTAL ADMINISTRATIVE AGENT AND ALL
REFERENCES THEREIN TO THE ADMINISTRATIVE AGENT SHALL BE DEEMED TO BE REFERENCES
TO THE ADMINISTRATIVE AGENT AND/OR SUCH SUPPLEMENTAL ADMINISTRATIVE AGENT, AS
THE CONTEXT MAY REQUIRE.

 

(C)  SHOULD ANY INSTRUMENT IN WRITING FROM THE COMPANY, HOLDINGS OR ANY OTHER
LOAN PARTY BE REQUIRED BY ANY SUPPLEMENTAL ADMINISTRATIVE AGENT SO APPOINTED BY
THE ADMINISTRATIVE AGENT FOR MORE FULLY AND CERTAINLY VESTING IN AND CONFIRMING
TO HIM OR IT SUCH RIGHTS, POWERS, PRIVILEGES AND DUTIES, THE COMPANY OR
HOLDINGS, AS APPLICABLE, SHALL, OR SHALL CAUSE SUCH LOAN PARTY TO, EXECUTE,
ACKNOWLEDGE AND DELIVER ANY AND ALL SUCH INSTRUMENTS PROMPTLY UPON REQUEST BY
THE ADMINISTRATIVE AGENT.  IN CASE ANY SUPPLEMENTAL ADMINISTRATIVE AGENT, OR A
SUCCESSOR THERETO, SHALL DIE, BECOME INCAPABLE OF ACTING, RESIGN OR BE REMOVED,
ALL THE RIGHTS, POWERS, PRIVILEGES AND DUTIES OF SUCH SUPPLEMENTAL
ADMINISTRATIVE AGENT, TO THE EXTENT PERMITTED BY LAW, SHALL VEST IN AND BE
EXERCISED BY THE ADMINISTRATIVE AGENT UNTIL THE APPOINTMENT OF A NEW
SUPPLEMENTAL ADMINISTRATIVE AGENT.

 

ARTICLE X

MISCELLANEOUS

 

SECTION 10.01.  Amendments, Etc.  Except as otherwise set forth in this
Agreement or any other Loan Document, no amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Company or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Company or the applicable Loan
Party, as the case may be, and each such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
provided that, no such amendment, waiver or consent shall:

 

(A)  EXTEND OR INCREASE THE COMMITMENT OF ANY LENDER WITHOUT THE WRITTEN CONSENT
OF EACH LENDER DIRECTLY AFFECTED THEREBY (IT BEING UNDERSTOOD THAT A WAIVER OF
ANY CONDITION PRECEDENT SET FORTH IN SECTION 4.02 OR THE WAIVER OF ANY DEFAULT,
MANDATORY PREPAYMENT OR MANDATORY REDUCTION OF THE COMMITMENTS SHALL NOT
CONSTITUTE AN EXTENSION OR INCREASE OF ANY COMMITMENT OF ANY LENDER);

 

(B)  POSTPONE ANY DATE SCHEDULED FOR, OR REDUCE OR FORGIVE THE AMOUNT OF, ANY
PAYMENT OF PRINCIPAL OR INTEREST UNDER SECTION 2.07 OR 2.08 WITHOUT THE WRITTEN
CONSENT OF EACH LENDER DIRECTLY AFFECTED THEREBY, IT BEING UNDERSTOOD THAT THE
WAIVER OF (OR AMENDMENT TO THE TERMS OF) ANY MANDATORY PREPAYMENT OF THE TERM
LOANS SHALL NOT CONSTITUTE A POSTPONEMENT OF ANY DATE SCHEDULED FOR THE PAYMENT
OF PRINCIPAL OR INTEREST;

 

(C)  REDUCE OR FORGIVE THE PRINCIPAL OF, OR THE RATE OF INTEREST SPECIFIED
HEREIN ON, ANY LOAN OR L/C BORROWING OR (SUBJECT TO CLAUSE (III) OF THE SECOND
PROVISO TO THIS SECTION 10.01) ANY FEES (INCLUDING FEES SET FORTH IN
SECTION 2.09 OR OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT), OR EXTEND, POSTPONE OR WAIVE THE DATE UPON WHICH ANY FEES ARE TO BE
PAID, WITHOUT THE WRITTEN CONSENT OF EACH LENDER DIRECTLY AFFECTED THEREBY, IT
BEING UNDERSTOOD THAT ANY CHANGE TO THE DEFINITION OF TOTAL LEVERAGE RATIO OR IN
THE COMPONENT DEFINITIONS THEREOF SHALL NOT CONSTITUTE A REDUCTION IN THE RATE;
PROVIDED THAT, ONLY THE CONSENT OF THE REQUIRED LENDERS SHALL BE

 

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NECESSARY TO AMEND THE DEFINITION OF “DEFAULT RATE” OR TO WAIVE ANY OBLIGATION
OF THE BORROWERS TO PAY INTEREST AT THE DEFAULT RATE;

 

(D)  CHANGE ANY PROVISION OF THIS SECTION 10.01, THE DEFINITION OF “REQUIRED
LENDERS” OR “PRO RATA SHARE”, SECTION 2.06(C), THE THIRD SENTENCE OF
SECTION 2.12(A), SECTION 2.13, SECTION 8.04 OR SECTION 10.07(A)(X) WITHOUT THE
WRITTEN CONSENT OF EACH LENDER AFFECTED THEREBY;

 

(E)  OTHER THAN IN A TRANSACTION PERMITTED UNDER SECTION 7.05, RELEASE ALL OR
SUBSTANTIALLY ALL OF THE COLLATERAL IN ANY TRANSACTION OR SERIES OF RELATED
TRANSACTIONS, WITHOUT THE WRITTEN CONSENT OF EACH LENDER; OR

 

(F)  OTHER THAN IN CONNECTION WITH A TRANSACTION PERMITTED UNDER SECTION 7.04 OR
7.05, RELEASE ALL OR SUBSTANTIALLY ALL OF THE AGGREGATE VALUE OF THE GUARANTEES,
WITHOUT THE WRITTEN CONSENT OF EACH LENDER;

 

and provided further that (i) no amendment, waiver or consent shall, unless in
writing and signed by each L/C Issuer in addition to the Lenders required above,
affect the rights or duties of an L/C Issuer under this Agreement or any Letter
of Credit Application relating to any Letter of Credit issued or to be issued by
it; (ii) no amendment, waiver or consent shall, unless in writing and signed by
the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of, or any fees or other amounts payable to, the Administrative
Agent under this Agreement or any other Loan Document; (iv) Section 10.07(h) may
not be amended, waived or otherwise modified without the consent of each
Granting Lender all or any part of whose Loans are being funded by an SPC at the
time of such amendment, waiver or other modification; and (v) the consent of
Lenders holding more than 50% of any Class of Commitments shall be required with
respect to any amendment that by its terms adversely affects the rights of such
Class in respect of payments hereunder in a manner different than such amendment
affects other Classes.  Notwithstanding anything to the contrary herein, no
Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Commitment of such Lender may not
be increased or extended without the consent of such Lender (it being understood
that any Commitments or Loans held or deemed held by any Defaulting Lender shall
be excluded for a vote of the Lenders hereunder requiring any consent of the
Lenders).

 

Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the written consent of the Required Lenders, the Administrative
Agent and the Company (a) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof to
share ratably in the benefits of this Agreement and the other Loan Documents
with the U.S. Term Loans, the Euro Term Loans and the Revolving Credit Loans and
the accrued interest and fees in respect thereof and (b) to include
appropriately the Lenders holding such credit facilities in any determination of
the Required Lenders.

 

In addition, notwithstanding the foregoing, this Agreement may be amended with
the written consent of the Administrative Agent, the Company and the Lenders
(and, in the case of any amendment with respect to Euro Replacement Term Loans
(as defined below), the German Borrower) providing the relevant U.S. Replacement
Term Loans or Euro Replacement Term Loans (as defined below) to permit the
refinancing of all outstanding U.S. Term Loans (“U.S. Refinanced Term Loans”) or
Euro Term Loans (the “Euro Refinanced Term Loans”) with a

 

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replacement U.S. term loan tranche denominated in Dollars (“U.S. Replacement
Term Loans”) or Euro term loan tranche denominated in Euros (“Euro Replacement
Term Loans”), respectively, hereunder; provided that (a) the aggregate principal
amount of such U.S. Replacement Term Loans or Euro Replacement Term Loans shall
not exceed the aggregate principal amount of such U.S. Refinanced Term Loans or
Euro Refinanced Term Loans, respectively, (b) the Applicable Rate for such U.S.
Replacement Term Loans or Euro Replacement Term Loans shall not be higher than
the Applicable Rate for such U.S. Refinanced Term Loans or Euro Refinanced Term
Loans, respectively, (c) the Weighted Average Life to Maturity of such U.S.
Replacement Term Loans or Euro Replacement Term Loans shall not be shorter than
the Weighted Average Life to Maturity of such U.S. Refinanced Term Loans or Euro
Refinanced Term Loans, respectively, at the time of such refinancing (except to
the extent of nominal amortization for periods where amortization has been
eliminated as a result of prepayment of the applicable Term Loans) and (d) all
other terms applicable to such U.S. Replacement Term Loans or Euro Replacement
Term Loans shall be substantially identical to, or less favorable to the Lenders
providing such U.S. Replacement Term Loans or Euro Replacement Term Loans than,
those applicable to such U.S. Refinanced Term Loans or Euro Refinanced Term
Loans, respectively, except to the extent necessary to provide for covenants and
other terms applicable to any period after the latest final maturity of the Term
Loans in effect immediately prior to such refinancing.

 

Notwithstanding anything to the contrary contained in Section 10.01, guarantees,
collateral security documents and related documents executed by Foreign
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Administrative Agent and may be, together with this Agreement,
amended and waived with the consent of the Administrative Agent at the request
of the Company without the need to obtain the consent of any other Lender if
such amendment or waiver is delivered in order (i) to comply with local Law or
advice of local counsel, (ii) to cure ambiguities or defects or (iii) to cause
such guarantee, collateral security document or other document to be consistent
with this Agreement and the other Loan Documents.

 

Section 10.02.  Notices and Other Communications; Facsimile Copies. 
(a)  General.  Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder or under any other Loan Document shall be
in writing (including by facsimile transmission).  All such written notices
shall be mailed, faxed or delivered to the applicable address, facsimile number
or electronic mail address, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:

 

(I)  IF TO ANY BORROWER, THE ADMINISTRATIVE AGENT, AN L/C ISSUER OR THE SWING
LINE LENDER, TO THE ADDRESS, FACSIMILE NUMBER, ELECTRONIC MAIL ADDRESS OR
TELEPHONE NUMBER SPECIFIED FOR SUCH PERSON ON SCHEDULE 10.02 OR TO SUCH OTHER
ADDRESS, FACSIMILE NUMBER, ELECTRONIC MAIL ADDRESS OR TELEPHONE NUMBER AS SHALL
BE DESIGNATED BY SUCH PARTY IN A NOTICE TO THE OTHER PARTIES; AND

 

(II)  IF TO ANY OTHER LENDER, TO THE ADDRESS, FACSIMILE NUMBER, ELECTRONIC MAIL
ADDRESS OR TELEPHONE NUMBER SPECIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE OR TO
SUCH OTHER ADDRESS, FACSIMILE NUMBER, ELECTRONIC MAIL ADDRESS OR TELEPHONE
NUMBER AS SHALL BE DESIGNATED BY SUCH PARTY IN A NOTICE TO THE COMPANY, THE
ADMINISTRATIVE AGENT, THE L/C ISSUERS AND THE SWING LINE LENDER.

 

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All such notices and other communications shall be deemed to be given or made,
if given or made during the recipient’s normal business hours (and if not, shall
be deemed to be given or made on the next succeeding Business Day), upon the
earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four (4) Business Days
after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when
sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of
Section 10.02(d)), when delivered; provided that notices and other
communications to the Administrative Agent, the L/C Issuers and the Swing Line
Lender pursuant to Article II shall not be effective until actually received by
such Person.  In no event shall a voice mail message be effective as a notice,
communication or confirmation hereunder.

 

(B)  EFFECTIVENESS OF FACSIMILE DOCUMENTS AND SIGNATURES.  LOAN DOCUMENTS MAY BE
TRANSMITTED AND/OR SIGNED BY FACSIMILE OR “PDF” (SUBJECT TO SECTION 10.02(D). 
THE EFFECTIVENESS OF ANY SUCH DOCUMENTS AND SIGNATURES SHALL, SUBJECT TO
APPLICABLE LAW, HAVE THE SAME FORCE AND EFFECT AS MANUALLY SIGNED ORIGINALS AND
SHALL BE BINDING ON ALL LOAN PARTIES, THE AGENTS AND THE LENDERS.

 

(C)  RELIANCE BY AGENTS AND LENDERS.  THE ADMINISTRATIVE AGENT AND THE LENDERS
SHALL BE ENTITLED TO RELY AND ACT UPON ANY NOTICES (INCLUDING TELEPHONIC
COMMITTED LOAN NOTICES AND SWING LINE LOAN NOTICES) PURPORTEDLY GIVEN BY OR ON
BEHALF OF ANY BORROWER EVEN IF (I) SUCH NOTICES WERE NOT MADE IN A MANNER
SPECIFIED HEREIN, WERE INCOMPLETE OR WERE NOT PRECEDED OR FOLLOWED BY ANY OTHER
FORM OF NOTICE SPECIFIED HEREIN, OR (II) THE TERMS THEREOF, AS UNDERSTOOD BY THE
RECIPIENT, VARIED FROM ANY CONFIRMATION THEREOF.  THE BORROWERS SHALL INDEMNIFY
EACH AGENT-RELATED PERSON AND EACH LENDER FROM ALL LOSSES, LIABILITIES AND
RELATED REASONABLE OUT-OF-POCKET COSTS AND EXPENSES RESULTING FROM THE RELIANCE
BY SUCH PERSON ON EACH NOTICE PURPORTEDLY GIVEN BY OR ON BEHALF OF THE BORROWERS
IN THE ABSENCE OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  ALL TELEPHONIC
NOTICES TO THE ADMINISTRATIVE AGENT MAY BE RECORDED BY THE ADMINISTRATIVE AGENT,
AND EACH OF THE PARTIES HERETO HEREBY CONSENTS TO SUCH RECORDING.

 

(D)  ELECTRONIC COMMUNICATIONS.  NOTICES AND OTHER COMMUNICATIONS TO THE LENDERS
HEREUNDER MAY BE DELIVERED OR FURNISHED BY ELECTRONIC COMMUNICATION (INCLUDING
E-MAIL AND INTERNET OR INTRANET WEBSITES) PURSUANT TO PROCEDURES APPROVED BY THE
ADMINISTRATIVE AGENT, PROVIDED THAT THE FOREGOING SHALL NOT APPLY TO NOTICES TO
ANY LENDER PURSUANT TO ARTICLES II AND III, IF SUCH LENDER HAS NOTIFIED THE
ADMINISTRATIVE AGENT THAT IT IS INCAPABLE OF RECEIVING NOTICES THEREUNDER BY
ELECTRONIC COMMUNICATION.  THE ADMINISTRATIVE AGENT OR THE COMPANY MAY, IN THEIR
DISCRETION, AGREE TO ACCEPT NOTICES AND OTHER COMMUNICATIONS TO THEM HEREUNDER
BY ELECTRONIC COMMUNICATIONS PURSUANT TO PROCEDURES APPROVED BY IT, PROVIDED
THAT APPROVAL OF SUCH PROCEDURES MAY BE LIMITED TO PARTICULAR NOTICES OR
COMMUNICATIONS.  UNLESS THE ADMINISTRATIVE AGENT OTHERWISE PRESCRIBES,
(I) NOTICES AND OTHER COMMUNICATIONS SENT TO AN E-MAIL ADDRESS SHALL BE DEEMED
RECEIVED UPON THE SENDER’S RECEIPT OF AN ACKNOWLEDGMENT FROM THE INTENDED
RECIPIENT (SUCH AS BY THE “RETURN RECEIPT REQUESTED” FUNCTION, AS AVAILABLE,
RETURN E-MAIL OR OTHER WRITTEN ACKNOWLEDGMENT), PROVIDED THAT IF SUCH NOTICE OR
OTHER COMMUNICATION IS NOT SENT DURING THE NORMAL BUSINESS HOURS OF THE
RECIPIENT, SUCH NOTICE OR COMMUNICATION SHALL BE DEEMED TO HAVE BEEN SENT AT THE
OPENING OF BUSINESS ON THE NEXT BUSINESS DAY FOR THE RECIPIENT, AND (II) NOTICES
OR COMMUNICATIONS POSTED TO AN INTERNET OR INTRANET WEBSITE SHALL BE DEEMED
RECEIVED UPON THE DEEMED RECEIPT BY THE INTENDED RECIPIENT AT ITS E-MAIL ADDRESS
AS DESCRIBED IN THE FOREGOING CLAUSE (I) OF NOTIFICATION THAT SUCH NOTICE OR
COMMUNICATION IS AVAILABLE AND IDENTIFYING THE WEBSITE ADDRESS THEREFOR.

 

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(E)  DESIGNATION BY OVERSEAS BORROWERS.  EACH OVERSEAS BORROWER HEREBY
DESIGNATES THE COMPANY AS ITS REPRESENTATIVE AND AGENT ON ITS BEHALF FOR THE
PURPOSES OF GIVING AND RECEIVING ALL NOTICES (OTHER THAN COMMITTED LOAN NOTICES)
AND ANY OTHER DOCUMENTATION REQUIRED TO BE DELIVERED TO IT PURSUANT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENT BY THE ADMINISTRATIVE AGENT OR ANY
LENDER.  THE COMPANY HEREBY ACCEPTS SUCH APPOINTMENT.  THE AGENTS AND THE
LENDERS MAY REGARD ANY NOTICE (OTHER THAN COMMITTED LOAN NOTICES) OR OTHER
COMMUNICATION PURSUANT TO ANY LOAN DOCUMENT FROM THE COMPANY AS A NOTICE OR
COMMUNICATION FROM ALL BORROWERS, AND MAY GIVE ANY NOTICE OR COMMUNICATION
REQUIRED OR PERMITTED TO BE GIVEN TO ANY OVERSEAS BORROWER OR OVERSEAS BORROWERS
HEREUNDER TO THE COMPANY ON BEHALF OF SUCH OVERSEAS BORROWER OR OVERSEAS
BORROWERS.  EACH OVERSEAS BORROWER AGREES THAT EACH NOTICE, ELECTION,
REPRESENTATION AND WARRANTY, COVENANT, AGREEMENT AND UNDERTAKING MADE ON ITS
BEHALF BY THE COMPANY SHALL BE DEEMED FOR ALL PURPOSES TO HAVE BEEN MADE BY SUCH
OVERSEAS BORROWER AND SHALL BE BINDING UPON AND ENFORCEABLE AGAINST SUCH
OVERSEAS BORROWER TO THE SAME EXTENT AS IF THE SAME HAD BEEN MADE DIRECTLY BY
SUCH OVERSEAS BORROWER.

 

Section 10.03.  No Waiver; Cumulative Remedies.  No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers and privileges herein provided, and
provided under each other Loan Document, are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by Law.

 

Section 10.04.  Attorney Costs, Expenses and Taxes.  The Company agrees (a) if
the Closing Date occurs, to pay or reimburse the Administrative Agent, the
Syndication Agent, the Co-Documentation Agents and the Arrangers for all
reasonable out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation, syndication and execution of this Agreement and the
other Loan Documents, and any amendment, waiver, consent or other modification
of the provisions hereof and thereof (whether or not the transactions
contemplated thereby are consummated), and the consummation and administration
of the transactions contemplated hereby and thereby, including all Attorney
Costs of Simpson Thacher & Bartlett LLP and, if necessary, one local counsel in
each applicable jurisdiction, and (b) to pay or reimburse the Administrative
Agent, the Syndication Agent, the Co-Documentation Agents, the Arrangers and
each Lender for all reasonable out-of-pocket costs and expenses incurred in
connection with the enforcement of any rights or remedies under this Agreement
or the other Loan Documents (including all such costs and expenses incurred
during any legal proceeding, including any proceeding under any Debtor Relief
Law, and including all Attorney Costs of one counsel to the Administrative Agent
and the Lenders and, if necessary, one local counsel in each applicable
jurisdiction).  The foregoing costs and expenses shall include all reasonable
search, filing, recording and title insurance charges and fees and taxes related
thereto, and other reasonable out-of-pocket expenses incurred by any Agent.  The
agreements in this Section 10.04 shall survive the termination of the Aggregate
Commitments and repayment of all other Obligations.  All amounts due under this
Section 10.04 shall be paid within ten (10) Business Days of receipt by the
Company of an invoice relating thereto setting forth such expenses in reasonable
detail.  If any Loan Party fails to pay when due any costs, expenses or other
amounts payable by it hereunder or under any Loan Document, such amount may be
paid on behalf of such Loan Party by the Administrative Agent in its sole
discretion.

 

Section 10.05.  Indemnification by the Company.  Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold
harmless each

 

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Agent-Related Person, each Lender and their respective Affiliates, directors,
officers, employees, counsel, agents, trustees, investment advisors and
attorneys-in-fact (collectively the “Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments and suits and related reasonable out-of-pocket expenses (including
Attorney Costs) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (a) the execution, delivery,
enforcement, performance or administration of any Loan Document or any other
agreement, letter or instrument delivered in connection with the transactions
contemplated thereby or the consummation of the transactions contemplated
thereby, (b) any Commitment, Loan or Letter of Credit or the use or proposed use
of the proceeds therefrom (including any refusal by an L/C Issuer to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), or (c) to the extent relating to or arising from any of the
foregoing, any actual or alleged presence or release of Hazardous Materials on
or from any property currently or formerly owned or operated by the Company, any
Subsidiary or any other Loan Party, or any Environmental Liability related in
any way to the Company, any Subsidiary or any other Loan Party, or (d) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any pending or
threatened claim, investigation, litigation or proceeding) and regardless of
whether any Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits or expenses are found in a final non-appealable judgment of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee, any Affiliate of such Indemnitee or any
officer, director, employee, advisor, representative or agent of such Indemnitee
or any such Affiliate.  No Indemnitee shall be liable to any Group Member for
any damages arising from the use by others of any information or other materials
obtained through IntraLinks or other similar information transmission systems in
connection with this Agreement.  No Indemnitee shall be liable (whether direct
or indirect, in contract, tort or otherwise) to any Group Member (other than the
Lenders’ contractual liability for breach under this Agreement) except to the
extent such liability is found in a non-appealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee, any Affiliate of such Indemnitee or any officer,
director, employee, advisor, representative or agent of such Indemnitee or any
such Affiliate.  No Indemnitee shall have any liability to any Group Member, nor
any Group Member to any Indemnitee, for any special, punitive, indirect or
consequential damages (including, without limitation, loss of profits, business
or anticipated savings) relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether
before or after the Closing Date).  All amounts due under this Section 10.05
shall be paid within ten (10) Business Days after demand therefor; provided,
however, that such Indemnitee shall promptly refund any amount received under
this Section 10.05 to the extent that there is a final judicial or arbitral
determination that such Indemnitee was not entitled to indemnification or
contribution rights with respect to such payment pursuant to the express terms
of this Section 10.05.  The agreements in this Section 10.05 shall survive the
resignation of the Administrative Agent, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

 

Section 10.06.  Payments Set Aside.  To the extent that any payment by or on
behalf of the Company is made to any Agent or any Lender, or any Agent or any
Lender exercises its

 

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right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by such
Agent or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or repaid
by any Agent, plus interest thereon from the date of such demand to the date
such payment is made at a rate per annum equal to the applicable Overnight Rate
from time to time in effect.

 

Section 10.07.  Successors and Assigns.  (a)  The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (x) neither
Holdings nor any Borrower may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and
(y) no Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee, (ii) by way of participation in
accordance with the provisions of Section 10.07(e), (iii) by way of pledge or
assignment of a security interest subject to the restrictions of
Sections 10.07(g) or 10.07(i) or (iv) to an SPC in accordance with the
provisions of Section 10.07(h) (and any other attempted assignment or transfer
by any party hereto shall be null and void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in Section 10.07(e) and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

(B)  (I)  SUBJECT TO THE CONDITIONS SET FORTH IN PARAGRAPH (B)(II) BELOW, ANY
LENDER MAY ASSIGN TO ONE OR MORE ASSIGNEES (“ASSIGNEES”) ALL OR A PORTION OF ITS
RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT (INCLUDING ALL OR A PORTION OF ITS
COMMITMENT AND THE LOANS (INCLUDING FOR PURPOSES OF THIS SECTION 10.07(B),
PARTICIPATIONS IN L/C OBLIGATIONS AND IN SWING LINE LOANS) AT THE TIME OWING TO
IT) WITH THE PRIOR WRITTEN CONSENT (SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD
OR DELAYED) OF:

 

(A)  THE COMPANY, PROVIDED THAT NO CONSENT OF THE COMPANY SHALL BE REQUIRED FOR
AN ASSIGNMENT TO A LENDER, AN AFFILIATE OF A LENDER, AN APPROVED FUND OR, IF AN
EVENT OF DEFAULT UNDER SECTION 8.01(A), (F) OR (G) HAS OCCURRED AND IS
CONTINUING, ANY ASSIGNEE;

 

(B)  THE ADMINISTRATIVE AGENT, PROVIDED THAT NO CONSENT OF THE ADMINISTRATIVE
AGENT SHALL BE REQUIRED FOR AN ASSIGNMENT OF ALL OR ANY PORTION OF A TERM LOAN
TO A LENDER, AN AFFILIATE OF A LENDER OR AN APPROVED FUND;

 

(C)  EACH L/C ISSUER AT THE TIME OF SUCH ASSIGNMENT, PROVIDED THAT NO CONSENT OF
THE L/C ISSUERS SHALL BE REQUIRED FOR ANY ASSIGNMENT OF A TERM LOAN; AND

 

(D)  THE SWING LINE LENDER; PROVIDED THAT NO CONSENT OF THE SWING LINE LENDER
SHALL BE REQUIRED FOR ANY ASSIGNMENT OF A TERM LOAN.

 

(II)  ASSIGNMENTS SHALL BE SUBJECT TO THE FOLLOWING ADDITIONAL CONDITIONS:

 

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(A)  EXCEPT IN THE CASE OF AN ASSIGNMENT TO A LENDER, AN AFFILIATE OF A LENDER
OR AN APPROVED FUND OR AN ASSIGNMENT OF THE ENTIRE REMAINING AMOUNT OF THE
ASSIGNING LENDER’S COMMITMENT OR LOANS OF ANY CLASS, THE AMOUNT OF THE
COMMITMENT OR LOANS OF THE ASSIGNING LENDER SUBJECT TO EACH SUCH ASSIGNMENT
(DETERMINED AS OF THE DATE THE ASSIGNMENT AND ASSUMPTION WITH RESPECT TO SUCH
ASSIGNMENT IS DELIVERED TO THE ADMINISTRATIVE AGENT) SHALL NOT BE LESS THAN
$5,000,000 (IN THE CASE OF EACH REVOLVING CREDIT FACILITY), OR $1,000,000 (IN
THE CASE OF A TERM LOAN) AND IN INCREMENTS OF $1,000,000 IN EXCESS THEREOF
UNLESS EACH OF THE COMPANY AND THE ADMINISTRATIVE AGENT OTHERWISE CONSENTS,
PROVIDED THAT SUCH AMOUNTS SHALL BE AGGREGATED IN RESPECT OF EACH LENDER AND ITS
AFFILIATES OR APPROVED FUNDS, IF ANY;

 

(B)  THE PARTIES TO EACH ASSIGNMENT SHALL EXECUTE AND DELIVER TO THE
ADMINISTRATIVE AGENT AN ASSIGNMENT AND ASSUMPTION, TOGETHER WITH A PROCESSING
AND RECORDATION FEE OF $3,500; AND

 

(C)  THE ASSIGNEE, IF IT SHALL NOT BE A LENDER, SHALL DELIVER TO THE
ADMINISTRATIVE AGENT (1) AN ADMINISTRATIVE QUESTIONNAIRE IN WHICH THE ASSIGNEE
DESIGNATES ONE OR MORE CREDIT CONTACTS (AS DEFINED IN THE ADMINISTRATIVE
QUESTIONNAIRE) TO WHOM ALL SYNDICATE-LEVEL INFORMATION (WHICH MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION ABOUT HOLDINGS, THE BORROWERS, THE OTHER LOAN
PARTIES AND THEIR AFFILIATES AND RELATED PARTIES OR THEIR RESPECTIVE SECURITIES)
WILL BE MADE AVAILABLE AND WHO MAY RECEIVE SUCH INFORMATION IN ACCORDANCE WITH
THE ASSIGNEE’S COMPLIANCE PROCEDURES AND APPLICABLE LAWS, INCLUDING FEDERAL AND
STATE SECURITIES LAWS.

 

This paragraph (b) shall not prohibit any Lender from assigning all or a portion
of its rights and obligations among separate Facilities on a non-pro rata basis.

 

(C)  SUBJECT TO ACCEPTANCE AND RECORDING THEREOF BY THE ADMINISTRATIVE AGENT
PURSUANT TO SECTION 10.07(D), FROM AND AFTER THE EFFECTIVE DATE SPECIFIED IN
EACH ASSIGNMENT AND ASSUMPTION, THE ELIGIBLE ASSIGNEE THEREUNDER SHALL BE A
PARTY TO THIS AGREEMENT AND, TO THE EXTENT OF THE INTEREST ASSIGNED BY SUCH
ASSIGNMENT AND ASSUMPTION, HAVE THE RIGHTS AND OBLIGATIONS OF A LENDER UNDER
THIS AGREEMENT, AND THE ASSIGNING LENDER THEREUNDER SHALL, TO THE EXTENT OF THE
INTEREST ASSIGNED BY SUCH ASSIGNMENT AND ASSUMPTION, BE RELEASED FROM ITS
OBLIGATIONS UNDER THIS AGREEMENT (AND, IN THE CASE OF AN ASSIGNMENT AND
ASSUMPTION COVERING ALL OF THE ASSIGNING LENDER’S RIGHTS AND OBLIGATIONS UNDER
THIS AGREEMENT, SUCH LENDER SHALL CEASE TO BE A PARTY HERETO BUT SHALL CONTINUE
TO BE ENTITLED TO THE BENEFITS OF SECTIONS 3.01, 3.04, 3.05, 10.04 AND 10.05
WITH RESPECT TO FACTS AND CIRCUMSTANCES OCCURRING PRIOR TO THE EFFECTIVE DATE OF
SUCH ASSIGNMENT).  UPON REQUEST, AND THE SURRENDER BY THE ASSIGNING LENDER OF
ITS NOTE, THE RELEVANT BORROWER (AT ITS EXPENSE) SHALL EXECUTE AND DELIVER A
NOTE TO THE ASSIGNEE LENDER.  ANY ASSIGNMENT OR TRANSFER BY A LENDER OF RIGHTS
OR OBLIGATIONS UNDER THIS AGREEMENT THAT DOES NOT COMPLY WITH THIS CLAUSE
(C) SHALL BE TREATED FOR PURPOSES OF THIS AGREEMENT AS A SALE BY SUCH LENDER OF
A PARTICIPATION IN SUCH RIGHTS AND OBLIGATIONS IN ACCORDANCE WITH
SECTION 10.07(E).

 

(D)  THE ADMINISTRATIVE AGENT, ACTING SOLELY FOR THIS PURPOSE AS AN AGENT OF THE
BORROWERS, SHALL MAINTAIN AT THE ADMINISTRATIVE AGENT’S OFFICE A COPY OF EACH
ASSIGNMENT AND ASSUMPTION DELIVERED TO IT AND A REGISTER FOR THE RECORDATION OF
THE NAMES AND ADDRESSES OF THE LENDERS, AND THE COMMITMENTS OF, AND PRINCIPAL
AMOUNTS (AND RELATED INTEREST AMOUNTS) OF THE LOANS, L/C OBLIGATIONS (SPECIFYING
THE UNREIMBURSED AMOUNTS), L/C BORROWINGS AND AMOUNTS DUE UNDER SECTION 2.03,
OWING TO, EACH LENDER PURSUANT TO THE TERMS HEREOF FROM TIME TO TIME (THE
“REGISTER”).  THE ENTRIES IN THE REGISTER SHALL BE CONCLUSIVE, ABSENT MANIFEST
ERROR, AND THE BORROWERS, THE AGENTS AND THE LENDERS SHALL TREAT EACH PERSON
WHOSE NAME IS RECORDED IN THE

 

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REGISTER PURSUANT TO THE TERMS HEREOF AS A LENDER HEREUNDER FOR ALL PURPOSES OF
THIS AGREEMENT, NOTWITHSTANDING NOTICE TO THE CONTRARY.  THE REGISTER SHALL BE
AVAILABLE FOR INSPECTION BY THE COMPANY, ANY AGENT AND ANY LENDER, AT ANY
REASONABLE TIME AND FROM TIME TO TIME UPON REASONABLE PRIOR NOTICE.

 

(E)  ANY LENDER MAY AT ANY TIME, WITHOUT THE CONSENT OF, OR NOTICE TO, THE
BORROWERS OR THE ADMINISTRATIVE AGENT, SELL PARTICIPATIONS TO ANY PERSON (OTHER
THAN A NATURAL PERSON) (EACH, A “PARTICIPANT”) IN ALL OR A PORTION OF SUCH
LENDER’S RIGHTS AND/OR OBLIGATIONS UNDER THIS AGREEMENT (INCLUDING ALL OR A
PORTION OF ITS COMMITMENT AND/OR THE LOANS (INCLUDING SUCH LENDER’S
PARTICIPATIONS IN L/C OBLIGATIONS AND/OR SWING LINE LOANS) OWING TO IT);
PROVIDED THAT (I) SUCH LENDER’S OBLIGATIONS UNDER THIS AGREEMENT SHALL REMAIN
UNCHANGED, (II) SUCH LENDER SHALL REMAIN SOLELY RESPONSIBLE TO THE OTHER PARTIES
HERETO FOR THE PERFORMANCE OF SUCH OBLIGATIONS AND (III) THE BORROWERS, THE
AGENTS AND THE OTHER LENDERS SHALL CONTINUE TO DEAL SOLELY AND DIRECTLY WITH
SUCH LENDER IN CONNECTION WITH SUCH LENDER’S RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT.  ANY AGREEMENT OR INSTRUMENT PURSUANT TO WHICH A LENDER SELLS SUCH A
PARTICIPATION SHALL PROVIDE THAT SUCH LENDER SHALL RETAIN THE SOLE RIGHT TO
ENFORCE THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND TO APPROVE ANY
AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS; PROVIDED THAT SUCH AGREEMENT OR INSTRUMENT MAY PROVIDE
THAT SUCH LENDER WILL NOT, WITHOUT THE CONSENT OF THE PARTICIPANT, AGREE TO ANY
AMENDMENT, WAIVER OR OTHER MODIFICATION DESCRIBED IN THE FIRST PROVISO TO
SECTION 10.01 THAT DIRECTLY AFFECTS SUCH PARTICIPANT.  SUBJECT TO
SECTION 10.07(F), THE BORROWERS AGREE THAT EACH PARTICIPANT SHALL BE ENTITLED TO
THE BENEFITS OF SECTIONS 3.01, 3.04 AND 3.05 TO THE SAME EXTENT AS IF IT WERE A
LENDER AND HAD ACQUIRED ITS INTEREST BY ASSIGNMENT PURSUANT TO
SECTION 10.07(C) BUT SHALL NOT BE ENTITLED TO RECOVER GREATER AMOUNTS UNDER SUCH
SECTIONS THAN THE SELLING LENDER WOULD BE ENTITLED TO RECOVER.  TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTICIPANT ALSO SHALL BE ENTITLED TO THE
BENEFITS OF SECTION 10.09 AS THOUGH IT WERE A LENDER; PROVIDED THAT SUCH
PARTICIPANT AGREES TO BE SUBJECT TO SECTION 2.13 AS THOUGH IT WERE A LENDER.

 

(F)  A PARTICIPANT SHALL NOT BE ENTITLED TO RECEIVE ANY GREATER PAYMENT UNDER
SECTION 3.01, 3.04 OR 3.05 THAN THE APPLICABLE LENDER WOULD HAVE BEEN ENTITLED
TO RECEIVE WITH RESPECT TO THE PARTICIPATION SOLD TO SUCH PARTICIPANT, UNLESS
THE SALE OF THE PARTICIPATION TO SUCH PARTICIPANT IS MADE WITH THE RELEVANT
BORROWER’S PRIOR WRITTEN CONSENT.  A PARTICIPANT SHALL NOT BE ENTITLED TO THE
BENEFITS OF SECTION 3.01 UNLESS THE RELEVANT BORROWER IS NOTIFIED OF THE
PARTICIPATION SOLD TO SUCH PARTICIPANT AND SUCH PARTICIPANT AGREES, FOR THE
BENEFIT OF THE RELEVANT BORROWER, TO COMPLY WITH SECTION 10.15 AS THOUGH IT WERE
A LENDER.

 

(G)  ANY LENDER MAY AT ANY TIME, WITHOUT THE CONSENT OF THE COMPANY OR THE
ADMINISTRATIVE AGENT, PLEDGE OR ASSIGN A SECURITY INTEREST IN ALL OR ANY PORTION
OF ITS RIGHTS UNDER THIS AGREEMENT (INCLUDING UNDER ITS NOTE, IF ANY) TO SECURE
OBLIGATIONS OF SUCH LENDER, INCLUDING ANY PLEDGE OR ASSIGNMENT TO SECURE
OBLIGATIONS TO A FEDERAL RESERVE BANK; PROVIDED THAT NO SUCH PLEDGE OR
ASSIGNMENT SHALL RELEASE SUCH LENDER FROM ANY OF ITS OBLIGATIONS HEREUNDER OR
SUBSTITUTE ANY SUCH PLEDGEE OR ASSIGNEE FOR SUCH LENDER AS A PARTY HERETO.

 

(H)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY LENDER (A
“GRANTING LENDER”) MAY GRANT TO A SPECIAL PURPOSE FUNDING VEHICLE IDENTIFIED AS
SUCH IN WRITING FROM TIME TO TIME BY THE GRANTING LENDER TO THE ADMINISTRATIVE
AGENT AND THE RELEVANT BORROWER (AN “SPC”) THE OPTION TO PROVIDE ALL OR ANY PART
OF ANY LOAN THAT SUCH GRANTING LENDER WOULD OTHERWISE BE OBLIGATED TO MAKE
PURSUANT TO THIS AGREEMENT; PROVIDED THAT (I) NOTHING HEREIN SHALL CONSTITUTE A
COMMITMENT BY ANY SPC TO FUND ANY LOAN, AND (II) IF AN SPC ELECTS NOT TO
EXERCISE SUCH OPTION OR OTHERWISE FAILS TO MAKE ALL OR ANY PART OF SUCH LOAN,
THE GRANTING LENDER SHALL BE OBLIGATED TO MAKE SUCH LOAN PURSUANT TO THE TERMS
HEREOF.  EACH PARTY HERETO HEREBY AGREES THAT

 

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(I) NEITHER THE GRANT TO ANY SPC NOR THE EXERCISE BY ANY SPC OF SUCH OPTION
SHALL INCREASE THE COSTS OR EXPENSES OR OTHERWISE INCREASE OR CHANGE THE
OBLIGATIONS OF THE RELEVANT BORROWER UNDER THIS AGREEMENT (INCLUDING ITS
OBLIGATIONS UNDER SECTION 3.01, 3.04 OR 3.05), (II) NO SPC SHALL BE LIABLE FOR
ANY INDEMNITY OR SIMILAR PAYMENT OBLIGATION UNDER THIS AGREEMENT FOR WHICH A
LENDER WOULD BE LIABLE, AND (III) THE GRANTING LENDER SHALL FOR ALL PURPOSES,
INCLUDING THE APPROVAL OF ANY AMENDMENT, WAIVER OR OTHER MODIFICATION OF ANY
PROVISION OF ANY LOAN DOCUMENT, REMAIN THE LENDER OF RECORD HEREUNDER.  THE
MAKING OF A LOAN BY AN SPC HEREUNDER SHALL UTILIZE THE COMMITMENT OF THE
GRANTING LENDER TO THE SAME EXTENT, AND AS IF, SUCH LOAN WERE MADE BY SUCH
GRANTING LENDER.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY
SPC MAY (I) WITH NOTICE TO, BUT WITHOUT PRIOR CONSENT OF THE RELEVANT BORROWER
AND THE ADMINISTRATIVE AGENT AND WITH THE PAYMENT OF A PROCESSING FEE OF $3,500,
ASSIGN ALL OR ANY PORTION OF ITS RIGHT TO RECEIVE PAYMENT WITH RESPECT TO ANY
LOAN TO THE GRANTING LENDER AND (II) DISCLOSE ON A CONFIDENTIAL BASIS ANY
NON-PUBLIC INFORMATION RELATING TO ITS FUNDING OF LOANS TO ANY RATING AGENCY,
COMMERCIAL PAPER DEALER OR PROVIDER OF ANY SURETY OR GUARANTEE OR CREDIT OR
LIQUIDITY ENHANCEMENT TO SUCH SPC.

 

(I)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, (1) ANY LENDER
MAY IN ACCORDANCE WITH APPLICABLE LAW CREATE A SECURITY INTEREST IN ALL OR ANY
PORTION OF THE LOANS OWING TO IT AND THE NOTE, IF ANY, HELD BY IT AND (2) ANY
LENDER THAT IS A FUND MAY, WITHOUT THE CONSENT OF THE COMPANY OR THE
ADMINISTRATIVE AGENT, CREATE A SECURITY INTEREST IN ALL OR ANY PORTION OF THE
LOANS OWING TO IT AND THE NOTE, IF ANY, HELD BY IT TO THE TRUSTEE FOR HOLDERS OF
OBLIGATIONS OWED, OR SECURITIES ISSUED, BY SUCH FUND AS SECURITY FOR SUCH
OBLIGATIONS OR SECURITIES; PROVIDED THAT UNLESS AND UNTIL SUCH TRUSTEE ACTUALLY
BECOMES A LENDER IN COMPLIANCE WITH THE OTHER PROVISIONS OF THIS SECTION 10.07,
(I) NO SUCH PLEDGE SHALL RELEASE THE PLEDGING LENDER FROM ANY OF ITS OBLIGATIONS
UNDER THE LOAN DOCUMENTS AND (II) SUCH TRUSTEE SHALL NOT BE ENTITLED TO EXERCISE
ANY OF THE RIGHTS OF A LENDER UNDER THE LOAN DOCUMENTS.

 

(J)  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, ANY L/C ISSUER
OR THE SWING LINE LENDER MAY, UPON THIRTY (30) DAYS’ NOTICE TO THE COMPANY AND
THE LENDERS, RESIGN AS AN L/C ISSUER OR THE SWING LINE LENDER, RESPECTIVELY;
PROVIDED THAT ON OR PRIOR TO THE EXPIRATION OF SUCH 30-DAY PERIOD WITH RESPECT
TO SUCH RESIGNATION, THE RELEVANT L/C ISSUER OR THE SWING LINE LENDER SHALL HAVE
IDENTIFIED A SUCCESSOR L/C ISSUER OR SWING LINE LENDER REASONABLY ACCEPTABLE TO
THE COMPANY WILLING TO ACCEPT ITS APPOINTMENT AS SUCCESSOR L/C ISSUER OR SWING
LINE LENDER, AS APPLICABLE.  IN THE EVENT OF ANY SUCH RESIGNATION OF AN L/C
ISSUER OR THE SWING LINE LENDER, THE COMPANY SHALL BE ENTITLED TO APPOINT FROM
AMONG THE LENDERS WILLING TO ACCEPT SUCH APPOINTMENT A SUCCESSOR L/C ISSUER OR
SWING LINE LENDER HEREUNDER; PROVIDED THAT NO FAILURE BY THE COMPANY TO APPOINT
ANY SUCH SUCCESSOR SHALL AFFECT THE RESIGNATION OF THE RELEVANT L/C ISSUER OR
THE SWING LINE LENDER, AS THE CASE MAY BE, EXCEPT AS EXPRESSLY PROVIDED ABOVE. 
IF AN L/C ISSUER RESIGNS AS AN L/C ISSUER, IT SHALL RETAIN ALL THE RIGHTS AND
OBLIGATIONS OF AN L/C ISSUER HEREUNDER WITH RESPECT TO ALL LETTERS OF CREDIT
OUTSTANDING AS OF THE EFFECTIVE DATE OF ITS RESIGNATION AS AN L/C ISSUER AND ALL
L/C OBLIGATIONS WITH RESPECT THERETO (INCLUDING THE RIGHT TO REQUIRE THE LENDERS
TO MAKE BASE RATE LOANS OR FUND RISK PARTICIPATIONS IN UNREIMBURSED AMOUNTS
PURSUANT TO SECTION 2.03(C)).  IF THE SWING LINE LENDER RESIGNS AS SWING LINE
LENDER, IT SHALL RETAIN ALL THE RIGHTS OF THE SWING LINE LENDER PROVIDED FOR
HEREUNDER WITH RESPECT TO SWING LINE LOANS MADE BY IT AND OUTSTANDING AS OF THE
EFFECTIVE DATE OF SUCH RESIGNATION, INCLUDING THE RIGHT TO REQUIRE THE LENDERS
TO MAKE BASE RATE LOANS OR FUND RISK PARTICIPATIONS IN OUTSTANDING SWING LINE
LOANS PURSUANT TO SECTION 2.04(C).

 

SECTION 10.08.  Confidentiality.  Each of the Agents and the Lenders agrees to
maintain the confidentiality of the Information, except that Information may be
disclosed (a) to its Affiliates and its and its Affiliates’ directors, officers,
employees, trustees, investment advisors

 

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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 pursuant to the terms hereof); (b) to the extent
requested by any Governmental Authority; (c) to the extent  required by
applicable Laws or regulations or by any subpoena or similar legal process;
(d) to any other party to this Agreement; (e) subject to an agreement for the
benefit of the Company containing provisions substantially the same as those of
this Section 10.08 (or as may otherwise be reasonably acceptable to the
Company), to any pledgee referred to in Section 10.07(g), counterparty to a Swap
Contract, Eligible Assignee of or Participant in, or any prospective Eligible
Assignee of or Participant in, any of its rights or obligations under this
Agreement; (f) with the written consent of the Company; (g) to the extent such
Information becomes publicly available other than as a result of a breach of
this Section 10.08; (h) to any Governmental Authority or examiner (including the
National Association of Insurance Commissioners or any other similar
organization) regulating any Lender; or (i) to any rating agency when required
by it (it being understood that, prior to any such disclosure, such rating
agency shall undertake to preserve the confidentiality of any Information
relating to the Loan Parties received by it from such Lender).  In addition, the
Agents and the Lenders may disclose the existence of this Agreement and
information about this Agreement to market data collectors, similar service
providers to the lending industry, and service providers to the Agents and the
Lenders in connection with the administration and management of this Agreement,
the other Loan Documents, the Commitments, and the Credit Extensions.  For the
purposes of this Section 10.08, “Information” means all information received
from any Loan Party relating to any Loan Party or its business, other than any
such information that is publicly available to any Agent or any Lender prior to
disclosure by any Loan Party other than as a result of a breach of this
Section 10.08; provided that, in the case of information received from a Loan
Party after the date hereof, such information (i) is clearly identified at the
time of delivery as confidential or (ii) is delivered pursuant to Section 6.01,
6.02 or 6.03 hereof.

 

EACH LENDER ACKNOWLEDGES THAT INFORMATION FURNISHED TO IT PURSUANT TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY INCLUDE MATERIAL NON-PUBLIC
INFORMATION CONCERNING HOLDINGS, THE BORROWERS, THE OTHER LOAN PARTIES AND THEIR
AFFILIATES AND RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT
IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC
INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE
SECURITIES LAWS.

 

ALL INFORMATION, INCLUDING WAIVERS AND AMENDMENTS, FURNISHED BY HOLDINGS, THE
BORROWERS OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF
ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH
MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT HOLDINGS, THE BORROWERS, THE
OTHER LOAN PARTIES AND THEIR AFFILIATES AND RELATED PARTIES OR THEIR RESPECTIVE
SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO HOLDINGS, THE BORROWERS AND
THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE
QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION IN

 

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ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL
AND STATE SECURITIES LAWS.

 

SECTION 10.09.  Setoff.  In addition to any rights and remedies of the Lenders
provided by Law, upon the occurrence and during the continuance of any Event of
Default, each Lender and its Affiliates is authorized at any time and from time
to time, without prior notice to the Company or any other Loan Party, any such
notice being waived by the Company (on its own behalf and on behalf of each Loan
Party and its Subsidiaries) to the fullest extent permitted by applicable Law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other Indebtedness at any time
owing by, such Lender and its Affiliates to or for the credit or the account of
the respective Loan Parties and their Subsidiaries against any and all
Obligations owing to such Lender and its Affiliates hereunder or under any other
Loan Document, now or hereafter existing, irrespective of whether or not such
Agent or such Lender or Affiliate shall have made demand under this Agreement or
any other Loan Document and although such Obligations may be contingent or
unmatured or denominated in a currency different from that of the applicable
deposit or Indebtedness; provided that, in the case of any such deposits or
other Indebtedness for the credit or the account of any Foreign Subsidiary, such
set off may only be against any Obligations of Foreign Subsidiaries.  Each
Lender agrees promptly to notify the Company and the Administrative Agent after
any such set off and application made by such Lender; provided, that the failure
to give such notice shall not affect the validity of such setoff and
application.  The rights of the Administrative Agent and each Lender under this
Section 10.09 are in addition to other rights and remedies (including other
rights of setoff) that the Administrative Agent and such Lender may have. 
Notwithstanding anything herein or in any other Loan Document to the contrary,
in no event shall the assets of any Foreign Subsidiary that is not a Loan Party
constitute collateral security for payment of the Obligations of the Company or
any Domestic Subsidiary, it being understood that (a) the Equity Interests of
any Foreign Subsidiary that is not a Loan Party do not constitute such an asset
and (b) the provisions hereof shall not limit, reduce or otherwise diminish in
any respect the Borrowers’ obligations to make any mandatory prepayment pursuant
to Section 2.05(b)(ii).

 

SECTION 10.10.  Interest Rate Limitation.  Notwithstanding anything to the
contrary contained in any Loan Document, if at any time the interest rate
applicable to any Loan, together with all fees, charges and other amounts which
are treated as interest on such Loan under applicable Law (collectively the
“Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may
be contracted for, charged, taken, received or reserved by the Lender holding
such Loan in accordance with applicable Law, the rate of interest payable in
respect of such Loan hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the
interest and Charges that would have been payable in respect of such Loan but
were not payable as a result of the operation of this Section shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Rate to
the date of repayment, shall have been received by such Lender.

 

SECTION 10.11.  Counterparts.  This Agreement and each other Loan Document may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  Delivery by telecopier of an executed counterpart of a signature
page to this Agreement and each other Loan Document shall be effective as
delivery of an original executed counterpart of this Agreement and such other
Loan Document.  The Agents may also require that any such documents and
signatures delivered by telecopier be confirmed by a manually signed original
thereof; provided that the failure to request

 

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or deliver the same shall not limit the effectiveness of any document or
signature delivered by telecopier.

 

SECTION 10.12.  Integration.  This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter.  In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of the Agents or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement.  Each
Loan Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.

 

SECTION 10.13.  Survival of Representations and Warranties.  All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof.  Such
representations and warranties have been or will be relied upon by each Agent
and each Lender, regardless of any investigation made by any Agent or any Lender
or on their behalf and notwithstanding that any Agent or any Lender may have had
notice or knowledge of any Default at the time of any Credit Extension, and
shall continue in full force and effect as long as any Loan or any other
Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit
shall remain outstanding.

 

SECTION 10.14.  Severability.  If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

SECTION 10.15.  Tax Forms.  (a)  (i)  Each Lender and Agent that is not a
“United States person” within the meaning of Section 7701(a)(30) of the Code
(each, a “Foreign Lender”) shall deliver to the Company and the Administrative
Agent, on or prior to the date which is ten (10) Business Days after the Closing
Date (or upon accepting an assignment of an interest herein), two duly signed,
properly completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Foreign Lender and entitling it to an exemption from, or
reduction of, United States withholding tax on all payments to be made to such
Foreign Lender by the Company or any other Loan Party pursuant to this Agreement
or any other Loan Document) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Foreign Lender by the Company or
any other Loan Party pursuant to this Agreement or any other Loan Document) or
such other evidence reasonably satisfactory to the Company and the
Administrative Agent that such Foreign Lender is entitled to an exemption from,
or reduction of, United States withholding tax, including any exemption pursuant
to Section 871(h) or 881(c) of the Code, and in the case of a Foreign Lender
claiming such an exemption under Section 881(c) of the Code, a certificate that
establishes in writing to the Company and the Administrative Agent that such
Foreign Lender is not (i) a “bank” as defined in Section 881(c)(3)(A) of the
Code, (ii) a 10-percent stockholder within the meaning of
Section 871(h)(3)(B) of the Code, or (iii) a controlled foreign corporation
related to the Company with the meaning of Section 864(d) of the Code. 
Thereafter and from time to time, each such Foreign Lender shall (A) promptly
submit to the Company and the Administrative Agent such additional duly
completed and signed copies of one or more of such forms or certificates (or
such successor forms or certificates as shall be adopted from time to time by
the relevant United States taxing authorities) as may then be

 

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available under then current United States Laws and regulations to avoid, or
such evidence as is reasonably satisfactory to the Company and the
Administrative Agent of any available exemption from, or reduction of, United
States withholding taxes in respect of all payments to be made to such Foreign
Lender by the Company or other Loan Party pursuant to this Agreement, or any
other Loan Document, in each case, (1) on or before the date that any such form,
certificate or other evidence expires or becomes obsolete, (2) after the
occurrence of any event requiring a change in the most recent form, certificate
or evidence previously delivered by it to the Company and the Administrative
Agent and (3) from time to time thereafter if reasonably requested by the
Company or the Administrative Agent, and (B) promptly notify the Company and the
Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

 

(II)  EACH FOREIGN LENDER, TO THE EXTENT IT DOES NOT ACT OR CEASES TO ACT FOR
ITS OWN ACCOUNT WITH RESPECT TO ANY PORTION OF ANY SUMS PAID OR PAYABLE TO SUCH
FOREIGN LENDER UNDER ANY OF THE LOAN DOCUMENTS (FOR EXAMPLE, IN THE CASE OF A
TYPICAL PARTICIPATION BY SUCH FOREIGN LENDER), SHALL DELIVER TO THE COMPANY AND
THE ADMINISTRATIVE AGENT ON THE DATE WHEN SUCH FOREIGN LENDER CEASES TO ACT FOR
ITS OWN ACCOUNT WITH RESPECT TO ANY PORTION OF ANY SUCH SUMS PAID OR PAYABLE,
AND AT SUCH OTHER TIMES AS MAY BE NECESSARY IN THE DETERMINATION OF THE COMPANY
OR THE ADMINISTRATIVE AGENT (IN EITHER CASE, IN THE REASONABLE EXERCISE OF ITS
DISCRETION), (A) TWO DULY SIGNED COMPLETED COPIES OF THE FORMS OR STATEMENTS
REQUIRED TO BE PROVIDED BY SUCH FOREIGN LENDER AS SET FORTH ABOVE, TO ESTABLISH
THE PORTION OF ANY SUCH SUMS PAID OR PAYABLE WITH RESPECT TO WHICH SUCH FOREIGN
LENDER ACTS FOR ITS OWN ACCOUNT THAT IS NOT SUBJECT TO UNITED STATES WITHHOLDING
TAX, AND (B) TWO DULY SIGNED COMPLETED COPIES OF IRS FORM W-8IMY (OR ANY
SUCCESSOR THERETO), TOGETHER WITH ANY INFORMATION SUCH FOREIGN LENDER CHOOSES TO
TRANSMIT WITH SUCH FORM, AND ANY OTHER CERTIFICATE OR STATEMENT OF EXEMPTION
REQUIRED UNDER THE CODE, TO ESTABLISH THAT SUCH FOREIGN LENDER IS NOT ACTING FOR
ITS OWN ACCOUNT WITH RESPECT TO A PORTION OF ANY SUCH SUMS PAYABLE TO SUCH
FOREIGN LENDER.

 

(III)  EACH LENDER AND AGENT (OR PARTICIPANT) THAT IS ENTITLED TO AN EXEMPTION
FROM OR REDUCTION OF NON-U.S. WITHHOLDING TAX UNDER THE LAW OF THE JURISDICTION
IN WHICH A BORROWER IS FORMED OR ORGANIZED, OR ANY TREATY TO WHICH SUCH
JURISDICTION IS A PARTY, WITH RESPECT TO PAYMENTS UNDER THIS AGREEMENT SHALL
DELIVER TO SUCH BORROWER (WITH A COPY TO THE ADMINISTRATIVE AGENT), AT THE TIME
OR TIMES PRESCRIBED BY APPLICABLE LAW OR REASONABLY REQUESTED BY SUCH BORROWER,
SUCH PROPERLY COMPLETED AND EXECUTED DOCUMENTATION PRESCRIBED BY APPLICABLE LAW
AS WILL PERMIT SUCH PAYMENTS TO BE MADE WITHOUT WITHHOLDING, OR AT A REDUCED
RATE, PROVIDED THAT SUCH LENDER OR AGENT (OR PARTICIPANT) IS LEGALLY ENTITLED TO
COMPLETE, EXECUTE AND DELIVER SUCH DOCUMENTATION.  EACH LENDER AND AGENT (OR
PARTICIPANT) SHALL PROMPTLY NOTIFY SUCH BORROWER AND THE ADMINISTRATIVE AGENT OF
ANY CHANGE IN CIRCUMSTANCES WHICH WOULD MODIFY OR RENDER INVALID ANY CLAIMED
EXEMPTION OR REDUCTION.

 

(IV)  NO BORROWER SHALL BE REQUIRED TO PAY ANY ADDITIONAL AMOUNT OR ANY
INDEMNITY PAYMENT UNDER SECTION 3.01 TO (A) ANY LENDER IF SUCH LENDER SHALL HAVE
FAILED TO SATISFY THE FOREGOING PROVISIONS OF THIS SECTION 10.15(A), OR (B) ANY
U.S. LENDER IF SUCH U.S. LENDER SHALL HAVE FAILED TO SATISFY THE PROVISIONS OF
SECTION 10.15(B); PROVIDED THAT (I) IF SUCH LENDER SHALL HAVE SATISFIED THE
REQUIREMENT OF THIS OR SECTION 10.15(B), AS APPLICABLE, ON THE DATE SUCH LENDER
BECAME A LENDER OR, IF LATER, THE DATE SUCH LENDER MADE AN INCREMENTAL OVERSEAS
TERM LOAN TO ANY BORROWER OR THE DATE A CAM EXCHANGE OCCURRED, OR CEASED TO ACT
FOR ITS OWN ACCOUNT WITH RESPECT TO ANY PAYMENT UNDER ANY OF THE LOAN DOCUMENTS,
NOTHING IN THIS SECTION 10.15(A) OR SECTION 10.15(B) SHALL RELIEVE ANY BORROWER
OF ITS OBLIGATION TO PAY ANY AMOUNTS PURSUANT TO SECTION 3.01 IN THE EVENT THAT,
AS A RESULT OF ANY CHANGE IN ANY APPLICABLE LAW, TREATY OR GOVERNMENTAL RULE,
REGULATION OR ORDER, OR ANY CHANGE IN THE INTERPRETATION, ADMINISTRATION OR

 

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APPLICATION THEREOF, SUCH LENDER IS NO LONGER PROPERLY ENTITLED TO DELIVER
FORMS, CERTIFICATES OR OTHER EVIDENCE AT A SUBSEQUENT DATE ESTABLISHING THE FACT
THAT SUCH LENDER OR OTHER PERSON FOR THE ACCOUNT OF WHICH SUCH LENDER RECEIVES
ANY SUMS PAYABLE UNDER ANY OF THE LOAN DOCUMENTS IS NOT SUBJECT TO WITHHOLDING
OR IS SUBJECT TO WITHHOLDING AT A REDUCED RATE AND (II) NOTHING IN THIS
SECTION 10.15(A) SHALL RELIEVE ANY BORROWER OF ITS OBLIGATION TO PAY ANY AMOUNTS
PURSUANT TO SECTION 3.01 IN THE EVENT THAT THE REQUIREMENTS OF
SECTION 10.15(A)(II) OR 10.15(A)(III) HAVE NOT BEEN SATISFIED IF SUCH BORROWER
IS ENTITLED, UNDER APPLICABLE LAW, TO RELY ON ANY APPLICABLE FORMS AND
STATEMENTS REQUIRED TO BE PROVIDED UNDER THIS SECTION 10.15 BY THE LENDER THAT
DOES NOT ACT OR HAS CEASED TO ACT FOR ITS OWN ACCOUNT UNDER ANY OF THE LOAN
DOCUMENTS, INCLUDING IN THE CASE OF A TYPICAL PARTICIPATION.

 

(V)  THE ADMINISTRATIVE AGENT MAY DEDUCT AND WITHHOLD ANY TAXES REQUIRED BY ANY
LAWS TO BE DEDUCTED AND WITHHELD FROM ANY PAYMENT UNDER ANY OF THE
LOAN DOCUMENTS.

