Exhibit 4.1


 


EXECUTION
COPY




 





 


RD ESCROW CORPORATION,


 


THE READER’S DIGEST ASSOCIATION, INC.,


 


RDA HOLDING CO.,


 


THE SUBSIDIARY GUARANTORS PARTIES HERETO,


 


WELLS FARGO BANK, NATIONAL ASSOCIATION,

AS TRUSTEE


 


AND


 


WILMINGTON TRUST FSB,


AS COLLATERAL AGENT


 


Floating Rate Senior Secured Notes due 2017


 






 


INDENTURE


 


Dated as of February 11, 2010


 








 





 

















 


Table of Contents


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE

  	
  1

  
	
   

  	
   

  
	
  SECTION 1.1.  
  Definitions

  	
  1

  
	
  SECTION 1.2.  
  Other Definitions

  	
  41

  
	
  SECTION 1.3.  
  Incorporation by Reference of Trust Indenture Act

  	
  44

  
	
  SECTION 1.4.  
  Rules of Construction

  	
  45

  
	
   

  	
   

  
	
  ARTICLE II
  THE NOTES

  	
  45

  
	
   

  	
   

  
	
  SECTION 2.1.  
  Form, Dating and Terms

  	
  45

  
	
  SECTION 2.2.  
  Execution and Authentication

  	
  54

  
	
  SECTION 2.3.  
  Registrar and Paying Agent

  	
  55

  
	
  SECTION 2.4.  
  Paying Agent to Hold Money in Trust

  	
  56

  
	
  SECTION 2.5.  
  Holder Lists

  	
  56

  
	
  SECTION 2.6.  
  Transfer and Exchange

  	
  57

  
	
  SECTION 2.7.  
  Form of Certificate to be Delivered upon Termination of Restricted
  Period

  	
  61

  
	
  SECTION 2.8.  
  Form of Certificate to be Delivered in Connection with Transfers to
  Institutional Accredited Investors

  	
  62

  
	
  SECTION 2.9.  
  Form of Certificate to be Delivered in Connection with Transfers
  Pursuant to Regulation S

  	
  64

  
	
  SECTION 2.10.  
  Mutilated, Destroyed, Lost or Stolen Notes

  	
  65

  
	
  SECTION 2.11.  
  Outstanding Notes

  	
  66

  
	
  SECTION 2.12.  
  Temporary Notes

  	
  67

  
	
  SECTION 2.13.   Cancellation

  	
  67

  
	
  SECTION 2.14.   Payment of Interest;
  Defaulted Interest

  	
  68

  
	
  SECTION 2.15.   Computation of
  Interest

  	
  69

  
	
  SECTION 2.16.   CUSIP, Common Code
  and ISIN Numbers

  	
  69

  
	
   

  	
   

  
	
  ARTICLE III COVENANTS

  	
  69

  
	
   

  	
   

  
	
  SECTION 3.1.  
  Payment of Notes

  	
  69

  
	
  SECTION 3.2.  
  Limitation on incurrence of Indebtedness and issuance of Disqualified Stock
  and preferred stock

  	
  70

  
	
  SECTION 3.3.  
  Limitation on Restricted Payments

  	
  75

  
	
  SECTION 3.4.  
  Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

  	
  84

  
	
  SECTION 3.5.  
  Limitation on Sales of Assets and Subsidiary Stock

  	
  87

  
	
  SECTION 3.6.  
  Limitation on Liens

  	
  91

  
	
  SECTION 3.7.  
  Limitation on Guarantees of Indebtedness by
  Restricted Subsidiaries

  	
  91

  
	
  SECTION 3.8.  
  Transactions with Affiliates

  	
  92

  
	
  SECTION 3.9.  
  Limitation on Activities of Holdings

  	
  94

  



 


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  Page

  
	
   

  	
   

  
	
  SECTION 3.10.  
  Change of Control

  	
  94

  
	
  SECTION 3.11.  
  Reports and other information

  	
  97

  
	
  SECTION 3.12.  
  Future Guarantors

  	
  99

  
	
  SECTION 3.13.   Maintenance
  of Office or Agency

  	
  99

  
	
  SECTION 3.14.  
  Corporate Existence

  	
  100

  
	
  SECTION 3.15.  
  Payment of Taxes

  	
  100

  
	
  SECTION 3.16.  
  Payments for Consent

  	
  100

  
	
  SECTION 3.17.  
  Compliance Certificate

  	
  100

  
	
  SECTION 3.18.  
  Further Instruments and Acts

  	
  101

  
	
  SECTION 3.19.  
  Limitation on Lines of Business

  	
  101

  
	
  SECTION 3.20.  
  Statement by Officers as to Default

  	
  101

  
	
  SECTION 3.21.  
  Activities prior to the Assumption

  	
  101

  
	
  SECTION 3.22.  
  Escrow of Funds

  	
  102

  
	
  SECTION 3.23.  
  Suspension of Certain Covenants

  	
  102

  
	
   

  	
   

  
	
  ARTICLE IV SUCCESSOR ISSUER

  	
  103

  
	
   

  	
   

  
	
  SECTION 4.1.  
  Merger, Consolidation or Sale of All or Substantially All Assets

  	
  103

  
	
   

  	
   

  
	
  ARTICLE V REDEMPTION OF SECURITIES

  	
  105

  
	
   

  	
   

  
	
  SECTION 5.1.  
  Notices to Trustee

  	
  105

  
	
  SECTION 5.2.  
  Selection of Notes to Be Redeemed or Purchased

  	
  106

  
	
  SECTION 5.3.  
  Notice to Redemption

  	
  106

  
	
  SECTION 5.4.  
  Effect of Notice of Redemption

  	
  107

  
	
  SECTION 5.5.  
  Deposit of Redemption or Purchase Price

  	
  107

  
	
  SECTION 5.6.  
  Notes Redeemed or Purchased in Part

  	
  108

  
	
  SECTION 5.7.  
  Optional Redemption

  	
  108

  
	
  SECTION 5.8.  
  Mandatory Redemption

  	
  109

  
	
  SECTION 5.9.  
  Excess Cash Flow Offer

  	
  109

  
	
  SECTION 5.10.  
  Special Mandatory Redemption

  	
  111

  
	
   

  	
   

  
	
  ARTICLE VI DEFAULTS AND REMEDIES

  	
  111

  
	
   

  	
   

  
	
  SECTION 6.1.  
  Events of Default

  	
  111

  
	
  SECTION 6.2.  
  Acceleration

  	
  114

  
	
  SECTION 6.3.  
  Other Remedies

  	
  115

  
	
  SECTION 6.4.  
  Waiver of Past Defaults

  	
  115

  
	
  SECTION 6.5.  
  Control by Majority

  	
  115

  
	
  SECTION 6.6.  
  Limitation on Suits

  	
  116

  
	
  SECTION 6.7.  
  Rights of Holders to Receive Payment

  	
  116

  
	
  SECTION 6.8.  
  Collection Suit by Trustee

  	
  116

  
	
  SECTION 6.9.  
  Trustee May File Proofs of Claim

  	
  116

  
	
  SECTION 6.10.  
  Priorities

  	
  117

  
	
  SECTION 6.11.  
  Undertaking for Costs

  	
  117

  



 


ii

















 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE VII TRUSTEE

  	
  117

  
	
   

  	
   

  
	
  SECTION 7.1.  
  Duties of Trustee

  	
  117

  
	
  SECTION 7.2.  
  Rights of Trustee

  	
  119

  
	
  SECTION 7.3.  
  Individual Rights of Trustee

  	
  120

  
	
  SECTION 7.4.  
  Trustee’s Disclaimer

  	
  121

  
	
  SECTION 7.5.  
  Notice of Defaults

  	
  121

  
	
  SECTION 7.6.  
  Reports by Trustee to Holders

  	
  121

  
	
  SECTION 7.7.  
  Compensation and Indemnity

  	
  121

  
	
  SECTION 7.8.  
  Replacement of Trustee

  	
  122

  
	
  SECTION 7.9.  
  Successor Trustee by Merger

  	
  123

  
	
  SECTION 7.10.  
  Eligibility; Disqualification

  	
  123

  
	
  SECTION 7.11.  
  Preferential Collection of Claims Against the Issuer

  	
  124

  
	
  SECTION 7.12.  
  Trustee’s Application for Instruction from the Issuer

  	
  124

  
	
   

  	
   

  
	
  ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE

  	
  124

  
	
   

  	
   

  
	
  SECTION 8.1.  
  Option to Effect Legal Defeasance or Covenant Defeasance; Defeasance

  	
  124

  
	
  SECTION 8.2.  
  Legal Defeasance and Discharge

  	
  124

  
	
  SECTION 8.3.  
  Covenant Defeasance

  	
  125

  
	
  SECTION 8.4.  
  Conditions to Legal or Covenant Defeasance

  	
  125

  
	
  SECTION 8.5.  
  Deposited Money and Government Securities to be Held in Trust; Other
  Miscellaneous Provisions

  	
  127

  
	
  SECTION 8.6.  
  Repayment to the Issuer

  	
  127

  
	
  SECTION 8.7.  
  Reinstatement

  	
  128

  
	
   

  	
   

  
	
  ARTICLE IX AMENDMENTS

  	
  128

  
	
   

  	
   

  
	
  SECTION 9.1.  
  Without Consent of Holders

  	
  128

  
	
  SECTION 9.2.  
  With Consent of Holders

  	
  129

  
	
  SECTION 9.3.  
  Compliance with Trust Indenture Act

  	
  131

  
	
  SECTION 9.4.  
  Revocation and Effect of Consents and Waivers

  	
  131

  
	
  SECTION 9.5.  
  Notation on or Exchange of Notes

  	
  132

  
	
  SECTION 9.6.  
  Trustee to Sign Amendments

  	
  132

  
	
   

  	
   

  
	
  ARTICLE X GUARANTEE

  	
  132

  
	
   

  	
   

  
	
  SECTION 10.1.  
  Guarantee

  	
  132

  
	
  SECTION 10.2.  
  Limitation on Liability; Termination, Release and Discharge

  	
  134

  
	
  SECTION 10.3.  
  Right of Contribution

  	
  137

  
	
  SECTION 10.4.   No
  Subrogation

  	
  137

  
	
   

  	
   

  
	
  ARTICLE XI COLLATERAL AND SECURITY

  	
  137

  
	
   

  	
   

  
	
  SECTION 11.1.  
  The Collateral

  	
  137

  



 


iii

















 


	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 11.2.  
  Further Assurances

  	
  139

  
	
  SECTION 11.3.  
  After-Acquired Property

  	
  139

  
	
  SECTION 11.4.  
  Impairment of Security Interest

  	
  140

  
	
  SECTION 11.5.  
  Real Estate Mortgages and Filings

  	
  140

  
	
  SECTION 11.6.  
  Release of Liens on the Collateral

  	
  141

  
	
  SECTION 11.7.  
  Authorization of Actions to be Taken by the Trustee or the Collateral Agent
  Under the Security Documents

  	
  142

  
	
  SECTION 11.8.  
  Collateral Accounts

  	
  144

  
	
  SECTION 11.9.  
  Rule 3-16 of Regulation S-X

  	
  145

  
	
  SECTION 11.10.  
  Control Agreements

  	
  145

  
	
  SECTION 11.11.   Information
  Regarding Collateral

  	
  146

  
	
   

  	
   

  
	
  ARTICLE XII SATISFACTION AND DISCHARGE

  	
  146

  
	
   

  	
   

  
	
  SECTION 12.1.  
  Satisfaction and Discharge

  	
  146

  
	
  SECTION 12.2.  
  Application of Trust Money

  	
  147

  
	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
  148

  
	
   

  	
   

  
	
  SECTION 13.1.  
  Trust Indenture Act Controls

  	
  148

  
	
  SECTION 13.2.  
  Notices

  	
  148

  
	
  SECTION 13.3.  
  Communication by Holders with other Holders

  	
  150

  
	
  SECTION 13.4.  
  Certificate and Opinion as to Conditions Precedent

  	
  150

  
	
  SECTION 13.5.  
  Statements Required in Certificate or Opinion

  	
  150

  
	
  SECTION 13.6.  
  When Notes Disregarded

  	
  151

  
	
  SECTION 13.7.  
  Rules by Trustee, Paying Agent and Registrar

  	
  151

  
	
  SECTION 13.8.  
  Legal Holidays

  	
  151

  
	
  SECTION 13.9.  
  GOVERNING LAW

  	
  151

  
	
  SECTION 13.10.  
  USA Patriot Act

  	
  151

  
	
  SECTION 13.11.  
  No Recourse Against Others

  	
  151

  
	
  SECTION 13.12.  
  Successors

  	
  152

  
	
  SECTION 13.13.  
  Multiple Originals

  	
  152

  
	
  SECTION 13.14.  
  Qualification of Indenture

  	
  152

  
	
  SECTION 13.15.  
  Table of Contents; Headings

  	
  152

  
	
  SECTION 13.16.   WAIVERS OF JURY TRIAL

  	
  152

  
	
  SECTION 13.17.  
  Security Agreement Controls

  	
  152

  
	
  SECTION 13.18.  
  Force Majeure

  	
  152

  
	
  SECTION 13.19.  
  Effectiveness of Provisions for RDA and the Guarantors

  	
  153

  



 


	
  EXHIBIT A

  	
  Form of
  Series A Note

  
	
  EXHIBIT B

  	
  Form of
  Series B Note

  
	
  EXHIBIT C

  	
  Form of
  Indenture Supplement for Merger of the Issuer with and into RDA

  
	
  EXHIBIT D

  	
  Form of
  Indenture Supplement to Add Subsidiary Guarantors

  
	
  EXHIBIT E

  	
  Form of
  Security Agreement

  
	
  EXHIBIT F

  	
  Form of
  Mortgage

  
	
  EXHIBIT G

  	
  Forms
  of IP Security Agreements

  



 


iv

















 


	
  EXHIBIT H

  	
  Form of Junior Lien
  Intercreditor Agreement

  



 


v

















 


CROSS-REFERENCE TABLE


 


	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
   

  	
   

  	
   

  
	
  310(a)(1)

  	
   

  	
  7.10

  
	
  (a)(2)

  	
   

  	
  7.10

  
	
  (a)(3)

  	
   

  	
  N.A.

  
	
  (a)(4)

  	
   

  	
  N.A.

  
	
  (a)(5)

  	
   

  	
  7.10

  
	
  (b)

  	
   

  	
  7.3; 7.8; 7.10

  
	
  (c)

  	
   

  	
  7.10

  
	
  311(a)

  	
   

  	
  7.11

  
	
  (b)

  	
   

  	
  7.11

  
	
  (c)

  	
   

  	
  N.A.

  
	
  312(a)

  	
   

  	
  2.5

  
	
  (b)

  	
   

  	
  13.3

  
	
  (c)

  	
   

  	
  13.3

  
	
  313(a)

  	
   

  	
  7.6

  
	
  (b)(1)

  	
   

  	
  7.6; 11.2

  
	
  (b)(2)

  	
   

  	
  7.6; 11.2

  
	
  (c)

  	
   

  	
  7.6; 11.2

  
	
  (d)

  	
   

  	
  7.6

  
	
  314(a)

  	
   

  	
  3.11; 3.17; 13.5

  
	
  (b)

  	
   

  	
  11.2(b)

  
	
  (c)(1)

  	
   

  	
  13.4

  
	
  (c)(2)

  	
   

  	
  13.4

  
	
  (c)(3)

  	
   

  	
  N.A.

  
	
  (d)

  	
   

  	
  11.2; 11.6(b)

  
	
  (e)

  	
   

  	
  13.5

  
	
  315(a)

  	
   

  	
  7.1

  
	
  (b)

  	
   

  	
  7.5; 13.2

  
	
  (c)

  	
   

  	
  7.1

  
	
  (d)

  	
   

  	
  7.1

  
	
  (e)

  	
   

  	
  6.11

  
	
  316(a)(last
  sentence)

  	
   

  	
  13.6

  
	
  (a)(1)(A)

  	
   

  	
  6.5

  
	
  (a)(1)(B)

  	
   

  	
  6.4

  
	
  (a)(2)

  	
   

  	
  N.A.

  
	
  (b)

  	
   

  	
  6.7

  
	
  (c)

  	
   

  	
  6.5

  
	
  317(a)(1)

  	
   

  	
  6.8

  
	
  (a)(2)

  	
   

  	
  6.9

  
	
  (b)

  	
   

  	
  2.4

  
	
  318(a)

  	
   

  	
  13.1

  



 


N.A.
means Not Applicable.


 


Note:  This Cross-Reference Table shall not, for any
purpose, be deemed to be part of this Indenture.


 


vi

















 


INDENTURE
dated as of February 11, 2010, among RD ESCROW CORPORATION, a Delaware
corporation  (“Issuer”), THE
READER’S DIGEST ASSOCIATION, INC., a Delaware corporation (“RDA”),
RDA HOLDING CO., a Delaware corporation (“Holdings”), the SUBSIDIARY
GUARANTORS (as defined herein) parties hereto, WELLS FARGO BANK, NATIONAL
ASSOCIATION (the “Trustee”), as Trustee, and WILMINGTON TRUST FSB (the “Collateral
Agent”), as collateral agent.


 


Each
party agrees as follows for the benefit of the other parties and for the equal
and ratable benefit of the Holders of (i) the Issuer’s Floating Rate
Senior Secured Notes, Series A, due 2017, issued on the date hereof (the “Initial
Notes”), (ii) if and when issued, an unlimited principal amount of
additional Floating Rate Senior Secured Notes, Series A, due 2017 in a
non-registered offering or Floating Rate Senior Secured Notes, Series B,
due 2017 in a registered offering that may be offered from time to time
subsequent to the Issue Date, in each case subject to Section 2.1
(the “Additional Notes”) as provided in Section 2.1(a) and
(iii) if and when issued, the Issuer’s Floating Rate Senior Secured Notes,
Series B, due 2017 that may be issued from time to time in exchange for
Initial Notes or any Additional Notes in an offer registered under the Securities
Act as provided in the Registration Rights Agreement, as hereinafter defined,
(the “Exchange Notes,” and together with the Initial Notes and
Additional Notes, the “Notes”):


 


ARTICLE I




DEFINITIONS AND INCORPORATION BY REFERENCE


 


SECTION 1.1.  
Definitions.


 


“Acquired
Indebtedness” means with respect to any specified Person,


 


(1)           Indebtedness or
Disqualified Stock of any other Person existing at the time such other Person
is merged with or into or became a Restricted Subsidiary of such specified
Person, including, without limitation, Indebtedness or Disqualified Stock
incurred in connection with, or in contemplation of, such other Person merging
with or into or becoming a Restricted Subsidiary of such specified Person; and


 


(2)           Indebtedness secured
by a Lien encumbering any asset acquired by such specified Person.


 


“Additional
Interest” means all additional interest then owing pursuant to the
Registration Rights Agreement.


 


“Affiliate”
of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.


 

















 


“Applicable
Premium” means, with respect to a Note on any Redemption Date, the
greater of:


 


(1) 1.0%
of the principal amount of such Note; and


 


(2) the
excess of: (a) the present value at such Redemption Date of
(i) the redemption price of such Note at February 15, 2013 (such
redemption price being set forth in the table appearing in Section 5.7(b)),
plus (ii) all remaining required interest payments (calculated assuming
the then current applicable interest rate) due on such Note through
February 15, 2013 (excluding accrued but unpaid interest to the
Redemption Date), computed using a discount rate equal to the Treasury
Rate as of such Redemption Date plus 50 basis points; over (b) the
principal amount of such Note.


 


“Asset
Sale” means:


 


(1) the
sale, conveyance, transfer or other disposition, whether in a single
transaction or a series of related transactions, of property or assets
(including by way of a sale and leaseback) of the Issuer, a Guarantor or any
Restricted Subsidiary (each referred to in this definition as a “disposition”);
or


 


(2) the
issuance or sale of Equity Interests of any Restricted Subsidiary (other than
directors’ qualifying shares or shares required by applicable law to be held by
a Person other than the Issuer or a Restricted Subsidiary), whether in a single
transaction or a series of related transactions (other than preferred stock of
Restricted Subsidiaries issued in compliance with Section 3.2) in
each case, other than:


 


(a) a
disposition of Cash Equivalents or obsolete, damaged or worn out equipment in
the ordinary course of business or the sale or lease of equipment, inventory or
accounts receivable in the ordinary course of business and dispositions of
property in the ordinary course of business that is no longer used or useful in
the conduct of the business of the Issuer and its Restricted Subsidiaries;


 


(b) the
disposition of all or substantially all of the assets of the Issuer and the
Restricted Subsidiaries in a manner permitted pursuant to Section 4.1
or any disposition that constitutes a Change of Control pursuant to the
Indenture;


 


(c) the
making of any Restricted Payment or Permitted Investment that is permitted to
be made, and is made, under Section 3.3 or the granting of a Lien
permitted by Section 3.6;


 


(d) any
disposition of assets or issuance or sale of Equity Interests of any Restricted
Subsidiary in any transaction or series of transactions with an aggregate fair
market value of less than $5.0 million;


 


(e) any
disposition of property or assets or issuance of securities by (i) a
Restricted Subsidiary to the Issuer, (ii) the Issuer or a Restricted
Subsidiary to another Subsidiary Guarantor or (iii) a Restricted
Subsidiary that is not a Subsidiary Guarantor to another Restricted Subsidiary
that is not a Subsidiary Guarantor;


 


2

















 


(f) to
the extent allowable under Section 1031 of the Internal Revenue Code of
1986, any exchange of like property (excluding any boot thereon) for use in a
Similar Business;


 


(g) the
lease, assignment or sublease of any real or personal property in the ordinary
course of business;


 


(h) licenses
or sub-licenses of intellectual property in the ordinary course of business
(other than any perpetual licensing or exclusive licenses or sub-licenses or
assignments of intellectual property that have a material adverse effect on the
value of the Collateral or the ability of the Collateral Agent or the Holders
of the notes to realize the benefits of, and intended to be afforded by, the
Collateral);


 


(i) solely
with respect to clauses (a)(1) and (2) and (b)(1) and
(2) under Section 3.5, foreclosures on assets, involuntary
asset transfers or transfers by reason of eminent domain;


 


(j) sales
of accounts receivable, or participations therein, in connection with any
Receivables Facility;


 


(k) any
financing transaction with respect to property built or acquired by the Issuer
or any Restricted Subsidiary after the Issue Date, including, without
limitation, sale leasebacks and asset securitizations permitted by the
Indenture;


 


(l) any
issuance or sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary, including in connection with any merger or
consolidation;


 


(m) dispositions
of accounts receivable in connection with the compromise, settlement or
collection thereof in the ordinary course of business or in bankruptcy or
similar proceedings and not in connection with a Receivables Facility;


 


(n) the
factoring by Foreign Subsidiaries at maturity or collection of any accounts receivable
pursuant to factoring programs entered into in the ordinary course of business
on customary market terms and with respect to receivables of, and generated by,
Foreign Subsidiaries;


 


(o) the
sale, lease, assignment, transfer or disposal of any property or assets in
connection with any office move or relocation in the ordinary course of
business;


 


(p) solely
for purposes of satisfying clause (a)(1) or clause (b)(1) of Section 3.5,
the sale, lease, assignment, transfer or disposal of Investments in joint
ventures to the extent required by, or made pursuant to customary sell
arrangements between, the joint venture parties set forth in joint venture
arrangements and similar binding arrangements;


 


(q) the
sale, lease, assignment, transfer or disposal of any and all of the art
collections owned by the Issuer or its Restricted Subsidiaries on the Issue
Date.