 

(B)  EACH LENDER AND AGENT THAT IS A “UNITED STATES PERSON” WITHIN THE MEANING
OF SECTION 7701(A)(30) OF THE CODE (EACH, A “U.S. LENDER”) SHALL DELIVER TO THE
ADMINISTRATIVE AGENT AND THE COMPANY TWO DULY SIGNED, PROPERLY COMPLETED COPIES
OF IRS FORM W-9 ON OR PRIOR TO THE CLOSING DATE (OR ON OR PRIOR TO THE DATE IT
BECOMES A PARTY TO THIS AGREEMENT), CERTIFYING THAT SUCH U.S. LENDER IS ENTITLED
TO AN EXEMPTION FROM UNITED STATES BACKUP WITHHOLDING TAX, OR ANY SUCCESSOR
FORM.  IF SUCH U.S. LENDER FAILS TO DELIVER SUCH FORMS, THEN THE ADMINISTRATIVE
AGENT MAY WITHHOLD FROM ANY PAYMENT TO SUCH U.S. LENDER AN AMOUNT EQUIVALENT TO
THE APPLICABLE BACKUP WITHHOLDING TAX IMPOSED BY THE CODE.  THEREAFTER AND FROM
TIME TO TIME, EACH SUCH U.S. LENDER SHALL (A) PROMPTLY SUBMIT TO THE COMPANY AND
THE ADMINISTRATIVE AGENT SUCH ADDITIONAL DULY COMPLETED AND SIGNED COPIES OF ONE
OR MORE OF SUCH FORMS OR CERTIFICATES (OR SUCH SUCCESSOR FORMS) AS MAY THEN BE
AVAILABLE UNDER THEN CURRENT UNITED STATES LAWS AND REGULATIONS TO AVOID, OR
SUCH EVIDENCE AS IS REASONABLY SATISFACTORY TO THE COMPANY AND THE
ADMINISTRATIVE AGENT OF ANY AVAILABLE EXEMPTION FROM UNITED STATES BACK UP
WITHHOLDING TAXES IN RESPECT OF ALL PAYMENTS TO BE MADE TO SUCH U.S. LENDER BY
THE COMPANY OR OTHER LOAN PARTY PURSUANT TO THIS AGREEMENT, OR ANY OTHER LOAN
DOCUMENT, IN EACH CASE, (1) ON OR BEFORE THE DATE THAT ANY SUCH FORM OR OTHER
EVIDENCE EXPIRES OR BECOMES OBSOLETE, (2) AFTER THE OCCURRENCE OF ANY EVENT
REQUIRING A CHANGE IN THE MOST RECENT FORM OR EVIDENCE PREVIOUSLY DELIVERED BY
IT TO THE COMPANY AND THE ADMINISTRATIVE AGENT AND (3) FROM TIME TO TIME
THEREAFTER IF REASONABLY REQUESTED BY THE COMPANY OR THE ADMINISTRATIVE AGENT,
AND (B) PROMPTLY NOTIFY THE COMPANY AND THE ADMINISTRATIVE AGENT OF ANY CHANGE
IN CIRCUMSTANCES WHICH WOULD MODIFY OR RENDER INVALID ANY CLAIMED EXEMPTION.

 

SECTION 10.16.  Governing Law.  (a)  THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

 

(b)  ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY LOAN DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH BORROWER, HOLDINGS, EACH AGENT AND EACH LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS.  EACH BORROWER, HOLDINGS, EACH AGENT AND EACH
LENDER IRREVOCABLY WAIVES

 

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ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH COURTS IN RESPECT OF ANY LOAN
DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

 

SECTION 10.17.  Waiver of Right to Trial by Jury.  EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION 10.17 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

SECTION 10.18.  Binding Effect.  This Agreement shall become effective when it
shall have been executed by the Borrowers and Holdings and the Administrative
Agent shall have been notified by each Lender, Swing Line Lender and L/C Issuer
that each such Lender, Swing Line Lender and L/C Issuer has executed it and
thereafter shall be binding upon and inure to the benefit of the Company, each
Agent and each Lender and their respective permitted successors and assigns,
except that the Company shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders except
as permitted by Section 7.04.

 

SECTION 10.19.  Lender Action.  Each Lender agrees that it shall not take or
institute any actions or proceedings, judicial or otherwise, for any right or
remedy against any Loan Party or any other obligor under any of the Loan
Documents or the Secured Hedge Agreements (including the exercise of any right
of setoff, rights on account of any banker’s lien or similar claim or other
rights of self-help), or institute any actions or proceedings, or otherwise
commence any remedial procedures, with respect to any Collateral or any other
property of any such Loan Party, without the prior written consent of the
Administrative Agent.  The provision of this Section 10.19 are for the sole
benefit of the Lenders and shall not afford any right to, or constitute a
defense available to, any Loan Party.

 

SECTION 10.20.  USA PATRIOT Act.  Each Lender hereby notifies the Borrowers that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrowers, which information
includes the name and address of the Borrowers and other information that will
allow such Lender to identify the Borrowers in accordance with the Act.

 

SECTION 10.21.  Agent for Service of Process.  The Company agrees that promptly
following request by the Administrative Agent it shall cause each Foreign
Subsidiary which is a Loan Party or for whose account a Letter of Credit is
issued to appoint and maintain an agent reasonably satisfactory to the
Administrative Agent to receive service of process in New York City on behalf of
such Foreign Subsidiary.

 

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SECTION 10.22.  Effectiveness of the Merger; Assignment and Delegation to and
Assumption by Reader’s Digest.  Reader’s Digest shall have no rights or
obligations hereunder until the consummation of the Merger and any
representations and warranties of Reader’s Digest hereunder shall not become
effective until such time.  Upon consummation of the Merger, and without any
further action by any Person, (a) Reader’s Digest hereby irrevocably and
unconditionally (i) assumes and agrees punctually to pay, perform and discharge
when due each of the Obligations and each and every debt, covenant and agreement
incurred, made or to be paid, performed or discharged by the Company under the
Loan Documents, (ii) agrees to be bound by all the terms, provisions and
conditions of the Loan Documents applicable to the Company and (iii) agrees that
it will be responsible for and deemed to have made all the representations and
warranties of the Company, whenever made or deemed to have been made and
(b) Reader’s Digest automatically assumes and agrees to perform all the
obligations of Acquisition Co under the Commitment Letter dated November 16,
2006, among Holdings, Acquisition Co, the Arrangers and the Agents and the Fee
Letter referred to therein.  Upon the effectiveness of the assumption provided
for above, Reader’s Digest will be the Company for all purposes of this
Agreement and the other Loan Documents and may exercise every right and power of
the Company under this Agreement and the other Loan Documents.

 

SECTION 10.23.  Judgment Currency.  If, for the purposes of obtaining judgment
in any court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business
Day preceding that on which final judgment is given.  The obligation of each
Borrower in respect of any such sum due from it to the Administrative Agent or
the Lenders hereunder or under the other Loan Documents shall, notwithstanding
any judgment in a currency (the “Judgment Currency”) other than that in which
such sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent of any sum
adjudged to be so due in the Judgment Currency, the Administrative Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency.  If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Administrative Agent from any Borrower
in the Agreement Currency, such Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or the
Person to whom such obligation was owing against such loss.  If the amount of
the Agreement Currency so purchased is greater than the sum originally due to
the Administrative Agent in such currency, the Administrative Agent agrees to
return the amount of any excess to such Borrower (or to any other Person who may
be entitled thereto under applicable Law).

 

SECTION 10.24.  German Tax Confirmation.  (a)   If, at any time after the
Closing Date, the German Borrower determines that a confirmation by the
Administrative Agent and/or each of the Euro Term Lenders substantially in the
form of the Decree issued by the German Federal Ministry of Finance as of
October 20, 2005 (substantially in the form of Exhibit L, the “Tax
Confirmation”) may be required under the decrees to § 8a of the German Corporate
Income Tax Act (Körperschaftsteuergesetz or KStG) dated July 15, 2004, July 22,
2005, and October 20, 2005 (as in effect on the date hereof, the “Decrees”) with
respect to the Euro Term Loans, the German Borrower may prepare and deliver to
the Euro Term Lenders (through the Administrative Agent) a complete and accurate
draft Tax Confirmation listing all guarantees and security interests securing
the claims of the Euro Term Lenders under the Loan Documents and the Secured
Hedge Agreements and provide to the Euro Term Lenders any further information
which may reasonably be required by the Administrative Agent or any Euro Term
Lender to issue the

 

147

--------------------------------------------------------------------------------

 

Tax Confirmation (based on the then applicable practice of the German tax
authorities), such information to be requested within fifteen (15) Business Days
after the delivery of the draft Tax Confirmation by the German Borrower to the
Euro Term Lenders (through the Administrative Agent).

 

(b)  The Tax Confirmation shall only include factual but not legal statements to
be issued by the Euro Term Lenders.  The Tax Confirmation shall not contain any
statement that any Euro Term Lender is not permitted to issue by law,
administrative rule or regulation of the jurisdiction to which the relevant Euro
Term Lender is subject.

 

(c)  Each Euro Term Lender (including any Person that becomes a Euro Term Lender
subsequent to the date hereof pursuant to Section 10.07) hereby authorizes the
Administrative Agent on behalf of such Euro Term Lender to issue a Tax
Confirmation and provide it to the German Borrower within sixteen (16) Business
Days after such Euro Term Lender’s receipt of the following (which receipt shall
be deemed to have occurred upon the Administrative Agent’s posting of the
following to Intralinks or other similar information transmission system):

 

(I)  THE GERMAN BORROWER’S REQUEST THEREFOR,

 

(II)  A COMPLETE AND ACCURATE DRAFT OF SUCH TAX CONFIRMATION LISTING ALL
GUARANTEES AND SECURITY INTERESTS PURSUANT TO CLAUSE (A) ABOVE, AND

 

(III)  ALL FURTHER INFORMATION REASONABLY REQUESTED WITHIN THE PERIOD SET FORTH
FOR SUCH REQUEST PURSUANT TO CLAUSE (A) ABOVE TO ENABLE THE EURO TERM LENDERS TO
COMPLETE SUCH TAX CONFIRMATION,

 

unless such Euro Term Lender notifies the Administrative Agent within the
15-Business Day period described in clause (a) above that (x) it is prohibited
from doing so by law, administrative rule or regulation of the jurisdiction to
which such Euro Term Lender is subject or (y) it has reasonably determined that
the factual information provided by the German Borrower is not correct or not
complete or, in the view of such Euro Term Lender (acting in good faith), is
misleading or (z) such Euro Term Lender has not been released from
confidentiality obligations to any Loan Party under applicable banking secrecy
rules with respect to confidential information with respect to such Loan Party
contained in such Tax Confirmation or, to the extent applicable, has not been
instructed to disclose any such information by the relevant Loan Party.  Subject
to the terms of the preceding sentence, within the 16-Business Day period set
forth above, the Administrative Agent acting also on behalf of the Euro Term
Lenders shall issue and provide to the German Borrower the requested Tax
Confirmation.

 

(d)  The Company agrees to pay or reimburse the Administrative Agent and each
Euro Term Lender for all reasonable expenses incurred in connection with any Tax
Confirmation in accordance with the principles set forth in Section 10.04,
including Attorney Costs.  The Company shall indemnify and hold harmless each
Indemnitee from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments and suits and related
reasonable expenses (including all reasonable Attorney Costs) of any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any such Indemnitee in any way relating to or arising out of or in
connection with any Tax Confirmation in accordance with the principles set forth
in Section 10.05.  The agreements in this clause (d) shall survive the
resignation of the Administrative Agent, the replacement of any Lender, the
termination of the Aggregate Commitments and repayment, satisfaction or
discharge of all other Obligations.

 

148

--------------------------------------------------------------------------------

 

(E)  THE GERMAN BORROWER CONFIRMS TO THE ADMINISTRATIVE AGENT AND EACH EURO TERM
LENDER THAT (I) THE EURO TERM LENDERS WILL ISSUE THEIR RESPECTIVE TAX
CONFIRMATIONS EXCLUSIVELY AT THE REQUEST OF THE GERMAN BORROWER AND SOLELY FOR
THE PURPOSE OF PROVIDING INFORMATION TO THE GERMAN TAX AUTHORITIES AS REQUIRED
PURSUANT TO THE DECREES, (II) THE EURO TERM LENDERS ARE NOT RESPONSIBLE FOR
EXAMINING ANY BORROWER’S TAX POSITION OR FOR ACHIEVING ANY CERTAIN TAX TREATMENT
WITH RESPECT TO ANY BORROWER AND (III) NO LOAN PARTY WILL RAISE ANY CLAIMS
AGAINST THE ADMINISTRATIVE AGENT OR ANY EURO TERM LENDER BASED ON, OR IN
CONNECTION WITH, ANY TAX CONFIRMATION AND NO EURO TERM LENDER WILL HAVE ANY
LIABILITY TO ANY LOAN PARTY WITH RESPECT TO ANY TAX CONFIRMATION (OTHER THAN,
SUBJECT TO THE PRINCIPLES OF SECTION 10.05, FOR FAILURE TO COMPLY WITH THE LAST
SENTENCE OF SECTION 10.24(C)).

 

(F)  IT IS THE COMMON UNDERSTANDING OF THE PARTIES HERETO THAT NO PARTY IS
PROVIDING ANY LEGAL AND/OR TAX ADVICE TO ANY OTHER PARTY WITH RESPECT TO THIS
AGREEMENT OR, IN PARTICULAR, WITH RESPECT TO THE APPLICATION OF § 8A KSTG AND
THE INTERPRETATION OF § 8A KSTG IN THE DECREES, AND THAT IT IS THE
RESPONSIBILITY OF EACH PARTY, IN PARTICULAR EACH LOAN PARTY, TO CONSULT WITH ITS
OWN LEGAL/TAX ADVISERS.

 

(G)  EACH LOAN PARTY RELEASES EACH EURO TERM LENDER FROM ITS DUTY OF
CONFIDENTIALITY AND/OR OBLIGATION OF BANK SECRECY (BANKGEHEIMNIS) WITH REGARD TO
THE ISSUANCE OF A TAX CONFIRMATION TO THE GERMAN BORROWER AND ITS SUBMISSION TO
THE GERMAN TAX AUTHORITIES.

 

(H)  IF, AFTER THE DATE OF THIS AGREEMENT, CHANGES OCCUR TO GERMAN TAX
LEGISLATION OR ITS INTERPRETATION MATERIALLY PREJUDICING THE TAX TREATMENT OF
INTEREST PAYMENTS OF THE GERMAN BORROWER, THE ADMINISTRATIVE AGENT AND THE EURO
TERM LENDERS AGREE THAT THEY WILL NEGOTIATE IN GOOD FAITH (WITHOUT ANY LEGAL
OBLIGATION TO AGREE) WITH THE COMPANY AND THE GERMAN BORROWER TO RESTRUCTURE THE
COLLATERAL SECURING THE EURO TERM LOANS TO SEEK TO REDUCE THE IMPACT OF SUCH
MATERIALLY PREJUDICIAL TAX TREATMENT WHILE RETAINING COLLATERAL ACCEPTABLE TO
THE EURO TERM LENDERS.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

149

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

 

 

DOCTOR ACQUISITION CO.

 

 

 

     by

 

 

/s/ Christopher Minnetian

 

 

Name: Christopher Minnetian

 

 

Title:

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

RDA HOLDING CO.

 

      by

 

 

 

 

/s/ Christopher Minnetian

 

 

Name: Christopher Minnetian

 

 

Title:

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

THE READER’S DIGEST ASSOCIATION,
INC.

 

 

 

    by

 

 

/s/ William H. Magill

 

 

Name: William H. Magill

 

 

Title: Vice President and Treasurer

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

RD GERMAN HOLDINGS GMBH

 

 

 

    by

 

 

/s/ Werner Neunzig

 

 

Name: Werner Neunzig

 

 

Title: Managing Director

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

JPMORGAN CHASE BANK, N.A., as
Administrative Agent and a Lender,

 

 

 

    by

 

 

/s/ Gary L. Spevack

 

 

Name: Gary L. Spevack

 

 

Title: Vice President

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

CITICORP NORTH AMERICA, INC., as
Co-Syndication Agent and a Lender,

 

 

 

    by

 

 

/s/ Caesar Wyszomirski

 

 

Name: Caesar Wyszomirski

 

 

Title: Vice President

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED, as Co-
Syndication Agent, Co-Lead Arranger and Joint Bookrunner

 

 

 

    by

 

 

/s/ Gregory Margolies

 

 

Name: Gregory Margolies

 

 

Title: Managing Director

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

MERRILL LYNCH CAPITAL
CORPORATION, as a Lender,

 

 

 

    by

 

 

/s/ Gregory Margolies

 

 

Name: Gregory Margolies

 

 

Title: Vice President

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

THE ROYAL BANK OF SCOTLAND PLC,
as Documentation Agent and a Lender,

 

 

 

    by

 

 

/s/ Jim Kuster

 

 

Name: Jim Kuster

 

 

Title: Managing Director

 

Senior Secured Credit Agreement

 

--------------------------------------------------------------------------------

 

 

Credit Industrial ET Commercial,

 

as a Lender

 

 

 

by

/s/ Marcus Edward

 

 

Name:

Marcus Edward

 

 

Title:

Managing Director

 

 

 

 

 

 

 

by

/s/ Anthony Rock

 

 

Name:

Anthony Rock

 

 

Title:

Managing Director

 

--------------------------------------------------------------------------------

 

 

General Electric Capital Corporation,
as a Lender

 

 

 

 

by

/s/ Karl E. Kleffer

 

 

Name:

Karl E. Kleffer

 

 

Title:

Duly Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

Toronto Dominion (Texas) LLC,
as a Lender

 

 

 

 

by

/s/ Debbi Brito

 

 

Name:

Debbi Brito

 

 

Title:

Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

The CIT Group/Equipment Financing, Inc.,
as a Lender

 

 

 

 

by

/s/ Peter Connolly

 

 

Name:

Peter Connolly

 

 

Title:

EVP

 

--------------------------------------------------------------------------------

 

 

J.P. Morgan Securities Inc., as Co-Lead Arranger and Joint Bookrunner

 

 

 

 

by:

/s/ Gary L. Spevack

 

 

Name:

Gary L. Spevack

 

 

Title:

Vice President

 

--------------------------------------------------------------------------------

 

 

Citigroup Global Markets, Inc., as Co-Lead Arranger and Joint Bookrunner

 

 

 

 

by

/s/ Caesar Wyszomirski

 

 

Name:

Caesar Wyszomirski

 

 

Title:

Director

 

--------------------------------------------------------------------------------

 

 

RBS Securities Corporation, as Co-Lead Arranger and Joint Bookrunner

 

 

 

 

by

/s/ Jim Kuster

 

 

Name:

Jim Kuster

 

 

Title:

Managing Director

 

--------------------------------------------------------------------------------

 

Schedule 1.01A

Certain Security Interests and Guarantees

 

·                                          Guarantee and Collateral Agreement;
and

 

·                                          Mortgages with respect to each real
property listed in Schedule 1.01B.

 

--------------------------------------------------------------------------------

 

Schedule 1.01B

Mortgaged Properties

 

Record Owner

 

Property Address

Books Are Fun, Ltd.

 

1680 Highway 1 North

Fairfield, Iowa

 

111 North Main Street

Fairfield, Iowa

 

123 North Main Street
Fairfield, Iowa

 

 

 

Reiman Media Group, Inc.

 

5400 South 60th Street

Greendale, Wisconsin

 

--------------------------------------------------------------------------------

 

Schedule 1.01C

Management Adjustments

 

Reader’s Digest adjustments:

 

·                                          In connection with the Transactions,
Reader’s Digest will record a pro forma balance sheet adjustment to decrease
unearned revenue by approximately $175.0 million. This adjustment is expected to
reduce net revenue by approximately $133.0 million in the first year following
the Transactions. The remaining balance is expected to impact net revenue in
periods thereafter.

 

·                                          Restructuring activities comprised:

 

·                                          Charges of $2.8 million for
severance, $2.6 million for asset impairments and $0.5 million for other costs
associated with the restructuring plan at Books Are Fun, Ltd.. These charges
were taken at Books Are Fun, Ltd. to lower the cost base, upgrade the management
team and sales force and improve the business model. The actions associated with
these initiatives are expected to be completed by the end of fiscal 2007. Asset
impairment charges were primarily attributed to write-offs of capitalized
software costs related to abandoned assets. The remaining costs are those
incurred to close Books Are Fun Ltd.’s jewelry business and to terminate
contractual lease obligations.

 

·                                          Charges of $3.5 million for
severance, $0.2 million for asset impairments, and $1.4 million in other costs
to lower Reader’s Digest’s cost base commensurate with Reader’s Digest’s current
revenue and in an effort to streamline Reader’s Digest’s operations.
Approximately 29%, 54% and 17% of these costs related to Reader’s Digest North
America, Reader’s Digest International and Consumer Business Services,
respectively. These actions are expected to be completed by the end of fiscal
2007.

 

·                                          Income of $2.0 million related to
reversals of charges, primarily severance, recorded in previous years and the
reversal of amortized gains related to the sale and partial lease-back of the
Reader’s Digest headquarters facility. Reader’s Digest reviews its restructuring
plans periodically to determine the appropriateness of existing accruals in
light of current circumstances. Accordingly, these charges were reversed because
of the occurrence of events that affected the original plans.

 

·                                          Reader’s Digest disposed of American
Woodworker magazine in the second quarter of fiscal 2007 at a book loss of $6.2
million.

 

·                                          Represents a charge of $5.6 million
because Reader’s Digest determined that it was probable that QSP, Inc. would not
satisfy the minimum tonnage purchase requirement during calendar 2006 in its
World’s Finest Chocolate licensing agreement. In the event QSP, Inc. does not
satisfy the purchase requirement in future calendar years, QSP, Inc.

 

--------------------------------------------------------------------------------

 

will be required to make similar payments. QSP, Inc. paid $2.0 million and $0.8
million in fiscal 2003 and 2004, respectively, in penalties to World’s Finest
Chocolate for failure to satisfy minimum purchase requirements.

 

·                                          Includes $2.0 million of expense
under Reader’s Digest’s key employee long-term incentive compensation plan,
primarily attributable to the increase in the market price of Reader’s Digest’s
common stock in connection with the Transactions. Also includes additional
compensation of $0.6 million to retain key personnel in connection with the
Transactions.

 

·                                          Compensation and benefits paid to,
and other expenses in the aggregate amount of $4.2 million associated with,
Reader’s Digest’s chairman of the board during the twelve months ended
December 31, 2006. Reader’s Digest’s chairman of the board retired from that
capacity on December 31, 2006.

 

·                                          Professional fees of $4.0 million
relating to an international tax planning initiative that ultimately was not
implemented.

 

·                                          Books Are Fun, Ltd. adjustments
relate to: (a) a $7.0 million charge in fiscal 2006 to write down the value of
old and discontinued items, (b) $6.1 million of legal expenses incurred in
connection with suits against the founder of Books Are Fun, a competitor of
Books Are Fun, Ltd. and certain former executives of Books Are Fun, Ltd. and
(c) $1.1 million of expenses to relocate the Books Are Fun, Ltd. headquarters
from Iowa to the Chicago area and recruit new management.

 

·                                          Stock-based compensation of $11.4
million includes: (a) compensation costs for all share-based payments granted
prior to, but not yet vested as of July 1, 2005, based on the grant date fair
value estimated in accordance with the original provisions of SFAS No. 123, and
compensation cost for all share-based payments granted subsequent to July 1,
2005, based on the grant date fair values estimated in accordance with the
provisions of SFAS No. 123R and (b) the expensing of restricted and deferred
stock awards over the two- to four-year restriction period.

 

·                                          Anticipated cost savings include
(a) $4.0 million of estimated annual cost savings expected to be recognized
through the restructuring of certain of Reader’s Digest’s operations and
(b) $7.0 million of estimated annual cost savings as a consequence of the
conversion to a private company. These costs savings will generally be in the
areas of eliminating or reducing public company director fees, director and
officer insurance, and certain professional services and staff.*

 

WRC Media adjustments:

 

·                                          Restructuring and other non-recurring
items include:

 

--------------------------------------------------------------------------------

 

·                                          Costs related to the shutdown of
CompassLearning facilities in San Diego, California ($2.6 million) and Weston,
Florida ($0.5 million) and a Gareth Stevens facility in Milwaukee, Wisconsin
($0.4 million). San Diego facility costs include $2.0 million in
employee-related expenses (including severance and relocations) and $0.6 million
in vacated facility rent and fixed asset moving expenses. Weston,
Florida-related charges of $0.5 million relate to employee severance and
relocation. The Gareth Stevens-related charges include $0.2 million of employee
severance and relocation costs and $0.2 million of fixed asset write-offs.

 

·                                          Indemnification costs of $0.7 million
for defense of former WRC Media’s employees with regard to an SEC investigation
regarding such employees.

 

·                                          Costs of $1.5 million associated with
the closure of two warehouse facilities (Cleveland, Ohio and Milwaukee,
Wisconsin) in connection with the opening of WRC Media’s new warehouse in
Strongsville, Ohio. Expenses include $0.9 million in rent payments on vacated
facilities, $0.3 million in relocation and moving costs and $0.2 million of
employee severance costs.

 

·                                          Impairment of goodwill and
intangibles charge of $5.0 million.

 

·                                          Anticipated cost savings include
(1) estimated annual cost savings of $7.4 million attributable to transitioning
corporate functions to Reader’s Digest and consolidating operations in Austin,
Texas and Stamford, Connecticut, and (2) estimated annual cost savings of $1.9
million attributable to consolidation of fulfillment systems and renegotiation
of supply contracts.*

 

Direct Holdings adjustments:

 

·                                          $1.4 million stock-based compensation
expense attributable to equity-based awards to Direct Holdings employees.

 

·                                          Restructuring and other non-recurring
items include (1) a write-off of $20.6 million related to a loan to Lillian
Vernon Corporation (LVC), a former affiliate of Direct Holdings, (2) $1.0
million of transaction fees related to the sale of LVC and (3) $0.8 million of
expenses related to the European and other restructuring activities.

 

·                                          Portion of annualized cost savings
attributable to restructuring actions taken during the twelve months ended
December 31, 2006 that are not reflected in historical results of $1.4 million.
These actions primarily related to the restructuring of Direct Holdings’
European operations.

 

--------------------------------------------------------------------------------

 

·                                          Anticipated cost savings include:
(1) anticipated cost savings of $5.9 million attributable to closing certain
offices and transitioning corporate functions to Reader’s Digest and
(2) anticipated fulfillment savings of $5.6 million.*

 

·                                          Annual monitoring fee of $7.5 million
to be paid to the Sponsors following the consummation of the Transactions.

 

--------------------------------------------------------------------------------

*  The adjustments for the anticipated cost savings described do not include
anticipated cash costs to implement such cost savings. Reader’s Digest has
budgeted $40 million in expected cash costs to achieve these anticipated annual
cost savings.

 

--------------------------------------------------------------------------------

 

Schedule 1.01D

Excluded Subsidiaries

 

Direct Holdings IP L.L.C.

 

--------------------------------------------------------------------------------

 

Schedule 1.01E

Foreign Subsidiaries

 

Foreign Subsidiary

 

Country of
Organization

Reader’s Digest Argentina, SRL

 

Argentina

The Reader’s Digest Association Pty. Limited

 

Australia

Reader’s Digest (Australia) Pty. Ltd.

 

Australia

Verlag Das Beste GmbH

 

Austria

Reader’s Digest N.V. - S.A.

 

Belgium

Reader’s Digest World Services S.A.

 

Belgium

Reader’s Digest Brasil Ltda.

 

Brazil

Reader’s Digest EOOD

 

Bulgaria

1302791 Alberta ULC

 

Canada

Quality Service Programs, Inc.

 

Canada

eFundraising.com Corporation Incorporated/Corporation
eFundraising.com Incorporee (Canada)

 

Canada

The Reader’s Digest Association (Canada) Ltd.

 

Canada

Reader’s Digest Magazines Limited

 

Canada

3634116 Canada Inc.

 

Canada

Shanghai Ying Cui Advertising Company Ltd.

 

China

Guangdong Pegasus Marketing Information & Services Co. Ltd

 

China

Reader’s Digest (Guangzhou) Direct Mail Service Co. Ltd.

 

China

Reader’s Digest Vyber s.r.o.

 

Czech Republic

Oy Valitut Palat - Reader’s Digest Ab

 

Finland

Sélection du Reader’s Digest S.A.

 

France

Sélection du Reader’s Digest Assurances SARL

 

France

RD German Holdings GmbH

 

Germany

Verlag Das Beste GmbH

 

Germany

Optimail Direkwerbeservice GmbH

 

Germany

Pegasus Medien Produktions-und Vertriebsgesellschaft mbH

 

Germany

Reader’s Digest Deutschland Holding GmbH

 

Germany

Reader’s Digest Hellas Publications Company with Limited Liability

 

Greece

Asian Qualiproducts Services, Ltd.

 

Hong Kong

Reader’s Digest Global Advertising Ltd.

 

Hong Kong

Reader’s Digest Association Far East Limited

 

Hong Kong

Reader’s Digest Asia, Ltd.

 

Hong Kong

Reader’s Digest (China) Direct Marketing Services Co., Ltd.

 

Hong Kong

Reader’s Digest (East Asia) Limited

 

Hong Kong

R.D. Properties, Ltd.

 

Hong Kong

Reader’s Digest Kiadó Korlátolt Felelosségu Társaság

 

Hungary

Reader’s Digest Book and Home Entertainment (India) Private Limited

 

India

 

--------------------------------------------------------------------------------

 

Foreign Subsidiary

 

Country of
Organization

Libri e più, S.r.l.

 

Italy

The Reader’s Digest Ltd.

 

Japan

LLC Publisher Reader’s Digest

 

Kazakhstan

Pegasus Netherlands Services Lux Primary SC

 

Luxembourg

Pegasus Netherlands Services Lux Secondary SCS

 

Luxembourg

RD Luxembourg Tertiary Services

 

Luxembourg

Reader’s Digest (Malaysia) Sdn. Bhd

 

Malaysia

Caribe Condor S.A. de C.V.

 

Mexico

Reader’s Digest México, S.A. de C.V.

 

Mexico

Corporativo Reader’s Digest Mexico, S. de R.L. de C.V.

 

Mexico

Grupo Editorial Reader’s Digest, S. de R.L. de C.V.

 

Mexico

Distrimedia Services B.V.

 

Netherlands

Pegasus Netherlands Services CV

 

Netherlands

RD Netherlands Holdings BV

 

Netherlands

Uitgeversmaatschappij The Reader’s Digest N.V.

 

Netherlands

Reader’s Digest European Shared Services B.V.

 

Netherlands

Reader’s Digest Netherlands Holdings B.V.

 

Netherlands

Reader’s Digest (Philippines) Inc.

 

Philippines

Reader’s Digest Przeglad Sp. z.o.o.

 

Poland

Selecçoes do Reader’s Digest (Portugal) S.A.

 

Portugal

Euroselecçoes — Publicaçoes E Artigos Promocionais, Lda.
Promocionals, Lda.

 

Portugal

Editura Reader’s Digest SRL

 

Romania

LLC Digest Direct

 

Russia

JSC Publishing House Reader’s Digest

 

Russia

Reader’s Digest Asia Pte. Ltd.

 

Singapore

Reader’s Digest Vyber Slovensko, s.r.o.

 

Slovak Republic

Reader’s Digest Selecciones S.A.

 

Spain

Sociedad Difusión Cultural, S.L.

 

Spain

Reader’s Digest Aktiebolag

 

Sweden

Das Beste aus Reader’s Digest AG

 

Switzerland

Reader’s Digest (Thailand) Limited

 

Thailand

Reader’s Digest Secilmis Yayincilik Dagitim Pazarlama Ticaret Limited Sirketi

 

Turkey

LLC Direct Digest

 

Ukraine

LLC Publisher Reader’s Digest

 

Ukraine

Pegasus UK Holdings Limited

 

United Kingdom

The Reader’s Digest Association Limited

 

United Kingdom

RD Publications Limited

 

United Kingdom

Money Magazine Limited

 

United Kingdom

Reader’s Digest Financial Services Limited

 

United Kingdom

Fundraising For You Limited

 

United Kingdom

Reader’s Digest Europe Limited

 

United Kingdom

 

--------------------------------------------------------------------------------

 

Foreign Subsidiary

 

Country of
Organization

Reader’s Digest Children’s Publishing Limited

 

United Kingdom

Reader’s Digest European Systems Ltd.

 

United Kingdom

Reader’s Digest Central & Eastern Europe Limited

 

United Kingdom

Reader’s Digest Holdings Limited

 

United Kingdom

 

 

 

Direct Holdings (N.Z.) Pty Limited

 

Australia

Direct Holdings Asia Pacific Pty Limited

 

Australia

Direct Holdings Australia Pty Limited

 

Australia

Shop Australia Pty Limited

 

Australia

Direct Entertainment U.K. Limited

 

England and Wales

Target Direct Marketing Services GmbH

 

Germany

Direct Holdings Holland B.V.

 

Netherlands

Direct Holdings International B.V.

 

Netherlands

Direct Holdings Switzerland GmbH

 

Switzerland

 

--------------------------------------------------------------------------------

 

Schedule 1.01F

Holdings Contractual Obligations

 

Agreement and Plan of Merger dated as of November 16, 2006, among RDA Holding
Co. (f/k/a Doctor Acquisition Holding Co.), Doctor Acquisition Co. and The
Reader’s Digest Association, Inc.

 

Stock Acquisition Agreement dated as of January 23, 2007, among Direct Holdings
U.S. Corp., RDA Holding Co., and the Transferors (as defined therein).

 

Agreement and Plan of Merger dated as of January 23, 2007, among RDA Holding
Co., WRC Acquisition Co., a Delaware corporation, and WRC Media Inc.

 

Procurement Agreement dated as of February 2, 2007, between Opera Solutions, LLC
and RDA Holding Co.(1)

 

--------------------------------------------------------------------------------

(1) The obligations of RDA Holding Co. (other than the issuance of equity
interests) under this agreement to be assigned to a Restricted Subsidiary on or
prior to the Closing Date.

 

--------------------------------------------------------------------------------

 

Schedule 1.01G

Unrestricted Subsidiaries

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 1.01H

Mandatory Cost Formulae

 

1.                                       The Mandatory Cost (to the extent
applicable) is an addition to the interest rate to compensate Lenders for the
cost of compliance with:

 

(a)                                  the requirements of the Bank of England
and/or the Financial Services Authority (or, in either case, any other authority
which replaces all or any of its functions); or

 

(b)                                 the requirements of the European Central
Bank.

 

2.                                       On the first day of each Interest
Period (or as soon as practicable thereafter) the Administrative Agent shall
calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each
Lender, in accordance with the paragraphs set out below.  The Mandatory Cost
will be calculated by the Administrative Agent as a weighted average of the
Lenders’ Additional Cost Rates (weighted in proportion to the percentage
participation of each Lender in the relevant Loan) and will be expressed as a
percentage rate per annum.  The Administrative Agent will, at the request of the
Company or any Lender, deliver to the Company or such Lender as the case may be,
a statement setting forth the calculation of any Mandatory Cost.

 

3.                                       The Additional Cost Rate for any Lender
lending from a Lending Office in a Participating Member State will be the
percentage notified by that Lender to the Administrative Agent.  This percentage
will be certified by such Lender in its notice to the Administrative Agent to be
its reasonable determination of the cost (expressed as a percentage of such
Lender’s participation in all Loans made from such Lending Office) of complying
with the minimum reserve requirements of the European Central Bank in respect of
Loans made from that Lending Office.

 

4.                                       The Additional Cost Rate for any Lender
lending from a Lending Office in the United Kingdom will be calculated by the
Administrative Agent as follows:

 

(a)                                  in relation to any Loan in Sterling:

 

AB+C(B-D)+E x 0.01

p per cent per annum

100 - (A+C)

 

(b)                                 in relation to any Loan in any currency
other than Sterling:

 

E x 0.01

p percent per annum

300

 

--------------------------------------------------------------------------------

 

Where:

 

“A”                          is the percentage of Eligible Liabilities (assuming
these to be in excess of any stated minimum) which that Lender is from time to
time required to maintain as an interest free cash ratio deposit with the Bank
of England to comply with cash ratio requirements.

 

“B”                            is the percentage rate of interest (excluding the
Applicable Rate, the Mandatory Cost and any interest charged on overdue amounts
pursuant to the first sentence of Section 2.08(b) and, in the case of interest
(other than on overdue amounts) charged at the Default Rate, without counting
any increase in interest rate effected by the charging of the Default Rate)
payable for the relevant Interest Period of such Loan.

 

“C”                            is the percentage (if any) of Eligible
Liabilities which that Lender is required from time to time to maintain as
interest bearing Special Deposits with the Bank of England.

 

“D”                           is the percentage rate per annum payable by the
Bank of England to the Administrative Agent on interest bearing Special
Deposits.

 

“E”                             is designed to compensate Lenders for amounts
payable under the Fees Regulations and is calculated by the Administrative Agent
as being the average of the most recent rates of charge supplied by the Lenders
to the Administrative Agent pursuant to paragraph 7 below and expressed in
pounds per £1,000,000.

 

5.                                       For the purposes of this Schedule:

 

(a)                                  “Eligible Liabilities” and “Special
Deposits” have the meanings given to them from time to time under or pursuant to
the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;

 

(b)                                 “Fees Regulations” means the rules or
periodic fees contained in the FSA Supervision Manual or such other law or
regulation as may be in force from time to time in respect of the payment of
fees for the acceptance of deposits;

 

(c)                                  “Fee Tariffs” means the fee tariffs
specified in the Fees Regulations under the activity group A.1 Deposit acceptors
(ignoring any minimum fee or zero rated fee required pursuant to the Fees
Regulations but taking into account any applicable discount rate); and

 

--------------------------------------------------------------------------------

 

(d)                                 “Tariff Base” has the meaning given to it
in, and will be calculated in accordance with, the Fees Regulations.

 

6.                                       In application of the above formulae,
A, B, C and D will be included in the formulae as percentages (i.e. 5% will be
included in the formula as 5 and not as 0.05).  A negative result obtained by
subtracting D from B shall be taken as zero.  The resulting figures shall be
rounded to four decimal places.

 

7.                                       If requested by the Administrative
Agent or the Company, each Lender with a Lending Office in the United Kingdom or
a Participating Member State shall, as soon as practicable after publication by
the Financial Services Authority, supply to the Administrative Agent and the
Company, the rate of charge payable by such Lender to the Financial Services
Authority pursuant to the Fees Regulations in respect of the relevant financial
year of the Financial Services Authority (calculated for this purpose by such
Lender as being the average of the Fee Tariffs applicable to such Lender for
that financial year) and expressed in pounds per £1,000,000 of the Tariff Base
of such Lender.

 

8.                                       Each Lender shall supply any
information required by the Administrative Agent for the purpose of calculating
its Additional Cost Rate.  In particular, but without limitation, each Lender
shall supply the following information in writing on or prior to the date on
which it becomes a Lender:

 

(a)                                  its jurisdiction of incorporation and the
jurisdiction of the Lending Office out of which it is making available its
participation in the relevant Loan; and

 

(b)                                 any other information that the
Administrative Agent may reasonably require for such purpose.

 

Each Lender shall promptly notify the Administrative Agent in writing of any
change to the information provided by it pursuant to this paragraph.

 

9.                                       The percentages or rates of charge of
each Lender for the purpose of A, C and E above shall be determined by the
Administrative Agent based upon the information supplied to it pursuant to
paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies
the Administrative Agent to the contrary, each Lender’s obligations in relation
to cash ratio deposits, Special Deposits and the Fees Regulations are the same
as those of a typical bank from its jurisdiction of incorporation with a Lending
Office in the same jurisdiction as such Lender’s Lending Office.

 

10.                                 The Administrative Agent shall have no
liability to any Person if such determination results in an Additional Cost Rate
which over- or under-compensates any Lender and shall be entitled to assume that
the information provided by any Lender pursuant to paragraphs 3, 7 and 8 above
is true and correct in all respects.

 

--------------------------------------------------------------------------------

 

11.                                 The Administrative Agent shall distribute
the additional amounts received as a result of the Mandatory Cost to the Lenders
on the basis of the Additional Cost Rate for each Lender based on the
information provided by each Lender pursuant to paragraphs 3, 7 and 8 above.

 

12.                                 Any determination by the Administrative
Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an
Additional Cost Rate or any amount payable to a Lender shall, in the absence of
manifest error, be conclusive and binding on all parties hereto.

 

The Administrative Agent may from time to time, after consultation with the
Company and the Lenders, determine and notify to all parties any amendments
which are required to be made to this Schedule in order to comply with any
change in law, regulation or any requirements from time to time imposed by the
Bank of England, the Financial Services Authority or the European Central Bank
(or, in any case, any other authority which replaces all or any of its
functions) and any such determination shall, in the absence of manifest error,
be conclusive and binding on all parties hereto.

 

--------------------------------------------------------------------------------

 

Schedule 1.01I

Letters of Credit

 

Each of the following letters of credit are issued by JPMorgan Chase Bank, N.A.:

 

Letter of Credit No.

 

Beneficiary

 

Stated Amount

 

Expiry Date

 

T-612818

 

COGNAC WILLOW, LLC C/O PRUDENTIAL REAL ESTATE INVESTORS

 

$

559,667.06

 

12-Oct-07

 

IBTI580368

 

TRANSFAR INTERNATIONAL CORP.

 

$

56,749.20

 

5-Mar-07

 

IBTI580368

 

TRANSFAR INTERNATIONAL CORP.

 

$

60,283.20

 

5-Mar-07

 

IBTI580368

 

TRANSFAR INTERNATIONAL CORP.

 

$

90,424.80

 

13-Mar-07

 

IBTI580368

 

TRANSFAR INTERNATIONAL CORP.

 

$

42,271.20

 

19-Mar-07

 

IBTI580368

 

TRANSFAR INTERNATIONAL CORP.

 

$

30,141.60

 

19-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

26,769.60

 

6-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

26,769.60

 

6-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

26,769.60

 

7-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

26,769.60

 

16-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

9,235.20

 

13-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

53,539.20

 

13-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

26,769.60

 

13-Mar-07

 

IBTI581571

 

TRANSFAR INTERNATIONAL CORP.

 

$

26,769.60

 

13-Mar-07

 

IBTI582020

 

SUN VIGOR INDUSTRIAL CO. LTD.

 

$

86,793.18

 

6-Apr-07

 

IBTI583478

 

M. K. DISTRIBUTORS INC.

 

$

340,470.00

 

20-Mar-07

 

IBTI583479

 

WOODMAX KY INDUSTRIES CORP.

 

$

151,988.94

 

7-Mar-07

 

IBTI583944

 

YOA LING INDUSTRY CO LTD

 

$

148,751.80

 

13-Mar-07

 

IBTI584462

 

SUN VIGOR INDUSTRIAL CO. LTD.

 

$

98,455.00

 

8-Mar-07

 

I584463

 

SUN VIGOR INDUSTRIAL CO. LTD.

 

$

162,086.64

 

2-May-07

 

I585750

 

SUN VIGOR INDUSTRIAL CO. LTD.

 

$

106,898.30

 

16-Apr-07

 

 

--------------------------------------------------------------------------------

 

Schedule 2.01

Commitments

 

 

LENDER

 

REVOLVING
COMMITMENT

 

TERM LOAN
COMMITMENT

 

EURO TERM LOAN
COMMITMENT(1)

 

JPMorgan Chase Bank, N.A.

 

$

77,666,666.68

 

$

403,333,333.34

 

$

100,000,000

 

Citicorp North America, Inc.

 

$

77,666,666.66

 

$

403,333,333.33

 

$

0

 

Merrill Lynch Capital Corporation

 

$

77,666,666.66

 

$

403,333,333.33

 

$

0

 

The Royal Bank of Scotland plc

 

$

35,000,000

 

$

0

 

$

0

 

General Electric Capital Corporation

 

$

25,000,000

 

$

0

 

$

0

 

Toronto Dominion (Texas) LLC

 

$

5,000,000

 

$

0

 

$

0

 

The CIT Group/Equipment Financing, Inc.

 

$

2,000,000

 

$

0

 

$

0

 

Total

 

$

300,000,000

 

$

1,210,000,000

 

$

100,000,000

 

 

--------------------------------------------------------------------------------

(1) To be funded in Euros.

 

--------------------------------------------------------------------------------

 

Schedule 5.05

Certain Liabilities

 

·                                          The Reader’s Digest Pension Scheme
(U.K.), approved, is currently under funded by approximately $70 million.

 

·                                          Lindner, et al. v. the Company.  The
Company is a defendant in a putative class action before the U.S. District Court
for the Central District of California, Southern Division.  The class action
claims that Reader’s Digest magazine’s continuous renewal program violates
federal and state consumer protection status.  As of September 25, 2006, this
matter was fully briefed on appeal to the 9th Circuit Court of Appeals following
the trial court’s dismissal of the action.

 

·                                          The following table lists ongoing
audits or examinations by taxing authorities of Reader’s Digest or any of its
Subsidiaries:

 

Company

 

Taxing Jurisdiction

 

Type of Tax

 

Period Under Audit

Domestic Tax Audits

 

 

 

 

 

 

The Reader’s Digest Association, Inc.

 

Federal

 

Income

 

2001 - 2003

The Reader’s Digest Association, Inc.

 

Federal

 

Employment

 

2000 - 2003

The Reader’s Digest Association, Inc.

 

New York

 

Income

 

1997 - 1999

The Reader’s Digest Association, Inc.

 

New York

 

Income

 

2000 - 2003

The Reader’s Digest Association, Inc.

 

Texas

 

Franchise

 

TBD(2)

Books Are Fun, Ltd.

 

Minnesota

 

Sales

 

1/03 - 5/06

Books Are Fun, Ltd.

 

Wisconsin

 

Income

 

2002 - 2005

QSP, Inc.

 

Arizona

 

Sales

 

4/00 - 3/04

QSP, Inc.

 

Florida

 

Sales

 

12/03 - 11/06

QSP, Inc.

 

Illinois

 

Sales

 

2003 - 2005

QSP, Inc.

 

Minnesota

 

Income

 

2001 - 2004

QSP, Inc.

 

New York

 

Income

 

2002 - 2003

QSP, Inc.

 

Ohio

 

Franchise

 

2002 - 2003

QSP, Inc.

 

Washington

 

Sales & B&O

 

2002 - 2005

Taste of Home Entertaining, Inc.

 

Shelby County, AL

 

Sales

 

TBD(3)

Taste of Home Productions, Inc.

 

South Dakota

 

Sales

 

2002 - 2006

World Wide Country Tours, Inc.

 

Minnesota

 

Income

 

2003 - 2005

World Wide Country Tours, Inc.

 

Texas

 

Income & Sales

 

2002 - 2006

 

 

 

 

 

 

 

Foreign Tax Audits

 

 

 

 

 

 

The Reader’s Digest Association (Canada), Ltd.

 

Federal Revenue

 

Income

 

2001 - 2004

 

--------------------------------------------------------------------------------

(2) State to inform company regarding period being audited.

 

(3) County to inform company regarding period being audited.

 

--------------------------------------------------------------------------------

 

The Reader’s Digest Association (Canada), Ltd.

 

Ontario

 

Sales

 

1/02 - 7/05

Quality Service Programs, Inc. (Canada)

 

Federal Revenue

 

Income

 

2002 - 2003

Quality Service Programs, Inc. (Canada)

 

Provincial - Quebec

 

Sales

 

6/03 - 6/06

Selecceous do Reader’s Digest (Portugal) S.A.

 

Federal

 

Income

 

2001 - 2005

Selecceous do Reader’s Digest (Portugal) S.A.

 

Federal

 

Withholding

 

2002

JSC Publishing House Reader’s Digest (Russia)

 

Federal

 

Income

 

2002 - 2003

Das Beste Aus Reader’s Digest AG (Switzerland)

 

Federal

 

Income

 

2004

Reader’s Digest N.V. - S.A. (Belgium)

 

Federal

 

Income

 

2004 - 2005

eFundraising.com Corporation
Incorporated/Corporation eFundraising.com
Incorporee (Canada)

 

Provincial - Quebec

 

Income

 

2003 - 2005

Reader’s Digest (Guangzhou) Direct Mail Service Co. Ltd. (China)

 

Federal

 

Income

 

2004

Reader’s Digest Vyber S.R.O. (Czech)

 

Federal

 

Income

 

2006

LLC Publisher Reader’s Digest (Kazakhstan)

 

Federal

 

VAT

 

2005

The Reader’s Digest Assoc. Ltd. (UK)

 

Federla

 

Income

 

2004

 

·                                          Direct Holdings U.S. Corp. will
assume the indemnification obligations of Direct Holdings Worldwide L.L.C. under
the Stock Purchase Agreement dated as of May 26, 2006, among LV Catalog Holding
Corp., LVC, Direct Holdings Worldwide L.L.C., and Lillian Vernon.

 

·                                          By email dated December 2, 2005, a
representative of Warner Music Group advised DHAI of several issues they
considered open in connection with an agreement between Rhino Entertainment
Company and DHAI entered into in 2001 regarding a music product called “Treasury
of Folk” or “The Folk Years” and an agreement entered into between Warner
Strategic Marketing, Inc. and DHAI entered into in 2002 regarding a video
product called “Doo Wop”.  The email asserted, among other things, that Rhino
has never received any accounting or payments on certain incremental sales
associated with Treasury of Folk or The Folk Years purportedly due, that a
royalty reduction on the Doo Wop product was subject to conditions that had not
been satisfied and that underpayment of royalties based on the unreduced rate
was $791,626 through March 2005, and that WQED has separately brought a breach
of contract claim against Warner Strategic Marketing on the basis that DHAI’s
inclusion of WQED’s “This Land is Your Land” 2-CD music set in non-pledge box
set sales was not authorized.  By subsequent email dated January 11, 2006, a
representative of Warner Music Group stated, among other things, that nearly
$800,000 in royalties remain unpaid and that, as a result of Time Life’s
actions, Warner Music Group has had to settle a related royalty dispute with
WQED for over $400,000.  The matter is still pending.

 

·                                          SEC v. Martin E. Kenney, 05 Civ. 7944
(S.D.N.Y. Sept. 13, 2005):  The Securities and Exchange Commission (SEC) filed a
complaint against Martin E. Kenney, former Chief Executive Officer of the
Company, alleging various securities law violations.  The Company was not named
as a defendant in the lawsuit.  A tentative settlement has been reached and
remains subject to final agreement among the parties and SEC approval.

 

--------------------------------------------------------------------------------

 

The terms of the tentative settlement would require Kenney to pay a penalty of
$60,000, for which he could not be reimbursed by the Company.  Kenney requested
indemnification by the Company in a letter dated March 10, 2004, pursuant to
Article VII of the Company’s By-Laws, which provides for indemnification of
officers for expenses, judgments, fines and amounts paid in settlement
expenses.  The Company incurred approximately $3.4 million in legal fees in
connetion with this case, including fees incurred during the initial
investigation by the SEC, the defense of an officer of CompassLearning, other
employees of CompassLearning, and Kenney.  Kenney’s attorneys have indicated
that they intend to take the position that the Company should pay whatever legal
fees are not covered by the insurance company.  To date, the Company’s directors
and officers insurance carrrier has taken the position that it will cover only
reasonable counsel fees for Kenney’s attorney following the commencement of the
action, potentially leaving approximately $2.1 million or more in legal fees
uncovered, of which the Company has already paid all but approximately $600,000.

 

·                                          Kindle Publishing LLC v.
CompassLearning, Inc. and American Guidance Service, Inc., No. A06CA948-SS (W.D.
Tex. Dec. 4, 2006):  Kindle Publishing has filed a complaint against
CompassLearning alleging copyright infringement and unfair competition and
seeking a preliminary injunction in connection with a license agreement between
CompassLearning and Lindy Acquisition, which subsequently assigned its rights to
Kindle Publishing.  CompasLearning intends to deny any liability under the
license agreement, but it projects that it will nevertheless incur approximately
$1.25 million in expenses in replacing such content since Kindle has effectively
terminated the license agreement effective August 2007.

 

--------------------------------------------------------------------------------

 

Schedule 5.09

Environmental Matters

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 5.10

Taxes

 

·                                          The Reader’s Digest Association, Inc.
currently has a tax reserve for possible state and local income tax liabilities
related to QSP, Inc. for tax returns that have not been filed in prior years in
the following states and localities:

 

Arizona

Colorado

Connecticut

Florida

Georgia

Hawaii

Louisiana

Maryland

Massachusetts

Minnesota

New Mexico

New York City

Ohio

Tennessee

Texas

 

·                                          Weekly Reader Corporation. 
Connecticut Income/Franchise tax assessment (12/31/1994-12/31/1999).  $592,000. 
Connecticut has imputed interest income on the taxpayer’s intercompany
balances.  In addition, the state has challenged the Company’s apportionment of
intangibles outside of the state (franchise component).  An informal conference
has been requested (indmenified by Primedia, Inc.).  The Company contests the
assessment on the basis of procedural grounds (the statute of limitations has
expired) as well as technical merits.

 

·                                          Weekly Reader Corporation. 
Connecticut Income/Franchise tax assessment (11/17/1999).  $740,000.  The
assessment relates to a state challenge to the taxpayer’s unitary apportionment
filing method.  The state recalculated the Company’s tax liability based upon a
separate filing method.  The liability is materially due to the apportionment of
IRC 338(h)(10) gain to Connecticut.  An informal conference was requested
(indemnified by Primedia, Inc.)  The Company contests the assessment on
technical merits and abuse of Commissioner of Revenue Services’ discretion in
granting an alternative apportionment method.

 

·                                          Lifetime Learning Systems, Inc. 
Connecticut Income/Franchise tax assessment (Primedia, Inc. Combined Return). 
(1/1/1999-11/17/1999).  $1,395,000.  The assesstment relates to a state
challenge to the taxpayer’s unitary apportionment filing method.  The state
recalculated the Company’s tax liability based upon a separate filing method. 
The liability is materially due to the apportionment of IRC 338(h)(10) gain to
Connecticut.  An informal conference was requested (indemnified by
Primedia, Inc.)  The

 

--------------------------------------------------------------------------------

 

Company contests the assessment on technical merits and abuse of Commissioner of
Revenue Services’ discretion in granting an alternative apportionment method.

 

·                                          Additional tax exposure related to
the pushdown and allocation of interest to its subsidiaries was reflected in the
12/31/2005 financial statements.

 

24

--------------------------------------------------------------------------------

 

Schedule 5.11

ERISA Compliance

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 5.12

Subsidiaries and Other Equity Investments(4)

 

Domestic

 

Loan Party

 

Subsidiary

 

Subsidiary
Jurisdiction
of
Organization

 

Ownership Interest

 

Percent
Ownership

 

Equity
Interest
Required to
be Pledged

 

RDA Holding Co.

 

The Reader’s Digest Association, Inc.

 

Delaware

 

1,000 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Allrecipes.com, Inc.

 

Washington

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Ardee Music Publishing, Inc.

 

Delaware

 

100 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Books Are Fun, Ltd.

 

Iowa

 

100 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Christmas Angel Productions, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Pegasus Asia Investments Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Pegasus Finance Corp.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Pegasus Investment, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Pegasus Sales, Inc.

 

Delaware

 

1,000 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Pleasantville Music Publishing, Inc.

 

Delaware

 

100 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

QSP, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

R. D. Manufacturing Corporation

 

Delaware

 

1,000 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

RD Publications, Inc. (f/k/a Travel Publications, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Children’s Publishing, Inc. (f/k/a Reader’s Digest Sub
Five, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Consumer Services, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

 

--------------------------------------------------------------------------------

(4) Reflects final structure on the Closing Date, following the consummation of
the Acquisitions and the contribution by RDA Holding Co. to The Reader’s Digest
Association, Inc. of the Equity Interests of each of Direct Holdings U.S. Corp.
and WRC Media Inc.

 

--------------------------------------------------------------------------------

 

The Reader’s Digest Association, Inc.

 

Reader’s Digest Entertainment, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Financial Services, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Latinoamerica S.A.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Sales and Services, Inc.

 

Delaware

 

1,000 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Sub Nine, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Reader’s Digest Young Families, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

SMDDMS, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

Taste of Home Entertaining, Inc. (f/k/a Reader’s Digest Home Parties)

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

The Reader’s Digest Association (Russia) Incorporated (f/k/a Reader’s Digest Sub
Four, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

The Reader’s Digest Association, Inc.

 

W.A. Publications, LLC

 

Delaware

 

100%

 

100

%

100

%

QSP, Inc.

 

Family Reading Program Corp.

 

Delaware

 

10 shares common

 

100

%

100

%

QSP, Inc.

 

Fundraising.com, Inc. (f/k/a Reader’s Digest Sub Eight, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

QSP, Inc.

 

QSP Distribution Services, LLC

 

Delaware

 

100%

 

100

%

100

%

QSP, Inc.

 

QSP Products and Programs, LLC

 

Delaware

 

100%

 

100

%

100

%

QSP, Inc.

 

QSP Sales, LLC

 

Delaware

 

100%

 

100

%

100

%

QSP, Inc.

 

QSP Services, LLC

 

Delaware

 

100%

 

100

%

100

%

QSP, Inc.

 

QSP Ventures, LLC

 

Delaware

 

100%

 

100

%

100

%

QSP, Inc.

 

Reiman Media Group, Inc. (f/k/a Reader’s Digest Media Group, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

QSP, Inc.

 

VideOvation, Inc. (f/k/a Reader’s Digest Sub Three, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

RD Publications, Inc. (f/k/a Travel Publications, Inc.)

 

Home Service Publications, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

 

27

--------------------------------------------------------------------------------

 

RD Publications, Inc.

 

RD Large Edition, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

RD Publications, Inc.

 

RD Trade Shows, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

RD Publications, Inc.

 

RD Walking, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

RD Publications, Inc.

 

Retirement Living Publishing Company, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

RD Publications, Inc.

 

Travel Publications, Inc. (f/k/a RD Publications, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

Reader’s Digest Consumer Services, Inc.

 

RD Magazine Value Partners, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

Reader’s Digest Latinoamerica, S.A.

 

WAPLA, LLC

 

Delaware

 

100 units limited liability interests

 

100

%

100

%

Reiman Media Group, Inc. (f/k/a Reader’s Digest Media Group, Inc.)

 

Taste of Home Media Group, Inc. (f/k/a Reader’s Digest RAP, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

Reiman Media Group, Inc. (f/k/a Reader’s Digest Media Group, Inc.)

 

Taste of Home Productions, Inc. (f/k/a Reader’s Digest HV, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

Reiman Media Group, Inc. (f/k/a Reader’s Digest Media Group, Inc.)

 

World Wide Country Tours, Inc. (f/k/a Reader’s Digest WWCT, Inc.)

 

Delaware

 

10 shares common

 

100

%

100

%

Travel Publications, Inc.

 

RD Member Services, Inc.

 

Delaware

 

10 shares common

 

100

%

100

%

 

 

 

 

 

 

 

 

 

 

 

 

The Reader’s Digest Association, Inc.

 

Direct Holdings U.S. Corp.

 

Delaware

 

200,000 shares common

 

100

%

100

%

Direct Holdings U.S. Corp.

 

Direct Holdings Americas Inc. (f/k/a Time-Life Books Inc.)

 

Delaware

 

1,000 shares common

 

100

%

100

%

Direct Holdings U.S. Corp.

 

Direct Holdings IP L.L.C.

 

Delaware

 

100%

 

100

%

100

%

Direct Holdings Americas Inc. (f/k/a Time Life Inc.)

 

Direct Holdings Custom Publishing Inc. (f/k/a Time Life Custom Publishing Inc.)

 

Delaware

 

100 shares common

 

100

%

100

%

Direct Holdings Americas Inc. (f/k/a Time Life Inc.)

 

Direct Holdings Education Inc. (f/k/a Time Life Education Inc.)

 

Delaware

 

100 shares common

 

100

%

100

%

Direct Holdings Americas Inc. (f/k/a Time Life Inc.)

 

Alex Inc.

 

Delaware

 

100 shares common

 

100

%

100

%

Direct Holdings Americas Inc. (f/k/a Time-Life Books Inc.)

 

Direct Holdings Customer Service, Inc. (f/k/a Time-Life Customer Service Inc.)

 

Delaware

 

100 shares common

 

100

%

100

%

Direct Holdings Americas Inc. (f/k/a Time Life Inc.)

 

Direct Holdings Libraries Inc. (f/k/a Time-Life Libraries, Inc.)

 

New York

 

10,000 shares common

 

100

%

100

%

 

28

--------------------------------------------------------------------------------

 

The Reader’s Digest Association, Inc.

 

WRC Media Inc.

 

Delaware

 

1,000 shares common

 

100

%

100

%

WRC Media Inc.

 

CompassLearning, Inc.

 

Delaware

 

10,000 shares common

 

100

%

100

%

WRC Media Inc.

 

Weekly Reader Corporation

 

Delaware

 

2,685,670 shares common

 

94.9

%

100

%

Weekly Reader Corporation

 

Lifetime Learning Systems, Inc.

 

Delaware

 

1,000 shares common

 

100

%

100

%

Weekly Reader Corporation

 

World Almanac Education Group, Inc.

 

Delaware

 

1,000 shares common

 

100

%

100

%

World Almanac Education Group, Inc.

 

Funk & Wagnalls Yearbook Corp.

 

Delaware

 

1,000 shares common

 

100

%

100

%

World Almanac Education Group, Inc.

 

Gareth Stevens, Inc.

 

Wisconsin

 

2,314,305 shares common

 

100

%

100

%

 

Foreign

 

Loan Party

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent Ownership

 

Equity
Interest
Required to
be Pledged

 

W.A. Publications, LLC
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

1
872,237
469,665

 

The Reader’s Digest Association Pty. Limited

 

Australia

 

100

%

65

%

Doctor Acquisition Co.

 

1,000

 

1302791 Alberta ULC

 

Canada

 

100

%

0

%(5)

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

72,000
38,000

 

Oy Valitut Palat - Reader’s Digest Ab

 

Finland

 

100

%

65

%

The Reader’s Digest Association, Inc.

 

1

 

RD German Holdings GmbH

 

Germany

 

100

%

65

100

%(6)

%(7)

 

--------------------------------------------------------------------------------

(5) Not required to be delivered.

 

(6) With respect to the Obligations.

 

(7) With respect to the Obligations of the German Borrower.

 

29

--------------------------------------------------------------------------------

 

Loan Party

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent Ownership

 

Equity Interest Required to
be Pledged

 

The Reader’s Digest Association, Inc.

 

80,000 DM
20,000 DM

1,900,000 DM

1,000,000 DM

9,000,000 DM

8,000,000 DM

 

Verlag Das Beste GmbH

 

Germany

 

100

%

10

%(8)

W.A. Publications, LLC

The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

 

5
45

33

12

 

Reader’s Digest Association Far East Limited

 

Hong Kong

 

100

%

65

%

W.A. Publications, LLC
W.A. Publications, LLC
The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

 

1
9
65

25

 

Reader’s Digest Asia, Ltd.

 

Hong Kong

 

 

100

%

65

%

W.A. Publications, LLC
W.A. Publications, LLC

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

1
9
65
24

 

Reader’s Digest (East Asia) Limited

 

Hong Kong

 

 

100

%

65

%

W.A. Publications, LLC

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

1

6,500

3,499

 

R.D. Properties, Ltd.

 

Hong Kong

 

 

100

%

65

%

Reader’s Digest Association Far East Limited
The Reader’s Digest Association, Inc.

 

1

99

 

Reader’s Digest Book and Home Entertainment (India) Private Limited

 

India

 

 

100

%

65

%

The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

 

130

70

 

The Reader’s Digest Ltd.

 

Japan

 

 

100

%

65

%

W.A. Publications, LLC

The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

 

1

17,913,286

9,645,615

 

Caribe Condor S.A. de C.V.

 

Mexico

 

 

100

%

65

%

W.A. Publications, LLC

 

1

 

Reader’s Digest Mexico S.A. de C.V.

 

Mexico

 

1

%

65

%(9)

 

--------------------------------------------------------------------------------

(8) 90% to be transferred to the RD German Holdings GmbH.

 

(9) Certificated, but not to be delivered given that W.A. Publications, LLC only
owns one share.

 

30

--------------------------------------------------------------------------------

 

Loan Party

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent 
Ownership

 

Equity
Interest
Required to
be Pledged

 

W.A. Publications, LLC

 

1

 

Corporativo Reader’s Digest Mexico S. de R.L. de C.V.

 

Mexico

 

1

%

65

%

W.A. Publications, LLC

 

1

 

Grupo Editorial Reader’s Digest S. de R.L. de C.V.

 

Mexico

 

1

%

65

%

W.A. Publications, LLC
W.A. Publications, LLC
The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

 

100
100

1,300

495

 

Reader’s Digest (Philippines) Inc.

 

Philippines

 

 

100

%(10)

65

%

Selecções do Reader’s Digest (Portugal), SA
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

20
5
5
5
5
5
5
50
4,900
1,100
443,900

 

Selecções do Reader’s Digest (Portugal) S.A.

 

Portugal

 

 

100

%

65

%

Selecções do Reader’s Digest (Portugal), SA
The Reader’s Digest Association, Inc.

 

€1,796
€199

 

Euroselecções - Publicações E Artigos Promocionais, Lda.

 

Portugal

 

 

100

%

65

%

W.A. Publications, LLC
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

2

4,550

2,448

 

Reader’s Digest Selecciones S.A.

 

Spain

 

 

100

%

65

%

The Reader’s Digest Association, Inc.

The Reader’s Digest Association, Inc.

 

15,750

29,250

 

Reader’s Digest Aktiebolag

 

Sweden

 

 

100

%

65

%

The Reader’s Digest Association, Inc.

 

497

 

Das Beste aus Reader’s Digest AG/
Sélection du Reader’s Digest SA/
Selezione dal Reader’s Digest SA

 

Switzerland

 

 

100

%(11)

65

%

 

--------------------------------------------------------------------------------

(10) Five shares held by each of the five directors.

 

(11) 3 shares held by individuals.

 

31

--------------------------------------------------------------------------------

 

 

Loan Party

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent 
Ownership

 

Equity
Interest
Required to
be Pledged

 

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

9,993
571,996

298,004

 

Reader’s Digest (Thailand) Limited

 

Thailand

 

100

%(12)

65

%

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

201,500,000
108,500,000

 

The Reader’s Digest Association Limited

 

United Kingdom

 

100

%

65

%

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

1,089,573
586,692

 

Reader’s Digest Children’s Publishing Limited

 

United Kingdom

 

100

%

65

%

The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.
The Reader’s Digest Association, Inc.

 

1
34
65

 

Reader’s Digest Europe Limited

 

United Kingdom

 

100

%

65

%

Reader’s Digest Latinoamerica, S.A.

WAPLA, LLC

 

11,880 interests

120 interests

 

Reader’s Digest Argentina, SRL

 

Argentina

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

500,000

 

Verlag Das Beste GmbH

 

Austria

 

100

%

65

%*

W.A. Publications, LLC
The Reader’s Digest Association, Inc.

 

1
253,845

 

Reader’s Digest World Services, S.A.

 

Belgium

 

100

%

65

%*

W.A. Publications, LLC
The Reader’s Digest Association, Inc.

 

164,200

656,800

 

Reader’s Digest N.V. - S.A.

 

Belgium

 

100

%

65

%*

W.A. Publications, LLC
The Reader’s Digest Association, Inc.

 

10%
90%

 

Reader’s Digest Brasil, Ltda.

 

Brazil

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

193,846,000,000 CZK (no shares issued)

 

Reader’s Digest Vyber s.r.o.

 

Czech Republic

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

61,992

 

Sélection du Reader’s Digest S.A.

 

France

 

100

%(13)

65

%*

The Reader’s Digest Association, Inc.

 

25,000

 

Reader’s Digest Deutschland Holding GmbH

 

Germany

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

599

 

Reader’s Digest Hellas Publications Company with Limited Liability

 

Greece

 

100

%(14)

65

%*

 

--------------------------------------------------------------------------------

(12) 7 shares held by individuals.

 

(13) 8 shares held by individuals.

 

(14) 1 share held by an individual.

 

32

--------------------------------------------------------------------------------

 

Loan Party

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent 
Ownership

 

Equity
Interest
Required to
 be Pledged

 

The Reader’s Digest Association, Inc.

 

600,000,000 HUF (no shares issued)

 

Reader’s Digest Kiadó Korlátolt Felelosségu Társaság

 

Hungary

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

€10,000

 

Libri e più, S.r.l.

 

Italy

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

182

 

Reader’s Digest European Shared Services B.V.

 

Netherlands

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

100%

 

Uitgeversmaatschappij The Reader’s Digest N.V.

 

Netherlands

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

16,162

 

Reader’s Digest Przeglad Sp Z.o.o.

 

Poland

 

100

%

65

%*

The Reader’s Digest Association, Inc.

 

299,999

 

Reader’s Digest Asia Pte. Ltd.

 

Singapore

 

100

%(15)

65

%*

The Reader’s Digest Association, Inc.

 

4,500 YTL

 

Reader’s Digest Secilmis Yayincilik Dagitim Pazarlama Ticaret Limited Sirketi

 

Turkey

 

90

%(16)

65

%*

 

 

 

 

 

 

 

 

 

 

 

 

Direct Holdings U.S. Corp.

 

404 shares common

 

Direct Holdings International B.V.

 

Netherlands

 

100

%

65

%*

 

--------------------------------------------------------------------------------

* Uncertificated.

 

(15) 1 share owned by an individual.

 

(16) 10% owned by an individual.

 

33

--------------------------------------------------------------------------------

 

 

Non-first tier foreign subsidiaries/equity investments:

 

Foreign

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent 
Ownership

 

Equity
Interest
Required to
be Pledged

 

The Reader’s Digest Association (Pty.) Limited

 

9,998
1
1

 

Reader’s Digest (Australia) Pty. Ltd.

 

 

Australia

 

100

%

0

%

The Reader’s Digest Association (Canada) Ltd.

 

1

4,999

5,000

 

Quality Service Programs, Inc.

 

Canada

 

100

%

0

%

Quality Service Programs, Inc.

(100%)

 

Quality Service Programs, Inc. (100 Common Shares)

 

The Reader’s Digest Association (Canada) Ltd. (5,500,000 Class A preferred
shares)

 

eFundraising.com Corporation
Incorporated / Corporation
eFundraising.com Incorporée

 

Canada

 

100

%

0

%

1302791 Alberta ULC

 

1,000

 

The Reader’s Digest Association (Canada) Ltd.

 

Canada

 

100

%

0

%

The Reader’s Digest Association (Canada) Ltd.

 

50,000

 

Reader’s Digest Magazines Limited

 

Canada

 

25

%(17)

0

%

The Reader’s Digest Association (Canada) Ltd.

 

1

 

3634116 Canada Inc.

 

Canada

 

100

%

0

%

Reader’s Digest Far East Ltd.

 

100%

 

Shanghai Ying Cui Advertising Company Ltd.

 

China

 

100

%**

0

%

Asian Qualiproducts. Services Ltd.

 

CNY945,000

 

Guangdong Pegasus Marketing Information & Service Co. Ltd.

 

China

 

90

%(18)**

0

%

 

--------------------------------------------------------------------------------

(17) 150,000 shares owned by Reader’s Digest Foundation of Canada.

 

34

--------------------------------------------------------------------------------

 

Foreign

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent
 Ownership

 

Equity
Interest
Required to
be Pledged

 

Reader’s Digest (China) Direct Marketing Service Co. Ltd.

 

HK$1,890,000

 

Reader’s Digest (Guangzhou) Direct Mail Service Co. Ltd.

 

China

 

90

%(19)**

0

%

Sélection du Reader’s Digest S.A.

 

1,999

 

Sélection du Reader’s Digest Assurances SARL

 

France

 

100

%(20)

0

%

Verlag Das Beste GmbH

 

100,000 DEM

 

Optimail Direktwerbeservice GmbH

 

GERMANY

 

100

%**

0

%

Verlag Das Beste GmbH

 

DM200,000

 

Pegasus Medien Produktions- und Vertriebsgesellschaft GmbH

 

GERMANY

 

100

%**

0

%

Reader’s Digest Association Far East Limited

Reader’s Digest Asia, Ltd.

 

99

1

 

Asian Qualiproducts Services, Ltd.

 

HONG KONG

 

100

%

0

%

Reader’s Digest (East Asia), Ltd.
Reader’s Digest Asia, Ltd.

 

9,999
1

 

Reader’s Digest Global Advertising Ltd.

 

HONG KONG

 

100

%

0

%

Reader’s Digest Association Far East Ltd.

 

1
59,999

 

Reader’s Digest  (China) Direct Marketing Services Co., Ltd.

 

HONG KONG

 

60

%(21)

0

%

JSC Publishing House Reader’s Digest

 

No shares issued

 

LLC Publisher Reader’s Digest

 

KAZAKHSTAN

 

100

%

0

%

Pegasus Netherlands Services CV (99%), RD Primary European Holdings, LLC (1%)

 

124,000 euro of share capital

 

Pegasus Netherlands Services Lux Primary SC

 

LUXEMBOURG

 

100

%**

0

%

Pegasus Netherlands Services CV (99%), RD Secondary European Holdings, LLC (1%)

 

€ 83,000 share capital

 

Pegasus Netherlands Services Lux Secondary SCS

 

LUXEMBOURG

 

100

%**

0

%

Pegasus Netherlands Services Lux Secondary SCS

 

1,000 shares of € 25 each

 

RD Luxembourg Tertiary Services

 

LUXEMBOURG

 

100

%**

0

%

 

--------------------------------------------------------------------------------

(18) 10% owned by third party.

 

(19) 10% owned by third party.

 

(20) 1 share owned by an individual.

 

(21) 40% owned by third party.

 

35

--------------------------------------------------------------------------------

 

Foreign

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent
Ownership

 

Equity
Interest 
Required to
be Pledged

 

Reader’s Digest (East Asia) Limited

 

 

Reader’s Digest Asia Ltd.

 

98

1

99,990

400,000
1

 

Reader’s Digest (Malaysia) Sdn. Bhd

 

MALAYSIA

 

100

%

0

%

Caribe Condor, S.A. de C.V.

 

$23,965,884

 

Reader’s Digest México, S.A. de C.V.

 

Mexico

 

99

%

0

%

Caribe Condor, S.A. de C.V.

 

$3,620,460

 

Corporativo Reader’s Digest Mexico, S. de R.L. de C.V.

 

Mexico

 

99

%

0

%

Caribe Condor, S.A. de C.V.

 

$4,999

 

Grupo Editorial Reader’s Digest, S. de R.L. de C.V.

 

Mexico

 

100

%

0

%

Uitgeversmaatschappij The Reader’s Digest N.V.

 

35

 

Distrimedia Services B.V.

 

Netherlands

 

100

%**

0

%

Reader’s Digest World Services S.A.
Reader’s Digest N.V. - S.A.

 

270,000 shares of € 1 each

 

Pegasus Netherlands Services CV

 

Netherlands

 

100

%

0

%

Pegasus UK Holdings Ltd.

 

90,000 shares of € 1 each

 

RD Netherlands Holdings BV

 

Netherlands

 

100

%

0

%

Uitgeversmaatschappij The Reader’s Digest N.V.

 

100 shares

 

Reader’s Digest Netherlands Holdings B.V.

 

Netherlands

 

100

%**

0

%

Reader’s Digest Vyber s.r.o. (Czech Republic)

 

3,380 shares of 10 RON each , 1 class

 

Editura Reader’s Digest SRL

 

Romania

 

100

%**

0

%

JSC Publishing House Reader’s Digest

 

No shares issued

 

LLC Digest Direct

 

Russia

 

100

%**

0

%

Reader’s Digest Deutschland Holding GmbH

 

10

 

JSC Publishing House Reader’s Digest

 

Russia

 

100

%**

0

%

Reader’s Digest Vyber s.r.o.

Reader’s Digest Kiado KFT (Hungary)

 

99.7059%
0.2941%
No shares issued

 

Reader’s Digest Vyber Slovensko, s.r.o.

 

Slovak Republic

 

100

%

0

%

Reader’s Digest Selecciones S.A.

 

199

 

Sociedad Difusión Cultural, S.L.

 

Spain

 

100

%(22)

0

%

 

--------------------------------------------------------------------------------

(22) 1 share held by an individual.

 

36

--------------------------------------------------------------------------------

 

Foreign

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent 
Ownership

 

Equity
Interest
Required to
be Pledged

 

JSC Publishing House Reader’ Digest [Russia]

LLC Digest Direct [Russia]

 

 

90%

10%
No shares issued

 

LLC Direct Digest

 

Ukraine

 

100

%

0

%

JSC Publishing House Reader’s Digest [Russia]

LLC Direct Digest [Ukraine]

 

29%
71%

 

LLC Publisher Reader’s Digest

 

Ukraine

 

100

%

0

%

The Reader’s Digest Association, Inc.

 

 

100,000,000 ordinary shares of ₤ 1 each

 

Pegasus UK Holdings Limited

 

United Kingdom

 

100

%

0

%

Reader’s Digest  Holdings Limited

 

100

 

RD Publications Limited (Previously Berkeley Magazine Ltd.)

 

United Kingdom

 

100

%

0

%

Reader’s Digest  Holdings Limited

 

100

 

Money Magazine Limited

 

United Kingdom

 

100

%

0

%

Reader’s Digest  Holdings Limited

 

201,000

 

Reader’s Digest Financial Services Limited

 

United Kingdom

 

100

%

0

%

Reader’s Digest  Holdings Limited

 

100

 

Fundraising For You Limited

 

United Kingdom

 

100

%

0

%

Reader’s Digest  Holdings Limited

 

19,184,000

 

Reader’s Digest European Systems Ltd.

 

United Kingdom

 

100

%

0

%

Reader’s Digest  Holdings Limited

 

1

 

Reader’s Digest Central & Eastern Europe Limited

 

United Kingdom

 

100

%

0

%

 

37

--------------------------------------------------------------------------------

 

Foreign

 

No. of
Shares

 

Subsidiary / Equity Investment

 

Country
of Incorporation

 

Percent
Ownership

 

Equity
Interest
Required to
be Pledged

 

Reader’s Digest Association Ltd.

 

402 Ordinary shares of nominal value £1 issued as follows:

 

100 shares at £1 per share at a premium of £171,665 per share

 

100 shares at £1 per share at a premium of £2,009 per share

 

202 shares at £1 per share (including original subscriber share)

 

Reader’s Digest Holdings Limited

 

United Kingdom

 

100

%

0

%

 

--------------------------------------------------------------------------------

** Uncertificated.

 

38

--------------------------------------------------------------------------------

 

Schedule 5.18

Collateral Matters

 

Loan Party

 

Filing Office

RDA Holding Co.

 

Delaware Secretary of State

Doctor Acquisition Co.

 

Delaware Secretary of State

The Reader’s Digest Association, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office
United States Copyright Office

Allrecipes.com, Inc.

 

Washington Secretary of State
United States Patent and Trademark Office

Ardee Music Publishing, Inc.

 

Delaware Secretary of State

Books Are Fun, Ltd.

 

Iowa Secretary of State
United StatesPatent and Trademark Office
United States Copyright Office

Christmas Angel Productions, Inc.

 

Delaware Secretary of State

Pegasus Asia Investments Inc.

 

Delaware Secretary of State

Pegasus Finance Corp.

 

Delaware Secretary of State

Pegasus Investment, Inc.

 

Delaware Secretary of State

Pegasus Sales, Inc.

 

Delaware Secretary of State

Pleasantville Music Publishing, Inc.

 

Delaware Secretary of State

QSP, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office

Family Reading Program Corp.

 

Delaware Secretary of State

QSP Distribution Services, LLC

 

Delaware Secretary of State

QSP Products and Programs, LLC

 

Delaware Secretary of State

QSP Sales, LLC

 

Delaware Secretary of State

QSP Services, LLC

 

Delaware Secretary of State

QSP Ventures, LLC

 

Delaware Secretary of State

Fundraising.com, Inc.

 

Delaware Secretary of State

Reiman Media Group, Inc.

 

Delaware Secretary of State
 United States Patent and Trademark Office
 United States Copyright Office

Taste of Home Productions, Inc.

 

Delaware Secretary of State

Taste of Home Media Group, Inc.

 

Delaware Secretary of State

World Wide Country Tours, Inc.

 

Delaware Secretary of State

VideOvation, Inc.

 

Delaware Secretary of State

R. D. Manufacturing Corporation

 

Delaware Secretary of State

RD Publications, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office

Home Service Publications, Inc.

 

Delaware Secretary of State

RD Large Edition, Inc.

 

Delaware Secretary of State

RD Trade Shows, Inc.

 

Delaware Secretary of State

 

--------------------------------------------------------------------------------

 

RD Walking, Inc.

 

Delaware Secretary of State

Retirement Living Publishing Company, Inc.

 

Delaware Secretary of State

Travel Publications, Inc.

 

Delaware Secretary of State

RD Member Services, Inc.

 

Delaware Secretary of State

Reader’s Digest Children’s Publishing, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office

Reader’s Digest Consumer Services, Inc.

 

Delaware Secretary of State

RD Magazine Value Partners, Inc.

 

Delaware Secretary of State

Reader’s Digest Entertainment, Inc.

 

Delaware Secretary of State

Reader’s Digest Financial Services, Inc.

 

Delaware Secretary of State

Taste of Home Entertaining, Inc.

 

Delaware Secretary of State

Reader’s Digest Latinoamerica S.A.

 

Delaware Secretary of State

WAPLA, LLC

 

Delaware Secretary of State

Reader’s Digest Sales and Services, Inc.

 

Delaware Secretary of State

Reader’s Digest Sub Nine, Inc.

 

Delaware Secretary of State

Reader’s Digest Young Families, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office

SMDDMS, Inc.

 

Delaware Secretary of State

The Reader’s Digest Association (Russia) Incorporated

 

Delaware Secretary of State

W.A. Publications, LLC

 

Delaware Secretary of State

 

 

 

Alex Inc.

 

Delaware Secretary of State

Direct Holdings Americas Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office
United States Copyright Office

Direct Holdings Custom Publishing Inc.

 

Delaware Secretary of State

Direct Holdings Customer Service, Inc.

 

Delaware Secretary of State

Direct Holdings Education Inc.

 

Delaware Secretary of State

Direct Holdings Libraries Inc.

 

New York Secretary of State

Direct Holdings U.S. Corp.

 

Delaware Secretary of State

 

 

 

WRC Media Inc.

 

Delaware Secretary of State

United States Patent and Trademark Office

CompassLearning, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office
United States Copyright Office

Weekly Reader Corporation

 

Delaware Secretary of State
United States Patent and Trademark Office

Lifetime Learning Systems, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office

World Almanac Education Group, Inc.

 

Delaware Secretary of State
United States Patent and Trademark Office
United States Copyright Office

Funk & Wagnalls Yearbook Corp.

 

Delaware Secretary of State

Gareth Stevens, Inc.

 

Wisconsin Secretary of State

 

40

--------------------------------------------------------------------------------

 

Schedule 7.01(b)

Existing Liens

 

·                                          UCC-1 financing statement number
52446723 filed with the Delaware Secretary of State on August 8, 2005.  Reader’s
Digest Entertainment, Inc. is the debtor.  Screen Actors Guild, Inc. is the
secured party.  Collateral includes made-for-television motion picture
tentatively entitled “Prisoner of Silence.”

 

·                                          Cash Collateral Security Agreement
made as of July 22, 2005 by and between Weekly Reader Corporation,
CompassLearning, Inc., WRC Media, Inc., World Almanac Education Group, Inc. and
Bank of America, regarding outstanding letters of credit in an aggregate amount
of $2,872,500.

 

·                                          Duplicating and Replicating Services
Agreement effective as of June 7, 2004, by and between Technicolor
Videocassette, Inc. and Technicolor Videocassette of Michigan, Inc.
(collectively, “Technicolor”), and Direct Holdings Americas Inc.  Technicolor
has a possessory lien on videocassets, dvds and certain other materials.

 

--------------------------------------------------------------------------------

 

Schedule 7.02(f)

Existing Investments

 

Issuer

 

State/Country
of
Incorporation

 

Equity Interests

 

No. of Interests

 

Record and Beneficial Owner

BrandDirect Marketing, Inc.

 

Delaware

 

Series A Preferred Stock

 

69,512 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series A Preferred Stock

 

41,707 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series A Preferred Stock

 

41,708 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series A Preferred Stock

 

41,707 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series A Preferred Stock

 

41,708 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series A Preferred Stock

 

69,512 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series B Preferred Stock

 

55,610 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series B Preferred Stock

 

69,512 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series B Preferred Stock

 

55,610 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series B Preferred Stock

 

69,512 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series D Preferred Stock

 

1,112,200 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series D Preferred Stock

 

278,050 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series D Preferred Stock

 

834,150 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series D Preferred Stock Warrant

 

Variable

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series D Preferred Stock Warrant

 

839,807 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing, Inc.

 

Delaware

 

Series D Preferred Stock Warrant

 

839,807 shares

 

The Reader’s Digest Association, Inc.

BrandDirect Marketing (UK) Limited

 

U.K.

 

Shares

 

1,000 shares

 

The Reader’s Digest Association, Inc.

Dynegy, Inc.

 

Illinois

 

Class A Common Stock

 

2,426 shares

 

The Reader’s Digest Association, Inc.

Finet Group Limited (formerly known as Finet International Holdings Ltd. and
China Markets Limited)

 

Cayman Islands

 

Series B Common Shares

 

341,516 shares

 

The Reader’s Digest Association, Inc.

Infocrossing, Inc.

 

Delaware

 

Common Stock Purchase Warrant

 

50,000 shares

 

The Reader’s Digest Association, Inc.

LoyaltyPoint, Inc.

 

Delaware

 

Common Stock

 

3,335,263 shares

 

The Reader’s Digest Association, Inc.

Onvia.com, Inc.

 

Delaware

 

Common Stock

 

2,558 shares

 

The Reader’s Digest Association, Inc.

Onvia.com, Inc.

 

Delaware

 

Common Stock

 

639 shares

 

Reader’s Digest Sales and Services, Inc.

 

--------------------------------------------------------------------------------

 

·              Direct Holdings Australia Pty Limited is party to an Alliance
Sales Agreement for Japan dated as of February 22, 2005, as amended, with Oak
Lawn Marketing Inc.  Although the relationship under the agreement is not
structured as a joint venture entity or partnership for legal purposes, the
arrangement is accounted for as a joint venture.

 

·              CompassLearning, Inc. has a minority investment in ThinkBox, Inc.
represented by 13,632,838 shares of Series C preferred stock, convertible into
common stock equal to 31.06% of Think Box, Inc.’s outstanding common stock.

 

--------------------------------------------------------------------------------

 

Schedule 7.03(b)

Existing Indebtedness

 

Three letters of credit issued by Bank of America on behalf of Weekly Reader
Corporation/WRC Media Inc. in an aggregate amount of $2,872,500.

 

--------------------------------------------------------------------------------

 

Schedule 7.05(k)

Dispositions

 

·              Dispositions of the businesses of (or Equity Interests in)
QSP, Inc., Family Reading Program Corp., QSP Distribution Services, LLC, QSP
Products and Programs, LLC, QSP Sales, LLC, QSP Services, LLC, QSP Ventures,
LLC, Fundraising.com, Inc., RD Magazine Value Partners, Inc., EFundraising.com
Corporation Incorporated/Corporation eFundraising.com Incorporee (Canada), Books
are Fun, Ltd., Weekly Reader Corporation, CompassLearning, Inc. and World
Almanac Education Group.

 

·              The Company is in the process of negotiating the sale of a 15%
interest in Reader’s Digest Book and Home Entertainment (India) Private Limited
to Living Media India Ltd.

 

--------------------------------------------------------------------------------

 

Schedule 7.08

Transactions with Affiliates

 

·                                          Consulting Agreement between Direct
Holdings U.S. Corp., ZelnickMedia Corp. and Strauss Zelnick dated as of
January 23, 2007, providing for the payment of $750,000.  Agreement expires
December 31, 2008.

 

·                                          Management Agreement dated as of
November 17, 1999 among Ripplewood Holdings L.L.C. and CompassLearning, Inc.*

 

·                                          Management Agreement dated as of
November 17, 1999 among Ripplewood Holdings L.L.C. and Weekly Reader
Corporation.*

 

--------------------------------------------------------------------------------

*  Together with the payment of management fees to the Sponsors, not to exceed
$1,875,000 in any fiscal quarter.

 

--------------------------------------------------------------------------------

 

Schedule 7.09

Existing Restrictions

 

None.

 

--------------------------------------------------------------------------------

 

Schedule 10.02

Administrative Agent’s Office, Certain Addresses for Notices

 

If to the Administrative Agent, to:

 

 

 

For Houston Loan and Agency:

 

 

 

Cynthia E. Jasso

 

JPMorgan Chase Bank N.A.

 

Americas Investment Bank Loan Operations

 

Phone: 713-750-2119

 

Fax:713-750-2782

 

 

 

For London:

 

 

 

J.P.Morgan Europe Limited

 

125 London Wall, London EC2Y 5AJ

 

Attn : The Manager

 

Tel : +44 207 777 2434 / +44 207 7772940

 

Fax: +44 207 777 2360

 

 

If to Holdings or Acquisition Co, to:

 

c/o Ripplewood Holdings L.L.C.

 

One Rockefeller Plaza, 32nd Floor

 

New York, NY 10010

 

Attention: Christopher Minnetian, Esq.

 

 

If to Reader’s Digest, to:

 

 

 

The Reader’s Digest Association, Inc.

 

Reader’s Digest Road

 

Pleasantville, NY 10570

 

Attention: Treasurer

 

 

 

Telephone number:

914-244-7683

 

Facsimile number:

914-244-5904

 

Electronic mail address:

william.magill@rd.com

 

Website address:

www.rd.com

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

[FORM OF]

 

COMMITTED LOAN NOTICE

 

To:

JPMorgan Chase Bank, N.A., as Administrative Agent

 

Loan & Agency Services

 

1111 Fannin, 10th Floor

 

Houston, TX 77002-6925

 

Attention: Antonio Adollo

 

[Date]

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of March 2, 2007 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Doctor Acquisition Co., a Delaware corporation (to be merged with and into
Reader’s Digest (as defined herein), the “Company”), RDA Holding Co., a Delaware
corporation (“Holdings”), The Reader’s Digest Association, Inc., a Delaware
corporation (“Reader’s Digest”), the Overseas Borrowers from time to time party
hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, each lender from
time to time party thereto (collectively, the “Lenders” and individually, a
“Lender”), Citicorp North America, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as Co-Syndication Agents, and The Royal Bank of Scotland
plc, as Documentation Agent.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

 

The undersigned Company hereby requests (select one):

 

o  A Borrowing of new Loans

 

o  A conversion of Loans

 

o  A continuation of Loans

 

to be made on the terms set forth below:

 

(A)

Class of Borrowing (Term or Revolving Credit)

 

 

 

(B)

Date of Borrowing, conversion or continuation
(which is a Business Day)

 

 

 

(C)

Aggregate principal amount

 

 

 

(D)

Type of Loan (Eurodollar or Base Rate)

 

 

--------------------------------------------------------------------------------

 

(E)

Initial Interest Period (23)

 

 

[The undersigned Company hereby represents and warrants to the Administrative
Agent and the Lenders that, on the date of this Committed Loan Notice and on the
date of the related Borrowing, the conditions to lending specified in paragraphs
(a) and (b) of Section 4.02 of the Credit Agreement have been satisfied.](24)

 

 

[COMPANY],

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

(23) Applicable for Eurodollar Borrowings/Loans only.

 

(24) Insert bracketed language if the Borrowing is the initial Credit Extension,
to include only those Specified Representations in Section 4.01 of the Credit
Agreement.

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

[FORM OF]

 

SWING LINE LOAN NOTICE

 

To:

JPMorgan Chase Bank, N.A., as Swing Line Lender and Administrative Agent

 

1111 Fannin, 10th Floor

 

Houston, TX 77002

 

Attention: Antonio Adollo

 

[Date]

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement dated as of March 2, 2007 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Doctor Acquisition Co., a Delaware corporation (to be merged with and into
Reader’s Digest (as defined herein), the “Company”), RDA Holding Co., a Delaware
corporation (“Holdings”), The Reader’s Digest Association, Inc., a Delaware
corporation (“Reader’s Digest”), the Overseas Borrowers from time to time party
hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, each lender from
time to time party thereto (collectively, the “Lenders” and individually, a
“Lender”), Citicorp North America, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as Co-Syndication Agents, and The Royal Bank of Scotland
plc, as Documentation Agent.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

 

(A)

Aggregate principal amount
to be borrowed(25)

 

 

 

 

(B)

Date of Borrowing
(which is a Business Day)

 

 

 

 

[THE READER’S DIGEST ASSOCIATION, INC.],

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

(25) Shall be a minimum of $250,000.

 

--------------------------------------------------------------------------------

 

EXHIBIT C-1

 

LENDER: [·]

PRINCIPAL AMOUNT: $[·]

 

[FORM OF] TERM NOTE

 

New York, New York

[Date]

 

FOR VALUE RECEIVED, the undersigned, Doctor Acquisition Co., a Delaware
corporation (to be merged with and into Reader’s Digest (as defined herein), the
“Company”), hereby promises to pay to the Lender set forth above (the “Lender”),
in lawful money of the United States of America in immediately available funds
at the relevant Administrative Agent’s Office (such term, and each other
capitalized term used but not defined herein, having the meaning assigned to it
in the Credit Agreement dated as of March 2, 2007 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Company, RDA Holding Co., a Delaware corporation, The Reader’s Digest
Association, Inc., a Delaware corporation (“Reader’s Digest”), the Overseas
Borrowers from time to time party hereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, the lenders from time to time party thereto, Citicorp
North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Co-Syndication Agents, and The Royal Bank of Scotland plc, as Documentation
Agent (i) on the Maturity Date the principal sum of                  Dollars
($        ) or, if less, the then unpaid principal amount of all Term Loans made
by the Lender to the Company pursuant to the Credit Agreement and (ii) on each
Interest Payment Date, interest at the rate or rates per annum as provided in
the Credit Agreement on the unpaid principal amount of all Term Loans made by
the Lender to the Company pursuant to the Credit Agreement.

 

The Company promises to pay interest, on demand, on any overdue principal and,
to the extent permitted by applicable Law, overdue interest from their due dates
at the rate or rates provided in the Credit Agreement.

 

The Company hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever.

 

All borrowings evidenced by this note and all payments and prepayments of the
principal hereof and interest hereon and the respective dates thereof shall be
endorsed by the holder hereof on the schedule attached hereto and made a part
hereof or on a continuation thereof which shall be attached hereto and made a
part hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such notation shall not affect the obligations of the Company
under this note.

 

This note is one of the Term Notes referred to in the Credit Agreement that,
among other things, contains provisions for the acceleration of the maturity
hereof upon the continuance of an Event of Default, for optional and mandatory
prepayment of the principal hereof prior to the Maturity Date with respect to
the Term Loans and for the

 

--------------------------------------------------------------------------------

 

amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions specified in the Credit Agreement.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

 

***********************************************

 

 

DOCTOR ACQUISITION CO.,

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

LOANS AND PAYMENTS

 

Date

 

Amount of Loan

 

Maturity
Date

 

Payments of
Principal/Interest

 

Principal
Balance of
Note

 

Name of
Person
Making the
Notation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C-2

 

LENDER: [·]

PRINCIPAL AMOUNT: $[·]

 

[FORM OF] REVOLVING CREDIT NOTE

 

New York, New York

[Date]

 

FOR VALUE RECEIVED, the undersigned, Doctor Acquisition Co., a Delaware
corporation (to be merged with and into Reader’s Digest (as defined herein), the
“Company”), hereby promises to pay to the Lender set forth above (the “Lender”),
in lawful money of the United States of America in immediately available funds
at the relevant Administrative Agent’s Office (such term, and each other
capitalized term used but not defined herein, having the meaning assigned to it
in the Credit Agreement dated as of March 2, 2007 (as the same may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Company, RDA Holding Co., a Delaware corporation, The Reader’s Digest
Association, Inc., a Delaware corporation (“Reader’s Digest”), the Overseas
Borrowers from time to time party hereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, the lenders from time to time party thereto, Citicorp
North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Co-Syndication Agents, and The Royal Bank of Scotland plc, as Documentation
Agent (i) on the Maturity Date the principal sum of                  Dollars
($        ) or, if less, the then unpaid principal amount of all Term Loans made
by the Lender to the Company pursuant to the Credit Agreement and (ii) on each
Interest Payment Date, interest at the rate or rates per annum as provided in
the Credit Agreement on the unpaid principal amount of all Term Loans made by
the Lender to the Company pursuant to the Credit Agreement.

 

The Company promises to pay interest, on demand, on any overdue principal and,
to the extent permitted by applicable Law, overdue interest from their due dates
at the rate or rates provided in the Credit Agreement.

 

The Company hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever.

 

All borrowings evidenced by this note and all payments and prepayments of the
principal hereof and interest hereon and the respective dates thereof shall be
endorsed by the holder hereof on the schedule attached hereto and made a part
hereof or on a continuation thereof which shall be attached hereto and made a
part hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such notation shall not affect the obligations of the Company
under this note.

 

This note is one of the Revolving Credit Notes referred to in the Credit
Agreement that, among other things, contains provisions for the acceleration of
the maturity hereof upon the continuance of an Event of Default, for optional
and mandatory prepayment of the principal hereof prior to the Maturity Date with
respect to the Revolving Credit Facility and

 

--------------------------------------------------------------------------------

 

for the amendment or waiver of certain provisions of the Credit Agreement, all
upon the terms and conditions specified in the Credit Agreement.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

 

 

 

 

DOCTOR ACQUISITION CO.,

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

LOANS AND PAYMENTS

 

Date

 

Amount of Loan

 

Maturity
Date

 

Payments of
Principal/Interest

 

Principal
Balance of
Note

 

Name of
Person
Making the
Notation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT C-3

 

LENDER: [·]

PRINCIPAL AMOUNT: € [·]

 

[FORM OF] EURO TERM NOTE

 

New York, New York

[Date]

 

FOR VALUE RECEIVED, the undersigned, RD German Holdings GmbH, a German
corporation (the “Company”), hereby promises to pay to the Lender set forth
above (the “Lender”), in Euros in immediately available funds at the relevant
Administrative Agent’s Office (such term, and each other capitalized term used
but not defined herein, having the meaning assigned to it in the Credit
Agreement dated as of March 2, 2007 (as the same may be amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among Doctor
Acquisition Co., a Delaware corporation, RDA Holding Co., a Delaware
corporation, The Reader’s Digest Association, Inc., a Delaware corporation
(“Reader’s Digest”), the Overseas Borrowers from time to time party hereto,
JPMorgan Chase Bank, N.A., as Administrative Agent, the lenders from time to
time party thereto, Citicorp North America, Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as Co-Syndication Agents, and The Royal Bank of
Scotland plc, as Documentation Agent (i) on the Maturity Date the principal sum
of                  Euros (€        ) or, if less, the then unpaid principal
amount of all Euro Term Loans made by the Lender to the Company pursuant to the
Credit Agreement and (ii) on each Interest Payment Date, interest at the rate or
rates per annum as provided in the Credit Agreement on the unpaid principal
amount of all Euro Term Loans made by the Lender to the Company pursuant to the
Credit Agreement.

 

The Company promises to pay interest, on demand, on any overdue principal and,
to the extent permitted by applicable Law, overdue interest from their due dates
at the rate or rates provided in the Credit Agreement.

 

The Company hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever.

 

All borrowings evidenced by this note and all payments and prepayments of the
principal hereof and interest hereon and the respective dates thereof shall be
endorsed by the holder hereof on the schedule attached hereto and made a part
hereof or on a continuation thereof which shall be attached hereto and made a
part hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such notation shall not affect the obligations of the Company
under this note.

 

This note is one of the Euro Term Notes referred to in the Credit Agreement
that, among other things, contains provisions for the acceleration of the
maturity hereof upon the continuance of an Event of Default, for optional and
mandatory prepayment of the principal hereof prior to the Maturity Date with
respect to the Euro Term Loans and for the amendment or

 

--------------------------------------------------------------------------------

 

waiver of certain provisions of the Credit Agreement, all upon the terms and
conditions specified in the Credit Agreement.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.

 

***********************************************

 

 

 

RD GERMAN HOLDINGS GMBH,

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

LOANS AND PAYMENTS

 

Date

 

Amount of Loan

 

Maturity
Date

 

Payments of
Principal/Interest

 

Principal
Balance of
Note

 

Name of
Person
Making the
Notation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

[FORM OF]

 

COMPLIANCE CERTIFICATE

 

Reference is made to the Credit Agreement dated as of March 2, 2007 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among Doctor Acquisition Co., a Delaware corporation (to be merged with and into
Reader’s Digest (as defined herein), the “Company”), RDA Holding Co., a Delaware
corporation (“Holdings”), The Reader’s Digest Association, Inc., a Delaware
corporation (“Reader’s Digest”), the Overseas Borrowers from time to time party
hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, each lender from
time to time party thereto (collectively, the “Lenders” and individually, a
“Lender”), Citicorp North America, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as Co-Syndication Agents, and The Royal Bank of Scotland
plc, as Documentation Agent.  Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

 

Pursuant to Section 6.02 of the Credit Agreement, the undersigned, in his/her
capacity as a Responsible Officer of the Company certifies as follows:

 

1.                                       [Attached hereto as Exhibit [A] is the
audited consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of the fiscal year ended [     ] and related
consolidated statements of income or operations, stockholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all prepared in accordance with GAAP,
audited and accompanied by a report and opinion of [        ], prepared in
accordance with generally accepted auditing standards in the United States and
not subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit.]

 

2.                                       [Attached hereto as Exhibit [B] is the
unaudited consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of the fiscal quarter ended [     ] and the related
unaudited (i) consolidated statements of income or operations for such fiscal
quarter and for the portion of the fiscal year then ended and (ii) consolidated
statements of cash flows for the portion of the fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year.  These present fairly in all material respects the
consolidated financial condition, results of operations, stockholders’ equity
and cash flows of the Company and its consolidated Subsidiaries in accordance
with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes.]

 

3.                                       To my knowledge, on the date hereof, no
Default or Event of Default has occurred and is continuing.  [If unable to
provide the foregoing certification, fully describe the reasons therefor and
circumstances thereof and any action taken or proposed to be taken with respect
thereto on Annex A attached hereto.]

 

--------------------------------------------------------------------------------

 

4.                                       The following represent true and
accurate calculations to be used to determine whether the Company is in
compliance with the financial covenant set forth in Section 7.10 of the Credit
Agreement as of the last day of the Test Period ended [   ] (the “Certificate
Period”):

 

TOTAL LEVERAGE RATIO.

 

Consolidated Total Debt=

[          ]

Consolidated EBITDA=

[          ]

Actual Ratio=

[          ] to 1.0

Required Ratio=

[          ] to 1.0

 

SUPPORTING DETAIL SHOWING THE CALCULATION OF CONSOLIDATED TOTAL DEBT, AS OF THE
LAST DAY OF THE CERTIFICATE PERIOD, IS ATTACHED HERETO AS SCHEDULE 1. 
SUPPORTING DETAIL SHOWING THE CALCULATION OF CONSOLIDATED EBITDA, FOR THE
CERTIFICATE PERIOD, IS ATTACHED HERETO AS SCHEDULE 2.

 

5.                                       THE COMPANY AND ITS RESTRICTED
SUBSIDIARIES ARE IN COMPLIANCE WITH SECTION 7.14 OF THE CREDIT AGREEMENT.  FOR
THE CURRENT FISCAL YEAR THE LIMIT ON CAPITAL EXPENDITURES IS $[     ] [, WHICH
AMOUNT INCLUDES THE UNUSED AMOUNT CARRIED FORWARD FROM THE PREVIOUS FISCAL YEAR
PURSUANT TO SECTION 7.14 OF THE CREDIT AGREEMENT].  THE AMOUNT OF CAPITAL
EXPENDITURES INCURRED BY THE COMPANY AND ITS RESTRICTED SUBSIDIARIES IN THE
CURRENT FISCAL YEAR THROUGH THE END OF THE FISCAL QUARTER MOST RECENTLY ENDED IS
$[     ].  SUPPORTING DETAIL SHOWING THE CALCULATION OF THE FOREGOING CAPITAL
EXPENDITURES IS ATTACHED HERETO AS SCHEDULE 4.

 

IN WITNESS WHEREOF, the undersigned, in his/her capacity as a Responsible
Officer of the Company, has executed this certificate for and on behalf of the
Company and has caused this certificate to be delivered this          day of
                  .

 

 

THE READER’S DIGEST ASSOCIATION, INC.

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT E

 

[FORM OF]

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between the
Assignor (as defined below) and the Assignee (as defined below).  Capitalized
terms used in this Assignment and Assumption and not otherwise defined herein
have the meanings specified in the Credit Agreement dated as of March 2, 2007
(as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Doctor Acquisition Co., a Delaware corporation (to be merged
with and into Reader’s Digest (as defined herein), the “Company”), RDA Holding
Co., a Delaware corporation (“Holdings”), The Reader’s Digest Association, Inc.,
a Delaware corporation (“Reader’s Digest”), the Overseas Borrowers from time to
time party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, each
lender from time to time party thereto (collectively, the “Lenders” and
individually, a “Lender”), Citicorp North America, Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as Co-Syndication Agents, and The Royal
Bank of Scotland plc, as Documentation Agent, receipt of a copy of which is
hereby acknowledged by the Assignee.  The Standard Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the facility identified below
(including participations in any Letters of Credit or Swing Line Loans included
in such facility) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights
and obligations sold and assigned pursuant to clause (i) above (the rights and
obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the “Assigned Interest”).  Such sale and
assignment is without recourse to the Assignor and, except as expressly provided
in this Assignment and Assumption, without representation or warranty by the
Assignor.

 

1.                                       Assignor (the “Assignor”):

 

--------------------------------------------------------------------------------

 

2.                                       Assignee (the “Assignee”):

 

Assignee is an Affiliate of: [Name of Lender]

 

Assignee is an Approved Fund of: [Name of Lender]

 

3.                                       Borrowers:  The Reader’s Digest
Association, Inc.

 

4.                                       Administrative Agent:  JPMorgan Chase
Bank, N.A.

 

5.                                       Assigned Interest:

 

Facility

 

Aggregate Amount
of
Commitment/Loans
of all Lenders

 

Amount of
Commitment/Loans
Assigned

 

Percentage
Assigned of
Commitment/
Loans(26)

 

Revolving Credit Facility

 

$

  

 

$

  

 

%

 

Term Loans

 

$

  

 

$

  

 

%

 

Euro Term Loans

 

€

  

 

€

  

 

%

 

 

Effective Date:

 

[To be inserted by Administrative Agent and which shall be the Effective Date of
Recordation of Transfer in the Register therefore.]

 

--------------------------------------------------------------------------------

(26)  The Assignee (in the case an Assignee is not a Lender) agrees to deliver
to the Administrative Agent a completed Administrative Questionnaire in which
the Assignee designates one or more credit contacts to whom all syndicate-level
information (which may contain material non-public information about the Loan
Parties and their Related Parties or their respective securities) will be made
available and who may receive such information in accordance with the Assignee’s
compliance procedures and applicable laws, including Federal and state
securities laws.

 

--------------------------------------------------------------------------------

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

 

 

JPMORGAN CHASE BANK, N.A., as Assignor,

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

 

[NAME OF ASSIGNEE], as Assignee,

 

 

 

by

 

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

[Consented to and](27) Accepted:

 

JPMORGAN CHASE BANK, N.A.

as Administrative Agent,

 

by

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

[Consented to:

 

[L/C ISSUER], as L/C Issuer,

 

by

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

JPMORGAN CHASE BANK, N.A., as Swing Line Lender,

 

by

 

 

 

 

Name:

 

 

Title:]](28)

 

 

--------------------------------------------------------------------------------

(27)  No consent of the Administrative Agent shall be required for an assignment
of a Term Loan or a Euro Term Loan to a Lender, an Affiliate of a Lender or an
Approved Fund.

 

(28)  No consent of any L/C Issuer or the Swing Line Lender shall be required
for an assignment of a Term Loan or a Euro Term Loan.

 

--------------------------------------------------------------------------------

 

[THE READER’S DIGEST ASSOCIATION, INC.

 

by

 

 

 

 

Name:

 

 

Title:](29)

 

 

--------------------------------------------------------------------------------

(29)  No consent of the Company shall be required for an assignment to a Lender,
an Affiliate of a Lender, an Approved Fund or, if an Event of Default under
Section 8.01(a), (f) or (g) of the Credit Agreement has occurred and is
continuing, any Assignee.

 

--------------------------------------------------------------------------------

 

Annex 1

 

CREDIT AGREEMENT(30)

 

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

 

1.  Representations and Warranties.

 

1.1  Assignor.  The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, (iii) the financial
condition of Holdings, the Company, or any of their Subsidiaries or Affiliates
or any other Person obligated in respect of the Credit Agreement or (iv) the
performance or observance by Holdings, the Company, or any of their Subsidiaries
or Affiliates or any other Person of any of their obligations under the Credit
Agreement.

 

1.2.  Assignee.  The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6.01 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the

 

--------------------------------------------------------------------------------

(30)  Capitalized terms used in this Assignment and Assumption and not otherwise
defined herein have the meanings specified in the Credit Agreement dated as of
March [  ], 2007 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Doctor Acquisition Co., a Delaware
corporation (to be merged with and into Reader’s Digest (as defined herein), the
“Company”), RDA Holding Co., a Delaware corporation (“Holdings”), The Reader’s
Digest Association, Inc., a Delaware corporation (“Reader’s Digest”), the
Overseas Borrowers from time to time party hereto, JPMorgan Chase Bank, N.A., as
Administrative Agent, each lender from time to time party thereto (collectively,
the “Lenders” and individually, a “Lender”), Citicorp North America, Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Co-Syndication Agents,
and The Royal Bank of Scotland plc, as Documentation Agent.

 

--------------------------------------------------------------------------------

 

Assigned Interest on the basis of which it has made such analysis and decision
independently and without reliance on any Agent or any other Lender, and (v) if
it is a Foreign Lender, attached to this Assignment and Assumption is any
documentation required to be delivered by it pursuant to Section 10.15 of the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Assignor, any 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 the Credit Agreement, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender.

 

2.  Payments.  From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

 

3.  General Provisions.  This Assignment and Assumption shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors and assigns.  This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. 
Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by facsimile or other electronic transmission shall be effective as
delivery of a manually executed counterpart of this Assignment and Assumption. 
This Assignment and Assumption shall be construed in accordance with and
governed by the law of the State of New York.

 

--------------------------------------------------------------------------------

EXHIBIT F

 

 

 

GUARANTEE AND COLLATERAL AGREEMENT

 

made by

 

DOCTOR ACQUISITION CO.,

 

RDA HOLDING CO.,

 

THE READER’S DIGEST ASSOCIATION, INC.

 

and

 

THE GUARANTORS IDENTIFIED HEREIN

 

in favor of

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

Dated as of March 2, 2007

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 1.

DEFINED TERMS

1

1.1.

Definitions

1

1.2.

Other Definitional Provisions

5

 

 

 

Section 2.

GUARANTEE

5

2.1.

Guarantee

5

2.2.

Right of Contribution

6

2.3.

No Subrogation

6

2.4.

Amendments, etc., with respect to the Borrower Obligations

7

2.5.

Guarantee Absolute and Unconditional

7

2.6.

Reinstatement

8

2.7.

Payments

8

 

 

 

Section 3.

GRANT OF SECURITY INTEREST

8

 

 

 

Section 4.

REPRESENTATIONS AND WARRANTIES

10

4.1.

Title; No Other Liens

10

4.2.

Perfected First Priority Liens

11

4.3.

Jurisdiction of Organization

11

4.4.

Inventory and Equipment

11

4.5.

Farm Products

11

4.6.

Investment Property

11

4.7.

Receivables

12

4.8.

Intellectual Property

12

4.9.

Commercial Tort Claims

12

 

 

 

Section 5.

COVENANTS

12

5.1.

Delivery of Instruments, Certificated Securities and Chattel Paper

13

5.2.

Maintenance of Insurance

13

5.3.

Maintenance of Perfected Security Interest; Further Documentation

13

5.4.

Changes in Locations, Name, etc.

14

5.5.

Notices

14

5.6.

Investment Property

14

5.7.

Receivables

16

5.8.

Intellectual Property

16

5.9.

Commercial Tort Claims

18

 

 

 

Section 6.

REMEDIAL PROVISIONS

18

6.1.

Certain Matters Relating to Receivables

18

6.2.

Communications with Obligors; Grantors Remain Liable

19

6.3.

Pledged Equity

20

6.4.

Proceeds to be Turned Over to Administrative Agent

21

 

i

--------------------------------------------------------------------------------

 

 

 

Page

 

 

 

6.5.

Application of Proceeds

21

6.6.

Code and Other Remedies

21

6.7.

Registration Rights

22

6.8.

Deficiency

23

 

 

 

Section 7.

THE ADMINISTRATIVE AGENT

23

7.1.

Administrative Agent’s Appointment as Attorney-in-Fact, etc.

23

7.2.

Duty of Administrative Agent

25

7.3.

Execution of Financing Statements

25

7.4.

Authority of Administrative Agent

26

 

 

 

Section 8.

MISCELLANEOUS

26

8.1.

Amendments in Writing

26

8.2.

Notices

26

8.3.

No Waiver by Course of Conduct; Cumulative Remedies

26

8.4.

Enforcement Expenses; Indemnification

26

8.5.

Successors and Assigns

27

8.6.

Setoff

27

8.7.

Counterparts

27

8.8.

Severability

28

8.9.

Section Headings

28

8.10.

Integration

28

8.11.

GOVERNING LAW

28

8.12.

Submission To Jurisdiction; Waivers

28

8.13.

Acknowledgments

29

8.14.

Additional Guarantors and Grantors

29

8.15.

Releases

29

8.16.

WAIVER OF JURY TRIAL

30

8.17.

Effectiveness of the Merger; Assignment and Delegation to and Assumption by
Reader’s Digest

30

8.18.

German Borrower Security

30

8.19.

Parallel Obligations

31

 

SCHEDULES

 

Schedule 1

Notice Addresses

Schedule 2

Investment Property

Schedule 3

Perfection Matters

Schedule 4

Jurisdictions of Organization

Schedule 5

Inventory and Equipment Locations

Schedule 6

Intellectual Property

Schedule 7

Commercial Tort Claims

 

 

ANNEX

 

Annex 1

Form of Security Agreement Supplement

Annex 2

Form of Perfection Certificate

 

ii

--------------------------------------------------------------------------------

 

GUARANTEE AND COLLATERAL AGREEMENT, dated as of March 2, 2007, made by each of
the signatories hereto (other than the German Borrower, and together with any
other entity that may become a party hereto as provided herein, the “Grantors”),
in favor of JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such
capacity, the “Administrative Agent”) for the lending and other financial
institutions (the “Lenders”) from time to time parties to the Credit Agreement,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”), among DOCTOR ACQUISITION CO., a Delaware
corporation (to be merged with and into Reader’s Digest (as defined below), the
“Company”), RDA HOLDING CO., a Delaware corporation (“Holdings”), THE READER’S
DIGEST ASSOCIATION, INC., a Delaware corporation (“Reader’s Digest”), the
Overseas Borrowers from time to time party thereto (together with the Company,
the “Borrowers”), the Lenders and the Administrative Agent.

 

W I T N E S S E T H:

 

WHEREAS, Holdings, the Borrowers, the Lenders and the Administrative Agent have
entered into the Credit Agreement, pursuant to which the Lenders have severally
agreed to make extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein;

 

WHEREAS, each Borrower is a member of an affiliated group of companies that,
following the consummation of the Acquisitions, will include each other Grantor;

 

WHEREAS, the proceeds of the extensions of credit under the Credit Agreement
will be used in part to enable the Borrowers to make valuable transfers to one
or more of the other Grantors in connection with the operation of their
respective businesses;

 

WHEREAS, the Borrowers and the other Grantors are engaged in related businesses,
and each Grantor will derive substantial direct and indirect benefit from the
making of the extensions of credit under the Credit Agreement; and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders to make
their respective extensions of credit to the Borrowers under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Secured Parties;

 

NOW, THEREFORE, in consideration of the premises and the agreements hereinafter
set forth, and in order to induce the Administrative Agent and the Lenders to
enter into the Credit Agreement and in order to induce the Lenders to make their
respective extensions of credit to the Borrowers thereunder, each Grantor hereby
agrees with the Administrative Agent, for the ratable benefit of the Secured
Parties, as follows:

 

SECTION 1.                                DEFINED TERMS

 

1.1.                              Definitions.  (a)  Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement, and the following terms are used
herein as defined in the New York UCC:  Accounts, Certificated Security, Chattel
Paper, Commercial Tort Claims, Documents,

 

--------------------------------------------------------------------------------

 

Equipment, Farm Products, General Intangibles, Instruments, Inventory, Letter of
Credit Rights and Supporting Obligations.

 

(B)         THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

“Agreement”:  this Guarantee and Collateral Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

 

“Applicable Governmental Authority”:  as defined in Section 5.7(c).

 

“Borrower Obligations”:  the “Obligations” as defined in the Credit Agreement.

 

“Collateral”:  as defined in Section 3.

 

“Collateral Account”:  any collateral account established by the Administrative
Agent as provided in Section 6.1 or 6.4.

 

“Copyrights”:  (i) all copyrights arising under the laws of the United States,
any other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished (including, without
limitation, those listed in Schedule 6), all registrations and recordings
thereof, and all applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the United States
Copyright Office, and (ii) the right to obtain all renewals thereof.

 

“Copyright Licenses”:  any written agreement naming any Grantor as licensor or
licensee, granting any right under any Copyright, including, without limitation,
the grant of rights to manufacture, distribute, exploit and sell materials
derived from any Copyright.

 

“Deposit Account”:  as defined in the Uniform Commercial Code of any applicable
jurisdiction and, in any event, including, without limitation, any demand, time
savings, passbook or like account maintained with a depositary institution.

 

“Excluded Property”: as defined in Section 3.

 

“Foreign Subsidiary”:  any direct or indirect Restricted Subsidiary of the
Company which (i) is not a Domestic Subsidiary or (ii) is set forth on Schedule
1.01E to the Credit Agreement.

 

“Foreign Subsidiary Voting Stock”:  the voting Equity Interests of any Foreign
Subsidiary and of any Domestic Subsidiary substantially all of whose assets
consist of voting Equity Interests of one or more Foreign Subsidiaries.

 

“Guarantor Obligations”:  with respect to any Guarantor, all obligations and
liabilities of such Guarantor which may arise under or in connection with this
Agreement (including, without limitation, Section 2) or any other Loan Document
or any Secured Hedge Agreement to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or

 

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otherwise (including, without limitation, all Attorney Costs that are required
to be paid by such Guarantor pursuant to the terms of this Agreement or any
other Loan Document).

 

“Guarantors”:  the collective reference to each Grantor other than the Company;
provided that the term “Guarantors” shall include the Company in the case of the
Overseas Obligations.

 

“Intellectual Property”:  the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all rights to sue at
law or in equity for any infringement or other impairment thereof, including the
right to receive all proceeds and damages therefrom.

 

“Intercompany Note”:  any promissory note evidencing loans made by any Grantor
to Holdings or any of its Subsidiaries.

 

“Investment Property”:  the collective reference to (i) all “investment
property” as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Foreign Subsidiary Voting Stock and any Equity Interests of
Unrestricted Subsidiaries excluded from the definition of “Pledged Equity”) and
(ii) whether or not constituting “investment property” as so defined, all
Pledged Debt and all Pledged Equity.

 

“Issuers”:  the collective reference to each issuer of any Investment Property.

 

“LTIBR”:  any interest-bearing receivables, including deposits or other funds,
with a maturity that qualifies as long-term pursuant to section 8 no. 1 German
Trade Tax Act (Gewerbesteuergesetz) to be applied mutatis mutandis in accordance
with marginal notes 20 and 37 of the decree to § 8a of the German Corporate
Income Tax Act (Körperschaftsteuergesetz) dated July 15, 2004.

 

“New York UCC”:  the Uniform Commercial Code as from time to time in effect in
the State of New York.

 

“Obligations”:  (i) in the case of each Borrower, its Borrower Obligations, and
(ii) in the case of each Guarantor, its Guarantor Obligations.

 

“Patents”:  (i) all letters patent of the United States, any other country or
any political subdivision thereof, all reissues and extensions thereof and all
goodwill associated therewith, including, without limitation, any of the
foregoing referred to in Schedule 6, (ii) all applications for letters patent of
the United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule 6, and (iii) all rights to obtain any reissues
or extensions of the foregoing.

 

“Patent License”:  all agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in

 

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whole or in part by a Patent, including, without limitation, any of the
foregoing referred to in Schedule 6.

 

“Perfection Certificate” means a certificate substantially in the form of Annex
2, completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by the associate general counsel or the chief legal
officer of Reader’s Digest.

 

“Pledged Debt”:  all promissory notes listed on Schedule 2, all Intercompany
Notes at any time issued to any Grantor and all other promissory notes issued to
or held by any Grantor (other than promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of business).

 

“Pledged Equity”:  the Equity Interests listed on Schedule 2, together with any
other shares, stock certificates, options or rights of any nature whatsoever in
respect of the Equity Interests of any Person that may be issued or granted to,
or held by, any Grantor while this Agreement is in effect; provided that in no
event shall (i) more than 65% of the issued and outstanding Foreign Subsidiary
Voting Stock of any Foreign Subsidiary or of any Domestic Subsidiary
substantially all of whose assets consist of voting Equity Interests of one or
more Foreign Subsidiaries, (ii) Equity Interests of any Unrestricted Subsidiary,
(iii) the Company Preferred Stock or (iv) Equity Interests of any Restricted
Subsidiary pledged to secure Indebtedness permitted under Section 7.03(g) of the
Credit Agreement constitute Pledged Equity or be required to be pledged
hereunder.

 

“Proceeds”:  all “proceeds” as such term is defined in Section 9-102(a)(64) of
the New York UCC and, in any event, shall include, without limitation, all
dividends or other income from the Investment Property, collections thereon or
distributions or payments with respect thereto.

 

“Receivable”:  any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel
Paper and whether or not it has been earned by performance (including, without
limitation, any Account).

 

“Secured Parties”:  the collective reference to the Administrative Agent, the
other Agents, the L/C Issuers, the Lenders, the Hedge Banks, any Affiliate of a
Lender, the Supplemental Administrative Agent and each co-agent or sub-agent
appointed by the Administrative Agent from time to time pursuant to
Section 9.01(c) of the Credit Agreement, to which Borrower Obligations or
Guarantor Obligations, as applicable, are owed.

 

“Securities Act”:  the Securities Act of 1933, as amended.

 

“Specified Assets” means (a) LTIBR and (b) following any amendment or
replacement of § 8a of the German Corporate Income Tax Act
(Körperschaftsteuergesetz), any other property or assets owned by any Loan Party
or any other provider of security, direct or indirect access to which property
or assets (whether through inclusion in the Collateral or otherwise) would
result in adverse tax

 

4

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consequences to Holdings and its Subsidiaries as a consequence of any such
amendment or replacement, provided that the aggregate fair market value of the
property and assets included in the definition of Specified Assets pursuant to
this clause (b) shall not exceed an amount equal to 10% of the consolidated
total assets of the German Borrower and its Subsidiaries.

 

“Subsidiary Guarantor”:  any Subsidiary of the Company that is or becomes a
party to this Agreement.

 

“Trademarks”:  (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers, and all goodwill associated therewith,
now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to in Schedule 6,
and (ii) the right to obtain all renewals thereof.