 


“Assumption”
means, upon the consummation of the merger between the Issuer and RDA, the
express assumption by RDA of all of the obligations of the Issuer under this
Indenture and the Notes (and thereafter all references to “Issuer” in this
Indenture and the Notes


 


3














 


shall
mean RDA) and whereupon the Guarantees of the Notes will automatically become
effective and the obligations of RDA and the Guarantors under the Security
Documents will become effective.


 


“Bankruptcy
Court” means the United States Bankruptcy Court for the Southern District
of New York presiding over the Chapter 11 cases of The Reader’s Digest
Association, Inc. and its affiliates, Case No. 09-23529 (RDD).


 


“Bankruptcy
Law” means Title 11 of the United States Code or similar federal or state
law for the relief of debtors.


 


“Board
of Directors” means:


 


(1)                                 with respect to
a corporation, the board of directors of the corporation or any committee
thereof duly authorized to act on behalf of such board;


 


(2)                                 with respect to
a partnership, the Board of Directors of the general partner of the
partnership;


 


(3)                                 with respect to
a limited liability company, the managing member or members or any controlling
committee of managing members thereof; and


 


(4)                                 with respect to
any other Person, the board or committee of such Person serving a similar
function.


 


“Board
Resolution” means a copy of a resolution certified by the Secretary or an
Assistant Secretary of a Person to have been duly adopted by the Board of
Directors of such Person and to be in full force and effect on the date of such
certification, and delivered to the Trustee.


 


 “Business Day” means each day that is
not a Saturday, Sunday or other day on which banking institutions in New York,
New York are authorized or required by law to close.


 


“Calculation
Agent” means, an agent appointed by the Issuer to calculate LIBOR and which
shall initially be the Trustee.


 


“Capital
Expenditures” means, for any period, the sum, without duplication, of the
additions to property, plant or equipment and other capital expenditures,
including replacements, capitalized repairs and improvements during such
period, of the Issuer and its Restricted Subsidiaries for such period,
determined in accordance with GAAP.


 


“Capital
Stock” means:


 


(1)                                 in the case of
a corporation, corporate stock,


 


(2)                                 in the case of
an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock;


 


4

















 


(3)                                 in the case of
a partnership or limited liability company, partnership or membership interests
(whether general or limited); and


 


(4)                                 any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, the issuing
Person.


 


“Capitalized
Lease Obligation” means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at
such time be required to be capitalized and reflected as a liability on a
balance sheet (excluding the footnotes thereto) in accordance with GAAP.


 


“Cash
Equivalents” means:


 


(1)                                 U.S. dollars
and any other foreign currency held by the Issuer and the Restricted
Subsidiaries in the ordinary course of business;


 


(2)                                 securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof), maturing,
unless such securities are deposited to defease any Indebtedness, not more than
two years from the date of acquisition;


 


(3)                                 securities
issued by U.S. government-sponsored entities and federally related
institutions, maturing and not more than two years from the date of acquisition;


 


(4)                                 repurchase
agreements with primary dealers of eligible banks, and


 


(a)                                 with a maturity of not more
than one year from the date of acquisition; and


 


(b)                                 supported by underlying
collateral that is U.S. Treasury of U.S. government-sponsored
entities;


 


(5)                                 certificates of
deposit, time deposits, Eurodollar time deposits, and bankers’ acceptances


 


(a)                                 with a rated bank that has
received a short-term rating from a nationally recognized statistical rating
organization (“NRSRO”)
in the highest short-term rating category for debt obligations (within which
there may be subcategories or gradations indicating relative standing).
Long-term ratings may be used if short-term ratings are not available; and


 


(b)                                 with a maturity of not more
than two years from the date of acquisition;


 


(6)                                 securities
issued or fully guaranteed or insured by any state, commonwealth or territory
of the United States, or by any political subdivision or taxing authority
thereof; and


 


5

















 


(a)                                 such security is a rated
security that has received a short-term rating from a NRSRO in the highest
short-term rating category for debt obligations (within which there may be
subcategories or gradations indicating relative standing). Long-term ratings may
be used if short-term ratings are not available; and


 


(b)                                 such security has a maturity
of not more than two years from the date of acquisition;


 


(7)                                 money market
funds assets of which are consistent with the quality standards of Cash
Equivalents described herein (but excluding for purposes of this
clause (7) money market funds that invest primarily in auction rate
securities);


 


(8)                                 commercial
paper and corporate obligations of corporations, provided that such security:


 


(a)                                 is a rated security that has
received a short-term rating from a NRSRO in the highest short-term rating
category for debt obligations (within which there may be sub-categories or
gradations indicating relative standing); and


 


(b)                                 has a stated final maturity
of not more than one year from the date of acquisition; and


 


(9)                                 instruments
equivalent to those referred to in clauses (1) to (8) above
denominated in euro or pounds sterling 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 not
for speculative purposes.


 


“Cash
Management Obligations” means obligations owed by the Issuer or any
Guarantor to any lender or Affiliate of a lender under the Credit Facilities in
respect of any overdraft and related liabilities arising from treasury,
depository and cash management services or any automated clearing house
transfers of funds.


 


“Change
of Control” means the occurrence of any of the following:


 


(1)                                 the direct or
indirect sale, assignment, conveyance lease, transfer or other disposition, in
one or a series of related transactions, of all or substantially all of the
assets or properties of the Issuer and its Subsidiaries, taken as a whole, to
any “person” or “group” (as such terms are used in Section 13(d) or 14(d)
of the Exchange Act or any successor provision);


 


(2)                                 the Issuer
become aware of (by way of a report or any other filing pursuant to
Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) the acquisition by any “person” or “group” (as defined above),
including any group acting for the purpose of acquiring, holding or disposing
of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act), in a single transaction or in a related series of 


 


6

















 


transactions,
by way of merger, consolidation or other business combination or purchase of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act, or any successor provision), directly or indirectly, of 50% or more of the
total voting power of the Voting Stock of the Issuer or any of its direct or
indirect parents;


 


(3)                                 after an
initial public offering of the Issuer or any direct or indirect parent of the
Issuer, the first day on which a majority of the members of the Board of
Directors of the Issuer are not Continuing Directors; or


 


(4)                                 the Issuer
ceases to be a Wholly-Owned Subsidiary of Holdings (except in a transaction
consummated in accordance with the covenant described in Section 4.1).


 


“Code”
means the Internal Revenue Code of 1986, as amended.


 


“Collateral”
means all property and assets, whether now owned or hereafter acquired, in
which Liens are, from time to time, purported to be granted to secure the Notes
pursuant to the Security Documents.


 


“Collateral
Account” means one or more segregated accounts pledged under the Security
Documents that is under the sole control of the Collateral Agent and is free
from all other Liens (other than Liens permitted to be incurred under
clauses (30) and (31) under the definition of “Permitted Liens,”
Liens securing Priority Payment Lien Obligations, Pari Passu Payment Lien
Obligations and Junior Lien Indebtedness), and includes cash and Cash
Equivalents received by the Trustee or the Collateral Agent from Asset Sales of
Collateral, Recovery Events, foreclosures on or sales of Collateral or any
other awards or proceeds pursuant to the Security Documents, including
earnings, revenues, rents, issues, profits and income from the Collateral
received pursuant to the Security Documents and interest earned thereon.


 


“Collateral
Agent” means Wilmington Trust FSB, acting as the collateral agent under the
Security Documents until a successor replaces it and, thereafter, means the
successor.


 


“Confirmation
Order” means the order of the United States Bankruptcy Court for the Southern
District of New York, dated January 19, 2010, confirming the Plan of
Reorganization.


 


“Consolidated Current Assets”
means of any Person at any date, all amounts (other than cash and Cash
Equivalents and, without duplication, deferred tax assets) 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 such Person and its
Restricted Subsidiaries at such date.


 


“Consolidated Current Liabilities”
means of any Person at any date, 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 such Person and its Restricted
Subsidiaries at such date, but excluding, (a) the current portion of any
long-term Indebtedness, (b) without duplication, deferred tax liabilities
and (c), without duplication, all Indebtedness consisting of revolving
loans or letters of credit to the extent otherwise included therein.


 


7

















 


“Consolidated Depreciation and Amortization
Expense” means with respect to any Person for any period, the total
amount of depreciation and amortization expense, including the amortization of
deferred financing fees, of such Person and its Restricted Subsidiaries for
such period on a consolidated basis and otherwise determined in accordance with
GAAP.


 


 “Consolidated Interest Expense” means,
with respect to any Person for any period, the sum, without duplication, of:


 


(a)                                 consolidated interest
expense of such Person and its Restricted Subsidiaries for such period, to the
extent such expense was deducted (and not added back) in computing Consolidated
Net Income (including (a) amortization of original issue discount resulting
from the issuance of Indebtedness at less than par, (b) all commission,
discounts and other fees and charges owed with respect to letters of credit or
bankers’ acceptances, (c) non-cash interest payments (but excluding any
non-cash interest expense attributable to the movement in the mark to market
valuation of Hedging Obligations or other derivative instruments pursuant to
ASC No. 815—“Derivatives and Hedging Overview”), (d) the
interest component of Capitalized Lease Obligations (e) and net payments,
if any, without duplication, pursuant to interest rate Hedging Obligations with
respect to Indebtedness, and excluding (1) any Additional Interest,
(2) amortization of deferred financing fees and (3) any expensing of
bridge or other financing fees); plus


 


(b)                                 consolidated capitalized
interest of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued; less


 


(c)                                  interest income for such
period.


 


“Consolidated Leverage Ratio”
means, with respect to any Person for any period, the ratio of:


 


(1)                                 the
Consolidated Total Indebtedness of such Person and its Restricted Subsidiaries
at the time of determination (the “Calculation
Date”), to


 


(2)                                 the EBITDA of
such Person for the four most recent full fiscal quarters (for purposes of this
definition, the period from January 1, 2010 to March 31, 2010 shall
be deemed to be a full fiscal quarter of the Issuer without giving effect to
the Emergence Date) ending immediately prior to the date for which internal
financial statements are available.


 


If
the Issuer or any Restricted Subsidiary has incurred, assumed, guaranteed,
redeemed, retired or extinguished any Indebtedness (other than Indebtedness
incurred under any revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) or issues or redeems Disqualified
Stock or preferred stock subsequent to the commencement of the period for which
the Consolidated Leverage Ratio is being calculated but prior to or
substantially concurrently with the event for which the calculation of the
Consolidated Leverage Ratio is made, then the Consolidated Leverage Ratio shall
be calculated giving pro forma effect
to such incurrence, assumption, guarantee, redemption, retirement or
extinguishment 


 


8

















 


of
Indebtedness, or such issuance or redemption of Disqualified Stock or preferred
stock, as if the same had occurred at the beginning of the applicable
four-quarter period.


 


For
purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and disposed operations (as
determined in accordance with GAAP) that have been made by the Issuer or any of
its Restricted Subsidiaries during the four-quarter reference period or subsequent
to such reference period and on or prior to or simultaneously with the
Calculation Date shall be calculated on a pro
forma basis assuming that all such Investments, acquisitions,
dispositions, mergers, consolidations and disposed operations (and the change
in any associated fixed charge obligations and the change in EBITDA resulting
therefrom) had occurred on the first day of the four-quarter reference period.
If since the beginning of such period any Person that subsequently became a
Restricted Subsidiary or was merged with or into the Issuer or any of its
Restricted Subsidiaries since the beginning of such period shall have made any
Investment, acquisition, disposition, merger, consolidation or disposed
operation that would have required adjustment pursuant to this definition, then
the Consolidated Leverage Ratio shall be calculated giving pro forma effect thereto for such period
as if such Investment, acquisition, disposition, merger, consolidation or
disposed operation had occurred at the beginning of the applicable four-quarter
period.


 


For
purposes of this definition, whenever pro forma effect is to be given to a
transaction, the pro forma calculations shall be (x) made in good faith by
a responsible financial or accounting officer of the Issuer (and may include,
for the avoidance of doubt, cost savings and operating expense reductions
resulting from such Investments acquisition, disposition, merger or
consolidation or disposition which is being given pro forma effect that have
been or are reasonably expected to be realized within twelve (12) months
after the date of such Investment, acquisition, disposition, merger,
consolidation or disposed operation as the result of specified actions taken or
to be taken within six (6) months after such date) and which are
reasonably identifiable and factually supportable, except as otherwise provided
herein or (y) determined in accordance with Regulation S-X. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest on such Indebtedness shall be calculated as if the rate in
effect on the Calculation Date had been the applicable rate for the entire
period (taking into account any Hedging Obligations applicable to such
Indebtedness). Interest on a Capitalized Lease Obligations shall be deemed to
accrue at an interest rate reasonably determined by a responsible financial or
accounting officer of the Issuer to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP. For purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period except
as set forth in the first paragraph of this definition. Interest on
Indebtedness that may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate actually chosen,
or, if none, then based upon such optional rate chosen as the Issuer may
designate.


 


For
the purposes of this definition, any amount in a currency other than
U.S. dollars will be converted to U.S. 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.


 


9

















 


“Consolidated
Net Income” means, with respect to any Person for any period, the aggregate
of the Net Income, of such Person and its Restricted Subsidiaries for such
period, on a consolidated basis, and otherwise determined in accordance with GAAP;
provided, however, that, without duplication,


 


(1)                                 any net
after-tax effect of extraordinary, non-recurring or unusual gains or losses,
costs, charges or expenses (less all fees and expenses relating thereto) shall
be excluded (including, without limitation, severance, relocation, transition
and other restructuring costs and curtailments or modifications to pension and
post-retirement employee benefit plans),


 


(2)                                 the Net Income
for such period shall not include the cumulative effect of a change in accounting
principles during such period,


 


(3)                                 any net
after-tax effect of income (loss) from disposed, abandoned or discontinued
operations and any net after-tax gains or losses on disposal, abandoned of
disposed or discontinued operations shall be excluded,


 


(4)                                 any net
after-tax gains or losses (less all fees and expenses relating thereto)
attributable to asset dispositions other than in the ordinary course of
business, as determined in good faith by the Board of Directors of the Issuer,
shall be excluded,


 


(5)                                 the Net Income
for such period of any Person that is not a Subsidiary, or is an Unrestricted
Subsidiary, or that is accounted for by the equity method of accounting, shall
be excluded; provided that Consolidated Net Income of the Issuer shall be increased
by the amount of dividends or distributions or other payments that are actually
paid in cash (or to the extent converted into cash) to the referent Person or a
Restricted Subsidiary thereof in respect of such period (without duplication
for purposes of Section 3.3 of any amounts included in Section
3.3(a)(C)(iv)(A));


 


(6)                                 solely for the
purpose of determining the amount available for Restricted Payments under Section
3.3(a)(C)(i), the Net Income for such period of any Restricted Subsidiary
(other than any Subsidiary Guarantor) shall be excluded if the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
its Net Income is not at the date of determination wholly permitted without any
prior governmental approval (which has not been obtained) or, directly or
indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or in similar
distributions has been legally waived; provided that Consolidated Net Income of
the Issuer will be increased by the amount of dividends or other distributions
or other payments actually paid in cash (or to the extent converted into cash)
to the Issuer or a Restricted Subsidiary thereof in respect of such period, to
the extent not already included therein;


 


(7)                                 the effects of
adjustments (including the effects of such adjustments pushed down to the
Issuer and the Restricted Subsidiaries) in any line item of such Person’s
consolidated financial statements pursuant to GAAP resulting from the
application of 


 


10

















 


purchase
accounting in relation to any consummated acquisition, net of taxes, shall be
excluded;


 


(8)                                 any net
after-tax income (loss) from the early extinguishment or cancellation of
Indebtedness or Hedging Obligations or other derivative instruments shall be
excluded;


 


(9)                                 any impairment
charge or asset write-off pursuant to ASC No. 350—“Intangible Assets” and
No. 360—“Impairments” and the amortization of intangibles arising pursuant
to ASC No. 805 (excluding any such impairment charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future period)
shall be excluded;


 


(10)                          the amount of
any expense will be excluded to the extent a corresponding amount is received
in cash by the Issuer and the Restricted Subsidiaries from a Person other than
the Issuer or any Restricted Subsidiaries under any agreement providing for
reimbursement of any such expense, provided such reimbursement payment has not
been included in determining Consolidated Net Income (it being understood that
if the amounts received in cash under any such agreement in any period exceed
the amount of expense in respect of such period, such excess amounts received
may be carried forward and applied against expense in future periods);


 


(11)                          any non-cash
compensation charge or expense recorded from grants of stock appreciation or
similar rights, stock options or other rights to officers, directors or
employees shall be excluded; and


 


(12)                          any increase in
amortization or depreciation or other non-cash charges or the impact of
write-off of deferred revenues resulting from the application of SOP 90-7
in relation to the Emergence Transactions shall be excluded.


 


Notwithstanding
the foregoing, for the purpose of Section 3.3 only (other than Section
3.3(a)(C)(iv)), there shall be excluded from Consolidated Net Income any
income arising from any sale or other disposition of Restricted Investments
made by the Issuer and the Restricted Subsidiaries, any repurchases and
redemptions of Restricted Investments from the Issuer and the Restricted Subsidiaries,
any repayments of loans and advances which constitute Restricted Investments by
the Issuer or any Restricted Subsidiary, any sale of the stock of an
Unrestricted Subsidiary or any distribution or dividend from an Unrestricted
Subsidiary, in each case only to the extent such amounts increase the amount of
Restricted Payments permitted under Section 3.3(a)(C)(iv).


 


“Consolidated Secured Debt Ratio”
means, with respect to any specified Person, as of any date of determination,
the ratio of (1) the sum, without duplication, of (a) the aggregate
principal amount of the notes, plus (b) the aggregate amount outstanding
under any Receivables Facility, plus (c) the aggregate principal amount
(or accreted value) outstanding under any Pari Passu Payment Lien Obligations,
plus (d) the aggregate principal amount (or accreted value) outstanding
under Credit Facilities which constitute Priority Payment Lien Obligations
(including letters of credit) and any other Priority Payment Lien Obligations,
and plus (e) the aggregate 


 


11

















 


amount
of any incremental Indebtedness and other obligations permitted to be incurred
pursuant to Section 3.2(b)(1) after giving effect to any amounts of
Indebtedness and other obligations incurred under such Section 3.2(b)(1),
as of the last day of the most recent fiscal quarter for which internal
financial statements are available immediately preceding the date on which such
event for which such calculation is being made shall occur (for the purposes of
this definition, the period from January 1, 2010 to March 31, 2010 shall be
deemed to be a full fiscal quarter of the Issuer without giving effect to the
Emergence Date) to (2) the EBITDA of the specified Person and its
Restricted Subsidiaries (on a consolidated basis) for the most recently ended
four full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such event for which such calculation
is being made shall occur (for the purposes of this definition, the period from
January 1, 2010 to March 31, 2010 shall be deemed to be a full fiscal
quarter of the Issuer without giving effect to the Emergence Date), in each
case with such pro forma adjustments as are appropriate and consistent with the
pro forma adjustment provisions set forth in the definition of Consolidated
Leverage Ratio.


 


“Consolidated Total Indebtedness”
means, as at any date of determination, an amount equal to the sum of
(1) the aggregate amount of all outstanding Indebtedness of the Issuer and
its Restricted Subsidiaries on a consolidated basis consisting of Indebtedness
for borrowed money, Obligations in respect of Capitalized Lease Obligations and
debt obligations evidenced by promissory notes and similar instruments, (2) the
aggregate amount of all outstanding Disqualified Stock of the Issuer and all
preferred stock of its Restricted Subsidiaries on a consolidated basis, with
the amount of such Disqualified Stock and preferred stock equal to the greater
of their respective voluntary or involuntary liquidation preferences and
maximum fixed repurchase prices, in each case determined on a consolidated
basis in accordance with GAAP, and (3) all obligations relating to
Receivables Facilities.


 


For
purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock
or preferred stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock or preferred
stock as if such Disqualified Stock or preferred stock were repurchased on any
date on which Consolidated Total Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the fair market value of such Disqualified Stock or preferred
stock, such fair market value shall be determined reasonably and in good faith
by the Issuer.


 


“Consolidated Working Capital”
means at any date, the difference of (a) Consolidated Current Assets on
such date less (b) Consolidated Current Liabilities on such date.


 


“Contingent Obligations” means,
with respect to any Person, any obligation of such Person guaranteeing any
leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any
other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent,


 


(1)                                 to purchase any
such primary obligation or any property constituting direct or indirect
security therefor,


 


12

















 


(2)                                 to advance or
supply funds


 


(a)                                 for the purchase or payment
of any such primary obligation, or


 


(b)                                 to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency of the primary obligor, or


 


(c)                                  to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation against loss in respect thereof.


 


 “Continuing Directors” means, as of any
date of determination, any member of the Board of Directors of the Issuer who:


 


(1)                                 was a member of
such Board of Directors on the Emergence Date; or


 


(2)                                 was nominated
for election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.


 


“Covenant Suspension” means,
during any period of time following the issuance of the Notes, that
(i) the Notes have Investment Grade Ratings from both Rating Agencies, and
(ii) no Default has occurred and is continuing under the Indenture.


 


“Credit
Facilities” means, with respect to the Issuer or any of its Restricted
Subsidiaries, one or more debt facilities, including the Senior Credit
Facility, or other financing arrangements (including, without limitation,
commercial paper facilities or indentures) providing for revolving credit
loans, term loans, letters of credit or other long-term Indebtedness, including
any notes, mortgages, guarantees, security documents, instruments and
agreements executed in connection therewith, and any amendments, supplements,
modifications, extensions, renewals, restatements or refundings thereof and any
indentures or credit facilities or commercial paper facilities that replace,
refund or refinance any part of the loans, notes, other credit facilities or
commitments thereunder, including any such replacement, refunding or
refinancing facility or indenture that increases the amount permitted to be
borrowed thereunder or alters the maturity thereof (provided that such increase
in borrowings is permitted under Section 3.2) or adds Restricted
Subsidiaries as additional borrowers or guarantors thereunder and whether by
the same or any other agent, lender or investor or group of lenders or
investors.


 


“Custodian”
means any receiver, trustee, assignee, liquidator, custodian or similar
official under any Bankruptcy Law.


 


“Debtors”
means Holdings and all of its subsidiaries, including RDA but excluding the
Issuer, that filed voluntary petitions for relief under the Bankruptcy Code in
Bankruptcy Court in 2009.


 


“Default”
means any event that is, or with the passage of time or the giving of notice or
both would be, an Event of Default provided that any Default that results
solely from the


 


13














 


taking
of any action that would have been permitted but for the continuation of a
previous Default will be deemed to be cured if such previous Default is cured
prior to becoming an Event of Default.


 


“Definitive
Notes” means certificated Notes.


 


“Designated Noncash Consideration” means the
fair market value of noncash consideration received by the Issuer or a
Restricted Subsidiary in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers’ Certificate, setting
forth the basis of such valuation, less the amount of cash or Cash Equivalents
received in connection with a subsequent sale of such Designated Noncash
Consideration.


 


“Designated Preferred Stock” means
preferred stock of the Issuer or any direct or indirect parent thereof (in each
case other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary or an employee stock ownership plan or trust established
by the Issuer or any of its Subsidiaries) and is so designated as Designated
Preferred Stock, pursuant to an Officers’ Certificate, as the case may be, on
the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in Section 3.3(a)(C).


 


“Disqualified
Stock” means, with respect to any Person, any Capital Stock of such Person
which, by its terms, or by the terms of any security into which it is
convertible or for which it is putable or exchangeable, or upon the happening
of any event, matures or is mandatorily redeemable, other than as a result of a
change of control or asset sale, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, other than as
a result of a change of control or asset sale, in whole or in part, in each
case prior to the date 91 days after the earlier of the maturity date of
the Notes or the date the Notes are no longer outstanding; provided, however,
that only the portion of Capital Stock that so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date will be deemed to be Disqualified
Stock; and, provided further, that if such Capital Stock is issued to any plan
for the benefit of employees of the Issuer or its Subsidiaries or by any such
plan to such employees, such Capital Stock shall not constitute Disqualified
Stock solely because it may be required to be repurchased by the Issuer or any
of its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations.


 


“Domestic Subsidiary” means, with
respect to any Person, any Restricted Subsidiary of such Person other than a
Foreign Subsidiary.


 


“DTC”
means The Depository Trust Company, its nominees and their respective
successors and assigns, or such other depository institution hereinafter
appointed by the Issuer.


 


“EBITDA” means, with respect to
any Person for any period, the Consolidated Net Income of such Person for such
period plus (without duplication):


 


(a)                                 provision for taxes based on
income or profits, plus franchise or similar taxes, of such Person for such
period deducted (and not added back) in computing Consolidated Net Income, plus


 


14

















 


(b)                                 Consolidated Interest
Expense of such Person for such period to the extent the same was deducted (and
not added back) in calculating such Consolidated Net Income, plus


 


(c)                                  Consolidated Depreciation
and Amortization Expense of such Person for such period to the extent such
depreciation and amortization were deducted (and not added back) in computing
Consolidated Net Income, plus


 


(d)                                 any fees, expenses or
charges related to any Equity Offering, Permitted Investment, acquisition,
disposition, recapitalization or Indebtedness permitted to be incurred by the
Indenture (whether or not successful), including such fees, expenses or charges
related to the offering of the notes, and, in each case, deducted (and not
added back) in computing Consolidated Net Income, plus


 


(e)                                  the amount of any
restructuring charges deducted (and not added back) in such period in computing
Consolidated Net Income, including any one-time costs incurred in connection
with acquisitions after the Issue Date, plus


 


(f)                                   any other non-cash charges,
expenses or losses reducing Consolidated Net Income for such period (including
any impairment charges or the impact of purchase accounting and the effects of
fresh start accounting under SOP 90-7), excluding any such charge that
represents an accrual or reserve for a cash expenditure for a future period,
plus


 


(g)                                  the amount of any minority
interest expense or non-controlling interest in income of consolidated
subsidiaries deducted (and not added back) in such period in calculating
Consolidated Net Income (less the amount of any cash dividends paid to the holders
of such minority interests), plus


 


(h)                                 all non-recurring costs and
expenses of the Issuer and its Restricted Subsidiaries incurred in connection
with the Emergence Transactions; plus


 


(i)                                     any net loss resulting from
Hedging Obligations (including pursuant to the application of
SFAS No. 133), plus


 


(j)                                    foreign exchange losses
resulting from the impact of foreign currency changes on the valuation of
assets or liabilities on the balance sheet of the Issuer and its consolidated
Subsidiaries, plus


 


(k)                                 any deductions consisting of
subsidiary income attributable to minority interests in Reader’s Digest
Association Limited, except to the extent actually paid to a holder of Equity
Interests in such Subsidiary (or any designee of such Person) other than the
Issuer and its Subsidiaries (with such payments to be deducted in the period
made), less


 


(l)                                     any net gain resulting from
Hedging Obligations (including pursuant to the application of
SFAS No. 133), less


 


15

















 


(m)                             foreign exchange gains
resulting from the impact of foreign currency changes on the valuation of
assets or liabilities on the balance sheet of the Issuer and its consolidated
Subsidiaries, less


 


(n)                                 any additions resulting from
subsidiary losses attributable to minority interests in Reader’s Digest
Association Limited, less


 


(o)                                 non-cash items increasing
Consolidated Net Income of such Person for such period (including the effects
of fresh start accounting under SOP 90-7), excluding any non-cash gains
which represent the reversal of any accrual of, or cash reserve for,
anticipated cash charges that reduced EBITDA in any prior period.


 


It
is understood that if the EBITDA for any fiscal quarter is less than zero, then
such EBITDA shall be deemed to be equal to zero.


 


“Emergence Date” means the day (a)
that is the business day selected by the Debtors after the date of the
Confirmation Order on which all conditions specified in Article IX.A of the
Plan of Reorganization have been satisfied or waived pursuant to Article IX.B
of the Plan of Reorganization; (b) the Emergence Transactions shall have
occurred; and (c) the Plan of Reorganization shall have been substantially
consummated.


 


“Emergence Transactions” mean the
various transactions set forth in the Plan of Reorganization entered into by
RDA and certain of its affiliates in connection with the Emergence Date and
substantial consummation of the Plan of Reorganization.


 


“Equity Interests” means Capital
Stock and all warrants, options or other rights to acquire Capital Stock, but
excluding any debt security that is convertible into, or exchangeable for,
Capital Stock.


 


“Equity
Offering” means any public or private sale of common or preferred equity of
the Issuer or any of its direct or indirect parent companies (excluding
Disqualified Stock), other than (a) public offerings with respect to the
Issuer’s or any direct or indirect parent company’s common stock registered on
Form S-8, (b) any sales to Holdings, the Issuer or any of its
Subsidiaries, and (c) any such public or private sale that constitutes an
Excluded Contribution or representing Designated Preferred Stock.


 


“Escrow
Account” means a segregated account, under the sole control of the Trustee,
that includes only cash and Cash Equivalents, the proceeds thereof and interest
earned thereon, free from all Liens other than the Lien in favor of the Trustee
for the benefit of the Holders of the Notes.


 


“Escrow
Agreement” means that certain escrow and security agreement dated as of the
date of this Indenture by and among the Issuer, RDA, the Trustee, and
Wilmington Trust FSB, as Escrow Agent, as the same may be amended, supplemented
or otherwise modified from time to time.


 


16

















 


“Escrow
Condition Date” shall mean the date of the Emergence Date and consummation
of the Emergence Transactions in accordance with the Plan of Reorganization.


 


“Escrow
Conditions” means (i) the occurrence of the Escrow Condition Date, (ii) the
Plan of Reorganization shall not have been amended or terminated on or prior to
the Escrow Condition Date except for such amendments, modifications and waivers
that are not, individually or in the aggregate, materially adverse to RDA or
any of its subsidiaries (after giving effect to the consummation of the Emergence
Transactions), taken as a whole, or to the Holders of the Notes, (iii) the UK
Condition shall have been satisfied, (iv) no Default or Event of Default
(including with respect to Restricted Subsidiaries) shall have occurred and be
continuing on the Escrow Release Date (or would have occurred had RDA or any of
the Guarantors (after giving effect to the Emergence Transactions) been subject
to all the provisions of this Indenture as of the Issue Date) under the
Indenture, (v) the Liquidity on the Escrow Release Date of the Issuer and its
Restricted Subsidiaries is greater than $150.0 million on a pro forma basis for
any settlement of the UK Condition and (vi) there has been no Material Adverse
Change.


 


“Escrow
Release Date” means the date on or prior to February 28, 2010, that the
Escrow Conditions are fulfilled and the Escrow Agent receives the Officers’
Certificate described in Section 7 of the Escrow Agreement and the Escrow Agent
releases the Escrowed Property (as defined in the Escrow Agreement), including
investment earnings, to Pledgor (as defined in the Escrow Agreement) as set
forth in such Officers’ Certificate.


 


“Excess Cash Flow” means, for any
fiscal year, the sum (without duplication) of:


 


(1)           Consolidated Net
Income of the Issuer for such fiscal year, adjusted to exclude amounts referred
to in clause (6) of the definition thereof; plus


 


(2)           Non-cash charges
(including Consolidated Depreciation and Amortization Expense) deducted (and
not added back) in computing Consolidated Net Income; plus


 


(3)           decreases in
Consolidated Working Capital; plus


 


(4)           the net amount for
such fiscal year, if any, of any increase in the deferred tax liability of the
Issuer and the consolidated Subsidiaries or any decrease in the deferred tax
asset of the Issuer and the consolidated Subsidiaries, excluding any change in
deferred taxes that does not change or offset the taxes payable (or receivable,
if applicable) account of the Issuer and the consolidated Subsidiaries; minus


 


(5)           the sum of
(i) any non-cash gains included in determining such Consolidated Net
Income for such fiscal year plus (ii) the
net amount for such fiscal year, if any, of any decrease in the deferred tax
liability of the Issuer and the consolidated Subsidiaries or any increase in
the deferred tax assets of the Issuer and the consolidated Subsidiaries,
excluding any change in deferred taxes that does not change or offset the taxes
payable (or receivable if applicable) account of the Issuer and the
consolidated Subsidiaries; minus


 


(6)           the aggregate amount
of all non-cash credits included in arriving at Consolidated Net Income; minus


 


17

















 


(7)           the sum, without
duplication, of cash Capital Expenditures for such fiscal year (except to the
extent attributable to the increase of Capitalized Lease Obligations or
otherwise financed by incurring Indebtedness for such purpose); minus


 


(8)           increases in
Consolidated Working Capital; minus


 


(9)           the aggregate
principal amount of long-term Indebtedness (excluding the current portion of
any long-term Indebtedness) (other than the Notes) repaid or prepaid by the
Issuer and the consolidated Subsidiaries during such fiscal year, excluding
(i) Indebtedness in respect of revolving loans and letters of credit,
except to the extent that any repayment or prepayment of such Indebtedness is
accompanied by a permanent reduction in related commitments;
(ii) prepayments of Pari Passu Payment Lien Obligations and Priority
Payment Lien Obligations (x) with Net Proceeds and (y) pursuant to
any required prepayment from excess cash flow of the Issuer; and
(iii) repayments or prepayments of long-term Indebtedness (excluding the
current portion of any long-term Indebtedness) (including any such Indebtedness
referred to in the foregoing subclauses of this clause (9)) financed by
Incurring other long-term Indebtedness (excluding the current portion of any
long-term Indebtedness).


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.


 


“Exchange
Notes” means any notes issued in exchange for Notes pursuant to the
Registration Rights Agreement or similar agreement.


 


“Excluded
Asset” means (i) any property (including but not limited to the Equity
Interests of Direct Holdings IP L.L.C., a Delaware limited liability company)
to the extent that a grant of a security interest in such property pursuant to
the Security Documents is prohibited by any requirement of law of a
governmental authority, requires a consent not obtained of any governmental
authority pursuant to such requirement of law or is prohibited by, or
constitutes a breach or default under or results in the termination of 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 stock or pledged note (other than
any of the foregoing issued by the Issuer or a Guarantor), any applicable
shareholder, joint venture or similar agreement, except, in each case, to the
extent that such requirement of 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 termination or requiring
such consent is ineffective under applicable law (including but not limited to
the Uniform Commercial Code or Title 11 of the United States Code, as amended
(the “Bankruptcy Code”)), (ii) any intellectual property to the extent
that the grant of a security interest therein would result in the invalidity,
unenforceability, voiding or cancellation thereof (including, without
limitation, any trademark application filed on an intent to use basis), (iii)
any assets of Foreign Subsidiaries, unless any such Foreign Subsidiary is
required to become a Guarantor under this Indenture, (iv) any assets held by
any Unrestricted Subsidiaries or any other Subsidiary that is not a Guarantor,
(v) amounts used to cash collateralize the letters of credit (A) existing on
the Emergence Date (without renewal) and (B) under the Senior Credit Facility
in an amount not to exceed $26.5 million at any one time, (vi) any capital
stock of any Foreign Subsidiary owned by the Issuer or any Guarantor in excess
of 65% 


 


18

















 


of
the Capital Stock of such Foreign Subsidiary, (vii) any aircraft or any trucks,
trailers, tractors, service vehicles, automobiles, rolling stock or other
registered mobile equipment of the Issuer or any Guarantor or equipment of the
Issuer or any Guarantor covered by certificates of title or ownership, (viii)
any real property other than Material Real Property, (ix) any payroll accounts,
employee benefit accounts and tax accounts and (x) any capital stock and other securities
of a Subsidiary to the extent that the pledge of such Capital Stock and other
securities results in the Issuer being required to file separate financial
statements of such Subsidiary with the SEC, but only to the extent necessary
not to be subject to such requirement.


 


“Excluded Contribution” means net
cash proceeds, marketable securities or Qualified Proceeds received by the
Issuer and its Restricted Subsidiaries from


 


(a)                                 contributions to its common
equity capital, and


 


(b)                                 the sale (other than to a
Subsidiary of the Issuer or to any management equity plan or stock option plan
or any other management or employee benefit plan or agreement of the Issuer or
a Subsidiary) of Capital Stock (other than Disqualified Stock and Designated
Preferred Stock) of the Issuer or any direct or indirect parent of the Issuer,


 


in
each case designated as Excluded Contributions pursuant to an Officers’
Certificate on the date such capital contributions are made or the date such
Equity Interests are sold, as the case may be, which are excluded from the
calculation set forth in Section 3.3(a)(C).


 


“Existing
Indebtedness” means Indebtedness of the Issuer and its Restricted
Subsidiaries existing (i) on the Issue Date; provided
that all such Indebtedness is terminated on or prior to the Emergence Date and
(ii) on the Emergence Date.


 


 “Fiscal Year” means the fiscal year of
the Issuer ending on December 31 of each year.


 


“Foreign
Subsidiary” means, with respect to any Person, any Restricted Subsidiary of
such Person that is not organized or existing under the laws of the United
States, any state thereof or the District of Columbia, and any Restricted
Subsidiary of such Restricted Subsidiary.


 


“GAAP”
means generally accepted accounting principles in the United States which are
in effect on the Issue Date.


 


“Government Securities” means
securities that are


 


(a)                                 direct obligations of the
United States of America for the timely payment of which its full faith and
credit is pledged, or


 


(b)                                 obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America,


 


19

















 


which,
in either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with
respect to any such Government Securities or a specific payment of principal of
or interest on any such Government Securities held by such custodian for the
account of the holder of such depository receipt; provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Securities or the
specific payment of principal of or interest on the Government Securities
evidenced by such depository receipt.


 


“guarantee” means a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner (including,
without limitation, letters of credit and reimbursement agreements in respect
thereof), of all or any part of any Indebtedness or other obligations.


 


“Guarantee”
means the guarantee by any Guarantor of the Issuer’s Obligations under this
Indenture and the Notes.


 


“Guarantors”
means Holdings together with the Subsidiary Guarantors, until such time as such
Person’s Guarantee may be released in accordance with this Indenture.


 


“Hedging
Obligations” means, with respect to any Person, the obligations of such
Person under


 


(a)                                 currency exchange, interest
rate or commodity swap agreements, currency exchange, interest rate or
commodity cap agreements and currency exchange, interest rate or commodity
collar agreements; and


 


(b)                                 other agreements or
arrangements designed to manage, hedge or protect such Person against
fluctuations in currency exchange, interest rates or commodity prices.


 


“Holder”
means a Person in whose name a Note is registered in the Notes Register.


 


“Holdings”
means the Person named as such in the first introductory paragraph of this
Indenture.


 


“IAI”
means an institutional “accredited investor” as described in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act.


 


“Indebtedness”
means, with respect to any Person,


 


(a)                                 any Indebtedness (including
principal and premium) of such Person, whether or not contingent:


 


(1)           in respect of
borrowed money,


 


20

















 


(2)           evidenced by bonds,
notes, debentures or similar instruments or letters of credit or bankers’
acceptances (or, without double counting, reimbursement agreements in respect
thereof),


 


(3)           representing the
deferred and unpaid balance of the purchase price of any property (including
Capitalized Lease Obligations), except any such balance that constitutes a
trade payable or similar obligation to a trade creditor, in each case accrued
in the ordinary course of business, or


 


(4)           representing any
Hedging Obligations,


 


if and to the extent that any of the foregoing Indebtedness (other than
letters of credit and Hedging Obligations) would appear as a liability upon a
balance sheet (excluding the footnotes thereto) of such Person prepared in
accordance with GAAP,


 


(b)                                 to the extent not otherwise
included, any obligation by such Person to be liable for, or to pay, as
obligor, guarantor or otherwise, on the Indebtedness of another Person (whether
or not such items would appear upon the balance sheet of such obligor or
guarantor), other than by endorsement of negotiable instruments for collection
in the ordinary course of business, and


 


(c)                                  to the extent not otherwise
included, Indebtedness of another Person secured by a Lien on any asset owned
by such Person, whether or not such Indebtedness is assumed by such Person
(with the amount of such Indebtedness deemed to be the lower of (i) the
principal amount of the Indebtedness of such other person and (ii) the
fair market value of the assets securing such Indebtedness at the date of
determination);


 


provided, however, that (x) Contingent Obligations incurred in
the ordinary course of business, (y) and obligations under or in respect
of Receivables Facilities, and (z) in the case of the Issuer and its
Restricted Subsidiaries, 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 in the ordinary course of
business shall be deemed not to constitute Indebtedness.


 


“Indenture”
means this Indenture as amended or supplemented from time to time.


 


“Independent Financial Advisor”
means an accounting, appraisal, investment banking firm or consultant to
Persons engaged in Similar Businesses of nationally recognized standing that
is, in the good faith judgment of the Issuer, qualified to perform the task for
which it has been engaged.


 


“Initial
Notes” has the meaning ascribed to it in the second introductory paragraph
of this Indenture.


 


“Initial
Purchasers” means J.P. Morgan Securities Inc., Banc of America
Securities LLC, Credit Suisse Securities (USA) LLC, Goldman, Sachs &
Co. and Moelis & Company LLC.


 


21

















 


 “Interest
Period” means the period commencing on and including an interest
payment date and ending on and including the day immediately preceding the next
succeeding interest payment date, with the exception that the first Interest
Period shall commence on and include the Issue Date and end on and include
May 14, 2010.


 


“Investment Grade Rating” means a
rating equal to or higher than Baa3 (or the equivalent) by Moody’s Investors
Service, Inc. and BBB- (or the equivalent) by Standard & Poor’s
Ratings Group, Inc., in each case, with a stable or better outlook, or an
equivalent rating by any other Rating Agency.


 


“Investments” means, with respect
to any Person, all investments by such Person in other Persons (including
Affiliates) in the form of loans (including guarantees), advances or capital
contributions (excluding accounts receivable, trade credit, advances to
customers, commission, travel and similar advances to officers and employees,
in each case made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities issued by any other Person and investments that are required by GAAP
to be classified on the balance sheet (excluding the footnotes) of such Person
in the same manner as the other investments included in this definition to the
extent such transactions involve the transfer of cash or other property. For
purposes of the definition of “Unrestricted Subsidiary” and Section 3.3,


 


(1)           “Investments” shall
include the portion (proportionate to the Issuer’s direct or indirect equity
interest in such Subsidiary) of the fair market value of the net assets of a
Subsidiary of the Issuer at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Issuer or applicable Restricted
Subsidiary shall be deemed to continue to have a permanent “Investment” in an
Unrestricted Subsidiary in an amount (if positive) equal to


 


(x)                                 the Issuer’s direct or
indirect “Investment” in such Subsidiary at the time of such redesignation;
less


 


(y)                                 the portion (proportionate
to the Issuer’s direct or indirect equity interest in such Subsidiary) of the
fair market value of the net assets of such Subsidiary at the time of such
redesignation; and


 


(2)           any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined in good
faith by the Issuer.


 


“IP
Security Agreements” means the grants of security interest in trademark
rights, patent rights and copyrights in substantially the forms attached as
Exhibit G hereto, as the same may be
amended, supplemented or modified from time to time.


 


“Issue
Date” means the date on which the Notes are initially issued.


 


“Issuer”
means the Person named as the “Issuer” in the first introductory paragraph of
this Indenture until a successor Person shall have become such pursuant to the
applicable 


 


22

















 


provisions
of this Indenture (including as a result of the Assumption), and thereafter “Issuer”
shall mean such successor Person.


 


“Junior
Lien Intercreditor Agreement” means the Junior Lien Intercreditor Agreement
in substantially the form attached as Exhibit H hereto, as the
same may be amended, supplemented or otherwise modified from time to time.