 

“Trademark License”:  any agreement, whether written or oral, providing for the
grant by or to any Grantor of any right to use any Trademark.

 

1.2.                              Other Definitional Provisions.  (a)  The words
“hereof,” “herein, “ “hereto” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.

 

(B)         THE MEANINGS GIVEN TO TERMS DEFINED HEREIN SHALL BE EQUALLY
APPLICABLE TO BOTH THE SINGULAR AND PLURAL FORMS OF SUCH TERMS.

 

(C)          WHERE THE CONTEXT REQUIRES, TERMS RELATING TO THE COLLATERAL OR ANY
PART THEREOF, WHEN USED IN RELATION TO A GRANTOR, SHALL REFER TO SUCH GRANTOR’S
COLLATERAL OR THE RELEVANT PART THEREOF.

 

SECTION 2.                                GUARANTEE

 

2.1.                              Guarantee.  (a)  Each of the Guarantors
hereby, jointly and severally, unconditionally and irrevocably, guarantees to
the Administrative Agent, for the ratable benefit of the Secured Parties and
their respective successors and permitted indorsees, transferees and assigns,
the prompt and complete payment and performance by the Borrowers when due
(whether at the stated maturity, by acceleration or otherwise) of the Borrower
Obligations.

 

(B)         ANYTHING HEREIN OR IN ANY OTHER LOAN DOCUMENT TO THE CONTRARY
NOTWITHSTANDING, THE MAXIMUM LIABILITY OF EACH GUARANTOR HEREUNDER AND UNDER THE
OTHER LOAN DOCUMENTS SHALL IN NO EVENT EXCEED THE AMOUNT WHICH CAN BE GUARANTEED
BY SUCH GUARANTOR UNDER APPLICABLE FEDERAL AND STATE LAWS RELATING TO THE
INSOLVENCY OF DEBTORS (AFTER GIVING EFFECT TO THE RIGHT OF CONTRIBUTION
ESTABLISHED IN SECTION 2.2).

 

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(C)          EACH GUARANTOR AGREES THAT THE BORROWER OBLIGATIONS MAY AT ANY TIME
AND FROM TIME TO TIME EXCEED THE AMOUNT OF THE LIABILITY OF SUCH GUARANTOR
HEREUNDER WITHOUT IMPAIRING THE GUARANTEE CONTAINED IN THIS SECTION 2 OR
AFFECTING THE RIGHTS AND REMEDIES OF THE ADMINISTRATIVE AGENT OR ANY LENDER
HEREUNDER.

 

(D)         THE GUARANTEE CONTAINED IN THIS SECTION 2 SHALL REMAIN IN FULL FORCE
AND EFFECT UNTIL ALL THE OBLIGATIONS (OTHER THAN CONTINGENT INDEMNIFICATION AND
CONTINGENT EXPENSE REIMBURSEMENT OBLIGATIONS, ANY OBLIGATIONS IN RESPECT OF
SECURED HEDGE AGREEMENTS AND CASH MANAGEMENT OBLIGATIONS) SHALL HAVE BEEN
SATISFIED BY PAYMENT IN FULL, NO LETTER OF CREDIT SHALL BE OUTSTANDING AND THE
COMMITMENTS SHALL BE TERMINATED, NOTWITHSTANDING THAT FROM TIME TO TIME DURING
THE TERM OF THE CREDIT AGREEMENT THE BORROWERS MAY BE FREE FROM ANY BORROWER
OBLIGATIONS.

 

(E)          EXCEPT AS PROVIDED IN SECTION 8.15, NO PAYMENT MADE BY ANY
BORROWER, ANY OF THE GUARANTORS, ANY OTHER GUARANTOR OR ANY OTHER PERSON OR
RECEIVED OR COLLECTED BY THE ADMINISTRATIVE AGENT OR ANY LENDER FROM ANY
BORROWER, ANY OF THE GUARANTORS, ANY OTHER GUARANTOR OR ANY OTHER PERSON BY
VIRTUE OF ANY ACTION OR PROCEEDING OR ANY SETOFF, APPROPRIATION OR APPLICATION
AT ANY TIME OR FROM TIME TO TIME IN REDUCTION OF OR IN PAYMENT OF THE BORROWER
OBLIGATIONS SHALL BE DEEMED TO MODIFY, REDUCE, RELEASE OR OTHERWISE AFFECT THE
LIABILITY OF ANY GUARANTOR HEREUNDER WHICH SHALL, NOTWITHSTANDING ANY SUCH
PAYMENT (OTHER THAN ANY PAYMENT MADE BY SUCH GUARANTOR IN RESPECT OF THE
BORROWER OBLIGATIONS OR ANY PAYMENT RECEIVED OR COLLECTED FROM SUCH GUARANTOR IN
RESPECT OF THE BORROWER OBLIGATIONS), REMAIN LIABLE FOR THE BORROWER OBLIGATIONS
UP TO THE MAXIMUM LIABILITY OF SUCH GUARANTOR HEREUNDER UNTIL THE BORROWER
OBLIGATIONS ARE PAID IN FULL, NO LETTER OF CREDIT IS OUTSTANDING AND THE
COMMITMENTS ARE TERMINATED.

 

2.2.                              Right of Contribution.  Each Subsidiary
Guarantor hereby agrees that to the extent that a Subsidiary Guarantor shall
have paid more than its proportionate share of any payment made hereunder, such
Subsidiary Guarantor shall be entitled to seek and receive contribution from and
against any other Subsidiary Guarantor hereunder which has not paid its
proportionate share of such payment.  Each Subsidiary Guarantor’s right of
contribution shall be subject to the terms and conditions of Section 2.3.  The
provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of any Subsidiary Guarantor to the Administrative Agent and the
Lenders, and each Subsidiary Guarantor shall remain liable to the Administrative
Agent and the Lenders for the full amount guaranteed by such Subsidiary
Guarantor hereunder.

 

2.3.                              No Subrogation.  Notwithstanding any payment
made by any Guarantor hereunder or any setoff or application of funds of any
Guarantor by the Administrative Agent or any Lender, no Guarantor shall be
entitled to be subrogated to any of the rights of the Administrative Agent or
any Lender against any Borrower or any other Guarantor or any collateral
security, guarantee or right of offset held by the Administrative Agent or any
Lender for the payment of the Borrower Obligations, nor shall any Guarantor seek
any contribution or reimbursement from any Borrower or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Administrative Agent and the Lenders by the Borrowers on account of the
Borrower Obligations are paid in full, no Letter of Credit is outstanding and
the Commitments are terminated.  If any amount shall be paid to any Guarantor on
account of such subrogation rights at any time when all of the Borrower
Obligations shall not

 

6

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have been paid in full, such amount shall be held by such Guarantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.  For the avoidance of doubt,
nothing in the foregoing shall operate as a waiver of any subrogation rights.

 

2.4.                              Amendments, etc., with respect to the Borrower
Obligations.  To the fullest extent permitted by applicable law, each Guarantor
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against any Guarantor and without notice to or further assent by any
Guarantor, any demand for payment of any of the Borrower Obligations made by the
Administrative Agent or any Lender may be rescinded by the Administrative Agent
or such Lender and any of the Borrower Obligations continued, and the Borrower
Obligations, or the liability of any other Person upon them or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Lender, and the Credit Agreement and
the other Loan Documents and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required Lenders or all
Lenders, as the case may be) may reasonably deem advisable from time to time,
and any collateral security, guarantee or right of offset at any time held by
the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released.  Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.

 

2.5.                              Guarantee Absolute and Unconditional.  To the
fullest extent permitted by applicable law, each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between any Borrower and any of
the Guarantors, on the one hand, and the Administrative Agent and the Lenders,
on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2.  To the
fullest extent permitted by applicable law, each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon any Borrower or any of the Guarantors with respect to the Borrower
Obligations.  Each Guarantor understands and agrees that the guarantee contained
in this Section 2, to the fullest extent permitted by applicable law, shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of the Credit Agreement or
any other Loan Document, any of the Borrower Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Administrative Agent or any Lender,
(b) any defense, setoff or counterclaim (other than a defense of payment or
performance)

 

7

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which may at any time be available to or be asserted by any Borrower or any
other Person against the Administrative Agent or any Lender or (c) any other
circumstance whatsoever (with or without notice to or knowledge of any Borrower
or such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any Borrower for the Borrower Obligations, or of
such Guarantor under the guarantee contained in this Section 2, in bankruptcy or
in any other instance.  When making any demand hereunder or otherwise pursuing
its rights and remedies hereunder against any Guarantor, the Administrative
Agent or any Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
any Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by the Administrative Agent or any Lender to
make any such demand, to pursue such other rights or remedies or to collect any
payments from any Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of any Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Administrative Agent or any Lender against
any Guarantor.  For the purposes hereof “demand” shall include the commencement
and continuance of any legal proceedings.

 

2.6.                              Reinstatement.  The guarantee contained in
this Section 2 shall continue to be effective, or be reinstated, as the case may
be, if at any time payment, or any part thereof, of any of the Borrower
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Borrower or any Guarantor, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, any Borrower or any Guarantor or any substantial
part of its property, or otherwise, all as though such payments had not been
made.

 

2.7.                              Payments.  Each Guarantor hereby guarantees
that payments hereunder will be paid to the Administrative Agent without setoff
or counterclaim in Dollars at the Administrative Agent’s Office.

 

SECTION 3.                                GRANT OF SECURITY INTEREST

 

Each Grantor hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the ratable benefit of the
Secured Parties, a security interest in, all of the following property now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest other
than Excluded Property (collectively, the “Collateral”), as collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of such Grantor’s Obligations:

 

(A)          ALL ACCOUNTS;

 

(B)         ALL CHATTEL PAPER;

 

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(C)          ALL DEPOSIT ACCOUNTS;

 

(D)         ALL DOCUMENTS;

 

(E)          ALL EQUIPMENT;

 

(F)            ALL FIXTURES;

 

(G)         ALL GENERAL INTANGIBLES;

 

(H)         ALL INSTRUMENTS;

 

(I)             ALL INTELLECTUAL PROPERTY;

 

(J)             ALL INVENTORY;

 

(K)          ALL INVESTMENT PROPERTY;

 

(L)             ALL LETTER OF CREDIT RIGHTS;

 

(M)       ALL COMMERCIAL TORT CLAIMS WITH RESPECT TO THE MATTERS DESCRIBED ON
SCHEDULE 7;

 

(N)         ALL OTHER PERSONAL PROPERTY NOT OTHERWISE DESCRIBED ABOVE;

 

(O)         ALL BOOKS AND RECORDS PERTAINING TO THE COLLATERAL; AND

 

(P)         TO THE EXTENT NOT OTHERWISE INCLUDED, ALL PROCEEDS, SUPPORTING
OBLIGATIONS AND PRODUCTS OF ANY AND ALL OF THE FOREGOING AND ALL COLLATERAL
SECURITY AND GUARANTEES GIVEN BY ANY PERSON WITH RESPECT TO ANY OF THE
FOREGOING;

 

provided, however, that notwithstanding any of the other provisions set forth in
this Section 3, the term Collateral and the terms set forth in this
Section defining the components of Collateral shall not include, and this
Agreement shall not constitute a grant of a security interest in, any of the
following (the “Excluded Property”): (i) any property to the extent that such
grant of a security interest is prohibited by any applicable Law of a
Governmental Authority, requires a consent not obtained of any Governmental
Authority pursuant to such Law or is prohibited by, or constitutes a breach or
default under or results in the termination of or gives rise to a right on the
part of the parties thereto other than Holdings, the Company and the Company’s
Subsidiaries to terminate (or materially modify) or requires any consent not
obtained under any contract, license, agreement, instrument or other document
evidencing or giving rise to such property or, in the case of any Investment
Property, Pledged Equity or Pledged Debt, any applicable shareholder or similar
agreement, except to the extent that such Law or the term in such contract,
license, agreement, instrument or other document or shareholder or similar
agreement providing for such prohibition, breach, default or right of
termination or modification or requiring such consent is ineffective under
applicable law, (ii) any property owned by any Grantor on the date hereof or
hereafter acquired that is subject to a Lien securing a purchase money, project
financing or capital or finance lease obligation permitted to be incurred
pursuant to the Credit Agreement if

 

9

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the contract or other agreement in which such Lien is granted (or the
documentation providing for such purchase money, project financing or capital or
finance lease obligation) prohibits the creation of any other Lien on such
property, (iii) any trucks, trailers, tractors, service vehicles, automobiles,
rolling stock or other registered mobile equipment or equipment covered by
certificates of title or ownership of any Grantor, (iv) Deposit Accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments or any other Deposit Account with an average annual balance of less
than $5,000,000 and (v) the Equity Interests of Direct Holdings IP L.L.C., a
Delaware limited liability company, and any joint venture in respect of which
Holdings or any of its Subsidiaries holds an Equity Interest if (and only so
long as), in any case, the grant of any such security interest is prohibited by,
or constitutes a breach or default under or results in the termination of or
gives rise to a right on the part of the parties thereto other than Holdings,
the Company and the Company’s Subsidiaries to terminate (or materially modify)
or requires any consent not obtained under any contract, license, agreement,
instrument or other document evidencing or giving rise to such property or any
applicable shareholder, joint venture or similar agreement; provided, however,
that Excluded Property shall not include any Proceeds, substitutions or
replacements of any Excluded Property referred to above and such Proceeds shall
not constitute “Excluded Property” (unless such Proceeds, substitutions or
replacements would constitute Excluded Property referred to above).  If an Event
of Default shall have occurred and be continuing, each Grantor shall, if
requested to do so by the Administrative Agent, use commercially reasonable
efforts to obtain any required consent that is reasonably obtainable with
respect to Collateral which the Administrative Agent reasonably determines to be
material.

 

SECTION 4.                                REPRESENTATIONS AND WARRANTIES

 

To induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrowers thereunder, each Grantor hereby represents and warrants
to the Administrative Agent and each Lender that:

 

4.1.                              Title; No Other Liens.  Except for the
security interest granted to the Administrative Agent for the ratable benefit of
the Secured Parties pursuant to this Agreement and the other Liens permitted to
exist on the Collateral by the Credit Agreement, such Grantor owns each item of
the Collateral free and clear of any and all Liens.  No effective financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or as are permitted by the Credit
Agreement or as to which documentation to terminate the same shall have been
delivered to the Administrative Agent.  For the avoidance of doubt, it is
understood and agreed that any Grantor may, as part of its business, grant
licenses to third parties to use Intellectual Property owned or developed by a
Grantor.  For purposes of this Agreement and the other Loan Documents, such
licensing activity shall not constitute a “Lien” on such Intellectual Property. 
Each of the Administrative Agent and each Lender understands that any such
licenses may be exclusive to the applicable licensees, and such exclusivity
provisions may limit the ability of the Administrative Agent to utilize, sell,
lease or transfer the related Intellectual Property or otherwise realize value
from such Intellectual Property pursuant hereto.

 

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4.2.                              Perfected First Priority Liens.  The
Perfection Certificate has been duly prepared, completed and executed and the
information set forth therein, including the exact legal name of each Grantor,
is correct and complete in all material aspects as of the Closing Date.  The
security interests granted pursuant to this Agreement (i) upon completion of the
filings and other actions specified on Schedule 3 (which, in the case of all
filings and other documents referred to on said Schedule, have been delivered to
the Administrative Agent in completed and, where required, duly executed form)
(x) will constitute valid perfected security interests in all of the Collateral
(other than Intellectual Property) in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, as collateral security for such
Grantor’s Obligations, enforceable in accordance with the terms hereof against
all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor, to the extent a security interest therein may be
perfected by filing, recording or registration in the United States pursuant to
the New York UCC, and (y) will constitute valid perfected security interests in
all of the Collateral consisting of Intellectual Property in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, as
collateral security for such Grantor’s Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor, to the extent a
security interest therein may be perfected by filings to be made in the United
States Patent and Trademark Office and the United States Copyright Office, and
(ii) are prior to all other Liens on the Collateral in existence on the date
hereof except for Liens permitted by the Credit Agreement which have priority
over the Liens on the Collateral by operation of law (including the priority
rules under the New York UCC) or which, in the case of Collateral consisting of
Pledged Equity and Pledged Debt, are nonconsensual Liens permitted pursuant to
Section 7.01 of the Credit Agreement to be prior to the security interests
granted pursuant to this Agreement or which, in the case of Collateral other
than Pledged Equity and Pledged Debt, are permitted pursuant to Section 7.01 of
the Credit Agreement to be prior to the security interests granted pursuant to
this Agreement.

 

4.3.                              Jurisdiction of Organization.  On the date
hereof, such Grantor’s jurisdiction of organization and identification number
from the jurisdiction of organization (if any) are specified on Schedule 4. 
Such Grantor has furnished to the Administrative Agent a certified charter,
certificate of incorporation or other organization document and long-form good
standing certificate as of a date which is recent to the date hereof.

 

4.4.                              Inventory and Equipment.  On the date hereof,
the Inventory and the Equipment of each Grantor are kept at the locations listed
on Schedule 5.  The provisions of this Section 4.4 shall not apply to Equipment
or Inventory in transit, that has been sold (including sales on consignment or
approval in the ordinary course of business), that is out for repair, that is at
other locations for purposes of onsite maintenance or repair or to Equipment and
Inventory at locations with less than $5,000,000 in aggregate value.

 

4.5.                              Farm Products.  None of the Collateral
constitutes, or is the Proceeds of, Farm Products.

 

4.6.                              Investment Property.  (a)  On the date hereof,
the shares of Pledged Equity pledged by such Grantor hereunder constitute all
the issued and outstanding shares of all classes of the Equity Interests of each
Restricted Subsidiary owned by such Grantor or, in the case of Restricted
Subsidiaries that are Foreign Subsidiaries or Domestic Subsidiaries
substantially all of

 

11

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whose assets consist of voting Equity Interests of one or more Foreign
Subsidiaries, the shares of such Issuers pledged by such Grantor constitute 65%
of the outstanding Foreign Subsidiary Voting Stock of each such Issuer (or, if
such Grantor owns less than 65% of the outstanding Foreign Subsidiary Voting
Stock of any such Issuer, constitute all the Foreign Subsidiary Voting Stock of
such Issuer owned by such Grantor) in each case to the extent required by clause
(d) of the Collateral and Guarantee Requirement.

 

(B)         ALL THE SHARES OF THE PLEDGED EQUITY AS TO WHICH THE COMPANY OR A
RESTRICTED SUBSIDIARY OF THE COMPANY IS THE ISSUER HAVE BEEN DULY AND VALIDLY
ISSUED AND ARE FULLY PAID AND NONASSESSABLE.

 

(C)          TO THE BEST OF SUCH GRANTOR’S KNOWLEDGE, EACH OF THE PLEDGED DEBT
CONSTITUTES THE LEGAL, VALID AND BINDING OBLIGATION OF THE OBLIGOR WITH RESPECT
THERETO, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, SUBJECT TO THE EFFECTS OF
BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE, REORGANIZATION, MORATORIUM AND
OTHER SIMILAR LAWS RELATING TO OR AFFECTING CREDITORS’ RIGHTS GENERALLY, GENERAL
EQUITABLE PRINCIPLES (WHETHER CONSIDERED IN A PROCEEDING IN EQUITY OR AT LAW)
AND AN IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING.

 

(D)         SUCH GRANTOR IS THE BENEFICIAL OWNER OF, AND HAS GOOD AND MARKETABLE
TITLE TO, THE INVESTMENT PROPERTY PLEDGED BY IT HEREUNDER, FREE OF ANY AND ALL
LIENS OR OPTIONS IN FAVOR OF ANY OTHER PERSON, EXCEPT THE SECURITY INTEREST
CREATED BY THIS AGREEMENT OR NONCONSENSUAL LIENS PERMITTED PURSUANT TO
SECTION 7.01 OF THE CREDIT AGREEMENT.

 

4.7.                              Receivables.  (a)  No amount payable to such
Grantor under or in connection with any Receivable of an amount greater than
$5,000,000 is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Administrative Agent.

 

(B)         AS OF THE EFFECTIVE DATE, THE AGGREGATE AMOUNT OF RECEIVABLES
REQUIRED TO BE INCLUDED IN COLLATERAL OWED BY GOVERNMENTAL AUTHORITIES TO THE
GRANTORS DOES NOT EXCEED $5,000,000.

 

4.8.                              Intellectual Property.  Schedule 6 lists all
Intellectual Property (other than Copyright Licenses and Trademark Licenses)
that is registered in the United States or for which application for
registration in the United States has been filed and that is material to the
operation of the business of the Company and its Subsidiaries taken as a whole
owned by such Grantor in its own name on the date hereof.

 

4.9.                              Commercial Tort Claims.  On the date hereof,
except to the extent listed in Section 3 above, no Grantor has knowledge of
rights in any Commercial Tort Claim as to which it reasonably expects to recover
more than $5,000,000.

 

SECTION 5.                                COVENANTS

 

Each Grantor covenants and agrees with the Administrative Agent and the Lenders
that, from and after the date of this Agreement until the Obligations (other
than contingent indemnification and contingent expense reimbursement
obligations, any Obligations

 

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in respect of Secured Hedge Agreements and Cash Management Obligations) shall
have been paid in full, no Letter of Credit shall be outstanding and the
Commitments shall have terminated:

 

5.1.                              Delivery of Instruments, Certificated
Securities and Chattel Paper.  (a)  If (i) any amount in excess of $5,000,000
owed by any Subsidiary of the Company to any Grantor or (ii) any other amount in
excess of $5,000,000 payable under or in connection with any of the Collateral
shall be or become evidenced by any Instrument, Certificated Security or Chattel
Paper, such Instrument, Certificated Security or Chattel Paper shall be
delivered as soon as reasonably practicable to the Administrative Agent, duly
indorsed in a manner reasonably satisfactory to the Administrative Agent, to be
held as Collateral pursuant to this Agreement.

 

(B)         ANY GUARANTEE REQUIRED TO BE SUBORDINATED PURSUANT TO
SECTION 7.03(C)(C) OF THE CREDIT AGREEMENT AND ANY INDEBTEDNESS REQUIRED TO BE
SUBORDINATED PURSUANT TO SECTION 7.03(D) OF THE CREDIT AGREEMENT SHALL, IN EACH
CASE, BE FULLY SUBORDINATED TO THE PAYMENT IN FULL OF THE OBLIGATIONS.

 

5.2.                              Maintenance of Insurance.  (a)  Such Grantor
will maintain the insurance required by Section 6.07 of the Credit Agreement.

 

(B)         ALL SUCH INSURANCE SHALL (I) PROVIDE THAT NO CANCELLATION, MATERIAL
REDUCTION IN AMOUNT OR MATERIAL CHANGE IN COVERAGE THEREOF SHALL BE EFFECTIVE
UNTIL AT LEAST 30 DAYS OR, IN THE CASE OF INSURANCE EXISTING AS OF THE DATE
HEREOF, AT LEAST 10 DAYS AFTER RECEIPT BY THE ADMINISTRATIVE AGENT OF WRITTEN
NOTICE THEREOF AND (II) NAME THE ADMINISTRATIVE AGENT AS INSURED PARTY OR LOSS
PAYEE.

 

5.3.                              Maintenance of Perfected Security Interest;
Further Documentation.  (a)  Such Grantor shall take all actions reasonably
requested by the Administrative Agent to maintain the security interest created
by this Agreement as a security interest having at least the perfection and
priority described in Section 4.2 and shall take all commercially reasonable
actions to defend such security interest against the claims and demands of all
Persons whomsoever, subject in each case to, in the case of Collateral
consisting of Pledged Equity and Pledged Debt, nonconsensual Liens permitted by
Section 7.01 of the Credit Agreement and, in the case of Collateral other than
Pledged Equity and Pledged Debt, Liens permitted by the Credit Agreement and to
the rights of such Grantor under the Loan Documents to dispose of the
Collateral.

 

(B)         SUCH GRANTOR WILL FURNISH TO THE ADMINISTRATIVE AGENT FROM TIME TO
TIME STATEMENTS AND SCHEDULES FURTHER IDENTIFYING AND DESCRIBING THE ASSETS AND
PROPERTY OF SUCH GRANTOR AND SUCH OTHER REPORTS IN CONNECTION THEREWITH AS THE
ADMINISTRATIVE AGENT MAY REASONABLY REQUEST, ALL IN REASONABLE DETAIL.  EACH
YEAR, AT THE TIME OF DELIVERY OF ANNUAL FINANCIAL STATEMENTS WITH RESPECT TO THE
PRECEDING FISCAL YEAR PURSUANT TO SECTION 6.01(A) OF THE CREDIT AGREEMENT, THE
COMPANY SHALL DELIVER TO THE ADMINISTRATIVE AGENT A CERTIFICATE EXECUTED BY THE
ASSOCIATE GENERAL COUNSEL OR THE CHIEF LEGAL OFFICER OF THE COMPANY SETTING
FORTH THE INFORMATION REQUIRED PURSUANT TO THE PERFECTION CERTIFICATE OR
CONFIRMING THAT THERE HAS BEEN NO CHANGE IN SUCH INFORMATION SINCE THE DATE OF
SUCH CERTIFICATE OR THE DATE OF THE MOST RECENT CERTIFICATE DELIVERED PURSUANT
TO THIS SECTION 5.3(B).

 

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(C)          AT ANY TIME AND FROM TIME TO TIME, UPON THE WRITTEN REQUEST OF THE
ADMINISTRATIVE AGENT, AND AT THE SOLE EXPENSE OF SUCH GRANTOR, SUCH GRANTOR WILL
PROMPTLY AND DULY EXECUTE AND DELIVER, AND HAVE RECORDED, SUCH FURTHER
INSTRUMENTS AND DOCUMENTS AND TAKE SUCH FURTHER ACTIONS AS THE ADMINISTRATIVE
AGENT MAY REASONABLY REQUEST FOR THE PURPOSE OF OBTAINING OR PRESERVING THE FULL
BENEFITS OF THIS AGREEMENT AND OF THE RIGHTS AND POWERS HEREIN GRANTED,
INCLUDING, WITHOUT LIMITATION, (I) FILING ANY FINANCING OR CONTINUATION
STATEMENTS UNDER THE UNIFORM COMMERCIAL CODE (OR OTHER SIMILAR LAWS) IN EFFECT
IN ANY JURISDICTION WITH RESPECT TO THE SECURITY INTERESTS CREATED HEREBY AND
(II) IN THE CASE OF INVESTMENT PROPERTY NOT ISSUED BY THE COMPANY OR ITS
SUBSIDIARIES, DEPOSIT ACCOUNTS, LETTER OF CREDIT RIGHTS AND ANY OTHER RELEVANT
COLLATERAL, USING COMMERCIALLY REASONABLE EFFORTS TO TAKE, AT ANY TIME AFTER THE
OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT, ANY ACTIONS
NECESSARY TO ENABLE THE ADMINISTRATIVE AGENT TO OBTAIN “CONTROL” (WITHIN THE
MEANING OF THE APPLICABLE UNIFORM COMMERCIAL CODE) WITH RESPECT THERETO.

 

5.4.                              Changes in Locations, Name, etc.  Such Grantor
will not, except upon 10 days’ prior written notice to the Administrative Agent
(or such shorter notice as shall be reasonably satisfactory to the
Administrative Agent) and delivery to the Administrative Agent of all additional
executed financing statements and other documents reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of the
security interests provided for herein, (i) change its jurisdiction of
organization from that referred to in Section 4.3 or (ii) change its name.

 

5.5.                              Notices.  Such Grantor will advise the
Administrative Agent promptly, in reasonable detail, of:

 

(A)          ANY LIEN (OTHER THAN SECURITY INTERESTS CREATED HEREBY OR LIENS
PERMITTED UNDER THE CREDIT AGREEMENT) ON ANY OF THE COLLATERAL WHICH WOULD
ADVERSELY AFFECT THE ABILITY OF THE ADMINISTRATIVE AGENT TO EXERCISE ANY OF ITS
REMEDIES HEREUNDER; AND

 

(B)         THE OCCURRENCE OF ANY OTHER EVENT WHICH COULD REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT ON THE AGGREGATE VALUE OF THE COLLATERAL OR ON
THE SECURITY INTERESTS CREATED HEREBY.

 

5.6.                              Investment Property.  (a)  If such Grantor
shall become entitled to receive or shall receive any certificate (including,
without limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Equity Interests of any Restricted Subsidiary, which Equity
Interests are required to have been pledged pursuant to clause (d) of the
Collateral and Guarantee Requirement, whether in addition to, in substitution
of, as a conversion of, or in exchange for, any shares of the Pledged Equity, or
otherwise in respect thereof, such Grantor shall accept the same as the agent of
the Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor, to be held by
the Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations (provided that stock certificates representing the
Pledged Equity of any Foreign

 

14

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Immaterial Subsidiary need not be delivered to the Administrative Agent for so
long as such Foreign Immaterial Subsidiary remains a Foreign Immaterial
Subsidiary).  If an Event of Default shall have occurred and be continuing, and
any distribution of capital to a Grantor (other than cash) required to be
included in Collateral shall be made on or in respect of the Investment Property
or any property (other than cash) required to be included in Collateral shall be
distributed to a Grantor upon or with respect to the Investment Property
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, such Grantor shall, unless
such distribution of capital or property is otherwise subject to a perfected
security interest in favor of the Administrative Agent, use commercially
reasonable efforts to cause it to be subject to a perfected security interest in
favor of the Administrative Agent to the extent and in the manner required
pursuant to Section 5.3 hereof.  If any such property so distributed in respect
of the Investment Property shall be received by such Grantor, such Grantor
shall, until such property is delivered to the Administrative Agent, hold such
property in trust for the Administrative Agent and the Lenders as additional
collateral security for the Obligations.

 

(B)         WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT, SUCH
CONSENT NOT TO BE UNREASONABLY WITHHELD, SUCH GRANTOR WILL NOT (I) SELL, ASSIGN,
TRANSFER, EXCHANGE, OR OTHERWISE DISPOSE OF, OR GRANT ANY OPTION WITH RESPECT
TO, THE INVESTMENT PROPERTY OR PROCEEDS THEREOF (EXCEPT PURSUANT TO A
TRANSACTION EXPRESSLY PERMITTED BY THE CREDIT AGREEMENT), (II) CREATE, INCUR OR
PERMIT TO EXIST ANY LIEN OR OPTION IN FAVOR OF, OR ANY CLAIM OF ANY PERSON WITH
RESPECT TO, ANY OF THE INVESTMENT PROPERTY OR PROCEEDS THEREOF, OR ANY INTEREST
THEREIN, EXCEPT FOR THE SECURITY INTERESTS CREATED BY THIS AGREEMENT OR
PERMITTED UNDER SECTION 7.01 OF THE CREDIT AGREEMENT OR (III) EXCEPT AS
PERMITTED BY THE CREDIT AGREEMENT, ENTER, SUBSEQUENT TO THE DATE UPON WHICH SUCH
INVESTMENT PROPERTY BECOMES COLLATERAL HEREUNDER, INTO ANY AGREEMENT (OTHER THAN
THE CREDIT AGREEMENT) OR UNDERTAKING RESTRICTING THE RIGHT OR ABILITY OF SUCH
GRANTOR OR THE ADMINISTRATIVE AGENT TO SELL, ASSIGN OR TRANSFER ANY OF THE
INVESTMENT PROPERTY REQUIRED TO BE INCLUDED IN COLLATERAL OR PROCEEDS THEREOF.

 

(C)          IN THE CASE OF EACH GRANTOR WHICH IS AN ISSUER, SUCH ISSUER AGREES
THAT (I) IT WILL BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO THE
INVESTMENT PROPERTY REQUIRED TO BE INCLUDED IN COLLATERAL ISSUED BY IT AND WILL
COMPLY WITH SUCH TERMS INSOFAR AS SUCH TERMS ARE APPLICABLE TO IT, (II) IT WILL
NOTIFY THE ADMINISTRATIVE AGENT PROMPTLY IN WRITING OF THE OCCURRENCE OF ANY OF
THE EVENTS DESCRIBED IN SECTION 5.6(A) WITH RESPECT TO SUCH INVESTMENT PROPERTY
ISSUED BY IT AND (III) THE TERMS OF SECTIONS 6.3(C) AND 6.7 SHALL APPLY TO IT,
MUTATIS MUTANDIS, WITH RESPECT TO ALL ACTIONS THAT MAY BE REQUIRED OF IT
PURSUANT TO SECTION 6.3(C) AND 6.7 WITH RESPECT TO SUCH INVESTMENT PROPERTY
ISSUED BY IT.

 

(D)         NO GRANTOR SHALL PERMIT ANY SECURITY INTEREST IN CERTIFICATED
PLEDGED EQUITY OF ANY ISSUER THAT IS NOT A SUBSIDIARY TO BE PERFECTED BY
POSSESSION IN FAVOR OF A PERSON OTHER THAN THE ADMINISTRATIVE AGENT.

 

(E)          THE COMPANY SHALL NOT PERMIT ANY SECURITY INTEREST IN CERTIFICATED
PLEDGED EQUITY OF 1302791 ALBERTA ULC (OR ANY ULC PARENT ENTITY THEREOF THAT IS
A FOREIGN SUBSIDIARY THE EQUITY INTERESTS OF WHICH ARE DIRECTLY OWNED BY THE
COMPANY OR A U.S. GUARANTOR) TO BE PERFECTED BY POSSESSION IN FAVOR OF A PERSON
OTHER THAN THE ADMINISTRATIVE AGENT (AND SHALL SO

 

15

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PERFECT BY POSSESSION IN FAVOR OF THE ADMINISTRATIVE AGENT ON BEHALF OF THE
SECURED PARTIES UPON THE REASONABLE REQUEST OF THE ADMINISTRATIVE AGENT).

 

5.7.                              Receivables.  (a)  Other than in the ordinary
course of business, such Grantor will not (i) grant any extension of the time of
payment of any Receivable required to be included in Collateral, (ii) compromise
or settle any Receivable required to be included in Collateral for less than the
full amount thereof, (iii) release, wholly or partially, any Person liable for
the payment of any Receivable required to be included in Collateral, (iv) allow
any credit or discount whatsoever on any Receivable required to be included in
Collateral or (v) amend, supplement or modify any Receivable required to be
included in Collateral in any manner that could adversely affect the value
thereof.

 

(B)         SUCH GRANTOR WILL DELIVER TO THE ADMINISTRATIVE AGENT A COPY OF EACH
MATERIAL DEMAND, NOTICE OR DOCUMENT RECEIVED BY IT THAT QUESTIONS OR CALLS INTO
DOUBT THE VALIDITY OR ENFORCEABILITY OF MORE THAN 20% OF THE AGGREGATE AMOUNT OF
THE THEN-OUTSTANDING RECEIVABLES.

 

(C)          IF SUCH GRANTOR SHALL ENTER INTO ANY CONTRACT OR OTHER TRANSACTION
WITH AN APPLICABLE GOVERNMENTAL AUTHORITY (AS DEFINED BELOW) WHICH WILL RESULT
IN AN APPLICABLE GOVERNMENTAL AUTHORITY BECOMING AN OBLIGOR ON ANY RECEIVABLE
REQUIRED TO BE INCLUDED IN COLLATERAL OF AN AMOUNT GREATER THAN $5,000,000, SUCH
GRANTOR SHALL (I) PROMPTLY THEREAFTER NOTIFY THE ADMINISTRATIVE AGENT THEREOF,
(II) PROVIDE TO THE ADMINISTRATIVE AGENT ALL SUCH DOCUMENTS AND INSTRUMENTS, AND
TAKE ALL SUCH ACTIONS, AS SHALL BE REASONABLY REQUESTED BY THE ADMINISTRATIVE
AGENT TO ENABLE THE ADMINISTRATIVE AGENT TO COMPLY WITH THE REQUIREMENTS OF THE
FEDERAL ASSIGNMENT OF CLAIMS ACT OR ANY OTHER APPLICABLE LAW TO PERFECT ITS
SECURITY INTEREST IN SUCH RECEIVABLES AND OBTAIN THE BENEFITS OF SUCH ACT OR LAW
WITH RESPECT THERETO AND (III) OTHERWISE COMPLY WITH ITS OBLIGATIONS UNDER
SECTION 5.3(C) WITH RESPECT THERETO.  AS USED IN THIS PARAGRAPH, THE TERM
“APPLICABLE GOVERNMENTAL AUTHORITY” SHALL MEAN ANY GOVERNMENTAL AUTHORITY THE 
LAW APPLICABLE TO WHICH PROVIDE THAT, FOR A CREDITOR OF A PERSON TO WHICH SUCH
GOVERNMENTAL AUTHORITY HAS AN OBLIGATION TO PAY MONEY, WHETHER PURSUANT TO A
RECEIVABLE, A GENERAL INTANGIBLE OR OTHERWISE, TO PERFECT SUCH CREDITOR’S LIEN
ON SUCH OBLIGATION AND/OR TO OBTAIN THE FULL BENEFITS OF SUCH LIEN AND SUCH LAW,
CERTAIN NOTICE, FILING, RECORDING OR OTHER SIMILAR ACTIONS OTHER THAN THE FILING
OF A FINANCING STATEMENT UNDER THE UNIFORM COMMERCIAL CODE MUST BE GIVEN,
EXECUTED, FILED, RECORDED, DELIVERED OR COMPLETED, INCLUDING, WITHOUT
LIMITATION, ANY FEDERAL GOVERNMENTAL AUTHORITY TO WHICH THE FEDERAL ASSIGNMENT
OF CLAIMS ACT OF 1940 IS APPLICABLE.

 

5.8.                              Intellectual Property.  (a)  Such Grantor
(either itself or through licensees) will (i) continue to use each Trademark
that is material to the operation of the business of the Company and its
Subsidiaries taken as a whole on each and every trademark class of goods
applicable to its current line as reflected in its current catalogs, brochures
and price lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such Trademark
with the appropriate notice of registration and all other notices and legends
required by applicable Law, (iv) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademark unless the Administrative
Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected
security interest in such mark pursuant to this Agreement and (v) not (and not
permit any licensee or sublicensee thereof to) do any act or

 

16

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knowingly omit to do any act whereby such Trademark may become invalidated or
impaired in any material respect.

 

(B)         SUCH GRANTOR (EITHER ITSELF OR THROUGH LICENSEES) WILL NOT DO ANY
ACT, OR OMIT TO DO ANY ACT, WHEREBY ANY PATENT THAT IS MATERIAL TO THE OPERATION
OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE MAY BECOME
FORFEITED, ABANDONED OR DEDICATED TO THE PUBLIC.

 

(C)          SUCH GRANTOR (EITHER ITSELF OR THROUGH LICENSEES) (I) WILL EMPLOY
EACH COPYRIGHT THAT IS MATERIAL TO THE OPERATION OF THE BUSINESS OF THE COMPANY
AND ITS SUBSIDIARIES TAKEN AS A WHOLE AND (II) WILL NOT (AND WILL NOT PERMIT ANY
LICENSEE OR SUBLICENSEE THEREOF TO) DO ANY ACT OR KNOWINGLY OMIT TO DO ANY ACT
WHEREBY ANY PORTION OF THE COPYRIGHTS THAT IS MATERIAL TO THE OPERATION OF THE
BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE MAY BECOME
INVALIDATED OR OTHERWISE IMPAIRED.  SUCH GRANTOR WILL NOT (EITHER ITSELF OR
THROUGH LICENSEES) DO ANY ACT WHEREBY ANY PORTION OF THE COPYRIGHTS THAT IS
MATERIAL TO THE OPERATION OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES
TAKEN AS A WHOLE MAY FALL INTO THE PUBLIC DOMAIN.

 

(D)         SUCH GRANTOR (EITHER ITSELF OR THROUGH LICENSEES) WILL NOT DO ANY
ACT THAT KNOWINGLY USES ANY INTELLECTUAL PROPERTY THAT IS MATERIAL TO THE
OPERATION OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE
TO INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF ANY OTHER PERSON.

 

(E)          SUCH GRANTOR WILL NOTIFY THE ADMINISTRATIVE AGENT IMMEDIATELY IF IT
KNOWS, OR HAS REASON TO KNOW, THAT ANY APPLICATION OR REGISTRATION RELATING TO
ANY INTELLECTUAL PROPERTY THAT IS MATERIAL TO THE OPERATION OF THE BUSINESS OF
THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE MAY BECOME FORFEITED,
ABANDONED OR DEDICATED TO THE PUBLIC, OR OF ANY ADVERSE DETERMINATION OR
DEVELOPMENT (INCLUDING, WITHOUT LIMITATION, THE INSTITUTION OF, OR ANY SUCH
DETERMINATION OR DEVELOPMENT IN, ANY PROCEEDING IN THE UNITED STATES PATENT AND
TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT OFFICE OR ANY COURT OR TRIBUNAL IN
ANY COUNTRY) REGARDING SUCH GRANTOR’S OWNERSHIP OF, OR THE VALIDITY OF, ANY SUCH
INTELLECTUAL PROPERTY OR SUCH GRANTOR’S RIGHT TO REGISTER THE SAME OR TO OWN AND
MAINTAIN THE SAME.

 

(F)            IN THE EVENT SUCH GRANTOR, EITHER BY ITSELF OR THROUGH ANY AGENT,
EMPLOYEE, LICENSEE OR DESIGNEE, SHALL IN ANY FISCAL YEAR FILE AN APPLICATION FOR
THE REGISTRATION OF ANY INTELLECTUAL PROPERTY THAT IS MATERIAL TO THE OPERATION
OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE WITH THE UNITED STATES
PATENT AND TRADEMARK OFFICE, THE UNITED STATES COPYRIGHT OFFICE OR ANY SIMILAR
OFFICE OR AGENCY IN ANY OTHER COUNTRY OR ANY POLITICAL SUBDIVISION THEREOF, SUCH
GRANTOR SHALL REPORT SUCH FILING TO THE ADMINISTRATIVE AGENT AT THE TIME OF
DELIVERY OF ANNUAL FINANCIAL STATEMENTS WITH RESPECT TO SUCH FISCAL YEAR
PURSUANT TO SECTION 6.01(A) OF THE CREDIT AGREEMENT.  UPON REASONABLE REQUEST OF
THE ADMINISTRATIVE AGENT, SUCH GRANTOR SHALL EXECUTE AND DELIVER, AND HAVE
RECORDED, ANY AND ALL AGREEMENTS, INSTRUMENTS, DOCUMENTS, AND PAPERS AS THE
ADMINISTRATIVE AGENT MAY REASONABLY REQUEST TO EVIDENCE THE ADMINISTRATIVE
AGENT’S AND THE LENDERS’ SECURITY INTEREST IN ANY SUCH COPYRIGHT, PATENT OR
TRADEMARK AND THE GOODWILL AND GENERAL INTANGIBLES OF SUCH GRANTOR RELATING
THERETO OR REPRESENTED THEREBY.

 

(G)         SUCH GRANTOR WILL TAKE ALL REASONABLE AND NECESSARY STEPS,
INCLUDING, WITHOUT LIMITATION, IN ANY PROCEEDING BEFORE THE UNITED STATES PATENT
AND TRADEMARK OFFICE, THE UNITED

 

17

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STATES COPYRIGHT OFFICE OR ANY SIMILAR OFFICE OR AGENCY IN ANY OTHER COUNTRY OR
ANY POLITICAL SUBDIVISION THEREOF, TO MAINTAIN AND PURSUE EACH APPLICATION (AND
TO OBTAIN THE RELEVANT REGISTRATION) AND TO MAINTAIN EACH REGISTRATION OF THE
INTELLECTUAL PROPERTY THAT IS MATERIAL TO THE OPERATION OF THE BUSINESS OF THE
COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE, INCLUDING, WITHOUT LIMITATION,
FILING OF APPLICATIONS FOR RENEWAL, AFFIDAVITS OF USE AND AFFIDAVITS OF
INCONTESTABILITY.

 

(H)         IN THE EVENT THAT ANY INTELLECTUAL PROPERTY THAT IS MATERIAL TO THE
OPERATION OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A WHOLE
IS INFRINGED, MISAPPROPRIATED OR DILUTED BY A THIRD PARTY, SUCH GRANTOR SHALL
(I) TAKE SUCH ACTIONS AS SUCH GRANTOR SHALL REASONABLY DEEM APPROPRIATE UNDER
THE CIRCUMSTANCES TO PROTECT SUCH INTELLECTUAL PROPERTY AND (II) IF SUCH
INTELLECTUAL PROPERTY IS OF MATERIAL ECONOMIC VALUE, PROMPTLY NOTIFY THE
ADMINISTRATIVE AGENT AFTER IT LEARNS THEREOF AND SUE FOR INFRINGEMENT,
MISAPPROPRIATION OR DILUTION, TO SEEK INJUNCTIVE RELIEF WHERE APPROPRIATE AND TO
RECOVER ANY AND ALL DAMAGES FOR SUCH INFRINGEMENT, MISAPPROPRIATION OR DILUTION.

 

(I)             NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT,
SUBJECT TO THE PROVISIONS OF THE CREDIT AGREEMENT, NOTHING SHALL PREVENT ANY
GRANTOR IN THE ORDINARY COURSE OF BUSINESS FROM ABANDONING, CEASING TO USE OR
OTHERWISE IMPAIRING OR DISPOSING OF ANY INTELLECTUAL PROPERTY IF SUCH GRANTOR
REASONABLY BELIEVES THAT DOING SO IS IN ITS BUSINESS INTERESTS.  FOR THE
AVOIDANCE OF DOUBT, NOTHING IN THIS SECTION 5.8 SHALL PROHIBIT A SALE, TRANSFER
OR DISPOSITION OF ANY INTELLECTUAL PROPERTY MADE IN ACCORDANCE WITH SECTIONS
7.04 OR 7.05 OF THE CREDIT AGREEMENT.

 

(J)             NO GRANTOR SHALL, AND THE GRANTORS IN THE AGGREGATE SHALL NOT,
MAKE FILINGS IN THE UNITED STATES COPYRIGHT OFFICE OR THE UNITED STATES
TRADEMARK OFFICE TO PERFECT ANY SECURITY INTEREST IN ALL OR SUBSTANTIALLY ALL OF
THE COPYRIGHT LICENSES HELD BY THE GRANTORS IN THE AGGREGATE OR ALL OR
SUBSTANTIALLY ALL OF THE TRADEMARK LICENSES HELD BY THE GRANTORS IN THE
AGGREGATE (OTHER THAN TO PERFECT THE SECURITY INTEREST IN SUCH COPYRIGHT
LICENSES AND TRADEMARK LICENSES SECURING THE OBLIGATIONS).

 

(K)          UPON AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, EACH
GRANTOR SHALL USE ALL COMMERCIALLY REASONABLE EFFORTS TO OBTAIN ALL REQUISITE
CONSENTS OR APPROVALS UNDER EACH COPYRIGHT LICENSE, PATENT LICENSE AND TRADEMARK
LICENSE REASONABLY REQUESTED BY THE ADMINISTRATIVE AGENT TO EFFECT THE
ASSIGNMENT OF ALL SUCH GRANTOR’S RIGHT, TITLE AND INTEREST THEREUNDER TO THE
ADMINISTRATIVE AGENT OR ITS DESIGNEE.

 

5.9.                              Commercial Tort Claims.  If such Grantor shall
obtain an interest in any Commercial Tort Claim as to which it determines that
it reasonably expects to recover more than $5,000,000, such Grantor shall within
30 days of making such determination (or such other period reasonably
satisfactory to the Administrative Agent) sign and deliver documentation
reasonably acceptable to the Administrative Agent granting a security interest
under the terms and provisions of this Agreement in and to such Commercial Tort
Claim.

 

SECTION 6.                                REMEDIAL PROVISIONS

 

6.1.                              Certain Matters Relating to Receivables.  (a) 
The Administrative Agent shall have the right annually (or, if an Event of
Default has occurred and is continuing, at any

 

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time) to make test verifications of the Receivables required to be included in
Collateral in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information as
the Administrative Agent may require in connection with such test
verifications.  Annually (or, if an Event of Default has occurred and is
continuing, at any time), upon the Administrative Agent’s reasonable request and
at the expense of the relevant Grantor, such Grantor shall use commercially
reasonable efforts to cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the Administrative Agent
reports showing reconciliations, aging and test verifications of, and trial
balances for, such Receivables.

 

(B)         THE ADMINISTRATIVE AGENT HEREBY AUTHORIZES EACH GRANTOR TO COLLECT
SUCH GRANTOR’S RECEIVABLES REQUIRED TO BE INCLUDED IN COLLATERAL AND THE
ADMINISTRATIVE AGENT MAY CURTAIL OR TERMINATE SAID AUTHORITY AT ANY TIME AFTER
THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.  IF REQUIRED
BY THE ADMINISTRATIVE AGENT AT ANY TIME AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, ANY PAYMENTS OF SUCH RECEIVABLES, WHEN
COLLECTED BY ANY GRANTOR, (I) SHALL BE FORTHWITH (AND, IN ANY EVENT, WITHIN TWO
BUSINESS DAYS) DEPOSITED BY SUCH GRANTOR IN THE EXACT FORM RECEIVED, DULY
INDORSED BY SUCH GRANTOR TO THE ADMINISTRATIVE AGENT IF REQUIRED, IN A
COLLATERAL ACCOUNT MAINTAINED UNDER THE SOLE DOMINION AND CONTROL OF THE
ADMINISTRATIVE AGENT, SUBJECT TO WITHDRAWAL BY THE ADMINISTRATIVE AGENT FOR THE
ACCOUNT OF THE LENDERS ONLY AS PROVIDED IN SECTION 6.5, AND (II) UNTIL SO TURNED
OVER, SHALL BE HELD BY SUCH GRANTOR IN TRUST FOR THE ADMINISTRATIVE AGENT AND
THE LENDERS, SEGREGATED FROM OTHER FUNDS OF SUCH GRANTOR.  EACH SUCH DEPOSIT OF
PROCEEDS OF RECEIVABLES REQUIRED TO BE INCLUDED IN COLLATERAL SHALL BE
ACCOMPANIED BY A REPORT IDENTIFYING IN REASONABLE DETAIL THE NATURE AND SOURCE
OF THE PAYMENTS INCLUDED IN THE DEPOSIT.

 

(C)          IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, AT THE
ADMINISTRATIVE AGENT’S REQUEST, EACH GRANTOR SHALL DELIVER TO THE ADMINISTRATIVE
AGENT ALL ORIGINAL AND OTHER DOCUMENTS EVIDENCING, AND RELATING TO, THE
AGREEMENTS AND TRANSACTIONS WHICH GAVE RISE TO THE RECEIVABLES REQUIRED TO BE
INCLUDED IN COLLATERAL, INCLUDING, WITHOUT LIMITATION, ALL ORIGINAL ORDERS,
INVOICES AND SHIPPING RECEIPTS.

 

6.2.                              Communications with Obligors; Grantors Remain
Liable.  (a)  The Administrative Agent in its own name or in the name of others
may at any time when an Event of Default has occurred and is continuing,
communicate with obligors under the Receivables required to be included in
Collateral to verify with them to the Administrative Agent’s satisfaction the
existence, amount and terms of any such Receivables.

 

(B)         UPON THE REQUEST OF THE ADMINISTRATIVE AGENT AT ANY TIME AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, EACH GRANTOR SHALL
NOTIFY OBLIGORS ON THE RECEIVABLES REQUIRED TO BE INCLUDED IN COLLATERAL THAT
SUCH RECEIVABLES HAVE BEEN ASSIGNED TO THE ADMINISTRATIVE AGENT FOR THE RATABLE
BENEFIT OF THE SECURED PARTIES AND THAT PAYMENTS IN RESPECT THEREOF SHALL BE
MADE DIRECTLY TO THE ADMINISTRATIVE AGENT.

 

(C)          ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, EACH GRANTOR SHALL
REMAIN LIABLE UNDER EACH OF THE RECEIVABLES REQUIRED TO BE INCLUDED IN
COLLATERAL TO OBSERVE AND PERFORM ALL THE CONDITIONS AND OBLIGATIONS TO BE
OBSERVED AND PERFORMED BY IT THEREUNDER, ALL IN ACCORDANCE WITH THE TERMS OF ANY
AGREEMENT GIVING RISE THERETO.  NEITHER THE ADMINISTRATIVE

 

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AGENT NOR ANY LENDER SHALL HAVE ANY OBLIGATION OR LIABILITY UNDER ANY SUCH
RECEIVABLE (OR ANY AGREEMENT GIVING RISE THERETO) BY REASON OF OR ARISING OUT OF
THIS AGREEMENT OR THE RECEIPT BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY
PAYMENT RELATING THERETO, NOR SHALL THE ADMINISTRATIVE AGENT OR ANY LENDER BE
OBLIGATED IN ANY MANNER TO PERFORM ANY OF THE OBLIGATIONS OF ANY GRANTOR UNDER
OR PURSUANT TO ANY SUCH RECEIVABLE (OR ANY AGREEMENT GIVING RISE THERETO), TO
MAKE ANY PAYMENT, TO MAKE ANY INQUIRY AS TO THE NATURE OR THE SUFFICIENCY OF ANY
PAYMENT RECEIVED BY IT OR AS TO THE SUFFICIENCY OF ANY PERFORMANCE BY ANY PARTY
THEREUNDER, TO PRESENT OR FILE ANY CLAIM, TO TAKE ANY ACTION TO ENFORCE ANY
PERFORMANCE OR TO COLLECT THE PAYMENT OF ANY AMOUNTS WHICH MAY HAVE BEEN
ASSIGNED TO IT OR TO WHICH IT MAY BE ENTITLED AT ANY TIME OR TIMES.

 

6.3.                              Pledged Equity.  (a)  Unless an Event of
Default shall have occurred and be continuing and the Administrative Agent shall
have given notice to the relevant Grantor of the Administrative Agent’s intent
to exercise its corresponding rights pursuant to Section 6.3(b), each Grantor
shall be permitted to receive all dividends (other than dividends payable in
Equity Interests) paid in respect of the Pledged Equity and all payments made in
respect of the Pledged Debt, in each case to the extent permitted in the Credit
Agreement, and to exercise all voting and corporate or other organizational
rights with respect to the Investment Property; provided, however, that such
Grantor will not be entitled to exercise any such right if the result thereof
could materially and adversely affect the rights inuring to a holder of the
Investment Property or the rights and remedies of the Administrative Agent or
the Lenders under any Loan Document or the ability of the Administrative Agent
or the Lenders to exercise the same.

 

(B)         IF AN EVENT OF DEFAULT SHALL OCCUR AND BE CONTINUING AND THE
ADMINISTRATIVE AGENT SHALL GIVE NOTICE OF ITS INTENT TO EXERCISE SUCH RIGHTS TO
THE RELEVANT GRANTOR OR GRANTORS, (I) THE ADMINISTRATIVE AGENT SHALL HAVE THE
RIGHT TO RECEIVE ANY AND ALL CASH DIVIDENDS, PAYMENTS (INCLUDING SUMS PAID UPON
THE LIQUIDATION OR DISSOLUTION OF ANY ISSUER OR IN CONNECTION WITH ANY
DISTRIBUTION OF CAPITAL) OR OTHER PROCEEDS PAID IN RESPECT OF THE INVESTMENT
PROPERTY AND MAKE APPLICATION THEREOF TO THE OBLIGATIONS IN ACCORDANCE WITH THE
PROVISIONS OF THE CREDIT AGREEMENT AND (II) ANY OR ALL OF THE INVESTMENT
PROPERTY SHALL BE REGISTERED IN THE NAME OF THE ADMINISTRATIVE AGENT OR ITS
NOMINEE, AND THE ADMINISTRATIVE AGENT OR ITS NOMINEE MAY THEREAFTER EXERCISE
(X) ALL VOTING, CORPORATE AND OTHER RIGHTS PERTAINING TO SUCH INVESTMENT
PROPERTY AT ANY MEETING OF SHAREHOLDERS OF THE RELEVANT ISSUER OR ISSUERS OR
OTHERWISE AND (Y) ANY AND ALL RIGHTS OF CONVERSION, EXCHANGE AND SUBSCRIPTION
AND ANY OTHER RIGHTS, PRIVILEGES OR OPTIONS PERTAINING TO SUCH INVESTMENT
PROPERTY AS IF IT WERE THE ABSOLUTE OWNER THEREOF (INCLUDING, WITHOUT
LIMITATION, THE RIGHT TO EXCHANGE AT ITS DISCRETION ANY AND ALL OF THE
INVESTMENT PROPERTY UPON THE MERGER, CONSOLIDATION, REORGANIZATION,
RECAPITALIZATION OR OTHER FUNDAMENTAL CHANGE IN THE CORPORATE OR OTHER
ORGANIZATIONAL STRUCTURE OF ANY ISSUER, OR UPON THE EXERCISE BY ANY GRANTOR OR
THE ADMINISTRATIVE AGENT OF ANY RIGHT, PRIVILEGE OR OPTION PERTAINING TO SUCH
INVESTMENT PROPERTY, AND IN CONNECTION THEREWITH, THE RIGHT TO DEPOSIT AND
DELIVER ANY AND ALL OF THE INVESTMENT PROPERTY WITH ANY COMMITTEE, DEPOSITARY,
TRANSFER AGENT, REGISTRAR OR OTHER DESIGNATED AGENCY UPON SUCH TERMS AND
CONDITIONS AS THE ADMINISTRATIVE AGENT MAY DETERMINE), ALL WITHOUT LIABILITY
EXCEPT TO ACCOUNT FOR PROPERTY ACTUALLY RECEIVED BY IT, BUT THE ADMINISTRATIVE
AGENT SHALL HAVE NO DUTY TO ANY GRANTOR TO EXERCISE ANY SUCH RIGHT, PRIVILEGE OR
OPTION AND SHALL NOT BE RESPONSIBLE FOR ANY FAILURE TO DO SO OR DELAY IN SO
DOING.  IF ANY SUMS OF MONEY PAID OR DISTRIBUTED IN RESPECT OF INVESTMENT
PROPERTY, WHICH THE ADMINISTRATIVE AGENT SHALL BE ENTITLED TO RECEIVE PURSUANT
TO CLAUSE (I) ABOVE, SHALL BE RECEIVED BY A GRANTOR, SUCH GRANTOR SHALL, UNTIL
SUCH

 

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MONEY IS PAID TO THE ADMINISTRATIVE AGENT, HOLD SUCH MONEY IN TRUST FOR THE
ADMINISTRATIVE AGENT AND THE LENDERS AS ADDITIONAL COLLATERAL FOR THE
OBLIGATIONS.

 

(C)          EACH GRANTOR HEREBY AUTHORIZES AND INSTRUCTS EACH ISSUER OF ANY
INVESTMENT PROPERTY PLEDGED BY SUCH GRANTOR HEREUNDER TO (I) COMPLY WITH ANY
INSTRUCTION RECEIVED BY IT FROM THE ADMINISTRATIVE AGENT IN WRITING THAT
(X) STATES THAT AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND (Y) IS
OTHERWISE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WITHOUT ANY OTHER OR
FURTHER INSTRUCTIONS FROM SUCH GRANTOR, AND EACH GRANTOR AGREES THAT EACH ISSUER
SHALL BE FULLY PROTECTED IN SO COMPLYING, AND (II) UNLESS OTHERWISE EXPRESSLY
PERMITTED HEREBY, PAY ANY DIVIDENDS OR OTHER PAYMENTS WITH RESPECT TO THE
INVESTMENT PROPERTY DIRECTLY TO THE ADMINISTRATIVE AGENT.

 

6.4.                              Proceeds to be Turned Over to Administrative
Agent.  If an Event of Default occurs and is continuing and the Administrative
Agent so requests, all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Administrative Agent, if required).  All
Proceeds received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control.  All Proceeds while held by the Administrative Agent in a
Collateral Account (or by such Grantor in trust for the Administrative Agent and
the Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.

 

6.5.                              Application of Proceeds.  At such intervals as
may be agreed upon by the Company and the Administrative Agent, or, if an Event
of Default has occurred and is continuing, at any time at the Administrative
Agent’s election, the Administrative Agent shall apply all or any part of
Proceeds required to be included in Collateral, whether or not held in any
Collateral Account, and any proceeds of the guarantee set forth in Section 2, in
payment of the Obligations in accordance with Section 8.04 of the Credit
Agreement, and any part of such funds which the Administrative Agent elects not
so to apply and deems not required as collateral security for the Obligations
shall be paid over from time to time by the Administrative Agent to the Company
or to whosoever may be lawfully entitled to receive the same.  Any balance of
such Proceeds remaining after the Obligations shall have been paid in full, no
Letters of Credit shall be outstanding and the Commitments shall have terminated
shall be paid over to the Company or to whomsoever may be lawfully entitled to
receive the same.

 

6.6.                              Code and Other Remedies.  If an Event of
Default occurs and is continuing, the Administrative Agent, on behalf of the
Lenders, may exercise, in addition to all other rights and remedies granted to
them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the New York UCC or any other applicable law.  Without limiting the
generality of the foregoing, if an Event of Default occurs and is continuing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are

 

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hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Administrative Agent or any Lender
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk.  The Administrative Agent or any Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released.  Each Grantor
further agrees, at the Administrative Agent’s request following and during the
continuance of an Event of Default, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative Agent
shall reasonably select, whether at such Grantor’s premises or elsewhere.  The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable out-of-pocket costs
and expenses of every kind incurred in connection therewith or incidental to the
care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys’ fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the
Administrative Agent may elect, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-615(a)(3) of the New
York UCC, need the Administrative Agent account for the surplus, if any, to any
Grantor.  To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder.  If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition.