 


 “LIBOR”
with respect to an Interest Period, shall be the greater of (a) 3.0% or
(b) the interest rate determined by the Calculation Agent as follows:


 


(1)           the arithmetic mean
of the offered rates for deposits in U.S. dollars for the three-month
period that appear on “Reuters Page LIBOR 01” (or if such page by its
terms provides for a single rate, such single rate) at approximately
11:00 a.m., London time, on the date that is the second London Banking Day
before the interest determination date. “Reuters Page LIBOR 01” means the
display page designated as “LIBOR 01” on the Reuters service for the purpose of
displaying London interbank offered rates of major banks, or any successor page
on the Reuters service selected by the Issuer with the consent of the
Calculation Agent, or if the Issuer determines that no such successor service
exists on Reuters, an equivalent page on any successor service selected by the
Issuer with the consent of the Calculation Agent.


 


(2)           If a rate cannot be
determined under clause (1) above, the Calculation Agent shall determine
LIBOR on the basis of the rates at which deposits in U.S. dollars are
offered by four major banks in the London interbank market (selected by the
Calculation Agent after consulting with the Issuer) at approximately
11:00 a.m., London time, on the date that is the second London Banking Day
before the interest determination date to prime banks in the London interbank
market for a period of three months in principal amounts of at least
$1,000,000, which rates are representative for single transactions in such
market at such time. In such case, the Calculation Agent shall request the
principal London office of each such major bank to provide a quotation of that
rate. If at least two such quotations are provided, LIBOR for the applicable
interest reset date will be the arithmetic mean of the quotations. If fewer
than two such quotations are provided as requested, LIBOR for the applicable
interest reset date shall be the arithmetic mean of the rates quoted by three
major banks in New York City, New York (selected by the Calculation Agent after
consulting with the Issuer) at approximately 11:00 a.m. New York
time, on the date that is the second London Banking Day before the interest
determination date for the applicable interest reset date for loans in
U.S. dollars to leading banks for a period of three months commencing on
such interest reset date and in a principal amount equal to an amount not less
than $1,000,000, which rates are representative for single transactions in such
market at such time. If fewer than three quotations are provided as requested,
LIBOR for the following interest period shall be the same as the rate
determined for the then current interest period.


 


“Lien”
means, with respect to any asset, any mortgage, lien (statutory or otherwise),
pledge, charge, security interest, preference, priority or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law, including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to


 


23














 


give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction; provided that in no event shall an operating
lease be deemed to constitute a Lien.


 


“Liquidity”
means, as of the most recent date for which internal financial statements are
available, the sum of (i) cash, (ii) Cash Equivalents and (iii) unutilized
commitments available to be borrowed under revolving credit arrangements of the
Issuer and its Restricted Subsidiaries, after giving effect to outstanding
letters of credit thereunder.


 


“London Banking Day” means any day
in which dealings in U.S. dollars are transacted or, with respect to any
future date, are expected to be transacted in the London interbank market.


 


“Material
Adverse Change” means that since the Issue Date there has not been any
material adverse change, or any development which would reasonably be expected
to result in a material adverse change, in or affecting the business, assets,
financial position or results of operations of Holdings and its subsidiaries
taken as a whole, except (i) changes affecting the economy, generally or
financial markets in the United States generally, (ii) changes in GAAP or any
interpretation thereof after the Issue Date, (iii) acts of God, any outbreak or
escalation of hostilities or any calamity either within or outside the United
States after the Issue Date, (iv) any development with respect to the U.K.
pension scheme of Reader’s Digest Association Limited and (v) as otherwise
disclosed in the Preliminary Offering Memorandum as supplemented by the
Supplement to Preliminary Offering Memorandum.


 


“Material Real Property” means, on
any date, any real property owned (but excluding leases) by the Issuer or any
Guarantor with a fair market value as of such date in excess of
$2.5 million.


 


“Moody’s” means Moody’s Investors
Service, Inc. and any successor to its rating agency business.


 


“Mortgages”
means the mortgages, deeds of trust, deeds to secure Indebtedness or other
similar documents securing Liens on the Premises, as well as the other
Collateral secured by and described in the mortgages, deeds of trust, deeds to
secure Indebtedness or other similar documents.


 


 “Net Award” means any awards or
proceeds in respect of any condemnation or other eminent domain proceeding
relating to any Collateral deposited in the Collateral Account pursuant to the
Security Documents.


 


“Net
Income” means, with respect to any Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends.


 


“Net
Insurance Proceeds” means any awards or proceeds in respect of any casualty
insurance or title insurance claim relating to any Collateral deposited in the
Collateral Account pursuant to the Security Documents.


 


24

















 


“Net Proceeds” from an Asset Sale
means the aggregate cash proceeds received by the Issuer or any Restricted
Subsidiary (including any cash received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and net proceeds from
the sale of other disposition of any Designated Noncash Consideration and
securities or other assets received as consideration, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations
relating to the properties or assets that are the subject of such Asset Sale or
received in any other non-cash form) therefrom, in each case net of:


 


(1)           all brokerage,
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP or distributed or distributable to its members as a tax
distribution (after taking into account any available tax credits or deductions
and any tax sharing agreements), as a direct cost relating to such Asset Sale;


 


(2)           all payments made on
any Indebtedness that is secured with a higher priority than the notes and the
Guarantees by any assets subject to such Asset Sale, in accordance with the
terms of any Lien upon such assets, or that must by its terms, or in order to
obtain a necessary consent to such Asset Sale, or by applicable law, be repaid
out of the proceeds from such Asset Sale;


 


(3)           all distributions
and other payments required to be made to minority interest holders (other than
the Issuer or Restricted Subsidiaries) in Subsidiaries or joint ventures as a
result of such Asset Sale;


 


(4)           the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the property or other assets
disposed of in such Asset Sale and retained by the Issuer or any Restricted
Subsidiary after such Asset Sale; and


 


(5)           any portion of the
purchase price from an Asset Sale placed in escrow in accordance with GAAP
(whether as a reserve for adjustment of the purchase price, or for satisfaction
of indemnities in respect of such Asset Sale);


 


provided,
however, that, in the cases of clauses (4) and (5), upon reversal of any
such reserve or the termination of any such escrow, Net Proceeds shall be
increased by the amount of such reversal or any portion of funds released from
escrow to the Issuer or any Restricted Subsidiary.


 


“Notes First Lien Percentage”
means, at any time, a fraction (expressed as a percentage), the numerator of
which is the outstanding principal amount of the Notes (including any Additional
Notes) at such time and the denominator of which is the outstanding principal
amount of all outstanding Pari Passu Payment Lien Obligations (including the
Notes) and Priority Payment Lien Obligations at such time requiring a
prepayment based on the Issuer’s Excess Cash Flow (or other measure based on
cash flow) for a specified fiscal year.


 


“Non-U.S.
Person” means a Person who is not a U.S. Person (as defined in
Regulation S).


 


25

















 


“Notes”
has the meaning ascribed to it in the second introductory paragraph of this
Indenture.


 


“Notes
Custodian” means the custodian with respect to the Global Notes (as
appointed by DTC), or any successor Person thereto and shall initially be the
Trustee.


 


“Obligations” means any principal,
interest (including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable state, federal or foreign law),
penalties, fees, indemnifications, reimbursements (including, without
limitation, reimbursement obligations with respect to letters of credit and
banker’s acceptances), damages and other liabilities, and guarantees of payment
of such principal, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities, payable under the documentation governing any
Indebtedness.


 


“Offering Memorandum”
means the final offering memorandum, dated February 2, 2010 relating to the
offering by the Issuer of $525.0 million principal amount of Floating Rate
Senior Secured Notes due 2017 and any future offering memorandum relating to
Additional Notes.


 


“Officer”
means the Chairman of the Board of Directors, the Chief Executive Officer, the
Chief Financial Officer, the President, any Executive Vice President, Senior
Vice President or Vice President, the Treasurer or the Secretary of the Issuer.
“Officer” of any Guarantor has a correlative meaning.


 


“Officers’
Certificate” means a certificate signed on behalf of the Issuer by two
Officers of the Issuer, one of whom must be the principal executive officer,
the principal financial officer, the treasurer or the principal accounting
officer of the Issuer that meets the requirements set forth in the Indenture.


 


“Opinion
of Counsel” means a written opinion acceptable to the Trustee from legal
counsel who is acceptable to the Trustee. 
The counsel may be an employee of or counsel to the Issuer or the Trustee.


 


“Pari Passu Payment Lien Obligations”
means any Additional Notes and any other Indebtedness that has a stated
maturity date that is longer than the Notes and that is permitted to have Pari
Passu Payment Lien Priority relative to the Notes with respect to the
Collateral and is not secured by any other assets; provided that an authorized
representative of the holders of such Indebtedness (other than any Additional
Notes) shall have executed a joinder to the Security Documents in the form
provided therein. For the avoidance of doubt, Pari Passu Payment Lien
Obligations shall not include Priority Payment Lien Obligations.


 


“Pari Passu Payment Lien Priority”
means, relative to specified Indebtedness and other obligations, having equal
Lien priority to the Notes and the Guarantees, as the case may be, on the
Collateral.


 


“Permitted
Investments” means


 


26

















 


(a)                                 any Investment in the Issuer
or any Domestic Subsidiary or any Investment by a Restricted Subsidiary that is
not a Subsidiary Guarantor in a Restricted Subsidiary that is not a Subsidiary
Guarantor;


 


(b)                                 any Investment in cash and
Cash Equivalents;


 


(c)                                  any Investment by the Issuer
or any Domestic Subsidiary in a Person that is engaged in a Similar Business if
as a result of such Investment:


 


(1)           such Person becomes
a Domestic Subsidiary; or


 


(2)           such Person, in one
transaction or a series of related transactions, is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Issuer or a Domestic Subsidiary,


 


(d)                                 any Investment by a
Restricted Subsidiary that is not a Subsidiary Guarantor in a Person that is
engaged in a Similar Business if as a result of such Investment:


 


(1)           such Person becomes
a Restricted Subsidiary; or


 


(2)           such Person, in one
transaction or a series of related transactions, is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Issuer or a Restricted Subsidiary,


 


(e)                                  any Investment in securities
or other assets not constituting cash or Cash Equivalents and received in
connection with an Asset Sale made pursuant to the provisions of Section 3.5
or any other disposition of assets not constituting an Asset Sale;


 


(f)                                   any Investment existing or
pursuant to agreements or arrangements in effect on the Issue Date and any
modification, replacement, renewal or extension thereof; provided that the
amount of any such Investment may not be increased except (x) as required
by the terms of such Investment as in existence on the Issue Date or
(y) as otherwise permitted under the Indenture;


 


(g)                                  any Investment acquired by
the Issuer or any Restricted Subsidiary:


 


(1)           in exchange for any
other Investment or accounts receivable held by the Issuer or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuers of such other
Investment or accounts receivable; or


 


(2)           as a result of a
foreclosure by the Issuer or any Restricted Subsidiary with respect to any
secured Investment or other transfer of title with respect to any secured
Investment in default;


 


27

















 


(i)                                     Hedging Obligations
permitted under Section 3.2(b)(1) and Section 3.2(b)(12);


 


(j)                                    loans and advances to
officers, directors and employees for business-related travel expenses, moving
expenses and other expenses, in each case incurred in the ordinary course of
business and in compliance with applicable law or to finance the purchase of
Equity Interests of the Issuer or any of its direct or indirect parents and in
an amount not to exceed $5.0 million at any one time outstanding;


 


(k)                                 Investments the payment for
which consists of Equity Interests of the Issuer or any of its direct or
indirect parents (exclusive of Disqualified Stock of the Issuer); provided,
however, that such Equity Interests will not increase the amount available for
Restricted Payments under Section 3.3(a)(C);


 


(l)                                     (i) guarantees of
Indebtedness permitted under Section 3.2; provided that
if such Indebtedness can only be incurred by the Issuer or Subsidiary
Guarantors, then such guarantees are only permitted by this clause to the
extent made by the Issuer or a Subsidiary Guarantor, and (ii) performance
guarantees with respect to obligations incurred by the Issuer or any of its
Restricted Subsidiaries that are permitted by the Indenture;


 


(m)                             any transaction to the
extent it constitutes an Investment that is permitted and made in accordance
with Section 3.8(b) (except transactions described in clauses (2), (4),
(5), (6), (8) and (9) of such Section 3.8(b));


 


(n)                                 Investments consisting of
purchases and acquisitions of inventory, supplies, material or equipment in the
ordinary course of business or the non-exclusive licensing of intellectual
property pursuant to joint marketing arrangements with other Persons;


 


(o)                                 additional Investments
having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (o) that are at that time
outstanding, not to exceed the greater of (x) $50.0 million and
(y) 2.0% of Total Assets (with the fair market value of each Investment
being measured at the time made and without giving effect to subsequent changes
in value) plus the amount of any distributions, dividends, payments or other
returns in respect of such Investments (without duplication for purposes of Section
3.3 of any amounts applied pursuant to Section 3.3(a)(C)); provided
that if such Investment is in Capital Stock of a Person that subsequently
becomes a Restricted Subsidiary, such Investment shall thereafter be deemed
permitted under clause (a) or (d) above and shall not be included as
having been made pursuant to this clause (o);


 


(p)                                 Investments of a Restricted
Subsidiary acquired after the Issue Date or of an entity merged into the Issuer
or merged into or consolidated with a Restricted Subsidiary in accordance with
the covenant described in Section 4.1  


 


28

















 


after
the Issue 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;


 


(q)                                 the creation of Liens on the
assets of the Issuer or any of its Restricted Subsidiaries in compliance with
the covenant described in Section 3.6;


 


(r)                                    Investments relating to any
special-purpose wholly owned subsidiary of the Issuer organized in connection
with a Receivables Facility that, in the good faith determination of the Board
of Directors of the Issuer, are necessary or advisable to effect such
Receivables Facility;


 


(s)                                   Investments consisting of
earnest money deposits required in connection with a purchase agreement or
letter of intent permitted by the Indenture;


 


(t)                                    Investments in Reader’s
Digest Association Limited in an amount not to exceed £10.9 million to
settle under-funded pension liabilities; and


 


(u)                                 Investments in the form of
contributions of the Capital Stock or intercompany notes of
first-tier Foreign Subsidiaries to other first-tier Foreign
Subsidiaries to effectuate a tax reorganization of the Issuer and its Foreign
Subsidiaries.


 


“Permitted
Liens” means, with respect to any Person:


 


(1)           Liens, pledges,
prepayments or deposits by such Person in connection with workmen’s
compensation laws, unemployment insurance laws and other social security
legislation or similar legislation, Liens, pledges, prepayments or deposits
(including deposits made to satisfy statutory or other legal obligations in
connection with sweepstakes or similar contests and Liens in favor of postal
authorities) in connection with, or to secure the performance of, bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or Liens, pledges, prepayments or deposits to
secure public or statutory obligations of such Person or Liens or deposits of
cash or U.S. government bonds to secure surety or appeal bonds to which
such Person is a party, or Liens or deposits as security for contested taxes or
import duties or for the payment of rent, in each case incurred in the ordinary
course of business;


 


(2)           Liens imposed by
law, such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
workmen’s, suppliers’ or construction contractor’s Liens, in each case which
secure amounts which are not overdue for a period of more than forty-five
(45) days or if more than forty-five (45) days overdue, are unfiled
and no other action has been taken to enforce such Lien or being contested in
good faith by appropriate proceedings or other Liens arising out of judgments
or awards against such Person with respect to which such Person shall then be
proceeding with an appeal or other proceedings for review;


 


29

















 


(3)           Liens for taxes,
assessments or other governmental charges not yet due or payable or which are
being contested in good faith by appropriate proceedings;


 


(4)           Liens (including
rights of set-off), deposits, prepayments or cash pledges in connection with or
to secure the performance of statutory bonds, stay, customs and appeal bonds,
performance bonds and surety bonds or bid bonds and other obligations of a like
nature (including those to secure health, safety and environmental obligations)
or with respect to other regulatory requirements or letters of credit issued
pursuant to the request of and for the account of such Person in the ordinary
course of its business;


 


(5)           easements,
rights-of-way, restrictions (including zoning restrictions), covenants,
licenses, encroachments, protrusions and other similar minor encumbrances and
minor title defects affecting real property and zoning or other restrictions as
to the use of real properties or Liens incidental which are imposed by any
governmental authority having jurisdiction over such real property which do not
in the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;


 


(6)           Liens securing
Indebtedness permitted to be incurred pursuant to Section 3.2(b)(4); provided that Liens securing Indebtedness
incurred pursuant to Section 3.2(b)(4) are solely on acquired property
or the assets of the acquired entity;
provided, further, however, that individual financings of equipment
provided by one lender may be cross collateralized to other financings of
equipment provided by such lender;


 


(7)           Liens existing (i)
on the Issue Date and (ii) on the Emergence Date (other than Liens under the
Senior Credit Facility and Liens securing the Notes);


 


(8)           Liens on property or
shares of stock of or held by a Person at the time such Person becomes a
Restricted Subsidiary; provided, however, such Liens are not created or
incurred in connection with, or in contemplation of, such other Person becoming
such a subsidiary; provided, further, however, that such Liens may not extend
to any other property owned by the Issuer or any Restricted Subsidiary;


 


(9)           Liens on property at
the time the Issuer or a Restricted Subsidiary acquired the property, including
any acquisition by means of a merger or consolidation with or into the Issuer
or any Restricted Subsidiary; provided, however, that such Liens are not
created or incurred in connection with, or in contemplation of, such
acquisition; provided, further, however, that the Liens may not extend to any
other property owned by the Issuer or any Restricted Subsidiary;


 


(10)         Liens securing
Indebtedness or other obligations of a Restricted Subsidiary that is not a
Subsidiary Guarantor to another Restricted Subsidiary that is not a Subsidiary
Guarantor, in each case permitted to be incurred in accordance with Section
3.2; provided that the Liens extend only to assets of Restricted
Subsidiaries that are not Subsidiary Guarantors;


 


30

















 


(11)         Liens securing
Hedging Obligations so long as the related Indebtedness is, and is permitted to
be under the Indenture, secured by a Lien on the same property securing such
Hedging Obligations;


 


(12)         Liens on specific
items of inventory of other goods and proceeds of any Person securing such
Person’s obligations in respect of bankers’ acceptances issued or created for
the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;


 


(13)         Leases, licenses,
sublicenses and subleases of real property granted to others in the ordinary
course of business which do not materially interfere with the ordinary conduct of
the business of the Issuer or any of the Restricted Subsidiaries;


 


(14)         Liens arising from
Uniform Commercial Code financing statement filings regarding operating leases
entered into by the Issuer and its Restricted Subsidiaries in the ordinary
course of business;


 


(15)         Liens in favor of the
Issuer or any Domestic Subsidiary;


 


(16)         Liens on equipment of
the Issuer or any Restricted Subsidiary granted in the ordinary course of
business to the Issuer’s or any Restricted Subsidiary’s clients at which such equipment
is located;


 


(17)         Liens to secure any
refinancing, refunding, extension, renewal, modification or replacement (or
successive refinancing, refunding, extensions, renewals, modifications or
replacements) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in clauses (6), (7)(ii), (8), (9), (10), (15), (19) and (22); provided, however,
that (x) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements on such property and
after acquired-property that is affixed or incorporated into the property
covered by such Lien), (y) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness secured by a Lien described under clauses (6), (7)(ii), (8), (9),
(10), (15), (19) and (22) at the time the original Lien became a
Permitted Lien under the Indenture, and (B) an amount necessary to pay any
fees and expenses, including premiums and defeasance costs, related to such
refinancing, refunding, extension, renewal or replacement and (z) the new
Lien has no greater priority relative to the Notes and the Guarantees and the
holders of the Indebtedness secured by such Lien have no greater intercreditor
rights relative to the Notes and the Guarantees and Holders thereof than the
original Liens and the related Indebtedness;


 


(18)         Liens to secure
Indebtedness of any Foreign Subsidiary permitted by Section 3.2(b)(21)
covering only the assets of such Foreign Subsidiary;


 


(19)         Liens securing the
Notes outstanding on the Issue Date and the Exchange Notes in respect thereof,
the Guarantees relating to such Notes and Exchange Notes and any obligations
with respect to such Notes and Exchange Notes and Guarantees relating thereto;


 


31

















 


(20)         Liens on the
Collateral in favor of any collateral agent (including for the benefit of the
Holders) relating to such collateral agent’s administrative expenses with
respect to the Collateral;


 


(21)         Liens securing
judgments, attachments or awards not giving rise to an Event of Default and
notices of lis pendens and associated rights related to litigation being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made;


 


(22)         Liens on Collateral
securing Pari Passu Payment Lien Obligations or Junior Lien Indebtedness that
has a stated maturity date that is longer than the Notes permitted to be
incurred pursuant to Section 3.2(a); provided that
any such Indebtedness has Pari Passu Payment Lien Priority or junior Lien
priority (pursuant to the Junior Lien Intercreditor Agreement) relative to the
Notes and Guarantees and after giving pro forma effect thereto, the
Consolidated Secured Debt Ratio would be no greater than 2.25 to 1.0;


 


(23)         Any interest or title
of a lessor, sublessor, licensor or sublicensor in the property subject to any
lease, sublease, license or sublicense (other than any property that is the
subject of a sale and leaseback transaction);


 


(24)         Liens on assets or
securities deemed to arise in connection with and solely as a result of the
execution, delivery or performance of contracts to sell such assets or
securities if such sale is otherwise permitted by the Indenture;


 


(25)         Liens on Capital
Stock of Unrestricted Subsidiaries securing Indebtedness of such Unrestricted
Subsidiaries (except to the extent such Capital Stock is pledged as
Collateral);


 


(26)         Liens on
(x) Collateral securing Indebtedness incurred pursuant to, and obligations
described in, Section 3.2(b)(1); provided that
any such Indebtedness may be Priority Payment Lien Obligations, Pari Passu
Payment Lien Obligations or have junior Lien priority pursuant to the Junior
Lien Intercreditor Agreement relative to the Notes and Guarantees and
(y) Liens on property and assets of Foreign Subsidiaries securing
Indebtedness of Foreign Subsidiaries incurred pursuant to Section 3.2(b)(1);


 


(27)         Liens on Collateral
securing Junior Lien Indebtedness that has a stated maturity date that is
longer than the Notes and that is permitted to be incurred pursuant to Section
3.2(a); provided that any such Liens are subject to the Junior Lien
Intercreditor Agreement;


 


(28)         Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with importation of goods;


 


(29)         Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by the Issuer or any of its Restricted Subsidiaries
in the ordinary course of business;


 


32

















 


(30)         Liens that are
contractual rights of set-off or, in the case of clause (i) or
(ii) below, other bankers’ Liens (i) relating to treasury, depository
and cash management services or any automated clearing house transfers of funds
in the ordinary course of business and not given in connection with the
issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts
to permit satisfaction of overdraft or similar obligations incurred in the
ordinary course of business of the Issuer or any Subsidiary or
(iii) relating to purchase orders and other agreements entered into with
customers of the Issuer or any Restricted Subsidiary in the ordinary course of
business;


 


(31)         Liens (i) of a
collection bank arising under Section 4-210 of the Uniform Commercial Code
on items in the course of collection, (ii) in favor of a banking
institution arising as a matter of law encumbering deposits (including the
right of set-off) arising in the ordinary course of business in connection with
the maintenance of such accounts and (iii) arising under customary general
terms of the account bank in relation to any bank account maintained with such
bank and attaching only to such account and the products and proceeds thereof;


 


(32)         Liens arising by
operation of law or contract on insurance policies and the proceeds thereof to
secure premiums thereunder, and 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;


 


(33)         Liens attaching
solely to cash earnest money deposits in connection with fully collateralized
repurchase agreements that are permitted by Section 3.2 that constitute
temporary cash investments and that do not extend to any assets other than
those that are the subject of such repurchase agreement;


 


(34)         Liens solely on any
cash earnest money deposits made in connection with any letter of intent or
purchase agreement permitted hereunder;


 


(35)         Liens on accounts
receivable and related assets incurred in connection with a Receivables
Facility;


 


(36)         Liens on deposits in
the ordinary course of business securing credit card programs maintained in the
ordinary course of business in an amount not to exceed $15.0 million (plus
the amount, up to an additional $20.0 million, of such deposits sought by
JPMorgan Chase Bank, N.A. or its subsidiaries (including Paymentech)) in the
aggregate at any one time outstanding;


 


(37)         ground leases in
respect of real property on which facilities owned or leased by the Issuer 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
Issuer or any Subsidiary;


 


(38)         Liens on equipment
(including printing presses and data-processing equipment) owned by the Issuer
or any Restricted Subsidiary and located on the premises of any supplier, in
the ordinary course of business;


 


33














 


(39)         Utility and other
similar deposits made in the ordinary course of business;


 


(40)         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, consistent with past practice and not for
speculative purposes;


 


(41)         Liens (i) on
cash advances in favor of the seller of any property to be acquired in an
Investment permitted pursuant to Permitted Investments to be applied against
the purchase price for such Investment, and (ii) consisting of an
agreement to sell any property in an Asset Sale permitted under Section 3.5,
in each case, solely to the extent such Investment or Asset Sale, as the case
may be, would have been permitted on the date of the creation of such Lien;


 


(42)         Liens on cash
collateral securing letters of credit existing on the Emergence Date; and


 


(43)         Liens securing
Indebtedness and other obligations in an aggregate principal amount not to
exceed $5.0 million at any one time outstanding.