 

6.7.                              REGISTRATION RIGHTS.  (A)  IF THE
ADMINISTRATIVE AGENT SHALL DETERMINE TO EXERCISE ITS RIGHTS TO SELL ALL OR ANY
OF THE PLEDGED EQUITY PURSUANT TO SECTION 6.6, AND IF, IN THE OPINION OF THE
ADMINISTRATIVE AGENT, IT IS NECESSARY OR ADVISABLE TO HAVE THE PLEDGED EQUITY,
OR THAT PORTION THEREOF TO BE SOLD, REGISTERED UNDER THE PROVISIONS OF THE
SECURITIES ACT, THE RELEVANT GRANTOR WILL CAUSE THE ISSUER THEREOF TO
(I) EXECUTE AND DELIVER, AND CAUSE THE DIRECTORS AND OFFICERS OF SUCH ISSUER TO
EXECUTE AND DELIVER, ALL SUCH INSTRUMENTS AND DOCUMENTS, AND DO OR CAUSE TO BE
DONE ALL SUCH OTHER ACTS AS MAY BE, IN THE OPINION OF THE ADMINISTRATIVE AGENT,
NECESSARY OR ADVISABLE TO REGISTER THE PLEDGED EQUITY, OR THAT PORTION THEREOF
TO BE SOLD, UNDER THE PROVISIONS OF THE SECURITIES ACT, (II) USE ITS BEST
EFFORTS TO CAUSE THE REGISTRATION STATEMENT RELATING THERETO TO BECOME EFFECTIVE
AND TO REMAIN EFFECTIVE FOR A PERIOD OF ONE YEAR FROM THE DATE OF THE FIRST
PUBLIC OFFERING OF THE PLEDGED EQUITY, OR THAT PORTION THEREOF TO BE SOLD, AND
(III) MAKE ALL AMENDMENTS THERETO AND/OR TO THE RELATED PROSPECTUS WHICH, IN THE
OPINION OF THE ADMINISTRATIVE AGENT, ARE NECESSARY OR ADVISABLE, ALL IN
CONFORMITY WITH THE REQUIREMENTS OF THE SECURITIES ACT AND THE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION APPLICABLE THERETO.  EACH
GRANTOR AGREES TO CAUSE SUCH ISSUER TO COMPLY WITH THE PROVISIONS OF THE
SECURITIES OR “BLUE SKY” LAWS OF ANY AND ALL JURISDICTIONS WHICH THE
ADMINISTRATIVE AGENT SHALL DESIGNATE AND TO MAKE AVAILABLE TO ITS SECURITY
HOLDERS, AS SOON AS PRACTICABLE, AN EARNINGS STATEMENT (WHICH NEED NOT BE
AUDITED) WHICH WILL SATISFY THE PROVISIONS OF SECTION 11(A) OF THE SECURITIES
ACT.

 

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(B)         EACH GRANTOR RECOGNIZES THAT THE ADMINISTRATIVE AGENT MAY BE UNABLE
TO EFFECT A PUBLIC SALE OF ANY OR ALL THE PLEDGED EQUITY, BY REASON OF CERTAIN
PROHIBITIONS CONTAINED IN THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR OTHERWISE, AND MAY BE COMPELLED TO RESORT TO ONE OR MORE PRIVATE SALES
THEREOF TO A RESTRICTED GROUP OF PURCHASERS WHICH WILL BE OBLIGED TO AGREE,
AMONG OTHER THINGS, TO ACQUIRE SUCH SECURITIES FOR THEIR OWN ACCOUNT FOR
INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR RESALE THEREOF.  EACH
GRANTOR ACKNOWLEDGES AND AGREES THAT ANY SUCH PRIVATE SALE MAY RESULT IN PRICES
AND OTHER TERMS LESS FAVORABLE THAN IF SUCH SALE WERE A PUBLIC SALE AND,
NOTWITHSTANDING SUCH CIRCUMSTANCES, AGREES THAT ANY SUCH PRIVATE SALE SHALL BE
DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY REASONABLE MANNER.  THE
ADMINISTRATIVE AGENT SHALL BE UNDER NO OBLIGATION TO DELAY A SALE OF ANY OF THE
PLEDGED EQUITY FOR THE PERIOD OF TIME NECESSARY TO PERMIT THE ISSUER THEREOF TO
REGISTER SUCH SECURITIES FOR PUBLIC SALE UNDER THE SECURITIES ACT, OR UNDER
APPLICABLE STATE SECURITIES LAWS, EVEN IF SUCH ISSUER WOULD AGREE TO DO SO.

 

(C)          EACH GRANTOR AGREES TO USE ITS BEST EFFORTS TO DO OR CAUSE TO BE
DONE ALL SUCH OTHER ACTS AS MAY BE NECESSARY TO MAKE SUCH SALE OR SALES OF ALL
OR ANY PORTION OF THE PLEDGED EQUITY PURSUANT TO THIS SECTION 6.7 VALID AND
BINDING AND IN COMPLIANCE WITH ANY AND ALL OTHER APPLICABLE LAW.  EACH GRANTOR
FURTHER AGREES THAT A BREACH OF ANY OF THE COVENANTS CONTAINED IN THIS
SECTION 6.7 WILL CAUSE IRREPARABLE INJURY TO THE ADMINISTRATIVE AGENT AND THE
LENDERS, THAT THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE NO ADEQUATE REMEDY
AT LAW IN RESPECT OF SUCH BREACH AND, AS A CONSEQUENCE, THAT EACH AND EVERY
COVENANT CONTAINED IN THIS SECTION 6.7 SHALL BE SPECIFICALLY ENFORCEABLE AGAINST
SUCH GRANTOR, AND SUCH GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT ANY DEFENSES AGAINST AN ACTION FOR
SPECIFIC PERFORMANCE OF SUCH COVENANTS EXCEPT FOR A DEFENSE THAT NO EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING UNDER THE CREDIT AGREEMENT.

 

6.8.                              Deficiency.  Each Grantor shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Obligations and the reasonable fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.

 

SECTION 7.                                THE ADMINISTRATIVE AGENT

 

7.1.                              Administrative Agent’s Appointment as
Attorney-in-Fact, etc.  (a)  Each Grantor hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and in
the name of such Grantor or in its own name, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, each Grantor hereby gives the Administrative Agent the power
and right, on behalf of such Grantor, without notice to or assent by such
Grantor, to do any or all of the following:

 

(I)                                     IN THE NAME OF SUCH GRANTOR OR ITS OWN
NAME, OR OTHERWISE, TAKE POSSESSION OF AND INDORSE AND COLLECT ANY CHECKS,
DRAFTS, NOTES, ACCEPTANCES OR OTHER INSTRUMENTS FOR THE PAYMENT OF MONEYS DUE
UNDER ANY RECEIVABLE REQUIRED TO BE INCLUDED

 

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IN COLLATERAL HEREUNDER OR WITH RESPECT TO ANY OTHER COLLATERAL AND FILE ANY
CLAIM OR TAKE ANY OTHER ACTION OR PROCEEDING IN ANY COURT OF LAW OR EQUITY OR
OTHERWISE DEEMED APPROPRIATE BY THE ADMINISTRATIVE AGENT FOR THE PURPOSE OF
COLLECTING ANY AND ALL SUCH MONEYS DUE UNDER ANY SUCH RECEIVABLE OR WITH RESPECT
TO ANY OTHER COLLATERAL WHENEVER PAYABLE;

 

(II)                                  IN THE CASE OF ANY INTELLECTUAL PROPERTY
REQUIRED TO BE INCLUDED IN COLLATERAL HEREUNDER, EXECUTE AND DELIVER, AND HAVE
RECORDED, ANY AND ALL AGREEMENTS, INSTRUMENTS, DOCUMENTS AND PAPERS AS THE
ADMINISTRATIVE AGENT MAY REQUEST TO EVIDENCE THE ADMINISTRATIVE AGENT’S AND THE
LENDERS’ SECURITY INTEREST IN SUCH INTELLECTUAL PROPERTY AND THE GOODWILL AND
GENERAL INTANGIBLES OF SUCH GRANTOR RELATING THERETO OR REPRESENTED THEREBY;

 

(III)                               PAY OR DISCHARGE TAXES AND LIENS LEVIED OR
PLACED ON OR THREATENED AGAINST THE COLLATERAL, EFFECT ANY REPAIRS OR ANY
INSURANCE CALLED FOR BY THE TERMS OF THIS AGREEMENT AND PAY ALL OR ANY PART OF
THE PREMIUMS THEREFOR AND THE COSTS THEREOF;

 

(IV)                              EXECUTE, IN CONNECTION WITH ANY SALE PROVIDED
FOR IN SECTION 6.6 OR 6.7, ANY INDORSEMENTS, ASSIGNMENTS OR OTHER INSTRUMENTS OF
CONVEYANCE OR TRANSFER WITH RESPECT TO THE COLLATERAL; AND

 

(V)                                 (1) DIRECT ANY PARTY LIABLE FOR ANY PAYMENT
UNDER ANY OF THE COLLATERAL TO MAKE PAYMENT OF ANY AND ALL MONEYS DUE OR TO
BECOME DUE THEREUNDER DIRECTLY TO THE ADMINISTRATIVE AGENT OR AS THE
ADMINISTRATIVE AGENT SHALL DIRECT; (2) ASK OR DEMAND FOR, COLLECT, AND RECEIVE
PAYMENT OF AND RECEIPT FOR, ANY AND ALL MONEYS, CLAIMS AND OTHER AMOUNTS DUE OR
TO BECOME DUE AT ANY TIME IN RESPECT OF OR ARISING OUT OF ANY COLLATERAL;
(3) SIGN AND INDORSE ANY INVOICES, FREIGHT OR EXPRESS BILLS, BILLS OF LADING,
STORAGE OR WAREHOUSE RECEIPTS, DRAFTS AGAINST DEBTORS, ASSIGNMENTS,
VERIFICATIONS, NOTICES AND OTHER DOCUMENTS IN CONNECTION WITH ANY OF THE
COLLATERAL; (4) COMMENCE AND PROSECUTE ANY SUITS, ACTIONS OR PROCEEDINGS AT LAW
OR IN EQUITY IN ANY COURT OF COMPETENT JURISDICTION TO COLLECT THE COLLATERAL OR
ANY PORTION THEREOF AND TO ENFORCE ANY OTHER RIGHT IN RESPECT OF ANY COLLATERAL;
(5) DEFEND ANY SUIT, ACTION OR PROCEEDING BROUGHT AGAINST SUCH GRANTOR WITH
RESPECT TO ANY COLLATERAL; (6) SETTLE, COMPROMISE OR ADJUST ANY SUCH SUIT,
ACTION OR PROCEEDING AND, IN CONNECTION THEREWITH, GIVE SUCH DISCHARGES OR
RELEASES AS THE ADMINISTRATIVE AGENT MAY REASONABLY DEEM APPROPRIATE;
(7) SUBJECT TO ANY LICENSES (AND THE RIGHTS GRANTED THEREIN) EXISTING AT THE
TIME OF SUCH ASSIGNMENT, ASSIGN ANY COPYRIGHT, PATENT OR TRADEMARK (ALONG WITH
THE GOODWILL OF THE BUSINESS TO WHICH ANY SUCH COPYRIGHT, PATENT OR TRADEMARK
PERTAINS), THROUGHOUT THE WORLD FOR SUCH TERM OR TERMS, ON SUCH CONDITIONS, AND
IN SUCH MANNER, AS THE ADMINISTRATIVE AGENT SHALL IN ITS SOLE DISCRETION
DETERMINE; AND (8) GENERALLY, SELL, TRANSFER, PLEDGE AND MAKE ANY AGREEMENT WITH
RESPECT TO OR OTHERWISE DEAL WITH ANY OF THE COLLATERAL AS FULLY AND COMPLETELY
AS THOUGH THE ADMINISTRATIVE AGENT WERE THE ABSOLUTE OWNER THEREOF FOR ALL
PURPOSES, AND DO, AT THE ADMINISTRATIVE AGENT’S OPTION AND SUCH GRANTOR’S
EXPENSE, AT ANY TIME, OR FROM TIME TO TIME, ALL ACTS AND THINGS WHICH THE
ADMINISTRATIVE AGENT DEEMS NECESSARY TO PROTECT, PRESERVE OR REALIZE UPON THE
COLLATERAL AND THE ADMINISTRATIVE AGENT’S AND THE LENDERS’ SECURITY INTERESTS
THEREIN AND TO EFFECT THE INTENT OF THIS AGREEMENT, ALL AS FULLY AND EFFECTIVELY
AS SUCH GRANTOR MIGHT DO.

 

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Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.

 

(B)         IF ANY GRANTOR FAILS TO PERFORM OR COMPLY WITH ANY OF ITS AGREEMENTS
CONTAINED HEREIN, THE ADMINISTRATIVE AGENT, AT ITS OPTION, BUT WITHOUT ANY
OBLIGATION SO TO DO, MAY PERFORM OR COMPLY, OR OTHERWISE CAUSE PERFORMANCE OR
COMPLIANCE, WITH SUCH AGREEMENT.

 

(C)          THE REASONABLE OUT-OF-POCKET EXPENSES OF THE ADMINISTRATIVE AGENT
INCURRED IN CONNECTION WITH ACTIONS UNDERTAKEN AS PROVIDED IN THIS SECTION 7.1,
TOGETHER WITH INTEREST THEREON AT A RATE PER ANNUM EQUAL TO THE HIGHEST RATE PER
ANNUM AT WHICH INTEREST WOULD THEN BE PAYABLE ON ANY CATEGORY OF PAST DUE BASE
RATE LOANS UNDER THE CREDIT AGREEMENT, FROM THE DATE OF PAYMENT BY THE
ADMINISTRATIVE AGENT TO THE DATE REIMBURSED BY THE RELEVANT GRANTOR, SHALL BE
PAYABLE BY SUCH GRANTOR TO THE ADMINISTRATIVE AGENT ON DEMAND.

 

(D)         EACH GRANTOR HEREBY RATIFIES ALL THAT SAID ATTORNEYS SHALL LAWFULLY
DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.  ALL POWERS, AUTHORIZATIONS AND
AGENCIES CONTAINED IN THIS AGREEMENT ARE COUPLED WITH AN INTEREST AND ARE
IRREVOCABLE UNTIL THIS AGREEMENT IS TERMINATED AND THE SECURITY INTERESTS
CREATED HEREBY ARE RELEASED.

 

7.2.                              Duty of Administrative Agent.  The
Administrative Agent’s sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the New York UCC or otherwise, shall be to deal with it in the same manner as
the Administrative Agent deals with similar property for its own account. 
Neither the Administrative Agent, any Lender nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.  The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent’s and the Lenders’ interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers.  The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.

 

7.3.                              Execution of Financing Statements.  Pursuant
to any applicable law, each Grantor authorizes the Administrative Agent to file
or record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Grantor
in such form and in such offices as the Administrative Agent determines
appropriate to perfect the security interests of the Administrative Agent under
this Agreement.  Each Grantor authorizes the Administrative Agent to use the
collateral description “all personal property” or “all assets” in any such
financing statements.  Each Grantor hereby ratifies and authorizes the filing by
the Administrative Agent of any financing statement with respect to the
Collateral made prior to the date hereof; provided that, at the reasonable
request of any Grantor,

 

25

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the Administrative Agent shall amend any such statement (and any other financing
statement filed by the Administrative Agent in connection with this Agreement)
to exclude any property that is released from, or otherwise not included in, the
Collateral.  The Administrative Agent agrees promptly to furnish copies of all
such filings to the Company.

 

7.4.                              Authority of Administrative Agent.  Each
Grantor acknowledges that the rights and responsibilities of the Administrative
Agent under this Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative Agent
of any option, voting right, request, judgment or other right or remedy provided
for herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.

 

SECTION 8.                                MISCELLANEOUS

 

8.1.                              Amendments in Writing.  None of the terms or
provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 10.01 of the Credit Agreement.

 

8.2.                              Notices.  All notices, requests and demands to
or upon the Administrative Agent or any Grantor hereunder shall be effected in
the manner provided for in Section 10.02 of the Credit Agreement; provided that
any such notice, request or demand to or upon any Guarantor shall be addressed
to such Guarantor at its notice address set forth on Schedule 1.

 

8.3.                              No Waiver by Course of Conduct; Cumulative
Remedies.  Neither the Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to Section 8.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or Event of Default.  No failure to exercise,
nor any delay in exercising, on the part of the Administrative Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof.  No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  A waiver by the Administrative Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion.  The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.

 

8.4.                              Enforcement Expenses; Indemnification.  (a) 
Each Guarantor agrees to pay or reimburse each Lender and the Administrative
Agent for all its reasonable out-of-pocket costs and expenses incurred in
collecting against such Guarantor under the guarantee contained in Section 2 or
otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Guarantor is a party, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.

 

26

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(B)         EACH GUARANTOR AGREES TO PAY, AND TO SAVE THE ADMINISTRATIVE AGENT
AND THE LENDERS HARMLESS FROM, ANY AND ALL LIABILITIES WITH RESPECT TO, OR
RESULTING FROM ANY DELAY IN PAYING, ANY AND ALL STAMP, EXCISE, SALES OR OTHER
TAXES WHICH MAY BE PAYABLE OR DETERMINED TO BE PAYABLE WITH RESPECT TO ANY OF
THE COLLATERAL OR IN CONNECTION WITH ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.

 

(C)          EACH GUARANTOR AGREES TO PAY, AND TO SAVE THE ADMINISTRATIVE AGENT
AND THE LENDERS HARMLESS FROM, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS AND SUITS AND RELATED
REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEY COSTS) OF ANY KIND OR
NATURE WHATSOEVER WITH RESPECT TO THE EXECUTION, DELIVERY, ENFORCEMENT,
PERFORMANCE AND ADMINISTRATION OF THIS AGREEMENT TO THE EXTENT THE COMPANY WOULD
BE REQUIRED TO DO SO PURSUANT TO SECTION 10.05 OF THE CREDIT AGREEMENT.

 

(D)         THE AGREEMENTS IN THIS SECTION 8.4 SHALL SURVIVE REPAYMENT OF THE
OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE UNDER THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS.

 

8.5.                              Successors and Assigns.  This Agreement shall
be binding upon the permitted successors and assigns of each Grantor and shall
inure to the benefit of the Administrative Agent and the Lenders and their
permitted successors and assigns; provided that no Grantor may, except pursuant
to a merger or consolidation permitted by the Credit Agreement, assign, transfer
or delegate any of its rights or obligations under this Agreement without the
prior written consent of the Administrative Agent.

 

8.6.                              Setoff.  In addition to any rights and
remedies of the Lenders provided by Law, upon the occurrence and during the
continuance of any Event of Default, each Lender and its Affiliates is
authorized at any time and from time to time, without prior notice to any
Grantor, any such notice being waived by each Grantor to the fullest extent
permitted by applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held by, and other
Indebtedness at any time owing by, such Lender and its Affiliates to or for the
credit or the account of any Grantor against any and all Obligations owing to
such Lender and its Affiliates hereunder or under any other Loan Document, now
or hereafter existing, irrespective of whether or not such Agent or such Lender
or Affiliate shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured or
denominated in a currency different from that of the applicable deposit or
Indebtedness; provided that, in the case of any such deposits or other
Indebtedness for the credit or the account of any Foreign Subsidiary, such set
off may only be against any Obligations of Foreign Subsidiaries.  Each Lender
agrees promptly to notify such Grantor and the Administrative Agent after any
such set off and application made by such Lender; provided, that the failure to
give such notice shall not affect the validity of such setoff and application. 
The rights of the Administrative Agent and each Lender under this Section 8.6
are in addition to other rights and remedies (including other rights of setoff)
that the Administrative Agent and such Lender may have.

 

8.7.                              Counterparts.  This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.  Delivery by
telecopier of an executed counterpart of a signature

 

27

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page to this Agreement shall be effective as delivery of an original executed
counterpart of this Agreement.

 

8.8.                              Severability.  If any provision of this
Agreement is held to be illegal, invalid or unenforceable, the legality,
validity and enforceability of the remaining provisions of this Agreement shall
not be affected or impaired thereby.  The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

8.9.                              Section Headings.  The Section headings used
in this Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.

 

8.10.                        Integration.  This Agreement, together with the
other Loan Documents, comprises the complete and integrated agreement of the
parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter.

 

8.11.                     GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

8.12.                        Submission To Jurisdiction; Waivers.  (a)  Any
legal action or proceeding arising under any Loan Document or in any way
connected with or related or incidental to the dealings of the parties hereto or
any of them with respect to any Loan Document, or the transactions related
thereto, in each case whether now existing or hereafter arising, may be brought
in the courts of the State of New York sitting in New York City or of the United
States for the Southern District of such State, and by execution and delivery of
this Agreement, each Grantor and the Administrative Agent consents, for itself
and in respect of its property, to the non-exclusive jurisdiction of those
courts.  Each Grantor and the Administrative Agent irrevocably waives any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any action or proceeding in such courts in respect of any Loan
Document or other document related thereto.

 

(b)  Each Grantor hereby irrevocably and unconditionally:

 

(I)                                     AGREES THAT SERVICE OF PROCESS IN ANY
SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO SUCH GRANTOR AT ITS ADDRESS REFERRED TO IN SECTION 8.2 OR AT
SUCH OTHER ADDRESS OF WHICH THE ADMINISTRATIVE AGENT SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO;

 

(II)                                  AGREES THAT NOTHING HEREIN SHALL AFFECT
THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

 

28

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(III)                               WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.

 

8.13.                        Acknowledgments.  Each Grantor hereby acknowledges
that:

 

(A)          IT HAS BEEN ADVISED BY COUNSEL IN THE NEGOTIATION, EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY;

 

(B)         NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER HAS ANY FIDUCIARY
RELATIONSHIP WITH OR DUTY TO ANY GRANTOR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND THE RELATIONSHIP BETWEEN
THE GRANTORS, ON THE ONE HAND, AND THE ADMINISTRATIVE AGENT AND THE LENDERS, ON
THE OTHER HAND, IN CONNECTION HEREWITH OR THEREWITH IS SOLELY THAT OF DEBTOR AND
CREDITOR; AND

 

(C)          NO JOINT VENTURE IS CREATED HEREBY OR BY THE OTHER LOAN DOCUMENTS
OR OTHERWISE EXISTS BY VIRTUE OF THE TRANSACTIONS CONTEMPLATED HEREBY AMONG THE
LENDERS OR AMONG THE GRANTORS AND THE LENDERS.

 

8.14.                        Additional Guarantors and Grantors.  Each
Subsidiary of the Company that is required to become a party to this Agreement
pursuant to Section 6.10 of the Credit Agreement shall become a Guarantor and a
Grantor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of a Security Agreement Supplement in the form of Annex 1 hereto.

 

8.15.                        Releases.  (a)  At such time as the Loans and the
other Obligations (other than contingent indemnification and contingent expense
reimbursement obligations, Obligations in respect of Secured Hedge Agreements
and Cash Management Obligations) shall have been paid in full, the Commitments
have been terminated and no Letters of Credit shall be outstanding, the
Collateral shall be released from the Liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the Grantors.  At
the request and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by the
Administrative Agent hereunder and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.

 

(B)         IF ANY OF THE COLLATERAL SHALL BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF BY ANY GRANTOR IN A TRANSACTION PERMITTED BY THE CREDIT AGREEMENT,
THEN (I) THE LIENS CREATED HEREBY ON SUCH COLLATERAL SHALL AUTOMATICALLY BE
RELEASED AND (II) THE ADMINISTRATIVE AGENT, AT THE REQUEST AND SOLE EXPENSE OF
SUCH GRANTOR, SHALL EXECUTE AND DELIVER TO SUCH GRANTOR ALL RELEASES OR OTHER
DOCUMENTS REASONABLY NECESSARY OR DESIRABLE FOR THE RELEASE OF THE LIENS CREATED
HEREBY ON SUCH COLLATERAL.  IF ANY OF THE COLLATERAL SHALL BECOME SPECIFIED
ASSETS DESCRIBED IN CLAUSE (B) OF THE DEFINITION THEREOF (TAKING INTO ACCOUNT
THE PROVISO THERETO), THEN (A) THE LIENS CREATED HEREBY ON SUCH COLLATERAL SHALL
AUTOMATICALLY BE RELEASED AND (II) THE ADMINISTRATIVE AGENT, AT THE REQUEST AND
SOLE EXPENSE OF THE COMPANY, SHALL EXECUTE AND DELIVER TO THE COMPANY OR THE

 

29

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RELEVANT GRANTOR ALL RELEASES OR OTHER DOCUMENTS REASONABLY NECESSARY OR
DESIRABLE FOR THE RELEASE OF THE LIENS CREATED HEREBY ON SUCH COLLATERAL.  IN
ADDITION, AT THE REQUEST AND AT THE SOLE EXPENSE OF THE COMPANY, THE
ADMINISTRATIVE AGENT AGREES TO (X) PROVIDE TO EACH GRANTOR A POWER OF ATTORNEY
TO EXECUTE ANY DOCUMENT REASONABLY REQUIRED TO PERMIT ANY SALE PERMITTED BY THE
CREDIT AGREEMENT OF ANY ASSET, THE PERFECTION OF WHICH IS GOVERNED BY A
CERTIFICATE-OF-TITLE STATUTE, FREE OF THE LIENS CREATED BY THE SECURITY
DOCUMENTS AND (Y) WITH RESPECT TO ANY JURISDICTION IN WHICH RELEASES EXECUTED
PURSUANT TO SUCH POWER OF ATTORNEY ARE INSUFFICIENT TO RELEASE SUCH LIENS,
(1) EXECUTE IN BLANK ANY DOCUMENT REASONABLY REQUIRED TO PERMIT ANY SALE
PERMITTED BY THE CREDIT AGREEMENT OF ANY ASSET, THE PERFECTION OF WHICH IS
GOVERNED BY A CERTIFICATE-OF-TITLE STATUTE, FREE OF THE LIENS CREATED BY THE
SECURITY DOCUMENTS AND (2) AUTHORIZE SUCH GRANTOR TO FILL IN THE RELEVANT
INFORMATION TO RELEASE SUCH LIEN.  AT THE REQUEST AND SOLE EXPENSE OF THE
COMPANY, A SUBSIDIARY GUARANTOR SHALL BE RELEASED FROM ITS OBLIGATIONS HEREUNDER
IN THE EVENT THAT ALL THE EQUITY INTERESTS OF SUCH SUBSIDIARY GUARANTOR SHALL BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN A TRANSACTION PERMITTED BY THE
CREDIT AGREEMENT; PROVIDED THAT THE COMPANY SHALL HAVE DELIVERED TO THE
ADMINISTRATIVE AGENT, AT LEAST FIVE BUSINESS DAYS PRIOR TO THE DATE OF THE
PROPOSED RELEASE, A WRITTEN REQUEST FOR RELEASE IDENTIFYING THE RELEVANT
SUBSIDIARY GUARANTOR AND THE TERMS OF THE SALE OR OTHER DISPOSITION IN
REASONABLE DETAIL, INCLUDING THE PRICE THEREOF AND ANY EXPENSES IN CONNECTION
THEREWITH, TOGETHER WITH A CERTIFICATION BY THE COMPANY STATING THAT SUCH
TRANSACTION IS IN COMPLIANCE WITH THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.

 

8.16.                     WAIVER OF JURY TRIAL.  EACH GRANTOR HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION 10.17 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

8.17.                        Effectiveness of the Merger; Assignment and
Delegation to and Assumption by Reader’s Digest.  Reader’s Digest and its
Subsidiaries shall have no rights or obligations hereunder until the
consummation of the Merger and any representations and warranties of Reader’s
Digest or any of its Subsidiaries hereunder shall not become effective until
such time.  Upon consummation of the Merger, Reader’s Digest shall succeed to
all the rights and obligations of Doctor Acquisition Co. under this Agreement
and all rights, obligations, representations and warranties of Reader’s Digest
and its Subsidiaries shall become effective as of the date hereof, without any
further action by any Person.

 

8.18.                        German Borrower Security.  Notwithstanding any
provision to the contrary in any Loan Document or any Secured Hedge Agreement,
any guarantees, security interests or other security provided under or in
connection with this Agreement or any other

 

30

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Loan Document or any Secured Hedge Agreement (“Security”) shall at all times
exclude direct or indirect access to Specified Assets other than Specified
Assets of the German Borrower (in particular, no security in rem (dingliche
Sicherheit) in Specified Assets other than Specified Assets of the German
Borrower shall be created (or, in the event such exclusion is not possible under
applicable law, no such security in rem shall be enforceable), and no disposal
restriction (Verfügungsbeschränkung) and no submission to immediate foreclosure
(Unterwerfung unter die sofortige Zwangsvollstreckung) regarding Specified
Assets other than Specified Assets of the German Borrower shall apply with
respect to any contractual claim (schuldrechtlicher Anspruch) in favor of any
Secured Party).  The restriction set forth in this Section 8.18 shall be
applicable if and only to the extent that (and only for so long as) (a) such
Security secures Obligations of the German Borrower and (b) direct or indirect
access to such Specified Assets would result in adverse tax consequences to
Holdings and its Subsidiaries as a consequence of § 8a of the German Corporate
Income Tax Act (Körperschaftsteuergesetz) as amended from time to time or of any
future rules replacing § 8a of the German Corporate Income Tax Act
(Körperschaftsteuergesetz).

 

8.19.                        Parallel Obligations

 

.  (a)  Solely for purposes of the validity and enforcement of any security
interest granted to the Secured Parties in any Equity Interests or other assets
governed by German law, each of the parties hereto agrees (and each Secured
Party by its execution of the Credit Agreement or its Assignment and Assumption
agrees), and each of the Loan Parties acknowledges by way of an abstract
acknowledgement of debt (abstraktes Schuldanerkenntnis as effective under German
law) (the “Acknowledgement”), that the Obligations of such Loan Party (and each
of their respective permitted successors and assigns) (the “Original
Obligations”) shall also be owing in full to the Administrative Agent (and its
permitted successors and assigns), and that accordingly the Administrative Agent
will have its own independent right to demand performance by the respective Loan
Party of the Obligations of such Loan Party (such Obligations owed to the
Administrative Agent, the “Parallel Obligations”).  Any payment by any Loan
Party of its Parallel Obligations shall to the same extent reduce and be a good
discharge of the corresponding Original Obligations of such Loan Party owing to
the relevant Secured Parties, and payment by any Loan Party of its Original
Obligations to the relevant Secured Parties shall to the same extent reduce and
be a good discharge of the Parallel Obligations owing by it to the
Administrative Agent.  The Administrative Agent undertakes to each Loan Party
that in the case of any discharge of any such obligation owing to one of the
Administrative Agent or a Secured Party, it will, to the same extent, not make a
claim against such Loan Party under the Acknowledgement at any time, provided
that any such claims can be made against such Loan Party if such discharge is
made by virtue of any set off, counterclaim or similar defense invoked by such
Loan Party vis-a-vis the Administrative Agent other than with respect to claims
arising under the Loan Documents.

 

(b)  Without limiting or affecting the Administrative Agent’s rights against the
Loan Parties (whether under this Section 8.19 or under any other provision of
the Loan Documents), the Administrative Agent agrees with each other Secured
Party that it will not exercise its rights under the Acknowledgement with
respect to Obligations owed to such Secured Party except with the consent of
such Secured Party, which consent is hereby deemed given by its execution of the
Credit Agreement or its Assignment and Assumption.  Nothing in the

 

31

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previous sentence shall in any way limit the Administrative Agent’s right to act
in the protection or preservation of rights under or to enforce any Collateral
Document (or to do any act reasonably incidental to the foregoing).

 

32

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IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and
Collateral Agreement to be duly executed and delivered as of the date first
above written.

 

 

 

RDA HOLDING CO.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[Signature Page to Guarantee & Collateral Agreement]

 

--------------------------------------------------------------------------------

 

 

DOCTOR ACQUISITION CO.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

THE READER’S DIGEST ASSOCIATION, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

Solely for purposes of Sections 8.18 and 8.19:

 

RD GERMAN HOLDINGS GmbH

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

[CERTAIN SUBSIDIARIES OF THE READER’S DIGEST ASSOCIATION, INC.]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

 

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO GUARANTEE AND COLLATERAL AGREEMENT]

 

--------------------------------------------------------------------------------

 

ACKNOWLEDGMENT AND CONSENT***

 

The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement dated as of March 2, 2007 (the “Agreement”), made by the
Grantors parties thereto for the benefit of JPMORGAN CHASE BANK, N.A., as
Administrative Agent.  The undersigned agrees for the benefit of the
Administrative Agent and the Lenders as follows:

 

1.               THE UNDERSIGNED WILL BE BOUND BY THE TERMS OF THE AGREEMENT AND
WILL COMPLY WITH SUCH TERMS INSOFAR AS SUCH TERMS ARE APPLICABLE TO THE
UNDERSIGNED.

 

2.               THE UNDERSIGNED WILL NOTIFY THE ADMINISTRATIVE AGENT PROMPTLY
IN WRITING OF THE OCCURRENCE OF ANY OF THE EVENTS DESCRIBED IN SECTION 5.6(A) OF
THE AGREEMENT.

 

3.               THE TERMS OF SECTIONS 6.3(C) AND 6.7 OF THE AGREEMENT SHALL
APPLY TO IT, MUTATIS MUTANDIS, WITH RESPECT TO ALL ACTIONS THAT MAY BE REQUIRED
OF IT PURSUANT TO SECTION 6.3(C) OR 6.7 OF THE AGREEMENT.

 

 

[NAME OF ISSUER]

 

 

 

 

 

By

 

 

 

Name:

 

 

Title:

 

 

 

Address for Notices:

 

                                                                                                     

 

                                                                                                     

 

                                                                                                     

 

 

 

Fax:

 

--------------------------------------------------------------------------------

***

This consent is necessary only with respect to any Issuer which is not also a
Grantor. This consent may be modified or eliminated with respect to any Issuer
that is not controlled by a Grantor.

 

--------------------------------------------------------------------------------

 

Annex 1 to

Guarantee and Collateral Agreement

 

ASSUMPTION AGREEMENT, dated as of                              , 20    , made by
                                                          , a
                             corporation (the “Additional Grantor”), in favor of
JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, the
“Administrative Agent”), for the lending and other financial institutions (the
“Lenders”) parties to the Credit Agreement referred to below.  All capitalized
terms not defined herein shall have the meaning ascribed to them in such Credit
Agreement.

 

W I T N E S S E T H :

 

WHEREAS, RDA HOLDING CO., a Delaware corporation (“Holdings”), THE READER’S
DIGEST ASSOCIATION, INC., a Delaware corporation (the “Company”), the Overseas
Borrowers, the Lenders and the Administrative Agent have entered into a Credit
Agreement, dated as of March 2, 2007 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”);

 

WHEREAS, in connection with the Credit Agreement, Holdings, the Company and
certain of the Company’s Subsidiaries (other than the Additional Grantor) have
entered into the Guarantee and Collateral Agreement, dated as of March 2, 2007
(as amended, supplemented or otherwise modified from time to time, the
“Guarantee and Collateral Agreement”) in favor of the Administrative Agent for
the benefit of the Lenders;

 

WHEREAS, the Credit Agreement requires the Additional Grantor to become a party
to the Guarantee and Collateral Agreement; and

 

WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;

 

NOW, THEREFORE, IT IS AGREED:

 

1.                                       GUARANTEE AND COLLATERAL AGREEMENT.  BY
EXECUTING AND DELIVERING THIS ASSUMPTION AGREEMENT, THE ADDITIONAL GRANTOR, AS
PROVIDED IN SECTION 8.14 OF THE GUARANTEE AND COLLATERAL AGREEMENT, HEREBY
BECOMES A PARTY TO THE GUARANTEE AND COLLATERAL AGREEMENT AS A GUARANTOR AND A
GRANTOR THEREUNDER WITH THE SAME FORCE AND EFFECT AS IF ORIGINALLY NAMED THEREIN
AS A GUARANTOR AND A GRANTOR AND, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, HEREBY EXPRESSLY ASSUMES ALL OBLIGATIONS AND LIABILITIES OF A
GUARANTOR AND A GRANTOR THEREUNDER.  THE INFORMATION SET FORTH IN ANNEX 1-A
HERETO IS HEREBY ADDED TO THE INFORMATION SET FORTH IN THE SCHEDULES TO THE
GUARANTEE AND COLLATERAL AGREEMENT.  THE ADDITIONAL GRANTOR HEREBY REPRESENTS
AND WARRANTS THAT EACH OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
SECTION 4 OF THE GUARANTEE AND COLLATERAL AGREEMENT IS TRUE AND CORRECT ON AND
AS THE DATE HEREOF (AFTER GIVING EFFECT TO THIS ASSUMPTION AGREEMENT) AS IF MADE
ON AND AS OF SUCH DATE.

 

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2.              GOVERNING LAW.  THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.

 

 

[ADDITIONAL GRANTOR]

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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Annex 1-A to

Assumption Agreement

 

Supplement to Schedule 1

 

Supplement to Schedule 2

 

Supplement to Schedule 3

 

Supplement to Schedule 4

 

Supplement to Schedule 5

 

Supplement to Schedule 6

 

Supplement to Schedule 7

 

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EXHIBIT G

 

Document Number

Document Title

 

 

 

Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing

 

 

 

 

 

 

Recording Area

 

 

 

Name and Return Address:

 

 

 

After recording please return to:

 

 

 

Simpson Thacher & Bartlett LLP

 

425 Lexington Avenue

 

New York, New York 10017

 

Attention: Christopher Garcia

 

 

 

648-0016-020

 

 

(Parcel Identification Number)

 

 

 

As required by Wisconsin Statutes Chapter 59.43(5), this document has been
drafted by Yulia Rubin, Simpson Thacher & Bartlett LLP, 425 Lexington Avenue,
New York, New York 10017.

 

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After recording please return to:

 

 

 

 

 

Simpson Thacher & Bartlett LLP

 

[WISCONSIN]

425 Lexington Avenue

 

 

New York, New York 10017

 

 

Attention: Christopher Garcia

 

 

 

 

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING

 

made by

REIMAN MEDIA GROUP, INC.,

 

Mortgagor,

 

to

 

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent, Mortgagee

 

Dated as of March 2, 2007

 

 

THIS INSTRUMENT IS TO BE INDEXED AS BOTH A
MORTGAGE AND A FIXTURE FILING FILED AS A FINANCING STATEMENT

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

Background

 

2

 

 

 

Granting Clauses

 

3

 

 

 

Terms and Conditions

 

5

1.

 

Defined Terms

 

5

2.

 

Warranty of Title

 

6

3.

 

Payment of Obligations

 

6

4.

 

Requirements

 

6

5.

 

Payment of Taxes and Other Impositions

 

6

6.

 

Insurance

 

7

7.

 

Restrictions on Liens and Encumbrances

 

7

8.

 

Due on Sale and Other Transfer Restrictions

 

8

9.

 

Condemnation/Eminent Domain

 

8

10.

 

Leases

 

8

11.

 

Further Assurances

 

8

12.

 

Mortgagee’s Right to Perform

 

8

13.

 

Remedies

 

8

14.

 

Right of Mortgagee to Credit Sale

 

9

15.

 

Appointment of Receiver

 

10

16.

 

Extension, Release, etc

 

10

17.

 

Security Agreement under Uniform Commercial Code; Fixture Filing

 

11

18.

 

Assignment of Rents

 

11

19.

 

Additional Rights

 

12

20.

 

Notices

 

12

21.

 

No Oral Modification

 

13

22.

 

Partial Invalidity

 

13

23.

 

Mortgagor’s Waiver of Rights

 

13

24.

 

Remedies Not Exclusive

 

14

25.

 

Multiple Security

 

14

26.

 

Successors and Assigns

 

15

27.

 

No Waivers, etc.

 

15

28.

 

Governing Law, etc.

 

15

29.

 

Certain Definitions

 

16

30.

 

Duty of Mortgagee; Authority of Mortgagee

 

16

31.

 

Last Dollars Secured; Priority

 

17

32.

 

Enforcement Expenses; Indemnification

 

17

33.

 

Release

 

17

34.

 

Shortened Redemption Election

 

17

35.

 

Receivership

 

18

36.

 

Revolving Loans

 

18

 

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MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FILING

 

THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE
FILING, dated as of March 2, 2007 is made by REIMAN MEDIA GROUP, INC. (f/k/a
READER’S DIGEST MEDIA GROUP, INC.), a Delaware corporation (“Mortgagor”), whose
address is 5400 South 60th Street, Greendale, Wisconsin 53129, to JPMORGAN CHASE
BANK, N.A., as Administrative Agent (in such capacity, “Mortgagee”) whose
address is 270 Park Avenue, New York, New York 10017. References to this
“Mortgage” shall mean this instrument and any and all renewals, modifications,
amendments, supplements, extensions, consolidations, substitutions, spreaders
and replacements of this instrument.

 

Background

 

A.            Doctor Acquisition Co. (to be merged with and into Reader’s
Digest, “Borrower,” together with RD German Holdings GmbH and the other Overseas
Borrowers, collectively, “Borrowers”), a Delaware corporation, RDA Holding Co.,
a Delaware corporation, The Reader’s Digest Association, Inc., a Delaware
corporation, Mortgagee, the several banks and other financial institutions or
entities from time to time parties thereto (the “Lenders”), Citicorp North
America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Co-
Syndication Agents, and The Royal Bank of Scotland plc, as Documentation Agent,
are parties to that certain Credit Agreement, dated as of March 2, 2007 (as
amended, supplemented, restated, replaced, substituted, or otherwise modified
from time to time, the “Credit Agreement”). The terms of the Credit Agreement
are incorporated by reference in this Mortgage as if the terms thereof were
fully set forth herein;

 

B.            Pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrowers upon the terms and subject
to the conditions set forth therein;

 

C.            The Borrowers are members of an affiliated group of companies that
includes Mortgagor;

 

D.            The proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrowers to make valuable
transfers to Mortgagor in connection with the operation of its business;

 

E.             The Borrowers and Mortgagor are engaged in related businesses,
and Mortgagor will derive substantial direct and indirect benefit from the
making of the extensions of credit under the Credit Agreement;

 

F.             It is a condition precedent to the obligation of the Lenders to
make their respective extensions of credit to the Borrowers under the Credit
Agreement that Mortgagor shall have executed and delivered this Mortgage to
Mortgagee for the ratable benefit of the Secured Parties;

 

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G.              Mortgagor (i) is the owner of the fee simple estate in the
parcel(s) of real property, if any, described on Schedule A attached hereto (the
“Land”); and (ii) owns, leases or otherwise has the right to use all of the
buildings, improvements, structures, and fixtures now or subsequently located on
the Land (the “Improvements;” the Land and the Improvements being collectively
referred to as the “Real Estate”); and

 

H.              In consideration of the premises and to induce Mortgagee and the
Lenders to enter into the Credit Agreement, and to induce the Lenders to make
their respective extensions of credit to the Borrowers, Mortgagor hereby agrees
with Mortgagee, for the ratable benefit of the Secured Parties, as follows:

 

Granting Clauses

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Mortgagor agrees that to secure the payment of all
obligations and liabilities of Mortgagor which may arise under or in connection
with the Guarantee and Collateral Agreement (including, without limitation,
Section 2 thereof) or any other Loan Document or any Secured Hedge Agreement to
which Mortgagor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all Attorney Costs and disbursements
of counsel to Mortgagee or to any Secured Party that are required to be paid by
Mortgagor pursuant to the terms of this Mortgage or any other Loan Document)
(collectively, the “Obligations”);

 

MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND
HEREBY MORTGAGES AND WARRANTS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO
MORTGAGEE, WITH MORTGAGE COVENANTS:

 

(a)             the Land;

 

(b)             all right, title and interest Mortgagor now has or may hereafter
acquire in and to the Improvements or any part thereof and all the estate,
right, title, claim or demand whatsoever of Mortgagor, in possession or
expectancy, in and to the Real Estate or any part thereof;

 

(c)             all tight, title and interest of Mortgagor in, to and under all
easements, rights of way, licenses, operating agreements, abutting strips and
gores of land, streets, ways, alleys, passages, sewer rights, waters, water
courses, water and flowage rights, development rights, air rights, mineral and
soil rights, plants, standing and fallen timber, and all estates, rights,
titles, interests, privileges, licenses, tenements, hereditaments and
appurtenances belonging, relating or appertaining to the Real Estate, and any
reversions, remainders, rents, issues, profits and revenue thereof and all land
lying in the bed of any street, road or avenue, in front of or adjoining the
Real Estate to the center line thereof;

 

(d)             all of the fixtures, chattels, business machines, machinery,
apparatus, equipment, furnishings, fittings, appliances and articles of personal
property of every kind and nature whatsoever, and all appurtenances and
additions thereto and substitutions or replacements thereof (together with, in
each case, attachments, components, parts and accessories) currently owned or
subsequently acquired by Mortgagor and now or subsequently attached to, or
contained in or used or usable in any way in connection with

 

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any operation or letting of the Real Estate, including but without limiting the
generality of the foregoing, all screens, awnings, shades, blinds, curtains,
draperies, artwork, carpets, rugs, storm doors and windows, furniture and
furnishings, heating, electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilating, air conditioning and air-cooling apparatus,
refrigerating, and incinerating equipment, escalators, elevators, loading and
unloading equipment and systems, stoves, ranges, laundry equipment, cleaning
systems (including window cleaning apparatus), telephones, communication systems
(including satellite dishes and antennae), televisions, computers, sprinkler
systems and other fire prevention and extinguishing apparatus and materials,
security systems, motors, engines, machinery, pipes, pumps, tanks, conduits,
appliances, fittings and fixtures of every kind and description (all of the
foregoing in this paragraph (e) being referred to as the “Equipment”);

 

(e)           all right, title and interest of Mortgagor in and to all
substitutes and replacements of, and all additions and improvements to, the Real
Estate and the Equipment, subsequently acquired by or released to Mortgagor or
constructed, assembled or placed by Mortgagor on the Real Estate, immediately
upon such acquisition, release, construction, assembling or placement,
including, without limitation, any and all building materials whether stored at
the Real Estate or offsite, and, in each such case, without any further deed,
conveyance, assignment or other act by Mortgagor;

 

(f)            all right, title and interest of Mortgagor in, to and under all
leases, subleases, underlettings, concession agreements, management agreements,
licenses and other agreements relating to the use or occupancy of the Real
Estate or the Equipment or any part thereof, now existing or subsequently
entered into by Mortgagor and whether written or oral and all guarantees of any
of the foregoing (collectively, as any of the foregoing may be amended,
restated, extended, renewed or modified from time to time, the “Leases”), and
all rights of Mortgagor in respect of cash and securities deposited thereunder
and the right to receive and collect the revenues, income, rents, issues and
profits thereof, together with all other rents, royalties, issues, profits,
revenue, income and other benefits arising from the use and enjoyment of the
Mortgaged Property (as defined below) (collectively, the “Rents”);

 

(g)           all unearned premiums under insurance policies now or subsequently
obtained by Mortgagor relating to the Real Estate or Equipment and Mortgagor’s
interest in and to all proceeds of any such insurance policies (including title
insurance policies) including the right to collect and receive such proceeds,
subject to the provisions relating to insurance generally set forth below; and
all awards and other compensation, including the interest payable thereon and
the right to collect and receive the same, made to the present or any subsequent
owner of the Real Estate or Equipment for the taking by eminent domain,
condemnation or otherwise, of all or any part of the Real Estate or any easement
or other right therein;

 

(h)           to the extent not prohibited under the applicable contract,
consent, license or other item unless the appropriate consent has been obtained,
all right, title and interest of Mortgagor in and to (i) all contracts from time
to time executed by Mortgagor or any manager or agent on its behalf relating to
the ownership, construction, maintenance, repair, operation, occupancy, sale or
financing of the Real Estate or Equipment or any

 

4

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part thereof and all agreements and options relating to the purchase or lease of
any portion of the Real Estate or any property which is adjacent or peripheral
to the Real Estate, together with the right to exercise such options and all
leases of Equipment, (ii) all consents, licenses, building permits, certificates
of occupancy and other governmental approvals relating to construction,
completion, occupancy, use or operation of the Real Estate or any part thereof,
and (iii) all drawings, plans, specifications and similar or related items
relating to the Real Estate; and

 

(i)            all proceeds, both cash and noncash, of the foregoing;

 

(All of the foregoing property and rights and interests now owned or held or
subsequently acquired by Mortgagor and described in the foregoing clauses
(a) through (c) are collectively referred to as the “Premises”, and those
described in the foregoing clauses (a) through (i) are collectively referred to
as the “Mortgaged Property”).

 

TO HAVE AND TO HOLD the Mortgaged Property and the rights and privileges hereby
mortgaged unto Mortgagee, its successors and assigns for the uses and purposes
set forth, until the Obligations are fully paid and performed, provided,
however, that the condition of this Mortgage is such that if the Obligations
(other than contingent indemnification and contingent expense reimbursement
obligations, any Obligations in respect of Secured Hedge Agreements, and Cash
Management Obligations) are fully paid and performed, then the estate hereby
granted shall cease, terminate and become void but shall otherwise remain in
full force and effect.

 

This Mortgage covers present and future advances and re-advances, in the
aggregate amount of the obligations secured hereby, made by the Secured Parties
for the benefit of Mortgagor, and the lien of such future advances and
re-advances shall relate back to the date of this Mortgage.

 

Pursuant to Wisconsin Statutes Section 706.11, the lien of this Mortgage with
respect to any future advances, modifications, extensions, and renewals referred
to herein and made from time to time shall have the same priority to which this
Mortgage otherwise would be entitled as of the date this Mortgage is executed
and recorded without regard to the fact that any such future advance,
modification, extension, or renewal may occur after the Mortgage is executed.

 

Terms and Conditions

 

Mortgagor further represents, warrants, covenants and agrees with Mortgagee and
the Secured Parties as follows:

 

1.                                      Defined Terms. Capitalized terms used
herein (including in the “Background” and “Granting Clauses” sections above) and
not otherwise defined herein shall have the meanings ascribed thereto in the
Credit Agreement. References herein to the “Secured Parties” shall mean the
collective reference to (i) Mortgagee, as Administrative Agent, (ii) the other
Agents, (iii) the L/C Issuers, (iv) the Lenders, (v) the Hedge Banks, (vi) any
Affiliate of a Lender, (vii) the Supplemental Administrative Agent, and
(viii) each co-agent or sub-agent appointed by Mortgagee from time to time
pursuant to Section 9.01(c) of the Credit Agreement, to which Borrower
Obligations (as defined in the Credit Agreement) or Guarantor Obligations (as
defined in the Credit Agreement), as applicable, are owed.

 

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2.                                 Warranty of Title. Mortgagor warrants that it
has good record title in fee simple to, or a valid leasehold interest in, the
Real Estate, and good title to, or a valid leasehold interest in, the rest of
the Mortgaged Property, subject only to the matters that are set forth in
Schedule B of the title insurance policy or policies, if any, being issued to
Mortgagee to insure the lien of this Mortgage and any other lien or encumbrance
as permitted by Section 7.01 of the Credit Agreement (collectively, the
“Permitted Exceptions”). Mortgagor shall warrant, defend and preserve such title
and the lien of this Mortgage against all claims of all persons and entities
(not including the holders of the Permitted Exceptions). Mortgagor represents
and warrants that it has the right to mortgage the Mortgaged Property.

 

3.                                 Payment of Obligations. Mortgagor shall pay
and perform the Obligations at the times and places and in the manner specified
in the Loan Documents.

 

4.                                 Requirements. Mortgagor shall comply with all
covenants, restrictions and conditions now or later of record which may be
applicable to any of the Mortgaged Property, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Mortgaged Property, except where a failure to do so
could not reasonably be expected to have a material adverse effect (considered
both individually and together with other such failures) on (i) the current
business, operations or condition (financial or otherwise) of Mortgagor,
(ii) the current use of the Mortgaged Property or (iii) the value of the
Mortgaged Property (assuming its current use).

 

5.                                 Payment of Taxes and Other Impositions.
(a) Prior to the date on which any fine, penalty, interest or cost may be added
thereto or imposed, Mortgagor shall pay and discharge all taxes, charges and
assessments of every kind and nature, all charges for any easement or agreement
maintained for the benefit of any of the Real Estate, all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents and charges, vault taxes and all other public charges even if unforeseen
or extraordinary, imposed upon or assessed against or which may become a lien on
any of the Real Estate, or arising in respect of the occupancy, use or
possession thereof, together with any penalties or interest on any of the
foregoing (all of the foregoing are collectively referred to herein as the
“Impositions”), except where (i) the validity or amount thereof is being
contested in good faith by appropriate proceedings, and (ii) Mortgagor has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP. Upon request by Mortgagee, Mortgagor shall deliver to Mortgagee evidence
reasonably acceptable to Mortgagee showing the payment of any such Imposition.
If by law any Imposition, at Mortgagor’s option, may be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Mortgagor may elect to pay such Imposition in such installments and shall be
responsible for the payment of such installments with interest, if any.

 

(b)           Nothing herein shall affect any right or remedy of Mortgagee under
this Mortgage or otherwise, without notice or demand to Mortgagor, to pay any
Imposition after the date such Imposition shall have become delinquent, and add
to the Obligations the amount so paid, together with interest from the time of
payment at the Default Rate. Any sums paid by Mortgagee in discharge of any
Impositions shall be (i) a lien on the Premises secured hereby prior to any
right or title to, interest in, or claim upon the Premises subordinate to the
lien of this Mortgage, and (ii) payable on demand by Mortgagor to Mortgagee
together with interest at the Default Rate as set forth above.

 

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6.                                 Insurance. (a) Mortgagor shall maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Real Estate against loss by fire, explosion, theft and such other casualties as
may be reasonably satisfactory to Mortgagee, and (ii) insuring Mortgagor,
Mortgagee and the other Secured Parties against liability for personal injury
and property damage relating to such Real Estate, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
Mortgagee. All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least thirty (30) days or, in the case of insurance existing as of the
date hereof, at least ten (10) days after receipt by Mortgagee of written notice
thereof, (ii) name Mortgagee as an additional insured party or loss payee, and
(iii) include deductibles consistent with past practice or consistent with
industry practice or otherwise reasonably satisfactory to Mortgagee.

 

(b)             If any portion of the Premises is located in an area identified
as a special flood hazard area by the Federal Emergency Management Agency or
other applicable agency, Mortgagor shall maintain or cause to be maintained,
flood insurance in an amount reasonably satisfactory to Mortgagee, but in no
event less than the maximum limit of coverage available under the National Flood
Insurance Act of 1968, as amended.

 

(c)             Mortgagor promptly shall comply with and conform in all material
respects to (i) all provisions of each such insurance policy, and (ii) all
requirements of the insurers applicable to Mortgagor or to any of the Mortgaged
Property or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration or repair of any of the Mortgaged Property. Mortgagor
shall not use or permit the use of the Mortgaged Property in any manner which
would permit any insurer to cancel any insurance policy or void coverage
required to be maintained by this Mortgage.

 

(d)             If Mortgagor is in default of its obligations to insure or
deliver any such prepaid policy or policies, then Mortgagee, at its option upon
five (5) days’ notice to Mortgagor, may effect such insurance from year to year
at rates substantially similar to the rate at which Mortgagor had insured the
Premises, and pay the premium or premiums therefor, and Mortgagor shall pay to
Mortgagee on demand such premium or premiums so paid by Mortgagee with interest
from the time of payment at the Default Rate.

 

(e)             If the Mortgaged Property, or any part thereof, shall be
destroyed or damaged and the reasonably estimated cost thereof would exceed
$500,000, Mortgagor shall give prompt notice thereof to Mortgagee. All insurance
proceeds paid or payable in connection with any damage or casualty to the Real
Estate shall be deemed proceeds from a Casualty Event and applied in the manner
specified in the Credit Agreement.

 

(f)              In the event of foreclosure of this Mortgage or other transfer
of title to the Mortgaged Property, all right, title and interest of Mortgagor
in and to any insurance policies then in force shall pass to the purchaser or
grantee.

 

7.                                      Restrictions on Liens and Encumbrances.
Except for the lien of this Mortgage and the Permitted Exceptions, Mortgagor
shall not further mortgage, nor otherwise encumber the Mortgaged Property nor
create or suffer to exist any lien, charge or encumbrance on the

 

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Mortgaged Property, or any part thereof, whether superior or subordinate to the
lien of this Mortgage and whether recourse or non-recourse.

 

8.                                      Due on Sale and Other Transfer
Restrictions. Except as expressly permitted under Section 7.05 of the Credit
Agreement, Mortgagor shall not sell, transfer, convey or assign all or any
portion of, or any interest in, the Mortgaged Property.

 

9.                                      Condemnation/Eminent Domain. Promptly
upon obtaining knowledge of the institution of any proceedings for the
condemnation of the Mortgaged Property, or any material portion thereof,
Mortgagor will notify Mortgagee of the pendency of such proceedings. All awards
and proceeds relating to such condemnation shall be deemed proceeds from a
Casualty Event and applied in the manner specified in the Credit Agreement.

 

10.                                Leases. Except as expressly permitted under
the Credit Agreement, Mortgagor shall not (a) execute an assignment or pledge of
any Lease relating to all or any portion of the Mortgaged Property other than in
favor of Mortgagee, or (b) execute or permit to exist any Lease of any of the
Mortgaged Property.

 

11.                                Further Assurances. To further assure
Mortgagee’s rights under this Mortgage, Mortgagor agrees promptly upon demand of
Mortgagee to do any act or execute any additional documents (including, but not
limited to, security agreements on any personalty included or to be included in
the Mortgaged Property and a separate assignment of each Lease in recordable
form) as may be reasonably required by Mortgagee to confirm the lien of this
Mortgage and all other rights or benefits conferred on Mortgagee by this
Mortgage.

 

12.                                Mortgagee’s Right to Perform. If Mortgagor
fails to perform any of the covenants or agreements of Mortgagor in the Loan
Documents, within the applicable grace period, if any, provided for in the
Credit Agreement, Mortgagee, without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at any time upon five (5) days’
notice to Mortgagor (but shall be under no obligation to) pay or perform the
same, and the amount or cost thereof, with interest at the Default Rate, shall
immediately be due from Mortgagor to Mortgagee and the same shall be secured by
this Mortgage and shall be a lien on the Mortgaged Property prior to any right,
title to, interest in, or claim upon the Mortgaged Property attaching subsequent
to the lien of this Mortgage. No payment or advance of money by Mortgagee under
this Section shall be deemed or construed to cure Mortgagor’s default or waive
any right or remedy of Mortgagee.

 

13.                                Remedies. (a) Upon the occurrence and during
the continuance of any Event of Default, Mortgagee may immediately take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Mortgagor and in and to the Mortgaged Property, including,
but not limited to, the following actions, each of which may be pursued
concurrently or otherwise, at such time and in such manner as Mortgagee may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Mortgagee:

 

(i)            Mortgagee may, to the extent permitted by applicable law,
(A) institute and maintain an action of mortgage foreclosure against all or any
part of the Mortgaged Property, (B) institute and maintain an action on the
Credit

 

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Agreement, the Guarantee and Collateral Agreement or any other Loan Document,
(C) sell all or part of the Mortgaged Property (Mortgagor expressly granting to
Mortgagee the power of sale), or (D) take such other action at law or in equity
for the enforcement of this Mortgage or any of the Loan Documents as the law may
allow. Mortgagee may proceed in any such action to final judgment and execution
thereon for all sums due hereunder, together with interest thereon at the
Default Rate and all costs of suit, including, without limitation, reasonable
attorneys’ fees and disbursements. Interest at the Default Rate shall be due on
any judgment obtained by Mortgagee from the date of judgment until actual
payment is made of the full amount of the judgment; and

 

(ii)           Mortgagee may personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the Mortgaged
Property or any other collateral as security for the Obligations enter into and
upon the Mortgaged Property and each and every part thereof and exclude
Mortgagor and its agents and employees therefrom without liability for trespass,
damage or otherwise (Mortgagor hereby agreeing to surrender possession of the
Mortgaged Property to Mortgagee upon demand at any such time) and use, operate,
manage, maintain and control the Mortgaged Property and every part thereof.
Following such entry and taking of possession, Mortgagee shall be entitled,
without limitation, (x) to lease all or any part or parts of the Mortgaged
Property for such periods of time and upon such conditions as Mortgagee may, in
its discretion, deem proper, (y) to enforce, cancel or modify any Lease as
Mortgagee may in its discretion deem proper, and (z) generally to execute, do
and perform any other act, deed, matter or thing concerning the Mortgaged
Property as Mortgagee shall deem appropriate as fully as Mortgagor might do.

 

(b)             In case of a foreclosure sale, the Real Estate may be sold, at
Mortgagee’s election, in one parcel or in more than one parcel and Mortgagee is
specifically empowered (without being required to do so, and in its sole and
absolute discretion) to cause successive sales of portions of the Mortgaged
Property to be held.

 

(c)             In the event of any breach of any of the covenants, agreements,
terms or conditions contained in this Mortgage, Mortgagee shall be entitled to
enjoin such breach and obtain specific performance of any covenant, agreement,
term or condition and Mortgagee shall have the right to invoke any equitable
right or remedy as though other remedies were not provided for in this Mortgage.

 

(d)             It is agreed that if an Event of Default shall occur and be
continuing, any and all proceeds of the Mortgaged Property received by Mortgagee
shall be held by Mortgagee for the benefit of the Secured Parties as collateral
security for the Obligations (whether matured or unmatured), and shall be
applied in payment of the Obligations in the manner and in the order set forth
in Section 6.5 of the Guarantee and Collateral Agreement.

 

14.           Right of Mortgagee to Credit Sale. Upon the occurrence of any sale
made under this Mortgage, whether made under the power of sale or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof. In
lieu of paying cash therefor, Mortgagee may make settlement for

 

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the purchase price by crediting upon the Obligations or other sums secured by
this Mortgage, the net sales price after deducting therefrom the expenses of
sale and the cost of the action and any other sums which Mortgagee is authorized
to deduct under this Mortgage. In such event, this Mortgage, the Credit
Agreement, the Guarantee and Collateral Agreement and documents evidencing
expenditures secured hereby may be presented to the person or persons conducting
the sale in order that the amount so used or applied may be credited upon the
Obligations as having been paid.

 

15.           Appointment of Receiver. If an Event of Default shall have
occurred and be continuing, Mortgagee as a matter of right and without notice to
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged Property or any other collateral or
the interest of Mortgagor therein as security for the Obligations, shall have
the right to apply to any court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged Property, without requiring the
posting of a surety bond, and without reference to the adequacy or inadequacy of
the value of the Mortgaged Property or the solvency or insolvency of Mortgagor
or any other party obligated for payment of all or any part of the Obligations,
and whether or not waste has occurred with respect to the Mortgaged Property,
and Mortgagor hereby irrevocably consents to such appointment and waives notice
of any application therefor (except as may be required by law). Any such
receiver or receivers or manager shall have all the usual powers and duties of
receivers in like or similar cases and all the powers and duties of Mortgagee in
case of entry as provided in this Mortgage, including, without limitation and to
the extent permitted by law, the right to enter into leases of all or any part
of the Mortgaged Property, and shall continue as such and exercise all such
powers until the date of confirmation of sale of the Mortgaged Property unless
such receivership is sooner terminated.

 

16.           Extension, Release, etc. (a) Without affecting the lien or charge
of this Mortgage upon any portion of the Mortgaged Property not then or
theretofore released as security for the full amount of the Obligations,
Mortgagee may, from time to time and without notice, agree to (i) release any
person liable for the indebtedness borrowed or guaranteed under the Loan
Documents, (ii) extend the maturity or alter any of the terms of the
indebtedness borrowed or guaranteed under the Loan Documents or any other
guaranty thereof, (iii) grant other indulgences, (iv) release or reconvey, or
cause to be released or reconveyed at any time at Mortgagee’s option any parcel,
portion or all of the Mortgaged Property, (v) take or release any other or
additional security for any obligation herein mentioned, or (vi) make
compositions or other arrangements with debtors in relation thereto.

 

(b)           No recovery of any judgment by Mortgagee and no levy of an
execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect the lien of this Mortgage or any liens,
rights, powers or remedies of Mortgagee hereunder, and such liens, rights,
powers and remedies shall continue unimpaired.

 

(c)           If Mortgagee shall have the right to foreclose this Mortgage or to
direct a power of sale, Mortgagor authorizes Mortgagee at its option to
foreclose the lien of this Mortgage (or direct the sale of the Mortgaged
Property, as the case may be) subject to the rights of any tenants of the
Mortgaged Property. The failure to make any such tenants parties defendant to
any such foreclosure proceeding and to foreclose their rights, or to provide
notice to such tenants as required in any statutory procedure governing a sale
of the Mortgaged Property,

 

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or to terminate such tenant’s rights in such sale will not be asserted by
Mortgagor as a defense to any proceeding instituted by Mortgagee to collect the
Obligations or to foreclose the lien of this Mortgage.

 

(d)           Unless expressly provided otherwise, in the event that ownership
of this Mortgage and title to the Mortgaged Property or any estate therein shall
become vested in the same person or entity, this Mortgage shall not merge in
such title but shall continue as a valid lien on the Mortgaged Property for the
amount secured hereby.

 

17.           Security Agreement under Uniform Commercial Code; Fixture Filing.
(a) It is the intention of the parties hereto that this Mortgage shall
constitute a security agreement within the meaning of the Uniform Commercial
Code (the “Code”) of the State in which the Mortgaged Property is located. If an
Event of Default shall occur and be continuing, then in addition to having any
other right or remedy available at law or in equity, Mortgagee shall have the
option of either (i) proceeding under the Code and exercising such rights and
remedies as may be provided to a secured party by the Code with respect to all
or any portion of the Mortgaged Property which is personal property (including,
without limitation, taking possession of and selling such property) or
(ii) treating such property as real property and proceeding with respect to both
the real and personal property constituting the Mortgaged Property in accordance
with Mortgagee’s rights, powers and remedies with respect to the real property
(in which event the default provisions of the Code shall not apply). If
Mortgagee shall elect to proceed under the Code, then ten (10) days’ notice of
sale of the personal property shall be deemed reasonable notice and the
reasonable expenses of retaking, holding, preparing for sale, selling and the
like incurred by Mortgagee shall include, but not be limited to, attorneys’ fees
and legal expenses. At Mortgagee’s request, Mortgagor shall assemble the
personal property and make it available to Mortgagee at a place designated by
Mortgagee which is reasonably convenient to both parties.

 

(b)           Certain portions of the Mortgaged Property are or will become
“fixtures” (as that term is defined in the Code) on the Land, and this Mortgage,
upon being filed for record in the real estate records of the county wherein
such fixtures are situated, shall operate also as a financing statement filed as
a fixture filing in accordance with the applicable provisions of said Code upon
such portions of the Mortgaged Property that are or become fixtures. The real
property to which the fixtures relate is described in Schedule A hereto. The
record owner of the real property described in Schedule A hereto, if any, is
Mortgagor. The name, type of organization and jurisdiction of organization of
the debtor for purposes of this financing statement are the name, type of
organization and jurisdiction of organization of Mortgagor set forth in the
first paragraph of this Mortgage, and the name of the secured party for purposes
of this financing statement is the name of Mortgagee set forth in the first
paragraph of this Mortgage. The mailing address of Mortgagor/debtor is the
address of Mortgagor set forth in the first paragraph of this Mortgage. The
mailing address of Mortgagee/secured party from which information concerning the
security interest hereunder may be obtained is the address of Mortgagee set
forth in the first paragraph of this Mortgage. Mortgagor’s organizational
identification number is 146599.

 

18.           Assignment of Rents. (a) Mortgagor hereby assigns to Mortgagee the
Rents as further security for the payment of and performance of the Obligations,
and Mortgagor grants to Mortgagee the right to enter the Mortgaged Property for
the purpose of collecting the same and to let the Mortgaged Property or any part
thereof, and to apply the Rents on account of the

 

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Obligations. The foregoing assignment and grant is present and absolute and
shall continue in effect until the Obligations are fully paid and performed, but
Mortgagee hereby waives the right to enter the Mortgaged Property for the
purpose of collecting the Rents and Mortgagor shall be entitled to collect,
receive, use and retain the Rents until the occurrence of an Event of Default;
such right of Mortgagor to collect, receive, use and retain the Rents may be
revoked by Mortgagee upon the occurrence and during the continuance of any Event
of Default by giving not less than five (5) days’ written notice of such
revocation to Mortgagor; in the event such notice is given, Mortgagor shall pay
over to Mortgagee, or to any receiver appointed to collect the Rents, any lease
security deposits, and shall pay monthly in advance to Mortgagee, or to any such
receiver, the fair and reasonable rental value as determined by Mortgagee for
the use and occupancy of such part of the Mortgaged Property as may be in the
possession of Mortgagor or any affiliate of Mortgagor, and upon default in any
such payment Mortgagor and any such affiliate will vacate and surrender the
possession of the Mortgaged Property to Mortgagee or to such receiver, and in
default thereof may be evicted by summary proceedings or otherwise. Mortgagor
shall not accept prepayments of installments of Rent to become due for a period
of more than one month in advance (except for security deposits and estimated
payments of percentage rent, if any).

 

(b)           Mortgagor has not affirmatively done any act which would prevent
Mortgagee from, or limit Mortgagee in, acting under any of the provisions of the
foregoing assignment.

 

(c)           Except for any matter disclosed in the Credit Agreement, no action
has been brought or, so far as is known to Mortgagor, is threatened, which would
interfere in any way with the right of Mortgagor to execute the foregoing
assignment and perform all of Mortgagor’s obligations contained in this
Section and in the Leases.

 

(d)           The Assignment of Rents set forth therein shall constitute an
assignment of rents as set forth in Wisconsin Statute Section 708.11, and as
provided therein, will create a security interest in the Rents that will be
perfected upon the recording of this Mortgage.

 

19.           Additional Rights. The holder of any subordinate lien or
subordinate deed of trust on the Mortgaged Property shall have no right to
terminate any Lease whether or not such Lease is subordinate to this Mortgage
nor shall Mortgagor consent to any holder of any subordinate lien or subordinate
deed of trust joining any tenant under any Lease in any action to foreclose the
lien or modify, interfere with, disturb or terminate the rights of any tenant
under any Lease. By recordation of this Mortgage all subordinate lienholders and
the mortgagees and beneficiaries under subordinate mortgages are subject to and
notified of this provision, and any action taken by any such lienholder or
beneficiary contrary to this provision shall be null and void. Any such
application shall not be construed to cure or waive any Default or Event of
Default or invalidate any act taken by Mortgagee on account of such Default or
Event of Default.

 

20.           Notices. All notices, requests and demands to or upon Mortgagee or
Mortgagor hereunder shall be effected in the manner provided for in
Section 10.02 of the Credit Agreement; provided that any such notice, request or
demand to or upon Mortgagor shall be addressed to Mortgagor at its address set
forth above.

 

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21.           No Oral Modification. This Mortgage may not be amended,
supplemented or otherwise modified except in accordance with the provisions of
Section 10.01 of the Credit Agreement. Any agreement made by Mortgagor and
Mortgagee after the date of this Mortgage relating to this Mortgage shall be
superior to the rights of the holder of any intervening or subordinate lien or
encumbrance.

 

22.           Partial Invalidity. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been included.
Notwithstanding to the contrary anything contained in this Mortgage or in any
provisions of any Loan Document, the obligations of Mortgagor and of any other
obligor under any Loan Document shall be subject to the limitation that
Mortgagee shall not charge, take or receive, nor shall Mortgagor or any other
obligor be obligated to pay to Mortgagee, any amounts constituting interest in
excess of the maximum rate permitted by law to be charged by Mortgagee.

 

23.           Mortgagor’s Waiver of Rights. (a) Mortgagor hereby voluntarily and
knowingly releases and waives any and all rights to retain possession of the
Mortgaged Property after the occurrence of an Event of Default and any and all
rights of redemption from sale under any order or decree of foreclosure (whether
full or partial), pursuant to rights, if any, therein granted, as allowed under
any applicable law, on its own behalf, on behalf of all persons claiming or
having an interest (direct or indirectly) by, through or under each constituent
of Mortgagor and on behalf of each and every person acquiring any interest in
the Mortgaged Property subsequent to the date hereof, it being the intent hereof
that any and all such rights or redemption of each constituent of Mortgagor and
all such other persons are and shall be deemed to be hereby waived to the
fullest extent permitted by applicable law or replacement statute. Each
constituent of Mortgagor shall not invoke or utilize any such law or laws or
otherwise hinder, delay, or impede the execution of any right, power, or remedy
herein or otherwise granted or delegated to Mortgagee, but shall permit the
execution of every such right, power, and remedy as though no such law or laws
had been made or enacted.

 

(b)           To the fullest extent permitted by law, Mortgagor waives the
benefit of all laws now existing or that may subsequently be enacted providing
for (i) any appraisement before sale of any portion of the Mortgaged Property,
(ii) any extension of the time for the enforcement of the collection of the
Obligations or the creation or extension of a period of redemption from any sale
made in collecting such debt and (iii) exemption of the Mortgaged Property from
attachment, levy or sale under execution or exemption from civil process. To the
full extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any
time insist upon, plead, claim or take the benefit or advantage of any law now
or hereafter in force providing for any appraisement, valuation, stay,
exemption, extension or redemption, or requiring foreclosure of this Mortgage
before exercising any other remedy granted hereunder and Mortgagor, for
Mortgagor and its successors and assigns, and for any and all persons ever
claiming any interest in the Mortgaged Property, to the extent permitted by law,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of election to mature (except as expressly provided in
the Credit Agreement) or declare due the whole of the secured indebtedness and
marshalling in the event of exercise by Mortgagee of the foreclosure rights,
power of sale, or other rights hereby created.

 

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24.           Remedies Not Exclusive. Mortgagee shall be entitled to enforce
payment and performance of the Obligations and to exercise all rights and powers
under this Mortgage or under any of the other Loan Documents or other agreement
or any laws now or hereafter in force, notwithstanding some or all of the
Obligations may now or hereafter be otherwise secured, whether by deed of trust,
mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Mortgage nor its enforcement, shall prejudice or in any
manner affect Mortgagee’s rights to realize upon or enforce any other security
now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be
entitled to enforce this Mortgage and any other security now or hereafter held
by Mortgagee in such order and manner as Mortgagee may determine in its absolute
discretion. No remedy herein conferred upon or reserved to Mortgagee is intended
to be exclusive of any other remedy herein or by law provided or permitted, but
each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Mortgagee or to which
either may otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Mortgagee, as the case may be. In no event shall Mortgagee, in the exercise of
the remedies provided in this Mortgage (including, without limitation, in
connection with the assignment of Rents to Mortgagee, or the appointment of a
receiver and the entry of such receiver on to all or any part of the Mortgaged
Property), be deemed a “mortgagee in possession,” and Mortgagee shall not in any
way be made liable for any act, either of commission or omission, in connection
with the exercise of such remedies.

 

25.           Multiple Security. If (a) the Premises shall consist of one or
more parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter
hold or be the beneficiary of one or more additional mortgages, liens, deeds of
trust or other security (directly or indirectly) for the Obligations upon other
property in the State in which the Premises are located (whether or not such
property is owned by Mortgagor or by others) or (c) both the circumstances
described in clauses (a) and (b) shall be true, then to the fullest extent
permitted by law, Mortgagee may, at its election, commence or consolidate in a
single foreclosure action all foreclosure proceedings against all such
collateral securing the Obligations (including the Mortgaged Property), which
action may be brought or consolidated in the courts of, or sale conducted in,
any county in which any of such collateral is located. Mortgagor acknowledges
that the right to maintain a consolidated foreclosure action is a specific
inducement to Mortgagee to extend the indebtedness borrowed pursuant to or
guaranteed by the Loan Documents, and Mortgagor expressly and irrevocably waives
any objections to the commencement or consolidation of the foreclosure
proceedings in a single action and any objections to the laying of venue or
based on the grounds of forum non conveniens which it may now or hereafter have.
Mortgagor further agrees that if Mortgagee shall be prosecuting one or more
foreclosure or other proceedings against a portion of the Mortgaged Property or
against any collateral other than the Mortgaged Property, which collateral
directly or indirectly secures the Obligations, or if Mortgagee shall have
obtained a judgment of foreclosure and sale or similar judgment against such
collateral, then, whether or not such proceedings are being maintained or
judgments were obtained in or outside the State in which the Premises are
located, Mortgagee may commence or continue any foreclosure proceedings and
exercise its other remedies granted in this Mortgage against all or any part of
the Mortgaged Property and Mortgagor waives any objections to the commencement
or continuation of a foreclosure of this Mortgage or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer

 

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or consolidate either any action under this Mortgage or such other proceedings
on such basis. Neither the commencement nor continuation of proceedings to
foreclose this Mortgage, nor the exercise of any other rights hereunder nor the
recovery of any judgment by Mortgagee in any such proceedings or the occurrence
of any sale in any such proceedings shall prejudice, limit or preclude
Mortgagee’s right to commence or continue one or more foreclosure or other
proceedings or obtain a judgment against any other collateral (either in or
outside the State in which the Premises are located) which directly or
indirectly secures the Obligations, and Mortgagor expressly waives any
objections to the commencement of, continuation of, or entry of a judgment in
such other sales or proceedings or exercise of any remedies in such sales or
proceedings based upon any action or judgment connected to this Mortgage, and
Mortgagor also waives any right to seek to dismiss, stay, remove, transfer or
consolidate either such other sales or proceedings or any sale or action under
this Mortgage on such basis. It is expressly understood and agreed that to the
fullest extent permitted by law, Mortgagee may, at its election, cause the sale
of all collateral which is the subject of a single foreclosure action at either
a single sale or at multiple sales conducted simultaneously and take such other
measures as are appropriate in order to effect the agreement of the parties to
dispose of and administer all collateral securing the Obligations (directly or
indirectly) in the most economical and least time-consuming manner.

 

26.           Successors and Assigns. All covenants of Mortgagor contained in
this Mortgage are imposed solely and exclusively for the benefit of Mortgagee,
and its successors and assigns, and no other person or entity shall have
standing to require compliance with such covenants or be deemed, under any
circumstances, to be a beneficiary of such covenants, any or all of which may be
freely waived in whole or in part by Mortgagee at any time if in the sole
discretion of either of them such a waiver is deemed advisable. All such
covenants of Mortgagor shall run with the land and bind Mortgagor, the
successors and assigns of Mortgagor (and each of them) and all subsequent
owners, encumbrancers and tenants of the Mortgaged Property, and shall inure to
the benefit of Mortgagee and its successors and assigns. The word “Mortgagor”
shall be construed as if it read “Mortgagors” whenever the sense of this
Mortgage so requires, and if there shall be more than one Mortgagor, the
obligations of Mortgagors shall be joint and several.

 

27.           No Waivers, etc. Any failure by Mortgagee to insist upon the
strict performance by Mortgagor of any of the terms and provisions of this
Mortgage shall not be deemed to be a waiver of any of the terms and provisions
hereof, and Mortgagee, notwithstanding any such failure, shall have the right
thereafter to insist upon the strict performance by Mortgagor of any and all of
the terms and provisions of this Mortgage to be performed by Mortgagor.
Mortgagee may release, regardless of consideration and without the necessity for
any notice to or consent by the holder of any subordinate lien on the Mortgaged
Property, any part of the security held for the obligations secured by this
Mortgage without, as to the remainder of the security, in any way impairing or
affecting the lien of this Mortgage or the priority of such lien over any
subordinate lien or deed of trust.

 

28.           Governing Law, etc. This Mortgage shall be governed by and
construed and interpreted in accordance with the laws of the State in which the
Mortgaged Property is located, except that Mortgagor expressly acknowledges that
by their respective terms the Credit Agreement and the Guarantee and Collateral
Agreement shall be governed and construed in accordance with the laws of the
State of New York, and for purposes of consistency, Mortgagor agrees that in any
in personam proceeding related to this Mortgage the rights of the parties to
this

 

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Mortgage shall also be governed by and construed in accordance with the laws of
the State of New York governing contracts made and to be performed in that
State.

 

Anything elsewhere herein contained to the contrary notwithstanding, in the
event that any provision in this Mortgage shall be inconsistent with any
provision of Wisconsin Statutes Chapter 846 (the “Act”), the provisions of the
Act shall take precedence over the provisions of this Mortgage, but shall not
invalidate or render unenforceable any other provision of this Mortgage that can
be construed in a manner consistent with the Act.

 

29.           Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage shall be used interchangeably in singular or plural form and the
word “Mortgagor” shall mean “each Mortgagor or any subsequent owner or owners of
the Mortgaged Property or any part thereof or interest therein,” the word
“Mortgagee” shall mean “Mortgagee or any successor agent for the Lenders,” the
word “Person” shall include any individual, corporation, partnership, limited
liability company, trust, unincorporated association, government, governmental
authority, or other entity, and the words “Mortgaged Property” shall include any
portion of the Mortgaged Property or interest therein. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa. The captions in this Mortgage are for
convenience or reference only and in no way limit or amplify the provisions
hereof.

 

30.           Duty of Mortgagee; Authority of Mortgagee. (a) Mortgagee’s sole
duty with respect to the custody, safekeeping and physical preservation of the
Mortgaged Property which is in its possession, or otherwise, shall be to deal
with it in the same manner as Mortgagee deals with similar property for its own
account. Neither Mortgagee, any Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Mortgaged Property or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Mortgaged Property upon the request of Mortgagor or any other Person or to take
any other action whatsoever with regard to the Mortgaged Property or any part
thereof. The powers conferred on Mortgagee and the Secured Parties hereunder are
solely to protect Mortgagee’s and the Secured Parties’ interests in the
Mortgaged Property and shall not impose any duty upon Mortgagee or any Secured
Party to exercise any such powers. Mortgagee and the Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to Mortgagor for any act or failure to
act hereunder, except for their own gross negligence or willful misconduct.

 

(b)           Mortgagor acknowledges that the rights and responsibilities of
Mortgagee under this Mortgage with respect to any action taken by Mortgagee or
the exercise or non-exercise by Mortgagee of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Mortgage shall, as between Mortgagee and the Secured Parties, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between Mortgagee and
Mortgagor, Mortgagee shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and Mortgagor shall be under no obligation, or entitlement, to make any
inquiry respecting such authority.

 

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31.           Last Dollars Secured; Priority. To the extent that this Mortgage
secures only a portion of the indebtedness owing or which may become owing by
Mortgagor to the Secured Parties, the parties agree that any payments or
repayments of such indebtedness shall be and be deemed to be applied first to
the portion of the indebtedness that is not secured hereby, it being the
parties’ intent that the portion of the indebtedness last remaining unpaid shall
be secured hereby. If at any time this Mortgage shall secure less than all of
the principal amount of the Obligations, it is expressly agreed that any
repayments of the principal amount of the Obligations shall not reduce the
amount of the lien of this Mortgage until the lien amount shall equal the
principal amount of the Obligations outstanding.

 

32.           Enforcement Expenses; Indemnification. (a) Mortgagor agrees to
pay, or reimburse each Secured Party and Mortgagee for, all its reasonable
out-of-pocket costs and expenses incurred in collecting against Mortgagor or
otherwise enforcing or preserving any rights under this Mortgage and the other
Loan Documents to which Mortgagor is a party, including, without limitation, the
reasonable fees and disbursements of counsel to each Secured Party and of
counsel to Mortgagee.

 

(b)           Mortgagor agrees to pay, and to save Mortgagee and the Secured
Parties harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Mortgaged
Property or in connection with any of the transactions contemplated by this
Mortgage.

 

(c)           Mortgagor agrees to pay, and to save Mortgagee and the Secured
Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, and suits and related reasonable
out-of-pocket expenses (including Attorney Costs) of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Mortgage to the extent the Borrowers would be required to
do so pursuant to Section 10.05 of the Credit Agreement.

 

(d)           The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.

 

33.           Release. If any of the Mortgaged Property shall be sold,
transferred or otherwise disposed of by any Mortgagor in a transaction permitted
by the Credit Agreement and the Net Cash Proceeds are applied in accordance with
the terms of the Credit Agreement, then Mortgagee, at the request and sole
expense of such Mortgagor, shall execute and deliver to such Mortgagor all
releases or other documents reasonably necessary or desirable for the release of
the Liens created hereby on such Mortgaged Property. Mortgagor shall deliver to
Mortgagee, at least five (5) Business Days prior to the date of the proposed
release, a written request for release identifying the sale or other disposition
in reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by Mortgagor stating that such
transaction is in compliance with, and permitted by, the Credit Agreement and
the other Loan Documents.

 

34.           Shortened Redemption Election. Mortgagor agrees to the provisions
of Section 846.103 of the Wisconsin Statutes, or any successor provision,
permitting Mortgagee, at its

 

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option upon waiving the right to judgment for deficiency, to hold a foreclosure
sale of real estate three (3) months after a foreclosure judgment is entered.

 

35.           Receivership. Any receiver appointed under this Mortgage shall
have all of the usual powers and duties of receivers pursuant to Wisconsin
common and statutory law, including, but not limited to, Wisconsin Statutes
Section 813.16, et al., as amended, modified and/or replaced from time to time.

 

36.           Revolving Loans. Notwithstanding anything contained in this
Mortgage or the other Loan Documents to the contrary, this Mortgage shall
secure: (i) a maximum principal amount of $2,110,000,000, exclusive of any items
described in (ii) below, including any additional advances made from time to
time after the date hereof pursuant to the Loan Documents whether made as part
of the secured indebtedness secured hereby, made at the option of Mortgagee
and/or the Lenders, made after a reduction to a zero (0) or other balance, or
made otherwise, and (ii) all other amounts payable by Mortgagor, or advanced by
Mortgagee or the Lenders for the account, or on behalf, of Borrowers, pursuant
to the Loan Documents, including amounts advanced with respect to the Property
for the payment of taxes, assessments, insurance premiums and other costs and
impositions incurred for the protection of the Property to the same extent as if
the future obligations and advances were made on the date of execution of the
Mortgage.

 

18

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This Mortgage has been duly executed by Mortgagor as of the date first above
written and is intended to be effective as of such date.

 

 

 

REIMAN MEDIA GROUP, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

[SIGNATURE PAGE TO WISCONSIN MORTGAGE]

 

--------------------------------------------------------------------------------

 

STATE OF  New York                                                 )

 

) ss

 

Westchester COUNTY             )

 

On this             day of March, 2007, before me a Notary Public in and for the
State of New York, personally appeared to me personally known, who being by me
first duly sworn, did say that he/she is the Vice President & Treasurer of
Reiman Media Group, Inc. and as said Vice President & Treasurer acknowledged
said instrument to be the free act and deed of Reiman Media Group, Inc.

 

 

 

 

 

 

 

Notary Public, State of

                                                     

 

My Commission expires

                                                  

 

[SIGNATURE PAGE TO WISCONSIN MORTGAGE]

 

--------------------------------------------------------------------------------

 

TITLE AFFIDAVIT, AFFIDAVIT OF NO CHANGES AND GAP INDEMNITY

 

 

STATE OF                                  ,  )

                                                        )          ss.:

COUNTY OF                                 )

 

The undersigned,                          , in his/her capacity
as                , of Reiman Media Group, Inc., f/k/a Reader’s Digest Media
Group, Inc., a Delaware corporation (“Reiman”), intending that Reiman (and not
the undersigned individually) shall be bound hereby, being duly sworn, deposes
and says:

 

(1)   Reiman is the record owner of the real property known as and by the street
address 5400 South 60th Street, Greendale, WI (the “Property”) which is more
particularly identified in the title commitment bearing commitment Case Number
WA261291, Other Company File Number NCS 120162 (the “Title Commitment”) issued
by LandAmerica Lawyers Title Insurance Corporation (the “Title Company”). The
undersigned is familiar with the Property and with the facts set forth herein.

 

(2)   To the best of my knowledge, Reiman has paid all real estate taxes,
special assessments, water and sewer charges and management fees, if any, with
respect to the Property which would be delinquent if not paid on or prior to the
date hereof (and to the extent that any of the foregoing has not been paid by
the date hereof, same will be paid within 30 days of the date hereof).

 

(3)   A survey of the Property dated April 4, 2002 was made by Paul A. Kubicek
(the “Survey”). To the best of my knowledge, no improvements or changes, which
would be reflected in a current survey, have been made to the surveyed Property
since the performance of the Survey, and the Survey accurately represents the
existing condition of the surveyed Property.

 

(4)   To the best of my knowledge, no labor has been supplied to the Property
and no materials have been delivered to the Property that might become the
subject of a labor, mechanic’s or materialmen’s lien on the Property, except for
labor and/or materials which will be paid for in the ordinary course of
business.

 

(5)   There are no existing tenancies, leases or other occupancy agreements
affecting the Property.

 

(6)   To the best of my knowledge, there are no judgments, decrees or orders
before any court or judicial officer against Reiman for the

 

[[2683760]]

 

--------------------------------------------------------------------------------

 

payment of money and no proceedings before any court or officer of the United
States or any state affecting Reiman or the Property which are likely to result
in such an order, judgment or decree except in each case for orders, judgments
or decrees which will be paid in the ordinary course of business by Reiman after
Reiman exhausts or waives any and all rights it may have to appeal the same.

 

(7)   In order to effectuate a New York-style closing, Reiman agrees, with
respect to the Property, that it will not in any way encumber the Property from
the date of the Commitment forward to the date that the Mortgage, Security
Agreement, Assignment of Leases and Rents, and Fixture Filing (the “Mortgage”)
to be insured pursuant to the Title Commitment and to be dated as of the date of
the closing (“Closing”) under the “Credit Agreement” (as defined in the
Mortgage), which Mortgage was made by Reiman in favor of JPMorgan Chase Bank,
N.A. (“JPMorgan”), acting as Administrative Agent, is recorded, and Reiman
hereby agrees to indemnify and hold the Title Company harmless from any loss,
cost, claim or damage that the Title Company may sustain or incur by reason of
any encumbrance of the Property by Reiman from this date to the date the
Mortgage is recorded against the Property.

 

(8)   This Affidavit is made for the purpose of inducing the Title Company to
issue, pursuant to the Title Commitment, a lender’s policy of title insurance
with respect to the Mortgage in connection with the Closing.

 

(9)   Reiman hereby indemnifies and agrees to hold the Title Company harmless
from and against any damages or expenses, including reasonable attorney’s fees
sustained by the Title Company as a result of the falsity of any statement
contained herein.

 

 

 

 

 

Name:

 

in his/her official capacity as
Vice President & Treasurer of

 

Reiman Media Group, Inc. f/k/a
Readers Digest Media Group, Inc.
(not intending to be personally liable
hereunder).

 

Sworn to before me this            

       day of                          , 2007.

 

--------------------------------------------------------------------------------

 

Schedule A

 

Description of the Land

 

OUTLOT A OF CERTIFIED SURVEY MAP NO. 5875, RECORDED AUGUST 31, 1993, ON REEL
3109, IMAGE 1422, AS DOCUMENT NUMBER 6820334, BEING A REDIVISION OF ALL OF
PARCEL 3 OF CERTIFIED SURVEY MAP NO. 5801, BEING IN THE SOUTHWEST 1/4 OF THE
SOUTHWEST 1/4 OF SECTION 26, TOWNSHIP 6 NORTH, RANGE 21 EAST, IN THE VILLAGE OF
GREENDALE, COUNTY OF MILWAUKEE, STATE OF WISCONSIN.

 

ALSO;

 

PARCEL 1 OF CERTIFIED SURVEY MAP NO. 4015, RECORDED APRIL 27, 1981, ON REEL
1371, IMAGE 198, AS DOCUMENT NUMBER 5471063, BEING A REDIVISION OF PART OF LOTS
6, 7, 8, 19 AND 20 IN THE REIGH AND SALENTINE CO’S SUBDIVISON NO. 1 AND PART OF
PARCEL 1 IN CERTIFIED SURVEY MAP NO. 719 AND LANDS IN THE NORTHWEST 1/4,
SOUTHWEST 1/4 AND THE SOUTHEAST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 26, TOWNSHIP
6 NORTH, RANGE 21 EAST, IN THE VILLAGE OF GREENDALE AND IN THE CITY OF
GREENFIELD, COUNTY OF MILWAUKEE, STATE OF WISCONSIN.

 

ALSO;

 

THAT PART OF THE SOUTHWEST 1/4 OF SECTION 26, IN TOWNSHIP 6 NORTH, RANGE 21
EAST, IN THE VILLAGE OF GREENDALE, COUNTY OF MILWAUKEE, STATE OF WISCONSIN,
DESCRIBED AS FOLLOWS: BEGINNING 145.34 FEET NORTH 0°45’ 12” WEST AND 187.20 FEET
NORTH 88°29’ 49” EAST OF THE SOUTHWEST CORNER OF THE SOUTHWEST 1/4, AS MEASURED
ALONG THE WEST LINE AND PARALLEL WITH THE SOUTH LINE OF THE SOUTHWEST 1/4;
THENCE NORTH 88° 29’ 49” EAST 501.86 FEET; THENCE NORTH 39°21’ 18” EAST 324.14
FEET; THENCE NORTH 50°38’ 42” WEST 117.25 FEET TO THE SOUTH LINE OF CERTIFIED
SURVEY MAP NO. 4015; THENCE SOUTH 79°51’ 25” WEST 411.56 FEET; THENCE SOUTH
38°30’ 57” WEST 339.54 FEET TO THE POINT OF BEGINNING.

 

ALSO;

 

PARCEL 4 OF CERTIFIED SURVEY MAP NO. 5801, BEING A REDIVISION OF PARCELS 1, 2
AND 3 OF CERTIFIED SURVEY MAP NO. 4721, AND LANDS ALL IN THE NORTH WEST 1/4,
SOUTH WEST 1/4 AND THE SOUTH EAST 1/4 OF THE SOUTH WEST 1/4 OF SECTION 26,
TOWNSHIP 6 NORTH, RANGE 21 EAST, IN THE VILLAGE OF GREENDALE, COUNTY OF
MILWAUKEE, STATE OF WISCONSIN, RECORDED ON FEBRUARY 3, 1993, AS DOCUMENT NO.
6725380. AFFIDAVIT OF CORRECTION RECORDED APRIL 26, 1993, IN REEL 3020, IMAGE
780, AS DOCUMENT NUMBER 6757193.

 

TOGETHER WITH EASEMENT FOR EMERGENCY EGRESS CONTAINED IN EASEMENT AGREEMENT
RECORDED ON DECEMBER 8, 1993 IN REEL 3178, IMAGE 230, AS DOCUMENT NUMBER
6868082.

 

PARCEL NO. 648-0016-020

 

--------------------------------------------------------------------------------

 

OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND RENTS, AND FIXTURE FILING

 

Preparer Information:

Yulia Rubin, 425 Lexington Avenue, New York, New York 10017
Telephone number: (212) 455-2646

 

After Recording, Please Return Document to:

Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017
Attention: Christopher Garcia

 

Name of Taxpayer:

Books Are Fun, Ltd., 1680 Highway 1 North, Fairfield, Iowa 52556

 

Name of Mortgagor:

Books Are Fun, Ltd.

 

Address of Mortgagor:

1680 Highway 1 North, Fairfield, Iowa 52556

 

Name of Mortgagee:

JPMorgan Chase Bank, N.A.

 

Address of Mortgagee:

270 Park Avenue, New York, New York 10017

 

Legal Description: See attached Schedule A.

 

ATTENTION COUNTY CLERK: THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO BECOME
FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED IN THE COUNTY
RECORDS WHERE MORTGAGES ON REAL PROPERTY ARE RECORDED. ADDITIONALLY, THIS
INSTRUMENT SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A MORTGAGE, BUT ALSO AS
A FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE
REAL PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE BORROWER/MORTGAGOR
(GRANTOR OR DEBTOR) AND OF THE BENEFICIARY/MORTGAGEE (SECURED PARTY) ARE SET
FORTH ABOVE AND ON THE FIRST PAGE OF THE MORTGAGE/FIXTURE FILING.

 

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TABLE OF CONTENTS

 

 

Page

 

 

Background

2

 

 

Granting Clauses

3

 

 

Terms and Conditions

5

1.

Defined Terms

5

2.

Warranty of Title

6

3.

Payment of Obligations

6

4.

Requirements

6

5.

Payment of Taxes and Other Impositions

6

6.

Insurance

7

7.

Restrictions on Liens and Encumbrances

8

8.

Due on Sale and Other Transfer Restrictions

8

9.

Condemnation/Eminent Domain

8

10.

Leases

8

11.

Further Assurances

8

12.

Mortgagee’s Right to Perform

8

13.

Remedies

8

14.

Right of Mortgagee to Credit Sale

10

15.

Appointment of Receiver

10

16.

Extension, Release, etc

10

17.

Security Agreement under Uniform Commercial Code; Fixture Filing

11

18.

Assignment of Rents

12

19.

Additional Rights

12

20.

Notices

12

21.

No Oral Modification

13

22.

Partial Invalidity

13

23.

Mortgagor’s Waiver of Rights

13

24.

Remedies Not Exclusive

14

25.

Multiple Security

14

26.

Successors and Assigns

15

27.

No Waivers, etc

16

28.

Governing Law, etc

16

29.

Certain Definitions

16

30.

Duty of Mortgagee; Authority of Mortgagee

16

31.

Last Dollars Secured; Priority

17

32.

Enforcement Expenses; Indemnification

17

33.

Redemption

18

34.

No Agricultural Use

18

35.

Brokers

18

36.

Release

19

 

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NOTICE: THIS OPEN-END MORTGAGE SECURES CREDIT IN THE AGGREGATE PRINCIPAL AMOUNT
OF $2,110,000,000. LOANS AND ADVANCES UP TO THIS AMOUNT, TOGETHER WITH INTEREST,
ARE SENIOR TO INDEBTEDNESS TO OTHER CREDITORS UNDER SUBSEQUENTLY RECORDED OR
FILED MORTGAGES AND LIENS

 

OPEN-END MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, AND FIXTURE FILING

 

THIS OPEN-END MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS, AND
FIXTURE FILING, dated as of March 2, 2007 is made by BOOKS ARE FUN, LTD., an
Iowa corporation (“Mortgagor”), whose address is 1680 Highway 1 North,
Fairfield, Iowa 52556, to JPMORGAN CHASE BANK, N.A., as Administrative Agent (in
such capacity, “Mortgagee”) whose address is 270 Park Avenue, New York, New York
10017. References to this “Mortgage” shall mean this instrument and any and all
renewals, modifications, amendments, supplements, extensions, consolidations,
substitutions, spreaders and replacements of this instrument.

 

Background

 

A.                              Doctor Acquisition Co. (to be merged with and
into Reader’s Digest, “Borrower,” together with RD German Holdings GmbH and the
other Overseas Borrowers, collectively, “Borrowers”), a Delaware corporation,
RDA Holding Co., a Delaware corporation, The Reader’s Digest Association, Inc.,
a Delaware corporation, Mortgagee, the several banks and other financial
institutions or entities from time to time parties thereto (the “Lenders”),
Citicorp North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Co-Syndication Agents, and The Royal Bank of Scotland plc, as
Documentation Agent, are parties to that certain Credit Agreement, dated as of
March 2, 2007 (as amended, supplemented, restated, replaced, substituted, or
otherwise modified from time to time, the “Credit Agreement”). The terms of the
Credit Agreement are incorporated by reference in this Mortgage as if the terms
thereof were fully set forth herein;

 

B.                                Pursuant to the Credit Agreement, the Lenders
have severally agreed to make extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein;

 

C.                                The Borrowers are members of an affiliated
group of companies that includes Mortgagor;

 

D.                               The proceeds of the extensions of credit under
the Credit Agreement will be used in part to enable the Borrowers to make
valuable transfers to Mortgagor in connection with the operation of its
business;

 

E.                                 The Borrowers and Mortgagor are engaged in
related businesses, and Mortgagor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;

 

2

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F.                                 It is a condition precedent to the obligation
of the Lenders to make their respective extensions of credit to the Borrowers
under the Credit Agreement that Mortgagor shall have executed and delivered this
Mortgage to Mortgagee for the ratable benefit of the Secured Parties;

 

G.                                Mortgagor (i) is the owner of the fee simple
estate in the parcel(s) of real property, if any, described on Schedule A
attached hereto (the “Land”); and (ii) owns, leases or otherwise has the right
to use all of the buildings, improvements, structures, and fixtures now or
subsequently located on the Land (the “Improvements;” the Land and the
Improvements being collectively referred to as the “Real Estate”); and

 

H.                               In consideration of the premises and to induce
Mortgagee and the Lenders to enter into the Credit Agreement, and to induce the
Lenders to make their respective extensions of credit to the Borrowers,
Mortgagor hereby agrees with Mortgagee, for the ratable benefit of the Secured
Parties, as follows:

 

Granting Clauses

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Mortgagor agrees that to secure the payment of all
obligations and liabilities of Mortgagor which may arise under or in connection
with the Guarantee and Collateral Agreement (including, without limitation,
Section 2 thereof) or any other Loan Document or any Secured Hedge Agreement to
which Mortgagor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all Attorney Costs and disbursements
of counsel to Mortgagee or to any Secured Party that are required to be paid by
Mortgagor pursuant to the terms of this Mortgage or any other Loan Document)
(collectively, the “Obligations”);

 

MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST IN, AND
HEREBY MORTGAGES AND WARRANTS, GRANTS, ASSIGNS, TRANSFERS AND SETS OVER TO
MORTGAGEE, WITH MORTGAGE COVENANTS:

 

(a)                             the Land;

 

(b)                            all right, title and interest Mortgagor now has
or may hereafter acquire in and to the Improvements or any part thereof and all
the estate, right, title, claim or demand whatsoever of Mortgagor, in possession
or expectancy, in and to the Real Estate or any part thereof;

 

(c)                             all right, title and interest of Mortgagor in,
to and under all easements, rights of way, licenses, operating agreements,
abutting strips and gores of land, streets, ways, alleys, passages, sewer
rights, waters, water courses, water and flowage rights, development rights, air
rights, mineral and soil rights, plants, standing and fallen timber, and all
estates, rights, titles, interests, privileges, licenses, tenements,
hereditaments and appurtenances belonging, relating or appertaining to the Real
Estate, and any reversions, remainders, rents, issues, profits and revenue
thereof and all land lying in the bed of any street, road or avenue, in front of
or adjoining the Real Estate to the center line thereof;

 

3

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(d)                            all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings, appliances and articles
of personal property of every kind and nature whatsoever, and all appurtenances
and additions thereto and substitutions or replacements thereof (together with,
in each case, attachments, components, parts and accessories) currently owned or
subsequently acquired by Mortgagor and now or subsequently attached to, or
contained in or used or usable in any way in connection with any operation or
letting of the Real Estate, including but without limiting the generality of the
foregoing, all screens, awnings, shades, blinds, curtains, draperies, artwork,
carpets, rugs, storm doors and windows, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilating, air conditioning and air-cooling apparatus, refrigerating,
incinerating equipment, escalators, elevators, loading and unloading equipment
and systems, stoves, ranges, laundry equipment, cleaning systems (including
window cleaning apparatus), telephones, communication systems (including
satellite dishes and antennae), televisions, computers, sprinkler systems and
other fire prevention and extinguishing apparatus and materials, security
systems, motors, engines, machinery, pipes, pumps, tanks, conduits, appliances,
fittings and fixtures of every kind and description (all of the foregoing in
this paragraph (e) being referred to as the “Equipment”);

 

(e)                             all right, title and interest of Mortgagor in
and to all substitutes and replacements of, and all additions and improvements
to, the Real Estate and the Equipment, subsequently acquired by or released to
Mortgagor or constructed, assembled or placed by Mortgagor on the Real Estate,
immediately upon such acquisition, release, construction, assembling or
placement, including, without limitation, any and all building materials whether
stored at the Real Estate or offsite, and, in each such case, without any
further deed, conveyance, assignment or other act by Mortgagor;

 

(f)                               all right, title and interest of Mortgagor in,
to and under all leases, subleases, underlettings, concession agreements,
management agreements, licenses and other agreements relating to the use or
occupancy of the Real Estate or the Equipment or any part thereof, now existing
or subsequently entered into by Mortgagor and whether written or oral and all
guarantees of any of the foregoing (collectively, as any of the foregoing may be
amended, restated, extended, renewed or modified from time to time, the
“Leases”), and all rights of Mortgagor in respect of cash and securities
deposited thereunder and the right to receive and collect the revenues, income,
rents, issues and profits thereof, together with all other rents, royalties,
issues, profits, revenue, income and other benefits arising from the use and
enjoyment of the Mortgaged Property (as defined below) (collectively, the
“Rents”);

 

(g)                            all unearned premiums under insurance policies
now or subsequently obtained by Mortgagor relating to the Real Estate or
Equipment and Mortgagor’s interest in and to all proceeds of any such insurance
policies (including title insurance policies) including the right to collect and
receive such proceeds, subject to the provisions relating to insurance generally
set forth below; and all awards and other compensation, including the interest
payable thereon and the right to collect and receive the same, made to the
present or any subsequent owner of the Real Estate or Equipment for the taking
by eminent domain, condemnation or otherwise, of all or any part of the Real
Estate or any easement or other right therein;

 

4

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(h)                            to the extent not prohibited under the applicable
contract, consent, license or other item unless the appropriate consent has been
obtained, all right, title and interest of Mortgagor in and to (i) all contracts
from time to time executed by Mortgagor or any manager or agent on its behalf
relating to the ownership, construction, maintenance, repair, operation,
occupancy, sale or financing of the Real Estate or Equipment or any part thereof
and all agreements and options relating to the purchase or lease of any portion
of the Real Estate or any property which is adjacent or peripheral to the Real
Estate, together with the right to exercise such options and all leases of
Equipment, (ii) all consents, licenses, building permits, certificates of
occupancy and other governmental approvals relating to construction, completion,
occupancy, use or operation of the Real Estate or any part thereof, and
(iii) all drawings, plans, specifications and similar or related items relating
to the Real Estate; and

 

(i)                                all proceeds, both cash and noncash, of the
foregoing;

 

(All of the foregoing property and rights and interests now owned or held or
subsequently acquired by Mortgagor and described in the foregoing clauses
(a) through (c) are collectively referred to as the “Premises”, and those
described in the foregoing clauses (a) through (i) are collectively referred to
as the “Mortgaged Property”).

 

TO HAVE AND TO HOLD the Mortgaged Property and the rights and privileges hereby
mortgaged unto Mortgagee, its successors and assigns for the uses and purposes
set forth, until the Obligations are fully paid and performed, provided,
however, that the condition of this Mortgage is such that if the Obligations
(other than contingent indemnification and contingent expense reimbursement
obligations, any Obligations in respect of Secured Hedge Agreements, and Cash
Management Obligations) are fully paid and performed, then the estate hereby
granted shall cease, terminate and become void but shall otherwise remain in
full force and effect.

 

This Mortgage covers present and future advances and re-advances, in the
aggregate amount of the obligations secured hereby, made by the Secured Parties
for the benefit of Mortgagor, and the lien of such future advances and
re-advances shall relate back to the date of this Mortgage.

 

The maturity date of the Obligations is March 2, 2013 with respect to the
Revolving Credit Facility, and March 2, 2014 with respect to the Term Loans.

 

Terms and Conditions

 

Mortgagor further represents, warrants, covenants and agrees with Mortgagee and
the Secured Parties as follows:

 

1.                                            Defined Terms. Capitalized terms
used herein (including in the “Background” and “Granting Clauses” sections
above) and not otherwise defined herein shall have the meanings ascribed thereto
in the Credit Agreement. References herein to the “Secured Parties” shall mean
the collective reference to (i) Mortgagee, as Administrative Agent, (ii) the
other Agents, (iii) the L/C Issuers, (iv) the Lenders, (v) the Hedge Banks,
(vi) any Affiliate of a Lender, (vii) the Supplemental Administrative Agent, and
(viii) each co-agent or sub-agent appointed by Mortgagee from time to time
pursuant to Section 9.01(c) of the Credit Agreement, to which

 

5

--------------------------------------------------------------------------------

 

Borrower Obligations (as defined in the Credit Agreement) or Guarantor
Obligations (as defined in the Credit Agreement), as applicable, are owed.

 

2.                                       Warranty of Title. Mortgagor warrants
that it has good record title in fee simple to, or a valid leasehold interest
in, the Real Estate, and good title to, or a valid leasehold interest in, the
rest of the Mortgaged Property, subject only to the matters that are set forth
in Schedule B of the title insurance policy or policies, if any, being issued to
Mortgagee to insure the lien of this Mortgage and any other lien or encumbrance
as permitted by Section 7.01 of the Credit Agreement (collectively, the
“Permitted Exceptions”). Mortgagor shall warrant, defend and preserve such title
and the lien of this Mortgage against all claims of all persons and entities
(not including the holders of the Permitted Exceptions). Mortgagor represents
and warrants that it has the right to mortgage the Mortgaged Property.

 

3.                                       Payment of Obligations. Mortgagor shall
pay and perform the Obligations at the times and places and in the manner
specified in the Loan Documents.

 

4.                                       Requirements. Mortgagor shall comply
with all covenants, restrictions and conditions now or later of record which may
be applicable to any of the Mortgaged Property, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Mortgaged Property, except where a failure to do so
could not reasonably be expected to have a material adverse effect (considered
both individually and together with other such failures) on (i) the current
business, operations or condition (financial or otherwise) of Mortgagor,
(ii) the current use of the Mortgaged Property or (iii) the value of the
Mortgaged Property (assuming its current use).

 

5.                                       Payment of Taxes and Other Impositions.
(a) Prior to the date on which any fine, penalty, interest or cost may be added
thereto or imposed, Mortgagor shall pay and discharge all taxes, charges and
assessments of every kind and nature, all charges for any easement or agreement
maintained for the benefit of any of the Real Estate, all general and special
assessments, levies, permits, inspection and license fees, all water and sewer
rents and charges, vault taxes and all other public charges even if unforeseen
or extraordinary, imposed upon or assessed against or which may become a lien on
any of the Real Estate, or arising in respect of the occupancy, use or
possession thereof, together with any penalties or interest on any of the
foregoing (all of the foregoing are collectively referred to herein as the
“Impositions”), except where (i) the validity or amount thereof is being
contested in good faith by appropriate proceedings, and (ii) Mortgagor has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP. Upon request by Mortgagee, Mortgagor shall deliver to Mortgagee evidence
reasonably acceptable to Mortgagee showing the payment of any such Imposition.
If by law any Imposition, at Mortgagor’s option, may be paid in installments
(whether or not interest shall accrue on the unpaid balance of such Imposition),
Mortgagor may elect to pay such Imposition in such installments and shall be
responsible for the payment of such installments with interest, if any.

 

(b)                            Nothing herein shall affect any right or remedy
of Mortgagee under this Mortgage or otherwise, without notice or demand to
Mortgagor, to pay any Imposition after the date such Imposition shall have
become delinquent, and add to the Obligations the amount so paid, together with
interest from the time of payment at the Default Rate. Any sums paid by
Mortgagee in discharge of any Impositions shall be (i) a lien on the Premises
secured hereby

 

6

--------------------------------------------------------------------------------

 

prior to any right or title to, interest in, or claim upon the Premises
subordinate to the lien of this Mortgage, and (ii) payable on demand by
Mortgagor to Mortgagee together with interest at the Default Rate as set forth
above.

 

6.                                       Insurance. (a) Mortgagor shall
maintain, with financially sound and reputable companies, insurance policies
(i) insuring the Real Estate against loss by fire, explosion, theft and such
other casualties as may be reasonably satisfactory to Mortgagee, and
(ii) insuring Mortgagor, Mortgagee and the other Secured Parties against
liability for personal injury and property damage relating to such Real Estate,
such policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to Mortgagee. All such insurance shall (i) provide that
no cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least thirty (30) days or, in the case of
insurance existing as of the date hereof, at least ten (10) days after receipt
by Mortgagee of written notice thereof, (ii) name Mortgagee as an additional
insured party or loss payee, and (iii) include deductibles consistent with past
practice or consistent with industry practice or otherwise reasonably
satisfactory to Mortgagee.

 

(b)                            If any portion of the Premises is located in an
area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, Mortgagor shall maintain or cause
to be maintained, flood insurance in an amount reasonably satisfactory to
Mortgagee, but in no event less than the maximum limit of coverage available
under the National Flood Insurance Act of 1968, as amended.

 

(c)                             Mortgagor promptly shall comply with and conform
in all material respects to (i) all provisions of each such insurance policy,
and (ii) all requirements of the insurers applicable to Mortgagor or to any of
the Mortgaged Property or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration or repair of any of the Mortgaged Property.
Mortgagor shall not use or permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel any insurance policy or void
coverage required to be maintained by this Mortgage.

 

(d)                            If Mortgagor is in default of its obligations to
insure or deliver any such prepaid policy or policies, then Mortgagee, at its
option upon five (5) days’ notice to Mortgagor, may effect such insurance from
year to year at rates substantially similar to the rate at which Mortgagor had
insured the Premises, and pay the premium or premiums therefor, and Mortgagor
shall pay to Mortgagee on demand such premium or premiums so paid by Mortgagee
with interest from the time of payment at the Default Rate.

 

(e)                             If the Mortgaged Property, or any part thereof,
shall be destroyed or damaged and the reasonably estimated cost thereof would
exceed $500,000, Mortgagor shall give prompt notice thereof to Mortgagee. All
insurance proceeds paid or payable in connection with any damage or casualty to
the Real Estate shall be deemed proceeds from a Casualty Event and applied in
the manner specified in the Credit Agreement.

 

(f)                               In the event of foreclosure of this Mortgage
or other transfer of title to the Mortgaged Property, all right, title and
interest of Mortgagor in and to any insurance policies then in force shall pass
to the purchaser or grantee.

 

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7.                                  Restrictions on Liens and Encumbrances.
Except for the lien of this Mortgage and the Permitted Exceptions, Mortgagor
shall not further mortgage, nor otherwise encumber the Mortgaged Property nor
create or suffer to exist any lien, charge or encumbrance on the Mortgaged
Property, or any part thereof, whether superior or subordinate to the lien of
this Mortgage and whether recourse or non-recourse.

 

8.                                  Due on Sale and Other Transfer Restrictions.
Except as expressly permitted under Section 7.05 of the Credit Agreement,
Mortgagor shall not sell, transfer, convey or assign all or any portion of, or
any interest in, the Mortgaged Property.

 

9.                                  Condemnation/Eminent Domain. Promptly upon
obtaining knowledge of the institution of any proceedings for the condemnation
of the Mortgaged Property, or any material portion thereof; Mortgagor will
notify Mortgagee of the pendency of such proceedings. All awards and proceeds
relating to such condemnation shall be deemed proceeds from a Casualty Event and
applied in the manner specified in the Credit Agreement.

 

10.                            Leases. Except as expressly permitted under the
Credit Agreement, Mortgagor shall not (a) execute an assignment or pledge of any
Lease relating to all or any portion of the Mortgaged Property other than in
favor of Mortgagee, or (b) execute or permit to exist any Lease of any of the
Mortgaged Property.

 

11.                            Further Assurances. To further assure Mortgagee’s
rights under this Mortgage, Mortgagor agrees promptly upon demand of Mortgagee
to do any act or execute any additional documents (including, but not limited
to, security agreements on any personalty included or to be included in the
Mortgaged Property and a separate assignment of each Lease in recordable form)
as may be reasonably required by Mortgagee to confirm the lien of this Mortgage
and all other rights or benefits conferred on Mortgagee by this Mortgage.

 

12.                            Mortgagee’s Right to Perform. If Mortgagor fails
to perform any of the covenants or agreements of Mortgagor in the Loan
Documents, within the applicable grace period, if any, provided for in the
Credit Agreement, Mortgagee, without waiving or releasing Mortgagor from any
obligation or default under this Mortgage, may, at any time upon ten (10) days’
notice to Mortgagor (but shall be under no obligation to) pay or perform the
same, and the amount or cost thereof, with interest at the Default Rate, shall
immediately be due from Mortgagor to Mortgagee and the same shall be secured by
this Mortgage and shall be a lien on the Mortgaged Property prior to any right,
title to, interest in, or claim upon the Mortgaged Property attaching subsequent
to the lien of this Mortgage. No payment or advance of money by Mortgagee under
this Section shall be deemed or construed to cure Mortgagor’s default or waive
any right or remedy of Mortgagee.

 

13.                            Remedies. (a) Upon the occurrence and during the
continuance of any Event of Default, Mortgagee may immediately take such action,
without notice or demand, as it deems advisable to protect and enforce its
rights against Mortgagor and in and to the Mortgaged Property, including, but
not limited to, the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such manner as Mortgagee may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Mortgagee:

 

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(i)                                Mortgagee may, to the extent permitted by
applicable law, (A) institute and maintain an action of mortgage foreclosure
against all or any part of the Mortgaged Property, (B) institute and maintain an
action on the Credit Agreement, the Guarantee and Collateral Agreement or any
other Loan Document, (C) sell all or part of the Mortgaged Property (Mortgagor
expressly granting to Mortgagee the power of sale, to the extent permitted by
applicable law), or (D) take such other action at law or in equity for the
enforcement of this Mortgage or any of the Loan Documents as the law may allow.
Mortgagee may proceed in any such action to final judgment and execution thereon
for all sums due hereunder, together with interest thereon at the Default Rate
and all costs of suit, including, without limitation, reasonable attorneys’ fees
and disbursements. Interest at the Default Rate shall be due on any judgment
obtained by Mortgagee from the date of judgment until actual payment is made of
the full amount of the judgment; and

 

(ii)                             Mortgagee may personally, or by its agents,
attorneys and employees and without regard to the adequacy or inadequacy of the
Mortgaged Property or any other collateral as security for the Obligations enter
into and upon the Mortgaged Property and each and every part thereof and exclude
Mortgagor and its agents and employees therefrom without liability for trespass,
damage or otherwise (Mortgagor hereby agreeing to surrender possession of the
Mortgaged Property to Mortgagee upon demand at any such time) and use, operate,
manage, maintain and control the Mortgaged Property and every part thereof.
Following such entry and taking of possession, Mortgagee shall be entitled,
without limitation, (x) to lease all or any part or parts of the Mortgaged
Property for such periods of time and upon such conditions as Mortgagee may, in
its discretion, deem proper, (y) to enforce, cancel or modify any Lease as
Mortgagee may in its discretion deem proper, and (z) generally to execute, do
and perform any other act, deed, matter or thing concerning the Mortgaged
Property as Mortgagee shall deem appropriate as fully as Mortgagor might do.

 

(b)                            In case of a foreclosure sale, the Real Estate
may be sold, at Mortgagee’s election, in one parcel or in more than one parcel
and Mortgagee is specifically empowered (without being required to do so, and in
its sole and absolute discretion) to cause successive sales of portions of the
Mortgaged Property to be held.

 

(c)                             In the event of any breach of any of the
covenants, agreements, terms or conditions contained in this Mortgage, Mortgagee
shall be entitled to enjoin such breach and obtain specific performance of any
covenant, agreement, term or condition and Mortgagee shall have the right to
invoke any equitable right or remedy as though other remedies were not provided
for in this Mortgage.

 

(d)                            It is agreed that if an Event of Default shall
occur and be continuing, any and all proceeds of the Mortgaged Property received
by Mortgagee shall be held by Mortgagee for the benefit of the Secured Parties
as collateral security for the Obligations (whether matured or unmatured), and
shall be applied in payment of the Obligations in the manner and in the order
set forth in Section 6.5 of the Guarantee and Collateral Agreement.

 

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14.         Right of Mortgagee to Credit Sale. Upon the occurrence of any sale
made under this Mortgage, whether made under the power of sale, to the extent
permitted by applicable law, or by virtue of judicial proceedings or of a
judgment or decree of foreclosure and sale, Mortgagee may bid for and acquire
the Mortgaged Property or any part thereof. In lieu of paying cash therefor,
Mortgagee may make settlement for the purchase price by crediting upon the
Obligations or other sums secured by this Mortgage, the net sales price after
deducting therefrom the expenses of sale and the cost of the action and any
other sums which Mortgagee is authorized to deduct under this Mortgage. In such
event, this Mortgage, the Credit Agreement, the Guarantee and Collateral
Agreement and documents evidencing expenditures secured hereby may be presented
to the person or persons conducting the sale in order that the amount so used or
applied may be credited upon the Obligations as having been paid.

 

15.         Appointment of Receiver. If an Event of Default shall have occurred
and be continuing, Mortgagee as a matter of right and without notice to
Mortgagor, unless otherwise required by applicable law, and without regard to
the adequacy or inadequacy of the Mortgaged Property or any other collateral or
the interest of Mortgagor therein as security for the Obligations, shall have
the right to apply to any court having jurisdiction to appoint a receiver or
receivers or other manager of the Mortgaged Property, without requiring the
posting of a surety bond, and without reference to the adequacy or inadequacy of
the value of the Mortgaged Property or the solvency or insolvency of Mortgagor
or any other party obligated for payment of all or any part of the Obligations,
and whether or not waste has occurred with respect to the Mortgaged Property,
and Mortgagor hereby irrevocably consents to such appointment and waives notice
of any application therefor (except as may be required by law). Any such
receiver or receivers or manager shall have all the usual powers and duties of
receivers in like or similar cases and all the powers and duties of Mortgagee in
case of entry as provided in this Mortgage, including, without limitation and to
the extent permitted by law, the right to enter into leases of all or any part
of the Mortgaged Property, and shall continue as such and exercise all such
powers until the date of confirmation of sale of the Mortgaged Property unless
such receivership is sooner terminated.

 

16.         Extension, Release, etc. (a) Without affecting the lien or charge of
this Mortgage upon any portion of the Mortgaged Property not then or theretofore
released as security for the full amount of the Obligations, Mortgagee may, from
time to time and without notice, agree to (i) release any person liable for the
indebtedness borrowed or guaranteed under the Loan Documents, (ii) extend the
maturity or alter any of the terms of the indebtedness borrowed or guaranteed
under the Loan Documents or any other guaranty thereof, (iii) grant other
indulgences, (iv) release or reconvey, or cause to be released or reconveyed at
any time at Mortgagee’s option any parcel, portion or all of the Mortgaged
Property, (v) take or release any other or additional security for any
obligation herein mentioned, or (vi) make compositions or other arrangements
with debtors in relation thereto.

 

(b)         No recovery of any judgment by Mortgagee and no levy of an execution
under any judgment upon the Mortgaged Property or upon any other property of
Mortgagor shall affect the lien of this Mortgage or any liens, rights, powers or
remedies of Mortgagee hereunder, and such liens, rights, powers and remedies
shall continue unimpaired.

 

(c)          If Mortgagee shall have the right to foreclose this Mortgage or to
direct a power of sale, to the extent permitted by applicable law, Mortgagor
authorizes Mortgagee at its

 

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option to foreclose the lien of this Mortgage (or direct the sale of the
Mortgaged Property, as the case may be) subject to the rights of any tenants of
the Mortgaged Property. The failure to make any such tenants parties defendant
to any such foreclosure proceeding and to foreclose their rights, or to provide
notice to such tenants as required in any statutory procedure governing a sale
of the Mortgaged Property, or to terminate such tenant’s rights in such sale
will not be asserted by Mortgagor as a defense to any proceeding instituted by
Mortgagee to collect the Obligations or to foreclose the lien of this Mortgage.

 

(d)           Unless expressly provided otherwise, in the event that ownership
of this Mortgage and title to the Mortgaged Property or any estate therein shall
become vested in the same person or entity, this Mortgage shall not merge in
such title but shall continue as a valid lien on the Mortgaged Property for the
amount secured hereby.