 


For
purposes of determining compliance with this definition, (A) Permitted
Liens need not be incurred solely by reference to one category of Permitted
Liens described above but are permitted to be incurred in part under any
combination thereof and (B) in the event that a Lien (or any portion
thereof) meets the criteria of one or more of the categories of Permitted Liens
described above, the Issuer shall, in its sole discretion, classify (or
reclassify) such item of Permitted Liens (or any portion thereof) in any manner
that complies with this definition and will only be required to include the
amount and type of such item of Permitted Liens in one of the above clauses and
such Lien will be treated as having been incurred pursuant to only one of such
clauses.


 


“Person”
means any individual, corporation, limited liability company, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.


 


“Plan of Reorganization” means the
Third Amended Joint Chapter 11 Plan of Reorganization for The Reader’s
Digest Association, Inc. and its Debtor Affiliates, dated as of
November 30, 2009, Case No. 09-23529 (RDD) filed in the United States
Bankruptcy Court for the Southern District of New York, as amended,
supplemented or otherwise modified.


 


“Post-Petition Interest” means any
interest or entitlement to fees or expenses or other charges that accrues after
the commencement of any bankruptcy proceeding, whether or not allowed or
allowable in any such bankruptcy proceeding.


 


“Predecessor
Note” of any particular Note means every previous Note evidencing all or a
portion of the same debt as that evidenced by such particular Note; and, for
the purposes of this definition, any Note authenticated and delivered under Section
2.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Note shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Note.


 


34

















 


“preferred stock” means any Equity
Interest with preferential rights of payment of dividends or upon liquidation,
dissolution, or winding up.


 


“Preliminary
Offering Memorandum” means the preliminary offering memorandum, dated
January 25, 2010, relating to the offering and sale by RDA of $525.0 million
principal amount of Floating Rate Senior Secured Notes due 2017.


 


 “Qualified
Proceeds” means assets that are used or useful in, or Capital Stock
of any Person engaged in, a Similar Business; provided that the fair market
value of any such assets or Capital Stock shall be determined by the Board of
Directors of the Issuer in good faith.


 


“QIB”
means any “qualified institutional buyer” as such term is defined in
Rule 144A.


 


“Rating Agencies” means Moody’s
and S&P or if Moody’s or S&P or both shall not make a rating on the
notes publicly available, a nationally recognized statistical rating agency or
agencies, as the case may be, selected by the Issuer which shall be substituted
for Moody’s or S&P or both, as the case may be.


 


“Ratings
Condition” means, that after giving effect to (i) the
merger or acquisition described in Section 3.2(b)(16), or (ii) the
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition described in Section 4.1(a)(4), as applicable, the rating of
the Notes is equal to or higher than the ratings of the Notes by both Rating
Agencies immediately prior to such transaction, in each case with a stable
outlook or better.


 


 “Receivables
Facility” means one or more receivables financing facilities, as
amended from time to time, the Indebtedness and Obligations of which are
non-recourse (except for standard representations, warranties, covenants and
indemnities made in connection with such facilities) to the Issuer and the
Restricted Subsidiaries pursuant to which the Issuer and/or any of their
Restricted Subsidiaries sells their accounts receivable to a Person that is not
a Restricted Subsidiary.


 


“Receivables
Fees” means distributions or payments made directly or by means of
discounts with respect to any participation interest in accounts receivables
issued or sold in connection with, and other fees paid to a Person that is not
a Restricted Subsidiary in connection with, any Receivables Facility.


 


“Recovery
Event” means any event, occurrence, claim or proceeding that results in any
Net Award or Net Insurance Proceeds being deposited into the Collateral Account
pursuant to the Security Documents.


 


“Registration
Rights Agreement” means the Registration Rights Agreement with respect to
the Notes dated as of the Issue Date, among the Issuer, the Guarantors and the
Initial Purchasers and, with respect to any Additional Notes, one or more
registration rights agreements among the Issuer, the Guarantors and the other
parties thereto, relating to the rights given by the Issuer and the Guarantors
to the purchasers of Additional Notes to register such Additional Notes under
the Securities Act.


 


35

















 


“Regulation S”
means Regulation S under the Securities Act.


 


“Regulation
S-X” means Regulation S-X under the Securities Act.


 


“Replacement Assets” means
(1) non-current assets and property (including any such assets acquired by
capital expenditures but excluding Indebtedness and Capital Stock) that shall
be used or useful in a Similar Business by the Issuer or a Restricted
Subsidiary or (2) substantially all the assets of a Similar Business or a
majority of the Voting Stock of any Person engaged in a Similar Business that
shall become on the date of acquisition thereof a Domestic Subsidiary (or a
Restricted Subsidiary solely to the extent the assets being replaced were sold
by a Foreign Subsidiary).


 


“Restricted
Investment” means an Investment other than a Permitted Investment.


 


“Restricted
Notes” means Initial Notes and Additional Notes bearing one of the
restrictive legends described in Section 2.1(d).


 


“Restricted
Notes Legend” means the legend set forth in Section 2.1(d)(1) and,
in the case of the Temporary Regulation S Global Note, the legend set forth in Section 2.1(d)(2).


 


“Restricted
Subsidiary” means, at any time, any direct or indirect Subsidiary of RDA
(including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary;
provided, however, that upon the occurrence of an Unrestricted Subsidiary
ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in
the definition of “Restricted Subsidiary.”


 


“Reversion Date” means, during any
period of time during which the Issuer and the Restricted Subsidiaries are not
subject to the covenants described in Sections
3.2, 3.3, 3.4, 3.5(b), 3.7, 3.8, 3.12
and 4.1(a)(4) (collectively, the “Suspended Covenants”) as
a result of a Covenant Suspension, the date on which one or both of the Rating
Agencies withdraws its Investment Grade Rating or downgrades the rating
assigned to the Notes below an Investment Grade Rating or a Default or Event of
Default occurs and is continuing, and after which date the Suspended Covenants
will thereafter be reinstated.


 


“Rule 144A”
means Rule 144A under the Securities Act.


 


“S&P” means Standard and Poor’s
Ratings Group and any successor to its rating agency business.


 


 “SEC” means the United States
Securities and Exchange Commission.


 


“Securities
Act” means the Securities Act of 1933 and the rules and regulations of the
SEC promulgated thereunder.


 


“Security
Agreement” means the Security Agreement in substantially the form attached
as Exhibit E hereto, as the same may be
amended, supplemented or otherwise modified from time to time.


 


36

















 


“Security
Documents” means the security agreements, including the Security Agreement
and the IP Security Agreements, pledge agreements, Mortgages, collateral
assignments, agency agreements and related agreements, instruments and
documents executed and delivered pursuant to this Indenture or any of the
foregoing (including, without limitation, finance statements under the Uniform
Commercial Code of the relevant states), as amended, supplemented, restated,
renewed, refunded, replaced, restructured, repaid, refinanced or otherwise
modified from time to time, and pursuant to which Collateral is pledged,
assigned or granted to or on behalf of the Collateral Agent for the ratable
benefit of the Holders and the Trustee or notice of such pledge, assignment or
grant is given.


 


“Senior Credit Facility” means the
Credit Agreement to be entered into on the Escrow Release Date among RDA,
Holdings, the subsidiary guarantors party thereto, JPMorgan Chase Bank, N.A.,
as Administrative Agent, and the lenders parties thereto from time to time, as
the same may be amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time (including increasing the
amount loaned thereunder, provided that
such additional Indebtedness is incurred in accordance with Section 3.2)
and that an authorized representative of the holders of such Indebtedness shall
have executed a joinder to the Security Documents in the form provided therein.


 


“Senior
Indebtedness” means:


 


(a)                                  all Hedging Obligations (and
guarantees thereof) permitted to be incurred under the terms of this Indenture;


 


(b)                                 any other Indebtedness of
the Issuer or any Guarantor permitted to be incurred under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the notes or any Guarantee;


 


(c)                                  all Indebtedness of the Issuer
or any Guarantor outstanding under the Senior Credit Facility and the Notes and
related Guarantees (including interest accruing on or after the filing of any
petition in bankruptcy or similar proceeding or for reorganization of the
Issuer or any Guarantor (at the rate provided for in the documentation with
respect thereto, regardless of whether or not a claim for post-filing interest
is allowed in such proceedings)), and any and all other fees, expense
reimbursement obligations, indemnification amounts, penalties, and other
amounts (whether existing on the Issue Date or thereafter created or incurred)
and all obligations of the Issuer or any Guarantor to reimburse any bank or
other Person in respect of amounts paid under letters of credit, acceptances or
other similar instruments; and


 


(d)                                 all Obligations with respect
to the items listed in the preceding clauses (a), (b) and (c).


 


Notwithstanding
anything to the contrary, Senior Indebtedness will not include:


 


37

















 


(i)                                     any liability for federal,
state, local or other taxes owed or owing by the Issuer;


 


(ii)                                  any accounts payable or
other liability to trade creditors arising in the ordinary course of business;


 


(iii)                               any obligation of such
Person to the Issuer or any of its Subsidiaries;


 


(iv)                              the portion of any
Indebtedness that is incurred in violation of the Indenture;


 


(v)                                 Indebtedness which is
classified as non-recourse in accordance with GAAP or any unsecured claim
arising in respect thereof by reason of the application of
section 1111(b)(1) of the Bankruptcy Code; or


 


(vi)                              any Indebtedness or other
Obligation of a Person which is subordinate or junior in any respect to any
other Indebtedness or other Obligation of such Person.


 


“Shelf
Registration Statement” shall have the meaning set forth in the
Registration Rights Agreement.


 


“Significant
Subsidiary” means any Restricted Subsidiary that would be a “significant
subsidiary” as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such
regulation is in effect on the date hereof.


 


“Similar Business” means any
business conducted or proposed to be conducted by the Issuer, RDA and its
Restricted Subsidiaries on the Issue Date or any business that is similar,
reasonably related, incidental or ancillary thereto or any business that is a
reasonable extension thereof.


 


“Stated
Maturity” means, with respect to any Obligation, the date specified in such
Obligation as the fixed date on which the payment of principal of such Obligation
is due and payable, including pursuant to any mandatory redemption provision,
but shall not include any date on which the payment of principal of such
security is due and payable as a result of any contingent obligations to repay,
redeem or repurchase any such principal prior to the date originally scheduled
for the payment thereof.


 


“Subsidiary”
means, with respect to any Person,


 


(1)           any corporation,
association, or other business entity (other than a partnership, joint venture,
limited liability company or similar entity) of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time of determination owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof; and


 


38

















 


(2)           any partnership,
joint venture, limited liability company or similar entity of which


 


(x) more
than 50% of the capital accounts, distribution rights, total equity and voting
interests or general or limited partnership interests, as applicable, are owned
or controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person or a combination thereof whether in the form
of membership, general, special or limited partnership or otherwise, and


 


(y) such
Person or any Restricted Subsidiary of such Person is a controlling general
partner or managing member of such entity.


 


“Subsidiary
Guarantee” means the Guarantee of a Subsidiary Guarantor.


 


“Subsidiary Guarantor” means each
wholly owned Domestic Subsidiary of RDA on the Issue Date (other than Direct
Holdings IP L.L.C.) and any other Restricted Subsidiaries that become
guarantors under the Indenture in accordance with the terms thereof until such
time as such Person’s Guarantee may be released in accordance with this
Indenture.


 


“Supplement to Preliminary Offering Memorandum”
means the supplement to the Preliminary Offering Memorandum, dated February 2,
2010 relating to the offering and sale by the Issuer of $525.0 million
principal amount of Floating Rate Senior Secured Notes due 2017.


 


“Total
Assets” means, with respect to any
Person, the total consolidated assets of such Person and its Restricted
Subsidiaries as shown on the most recent balance sheet of such Person.


 


“TIA”
or “Trust Indenture Act” means the Trust Indenture Act of 1939, as in
effect on the date of this Indenture.


 


“Treasury Rate” means, as of any
Redemption Date, the yield to maturity as of such redemption date of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15
(519) that has become publicly available at least two Business Days prior
to the Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the period from the redemption date to February 15, 2013; provided, however, that if the period from
the redemption date to February 15, 2013 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to
a constant maturity of one year will be used.


 


“Trustee”
means the party named as such in this Indenture until a successor replaces it
and, thereafter, means the successor.


 


“Trust
Officer” shall mean, when used with respect to the Trustee, any vice
president, assistant vice president, any trust officer or any other officer of
the Trustee who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of such 


 


39

















 


person’s
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.


 


“U.K.
Condition” means either (i) RDA UK shall have commenced an administration
proceeding and an administrator for RDA UK shall have been appointed under and
in accordance with the UK Insolvency Act 1986, as amended by the Enterprise Act
2002 or (ii) the Debtors reach a settlement of the UK pension liabilities that
is acceptable to the Debtors, the Prepetition Agent (as defined in the Plan of
Reorganization) and to the senior lender steering committee and such settlement
will not have a material adverse effect on the financial condition or liquidity
of RDA and its subsidiaries.


 


“Unrestricted
Subsidiary” means:


 


(1)           any Subsidiary of
RDA, which at the time of determination is an Unrestricted Subsidiary (as
designated by the Board of Directors of RDA, as provided below), and


 


(2)           any Subsidiary of an
Unrestricted Subsidiary.


 


The
Board of Directors of RDA may designate any Subsidiary of RDA (including any
existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Equity Interests or Indebtedness of, or owns or holds any Lien on, any
property of, RDA or any Subsidiary of RDA (other than any Subsidiary of the
Subsidiary to be so designated); provided that


 


(a)                                  any Unrestricted Subsidiary
must be an entity of which shares of the Capital Stock or other Equity
Interests (including partnership interests) entitled to cast at least a
majority of the votes that may be cast by all shares or Equity Interests having
ordinary voting power for the election of directors or other governing body are
owned, directly or indirectly, by RDA,


 


(b)                                 such designation complies
with Section 3.3, and


 


(c)                                  each of:


 


(1)           the Subsidiary to be
so designated, and


 


(2)           its Subsidiaries


 


has
not at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with
respect to any Indebtedness pursuant to which the lender has recourse to any of
the assets of the Issuer, RDA or any Restricted Subsidiary.


 


The
Board of Directors of RDA may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that, immediately after giving effect to such
designation no Default or Event of Default shall have occurred and be
continuing and either, in each case on a pro
forma basis taking into account such designation, (i) RDA would
be permitted to incur such Indebtedness pursuant to Section 3.2 or
(ii) the Ratings Condition is satisfied.


 


40

















 


Any
such designation by the Board of Directors of RDA shall be notified by RDA to
the Trustee by promptly filing with such Trustee a copy of the resolution of
the Board of Directors giving effect to such designation and an Officers’
Certificate certifying that such designation complied with the foregoing
provisions.


 


“Voting
Stock” of any Person as of any date means the Capital Stock of such Person
that is at the time entitled to vote in the election of the Board of Directors
of such Person.


 


“Weighted Average Life to Maturity”
means, when applied to any Indebtedness, Disqualified Stock or preferred stock,
as the case may be, at any date, the quotient obtained by dividing


 


(1)           the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal payment of such Indebtedness or redemption
or similar payment with respect to such Disqualified Stock or preferred stock
multiplied by the amount of such payment, by


 


(2)           the sum of all such
payments.


 


“Wholly
Owned Restricted Subsidiary” is any Wholly Owned Subsidiary that is a
Restricted Subsidiary.


 


 “Wholly
Owned Subsidiary” of any Person means a Subsidiary of such Person,
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors’ qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person.


 


SECTION
1.2.   Other Definitions.


 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Additional
  Restricted Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Affiliate
  Transaction”

  	
   

  	
  3.8

  
	
   

  	
   

  	
   

  
	
  “Agent
  Members”

  	
   

  	
  2.1(e)(iii)

  
	
   

  	
   

  	
   

  
	
  “Asset
  Sale Offer”

  	
   

  	
  3.5(b)

  
	
   

  	
   

  	
   

  
	
  “Authenticating
  Agent”

  	
   

  	
  2.2

  
	
   

  	
   

  	
   

  
	
  “Automatic
  Exchange”

  	
   

  	
  2.6(e)

  
	
   

  	
   

  	
   

  
	
  “Automatic
  Exchange Date”

  	
   

  	
  2.6(e)

  
	
   

  	
   

  	
   

  
	
  “Automatic
  Exchange Notice”

  	
   

  	
  2.6(e)

  
	
   

  	
   

  	
   

  
	
  “Automatic
  Exchange Notice Date”

  	
   

  	
  2.6(e)

  



 


41

















 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Bankruptcy
  Code

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “Calculation
  Date”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “Change
  of Control Offer”

  	
   

  	
  3.10

  
	
   

  	
   

  	
   

  
	
  “Change
  of Control Payment”

  	
   

  	
  3.10

  
	
   

  	
   

  	
   

  
	
  “Change
  of Control Payment Date”

  	
   

  	
  3.10(2)

  
	
   

  	
   

  	
   

  
	
  “Clearstream”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Collateral
  Disposition Offer”

  	
   

  	
  3.5(a)

  
	
   

  	
   

  	
   

  
	
  “Covenant
  Defeasance”

  	
   

  	
  8.3

  
	
   

  	
   

  	
   

  
	
  “Defaulted
  Interest”

  	
   

  	
  2.14

  
	
   

  	
   

  	
   

  
	
  “Escrow
  Period”

  	
   

  	
  3.21(c)

  
	
   

  	
   

  	
   

  
	
  “Euroclear”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Event
  of Default”

  	
   

  	
  6.1

  
	
   

  	
   

  	
   

  
	
  “Excess
  Cash Flow Offer”

  	
   

  	
  5.9(a)

  
	
   

  	
   

  	
   

  
	
  “Excess
  Cash Flow Offer Amount”

  	
   

  	
  5.9(a)

  
	
   

  	
   

  	
   

  
	
  “Excess
  Cash Flow Payment”

  	
   

  	
  5.9(b)(1)

  
	
   

  	
   

  	
   

  
	
  “Excess
  Cash Flow Payment Date”

  	
   

  	
  5.9(b)(2)

  
	
   

  	
   

  	
   

  
	
  “Excess
  Collateral Proceeds”

  	
   

  	
  3.5(a)

  
	
   

  	
   

  	
   

  
	
  “Excess
  Proceeds”

  	
   

  	
  3.5(b)

  
	
   

  	
   

  	
   

  
	
  “Exchange
  Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Global
  Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Guaranteed
  Obligations”

  	
   

  	
  10.1

  
	
   

  	
   

  	
   

  
	
  “incur”

  	
   

  	
  3.2

  
	
   

  	
   

  	
   

  
	
  “incurrence”

  	
   

  	
  3.2

  
	
   

  	
   

  	
   

  
	
  “Institutional
  Accredited Investor Global Note”

  	
   

  	
  2.1(b)

  



 


42

















 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Institutional
  Accredited Investor Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Issuer
  Order”

  	
   

  	
  2.2

  
	
   

  	
   

  	
   

  
	
  “Legal
  Defeasance”

  	
   

  	
  8.2

  
	
   

  	
   

  	
   

  
	
  “Legal
  Holiday”

  	
   

  	
  13.8

  
	
   

  	
   

  	
   

  
	
  “Notes
  Register”

  	
   

  	
  2.3

  
	
   

  	
   

  	
   

  
	
  “NRSRO”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “Paying
  Agent”

  	
   

  	
  2.3

  
	
   

  	
   

  	
   

  
	
  “Payor”

  	
   

  	
  5.9(a)

  
	
   

  	
   

  	
   

  
	
  “Permanent
  Regulation S Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Premises”

  	
   

  	
  11.5

  
	
   

  	
   

  	
   

  
	
  “primary
  obligations”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “primary
  obligor”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “Priority Payment Lien Obligations”

  	
   

  	
  11.1(a)

  
	
   

  	
   

  	
   

  
	
  “protected
  purchaser”

  	
   

  	
  2.10

  
	
   

  	
   

  	
   

  
	
  “Redemption
  Date”

  	
   

  	
  5.7(a)

  
	
   

  	
   

  	
   

  
	
  “Refinancing
  Indebtedness”

  	
   

  	
  3.2(b)(15)

  
	
   

  	
   

  	
   

  
	
  “Refunding
  Capital Stock”

  	
   

  	
  3.3(b)(2)

  
	
   

  	
   

  	
   

  
	
  “Registrar”

  	
   

  	
  2.3

  
	
   

  	
   

  	
   

  
	
  “Regulation S
  Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Regulation S
  Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Resale
  Restriction Termination Date”

  	
   

  	
  2.6(b)

  
	
   

  	
   

  	
   

  
	
  “Retired
  Capital Stock”

  	
   

  	
  3.3(b)(2)

  
	
   

  	
   

  	
   

  
	
  “Restricted
  Global Note”

  	
   

  	
  2.6(e)

  
	
   

  	
   

  	
   

  
	
  “Restricted
  Payments”

  	
   

  	
  3.3(a)

  



 


43

















 


	
  Term

  	
   

  	
  Defined in

  Section

  
	
   

  	
   

  	
   

  
	
  “Restricted
  Period”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Rule 144A
  Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Rule 144A
  Notes”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Special
  Interest Payment Date”

  	
   

  	
  2.14(a)

  
	
   

  	
   

  	
   

  
	
  “Special
  Record Date”

  	
   

  	
  2.14(a)

  
	
   

  	
   

  	
   

  
	
  “Special
  Redemption”

  	
   

  	
  5.10

  
	
   

  	
   

  	
   

  
	
  “Special
  Redemption Date”

  	
   

  	
  5.10

  
	
   

  	
   

  	
   

  
	
  “Successor
  Issuer”

  	
   

  	
  4.1(a)(1)

  
	
   

  	
   

  	
   

  
	
  “Successor
  Person”

  	
   

  	
  10.2(b)(1)

  
	
   

  	
   

  	
   

  
	
  “Suspended
  Covenants”

  	
   

  	
  1.1

  
	
   

  	
   

  	
   

  
	
  “Suspension
  Period”

  	
   

  	
  3.23

  
	
   

  	
   

  	
   

  
	
  “Temporary
  Regulation S Global Note”

  	
   

  	
  2.1(b)

  
	
   

  	
   

  	
   

  
	
  “Trustee”

  	
   

  	
  8.5

  
	
   

  	
   

  	
   

  
	
  “Unrestricted
  Global Note”

  	
   

  	
  2.6(e)

  
	
   

  	
   

  	
   

  
	
  “Unutilized
  Excess Collateral Proceeds”

  	
   

  	
  3.5(a)

  
	
   

  	
   

  	
   

  
	
  “Unutilized
  Excess Proceeds”

  	
   

  	
  3.5(b)

  



 


SECTION
1.3.   Incorporation by Reference of Trust Indenture Act.  This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture.  The following TIA terms have the following
meanings:


 


“Commission” means the SEC.


 


“indenture
securities” means the Notes.


 


“indenture
security holder” means a Holder.


 


“indenture
to be qualified” means this Indenture.


 


“indenture
trustee” or “institutional trustee” means the Trustee.


 


“obligor”
on the indenture securities means the Issuer and any other obligor on the
indenture securities.


 


44














 


All
other TIA terms used in this Indenture that are defined by the TIA, defined in
the TIA by reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.


 


SECTION 1.4.  
Rules of Construction.  Unless the context otherwise requires:


 


(1)           a term has the meaning assigned to it;


 


(2)           an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;


 


(3)           “or” is not exclusive;


 


(4)           “including” means including without
limitation;


 


(5)           words in the singular include the plural and
words in the plural include the singular;


 


(6)           the principal amount of any noninterest
bearing or other discount security at any date shall be the principal amount
thereof that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;


 


(7)           the principal amount of any preferred stock
shall be (i) the maximum liquidation value of such preferred stock or
(ii) the maximum mandatory redemption or mandatory repurchase price with
respect to such preferred stock, whichever is greater;


 


(8)           all amounts expressed in this Indenture or in
any of the Notes in terms of money refer to the lawful currency of the United
States of America;


 


(9)           the words “herein,” “hereof” and “hereunder” and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and


 


(10)         unless otherwise specifically indicated, the
term “consolidated” with respect to any Person refers to such Person
consolidated with its Restricted Subsidiaries, and excludes from such
consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary
were not an Affiliate of such Person.


 


ARTICLE II


 


THE
NOTES


 


SECTION 2.1.  
Form, Dating and Terms.


 


(a)           The aggregate principal amount of Notes that may be authenticated and
delivered under this Indenture is unlimited. 
The Initial Notes issued on the date hereof will be in 


 


45

















 


an aggregate principal
amount of $525,000,000.  In addition, the
Issuer may issue, from time to time in accordance with the provisions of this
Indenture, Additional Notes (as provided herein) and Exchange Notes.  Furthermore, Notes may be authenticated and
delivered upon registration of transfer, exchange or in lieu of, other Notes
pursuant to Sections 2.2, 2.6, 2.10, 2.12, 5.6
or 9.5, in connection with a Collateral Disposition Offer or Asset Sale
Offer pursuant to Section 3.5, in connection with a Change of
Control Offer pursuant to Section 3.10 or in connection with an
Excess Cash Flow Offer pursuant to Section 5.9.


 


Notwithstanding
anything to the contrary contained herein, the Issuer may not issue any
Additional Notes, unless such issuance is in compliance with Sections 3.2
and 3.6.


 


The
Initial Notes shall be known and designated as “Floating Rate Senior Secured
Notes, Series A, due 2017” of the Issuer. 
Additional Notes issued as Restricted Notes shall be known and
designated as “Floating Rate Senior Secured Notes, Series A, due 2017” of
the Issuer.  Additional Notes issued
other than as Restricted Notes shall be known and designated as “Floating Rate
Senior Secured Notes, Series B, due 2017” of the Issuer, and Exchange
Notes shall be known and designated as “Floating Rate Senior Secured Notes, Series B,
due 2017” of the Issuer.


 


With
respect to any Additional Notes, the Issuer shall set forth in (a) a Board
Resolution and (b) (i) an Officers’ Certificate or (ii) one or
more indentures supplemental hereto, the following information:


 


(1)           the aggregate principal amount of such Additional
Notes to be authenticated and delivered pursuant to this Indenture;


 


(2)           the issue price and the issue date of such
Additional Notes, including the date from which interest shall accrue; and


 


(3)           whether such Additional Notes shall be Restricted
Notes issued in the form of Exhibit A hereto and/or shall be issued
in the form of Exhibit B hereto.


 


In
authenticating and delivering Additional Notes, the Trustee shall be entitled
to receive and shall be fully protected in relying upon, in addition to the
Opinion of Counsel and Officers’ Certificate required by Section 13.4,
an Opinion of Counsel as to the due authorization, execution, delivery,
validity and enforceability of such Additional Notes.


 


The
Initial Notes, the Additional Notes and the Exchange Notes shall be considered
collectively as a single class for all purposes of this Indenture and the
Security Documents.  Holders of the
Initial Notes, the Additional Notes and the Exchange Notes will vote and
consent together on all matters to which such Holders are entitled to vote or
consent as one class, and none of the Holders of the Initial Notes, the
Additional Notes or the Exchange Notes shall have the right to vote or consent
as a separate class on any matter to which such Holders are entitled to vote or
consent.


 


If
any of the terms of any Additional Notes are established by action taken
pursuant to Board Resolutions of the Issuer, a copy of an appropriate record of
such action shall be certified by the Secretary or any Assistant Secretary of
the Issuer and delivered to the Trustee at or prior to 


 


46

















 


the
delivery of the Officers’ Certificate or the indenture supplemental hereto
setting forth the terms of the Additional Notes.


 


(b)           The Initial Notes are being offered and sold by the Issuer pursuant to a
Purchase Agreement, dated February 2, 2010, among the Issuer, RDA, the
Guarantors, J.P. Morgan Securities Inc. and the other initial purchasers named
therein.  The Initial Notes and any
Additional Notes (if issued as Restricted Notes) (the “Additional Restricted
Notes”) will be resold initially only to (A) QIBs in reliance on
Rule 144A and (B) Non-U.S. Persons in reliance on
Regulation S.  Such Initial Notes
and Additional Restricted Notes may thereafter be transferred to, among others,
QIBs, purchasers in reliance on Regulation S and IAIs in accordance with
Rule 501 of the Securities Act, in each case, in accordance with the
procedure described herein.  Additional
Notes offered after the date hereof may be offered and sold by the Issuer from
time to time pursuant to one or more purchase agreements in accordance with
applicable law.


 


Initial
Notes and Additional Restricted Notes offered and sold to QIBs in the United
States of America in reliance on Rule 144A (the “Rule 144A Notes”)
shall be issued in the form of a permanent global Note substantially in the
form of Exhibit A, which is hereby incorporated by reference and
made a part of this Indenture, including appropriate legends as set forth in Section 2.1(d) (the
“Rule 144A Global Note”), deposited with the Trustee, as custodian
for DTC, duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided.  The Rule 144A
Global Note may be represented by more than one certificate, if so required by
DTC’s rules regarding the maximum principal amount to be represented by a
single certificate.  The aggregate
principal amount of the Rule 144A Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC or its nominee, as hereinafter provided.


 


Initial
Notes and any Additional Restricted Notes offered and sold outside the United
States of America (the “Regulation S Notes”) in reliance on
Regulation S shall initially be issued in the form of a temporary global
Note (the “Temporary Regulation S Global Note”), without interest
coupons.  Beneficial interests in the
Temporary Regulation S Global Note will be exchanged for beneficial interests
in a corresponding permanent global Note, without interest coupons,
substantially in the form of Exhibit A including appropriate
legends as set forth in Section 2.1(d) (the “Permanent
Regulation S Global Note” and, together with the Temporary Regulation S
Global Note, each a “Regulation S Global Note”) within a reasonable
period after the expiration of the Restricted Period (as defined below) upon
delivery of the certification contemplated by Section 2.7.  Each Regulation S Global Note will be deposited
upon issuance with, or on behalf of, the Trustee as custodian for DTC in the
manner described in this Article II for credit to the respective
accounts of the purchasers (or to such other accounts as they may direct),
including, but not limited to, accounts at Euroclear Bank S.A./N.V. (“Euroclear”)
or Clearstream Banking, société anonyme (“Clearstream”).  Prior to the 40th day after the later of the
commencement of the offering of the Initial Notes and the Issue Date (such
period through and including such 40th day, the “Restricted Period”),
interests in the Temporary Regulation S Global Note may only be transferred to
non-U.S. persons pursuant to Regulation S, unless exchanged for interests in a
Global Note in accordance with the transfer and certification requirements
described herein.


 


47

















 


Investors
may hold their interests in the Regulation S Global Note through organizations
other than Euroclear or Clearstream that are participants in DTC’s system or
directly through Euroclear or Clearstream, if they are participants in such
systems, or indirectly through organizations which are participants in such
systems.  If such interests are held
through Euroclear or Clearstream, Euroclear and Clearstream will hold such
interests in the applicable Regulation S Global Note on behalf of their
participants through customers’ securities accounts in their respective names
on the books of their respective depositaries. 
Such depositaries, in turn, will hold such interests in the applicable
Regulation S Global Note in customers’ securities accounts in the depositaries’
names on the books of DTC.


 


The
Regulation S Global Note may be represented by more than one certificate,
if so required by DTC’s rules regarding the maximum principal amount to be
represented by a single certificate.  The
aggregate principal amount of the Regulation S Global Note may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC or its nominee, as hereinafter provided.


 


Initial
Notes and Additional Restricted Notes resold to IAIs (the “Institutional
Accredited Investor Notes”) in the United States of America shall be issued
in the form of a permanent global Note substantially in the form of Exhibit A
including appropriate legends as set forth in Section 2.1(d) (the
“Institutional Accredited Investor Global Note”) deposited with the
Trustee, as custodian for DTC, duly executed by the Issuer and authenticated by
the Trustee as hereinafter provided.  The
Institutional Accredited Investor Global Note may be represented by more than
one certificate, if so required by DTC’s rules regarding the maximum
principal amount to be represented by a single certificate.  The aggregate principal amount of the Institutional
Accredited Investor Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.


 


Exchange
Notes exchanged for interests in the Rule 144A Notes, the
Regulation S Notes and the Institutional Accredited Investor Notes will be
issued in the form of a permanent global Note, substantially in the form of Exhibit B,
which is hereby incorporated by reference and made a part of this Indenture,
deposited with the Trustee as hereinafter provided, including the appropriate
legend set forth in Section 2.1(d) (the “Exchange Global
Note”).  The Exchange Global Note
will be deposited upon issuance with, or on behalf of, the Trustee as custodian
for DTC, duly executed by the Issuer and authenticated by the Trustee as
hereinafter provided. The Exchange Global Note may be represented by more than
one certificate, if so required by DTC’s rules regarding the maximum
principal amount to be represented by a single certificate.


 


The
Rule 144A Global Note, the Regulation S Global Note, the
Institutional Accredited Investor Global Note and the Exchange Global Note are
sometimes collectively herein referred to as the “Global Notes.”


 


The
principal of (and premium, if any) and interest on the Notes shall be payable
at the office or agency of Paying Agent or Registrar designated by the Issuer
maintained for such purpose in the Borough of Manhattan, The  City  of  New  York
(which shall initially be the office of the Trustee maintained for such
purpose), or at such other office or agency of the Issuer as may be maintained
for such purpose pursuant to Section 2.3; provided, however, that, at the option of
the Issuer, each installment of interest may be paid by (i) check mailed
to addresses of the Persons 


 


48

















 


entitled
thereto as such addresses shall appear on the Notes Register or (ii) wire
transfer to an account located in the United States maintained by the payee,
subject to the last sentence of this paragraph. 
Payments in respect of Notes represented by a Global Note (including
principal, premium, if any, and interest) will be made by wire transfer of
immediately available funds to the accounts specified by DTC.  Payments in respect of Notes represented by
Definitive Notes (including principal, premium, if any, and interest) held by a
Holder of at least $1,000,000 aggregate principal amount of Notes represented
by Definitive Notes will be made by wire transfer to a U.S. dollar account
maintained by the payee with a bank in the United States if such Holder elects
payment by wire transfer by giving written notice to the Trustee or the Paying
Agent to such effect designating such account no later than 15 days
immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).


 


The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage, in addition to those set forth on Exhibit A
and Exhibit B and in Section 2.1(d).  The Issuer shall approve any notation,
endorsement or legend on the Notes.  Each
Note shall be dated the date of its authentication.  The terms of the Notes set forth in Exhibit A
and Exhibit B are part of the terms of this Indenture and, to the
extent applicable, the Issuer, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to be bound by such
terms.


 


(c)           Denominations.  The Notes shall be issuable only in fully
registered form, without coupons, and only in denominations of $2,000 and any
integral multiple of $1,000 in excess thereof.


 


(d)           Restrictive Legends.  Unless and until (i) an Initial Note or
an Additional Note issued as a Restricted Note is sold under an effective registration
statement or (ii) an Initial Note or an Additional Note issued as a
Restricted Note is exchanged for an Exchange Note in connection with an
effective registration statement, in each case pursuant to the Registration
Rights Agreement or a similar agreement or (iii) the Trustee receives an
Opinion of Counsel reasonably satisfactory to the Issuer and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act:


 


(1)           the Rule 144A Global Note, the Regulation
S Global Note and the Institutional Accredited Investor Global Note shall bear
the following legend on the face thereof:


 


THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY,
BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY
INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR 


 


49

















 


OTHERWISE
TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION
DATE”) THAT IS [IN THE CASE OF THE RULE 144A GLOBAL NOTE AND THE INSTITUTIONAL
ACCREDITED INVESTOR GLOBAL NOTE: ONE YEAR] [IN THE CASE OF THE REGULATION S
GLOBAL NOTE: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON
IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN
THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION
WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE
CASE OF THE REGULATION S GLOBAL NOTE: BY ITS ACQUISITION HEREOF, THE HOLDER
HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE
ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.] BY ITS
ACQUISITION OF THIS SECURITY THE HOLDER AND ANY SUBSEQUENT TRANSFEREE HEREOF
WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) NO
PORTION OF THE ASSETS USED BY SUCH HOLDER OR ANY TRANSFEREE TO ACQUIRE AND HOLD
THIS SECURITY CONSTITUTES THE ASSETS OF AN EMPLOYEE BENEFIT PLAN THAT IS
SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED (“ERISA”), ANY PLANS, ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT
TO SECTION


 


50

















 


4975
OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR
PROVISION SUNDER ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR
REGULATIONS THAT ARE SIMILAR TO SUCH PROVISIONS OF ERISA OR THE CODE (“SIMILAR
LAWS”), OR OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE “PLAN
ASSETS” OF SUCH PLANS, ACCOUNTS OR ARRANGEMENTS, OR (II) THE ACQUISITION
AND HOLDING OF THIS SECURITY BY SUCH HOLDER OR TRANSFEREE WILL NOT CONSTITUTE A
NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICATION SIMILAR LAWS.


 


(2)           the Temporary Regulation S Global Note shall
bear the following additional legend on the face thereof:


 


THIS
SECURITY IS A TEMPORARY GLOBAL NOTE. 
PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO,
BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A
NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH INTEREST IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). 
BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES
OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE
INDENTURE.  TERMS IN THIS LEGEND ARE USED
AS USED IN REGULATION S UNDER THE SECURITIES ACT.


 


(3)           Each Global Security, whether or not an
Initial Security, shall bear the following legend on the face thereof:


 


UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE
ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


 


TRANSFERS
OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.


 


51

















 


 


(4)           Each Note issued hereunder that has more than
a de minimis amount of original issue discount for U.S. federal income tax
purposes shall bear a legend in substantially the following form:


 


THIS
SECURITY IS ISSUED WITH “ORIGINAL ISSUE DISCOUNT” WITHIN THE MEANING OF SECTION 1273
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. A HOLDER MAY OBTAIN THE
ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO
MATURITY FOR SUCH NOTE BY SUBMITTING A WRITTEN REQUEST FOR SUCH INFORMATION TO:
ATTENTION: CHIEF FINANCIAL OFFICER, THE READER’S DIGEST ASSOCIATION, INC.,
READER’S DIGEST ROAD, PLEASANTVILLE, NEW YORK 10570, TELEPHONE NUMBER (914)
238-1000.


 


(e)           Book-Entry Provisions.  (i)  This Section 2.1(e) shall
apply only to Global Notes deposited with the Trustee, as custodian for DTC.


 


(ii)           Each Global Note initially shall (x) be registered in the name of
DTC or the nominee of DTC, (y) be delivered to the Trustee as custodian
for DTC and (z) bear legends as set forth in Section 2.1(d).
Transfers of a Global Note (but not a beneficial interest therein) will be
limited to transfers thereof in whole, but not in part, to the DTC, its successors
or its respective nominees, except as set forth in Section 2.1(e)(v) and
2.1(f).  If a beneficial interest
in a Global Note is transferred or exchanged for a beneficial interest in
another Global Note, the Trustee will (x) record a decrease in the principal
amount of the Global Note being transferred or exchanged equal to the principal
amount of such transfer or exchange and (y) record a like increase in the
principal amount of the other Global Note. 
Any beneficial interest in one Global Note that is transferred to a
Person who takes delivery in the form of an interest in another Global Note, or
exchanged for an interest in another Global Note, will, upon transfer or
exchange, cease to be an interest in such Global Note and become an interest in
the other Global Note and, accordingly, will thereafter be subject to all
transfer and exchange restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such
an interest.


 


(iii)          Members of, or participants in, DTC (“Agent Members”) shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by DTC or by the Trustee as the custodian of DTC or under such Global
Note, and DTC may be treated by the Issuer, the Trustee and any agent of the
Issuer or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of
the Issuer or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between DTC and its
Agent Members, the operation of customary practices of DTC governing the
exercise of the rights of a Holder of a beneficial interest in any Global Note.


 


(iv)          In connection with any transfer of a portion of the beneficial interest
in a Global Note pursuant to Section 2.1(f) to beneficial
owners who are required to hold Definitive Notes, the Notes Custodian shall
reflect on its books and records the date and a 


 


52

















 


decrease in the principal
amount of such Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and the Issuer shall
execute, and the Trustee shall authenticate and make available for delivery,
one or more Definitive Notes of like tenor and amount.


 


(v)           In connection with the transfer of an entire Global Note to beneficial
owners pursuant to Section 2.1(f), such Global Note shall be deemed
to be surrendered to the Trustee for cancellation, and the Issuer shall
execute, and the Trustee shall authenticate and make available for delivery, to
each beneficial owner identified by DTC in exchange for its beneficial interest
in such Global Note, an equal aggregate principal amount of Definitive Notes of
authorized denominations.


 


(vi)          The registered Holder of a Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold interests
through Agent Members, to take any action which a Holder is entitled to take
under this Indenture or the Notes.


 


(vii)         Any
Holder of a Global Note shall, by acceptance of such Global Note, agree that
transfers of beneficial interests in such Global Note may be effected only
through a book-entry system maintained by (a) the Holder of such Global
Note (or its agent) or (b) any Holder of a beneficial interest in such
Global Note, and that ownership of a beneficial interest in such Global Note
shall be required to be reflected in a book entry.


 


(f)            Definitive Notes.  (i)  Except as provided below, owners of
beneficial interests in Global Notes will not be entitled to receive Definitive
Notes.  If required to do so pursuant to
any applicable law or regulation, beneficial owners may obtain Definitive Notes
in exchange for their beneficial interests in a Global Note upon written
request in accordance with DTC’s and the Registrar’s procedures.  In addition, Definitive Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Note if (A) DTC notifies the Issuer that it is unwilling or
unable to continue as depositary for such Global Note or DTC ceases to be a
clearing agency registered under the Exchange Act, at a time when DTC is
required to be so registered in order to act as depositary, and in each case a
successor depositary is not appointed by the Issuer within 90 days of such
notice or, (B) the Issuer in its sole discretion executes and delivers to
the Trustee and Registrar an Officers’ Certificate stating that such Global
Note shall be so exchangeable or (C) an Event of Default has occurred and
is continuing and the Registrar has received a request from DTC.  In the event of the occurrence of any of the
events specified in the second preceding sentence or in clause (A), (B) or
(C) of the preceding sentence, the Issuer shall promptly make available to
the Trustee a reasonable supply of Definitive Notes.