 

17.           Security Agreement under Uniform Commercial Code; Fixture Filing.
(a) It is  the intention of the parties hereto that this Mortgage shall
constitute a security agreement within the meaning of the Uniform Commercial
Code (the “Code”) of the State in which the Mortgaged Property is located. If an
Event of Default shall occur and be continuing, then in addition to having any
other right or remedy available at law or in equity, Mortgagee shall have the
option of either (i) proceeding under the Code and exercising such rights and
remedies as may be provided to a secured party by the Code with respect to all
or any portion of the Mortgaged Property which is personal property (including,
without limitation, taking possession of and selling such property) or
(ii) treating such property as real property and proceeding with respect to both
the real and personal property constituting the Mortgaged Property in accordance
with Mortgagee’s rights, powers and remedies with respect to the real property
(in which event the default provisions of the Code shall not apply). If
Mortgagee shall elect to proceed under the Code, then ten (10) days’ notice of
sale of the personal property shall be deemed reasonable notice and the
reasonable expenses of retaking, holding, preparing for sale, selling and the
like incurred by Mortgagee shall include, but not be limited to, attorneys’ fees
and legal expenses. At Mortgagee’s request, Mortgagor shall assemble the
personal property and make it available to Mortgagee at a place designated by
Mortgagee which is reasonably convenient to both parties.

 

(b)           Certain portions of the Mortgaged Property are or will become
“fixtures” (as that term is defined in the Code) on the Land, and this Mortgage,
upon being filed for record in the real estate records of the county wherein
such fixtures are situated, shall operate also as a financing statement filed as
a fixture filing in accordance with the applicable provisions of said Code upon
such portions of the Mortgaged Property that are or become fixtures. The real
property to which the fixtures relate is described in Schedule A hereto. The
record owner of the real property described in Schedule A hereto, if any, is
Mortgagor. The name, type of organization and jurisdiction of organization of
the debtor for purposes of this financing statement are the name, type of
organization and jurisdiction of organization of Mortgagor set forth in the
first paragraph of this Mortgage, and the name of the secured party for purposes
of this financing statement is the name of Mortgagee set forth in the first
paragraph of this Mortgage. The mailing address of Mortgagor/debtor is the
address of Mortgagor set forth in the first paragraph of this Mortgage. The
mailing address of Mortgagee/secured party from which information concerning the
security interest hereunder may be obtained is the address of Mortgagee set
forth in the first paragraph of this Mortgage. Mortgagor’s organizational
identification number is 146599.

 

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18.           Assignment of Rents. (a) Mortgagor hereby assigns to Mortgagee the
Rents as further security for the payment of and performance of the Obligations,
and Mortgagor grants to Mortgagee the right to enter the Mortgaged Property for
the purpose of collecting the same and to let the Mortgaged Property or any part
thereof, and to apply the Rents on account of the Obligations. The foregoing
assignment and grant is present and absolute and shall continue in effect until
the Obligations are fully paid and performed, but Mortgagee hereby waives the
right to enter the Mortgaged Property for the purpose of collecting the Rents
and Mortgagor shall be entitled to collect, receive, use and retain the Rents
until the occurrence of an Event of Default; such right of Mortgagor to collect,
receive, use and retain the Rents may be revoked by Mortgagee upon the
occurrence and during the continuance of any Event of Default by giving not less
than ten (10) days’ written notice of such revocation to Mortgagor; in the event
such notice is given, Mortgagor shall pay over to Mortgagee, or to any receiver
appointed to collect the Rents, any lease security deposits, and shall pay
monthly in advance to Mortgagee, or to any such receiver, the fair and
reasonable rental value as determined by Mortgagee for the use and occupancy of
such part of the Mortgaged Property as may be in the possession of Mortgagor or
any affiliate of Mortgagor, and upon default in any such payment Mortgagor and
any such affiliate will vacate and surrender the possession of the Mortgaged
Property to Mortgagee or to such receiver, and in default thereof may be evicted
by summary proceedings or otherwise. Mortgagor shall not accept prepayments of
installments of Rent to become due for a period of more than one month in
advance (except for security deposits and estimated payments of percentage rent,
if any).

 

(b)           Mortgagor has not affirmatively done any act which would prevent
Mortgagee from, or limit Mortgagee in, acting under any of the provisions of the
foregoing assignment.

 

(c)           Except for any matter disclosed in the Credit Agreement, no action
has been brought or, so far as is known to Mortgagor, is threatened, which would
interfere in any way with the right of Mortgagor to execute the foregoing
assignment and perform all of Mortgagor’s obligations contained in this
Section and in the Leases.

 

19.           Additional Rights. The holder of any subordinate lien or
subordinate deed of trust on the Mortgaged Property shall have no right to
terminate any Lease whether or not such Lease is subordinate to this Mortgage
nor shall Mortgagor consent to any holder of any subordinate lien or subordinate
deed of trust joining any tenant under any Lease in any action to foreclose the
lien or modify, interfere with, disturb or terminate the rights of any tenant
under any Lease. By recordation of this Mortgage all subordinate lienholders and
the mortgagees and beneficiaries under subordinate mortgages are subject to and
notified of this provision, and any action taken by any such lienholder or
beneficiary contrary to this provision shall be null and void. Any such
application shall not be construed to cure or waive any Default or Event of
Default or invalidate any act taken by Mortgagee on account of such Default or
Event of Default.

 

20.           Notices. All notices, requests and demands to or upon Mortgagee or
Mortgagor hereunder shall be effected in the manner provided for in
Section 10.02 of the Credit Agreement; provided that any such notice, request or
demand to or upon Mortgagor shall be addressed to Mortgagor at its address set
forth above.

 

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21.           No Oral Modification. This Mortgage may not be amended,
supplemented or otherwise modified except in accordance with the provisions of
Section 10.01 of the Credit Agreement. Any agreement made by Mortgagor and
Mortgagee after the date of this Mortgage relating to this Mortgage shall be
superior to the rights of the holder of any intervening or subordinate lien or
encumbrance.

 

22.           Partial Invalidity. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been included.
Notwithstanding to the contrary anything contained in this Mortgage or in any
provisions of any Loan Document, the obligations of Mortgagor and of any other
obligor under any Loan Document shall be subject to the limitation that
Mortgagee shall not charge, take or receive, nor shall Mortgagor or any other
obligor be obligated to pay to Mortgagee, any amounts constituting interest in
excess of the maximum rate permitted by law to be charged by Mortgagee.

 

Mortgagor agrees that notwithstanding the fact that the Mortgage contains
matters which may not be appropriate, available or enforceable in Iowa, the
inclusion of such matters does not affect the validity or enforceability of the
Mortgage as appropriate and available under Iowa law. To the extent the laws of
the State of Iowa limit (i) the availability of the exercise of any of the
remedies set forth herein, including, without limitation, remedies such as a
power of sale and taking possession of the property, or (ii) the enforcement of
waivers and indemnities made by Mortgagor, such remedies, waivers, or
indemnities shall be exercisable or enforceable, any provisions in this Mortgage
to the contrary notwithstanding, if, and to the extent, permitted by the laws in
force at the time of the exercise of such remedies or the enforcement of such
waivers or indemnities without regard to the enforceability of such remedies,
waiver or indemnities at the time of the execution and delivery of this
Mortgage.

 

23.           Mortgagor’s Waiver of Rights. (a) Mortgagor hereby voluntarily and
knowingly releases and waives any and all rights to retain possession of the
Mortgaged Property after the occurrence of an Event of Default and any and all
rights of redemption from sale under any order or decree of foreclosure (whether
full or partial), pursuant to rights, if any, therein granted, as allowed under
any applicable law, on its own behalf, on behalf of all persons claiming or
having an interest (direct or indirectly) by, through or under each constituent
of Mortgagor and on behalf of each and every person acquiring any interest in
the Mortgaged Property subsequent to the date hereof, it being the intent hereof
that any and all such rights or redemption of each constituent of Mortgagor and
all such other persons are and shall be deemed to be hereby waived to the
fullest extent permitted by applicable law or replacement statute. Each
constituent of Mortgagor shall not invoke or utilize any such law or laws or
otherwise hinder, delay, or impede the execution of any right, power, or remedy
herein or otherwise granted or delegated to Mortgagee, but shall permit the
execution of every such right, power, and remedy as though no such law or laws
had been made or enacted.

 

(b)           To the fullest extent permitted by law, Mortgagor waives the
benefit of all laws now existing or that may subsequently be enacted providing
for (i) any appraisement before sale of any portion of the Mortgaged Property,
(ii) any extension of the time for the enforcement of the collection of the
Obligations or the creation or extension of a period of redemption from any sale
made in collecting such debt and (iii) exemption of the Mortgaged Property from

 

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attachment, levy or sale under execution or exemption from civil process. To the
full extent Mortgagor may do so, Mortgagor agrees that Mortgagor will not at any
time insist upon, plead, claim or take the benefit or advantage of any law now
or hereafter in force providing for any appraisement, valuation, stay,
exemption, extension or redemption, or requiring foreclosure of this Mortgage
before exercising any other remedy granted hereunder and Mortgagor, for
Mortgagor and its successors and assigns, and for any and all persons ever
claiming any interest in the Mortgaged Property, to the extent permitted by law,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of election to mature (except as expressly provided in
the Credit Agreement) or declare due the whole of the secured indebtedness and
marshalling in the event of exercise by Mortgagee of the foreclosure rights,
power of sale, to the extent permitted by applicable law, or other rights hereby
created.

 

24.         Remedies Not Exclusive. Mortgagee shall be entitled to enforce
payment and performance of the Obligations and to exercise all rights and powers
under this Mortgage or under any of the other Loan Documents or other agreement
or any laws now or hereafter in force, notwithstanding some or all of the
Obligations may now or hereafter be otherwise secured, whether by deed of trust,
mortgage, security agreement, pledge, lien, assignment or otherwise. Neither the
acceptance of this Mortgage nor its enforcement, shall prejudice or in any
manner affect Mortgagee’s rights to realize upon or enforce any other security
now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be
entitled to enforce this Mortgage and any other security now or hereafter held
by Mortgagee in such order and manner as Mortgagee may determine in its absolute
discretion. No remedy herein conferred upon or reserved to Mortgagee is intended
to be exclusive of any other remedy herein or by law provided or permitted, but
each shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute. Every
power or remedy given by any of the Loan Documents to Mortgagee or to which
either may otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed expedient by
Mortgagee, as the case may be. In no event shall Mortgagee, in the exercise of
the remedies provided in this Mortgage (including, without limitation, in
connection with the assignment of Rents to Mortgagee, or the appointment of a
receiver and the entry of such receiver on to all or any part of the Mortgaged
Property), be deemed a “mortgagee in possession,” and Mortgagee shall not in any
way be made liable for any act, either of commission or omission, in connection
with the exercise of such remedies.

 

25.         Multiple Security. If (a) the Premises shall consist of one or more
parcels, whether or not contiguous and whether or not located in the same
county, or (b) in addition to this Mortgage, Mortgagee shall now or hereafter
hold or be the beneficiary of one or more additional mortgages, liens, deeds of
trust or other security (directly or indirectly) for the Obligations upon other
property in the State in which the Premises are located (whether or not such
property is owned by Mortgagor or by others) or (c) both the circumstances
described in clauses (a) and (b) shall be true, then to the fullest extent
permitted by law, Mortgagee may, at its election, commence or consolidate in a
single foreclosure action all foreclosure proceedings against all such
collateral securing the Obligations (including the Mortgaged Property), which
action may be brought or consolidated in the courts of, or sale conducted in,
any county in which any of such collateral is located. Mortgagor acknowledges
that the right to maintain a consolidated foreclosure action is a specific
inducement to Mortgagee to extend the indebtedness borrowed pursuant to or
guaranteed by the Loan Documents, and Mortgagor expressly and irrevocably waives
any objections to the commencement or consolidation of the foreclosure

 

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proceedings in a single action and any objections to the laying of venue or
based on the grounds of forum non conveniens which it may now or hereafter have.
Mortgagor further agrees that if Mortgagee shall be prosecuting one or more
foreclosure or other proceedings against a portion of the Mortgaged Property or
against any collateral other than the Mortgaged Property, which collateral
directly or indirectly secures the Obligations, or if Mortgagee shall have
obtained a judgment of foreclosure and sale or similar judgment against such
collateral, then, whether or not such proceedings are being maintained or
judgments were obtained in or outside the State in which the Premises are
located, Mortgagee may commence or continue any foreclosure proceedings and
exercise its other remedies granted in this Mortgage against all or any part of
the Mortgaged Property and Mortgagor waives any objections to the commencement
or continuation of a foreclosure of this Mortgage or exercise of any other
remedies hereunder based on such other proceedings or judgments, and waives any
right to seek to dismiss, stay, remove, transfer or consolidate either any
action under this Mortgage or such other proceedings on such basis. Neither the
commencement nor continuation of proceedings to foreclose this Mortgage, nor the
exercise of any other rights hereunder nor the recovery of any judgment by
Mortgagee in any such proceedings or the occurrence of any sale in any such
proceedings shall prejudice, limit or preclude Mortgagee’s right to commence or
continue one or more foreclosure or other proceedings or obtain a judgment
against any other collateral (either in or outside the State in which the
Premises are located) which directly or indirectly secures the Obligations, and
Mortgagor expressly waives any objections to the commencement of, continuation
of, or entry of a judgment in such other sales or proceedings or exercise of any
remedies in such sales or proceedings based upon any action or judgment
connected to this Mortgage, and Mortgagor also waives any right to seek to
dismiss, stay, remove, transfer or consolidate either such other sales or
proceedings or any sale or action under this Mortgage on such basis. It is
expressly understood and agreed that to the fullest extent permitted by law,
Mortgagee may, at its election, cause the sale of all collateral which is the
subject of a single foreclosure action at either a single sale or at multiple
sales conducted simultaneously and take such other measures as are appropriate
in order to effect the agreement of the parties to dispose of and administer all
collateral securing the Obligations (directly or indirectly) in the most
economical and least time-consuming manner.

 

In the event of foreclosure of this Mortgage, Mortgagor hereby agrees that the
court may, and requests the court to, enter a special order directing the clerk
to enter and record the judgment contained in the foreclosure decree on the
Credit Agreement secured by this Mortgage without requiring that the Credit
Agreement be first filed with the clerk of the court for cancellation. Mortgagor
further agrees, because the Credit Agreement secured by this Mortgage is also
secured by other mortgages and will be necessary to a foreclosure of those
mortgages, that notwithstanding Iowa Rule of Civil Procedure 228, as presently
enacted or as hereinafter amended or replaced, the clerk of the court may, in
the event of foreclosure of this Mortgage, enter and record the judgment
contained in the foreclosure decree on the Credit Agreement secured by this
Mortgage without requiring that the Credit Agreement be first filed with the
clerk of court for cancellation.

 

26.         Successors and Assigns. All covenants of Mortgagor contained in this
Mortgage are imposed solely and exclusively for the benefit of Mortgagee, and
its successors and assigns, and no other person or entity shall have standing to
require compliance with such covenants or be deemed, under any circumstances, to
be a beneficiary of such covenants, any or all of which may be freely waived in
whole or in part by Mortgagee at any time if in the sole discretion of

 

15

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either of them such a waiver is deemed advisable. All such covenants of
Mortgagor shall run with the land and bind Mortgagor, the successors and assigns
of Mortgagor (and each of them) and all subsequent owners, encumbrancers and
tenants of the Mortgaged Property, and shall inure to the benefit of Mortgagee
and its successors and assigns. The word “Mortgagor” shall be construed as if it
read “Mortgagors” whenever the sense of this Mortgage so requires, and if there
shall be more than one Mortgagor, the obligations of Mortgagors shall be joint
and several.

 

27.         No Waivers, etc. Any failure by Mortgagee to insist upon the strict
performance by Mortgagor of any of the terms and provisions of this Mortgage
shall not be deemed to be a waiver of any of the terms and provisions hereof,
and Mortgagee, notwithstanding any such failure, shall have the right thereafter
to insist upon the strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor. Mortgagee may
release, regardless of consideration and without the necessity for any notice to
or consent by the holder of any subordinate lien on the Mortgaged Property, any
part of the security held for the obligations secured by this Mortgage without,
as to the remainder of the security, in any way impairing or affecting the lien
of this Mortgage or the priority of such lien over any subordinate lien or deed
of trust.

 

28.         Governing Law, etc. This Mortgage shall be governed by and construed
and interpreted in accordance with the laws of the State in which the Mortgaged
Property is located, except that Mortgagor expressly acknowledges that by their
respective terms the Credit Agreement and the Guarantee and Collateral Agreement
shall be governed and construed in accordance with the laws of the State of New
York, and for purposes of consistency, Mortgagor agrees that in any in personam
proceeding related to this Mortgage the rights of the parties to this Mortgage
shall also be governed by and construed in accordance with the laws of the State
of New York governing contracts made and to be performed in that State.

 

29.         Certain Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Mortgage shall be used interchangeably in singular or plural form and the word
“Mortgagor” shall mean “each Mortgagor or any subsequent owner or owners of the
Mortgaged Property or any part thereof or interest therein,” the word
“Mortgagee” shall mean “Mortgagee or any successor agent for the Lenders,” the
word “Person” shall include any individual, corporation, partnership, limited
liability company, trust, unincorporated association, government, governmental
authority, or other entity, and the words “Mortgaged Property” shall include any
portion of the Mortgaged Property or interest therein. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural and vice versa. The captions in this Mortgage are for
convenience or reference only and in no way limit or amplify the provisions
hereof.

 

30.         Duty of Mortgagee; Authority of Mortgagee. (a) Mortgagee’s sole duty
with respect to the custody, safekeeping and physical preservation of the
Mortgaged Property which is in its possession, or otherwise, shall be to deal
with it in the same manner as Mortgagee deals with similar property for its own
account. Neither Mortgagee, any Secured Party nor any of their respective
officers, directors, employees or agents shall be liable for failure to demand,
collect or realize upon any of the Mortgaged Property or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Mortgaged Property upon the request of Mortgagor or any other Person or to take
any other action whatsoever with regard to the Mortgaged Property

 

16

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or any part thereof. The powers conferred on Mortgagee and the Secured Parties
hereunder are solely to protect Mortgagee’s and the Secured Parties’ interests
in the Mortgaged Property and shall not impose any duty upon Mortgagee or any
Secured Party to exercise any such powers. Mortgagee and the Secured Parties
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to Mortgagor for any act or
failure to act hereunder, except for their own gross negligence or willful
misconduct.

 

(b)           Mortgagor acknowledges that the rights and responsibilities of
Mortgagee under this Mortgage with respect to any action taken by Mortgagee or
the exercise or non-exercise by Mortgagee of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Mortgage shall, as between Mortgagee and the Secured Parties, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between Mortgagee and
Mortgagor, Mortgagee shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and Mortgagor shall be under no obligation, or entitlement, to make any
inquiry respecting such authority.

 

31.         Last Dollars Secured; Priority. To the extent that this Mortgage
secures only a portion of the indebtedness owing or which may become owing by
Mortgagor to the Secured Parties, the parties agree that any payments or
repayments of such indebtedness shall be and be deemed to be applied first to
the portion of the indebtedness that is not secured hereby, it being the
parties’ intent that the portion of the indebtedness last remaining unpaid shall
be secured hereby. If at any time this Mortgage shall secure less than all of
the principal amount of the Obligations, it is expressly agreed that any
repayments of the principal amount of the Obligations shall not reduce the
amount of the lien of this Mortgage until the lien amount shall equal the
principal amount of the Obligations outstanding.

 

32.         Enforcement Expenses; Indemnification. (a) Mortgagor agrees to pay
or reimburse each Secured Party and Mortgagee for all its reasonable
out-of-pocket costs and expenses incurred in collecting against Mortgagor or
otherwise enforcing or preserving any rights under this Mortgage and the other
Loan Documents to which Mortgagor is a party, including, without limitation, the
reasonable fees and disbursements of counsel to each Secured Party and of
counsel to Mortgagee.

 

(b)           Mortgagor agrees to pay, and to save Mortgagee and the Secured
Parties harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Mortgaged
Property or in connection with any of the transactions contemplated by this
Mortgage.

 

(c)           Mortgagor agrees to pay, and to save Mortgagee and the Secured
Parties harmless from, any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments and suits and related reasonable
out-of-pocket expenses (including Attorney Costs) of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Mortgage to the extent the Borrowers would be required to
do so pursuant to Section 10.05 of the Credit Agreement.

 

17

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(d)           The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.

 

33.         Redemption. It is agreed that, if this Mortgage covers less than ten
(10) acres of land, in the event of the foreclosure of this Mortgage and sale of
the Mortgaged Property by sheriff’s sale in such foreclosure proceedings, the
time of one (1) year for redemption from said sale provided by the statutes of
the State of Iowa shall be reduced to six (6) months; provided Mortgagee in such
action files an election to waive any deficiency judgment against Mortgagor
which may arise out of the foreclosure proceedings; all to be consistent with
the provisions of Section 628.26 and of Chapter 628, Iowa Code. If the
redemption period is so reduced, Mortgagor or its successors in interest or the
owner shall have the exclusive right to redeem for the first three (3) months
after such sale, and the time periods in Sections 628.5, 628.15 and 628.16 of
the Iowa Code shall be reduced to four (4) months. It is further agreed that the
period of redemption after a foreclosure of this Mortgage shall be reduced to
sixty (60) days if all of the three (3) following contingencies exist: (1) the
Mortgaged Property is less than ten (10) acres in size; (2) the court finds
affirmatively that said real estate has been abandoned by the owners and those
persons personally liable under this Mortgage at the time of such foreclosure;
and (3) Mortgagee in such action files an election to waive any deficiency
judgment against Mortgagor or its successors in interest in such action, all to
be consistent with the provisions of Section 628.27 and of Chapter 628, Iowa
Code. If the redemption period is so reduced, Mortgagor or its successors in
interest or the owner shall have the exclusive right to redeem for the first
thirty (30) days after such sale, and the time provided for redemption by
creditors as provided in Sections 628.5, 628.15 and 628.16, Iowa Code, shall be
reduced to forty (40) days. Entry of appearance by pleading or docket entry by
or on behalf of Mortgagor shall give rise to a presumption that the Premises are
not abandoned. Any such short redemption period shall be consistent with all of
the provisions of Chapter 628, Iowa Code, as amended; provided, however, that
any statement in this Section or elsewhere to the contrary notwithstanding,
Mortgagor does, if permitted by law at the time of foreclosure, waive any and
all rights of redemption. In addition to the above-described provisions
regarding the possible reduction of the redemption period applicable in the
event of foreclosure of this Mortgage by Mortgagee, Mortgagor and Mortgagee
agree that in the event of the foreclosure of this Mortgage and sale of the real
estate included within the Mortgaged Property by sheriff’s sale in such
foreclosure proceedings, the time of one hundred eighty (180) days for
redemption from said sale provided by the statutes shall be reduced to ninety
(90) days provided Mortgagee waives in such foreclosure proceedings any rights
to a deficiency judgment against Mortgagor which may arise out of the
foreclosure proceedings; all to be consistent with all provisions of
Section 628.28 and of Chapter 628, Iowa Code.

 

34.         No Agricultural Use. Mortgagor warrants that the Premises is not
used for agricultural purposes as defined in Iowa Code Section 535.13 and is not
agricultural land as defined in Iowa Code Section 9H. 1. Mortgagor further
warrants the Premises is not a one-family or two-family dwelling. Mortgagor
hereby waives and renounces all homestead and similar exemption rights with
respect to the Mortgaged Property provided for by the Constitution and the laws
of the United States and the State of Iowa.

 

35.         Brokers. Mortgagor further represents and warrants to Mortgagee that
no loan broker as defined in Iowa Code Chapter 535C was involved either directly
or indirectly in connection with the transactions contemplated by the Mortgage.

 

18

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36.         Release. If any of the Mortgaged Property shall be sold, transferred
or otherwise disposed of by any Mortgagor in a transaction permitted by the
Credit Agreement and the Net Cash Proceeds are applied in accordance with the
terms of the Credit Agreement, then Mortgagee, at the request and sole expense
of such Mortgagor, shall execute and deliver to such Mortgagor all releases or
other documents reasonably necessary or desirable for the release of the Liens
created hereby on such Mortgaged Property. Mortgagor shall deliver to Mortgagee,
at least five (5) Business Days prior to the date of the proposed release, a
written request for release identifying the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by Mortgagor stating that such
transaction is in compliance with, and permitted by, the Credit Agreement and
the other Loan Documents.

 

IMPORTANT: READ BEFORE SIGNING. THE TERM OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

 

19

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This Mortgage has been duly executed by Mortgagor as of the date first above
written and is intended to be effective as of such date.

 

 

 

BOOKS ARE FUN, LTD.,

 

an Iowa corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

[SIGNATURE PAGE TO IOWA MORTGAGE]

 

--------------------------------------------------------------------------------

 

STATE OF New York

)

 

 

 

: SS.:

 

 

COUNTY OF Westchester

)

 

On the             day of March, in the year 2007, before me, the undersigned,
personally appeared personally known to me or proved to me on the basis of
satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that s/he executed the same in his/her
capacity, and that by his/her signature on the instrument, the individual, the
person or entity upon behalf of which the individual acted, executed the
instrument.

 

 

 

 

 

 

 

 

Notary Public

[affix stamp and seal]

 

 

 

[SIGNATURE PAGE TO IOWA MORTGAGE]

 

--------------------------------------------------------------------------------

 

TITLE AFFIDAVIT AND GAP INDEMNITY

 

STATE OF                    ,

)

 

)     SS.:

COUNTY OF

)

 

The undersigned,                                                  , in his/her
capacity as                                   , of Books Are Fun, Ltd., an Iowa
corporation (“Books”), intending that Books (and not the undersigned
individually) shall be bound hereby, being duly sworn, deposes and says:

 

(1)          Books is the record owner of three real properties located in
Firfield, Iowa, known, respectively, as and by the street addresses 111 North
Main Street, 123 North Main Street and 1680 Highway 1 (collectively the
“Properties”) which Properties are more particularly identified in the title
commitment bearing Commitment No. 214639 (the “Title Commitment”) issued by
LandAmerica Lawyers Title Insurance Corporation (the “Title Company”). The
undersigned is familiar with the Properties and with the facts set forth herein.

 

(2)          To the best of my knowledge, Books has paid all real estate taxes,
special assessments, water and sewer charges and management fees, if any, with
respect to the Properties which would be delinquent if not paid on or prior to
the date hereof (and to the extent that any of the foregoing has not been paid
by the date hereof, same will be paid within 30 days of the date hereof).

 

(3)          To the best of my knowledge, no labor has been supplied to the
Properties and no materials have been delivered to the Properties that might
become the subject of a labor, mechanic’s or materialmen’s lien on the
Properties, except for labor and/or materials which will be paid for in the
ordinary course of business.

 

(4)          There are no existing tenancies, leases or other occupancy
agreements affecting the Properties.

 

(5)          To the best of my knowledge, there are no judgments, decrees or
orders before any court or judicial officer against Books for the payment of
money and no proceedings before any court or officer of the United States or any
state affecting Books or the Properties which are likely to result in such an
order, judgment or decree except in each case for orders, judgments or decrees
which will be paid in the ordinary course of business by Books after Books
exhausts or waives any and all rights it may have to appeal the same.

 

[[2683796]]

 

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(6)          In order to effectuate a New York-style closing, Books agrees, with
respect to the Properties, that it will not in any way encumber the Properties
from the date of the Commitment forward to the date that the Mortgage, Security
Agreement, Assignment of Leases and Rents, and Fixture Filing (the “Mortgage”)
to be insured pursuant to the Title Commitment and to be dated as of the date of
the closing (“Closing”) under the “Credit Agreement” (as defined in the
Mortgage), which Mortgage was made by Books in favor of JPMorgan Chase Bank,
N.A. (“JPMorgan”), acting as Administrative Agent, is recorded, and Books hereby
agrees to indemnify and hold the Title Company harmless from any loss, cost,
claim or damage that the Title Company may sustain or incur by reason of any
encumbrance of the Properties by Books from this date to the date the Mortgage
is recorded against the Properties.

 

(7)          This Affidavit is made for the purpose of inducing the Title
Company to issue, pursuant to the Title Commitment, a lender’s policy of title
insurance with respect to the Mortgage in connection with the Closing.

 

(8)          Books hereby indemnifies and agrees to hold the Title Company
harmless from and against any damages or expenses, including reasonable
attorney’s fees sustained by the Title Company as a result of the falsity of any
statement contained herein.

 

 

 

 

Name:

 

in his/her official capacity as

 

Vice President and Treasurer of

 

Books Are Fun, Ltd. (not intending

 

to be personally liable hereunder).

 

Sworn to before me this

        day of         , 2007.

 

 

 

Notary Public

 

 

--------------------------------------------------------------------------------

 

Schedule A

 

Description of the Land

 

Parcel 1:

 

The North Forty-Four (44) feet of Lots Three (3) and Four (4) in Block Eight
(8) of the Old Plat to the City of Fairfield, Jefferson County, Iowa, and a
strip of land which is part of the former right of way of Briggs and Main
Streets adjacent to the North 44 feet of Lots Three (3) and Four (4) in Block
Eight (8), Old Plat to the City of Fairfield, Jefferson County, Iowa, described
as follows:

 

Beginning at the Northeast Corner of Lot 3, Block 8, Old Plat; thence West 59.9
feet to the Point of Beginning; thence North 1.4 feet; thence West 72.4 feet;
thence South 45.4 feet; thence East .3 feet; thence North 44 feet to the
Northwest Corner of Lot 4, Block 8, Old Plat; thence East 72.1 feet to the Place
of Beginning, situated in Jefferson County, Iowa.

 

Parcel 2:

 

The West Two-Thirds (2/3) of Lot Five (5), Block Eight (8) of Old Plat of the
City of Fairfield, Jefferson County, Iowa.

 

Parcel 3:

 

Auditor’s designated parcel “A” of the East Half of the Southeast Quarter of
Section 2, Township 72 North, Range 10 West of the Fifth Principal Meridian in
Jefferson County, Iowa, more particularly described as follows:

 

Commence at the Southeast Corner of said Section 2; thence run North 00 degrees
42 minutes 22 seconds East along the East line of the Southeast Quarter of said
Section 2 for 767.01 feet; thence run North 90 degrees 00 minutes 00 seconds
West for 128.65 feet to the Westerly right-of-way line of Iowa Highway No. 1 and
the Point of Beginning; thence continue North 90 degrees 00 minutes 00 seconds
West for 200.00 feet; thence run South 00 degrees 00 minutes 00 seconds West for
65.00 feet; thence run South 90 degrees 00 minutes 00 seconds West for 839.03
feet; thence run North 00 degrees 00 minutes 00 seconds East for 1038.30 feet;
thence run South 90 degrees 00 minutes 00 seconds East for 1036.12 feet to the
Westerly right-of-way line of Iowa Highway No. 1; thence run South 10 degrees 28
minutes 28 seconds East along said right-of-way line for 132.68 feet; thence run
South 01 degrees 47 minutes 25 seconds West along said right-of-way line for
299.60 feet to the beginning of a tangent circular curve; thence run Southerly
for 543.51 feet along an arc of a curve concave Easterly with a radius of 28,770
feet and a chord of 543.50 feet bearing South 01 degrees 14 minutes 57 seconds
West to the Point of Beginning.

 

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EXHIBIT H-1

 

[FORM OF]

CRAVATH, SWAINE & MOORE LLP

 

 

 

 

March 2, 2007

 

RDA Holding Co.
Credit Agreement dated as of March 2, 2007

 

Ladies and Gentlemen:

 

We have acted as special New York counsel to RDA Holding Co., a Delaware
corporation (“Holdings”), in connection with the Credit Agreement dated as of
the date hereof (the “Credit Agreement”), among Holdings, Doctor Acquisition
Co., a Delaware corporation (to be merged with and into Reader’s Digest (as
defined below), the “Borrower”), The Reader’s Digest Association, Inc., a
Delaware corporation (“Reader’s Digest”), RD German Holdings GmbH, a company
organized under the laws of Germany (the “German Borrower”), the lending
institutions party thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as
administrative agent for the Lenders (the “Administrative Agent”), Citicorp
North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
co-syndication agents for the Lenders (the “Co-Syndication Agents”), and The
Royal Bank of Scotland PLC, as documentation agent for the Lenders (the
“Documentation Agent”). This opinion is being delivered to you pursuant to
Section 4.01(a)(v)(u) of the Credit Agreement. Capitalized terms used but not
defined herein have the meanings assigned to them in the Credit Agreement.

 

In that connection, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of such documents, corporate records and other
instruments as we have deemed necessary or appropriate for purposes of this
opinion, including:

 

(i)        the Credit Agreement,

 

(ii)       the Guarantee and Collateral Agreement dated as of the date hereof
(the “Security Agreement”), made by Holdings, the Borrower, Reader’s Digest and
the entities listed on Schedule I hereto (together with the German

 

--------------------------------------------------------------------------------

 

Borrower, each a “Loan Party” and collectively, the “Loan Parties”), in favor of
the Administrative Agent,

 

(iii)     the Mortgages identified on Schedule II hereto,

 

(iv)     the agreements identified on Schedule III hereto (collectively, the
“Specified Agreements”),

 

(v)      the UCC-1 financing statement listed on Schedule IV hereto, together
with all schedules and exhibits to such financing statement, to be filed in the
Office of the Secretary of State of the State of New York (the “New York
Filing Office”) (the “New York Financing Statement”),

 

(vi)     the Certificate of Incorporation of Direct Holdings Libraries Inc., a
corporation organized under the laws of the State of New York (the “New York
Loan Party”), as amended,

 

(vii)    the By laws of the New York Loan Party,

 

(viii)   resolutions adopted by the Board of Directors of the New York Loan
Party on March 2, 2007, and

 

(ix)      a certificate dated as of the date hereof, from officers of each of
the Loan Parties (the “Officer’s Certificate”), attached as Exhibit A hereto.

 

The documents described in clauses (i), (ii) and (iii) of the immediately
preceding sentence are sometimes referred to herein as the “Agreements”, and the
documents described in clauses (ii) and (iii) are sometimes referred to herein
as the “Collateral Agreements”. We have also relied, with respect to certain
factual matters, on the representations and warranties of each Loan Party
contained in the Agreements and have assumed compliance by each Loan Party with
the terms of the Agreements.

 

In rendering our opinion, we have assumed (a) the genuineness of all signatures,
(b) the due existence of each Loan Party not organized under the laws of the
State of New York (each, a “Non-New York Loan Party”), (c) that each Non-New
York Loan Party has all necessary power, authority and legal right to execute
and deliver the Agreements to which it is a party and to perform its obligations
thereunder, (d) the due authorization, execution and delivery of the Agreements
by all parties thereto other than the New York Loan Party, (e) the authenticity
of all documents submitted to us as originals, (f) the conformity to original
documents of all documents submitted to us as copies, (g) that the choice of New
York law contained in the Agreements is legal and valid under the laws of
Germany and that insofar as any obligation under any Agreement is to be
performed in, or by a party organized under the laws of, any jurisdiction
outside the State of New York, its performance will not be illegal or
ineffective in any jurisdiction by virtue of the law of that jurisdiction and
(h) that the First Supplemental Indenture dated as of February 8, 2007, among
The Reader’s Digest Association, Inc. and The Bank of New York, as successor
trustee, to the Indenture dated as of March 3, 2004,

 

2

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between The Reader’s Digest Association, Inc. and The Bank of New York, as
successor trustee, is effective and has become operative in accordance with the
terms thereof.

 

Based on the foregoing and subject to the qualifications hereinafter set forth,
we are of opinion as follows:

 

1.   Based solely on a certificate from the Secretary of State of the State of
New York, the New York Loan Party is a subsisting corporation under the laws of
the State of New York. The New York Loan Party has all necessary corporate power
and authority to execute and deliver the Agreements to which it is a party and
to perform its obligations thereunder.

 

2.   (a) The execution and delivery by the New York Loan Party of the Agreements
to which it is a party, the performance by the New York Loan Party of its
obligations thereunder and the grant by the New York Loan Party of security
interests pursuant to the Collateral Agreements to which it is a party (i) have
been duly authorized by all requisite corporate action on the part of the New
York Loan Party and (ii) do not violate the Certificate of Incorporation or
By-laws of the New York Loan Party.

 

(b) The execution and delivery by each Loan Party of the Agreements to which it
is a party, the performance by each Loan Party of its obligations thereunder and
the grant by each Loan Party of security interests pursuant to the Collateral
Agreements to which it is a party (i) do not violate any law, rule or regulation
of the United States of America or the State of New York and (ii) do not result
in a breach of or constitute a default under the express terms and conditions of
the Specified Agreements. Our opinion in clause (ii) of the preceding sentence
relating to the Specified Agreements does not extend to compliance with any
financial ratio or any limitation in any contractual restriction expressed as a
dollar amount (or an amount expressed in another currency) or to performance
under any contractual restriction in the Agreements to the extent it restricts
actions required under the Specified Agreements.

 

3.   The Agreements to which the New York Loan Party is a party have each been
duly executed and delivered by the New York Loan Party. To the extent governed
by New York law, each Agreement constitutes a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against such Loan Party
in accordance with its terms, subject in each case to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws relating to or affecting creditors’ rights generally from time to time in
effect and to general principles of equity (including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing),
regardless of whether considered in a proceeding in equity or at law. The
foregoing opinion is subject to the following qualifications: (i) certain
provisions of the Collateral Agreements are or may be unenforceable in whole or
part under the laws of the State of New York, but the inclusion of such
provisions does not affect the validity of the Collateral Agreements or the
liens and security interests purported to be created by the Collateral
Agreements, and the Collateral Agreements contain adequate provisions for the
practical realization of the principal rights and benefits intended to be
afforded thereby, (ii) insofar as provisions contained in the

 

3

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Agreements provide for indemnification or limitations on liability, the
enforceability thereof may be limited by public policy considerations, (iii) the
availability of a decree for specific performance or an injunction is subject to
the discretion of the court requested to issue any such decree or injunction and
(iv) we express no opinion as to the effect of the laws of any jurisdiction
other than the State of New York where any Lender may be located or where
enforcement of the Agreements may be sought that limit the rates of interest
legally chargeable or collectible.

 

4.   No authorization, approval or other action by, and no notice to, consent
of, order of or filing with, any United States Federal or New York State
governmental authority is required to be made or obtained by any Loan Party in
connection with the execution, delivery and performance by any Loan Party of the
Agreements to which it is a party or the grant by each Loan Party of the
security interests under the Collateral Agreements to which it is a party, other
than (i) such reports to United States governmental authorities regarding
international capital and foreign currency transactions as may be required
pursuant to 31 C.F.R. Part 128, (ii) those that have been made or obtained and
are in full force and effect or as to which the failure to be made or obtained
or to be in full force and effect should not result, individually or in the
aggregate, in a material adverse effect on Holdings and its Subsidiaries, taken
as a whole, (iii) such registrations, filings and approvals under Federal or
state laws as may be necessary in connection with the exercise of remedies or
sale of collateral or the granting of additional security interests or
guarantees pursuant to the Agreements, (iv) such registrations, filings or
approvals that are required in order to perfect or record security interests
granted under the Agreements and (v) such registrations, filings and approvals
that may be required because of the legal or regulatory status of any Lender or
because of any other facts specifically pertaining to any Lender.

 

5.   Assuming that the Borrower and the German Borrower comply with the
provisions of the Credit Agreement relating to the use of proceeds of the Loans,
the making of the Loans under the Credit Agreement on the date hereof does not
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System.

 

6.   Based solely on the Officer’s Certificate, none of the Loan Parties is
required to register as an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended.

 

7.   The provisions of the Security Agreement are sufficient to create in favor
of the Administrative Agent for the benefit of the Secured Parties a security
interest in all right, title and interest of each Loan Party party thereto in
such of the Collateral (as defined therein) as constitutes “accounts”, “chattel
paper”, “deposit accounts” , “documents”, “equipment”, “general intangibles”,
“instruments”, “inventory”, “investment property” and “letter-of-credit rights”
within the meaning of the Uniform Commercial Code of the State of New York as in
effect on the date hereof (the “New York UCC”) (such of the Collateral being
hereinafter referred to as the “Specified UCC Collateral” and the Specified UCC
Collateral other than any Collateral that constitutes “deposit accounts”,
“letter-of-credit rights” or “fixtures” (as defined in Section 9-102 of the New
York UCC) being hereinafter referred to as the “UCC Filing Collateral”), to the

 

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extent that the creation of security interests in the Specified UCC Collateral
is governed by the New York UCC.

 

8.   The New York Financing Statement is in proper form for filing in the State
of New York. Upon the filing and proper indexing of the New York Financing
Statement in the New York Filing Office, describing the UCC Filing Collateral,
the security interest granted to the Administrative Agent in the UCC Filing
Collateral described in the New York Financing Statement will be perfected, to
the extent perfection is governed by the New York UCC and may be accomplished by
the filing in the State of New York of financing statements under the New York
UCC.

 

The opinion expressed in this paragraph 8 is based on the assumption that all
filings and recordings necessary to maintain the effectiveness of the New York
Financing Statement will be made, including without limitation (i) continuation
statements and (ii) such other statements as may be required by (x) any change
in name, identity or corporate structure of the New York Loan Party or the
Administrative Agent, or (y) any change in the location of the New York Loan
Party.

 

9.   Upon delivery to and the continued possession by the Administrative Agent
for the benefit of the Secured Parties, in each case in the State of New York,
of all certificates evidencing the Pledged Equity (as defined in the Security
Agreement) in registered form and described in Schedule 2 attached to the
Security Agreement and pledged on the date hereof under the Security Agreement
that constitute certificated securities within the meaning of Article 8 of the
New York UCC (the “Pledged Certificates”), issued or endorsed in the name of the
Administrative Agent or in blank or together with stock powers properly executed
in the name of the Administrative Agent or in blank with respect thereto, the
security interest in favor of the Administrative Agent for the benefit of the
Secured Parties in such Pledged Certificates will be perfected, which security
interest in such Pledged Certificates will be prior to any security interest,
lien, charge or encumbrance that must be perfected by possession or filing under
the New York UCC, to the extent that the creation and perfection of security
interests in such Pledged Certificates is governed by the New York UCC.

 

The opinion expressed in this paragraph 9 is based on the assumption that the
Administrative Agent has obtained control (for purposes of Article 9 of the New
York UCC) of, and the Secured Parties have acquired their security interest in,
the Pledged Certificates for value. For purposes of the foregoing sentence, the
term “value” shall have the meaning given to such term in the New York UCC.

 

10. Our opinions expressed in paragraphs 7, 8 and 9 are further qualified as
follows:

 

(a)       we express no opinion as to (i) rights in or title to the Pledged
Certificates or any Collateral held by any Loan Party or (ii) the completeness
or accuracy of the description in such documents of any Collateral;

 

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(b)      we express no opinion as to the creation or perfection of any security
interests (i) in any item of Collateral other than (as to creation and
perfection) the Pledged Certificates, and (as to creation and, solely with
respect to the UCC Filing Collateral described in the New York Financing
Statement, perfection) the Specified UCC Collateral, (ii) in any item of
Collateral that is expressly excluded from the application of the New York UCC
pursuant to Section 9-109 thereof or (iii) in any item of Collateral that is
subject to (x) a statute or treaty of the United States that provides for a
national or international registration or a national or international
certificate of title for the perfection of a security interest therein or that
specifies a place of filing different from that specified in the New York UCC
for filing to perfect such security interest or (y) a certificate of title
statute;

 

(c)       we express no opinion as to the perfection of any security interest in
any “proceeds” (as such term is defined in the New York UCC) and note that the
creation or perfection of any such interest is limited to the extent set forth
in Section 9-315 of the New York UCC;

 

(d)      except as specifically set forth in paragraph 9, we express no opinion
as to the priority of any security interest created under the Agreements, and we
express no opinion in paragraph 9 as to the relative priority of the security
interest in the Pledged Certificates as against (i) any claim or lien in favor
of the United States of America or any agency or instrumentality thereof
(including, without limitation, Federal tax liens and liens under Title IV of
the Employee Retirement Income Security Act of 1974, as amended), (ii) the claim
of a lien creditor to the extent set forth in Section 9-317 or 9-323 of the New
York UCC, (iii) another secured party with a perfected security interest in
other property of any Loan Party to the extent any item of Collateral
constitutes proceeds of such other creditor’s property to the extent set forth
in Section 9-322 of the New York UCC or (iv) in the case of certificated
securities, negotiable documents or instruments (as defined in
Section 9-102(a)(47) of the New York UCC), another secured party with a security
interest perfected without filing or the taking of possession to the extent set
forth in Section 9-312(e) of the New York UCC;

 

(e)       in the case of property that becomes Collateral after the date hereof,
Section 552 of Title 11 of the United States Code (the “Bankruptcy Code”) limits
the extent to which property acquired by a debtor after the commencement of a
case under the Bankruptcy Code may be subject to a security interest arising
from a security agreement entered into by the debtor before the commencement of
such case;

 

(f)       we express no opinion as to the validity or enforceability of any
security interest in goods (as defined in the New York UCC) that have been
bought by a buyer in the ordinary course of business (as defined in
Section 1-201 of the New York UCC);

 

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(g)      we express no opinion as to perfection of any security interest in
“deposit accounts”, “letter of credit rights” or “fixtures”;

 

(h)      we express no opinion regarding any copyrights, patents, trademarks,
service marks or other intellectual property, the proceeds thereof, or money due
with respect to the lease, license or use thereof except to the extent Article 9
of the New York UCC may be applicable to the foregoing, and we express no
opinion as to the effect of any Federal laws relating to copyrights, patents,
trademarks, service marks or other intellectual property on the opinions
expressed herein;

 

(i)        we express no opinion as to security interests in any item of
collateral subject to any restriction on or prohibition against assignment or
transfer contained in or otherwise applicable to such item of collateral or any
contract, agreement, license, permit, security, instrument or document
constituting, evidencing or relating to such item, except to the extent that any
such restriction or prohibition is rendered ineffective pursuant to any of
Sections 9-406 through 9-409, inclusive, of the New York UCC. We note that even
though the New York UCC may render such a restriction or prohibition ineffective
for purposes of creation or perfection of a security interest, nonetheless, in
many cases, such a security interest may represent only limited rights in the
related items of collateral and be subject to various restrictions (including
restrictions on rights of use, assignment and enforcement);

 

(j)        we express no opinion as to any Collateral constituting claims
against any government or governmental agency, including any Collateral that is
subject to the Federal Assignment of Claims Act; and

 

(k)       we note that certain issuers of the Pledged Certificates are organized
under the laws of jurisdictions outside the United States of America, and,
accordingly, it may be necessary to comply with the laws of such jurisdictions
properly to create, perfect, maintain, enforce or preserve the priority of a
security interest in any such Pledged Certificates and we express no opinion
with respect to whether or to what extent the New York UCC would govern the
creation, perfection or priority of a security interest in any such Pledged
Certificates or the effect, if any, of the laws of such jurisdictions on the
rights of a secured party in such Pledged Certificates.

 

We express no opinion herein as to any provision in any Agreement that
(a) relates to the subject matter jurisdiction of any Federal court of the
United States of America, or any Federal appellate court, to adjudicate any
controversy related to the Agreements (such as the provision found in
Section 10.16(b) of the Credit Agreement), (b) contains a waiver of an
inconvenient forum (such as the provision found in Section 10.16(b) of the
Credit Agreement), (c) relates to a right of setoff in respect of purchases of
interests in loans (such as the provision found in Section 2.13 of the Credit
Agreement) or with respect to parties that may not hold mutual debts (such as
the provision found in Section 10.09 of the Credit Agreement), (d) provides for
liquidated

 

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damages or penalty interest, (e) relates to the waiver of rights to jury trial
(such as the provision found in Section 10.17 of the Credit Agreement),
(f) relates to governing law to the extent that it purports to affect the choice
of law governing perfection and the effect of perfection and non-perfection of
security interests or (g) relates to any arrangement or similar fee payable to
any arranger (including the Arrangers and the Administrative Agent) of the
commitments or loans under the Credit Agreement or any fee not set forth in the
Agreements. We also express no opinion as to (i) the enforceability of the
provisions of any Agreement to the extent that such provisions constitute a
waiver of illegality as a defense to performance of contract obligations or any
other defense to performance which cannot, as a matter of law, be effectively
waived, (ii) whether a state court outside the State of New York or a Federal
court of the United States would give effect to the choice of New York law
provided for in the Agreements or (iii) Section 8.06 or 10.24 of the Credit
Agreement or Section 8.18 or 8.19 of the Security Agreement.

 

Courts in the United States have not customarily rendered judgments for money
damages denominated in any currency other than United States dollars.
Section 27(b) of the Judiciary Law of the State of New York provides, however,
that a judgment or decree in an action based upon an obligation denominated in a
currency other than United States dollars shall be rendered in the foreign
currency of the underlying obligation and converted into United States dollars
at the rate of exchange prevailing on the date of the entry of the judgment or
decree. We express no opinion as to whether a Federal court would render a
judgment other than in United States dollars.

 

We note that the Specified Agreements purport to restrict assignment by a party
without the consent of the other parties thereto and we express no view in
paragraph 2 above as to the granting of security interests in the rights of Loan
Parties under the Specified Agreements or the exercise of the rights or remedies
of the Administrative Agent under the Collateral Agreements with respect to the
Specified Agreements.

 

We understand that you are satisfying yourselves as to the status under
Section 548 of the Bankruptcy Code and applicable state fraudulent conveyance
laws of the obligations of each Loan Party and the security interests of the
Administrative Agent and the Lenders under the Agreements, and we express no
opinion thereon.

 

We are admitted to practice only in the State of New York, and we express no
opinion as to matters governed by any laws other than the laws of the State of
New York and the Federal law of the United States of America. In particular, we
do not purport to pass on any matter governed by the laws of Germany. Our
opinions relating to security interests are limited to Article 8 and Article 9
of the New York UCC and do not address (i) laws of jurisdictions other than New
York, and laws of New York except for Article 8 or Article 9, as the case may
be, (ii) collateral of a type not subject to Article 8 or Article 9 of the New
York UCC, (iii) what law governs perfection and the effect of perfection or
non-perfection of such security interests or (iv) the effect, if any, of laws of
jurisdictions other than New York on the creation, perfection or priority of
such security interests.

 

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This opinion is rendered only to the Administrative Agent, the Co-Syndication
Agents, the Documentation Agent and the Lenders under the Credit Agreement and
is solely for their benefit in connection with the above transactions. In
addition, we hereby consent to reliance on this opinion by a permitted assign of
a Lender’s interest in the Credit Agreement, provided that such permitted assign
becomes a Lender on or prior to the 30th day after the date of this opinion. We
are opining as to the matters herein only as of the date hereof, and, while you
are authorized to deliver copies of this opinion to such permitted assigns and
they are permitted to rely on this opinion, the rights to do so do not imply any
obligation on our part to update this opinion. This opinion may not be relied
upon by any other person or for any other purpose or used, circulated, quoted or
otherwise referred to for any other purpose.

 

 

Very truly yours,

 

JPMorgan Chase Bank, N.A.,

as Administrative Agent,

Citicorp North America, Inc. and

Merrill Lynch, Pierce, Fenner & Smith Incorporated,

as Co-Syndication Agents,

The Royal Bank of Scotland PLC,

as Documentation Agent,

under the Credit Agreement referred

to above, and the Lenders party

to the Credit Agreement

 

In care of:

JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, New York 10017

 

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EXHIBIT H-2

 

[FORM OF]

RICHARDS, LAYTON & FINGER
A PROFESSIONAL ASSOCIATION
ONE RODNEY SQUARE
920 NORTH KING STREET
WILMINGTON, DELAWARE 19801
(302) 651-7700
FAX (302) 651-7701
WWW.RLF.COM

 

March 2, 2007

 

To Each of the Persons Listed
on Schedule A Attached Hereto

 

Re:                               The Reader’s Digest Association, Inc.

 

Ladies and Gentlemen:

 

We have acted as special Delaware counsel for Ripplewood Holdings L.L.C., a
Delaware limited liability company, in connection with (i) the Credit Agreement,
dated as of March 2, 2007 (the “Credit Agreement”), among Doctor Acquisition
Co., a Delaware corporation (“Acquisition Co.”), RDA Holding Co., a Delaware
corporation (“Holding Co.”), The Reader’s Digest Association, Inc., a Delaware
corporation (“Reader’s Digest”), the Overseas Borrowers (as defined therein)
from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative
agent (the “Administrative Agent”), the lenders from time to time party thereto,
Citicorp North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as co-syndication agents, and The Royal Bank of Scotland plc, as
documentation agent; and (ii) the matters set forth herein relating to each of
the Delaware corporations listed on Schedule B attached hereto (each, a
“Delaware Corporation” and collectively, the “Delaware Corporations”) and each
of the Delaware limited liability companies listed on Schedule C attached hereto
(each, a “Delaware LLC” and collectively, the “Delaware LLCs”). At your request,
this opinion is being furnished to you.

 

For purposes of giving the opinions hereinafter set forth, our examination of
documents has been limited to the examination of executed or conformed
counterparts, or copies otherwise proved to our satisfaction, of the following:

 

(a)                                  The Certificate of Incorporation of Holding
Co., dated October 24, 2006, as filed in the office of the Secretary of State of
the State of Delaware (the “Secretary of State”) on October 24, 2006, as amended
by the Certificate of Amendment of Certificate of Incorporation of Holding Co.,
dated January 5, 2007, as filed in the office of the Secretary of State on
January 5, 2007, as further amended by the Certificate of Amendment of
Certificate of Incorporation of Holding Co., dated February 9, 2007, as filed in
the office of the Secretary of State on February 9, 2007 (as so amended, the
“Holding Co. Certificate of Incorporation”);

 

(b)                                 Each of the documents listed on Schedule D
attached hereto (collectively, the “Subsidiary Certificates of Incorporation”);

 

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(c)                                  The bylaws of each of the Delaware
Corporations, as amended through the date hereof (each, “Bylaws” and
collectively, the “Delaware Corporations Bylaws”);

 

(d)                                 Resolutions adopted by the unanimous written
consent of the board of directors of each of the Delaware Corporations, each
dated March 2, 2007;

 

(e)                                  Each of the documents listed on Schedule E
attached hereto (collectively, the “LLC Certificates”);

 

(f)                                    Each of the documents listed on Schedule
F attached hereto (each, an “LLC Agreement” and collectively, the “LLC
Agreements”);

 

(g)                                 Resolutions adopted by the written consent
of the sole member of each of the Delaware LLCs, each dated March 2, 2007;

 

(h)                                 A certificate of the secretary of each of
the Delaware Corporations and the Delaware LLCs (collectively, the “Delaware
Companies”), dated March 2, 2007, as to certain matters;

 

(i)                                     The Credit Agreement;

 

(j)                                     The Guarantee and Collateral Agreement,
dated as of March 2, 2007 (the “Collateral Agreement”), made by each of the
Delaware Companies and certain other grantors identified therein in favor of the
Administrative Agent;

 

(k)                                  The financing statements on form UCC-1,
naming each of the Delaware Companies as a debtor and the Administrative Agent
as secured party, each in the form attached hereto and marked as Exhibit “A”
(collectively, the “Financing Statements”), to be filed with the Secretary of
State (Uniform Commercial Code Section) (the “Division”); and

 

(1)                                  A Certificate of Good Standing for each of
the Delaware Companies, each dated March 2, 2007, obtained from the Secretary of
State.

 

Initially capitalized terms used herein and not otherwise defined are used as
defined in the Collateral Agreement. The Holding Co. Certificate of
Incorporation and the Subsidiary Certificates of Incorporation are hereinafter
referred to each, as a “Certificate of Incorporation” and collectively, as the
“Certificates of Incorporation.” The Certificates of Incorporation and the LLC
Certificates are hereinafter referred to collectively as the “Certificates.” The
Credit Agreement and the Collateral Agreement are hereinafter referred to
jointly as the “Transaction Documents.”

 

For purposes of this opinion, we have not reviewed any documents other than the
documents listed in paragraphs (a) through (1) above. In particular, we have not
reviewed any document (other than the documents listed in paragraphs (a) through
(1) above) that is referred to

 

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in or incorporated by reference into any document reviewed by us. We have
assumed that there exists no provision in any document that we have not reviewed
that is inconsistent with the opinions stated herein. We have conducted no
independent factual investigation of our own but rather have relied solely upon
the foregoing documents, the statements and information set forth therein and
the additional matters recited or assumed herein, all of which we have assumed
to be true, complete and accurate in all material respects.

 

With respect to all documents examined by us, we have assumed that (i) all
signatures on documents examined by us are genuine, (ii) all documents submitted
to us as originals are authentic, and (iii) all documents submitted to us as
copies conform with the original copies of those documents.

 

For purposes of this opinion, we have assumed (i) that each of the LLC
Agreements constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the admission
of members to, and the creation, operation, management and termination of, the
relevant Delaware LLC, and that each of the LLC Agreements, the Certificates and
the Delaware Corporations Bylaws are in full force and effect, have not been
amended, and, except as may be contemplated by the M&A Transactions (as defined
below), no amendments of such documents are pending or have been proposed,
(ii) that any amendment or restatement of any document reviewed by us has been
accomplished in accordance with, and was permitted by, the relevant provisions
of said document prior to its amendment or restatement from time to time,
(iii) that at all times since its formation, WAPLA (as defined in Schedule E
attached hereto) has had at least one member, (iv) that except for the M&A
Transactions, there are no proceedings pending for (A) the merger,
consolidation, conversion, dissolution, liquidation or termination of any of the
Delaware Companies, or (B) any of the Delaware Companies’ transfer to or
domestication in any other jurisdiction, (v) except to the extent provided in
paragraphs 1 and 6 below, the due organization, formation or creation, as the
case may be, and valid existence in good standing of each party to the documents
examined by us under the laws of the jurisdiction governing its organization,
formation or creation, (vi) the legal capacity of natural persons who are
signatories to the documents examined by us, (vii) except to the extent provided
in paragraphs 2 and 7 below, that each of the parties to the documents examined
by us has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (viii) except to the extent provided in
paragraphs 3 and 8 below, the due authorization, execution and delivery by all
parties thereto of all documents examined by us, (ix) that each of the documents
examined by us constitutes a valid and binding obligation of the parties
thereto, and is enforceable against the parties thereto, in accordance with its
terms, (x) that all of the members of the board of directors of each of the
Delaware Corporations meet any applicable qualifications contained in the Bylaws
of such Delaware Corporation, (xi) that the restrictions on “business
combinations” established in Section 203(a) of the General Corporation Law of
the State of Delaware (8 Del. C. § 101, et seq.) (the “DGCL”) are not applicable
to the transactions contemplated by the Transaction Documents, (xii) that the
execution, delivery and performance by each of the Delaware Corporations of each
of the Transaction Documents to which it is a party is necessary and convenient
to the conduct,

 

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promotion or attainment of the business of each such Delaware Corporation,
(xiii) that each of the Delaware Companies (other than the Excluded Entities (as
defined in Schedule D attached hereto)) derives no income from or connected with
sources within the State of Delaware and has no assets, activities (other than
the maintenance of a registered office and registered agent in the State of
Delaware and the filing of documents with the Secretary of State) or employees
in the State of Delaware, (xiv) that each of the Excluded Entities (other than
QSP (as defined in Schedule D attached hereto)) has no assets or employees in
the State of Delaware, and (xv) that there have been obtained such
authorizations, consents, approvals and orders as are customarily required in
the conduct of the business of each of the Delaware Companies. We have not
participated in the preparation of any offering material relating to any of the
Delaware Companies and assume no responsibility for the contents of any such
material. In addition, we assume no responsibility for the filing of the
Financing Statements (or any continuation statements or amendments with respect
thereto) with the Division or any other governmental office or agency.

 

This opinion is limited to the laws of the State of Delaware (excluding the
insurance, securities and blue sky laws of the State of Delaware), and we have
not considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.

 

Based upon the foregoing, and upon our examination of such questions of law and
statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:

 

1.                                       Each of the Delaware Corporations has
been duly incorporated and is validly existing in good standing as a corporation
under the DGCL.

 

2.                                       Each of the Delaware Corporations has
all necessary corporate power and authority under the DGCL and under its
respective Certificate of Incorporation and Bylaws to execute and deliver, and
to perform its obligations under, the Transaction Documents to which it is a
party.

 

3.                                       The execution and delivery by each of
the Delaware Corporations of the Transaction Documents to which it is a party,
and the performance by each of the Delaware Corporations of its obligations
thereunder, have been duly authorized by all necessary corporate action on the
part of each of the Delaware Corporations under the DGCL and under its
respective Certificate of Incorporation and Bylaws.

 

4.                                       The execution, delivery and performance
by each of the Delaware Corporations of the Transaction Documents to which it is
a party do not violate (i) its respective Certificate of Incorporation or
Bylaws, or (ii) the DGCL.

 

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5.                                       No authorization, consent, approval or
order of any Delaware court or any Delaware governmental or administrative body
is required to be obtained by any of the Delaware Corporations solely as a
result of the execution and delivery by any such Delaware Corporation of the
Transaction Documents to which it is a party, or the performance by any such
Delaware Corporation of its obligations thereunder.

 

6.                                       Each of the Delaware LLCs has been duly
formed and is validly existing in good standing as a limited liability company
under the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.)
(the “Act”).

 

7.                                       Each of the Delaware LLCs has all
necessary limited liability company power and authority under the Act and under
its respective LLC Agreement to execute and deliver, and to perform its
obligations under, the Collateral Agreement.

 

8.                                       The execution and delivery by each of
the Delaware LLCs of the Collateral Agreement, and the performance by each of
the Delaware LLCs of its obligations thereunder, have been duly authorized by
all necessary limited liability company action on the part of each of the
Delaware LLCs under the Act and under its respective LLC Agreement.

 

9.                                       The execution, delivery and performance
by each of the Delaware LLCs of the Collateral Agreement do not violate (i) its
respective LLC Agreement, or (ii) the Act.

 

10.                                 No authorization, consent, approval or order
of any Delaware court or any Delaware governmental or administrative body is
required to be obtained by any of the Delaware LLCs solely as a result of the
execution and delivery by any such Delaware LLC of the Collateral Agreement, or
the performance by any such Delaware LLC of its obligations thereunder.