 


(ii)           Any Definitive Note delivered in exchange for an interest in a Global
Note pursuant to Section 2.1(e)(iii) or (iv) shall,
except as otherwise provided by Section 2.6(d), bear the applicable
legend regarding transfer restrictions applicable to the Definitive Note set
forth in Section 2.1(d).


 


(iii)          If a Definitive Note is transferred or exchanged for a beneficial
interest in a Global Note, the Trustee will (x) cancel such Definitive
Note, (y) record an increase in the principal amount of such Global Note
equal to the principal amount of such


 


53














 


transfer or exchange and (z) in
the event that such transfer or exchange involves less than the entire
principal amount of the canceled Definitive Note, the Issuer shall execute, and
the Trustee shall authenticate and make available for delivery, to the transferring
Holder a new Definitive Note representing the principal amount not so
transferred.


 


(iv)          If a Definitive Note is transferred or exchanged for another Definitive
Note, (x) the Trustee will cancel the Definitive Note being transferred or
exchanged, (y) the Issuer shall execute, and the Trustee shall
authenticate and make available for delivery, one or more new Definitive Notes
in authorized denominations having an aggregate principal amount equal to the
principal amount of such transfer or exchange to the transferee (in the case of
a transfer) or the Holder of the canceled Definitive Note (in the case of an
exchange), registered in the name of such transferee or Holder, as applicable,
and (z) if such transfer or exchange involves less than the entire
principal amount of the canceled Definitive Note, the Issuer shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder
thereof, one or more Definitive Notes in authorized denominations having an
aggregate principal amount equal to the untransferred or unexchanged portion of
the canceled Definitive Notes, registered in the name of the Holder thereof.


 


(v)           Notwithstanding anything to the contrary in this Indenture, in no event
shall a Definitive Note be delivered upon exchange or transfer of a beneficial
interest in the Temporary Regulation S Global Note prior to the end of the
Restricted Period.


 


SECTION 2.2.  
Execution and Authentication.  One Officer shall sign the Notes for the
Issuer by manual or facsimile signature. 
If the Officer whose signature is on a Note no longer holds that office
at the time the Trustee authenticates the Note, the Note shall be valid
nevertheless.


 


A
Note shall not be valid until an authorized officer of the Trustee manually
authenticates the Note.  The signature of
the Trustee on a Security shall be conclusive evidence that such Note has been
duly and validly authenticated and issued under this Indenture.  A Note shall be dated the date of its
authentication.


 


At
any time and from time to time after the execution and delivery of this
Indenture, the Trustee shall authenticate and make available for delivery:  (1) Initial Notes for original issue on
the Issue Date in an aggregate principal amount of $525,000,000,
(2) subject to the terms of this Indenture, Additional Notes for original
issue in an unlimited principal amount, (3) Exchange Notes for issue only
in an exchange offer pursuant to the Registration Rights Agreement or upon
resale under an effective Shelf Registration Statement, and only in exchange
for Initial Notes or Additional Notes of an equal principal amount and (4) under
the circumstances set forth in Section 2.6(e), Initial Notes
in the form of an Unrestricted Global Note, in each case upon a written order
of the Issuer signed by one Officer (the “Issuer Order”).  Such Issuer Order shall specify whether the
Notes will be in the form of Definitive Notes or Global Notes, the amount of
the Notes to be authenticated and the date on which the original issue of Notes
is to be authenticated and whether the Notes are to be Initial Notes,
Additional Notes or Exchange Notes.


 


54

















 


The
Trustee may appoint an agent (the “Authenticating Agent”) reasonably
acceptable to the Issuer to authenticate the Notes.  Any such instrument shall be evidenced by an
instrument signed by a Trust Officer, a copy of which shall be furnished to the
Issuer.  Unless limited by the terms of
such appointment, any such Authenticating Agent may authenticate Notes whenever
the Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.  An Authenticating
Agent has the same rights as any Registrar, Paying Agent or agent for service
of notices and demands.


 


In
case the Issuer or any Subsidiary Guarantor, pursuant to Article IV
or Section 10.2, as applicable, shall be consolidated or merged
with or into any other Person or shall convey, transfer, lease or otherwise
dispose of its properties and assets substantially as an entirety to any
Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Issuer or any Subsidiary Guarantor
shall have been merged, or the Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have executed an
indenture supplemental hereto with the Trustee pursuant to Article IV
or Section 10.2, as applicable, any of the Notes authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may (but shall not be required), from time to time, at the
request of the successor Person, be exchanged for other Notes executed in the
name of the successor Person with such changes in phraseology and form as may
be appropriate, but otherwise in substance of like tenor as the Notes
surrendered for such exchange and of like principal amount; and the Trustee,
upon the Issuer Order of the successor Person, shall authenticate and make
available for delivery Notes as specified in such order for the purpose of such
exchange.  If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section 2.2 in exchange or substitution for or upon
registration of transfer of any Notes, such successor Person, at the option of
the Holders but without expense to them, shall provide for the exchange of all
Notes at the time outstanding for Notes authenticated and delivered in such new
name.


 


SECTION 2.3.  
Registrar and Paying Agent.


 


The
Issuer shall maintain in the Borough of Manhattan, The New York, New York an
office or agency where Notes may be presented for registration of transfer or
for exchange (the “Registrar”) and an office or agency where Notes may
be presented for payment (the “Paying Agent”).  In addition, the Issuer shall appoint and
maintain at all times a Calculation Agent. 
The Registrar shall keep a register of the Notes and of their transfer
and exchange (the “Notes Register”). 
The Issuer may have one or more co-registrars and one or more additional
paying agents.  The term “Paying Agent”
includes any additional paying agent and the term “Registrar” includes any
co-registrar.


 


The Issuer shall
advise the Calculation Agent in writing prior to any interest payment date of
any Additional Interest payable to pursuant to the Registration Rights
Agreement.


 


The
Issuer shall enter into an appropriate agency agreement with any Registrar or
Paying Agent not a party to this Indenture, which shall incorporate the terms
of the TIA.  The agreement shall
implement the provisions of this Indenture that relate to such agent.  The Issuer shall notify the Trustee of the
name and address of each such agent.  If
the Issuer fails to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate 


 


55

















 


compensation
therefor pursuant to Section 7.7. 
The Issuer or any Guarantor may act as Paying Agent, Registrar or
transfer agent.


 


The
Issuer initially appoints the Trustee as Registrar and Paying Agent for the
Notes.  The Issuer may change any
Registrar or Paying Agent without prior notice to the Holders, but upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal
shall become effective until (i) acceptance of any appointment by a
successor as evidenced by an appropriate agreement entered into by the Issuer
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (ii) notification to the Trustee that the Trustee shall
serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (i) above. 
The Registrar or Paying Agent may resign at any time upon written notice
to the Issuer and the Trustee.


 


SECTION 2.4.  
Paying Agent to Hold Money in Trust.


 


By
no later than 10:00 a.m. (New York City time) on the date on which any
principal of, premium, if any, or interest on any Note is due and payable, the
Issuer shall deposit with the Paying Agent a sum sufficient in immediately
available funds to pay such principal, premium or interest when due.  The Issuer shall require each Paying Agent
(other than the Trustee) to agree in writing that such Paying Agent shall hold
in trust for the benefit of Holders or the Trustee all money held by such
Paying Agent for the payment of principal of, premium, if any, or interest on
the Notes (whether such assets have been distributed to it by the Issuer or
other obligors on the Notes), shall notify the Trustee in writing of any
default by the Issuer or any Guarantor in making any such payment and shall
during the continuance of any default by the Issuer (or any other obligor upon
the Notes) in the making of any payment in respect of the Notes, upon the
written request of the Trustee, forthwith deliver to the Trustee all sums held
in trust by such Paying Agent for payment in respect of the Notes together with
a full accounting thereof.  If the Issuer
or a Subsidiary of the Issuer acts as Paying Agent, it shall segregate the
money held by it as Paying Agent and hold it as a separate trust fund.  The Issuer at any time may require a Paying
Agent (other than the Trustee) to pay all money held by it to the Trustee and
to account for any funds or assets disbursed by such Paying Agent.  Upon complying with this Section 2.4,
the Paying Agent (if other than the Issuer or a Subsidiary of the Issuer) shall
have no further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or
similar proceeding with respect to the Issuer, the Trustee shall serve as
Paying Agent for the Notes.


 


SECTION 2.5.  
Holder Lists.


 


The
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Holders and
shall otherwise comply with TIA § 312(a). 
If the Trustee is not the Registrar, or to the extent otherwise required
under the TIA, the Issuer, on its own behalf and on behalf of each of the
Guarantors, shall furnish or cause the Registrar to furnish to the Trustee, in
writing at least five Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of Holders and the Issuer shall otherwise comply with TIA
§ 312(a).


 


56

















 


SECTION 2.6.  
Transfer and Exchange.


 


(a)           A Holder may transfer a Note (or a beneficial interest therein) to
another Person or exchange a Note (or a beneficial interest therein) for
another Note or Notes of any authorized denomination by presenting to the
Trustee a written request therefor stating the name of the proposed transferee
or requesting such an exchange, accompanied by any certification, opinion or
other document required by this Section 2.6.  The Trustee will promptly register any
transfer or exchange that meets the requirements of this Section 2.6
by noting the same in the register maintained by the Trustee for the purpose,
and no transfer or exchange will be effective until it is registered in such
register.  The transfer or exchange of
any Note (or a beneficial interest therein) may only be made in accordance with
this Section 2.6 and Section 2.1(e) and 2.1(f),
as applicable, and, in the case of a Global Note (or a beneficial interest
therein), the applicable rules and procedures of DTC, Euroclear and
Clearstream.  The Trustee shall refuse to
register any requested transfer or exchange that does not comply with this
paragraph.


 


(b)           Transfers of Rule 144A Notes and Institutional Accredited Investor
Notes. The following provisions shall apply with
respect to any proposed registration of transfer of a Rule 144A Note or an
Institutional Accredited Investor Note prior to the date which is one year
after the later of the date of its original issue and the last date on which
the Issuer or any Affiliate of the Issuer was the owner of such Notes (or any
predecessor thereto) (the “Resale Restriction Termination Date”):


 


(i)            a registration of transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a QIB shall be
made upon the representation of the transferee in the form as set forth on the
reverse of the Note that it is purchasing for its own account or an account
with respect to which it exercises sole investment discretion and that it and
any such account is a “qualified institutional buyer” within the meaning of
Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Issuer as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; provided
that no such written representation or other written certification shall be
required in connection with the transfer of a beneficial interest in the Rule 144A
Global Note to a transferee in the form of a beneficial interest in that Rule 144A
Global Note in accordance with this Indenture and the applicable procedures of
DTC.


 


(ii)           a registration of transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to an IAI shall be
made upon receipt by the Trustee or its agent of a certificate substantially in
the form set forth in Section 2.8 from the proposed transferee and,
if requested by the Issuer, the delivery of an opinion of counsel,
certification and/or other information satisfactory to it; and


 


(iii)          a registration of transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a Non-U.S. Person
shall be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.9 from the
proposed transferee and, if requested by the Issuer, the delivery of an opinion
of counsel, certification and/or other information satisfactory to it.


 


57

















 


(c)           Transfers of Regulations S Notes.  The following provisions shall apply with
respect to any proposed transfer of a Regulation S Note prior to the expiration
of the Restricted Period:


 


(i)            a transfer of a Regulation S Note or a beneficial interest therein to a
QIB shall be made upon the representation of the transferee, in the form of
assignment on the reverse of the certificate, that it is purchasing the Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a “qualified
institutional buyer” within the meaning of Rule 144A, is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Issuer as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A;


 


(ii)           a transfer of a Regulation S Note or a beneficial interest therein to an
IAI shall be made upon receipt by the Trustee or its agent of a certificate
substantially in the form set forth in Section 2.8 from the
proposed transferee and, if requested by the Issuer or the Trustee, the
delivery of an opinion of counsel, certification and/or other information
satisfactory to each of them; and


 


(iii)          a transfer of a Regulation S Note or a beneficial interest therein to a
Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Section 2.9
hereof from the proposed transferee and, if requested by the Issuer, receipt by
the Trustee or its agent of an opinion of counsel, certification and/or other
information satisfactory to the Issuer.


 


After
the expiration of the Restricted Period, interests in the Regulation S Note may
be transferred in accordance with applicable law without requiring the
certification set forth in Section 2.8, Section 2.9
or any additional certification.


 


(d)           Restricted Notes Legend.  Upon the transfer, exchange or replacement of
Notes not bearing a Restricted Notes Legend, the Registrar shall deliver Notes
that do not bear a Restricted Notes Legend. 
Upon the transfer, exchange or replacement of Notes bearing a Restricted
Notes Legend, the Registrar shall deliver only Notes that bear a Restricted
Notes Legend unless (i) Initial Notes are being exchanged for Exchange
Notes in an exchange offer pursuant to the Registration Rights Agreement, in
which case the Exchange Notes shall not bear a Restricted Notes Legend,
(ii) an Initial Note is being transferred pursuant to the Shelf
Registration Statement or other effective registration statement, (iii) Initial
Notes are being exchanged for Notes that do not bear the Restricted Notes
Legend in accordance with Section 2.6(e) or (iv) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuer and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.  Any
Additional Notes sold in a registered offering shall not be required to bear
the Restricted Notes Legend.


 


(e)           Automatic Exchange from Global Note Bearing Restricted Notes Legend to
Global Note Not Bearing Restricted Notes Legend.  Upon the Issuer’s satisfaction that the


 


58

















 


Restricted Notes Legend
shall no longer be required in order to maintain compliance with the Securities
Act, beneficial interests in a Global Note bearing the Restricted Notes Legend
(a “Restricted Global Note”) may be automatically exchanged into
beneficial interests in a Global Note not bearing the Restricted Notes Legend
(an “Unrestricted Global Note”) without any action required by or on
behalf of the Holder (the “Automatic Exchange”) at any time on or after
the date that is the 366th calendar day after (A) with respect to the
Notes issued on the Issue Date or (B) with respect to Additional Notes, if
any, the issue date of such Additional Notes, or, in each case, if such day is
not a Business Day, on the next succeeding Business Day (the “Automatic
Exchange Date”).  Upon the Issuer’s
satisfaction that the Restricted Notes Legend shall no longer be required in
order to maintain compliance with the Securities Act, the Issuer may pursuant
to the rules and procedures (i) provide written notice to DTC at
least fifteen (15) calendar days prior to the Automatic Exchange Date,
instructing DTC to exchange all of the outstanding beneficial interests in a
particular Restricted Global Note to the Unrestricted Global Note, which the
Issuer shall have previously otherwise made eligible for exchange with the DTC,
(ii) provide prior written notice (the “Automatic Exchange Notice”)
to each Holder at such Holder’s address appearing in the register of Holders at
least fifteen (15) calendar days prior to the Automatic Exchange Date (the “Automatic
Exchange Notice Date”), which notice must include (w) the Automatic
Exchange Date, (x) the section of the Indenture pursuant to which the
Automatic Exchange shall occur, (y) the “CUSIP” number of the Restricted
Global Note from which such Holder’s beneficial interests will be transferred
and the (z) “CUSIP” number of the Unrestricted Global Note into which such
Holder’s beneficial interests will be transferred, and (iii) on or prior
to the Automatic Exchange Date, deliver to the Trustee for authentication one
or more Unrestricted Global Notes, duly executed by the Issuer, in an aggregate
principal amount equal to the aggregate principal amount of Restricted Global
Notes to be exchanged. At the Issuer’s request on no less than five (5) calendar
days’ notice prior to the Automatic Exchange Notice Date, the Trustee shall
deliver, in the Issuer’s name and at its expense, the Automatic Exchange Notice
to each Holder at such Holder’s address appearing in the register of Holders.
Notwithstanding anything to the contrary in this Section 2.6(e),
during the fifteen (15) day period prior to the Automatic Exchange Date, no
transfers or exchanges other than pursuant to this Section 2.6(e) shall
be permitted without the prior written consent of the Issuer.  As a condition to any Automatic Exchange, the
Issuer shall provide, and the Trustee shall be entitled to rely upon, an
Officers’ Certificate in form reasonably acceptable to the Trustee to the
effect that the Automatic Exchange shall be effected in compliance with the
Securities Act and that the restrictions on transfer contained herein and in
the Restricted Notes Legend shall no longer be required in order to maintain
compliance with the Securities Act and that the aggregate principal amount of
the particular Restricted Global Note is to be transferred to the particular
Unrestricted Global Note by adjustment made on the records of the Trustee, as
custodian for the Depositary to reflect the Automatic Exchange. Upon such
exchange of beneficial interests pursuant to this Section 2.6(e),
the aggregate principal amount of the Global Notes shall be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary, to reflect the relevant increase or decrease in the principal
amount of such Global Note resulting from the applicable exchange. The
Restricted Global Note from which beneficial interests are transferred pursuant
to an Automatic Exchange shall be canceled following the Automatic Exchange.


 


(f)            Retention of Written Communications.  The Registrar shall retain copies of all
letters, notices and other written communications received pursuant to Section 2.1
or this Section 2.6.  The
Issuer shall have the right to inspect and make copies of all such letters,
notices or 


 


59

















 


other written
communications at any reasonable time upon the giving of reasonable prior
written notice to the Registrar.


 


(g)           Obligations with Respect to Transfers and Exchanges of Notes.


 


(i)            To permit registrations of transfers and exchanges, the Issuer shall,
subject to the other terms and conditions of this Article II,
execute and the Trustee shall authenticate Definitive Notes and Global Notes at
the Registrar’s request.


 


(ii)           No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Issuer may require the Holder to pay a sum
sufficient to cover any transfer tax assessments or similar governmental charge
payable in connection therewith (other than any such transfer taxes,
assessments or similar governmental charges payable upon exchange or transfer
pursuant to Sections 2.2, 2.6, 2.10, 2.12, 3.5,
3.10, 5.6, 5.9 or 9.5).


 


(iii)          The Issuer (and the Registrar) shall not be required to register the
transfer of or exchange of any Note (A) for a period beginning
(1) 15 days before the mailing of a notice of an offer to repurchase
or redeem Notes and ending at the close of business on the day of such mailing
or (2) 15 days before an interest payment date and ending on such
interest payment date or (B) called for redemption, except the unredeemed
portion of any Note being redeemed in part.


 


(iv)          Prior to the due presentation for registration of transfer of any Note,
the Issuer, the Trustee, the Paying Agent or the Registrar may deem and treat
the person in whose name a Note is registered as the owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and (subject to
paragraph 2 of the forms of Notes attached hereto as Exhibits A and B)
interest on such Note and for all other purposes whatsoever, including without
limitation the transfer or exchange of such Note, whether or not such Note is
overdue, and none of the Issuer, the Trustee, the Paying Agent or the Registrar
shall be affected by notice to the contrary.


 


(v)           Any Definitive Note delivered in exchange for an interest in a Global
Note pursuant to Section 2.1(f) shall, except as otherwise
provided by Section 2.6(d), bear the applicable legend regarding
transfer restrictions applicable to the Definitive Note set forth in Section 2.1(d).


 


(vi)          All Notes issued upon any transfer or exchange pursuant to the terms of
this Indenture shall evidence the same debt and shall be entitled to the same
benefits under this Indenture as the Notes surrendered upon such transfer or
exchange.


 


(h)           No Obligation of the Trustee.  (i)  The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global Note, a member
of, or a participant in, DTC or other Person with respect to the accuracy of
the records of DTC or its nominee or of any participant or member thereof, with
respect to any ownership interest in the Notes or with respect to the delivery
to any participant, member, beneficial owner or other Person (other than DTC)
of any notice (including any notice of redemption or purchase) or the payment
of any amount or delivery of any Notes (or other security or property) under or
with respect to such Notes.  All notices
and 


 


60

















 


communications to be given
to the Holders and all payments to be made to Holders in respect of the Notes
shall be given or made only to or upon the order of the registered Holders
(which shall be DTC or its nominee in the case of a Global Note).  The rights of beneficial owners in any Global
Note shall be exercised only through DTC subject to the applicable rules and
procedures of DTC.  The Trustee may rely
and shall be fully protected in relying upon information furnished by DTC with
respect to its members, participants and any beneficial owners.


 


(ii)           The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among DTC participants, members
or beneficial owners in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by, the terms of this Indenture,
and to examine the same to determine substantial compliance as to form with the
express requirements hereof. Neither the Trustee nor any of its agents shall
have any responsibility for any actions taken or not taken by DTC.


 


SECTION 2.7.  
Form of Certificate to be Delivered upon Termination of Restricted
Period.


 


	
   

  	
  [Date]

  



 


The
Reader’s Digest Association, Inc.


c/o
Wells Fargo Bank, National Association,


45
Broadway, 14th Floor


New
York, New York 10006


Attention:
Corporate Trust Services —


Reader’s
Digest Assoc. Administration


Telecopy:
212-515-1589


 


with
a copy to:


 


Dewey &
LeBoeuf LLP


1301
Avenue of the Americas


New
York, NY 10019


Attention:
Maria A. Dantas


 


Re:          The Reader’s Digest
Association, Inc. (the “Issuer”).


 


Floating Rate Senior Secured Notes due 2017 (the “Notes”)


 


Ladies
and Gentlemen:


 


This
letter relates to Notes represented by a temporary global Note (the “Temporary
Regulation S Global Note”).  Pursuant
to Section 2.1 of the Indenture dated as of February 11, 2010
relating to the Notes (the “Indenture”), we hereby certify that the
persons who are the beneficial owners of
$[              ]
principal amount of Notes represented by the Temporary 


 


61

















 


Regulation
S Global Note are persons outside the United States to whom beneficial
interests in such Notes could be transferred in accordance with Rule 904
of Regulation S promulgated under the Securities Act of 1933, as amended.  Accordingly, you are hereby requested to
issue a Permanent Regulation S Global Note representing the undersigned’s
interest in the principal amount of Notes represented by the Temporary
Regulation S Global Note, all in the manner provided by the Indenture.  We certify that we [are][are not] an
Affiliate of the Issuer.