 

11.                                 Each of the Financing Statements is in an
appropriate form for filing with the Division.

 

12.                                 Insofar as Article 9 of the Uniform
Commercial Code as in effect in the State of Delaware on the date hereof (the
“Delaware UCC”) is applicable (without regard to conflict of laws principles),
upon the filing of the Financing Statements with the Division, the
Administrative Agent will have a perfected security interest in the Delaware
Companies’ rights in that portion of the Collateral in which a security interest
may be perfected by the filing of a UCC financing statement with the Division
(the “Filing Collateral”) and the proceeds (as defined in Section 9-102(a)(64)
of the Delaware UCC) thereof.

 

The opinions expressed above are subject to the following additional
assumptions, qualifications, limitations and exceptions:

 

A.                                   We have assumed that (i) each of the
Delaware Companies has sufficient rights in the Collateral and has received
sufficient value and consideration in connection with the

 

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security interests granted under the Collateral Agreement for the security
interests of the Administrative Agent to attach, and we express no opinion as to
the nature or extent of any of the Delaware Companies’ rights in, or title to,
any portion of the Collateral, and (ii) the Collateral Agreement reasonably
identifies the Collateral. Accordingly, we have assumed that the security
interests in the Filing Collateral and the proceeds (as defined in Section
9-102(a)(64) of the Delaware UCC) thereof have been duly created and have
attached. In addition, we have assumed that none of the Filing Collateral
consists of a type of collateral described in Section 9-501(a)(1) of the
Delaware UCC. Further, we have assumed that the Delaware Companies have
authorized the filing of the Financing Statements with the Division.

 

B.                                     The opinions set forth in paragraphs 11
and 12 above are limited to Article 9 of the Delaware UCC, and therefore such
opinions do not address (i) laws of jurisdictions other than the State of
Delaware, and of the State of Delaware except for Article 9 of the Delaware UCC,
(ii) collateral of a type not subject to Article 9 of the Delaware UCC, and
(iii) what law governs perfection of the security interests granted in the
collateral covered by this opinion.

 

C.                                     We note that further filings under the
Delaware UCC may be necessary to preserve and maintain (to the extent
established and perfected by the filing of the Financing Statements as described
herein) the perfection of the security interests of the Administrative Agent in
the Filing Collateral, including, without limitation, the following:

 

(i)                                appropriate continuation filings to be made
within the period of six months prior to the expiration of five year anniversary
dates from the date of the original filing of the Financing Statements;

 

(ii)                             filings required with respect to proceeds of
collateral under Section 9-315(d) of the Delaware UCC;

 

(iii)                          filings required within four months of the change
of name, identity or structure made by or with respect to any of the Delaware
Companies, to the extent set forth in Sections 9-507 and 9-508 of the Delaware
UCC;

 

(iv)                         filings required within four months of a change by
any of the Delaware Companies of its location to another jurisdiction, to the
extent set forth in Sections 9-301 and 9-316 of the Delaware UCC; and

 

(v)                            filings required within one year after the
transfer of collateral to a person or entity that becomes a debtor and is
located in another jurisdiction, to the extent set forth in Section 9-316 of the
Delaware UCC.

 

D.                                    We do not express any opinion as to the
perfection of any security interest in any portion of the Collateral in which a
security interest cannot be perfected by the filing of a financing statement
with the Division. In addition, no opinion is expressed herein concerning (i)

 

6

--------------------------------------------------------------------------------

 

any collateral other than the Filing Collateral and the proceeds (as defined in
Section 9-102(a)(64) of the Delaware UCC) thereof, (ii) any portion of the
Filing Collateral that constitutes a “commercial tort claim” (as defined in
Section 9-102(a)(13) of the Delaware UCC), (iii) any consumer transaction, or
(iv) any security interest in goods covered by a certificate of title statute.
Further, we do not express any opinion as to the perfection of any security
interest in (i) Filing Collateral acquired by any of the Delaware Companies
after the date hereof, or (ii) proceeds (as defined in Section 9-102(a)(64) of
the Delaware UCC) of the Filing Collateral, except to the extent that such
proceeds consist of cash proceeds (as defined in Section 9-102(a)(9) of the
Delaware UCC) that are identifiable cash proceeds (as contemplated by Sections
9-315(b) and (d) of the Delaware UCC), subject, however, to the limitations of
Section 9-315 of the Delaware UCC.

 

E.                                      We do not express any opinion as to the
priority of any security interest.

 

F.                                      We call to your attention that under the
Delaware UCC, actions taken by a secured party (e.g., releasing or assigning the
security interest, delivering possession of the collateral to the debtor or
another person and voluntarily subordinating a security interest) may affect the
validity, perfection or priority of a security interest.

 

G.                                     The opinion expressed in paragraph 12
above is subject to the effect of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent conveyance and transfer
and other similar laws relating to or affecting the rights and remedies of
creditors generally, and (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law).

 

H.                                    In rendering the opinions expressed in
paragraphs 11 and 12 above, we have assumed that the word “Copy” imprinted on
the UCC-1 cover page of each of the Financing Statements attached hereto as
Exhibit “A” will be removed prior to the filing of the Financing Statements with
the Division.

 

I.                                         We note that notwithstanding any
covenants to the contrary contained in the Transaction Documents: (i) the
stockholders of any of the Delaware Corporations may dissolve such Delaware
Corporation under Section 275(c) of the DGCL upon the consent of all the
stockholders entitled to vote thereon; (ii) a stockholder owning at least 90% of
the outstanding shares of each class of stock of any of the Delaware
Corporations entitled to vote thereon may effect a merger with such Delaware
Corporation under Section 253 of the DGCL; and (iii) the stockholders of each of
the Delaware Corporations may amend the Bylaws of such Delaware Corporation.

 

J.                                        We understand that (i) pursuant to the
Agreement and Plan of Merger, dated as of November 16, 2006, among Holding Co.
(formerly known as Doctor Acquisition Holding Co.), Acquisition Co. and Reader’s
Digest, Acquisition Co. proposes to merge with and into Reader’s Digest;
(ii) pursuant to the Agreement and Plan of Merger, dated as of January 23, 2007,
WRC (as defined on Schedule D hereto) will be acquired by Holding Co.;
(iii) pursuant to

 

7

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the Stock Acquisition Agreement, dated January 23, 2007, Direct Holdings U.S.
(as defined on Schedule D hereto) will be acquired by Holding Co.; and
(iv) Holding Co. will take additional actions that will ultimately result in
WRC, Direct Holdings U.S. and their respective subsidiaries becoming direct or
indirect subsidiaries of Reader’s Digest (collectively, the “M&A Transactions”),
such M&A Transactions being effective on or about the date hereof but after the
delivery of this opinion. Accordingly, the opinions expressed above are rendered
prior to the effective time of the M&A Transactions.

 

We understand that you will rely as to matters of Delaware law upon this opinion
in connection with the transactions contemplated by the Transaction Documents.
In addition, your successors and assigns may rely as to matters of Delaware law
upon this opinion in connection with the matters set forth herein, subject to
the understanding that the opinions rendered herein are given on the date hereof
and such opinions are rendered only with respect to facts existing on the date
hereof and laws, rules and regulations currently in effect. In connection with
the foregoing, we hereby consent to your and your successors’ and assigns’
relying as to matters of Delaware law upon this opinion. Except as stated above,
without our prior written consent, this opinion may not be furnished or quoted
to, or relied upon by, any other person or entity for any purpose.

 

 

Very truly yours,

 

 

8

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EXHIBIT H-3

 

[FORM OF]

[THE READER’S DIGEST ASSOCIATION, INC.]

CLIFFORD H.R. DUPREE
Vice President, Corporate Secretary
and Associate General Counsel

 

TELEPHONE: (914) 244-5622
FAX: (914) 244-5007
clifford_dupree@rd.com

 

March 2, 2007

 

To

The Lenders and the Agents referred to below

 

c/o JPMorgan Chase Bank, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

I am Associate General Counsel of The Reader’s Digest Association, Inc., a
Delaware corporation (“Reader’s Digest”), and have acted as counsel to the
entities listed on Schedule 1 attached hereto (each, a “Loan Party” and
collectively, the “Loan Parties”) in connection with the preparation, execution
and delivery of (i) the Credit Agreement dated as of the date hereof (the
“Credit Agreement”), among RDA Holding Co., a Delaware corporation (“Holdings”),
Doctor Acquisition Co., a Delaware corporation (the “Borrower”), Reader’s
Digest, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A.,
as administrative agent for the Lenders (the “Administrative Agent”), Citicorp
North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
co-syndication agents for the Lenders (the “Co-Syndication Agents”), and The
Royal Bank of Scotland plc, as documentation agent for the Lenders (the
“Documentation Agent” and, together with the Administrative Agent and the
Co-Syndication Agents, the “Agents”), (ii) the Guarantee and Collateral
Agreement dated as of the date hereof (the “Guarantee and Collateral
Agreement”), made by Holdings, the Borrower, Reader’s Digest and the other Loan
Parties in favor of the Administrative Agent, (iii) the Perfection Certificate
dated as of the date hereof, (vii) the Mortgages identified on Schedule 2
attached hereto (the “Mortgages”), (viii) the [foreign security documents] (the
“Foreign Security Agreement”) and (viii) the other Loan Documents executed in
connection with the above documents. Unless otherwise indicated, capitalized
terms used and not defined in this opinion are used herein as defined in the
Credit Agreement. This opinion is being rendered to you at the request of the
Loan Parties and pursuant to Section 4.01(a)(v)(z) of the Credit Agreement.

 

For the purposes of this opinion, I have reviewed the following documents:

 

(a)                                       the Credit Agreement;

 

(b)                                      the Guarantee and Collateral Agreement;

 

(c)                                       the Perfection Certificate;

 

--------------------------------------------------------------------------------

 

(d)                                      the Mortgages;

 

(e)                                       the Foreign Security Agreement; and

 

(f)                                         such other documents as I have
deemed necessary or appropriate as a basis for the opinions set forth below.

 

The documents listed in clauses (a) - (e) above are referred to herein
collectively as the “Loan Documents”. The document listed in clause (b) above
are referred to herein collectively as the “Collateral Document”.

 

I have examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of the
opinions expressed below. In such examination, I have assumed the genuineness of
all signatures, the authenticity of all documents submitted to me as originals,
the conformity to authentic original documents of all documents submitted to me
as copies and the legal capacity of all individuals executing such documents. As
to questions of fact material to this opinion, which I did not independently
establish or verify, I have, with your consent, relied upon the statements,
certificates and representations of officers and other representatives of the
Loan Parties and on the representations and warranties of each Loan Party
contained in the Loan Documents. In addition, I have obtained and relied upon
such certificates and assurances from public officials, as I have deemed
necessary.

 

I have also assumed the valid authorization, execution, and delivery of each of
the Loan Documents by each party thereto, and I have assumed that each such
party has been duly organized and is validly existing and in good standing under
its jurisdiction of organization, and that each such party has the legal
capacity, power and authority to perform its obligations thereunder, and that
each Loan Document constitutes the valid and binding obligation of all parties
party thereto, enforceable against them in accordance with its terms.

 

I am a member of the Bar of the State of New York, and I have not considered,
and I express no opinion as to, the laws of any jurisdiction other than the laws
of the State of New York, the General Corporation Law of the State of Delaware
and the laws of the United States of America, in each case as in effect on the
date hereof.

 

Based upon the foregoing, and subject to the comments and qualifications set
forth below, it is my opinion that:

 

1.             The execution, delivery and performance of each of the Loan
Documents by the Loan Parties party thereto, the borrowings by Reader’s Digest
under the Credit Agreement and the grant of the security interests in the
Collateral by any Loan Party under the Collateral Document, (a) will not
(i) materially be in conflict with, contravene, result in a breach of or
constitute (alone or with notice or lapse of time or both) a material default
under, or give rise to any right to accelerate or to require the prepayment,
repurchase or redemption

 

2

--------------------------------------------------------------------------------

 

of any obligation under any provisions of any order binding upon any Loan Party
of any Governmental Authority of the State of New York, the State of Delaware
or, to my knowledge, any other state, or the United States of America or any
material agreement, note, deed of trust, license, franchise, permit, agreement,
contract, indenture, mortgage, lease, or other instrument (a “Material
Agreement”) to which any Loan Party is a party or by which it or any of its
property is or may be bound or (ii) result in the creation or imposition of any
Lien upon or with respect to any property or assets now owned or hereafter
acquired by any of the Loan Parties pursuant to any such Material Agreement
(other than any Lien created under the Loan Documents).

 

2.             To the best of my knowledge, there is no action, litigation,
proceeding, or governmental investigation pending or threatened by or against
any Loan Party or against any of its properties or revenues which questions the
validity of any Loan Document or any action taken or to be taken pursuant to any
Loan Document.

 

The opinions expressed above are subject to the following qualifications and
comments:

 

(A)                         In connection with the foregoing, I point out that
certain of the Material Agreements are or may be governed by laws other than the
laws of the State of New York. For purposes of the opinion expressed in
paragraph 1 above with respect to Material Agreements, my opinion is based
solely upon my understanding, or the understanding of lawyers working under my
supervision, of the plain language of such Material Agreements, and I do not
express any opinion as to the validity, binding nature or enforceability of any
such Material Agreement, and I do not assume any responsibility with respect to
the effect on my opinion of any interpretation thereof which may be inconsistent
with such understanding. My opinion also does not extend to compliance by any
Loan Party with any financial ratio or limitation in any Material Agreement
expressed as a dollar amount (or an amount expressed in another currency).

 

(B)                           Except as expressly covered in this opinion, I am
not expressing any opinion as to the effect of compliance by any Secured Party
with any state or federal laws or regulations applicable to the transactions
because of the nature of any of its businesses.

 

This opinion is being furnished only to you and is solely for the benefit of the
addressees. In addition, I hereby consent to reliance on this opinion by a
permitted assign of a Lender’s interest in the Credit Agreement, provided that
such permitted assign becomes a Lender on or prior to the 30th day after the
date of this opinion. I am opining as to the matters herein only as of the date
hereof, and, while you are authorized to deliver copies of this opinion to such

 

3

--------------------------------------------------------------------------------

 

permitted assigns and they are permitted to rely on this opinion, the rights to
do so do not imply any obligation on my part to update this opinion. This
opinion may not to be used, circulated, quoted, relied upon, or otherwise
referred to by any other person or for any other purpose without my prior
written consent.

 

 

Very truly yours,

 

4

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EXHIBIT H-4

 

[FORM OF WRC MEDIA]

 

Karen E. Andrews

 

March 2, 2007

 

To

The Lenders and the Agents referred to below

 

c/o JPMorgan Chase Bank, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

I am General Counsel of WRC Media Inc., a Delaware corporation (“WRC Media”). I
have been asked to give certain opinions regarding the entities listed on
Schedule 1 attached hereto (each, a “Loan Party” and collectively, the “Loan
Parties”) in connection with the preparation, execution and delivery of (1) the
Credit Agreement dated as of the date hereof (the “Credit Agreement”), among RDA
Holding Co., a Delaware corporation (“Holdings”), Doctor Acquisition Co., a
Delaware corporation (“Acquisition Co”), The Reader’s Digest Association, Inc.,
a Delaware corporation (“Reader’s Digest”), the Overseas Borrowers party
thereto, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A.,
as administrative agent for the Lenders (the “Administrative Agent”), Citicorp
North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
co-syndication agents for the Lenders (the “Co-Syndication Agents”), and The
Royal Bank of Scotland plc, as documentation agent for the Lenders (the
“Documentation Agent” and, together with the Administrative Agent and the Co-
Syndication Agents, the “Agents”), (ii) the Guarantee and Collateral Agreement
dated as of the date hereof (the “Guarantee and Collateral Agreement”), made by
Holdings, Acquisition Co, Reader’s Digest and the other Loan Parties in favor of
the Administrative Agent, and (iii) the other Loan Documents executed in
connection with the above documents. Unless otherwise indicated, capitalized
terms used and not defined in this opinion are used herein as defined in the
Credit Agreement. This opinion is being rendered to you at the request of the
Loan Parties and pursuant to Section 4.01(a)(v)(y) of the Credit Agreement.

 

--------------------------------------------------------------------------------

 

For the purposes of this opinion, I have reviewed the following documents:

 

(a)                 the Credit Agreement;

 

(b)                the Guarantee and Collateral Agreement; and

 

(c)                 such other documents as I have deemed necessary or
appropriate as a basis for the opinions set forth below.

 

The documents listed in clauses (a) - (b) above are referred to herein
collectively as the “Loan Documents”. The document listed in clause (b) above
are referred to herein collectively as the “Collateral Document”.

 

I have examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of the
opinions expressed below. In such examination, I have assumed the genuineness of
all signatures, the authenticity of all documents submitted to me as originals,
the conformity to authentic original documents of all documents submitted to me
as copies and the legal capacity of all individuals executing such documents. As
to questions of fact material to this opinion, which I did not independently
establish or verify, I have, with your consent, relied upon the statements,
certificates and representations of officers and other representatives of the
Loan Parties and on the representations and warranties of each Loan Party
contained in the Loan Documents. In addition, I have obtained and relied upon
such certificates and assurances from public officials, as I have deemed
necessary.

 

I have also assumed the valid authorization, execution, and delivery of each of
the Loan Documents by each party thereto and I have assumed that each such party
has been duly organized and is validly existing and in good standing under its
jurisdiction of organization, and that each such party has the legal capacity,
power and authority to perform its obligations thereunder, and that each Loan
Document constitutes the valid and binding obligation of all parties party
thereto, enforceable against them in accordance with its terms.

 

I am a member of the Bar of the State of New York, and I have not considered,
and I express no opinion as to, the laws of any jurisdiction other than the laws
of the State of New York and the laws of the United States of America, in each
case as in effect on the date hereof.

 

Based upon the foregoing, and subject to the comments and qualifications set
forth below, it is my opinion that:

 

2

--------------------------------------------------------------------------------

 

1.                                 The execution, delivery and performance of
each of the Loan Documents by the Loan Parties party thereto and the grant of
the security interests in the Collateral by any Loan Party under the Collateral
Document, (a) will not (i) materially be in conflict with, contravene, result in
a breach of or constitute (alone or with notice or lapse of time or both) a
default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any provisions of
any order binding upon any Loan Party of any Governmental Authority of the State
of New York or, to my knowledge, any other state, or the United States of
America or any material agreement, note, deed of trust, license, franchise,
permit, agreement, contract, indenture, mortgage, lease, or other instrument (a
“Material Agreement”) to which any Loan Party is a party or by which it or any
of its property is or may be bound or (ii) result in the creation or imposition
of any Lien upon or with respect to any property or assets now owned or
hereafter acquired by any of the Loan Parties pursuant to any such Material
Agreement (other than any Lien created under the Loan Documents).

 

2.                                 To the best of my knowledge, there is no
action, litigation, proceeding, or governmental investigation pending or
threatened by or against any Loan Party or against any of its properties or
revenues which questions the validity of any Loan Document or any action taken
or to be taken pursuant to any Loan Document.

 

The opinions expressed above are subject to the following qualifications and
comments:

 

(A)                             In connection with the foregoing, I point out
that certain of the Material Agreements are or may be governed by laws other
than the laws of the State of New York. For purposes of the opinion expressed in
paragraph 1 above with respect to Material Agreements, my opinion is based
solely upon my understanding, or the understanding of lawyers working under my
supervision, of the plain language of such Material Agreements, and I do not
express any opinion as to the validity, binding nature or enforceability of any
such Material Agreement, and I do not assume any responsibility with respect to
the effect on my opinion of any interpretation thereof which may be inconsistent
with such understanding. My opinion also does not extend to compliance by any
Loan Party with any financial ratio or limitation in any Material Agreement
expressed as a dollar amount (or an amount expressed in another currency).

 

(B)                               Except as expressly covered in this opinion, I
am not expressing any opinion as to the effect of compliance by any Secured
Party with any state or federal laws or regulations applicable to the
transactions because of the nature of any of its businesses.

 

3

--------------------------------------------------------------------------------

 

(C)                               I note that certain leases of the Loan Parties
purport to restrict assignment by, or pledge of a security interest in the
rights thereunder of, a Loan Party without the consent of the other parties
thereto and I express no view in paragraph 1 above as to the granting of
security interests in the rights of Loan Parties under such leases or the
exercise of the rights or remedies of the Administraive Agent under the
Collateral Documents with respect to such leases.

 

This opinion is being furnished only to you and is solely for the benefit of the
addressees. In addition, I hereby consent to reliance on this opinion by a
permitted assign of a Lender’s interest in the Credit Agreement, provided that
such permitted assign becomes a Lender on or prior to the 30th day after the
date of this opinion. I am opining as to the matters herein only as of the date
hereof, and, while you are authorized to deliver copies of this opinion to such
permitted assigns and they are permitted to rely on this opinion, the rights to
do so do not imply any obligation on my part to update this opinion. This
opinion may not to be used, circulated, quoted, relied upon, or otherwise
referred to by any other person or for any other purpose without my prior
written consent.

 

 

Very truly yours,

 

4

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EXHIBIT H-5

 

[FORM OF]

DIRECT HOLDINGS U.S. CORP.
8280 WILLOW OAKS CORPORATE DRIVE
FAIRFAX, VA 22031

 

March 2, 2007

 

To

The Lenders and the Agents referred to below

 

c/o JPMorgan Chase Bank, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

I am General Counsel of Direct Holdings U.S. Corp., a Delaware corporation
(“DHUS”), and have been asked to give certain opinions regarding the entities
listed on Schedule 1 attached hereto (each, a “Loan Party” and collectively, the
“Loan Parties”) in connection with the execution and delivery of (i) the Credit
Agreement dated as of the date hereof (the “Credit Agreement”), among RDA
Holding Co., a Delaware corporation (“Holdings”), Doctor Acquisition Co., a
Delaware corporation (“Acquisition Co”), The Reader’s Digest Association, Inc.,
a Delaware corporation (“Reader’s Digest”), the Overseas Borrowers party
thereto, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A.,
as administrative agent for the Lenders (the “Administrative Agent”), Citicorp
North America, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
co-syndication agents for the Lenders (the “Co-Syndication Agents”), and The
Royal Bank of Scotland plc, as documentation agent for the Lenders (the
“Documentation Agent” and, together with the Administrative Agent and the
Co-Syndication Agents, the “Agents”), (ii) the Guarantee and Collateral
Agreement dated as of the date hereof (the “Guarantee and Collateral
Agreement”), made by Holdings, Acquisition Co, Reader’s Digest and the other
Loan Parties in favor of the Administrative Agent, and (iii) the other Loan
Documents executed in connection with the above documents. Unless otherwise
indicated, capitalized terms used and not defined in this opinion are used
herein as defined in the Credit Agreement. This opinion is being rendered to you
at the request of the Loan Parties and pursuant to Section 4.01(a)(v)(z) of the
Credit Agreement.

 

For the purposes of this opinion, I have reviewed the following documents:

 

(a)                  the Credit Agreement;

 

(b)                 the Guarantee and Collateral Agreement; and

 

(c)                  such other documents as I have deemed necessary or
appropriate as a basis for the opinions set forth below.

 

--------------------------------------------------------------------------------

 

The documents listed in clauses (a) - (b) above are referred to herein
collectively as the “Loan Documents”. The document listed in clause (b) above is
referred to herein as the “Collateral Document”.

 

I have examined originals or copies, certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of the
opinions expressed below. In such examination, I have assumed the genuineness of
all signatures, the authenticity of all documents submitted to me as originals,
the conformity to authentic original documents of all documents submitted to me
as copies and the legal capacity of all individuals executing such documents. As
to questions of fact material to this opinion, which I did not independently
establish or verify, I have, with your consent, relied upon the statements,
certificates and representations of officers and other representatives of the
Loan Parties and on the representations and warranties of each Loan Party
contained in the Loan Documents. In addition, I have obtained and relied upon
such certificates and assurances from public officials, as I have deemed
necessary.

 

I have also assumed the valid authorization, execution, and delivery of each of
the Loan Documents by each party thereto and I have assumed that each such party
has been duly organized and is validly existing and in good standing under its
jurisdiction of organization, and that each such party has the legal capacity,
power and authority to perform its obligations thereunder, and that each Loan
Document constitutes the valid and binding obligation of all parties party
thereto, enforceable against them in accordance with its terms.

 

I am a member of the Bar of the Commonwealth of Virginia, and I have not
considered, and I express no opinion as to, the laws of any jurisdiction other
than the laws of the Commonwealth of Virginia and the laws of the United States
of America, in each case as in effect on the date hereof.

 

Based upon the foregoing, and subject to the comments and qualifications set
forth below, it is my opinion that:

 

1.                                 The execution, delivery and performance of
each of the Loan Documents by the Loan Parties party thereto and the grant of
the security interests in the Collateral by any Loan Party under the Collateral
Document, (a) will not (i) materially be in conflict with, contravene, result in
a breach of or constitute (alone or with notice or lapse of time or both) a
default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any provisions of
any order binding upon any Loan Party of any Governmental Authority of the
Commonwealth of Virginia or, to my knowledge, any other state, or the United
States of America or any material agreement, note, deed of trust, license,
franchise, permit, agreement, contract, indenture, mortgage, lease, or other
instrument (a “Material Agreement”) to which any Loan Party is a party or by
which it or any of its property is or may be bound or (ii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now

 

2

--------------------------------------------------------------------------------

 

owned or hereafter acquired by any of the Loan Parties pursuant to any such
Material Agreement (other than any Lien created under the Loan Documents).

 

2.                                 To the best of my knowledge, there is no
action, litigation, proceeding, or governmental investigation pending or
threatened by or against any Loan Party or against any of its properties or
revenues which questions the validity of any Loan Document or any action taken
or to be taken pursuant to any Loan Document.

 

The opinions expressed above are subject to the following qualifications and
comments:

 

(A)                             In connection with the foregoing, I point out
that certain of the Material Agreements are or may be governed by laws other
than the laws of the Commonwealth of Virginia. For purposes of the opinion
expressed in paragraph 1 above with respect to Material Agreements, my opinion
is based solely upon my understanding, or the understanding of lawyers working
under my supervision, of the plain language of such Material Agreements, and I
do not express any opinion as to the validity, binding nature or enforceability
of any such Material Agreement, and I do not assume any responsibility with
respect to the effect on my opinion of any interpretation thereof which may be
inconsistent with such understanding. My opinion also does not extend to
compliance by any Loan Party with any financial ratio or limitation in any
Material Agreement expressed as a dollar amount (or an amount expressed in
another currency).

 

(B)                              Except as expressly covered in this opinion, I
am not expressing any opinion as to the effect of compliance by any Secured
Party with any state or federal laws or regulations applicable to the
transactions because of the nature of any of its businesses.

 

(C)                              I note that certain leases of the Loan Parties
purport to restrict assignment by, or pledge of a security interest in the
rights thereunder of, a Loan Party without the consent of the other parties
thereto and I express no view in paragraph 1 above as to the granting of
security interests in the rights of Loan Parties under such leases or the
exercise of the rights or remedies of the Administrative Agent under the
Collateral Document with respect to such leases.

 

This opinion is being furnished only to you and is solely for the benefit of the
addressees. In addition, I hereby consent to reliance on this opinion by a
permitted assign of a Lender’s interest in the Credit Agreement, provided that
such permitted assign becomes a Lender on or prior to the 30th day after the
date of this opinion. I am opining as to the matters herein only as of the date
hereof, and, while you are authorized to deliver copies of this opinion to such
permitted assigns and they are permitted to rely on

 

3

--------------------------------------------------------------------------------

 

this opinion, the rights to do so do not imply any obligation on my part to
update this opinion. This opinion may not to be used, circulated, quoted, relied
upon, or otherwise referred to by any other person or for any other purpose
without my prior written consent.

 

 

Very truly yours,

 

4

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Exhibit I

 

Application for

Commercial

[g134791kl01i001.jpg]

Letter of Credit

 

 

This application and the Letter of Credit issued hereunder are subject to and
governed by the CONTINUING AGREEMENT FOR COMMERCIAL & STANDBY LETTERS OF CREDIT
executed by the undersigned in favor of JPMorgan Chase Bank, N.A.
on                        (the “Agreement”).

 

When transmitting this application by facsimile all pages must be transmitted.

 

To: JPMorgan Chase Bank, N.A. and/or its subsidiaries and/or affiliates.  Date:

 

I. Pursuant to the Terms and Conditions contained herein, please issue an
IRREVOCABLE DOCUMENTARY COMMERCIAL Letter of Credit (together with any
replacements, extensions or modifications, the “Credit”) and transmit it by:

 

o   Teletransmission

o   Courier

o   Air Mail (Domestic addresses only)

 

If completing in Microsoft Word, please enter data by ‘clicking’ on the gray
boxes.

 

Applicant/Obligor (Full name and address):

 

o

Credit is transferable. (Issuer is authorized to include its standard transfer
conditions and is authorized to nominate a Transferring Bank.)

 

 

 

 

 

 

 

Partial Shipment

 

Transhipment

[Signature lines are on last page].

 

o

Not Allowed (if blank, allowed)

o

Not Allowed (if blank, allowed)

 

 

 

 

 

 

Account Party (Full name and address of entity to be named in Letter of Credit
if different than the above Applicant/Obligor):

 

Shipment:

 

 

 

 

 

 

 

 

Shipment from:

 

 

 

 

 

 

 

 

 

For Transportation to:

 

 

 

 

 

 

 

 

 

Latest Shipment Date:

 

 

 

 

 

 

 

 

 

Credit available:

 

 

Advising Bank-Optional (If blank, issuer will select its branch or affiliate or
correspondent in the domicile of the beneficiary):

 

o

At sight.

 

 

 

 

 

 

 

 

 

 

o

By deferred payment at:

 

 

 

 

 

 

 

 

 

 

o

By acceptance of drafts at:

 

 

 

 

 

 

 

 

 

 

o

Discount Charges, if any, for the account of the

 

 

 

  (specify only if credit is available by acceptance)

 

 

 

 

 

 

 

 

 

o  Beneficiary

o  Applicant

Beneficiary (Full name and address):

 

Against the documents detailed herein and Beneficiary’s draft(s) drawn on Issuer
or Issuer’s branch or affiliate or correspondent (at Issuer’s option) for 100%
or         % of the invoice value.

 

 

 

Amount (In Figures):

 

Insurance:

 

 

o

Insurance effected by us. We agree to keep insurance in force until this
transaction is complete (no document required if checked).

Amount (In words):

 

 

 

 

 

If above is not checked, the following documents are required:

 

 

 

 

 

 

Indicate plus or minus percentage if applicable

 

o

Negotiable Insurance Policy or Certificate covering the following risks:

 

 

 

 

o  Plus     o   Minus      %

 

o

All Risks   o  War  o  SR&CC  o  Other Risks (specify)

 

 

 

 

Expiry Date:

 

 

 

 

 

 

 

 

 

Place of Expiry Unless the undersigned or Issuer nominates a bank which is
authorized to pay, to accept, to incur a deferred payment undertaking, or to
negotiate, the Credit will be freely negotiable. Issuer may nominate such a bank
in its sole discretion or stipulate that the Credit is available with Issuer
only.

If the Credit is freely negotiable, it will be considered to be freely
negotiable by any bank anywhere. (Issuer in its sole

 

o

 

o

Indicate if a full set is required.

 

Insurance coverage for        % (Unless otherwise specified the minimum amount
of insurance must be for 100% of the CIF or CIP value plus 10%. If the CIF or
CIP value cannot be determined from the documents on their face, insurance must
be for a minimum amount of 110% of the drawing amount or 110% of the gross
invoice amount, whichever is greater.)

 

Rev. 04/07/2005

 

1

--------------------------------------------------------------------------------

 

Exhibit J

 

Application for

 

[g134791kl01i001.jpg]

Standby Letter of Credit

 

 

This application and the Letter of Credit issued hereunder are subject to and
governed by the CONTINUING AGREEMENT FOR COMMERCIAL & STANDBY LETTERS OF CREDIT
executed by the undersigned in favor of JPMorgan Chase Bank, N.A. on
                         (the “Agreement”).

 

When Transmitting this application by facsimile all pages must be transmitted.

 

To: JPMorgan Chase Bank, N.A. and/or its subsidiaries and/or
affiliates.           Date:

 

I. Pursuant to the Terms and Conditions contained herein, please issue an
IRREVOCABLE STANDBY Letter of Credit (together with any replacements, extensions
or modifications, the “Credit”) and transmit it by:

 

o   Teletransmission

o   Courier

o   Air Mail (Domestic addresses only)

 

If completing in Microsoft Word, please enter data by ‘clicking’ on the gray
boxes.

 

Applicant/Obligor (Full name and address- jointly and severally if more than
one, individually and collectively, “Applicant/Obligor”):

 

Beneficiary (Full name and address):

 

 

 

 

 

 

 

 

 

[Signature lines are on last page].

 

 

 

 

 

Account Party (Full name and address of entity to be named in Letter of Credit
if different than the above Applicant/Obligor):

 

Advising Bank-Optional (If blank, Issuer will select its branch or affiliate or
correspondent in the domicile of the beneficiary):

 

 

 

 

 

 

 

 

 

Amount:
Up to an aggregate amount of
If not USD, indicate currency

 

Expiry Date: Demands/claims must be presented to the counters of the Issuing
bank not later than

 

 

 

Complete only if Automatic Extension of the expiry date is required.

 

 

 

Credit to contain Automatic Extension clause with extension period of o one
year/o other                                                 (please specify).

 

No less than                                        calendar days non-extension
notice to the beneficiary.

 

Automatic Extension final expiration
date:                                                                             (the
date after which the Credit will no longer be subject to Automatic Extension).

 

 

 

AVAILABLE BY (indicate A, B or C)

 

 

 

 

 

 

o

A.   Beneficiary’s dated statement referencing JPMorgan Chase Bank, N.A. Letter
of Credit Number indicating amount of demand/claim and purportedly signed by an
authorized person reading as follows (Please state within the quotation marks
the wording to appear on the statement to be presented):

 

 

 

“ (insert appropriate reason for drawing)

 

Rev. 04/27/2006

 

1

--------------------------------------------------------------------------------

 

Exhibit K

 

JPMorgan Chase Bank, N.A.

 

March 2, 2007

 

CONTINUING AGREEMENT FOR
COMMERCIAL & STANDBY LETTERS OF CREDIT BETWEEN

 

THE READER’S DIGEST ASSOCIATION, INC.

 

AND

 

JPMORGAN CHASE BANK, N.A.

 

To induce JPMorgan Chase Bank, N.A. and/or any of its domestic or foreign
subsidiaries or affiliates (individually and collectively, “Bank”), in its sole
discretion, to issue for the account of the Applicant or for the account of the
Account Party named in the Application, one or more standby or commercial
letters of credit or other independent undertakings, from time to time at the
request of the undersigned (individually and collectively, “Applicant”; jointly
and severally, if more than one), Applicant agrees as to each letter of credit
or undertaking (together with any replacements, extensions or modifications, a
“Credit”, collectively, “Credits”) as follows.

 

All Credits issued pursuant to this Continuing Agreement (the “Agreement”) are
issued under and pursuant to the terms, provisions and covenants of the Credit
Agreement (as amended, extended, restated or otherwise modified from time to
time, the “Credit Agreement”) dated as of March 2, 2007 among Doctor Acquisition
Co., RDA Holding Co., The Reader’s Digest Association, Inc., the Lenders party
thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent. Capitalized
terms used herein and not otherwise defined have the meaning assigned to them in
the Credit Agreement. Unless otherwise indicated herein, all references made
herein to Sections shall be construed to refer to Sections of the Credit
Agreement.

 

The provisions relating to letters of credit set forth in the Credit Agreement,
including without limitation, rights and remedies of the Bank as issuing bank
and lender shall apply to the Credit(s) and will be secured by Collateral (if
any), described in the Credit Agreement and other loan documents as such terms
are defined in the Credit Agreement. Notwithstanding anything herein or in the
applications referenced below, in the event of any conflict between (a) the
terms of this Agreement, any application for a commercial letter of credit or
any application for a standby letter of credit and (b) the terms of the Credit
Agreement, the terms of the Credit Agreement shall govern. In no event shall any
such application or this Agreement impose any additional obligations or
liabilities on any Loan Party, except as set forth in Section 9 below.

 

1.     Definitions: The following terms shall have the meanings set forth below:

 

“Application” means each request to issue a Credit.

 

“Good Faith” means honesty in fact in the conduct of the transaction concerned.

 

“Instructions” means inquiries, communications and instructions (whether oral,
telephonic, written, telegraphic, facsimile, electronic or other) regarding a
Credit; each Application and this Agreement are each referred to herein as
“Instructions” (and the term “Application” is subsumed within the term
“Instruction”).

 

“ISP” means International Standby Practices 1998 (International Chamber of
Commerce Publication No.590) and any subsequent revision thereof adhered to by
Bank on the date such Credit is issued.

 

“LOI’s” means steamship guarantees, releases or letters of indemnity in favor of
a carrier issued by Bank upon Instruction of Applicant.

 

“Obligations” means all obligations and liabilities of Applicant to Bank in
respect of any and all Credits and LOI’s issued hereunder (if any) and under
this Agreement, whether matured or unmatured, absolute or contingent, now
existing or hereafter incurred.

 

“Property” means all property of any kind whatsoever (now existing or hereafter
acquired) including, without limitation, any and all right, title and interest
of Applicant in any goods, equipment, inventory, money, documents, letters of
credit, warehouse receipts,

 

--------------------------------------------------------------------------------

 

instruments, securities, security entitlements, financial assets, investment
property, precious and base metals, chattel paper, electronic chattel paper,
accounts, commercial tort claims, deposit accounts, general intangibles
(including any claims for breach of contract, breach of warranty claims and any
insurance policies and proceeds), letter of credit rights, choses in action and
the proceeds of any and all thereof (including any and all of the aforesaid
referred to in any Credit or the drawing documents relating thereto).

 

“Released Merchandise” means all Property referred to in or relating to the
applicable Credit, released (including pursuant to a forwarders cargo receipt or
by any other means whatsoever) or consigned to Applicant or any Person
designated by Applicant in connection with such Credit or a LOI.

 

“Standard Letter of Credit Practice” means, for Bank, any domestic or foreign
law or letter of credit practices applicable in the city in which Bank issued
the applicable Credit or for its branch or correspondent, such laws and
practices applicable in the city in which it has advised, confirmed or
negotiated such Credit, as the case may be. Such practices shall be (i) of banks
that regularly issue Credits in the particular city and (ii) required or
permitted under the UCP or the ISP, as chosen in the applicable Credit.

 

“UCP” means Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No.500 and any
subsequent revision thereof adhered to by Bank on the date such Credit is
issued.

 

“UN Convention” means the United Nations Convention on Independent Guarantees
and Standby Letters of Credit.

 

2.     Applications/Instructions. Each Application shall be irrevocable once the
relevant Credit is issued, amended, extended, modified or renewed per the
relevant Application and shall be in such form as Bank shall from time to time
require or agree to accept (including any type of electronic form or means of
communication). Bank’s records of the content of any Instruction shall be
conclusive absent manifest error. Bank may transmit a Credit and any amendment
thereto by S.W.I.F.T. message and thereby bind Applicant directly and as
indemnitor to the S.W.I.F.T. rules, including rules obligating Applicant or Bank
to pay charges. Terms regarding LOI’s are set forth on Annex I.

 

3.     Amendment; Waiver. Bank shall not be deemed to have amended or modified
any term hereof, or waived any of its rights unless Bank consents in writing to
such amendment, modification or waiver. No such waiver, unless expressly stated
therein, shall be effective as to any transaction which occurs subsequent to
such waiver, nor as to any continuance of a breach after such waiver. Bank’s
consent to any amendment, waiver, or modification does not mean that Bank shall
consent or has consented to any other or subsequent Instruction to amend,
modify, or waive a term of this Agreement or any Credit.

 

4.     Indemnification; Limitation of Liability.

 

a)     Without limiting any other provisions of this Agreement or the Credit
Agreement, Bank and each other Indemnitee (as defined in the Credit Agreement),
shall not be responsible to Applicant for, and Bank’s rights and remedies
against Applicant and Applicant’s obligation to reimburse the Bank under the
Credit Agreement shall not be impaired by: (i) honor of a presentation under any
Credit which on its face substantially complies with the terms of such Credit;
(ii) honor of a presentation of any drawing documents which appear on their face
to have been signed, presented or issued (X) by any purported successor or
transferee of any beneficiary or other party required to sign, present or issue
the drawing documents or (Y) under a new name of the beneficiary;
(iii) acceptance as a draft of any written or electronic demand or request for
payment under a Credit, even if nonnegotiable or not in the form of a draft, and
may disregard any requirement that such draft, demand or request bear any or
adequate reference to the Credit; (iv) the identity or authority of any
presenter or signer of any drawing document or the form, accuracy, genuineness,
or legal effect of any presentation under any Credit or of any drawing
documents; (v) disregard of any non-documentary conditions stated in any Credit;
(vi) acting upon any Instruction which it, in Good Faith, believes to have been
given by a Person or entity authorized to give such Instruction; (vii) any
errors, omissions, interruptions or delays in transmission or delivery of any
message, advice or document (regardless of how sent or transmitted) or for
errors in interpretation of technical terms or in translation; (xiii) any delay
in giving or failing to give any notice; (ix) any acts, omissions or fraud by,
or the solvency of, any beneficiary, any nominated Person or any other Person;
(x) any breach of contract between the beneficiary and Applicant or any of the
parties to the underlying transaction; (xi) assertion or waiver of any provision
of the UCP or ISP which primarily benefits an issuer of a letter of credit,
including, any requirement that any drawing document be presented to it at a
particular hour or place; (xii) payment to any paying or negotiating bank
(designated or permitted by the terms of the applicable Credit) claiming that it
rightfully honored or is entitled to reimbursement or indemnity under the
Standard Letter of Credit Practice applicable to it; (xiii) dishonor of any
presentation upon or during any Event of Default or for which Applicant is
unable or unwilling to reimburse or indemnify Bank (provided that Applicant
acknowledges that if Bank shall later be required to honor the presentation,
Applicant shall be liable therefor in accordance with Section 2.03 (e) of the
Credit Agreement); or acting or failing to act as required or permitted under
Standard Letter of Credit Practice applicable to where it has issued, confirmed,
advised or negotiated such Credit, as the case may be; provided that the
foregoing shall not excuse the Bank from liability to the Applicant to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are waived by the Applicant to the extent permitted by
applicable Law) suffered by the Applicant that are caused by the Bank’s gross
negligence or willful misconduct when determining whether drafts and other
documents presented under a Credit comply with the terms thereof.

 

--------------------------------------------------------------------------------

 

b)     Without limiting Section 10.05 of the Credit Agreement, such
Section 10.05 shall apply to the Bank and each related Indemnitee
notwithstanding the occurrence of any of the events specified in clause (a) of
this Section 4 subject to the proviso set forth in such Section 10.05.

 

c)     If a Credit is to be governed by a law other than that of the State of
New York, Bank shall not be liable for any costs resulting from any act or
omission by Bank in accord with the UCP or the ISP, as applicable, and Applicant
shall indemnify Bank for all such costs.

 

5.     Compliance with Laws. Applicant will comply with all Laws (including the
USA Patriot Act, foreign exchange control regulations, foreign asset control
regulations and other trade-related regulations) now or hereafter applicable to
each Credit, the transactions underlying such Credit or Applicant’s execution,
delivery and performance of this Agreement, except if the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.     Representations and Warranties. Applicant hereby represents and warrants
that this Agreement constitutes the legal, valid and binding obligation of
Applicant enforceable against it in accordance with its terms (except as such
enforceability may be limited by Debtor Relief Laws and by general principles of
equity, regardless of whether considered in a proceeding in equity or at law)
and makes each of the representations and warranties set forth in the Credit
Agreement as of the date of this Agreement (and with each request for the
issuance of a Credit represents and warrants the same as of the date of such
issuance); provided that, on the Closing Date, only the Specified
Representations shall be made as to the Applicant and its Subsidiaries, and the
Specified Representations shall be made by Acquisition Co only).

 

7.     Assertion of Rights. To the extent Bank honors a presentation for which
Bank remains unpaid, Bank may assert rights of Applicant and Applicant shall
cooperate with Bank in its assertion of Applicant’s rights, if any, against the
beneficiary, the beneficiary’s rights against Applicant and any other rights
that Bank may have by subordination, subrogation, reimbursement, indemnity or
assignment.

 

8.     Electronic Transmissions. Bank is authorized to accept and process any
Application and any amendments, transfers, assignments of proceeds,
Instructions, consents, waivers and all documents relating to the Credit or the
Application which are sent to Bank by electronic transmission, including SWIFT,
electronic mail, telex, telecopy, telefax, courier, mail or other computer
generated telecommunications and such electronic communication shall have the
same legal effect as if written and shall be binding upon and enforceable
against the Applicant. Bank may, but shall not be obligated to, require
authentication of such electronic transmission or that Bank receives original
documents prior to acting on such electronic transmission. If it is a condition
of the Credit that payment may be made upon receipt by Bank of an electronic
transmission advising negotiation, Applicant hereby agrees to reimburse Bank on
demand for the amount indicated in such electronic transmission advice, and
further agrees to hold Bank harmless if the documents fail to arrive, or if,
upon the arrival of the documents, Bank should determine that the documents do
not comply with the terms and conditions of the Credit.

 

9.     COMMERCIAL CREDITS

 

Acceptance of Drawing Documents; No Waiver. Subject to the proviso in
Section 4(a), Applicant’s acceptance or retention of a drawing document
presented under or in connection with any Credit (whether or not the document is
genuine) or of any Released Merchandise shall ratify Bank’s honor of the
presentation and preclude Applicant from raising a defense, set-off or claim
with respect to Bank’s honor of such Credit. Bank shall not be required to seek
any waiver of discrepancies from Applicant or to grant any waiver of
discrepancies which Applicant approves or requests.

 

Possession of Drawing Documents. If Bank shall agree to honor (accept) drawing
documents under a Credit on a time draft or deferred payment basis, Applicant
shall not take possession of the drawing documents or the underlying Property
except for the purpose of loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with such Property in a manner
preliminary to its sale or exchange. An Instruction to release any such drawing
document or Property shall be deemed a representation by Applicant to Bank that
Applicant seeks such release for one of said purposes. In each such case,
Applicant immediately shall apply the sale proceeds of such Property to the
Obligations relating to the applicable Credit.

 

Absence of Written Instructions. In the absence of written instructions to the
contrary, the Applicant agrees that (a) if the Credit authorizes drawings and/or
shipments in installments and any installment is not drawn and/or shipped within
the period allowed for that installment but the Applicant waives such
discrepancy, the Bank is authorized to honor any subsequent installments so long
as documents for such installments are presented within the period allowed for
such installments; and (b) each negotiation Credit shall expire at the counters
of the nominated person even if notice of the presentation or any documents
contained in the presentation is not received by the Bank until after the expiry
date of the Credit or any installment thereof.

 

Release of Documents or Claiming of Goods from the Carrier. In the event Bank,
upon Applicant’s request, agrees to deliver to Applicant, a customs broker or
any other person designated by the Applicant, any of the documents of title
relating to the Credit, prior to having received payment in full of all the
Obligations, Applicant agrees to obtain possession of any goods represented by
such documents within twenty-one days after the date of delivery of such
documents, and if Applicant fails to do so, Applicant agrees to

 

--------------------------------------------------------------------------------

 

return such documents or to have them returned to Bank prior to the expiration
of the twenty-one day period. Applicant further agrees to execute and deliver to
Bank receipts for such documents and the goods represented thereby identifying
and describing such documents and goods. If Applicant claims from the carrier
any goods identified in the shipping documents required under the Credit, (by
virtue of a steamship release, air release, letter of indemnity or any other
means), with or without the assistance of Bank, and such goods have been
released to Applicant or a customs broker or agent acting on Applicant’s behalf,
the Applicant hereby authorizes Bank to immediately, and without further inquiry
and consideration, debit any account of Applicant in an amount equal to the fair
market value of such goods, that have been released, together with any
reasonable out-of-pocket charges or expenses owing to the Bank.

 

10.  Waiver of Defense; Joint and Several Liability. Applicant waives any
defense whatsoever which might constitute a defense available to, or discharge
of, a surety or a guarantor. If more than one Person signs this Agreement or an
Application hereunder, each of them shall be jointly and severally liable
hereunder and thereunder and all the terms and provisions regarding liabilities,
obligations and Property of such Persons shall apply to any liabilities,
obligations and Property of any and all of them.

 

11.  Continuing Agreement. This Agreement is a continuing agreement and may not
be terminated by Applicant except upon (i) thirty (30) days’ prior written
notice of such termination by Applicant to Bank at the address of Bank set forth
on the most recent Credit issued hereunder, (ii) payment of all Obligations and
(iii) the expiration or cancellation of all Credits issued hereunder.
Notwithstanding the foregoing sentence, if a Credit is issued in favor of a
sovereign or commercial entity, which is to issue a guarantee or undertaking on
Applicant’s behalf in connection therewith, or is issued as support for such a
guarantee, the Applicant shall remain liable with respect to such Credit until
Bank is fully released in writing by such entity.

 

12.  Commencement of Action. Any action or proceeding in respect of any matter
arising under or in connection with Credits, the Applications or this Agreement
may be brought by Applicant against the Bank within the time period specified in
Section 5-115 of the Uniform Commercial Code.

 

13.  Jurisdiction; Waiver of Jury Trial; Applicable Law. Applicant agrees to be
bound by the provisions in the Credit Agreement relating to jurisdiction, venue,
and waiver of jury trial and that such provisions shall also apply to this
Agreement. This Agreement shall be construed in accordance with and governed by
the law of the State of New York.

 

14.  No Third Party Benefits; Successor; Integration; Delivery by Facsimile;
Notices. This Agreement shall be binding upon and inure to the benefit of Bank
and Applicant and their respective successors and permitted assigns. This
Agreement shall not confer any right or benefit upon any Person other than the
parties to this Agreement, the Indemnified Persons and their respective
successors and permitted assigns. Applicant may not assign this Agreement
without the prior written consent of Bank. This Agreement may be signed and
delivered by facsimile transmission. Notices to Bank shall be sent to the
address of Bank as set forth on the Credit and shall be delivered by hand,
overnight courier or certified mail, return receipt requested. Notices to
Applicant shall be sent to the address set forth below the signature line
hereto. THIS AGREEMENT AND THE CREDIT AGREEMENT CONSTITUTE THE ENTIRE CONTRACT
AND FINAL AGREEMENT AMONG THE PARTIES RELATING TO THE SUBJECT MATTER AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

--------------------------------------------------------------------------------

 

THE UNDERSIGNED HEREBY AGREES TO ALL THE TERMS AND CONDITIONS SET FORTH HEREIN,
ALL OF WHICH HAVE BEEN READ AND UNDERSTOOD BY THE UNDERSIGNED.

 

 

 

 

 

 

(Applicant/Obligor)

 

 

 

 

 

 

 

 

(Authorized Signature/Title)

 

 

 

 

 

 

 

 

(Phone)

 

 

 

 

 

 

 

 

(Fax)

 

 

 

 

 

 

 

 

(Date)

 

 

THE FOLLOWING IS TO BE EXECUTED IF THE CREDIT IS TO BE ISSUED FOR THE ACCOUNT OF
A PERSON OTHER THAN THE PERSON SIGNING ABOVE:

 

AUTHORIZATION AND AGREEMENT OF ADDITIONAL PARTY NAMED AS ACCOUNT PARTY

 

To: THE ISSUER OF THE CREDIT

 

We join in the above Agreement, naming us as Account Party, for the issuance of
the Credit and, in consideration thereof, we irrevocably agree (i) that the
above Applicant has sole right to give instructions and make agreements with
respect to this Agreement and the Credit, and the disposition of documents, and
we have no right or claim against you, any of your affiliates or subsidiaries,
or any correspondent in respect of any matter arising in connection with any of
the foregoing and (ii) to be bound by the Agreement and all obligations of the
Applicant thereunder as if we were a party thereto. The Applicant is authorized
to assign or transfer to you all or any part of any security held by the
Applicant for our obligations arising in connection with this transaction and,
upon any such assignment or transfer, you shall be vested with all powers and
rights in respect of the security transferred or assigned to you and you may
enforce your rights under this Agreement against us or our Property in
accordance with the terms hereof.

 

 

 

 

 

 

(Account Party)

 

 

 

 

 

 

 

 

(Authorized Signature/Title)

 

 

 

 

 

 

 

 

(Phone)

 

 

 

 

 

 

 

 

(Fax)

 

 

 

 

 

 

 

 

(Date)

 

 

--------------------------------------------------------------------------------

 

Appendix A

To the Continuing Agreement for Commercial & Standby Letters of Credit
(To be completed by Account Party/Applicant/Correspondent Bank)

 

This Appendix will remain in effect until further notice in writing is received
by the JPMorgan Chase Bank, N.A. from the Account Party/Applicant/Correspondent
Bank. Changes to this Appendix require a new Appendix A to be executed and
delivered to JPMorgan Chase Bank, N A.

 

A)     In the event JPMorgan Chase Bank, N.A. issues or amends a Commercial or a
Standby Letter of Credit (“Credit”), any one of the following individual(s)
shall be authorized to sign on the behalf of:

 

 

(Print Name of Account Party/Applicant/Correspondent Bank)

 

 

 

 

 

 

 

 

 

(Printed Name)

 

(Title)

 

(Authorized Signature)

 

(Date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Printed Name)

 

(Title)

 

(Authorized Signature)

 

(Date)

 

B)       In regards to any “Credit”, JPMorgan Chase Bank, N.A. may accept and
rely on instructions including without limitation, (a) waiving of discrepancies,
(b) mailings/returning shipping documents, (c) changing Credit terms and
conditions prior to issuance, and amendments to Credits which do not extend,
increase or change the tenor of the draft(s) transmitted by the following
authorized representatives of:

 

 

(Print Name of Account Party/Applicant/Correspondent Bank)

 

 

 

 

 

 

 

 

 

(Printed Name)

 

(Title)

 

(Authorized Signature)

 

(Date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Printed Name)

 

(Title)

 

(Authorized Signature)

 

(Date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Printed Name)

 

(Title)

 

(Authorized Signature)

 

(Date)

 

C)       Signature Verification (To be completed by “Bank”):

The above individual(s) is/are authorized to execute and sign applications,
amendments and instructions on behalf of the Account
Party/Applicant/Correspondent Bank.

 

 

 

 

 

 

 

 

 

(Print Relationship Manager “RM” Name)

 

(“RM” Title)

 

(“RM” Authorized Signature)

 

(Date)

 

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ANNEX I TO AGREEMENT FOR COMMERCIAL LETTERS OF CREDIT ISSUED BY
JPMORGAN CHASE BANK, N.A.

 

If Bank issues a LOI or endorses a bill of lading at the Instruction of
Applicant or otherwise pursuant hereto, Applicant agrees as follows:

 

Except as otherwise set forth in this Annex I or expressly set forth elsewhere
in this Agreement, LOI’s shall be deemed issued by Bank subject to the same
terms and conditions set forth herein for Credits, including, without
limitation, payment obligations, indemnification provisions and limitations of
liability benefiting Bank and other Indemnified Persons. Applicant shall be
liable for payments made under any LOI on demand and otherwise subject to
paragraph 2. Bank shall have the right in its sole discretion and without notice
to or approval of Applicant, to pay, settle or adjust any claim or demand made
against or upon Bank in connection therewith without inquiry or determination,
on Bank’s part, of the circumstances, merits or validity of any claim or demand.
Applicant shall take whatever steps are necessary to obtain the shipping
documents concerning the Released Merchandise. Upon Applicant’s receipt of such
shipping documents, Applicant shall deliver them to the carrier, duly endorsed
by all parties whose endorsement is required by the carrier, and obtain from the
carrier and deliver to Bank, the LOI and a release of Bank’s liability to the
carrier. Bank may make payments against any drawing under the Credit related to
an LOI, whether or not the drawing shall comply with the terms and conditions of
such Credit, without any liability whatsoever to Bank. Applicant expressly
acknowledges that Applicant may be required to reimburse Bank for payments made
by Bank under both the LOI and such Credit with respect to the same Released
Merchandise. Applicant shall account by delivering to Bank, immediately upon the
receipt thereof by Applicant, the proceeds of the sale of the Released
Merchandise or the documents related thereto in whatever form received (with
Applicant’s endorsement where necessary) to be applied by Bank to the payment of
any drawing under the Credit. If any proceeds shall be notes, accounts,
acceptances, or in any form other than cash, they shall not be applied by Bank
until paid in cash. Bank shall have the option at any time to sell or discount
these items and so apply the net proceeds, conditionally upon final payment of
these items. Applicant shall pay all charges in connection with the Released
Merchandise and shall at all times hold it separate and apart from the Property
of Applicant and shall definitively show such separation in all its records and
entries. Applicant shall at all times keep the Released Merchandise fully
insured at Applicant’s expense in favor of, and to the satisfaction of, Bank
against loss by fire, theft, and any other risk to which it may be subject.
Applicant shall deposit the insurance policies with Bank upon its demand. If for
any reason any of such policies fail to provide for payment of the loss
thereunder to Bank as its interest may appear, Applicant hereby (1) assigns and
makes the loss payable under any of such policies payable to Bank as its
interest may appear, (2) assigns to Bank all of the avails and proceeds of any
and all of such policies, and (3) agrees to accept such avails and proceeds in
trust for Bank and to forthwith deliver the same to Bank in the exact form
received (with the endorsement of Applicant where necessary). Bank shall have no
responsibility for the existence, quantity, quality, condition, value or
delivery of any Released Merchandise or the correctness, validity or genuineness
of the documents purporting to represent Released Merchandise.

 

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Exhibit L

 

Form of German Tax Confirmation

 

(a)                                  If, at any time after Closing Date, [the
German Facility Borrower] determines that a confirmation by each of [the German
Facility Lenders] substantially in the form of the Decree issued by the German
Federal Ministry of Finance as of October 20, 2005 (substantially in the form of
Exhibit M, the “Tax Confirmation”) is required under the decrees to § 8a of the
German Corporate Income Tax Act (Körperschaftsteuergesetz or KStG) dated July
15, 2004, July 22, 2005, and October 20, 2005 (as in effect on the date hereof,
the “Decrees”) with respect to [the German Facility], the Borrower may prepare
and deliver to [the German Facility Lenders] (through the Administrative Agent)
a complete and accurate draft Tax Confirmation listing in particular all
guarantees and security interests securing the claims of [the German Facility
Lenders] under the Loan Documents and provide to [the German Facility Lenders]
any further information which may be required by the Administrative Agent or any
[German Facility Lender] to issue the Tax Confirmation (based on the then
applicable practice of the German tax authorities).

 

(b)                                 The Tax Confirmation shall only include
factual but not legal statements to be issued by [the German Facility Lenders].
The Tax Confirmation shall not contain any statement that any [German Facility
Lender] is not permitted to issue by law, administrative rule or regulation of
the jurisdiction to which the relevant [German Facility Lender] is subject.

 

(c)                                  Each [German Facility Lender] (including
any Person that becomes a German Facility Lender subsequent to the date hereof
pursuant to Section 10.07) authorizes the Administrative Agent on behalf of such
[German Facility Lender] to issue a Tax Confirmation within 20 Business Days
after such [German Facility Lender’s] receipt of the following (which receipt
shall be deemed to have occurred upon the Administrative Agent’s posting of the
following to Intralinks or other similar information transmission system):

 

(i)            [the German Facility Borrower’s] request therefor,

 

(ii)           a complete and accurate draft of such Tax Confirmation listing
all guarantees and security interests pursuant to clause (a) above, and

 

(iii)          all further information required pursuant to clause (a) above to
enable [the German Facility Lenders] to complete such Tax Confirmation,

 

unless such [German Facility Lender] notifies the Administrative Agent within
such 20-Business Day period that (x) it is prohibited from doing so by law,
administrative rule or regulation of the jurisdiction to which such [German
Facility Lender] is subject or (y) it has determined that the factual
information provided by the Borrower is not correct or not complete or, in the
view of such [German Facility Lender] (acting in good faith), is misleading.

 

(d)                                 The Borrower agrees to pay or reimburse the
Administrative Agent and each [German Facility Lender] for all costs and
expenses incurred in connection with any Tax Confirmation, including all legal
fees, expenses and disbursements. The Borrower shall indemnify and hold harmless
each Indemnitee from and against any and all liabilities, obligations, losses,
damages, penalties, claims, demands, actions, judgments and suits and related
expenses (including all legal fees, expenses and disbursements) or any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any such Indemnitee in any way relating to or arising out of or in
connection with any Tax Confirmation. The agreements in this clause (d) shall
survive the resignation of the Administrative Agent, the replacement of any
Lender, the

 

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termination of the Aggregate Commitments and repayment, satisfaction or
discharge of all other Obligations.

 

(e)                                  The Borrowers confirm to the Administrative
Agent and each [German Facility Lender] that (i) [the German Facility Lenders]
will issue their respective Tax Confirmations exclusively at the request of [the
German Facility Borrower] and solely for the purposes of this Section [    ]
pursuant to the Decrees with respect to the Loan Documents, (ii) [the German
Facility Lenders] are not responsible for examining any Borrower’s tax position
or for achieving any certain tax treatment with respect to any Borrower and
(iii) no Loan Party will raise any claims against the Administrative Agent or
any [German Facility Lender] based on, or in connection with, any Tax
Confirmation and no [German Facility Lender] will have any liability to any Loan
Party with respect to any Tax Confirmation.

 

(f)                                    It is the common understanding of the
parties hereto that no party is providing any legal and/or tax advice to any
other party with respect to this Agreement or, in particular, with respect to
the application of § 8a KStG and the interpretation of § 8a KStG in the Decrees,
and that it is the responsibility of each party, in particular each Loan Party,
to consult with its own legal/tax advisers.

 

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