 


You
and the Issuer are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.  Terms used in
this letter have the meanings set forth in Regulation S.


 


	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
  [Name
  of Transferor]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signature

  	
   

  



 


SECTION 2.8.  
Form of Certificate to be Delivered in Connection with Transfers to
Institutional Accredited Investors.


 


	
   

  	
  [Date]

  



 


The
Reader’s Digest Association, Inc.


c/o
Wells Fargo Bank, National Association,


as
Trustee and Registrar — DAPS Reorg


MAC
N9303-121


608
2nd Avenue South


Minneapolis,
MN 55479


Telephone
No.: (877) 872-4605


Fax
No.: (866) 969-1290


Email:  DAPSReorg@wellsfargo.com


 


Ladies
and Gentlemen:


 


This
certificate is delivered to request a transfer of
$[                  ]
principal amount of the Floating Rate Senior Secured Notes due 2017 (the “Notes”)
of [RD Escrow Corporation] [The Reader’s Digest Association, Inc.] (the “Issuer”).


 


Upon
transfer, the Notes would be registered in the name of the new beneficial owner
as follows:


 


	
  Name: 

  	
   

  	
   

  



 


62

















 


	
  Address: 

  	
   

  	
   

  



 


	
  Taxpayer
  ID Number:

  	
   

  	
   

  



 


The
undersigned represents and warrants to you that:


 


1.             We are an institutional “accredited
investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act of 1933, as amended (the “Securities Act”))
purchasing for our own account or for the account of such an institutional “accredited
investor” at least $250,000 principal amount of the Notes, and we are acquiring
the Notes not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act.  We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risk of our investment in the Notes and we invest in or purchase securities
similar to the Notes in the normal course of our business.  We and any accounts for which we are acting
are each able to bear the economic risk of our or its investment.


 


2.             We understand that the Notes
have not been registered under the Securities Act and, unless so registered,
may not be sold except as permitted in the following sentence.  We agree on our own behalf and on behalf of
any investor account for which we are purchasing Notes to offer, sell or otherwise
transfer such Notes prior to the date that is one year after the later of the
date of original issue and the last date on which the Issuer or any affiliate
of the Issuer was the owner of such Notes (or any predecessor thereto) (the “Resale
Restriction Termination Date”) only (a) to the Issuer or any
Subsidiary thereof, (b) pursuant to an effective registration statement
under the Securities Act, (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we
reasonably believe is a “qualified institutional buyer” under Rule 144A of
the Securities Act (a “QIB”) that is purchasing for its own account or
for the account of a QIB and to whom notice is given that the transfer is being
made in reliance on Rule 144A, (d) pursuant to offers and sales to
non-U.S. persons that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional “accredited
investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act that is purchasing for its own account or for the account of
such an institutional “accredited investor,” in each case in a minimum
principal amount of Notes of $250,000 for investment purposes and not with a
view to or for offer or sale in connection with any distribution in violation
of the Securities Act or (f) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in each of
the foregoing cases to any requirement of law that the disposition of our
property or the property of such investor account or accounts be at all times
within our or their control and in compliance with any applicable state
securities laws.  The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date.  If any resale or other
transfer of the Notes is proposed to be made pursuant to clause (e) above
prior to the Resale Restriction Termination Date, the transferor shall deliver
a letter from the transferee substantially in the form of this letter to the
Issuer and the Trustee, which shall provide, among other things, that the
transferee is an institutional “accredited investor” (within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and
that it is acquiring such Notes for investment purposes and not for
distribution in violation of the Securities Act.  Each purchaser acknowledges that the Issuer
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Termination Date of the Notes pursuant to clauses (d),
(e) or (f) above to require the delivery of an


 


63














 


opinion
of counsel, certifications and/or other information satisfactory to the Issuer
and the Trustee.


 


3.                                      We [are][are
not] an Affiliate of the Issuer.


 


	
   

  	
  TRANSFEREE:

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   

  
				



 


SECTION 2.9.  
Form of Certificate to be Delivered in Connection with Transfers
Pursuant to Regulation S.


 


	
   

  	
  [Date]

  



 


The
Reader’s Digest Association, Inc.

c/o Wells Fargo Bank, National Association,

as Trustee and Registrar — DAPS Reorg


MAC
N9303-121


608
2nd Avenue South


Minneapolis,
MN 55479


Telephone
No.: (877) 872-4605


Fax
No.: (866) 969-1290


Email:
DAPSReorg@wellsfargo.com


 


Re:                           [RD Escrow
Corporation] [The Reader’s Digest Association, Inc.] (the “Issuer”)


 


Floating Rate Senior Secured Notes due 2017 (the “Notes”)


 


Ladies
and Gentlemen:


 


In
connection with our proposed sale of
$[                ]
aggregate principal amount of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the United
States Securities Act of 1933, as amended (the “Securities Act”), and,
accordingly, we represent that:


 


64

















 


(a)                                 the offer of
the Notes was not made to a person in the United States;


 


(b)                                 either (i) at
the time the buy order was originated, the transferee was outside the United
States or we and any person acting on our behalf reasonably believed that the
transferee was outside the United States or (ii) the transaction was
executed in, on or through the facilities of a designated off-shore securities
market and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;


 


(c)                                  no directed
selling efforts have been made in the United States in contravention of the
requirements of Rule 903(a)(2) or Rule 904(a)(2) of
Regulation S, as applicable; and


 


(d)                                 the transaction
is not part of a plan or scheme to evade the registration requirements of the
Securities Act.


 


In
addition, if the sale is made during a restricted period and the provisions of
Rule 903(b)(2), Rule 903(b)(3) or Rule 904(b)(1) of
Regulation S are applicable thereto, we confirm that such sale has been
made in accordance with the applicable provisions of Rule 903(b)(2), Rule 903(b)(3) or
Rule 904(b)(1), as the case may be.


 


We
also hereby certify that we [are][are not] an Affiliate of the Issuer and, to
our knowledge, the transferee of the Notes [is][is not] an Affiliate of the
Issuer.


 


You
and the Issuer are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.  Terms used in
this certificate have the meanings set forth in Regulation S.


 


	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  
	
  [Name
  of Transferor]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Authorized Signature

  	
   

  
			



 


SECTION 2.10.  
Mutilated, Destroyed, Lost or Stolen Notes.


 


If
a mutilated Note is surrendered to the Registrar or if the Holder of a Note
claims that the Note has been lost, destroyed or wrongfully taken, the Issuer shall
issue and the Trustee shall authenticate a replacement Note if the requirements
of Section 8-405 of the Uniform Commercial Code are met, such that the
Holder (a) satisfies the Issuer or the Trustee that such Note has been
lost, destroyed or wrongfully taken within a reasonable time after such Holder
has notice of such loss, destruction or wrongful taking and the Registrar has
not registered a transfer prior to receiving such notification, (b) makes
such request to the Issuer or Trustee prior to the 


 


65

















 


Note
being acquired by a protected purchaser as defined in Section 8-303 of the
Uniform Commercial Code (a “protected purchaser”) and (c) satisfies
any other reasonable requirements of the Trustee; provided, however, if after the delivery of such replacement
Note, a protected purchaser of the Note for which such replacement Note was
issued presents for payment or registration such replaced Note, the Trustee or
the Issuer shall be entitled to recover such replacement Note from the Person
to whom it was issued and delivered or any Person taking therefrom, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Trustee in connection therewith.  If required by the Trustee or the Issuer,
such Holder shall furnish an indemnity bond sufficient in the judgment of the
Issuer and the Trustee to protect the Issuer, the Trustee, the Paying Agent and
the Registrar from any loss which any of them may suffer if a Note is replaced,
and, in the absence of notice to the Issuer, any Guarantor or the Trustee that
such Note has been acquired by a protected purchaser, the Issuer shall execute,
and upon receipt of an Issuer Order, the Trustee shall authenticate and make
available for delivery, in exchange for any such mutilated Note or in lieu of
any such destroyed, lost or stolen Note, a new Note of like tenor and principal
amount, bearing a number not contemporaneously outstanding.


 


In
case any such mutilated, destroyed, lost or stolen Note has become or is about
to become due and payable, the Issuer in its discretion may, instead of issuing
a new Note, pay such Note.


 


Upon
the issuance of any new Note under this Section 2.10, the Issuer
may require that such Holder pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of counsel and of the Trustee) in
connection therewith.


 


Subject
to the proviso in the initial paragraph of this Section 2.10, every
new Note issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional contractual
obligation of the Issuer, any Guarantor (if applicable) and any other obligor
upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.


 


The
provisions of this Section 2.10 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.


 


SECTION 2.11.  
Outstanding Notes.


 


Notes
outstanding at any time are all Notes authenticated by the Trustee except for
those cancelled by it, those delivered to it for cancellation and those
described in this Section as not outstanding.  A Note does not cease to be outstanding in
the event the Issuer or an Affiliate of the Issuer holds the Note; provided, however, that (i) for purposes of determining
which are outstanding for consent or voting purposes hereunder, the provisions
of Section 13.6 shall apply and (ii) in determining whether
the Trustee shall be protected in making a determination whether the Holders of
the requisite principal amount of outstanding Notes are present at a meeting of
Holders of Notes for quorum purposes or have consented to or voted in favor of
any request, 


 


66

















 


demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, or relying upon any such quorum, consent or vote, only Notes which a
Trust Officer of the Trustee actually knows to be held by the Issuer or an
Affiliate of the Issuer shall not be considered outstanding.


 


If
a Note is replaced pursuant to Section 2.10 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee and the Issuer receive proof satisfactory to them that the replaced
Note is held by a protected purchaser.  A
mutilated Note ceases to be outstanding upon surrender of such Note and
replacement pursuant to Section 2.10.


 


If
the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a Redemption Date or maturity date money sufficient to pay all
principal, premium, if any, and accrued interest payable on that date with
respect to the Notes (or portions thereof) to be redeemed or maturing, as the
case may be, and the Paying Agent is not prohibited from paying such money to
the Holders on that date pursuant to the terms of this Indenture, then on and
after that date such Notes (or portions thereof) cease to be outstanding and
interest on them ceases to accrue.


 


SECTION 2.12.  
Temporary Notes.


 


In
the event that Definitive Notes are to be issued under the terms of this
Indenture, until such Definitive Notes are ready for delivery, the Issuer may
prepare and the Trustee shall authenticate temporary Notes.  Temporary Notes shall be substantially in the
form, and shall carry all rights, of Definitive Notes but may have variations
that the Issuer considers appropriate for temporary Notes.  Without unreasonable delay, the Issuer shall
prepare and the Trustee shall authenticate Definitive Notes.  After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender
of the temporary Notes at any office or agency maintained by the Issuer for
that purpose and such exchange shall be without charge to the Holder.  Upon surrender for cancellation of any one or
more temporary Notes, the Issuer shall execute, and the Trustee shall authenticate
and make available for delivery in exchange therefor, one or more Definitive
Notes representing an equal principal amount of Notes.  Until so exchanged, the Holder of temporary
Notes shall in all respects be entitled to the same benefits under this Indenture
as a Holder of Definitive Notes.


 


SECTION 2.13.  
Cancellation.


 


The
Issuer at any time may deliver Notes to the Trustee for cancellation.  The Registrar and the Paying Agent shall
forward to the Trustee any Notes surrendered to them for registration of
transfer, exchange or payment.  The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment or cancellation and dispose of such Notes in
accordance with its internal policies and customary procedures including
delivery of a certificate describing such Notes disposed (subject to the record
retention requirements of the Exchange Act) or deliver canceled Notes to the
Issuer pursuant to written direction by one Officer.  If the Issuer or any Guarantor acquires any
of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation pursuant to this Section 2.13.  The Issuer may not 


 


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issue
new Notes to replace Notes it has paid or delivered to the Trustee for
cancellation for any reason other than in connection with a transfer or
exchange.


 


At
such time as all beneficial interests in a Global Note have either been
exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled,
such Global Note shall be returned by DTC to the Trustee for cancellation or
retained and canceled by the Trustee.  At
any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, transferred in exchange for an interest
in another Global Note, redeemed, repurchased or canceled, the principal amount
of Notes represented by such Global Note shall be reduced and an adjustment
shall be made on the books and records of the Trustee (if it is then the Notes
Custodian for such Global Note) with respect to such Global Note, by the
Trustee or the Notes Custodian, to reflect such reduction.


 


SECTION 2.14.  
Payment of Interest; Defaulted Interest.


 


Interest
on any Note which is payable, and is punctually paid or duly provided for, on
any interest payment date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered at the close of business on
the regular record date for such payment at the office or agency of the Issuer
maintained for such purpose pursuant to Section 2.3.


 


Any
interest on any Note which is payable, but is not paid when the same becomes
due and payable and such nonpayment continues for a period of 30 days
shall forthwith cease to be payable to the Holder on the regular record date,
and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called “Defaulted Interest”) shall
be paid by the Issuer, at its election in each case, as provided in
clause (a) or (b) below:


 


(a)                                 The Issuer may elect to make payment of any Defaulted Interest to the
Persons in whose names the Notes (or their respective predecessor Notes) are
registered at the close of business on a Special Record Date (as defined below)
for the payment of such Defaulted Interest, which shall be fixed in the following
manner.  The Issuer shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Note and the date (not less than 30 days after such notice) of the
proposed payment (the “Special Interest Payment Date”), and at the same
time the Issuer shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this Section 2.14(a).  Thereupon the Issuer shall fix a record date
(the “Special Record Date”) for the payment of such Defaulted Interest,
which date shall be not more than 15 days and not less than 10 days
prior to the Special Interest Payment Date and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment.  The Issuer shall promptly notify the Trustee
of such Special Record Date, and in the name and at the expense of the Issuer,
the Trustee shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date and Special Interest Payment Date therefor
to be given in the manner provided for in Section 13.2, not less
than 10 days prior to such Special Record Date.  Notice of the proposed payment of such
Defaulted Interest and the Special Record Date and Special Interest Payment
Date therefor having been so given, such Defaulted Interest shall be paid on
the Special 


 


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Interest Payment Date to
the Persons in whose names the Notes (or their respective predecessor Notes)
are registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the provisions in Section 2.14(b).


 


(b)                                 The Issuer may make payment of any Defaulted Interest in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Issuer to the Trustee of the proposed
payment pursuant to this Section 2.14(b), such manner of payment
shall be deemed practicable by the Trustee.


 


Subject
to the foregoing provisions of this Section 2.14, each Note
delivered under this Indenture upon registration of, transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.


 


SECTION 2.15.  
Computation of Interest.


 


Interest
on the Notes shall be computed as set forth in Exhibits A and B.


 


SECTION 2.16.  
CUSIP, Common Code and ISIN Numbers.


 


The
Issuer in issuing the Notes may use “CUSIP”, “Common Code” and “ISIN” numbers
and, if so, the Trustee shall use “CUSIP”, “Common Code” and “ISIN” numbers in
notices of redemption or purchase as a convenience to Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of a redemption or purchase and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption or purchase shall not be affected by any defect
in or omission of such CUSIP, Common Code and ISIN numbers.  The Issuer shall promptly notify the Trustee
in writing of any change in the CUSIP, Common Code and ISIN numbers.


 


ARTICLE III


 


COVENANTS


 


SECTION 3.1.  
Payment of Notes.


 


The
Issuer shall promptly pay the principal of, premium, if any, and interest
(including Additional Interest) on the Notes on the dates and in the manner
provided in the Notes and in this Indenture. 
Principal, premium, if any, and interest (including Additional Interest)
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal, premium, if any, and interest (including Additional Interest)
then due and the Trustee or the Paying Agent, as the case may be, is not
prohibited from paying such money to the Holders on that date pursuant to the
terms of this Indenture.


 


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The
Issuer shall pay interest on overdue principal at the rate specified therefor
in the Notes, and it shall pay interest on overdue installments of interest
(including Additional Interest) at the same rate to the extent lawful.


 


Notwithstanding
anything to the contrary contained in this Indenture, the Issuer may, to the
extent it is required to do so by law, deduct or withhold income or other
similar taxes imposed by the United States of America from principal or
interest payments hereunder.


 


SECTION 3.2.  
Limitation on incurrence of Indebtedness and issuance of Disqualified Stock
and preferred stock.


 


(a)                                 The Issuer will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, (collectively,
“incur” and collectively, an “incurrence”) with respect to any
Indebtedness (including Acquired Indebtedness) and the Issuer will not issue
any shares of Disqualified Stock and will not permit any Restricted Subsidiary
to issue any shares of Disqualified Stock or preferred stock; provided,
however, that the Issuer may incur Indebtedness (including Acquired
Indebtedness) or issue shares of Disqualified Stock, and any Subsidiary Guarantor
may incur Indebtedness (including Acquired Indebtedness), issue shares of
Disqualified Stock and issue shares of preferred stock, if the Consolidated
Leverage Ratio of the Issuer and the Restricted Subsidiaries at the time such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been no greater than 5.00 to 1.00, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or preferred stock had been issued, as the case may be, and
the application of proceeds therefrom had occurred at the beginning of the most
recently ended four full fiscal quarters for which internal financial statements
are available.


 


(b)                                 The limitations of Section 3.2(a) will not apply to:


 


(1)                                 the incurrence of (A) Indebtedness under
Credit Facilities by the Issuer or any of the Subsidiary Guarantors and the
issuance and creation of letters of credit and bankers’ acceptances thereunder
(with letters of credit and bankers’ acceptances being deemed to have a
principal amount equal to the face amount thereof), (B) Indebtedness under
Credit Facilities of Foreign Subsidiaries in an aggregate principal amount not
to exceed $50.0 million, (C) Hedging Obligations with lenders under Credit
Facilities or their Affiliates or (D) Cash Management Obligations;
provided that the aggregate principal amount of Indebtedness incurred under
clauses (A), (B), (C) and (D) outstanding at any one time shall not
exceed $100.0 million less the aggregate amount of all Net Proceeds of Asset
Sales applied by the Issuer or any Restricted Subsidiary since the Issue Date
to permanently repay any Indebtedness under Credit Facilities (and, in the case
of revolving credit Indebtedness, to effect a corresponding permanent reduction
thereunder);


 


(2)                                 the incurrence by the Issuer and any
Subsidiary Guarantor of Indebtedness represented by (i) the Notes issued
on the Issue Date (other than any Additional Notes), including any Guarantee
thereof, and (ii) any Exchange Notes (including any Guarantee thereof);


 


70

















 


(3)                                 Existing Indebtedness (other than Indebtedness
described in Sections 3.2(b)(1) and 3.2(b)(2);


 


(4)                                 Indebtedness (including Capitalized Lease
Obligations), Disqualified Stock and preferred stock incurred by the Issuer or
any of the Subsidiary Guarantors to finance the purchase, lease or improvement
of property (real or personal) or equipment that is used or useful in a Similar
Business, whether through the direct purchase of assets or the Capital Stock of
any Person owning such assets, in an aggregate principal amount which, when
aggregated with the principal amount of all other Indebtedness, Disqualified Stock
and preferred stock then outstanding and incurred pursuant to this Section 3.2(b)(4) 
and including all Refinancing Indebtedness incurred to refund, refinance or
replace any other Indebtedness, Disqualified Stock and preferred stock incurred
pursuant to this Section 3.2(b)(4), does not exceed the greater of
$20.0 million and 1.0% of Total Assets;


 


(5)                                 Indebtedness incurred by the Issuer or any
Restricted Subsidiary constituting reimbursement obligations with respect to
letters of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers’ compensation claims, or
other Indebtedness with respect to reimbursement type obligations regarding
workers’ compensation claims, health, disability or other employee benefits, or
property, casualty or liability insurance or self insurance obligations in the
ordinary course of business; provided, however, that upon the drawing of such
letters of credit or the incurrence of such Indebtedness, such obligations are
reimbursed within 30 days following such drawing or incurrence;


 


(6)                                 Indebtedness arising from agreements of the
Issuer or a Restricted Subsidiary providing for and to the extent of
indemnification, adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition or acquisition of
any business, assets or a Subsidiary, other than guarantees of Indebtedness
incurred by any Person acquiring all or any portion of such business, assets or
a Subsidiary for the purpose of financing such acquisition; provided that the
maximum assumable liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds including noncash proceeds (the fair market
value of such noncash proceeds being measured at the time received and without
giving effect to any subsequent changes in value) actually received by the
Issuer and the Restricted Subsidiaries in connection with such disposition;


 


(7)                                 Indebtedness of the Issuer to a Subsidiary
Guarantor; provided that any subsequent issuance or transfer of any Capital
Stock or any other event which results in any such Subsidiary Guarantor ceasing
to be a Subsidiary Guarantor or any other subsequent transfer of any such
Indebtedness (except to the Issuer or another Guarantor) shall be deemed, in
each case to be an incurrence of such Indebtedness not permitted by this clause
(7);


 


(8)                                 Indebtedness of the Issuer or a Subsidiary
Guarantor to a Restricted Subsidiary that is not a Subsidiary Guarantor;
provided that any such Indebtedness is subordinated in right of payment to the
Notes or the Guarantees, as applicable, provided 


 


71

















 


further
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of any such Indebtedness
(except to the Issuer or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness not permitted by this
clause (8);


 


(9)                                 Indebtedness of a Subsidiary Guarantor to the
Issuer or another Subsidiary Guarantor;


 


(10)                          Indebtedness of a Restricted Subsidiary that
is not a Subsidiary Guarantor to the Issuer or a Restricted Subsidiary;


 


(11)                          shares of preferred stock of a Restricted
Subsidiary issued to the Issuer or another Restricted Subsidiary; provided that
any subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such shares of preferred
stock (except to the Issuer or another Restricted Subsidiary) shall be deemed
in each case to be an issuance of such shares of preferred stock not permitted
by this clause (11);


 


(12)                          Hedging Obligations (excluding Hedging
Obligations entered into for speculative purposes) for the purpose of limiting:


 


(A)                               interest rate risk with respect to any Indebtedness permitted to be
incurred or outstanding under the Indenture; or


 


(B)                               exchange rate risk with respect to any currency exchange; or


 


(C)                               commodity risk;


 


(13)                          obligations in respect of performance, bid,
appeal and surety bonds and other similar types of performance and completion
guarantees provided by the Issuer or any Restricted Subsidiary in the ordinary
course of business;


 


(14)                          (i) any guarantee by the Issuer or a
Subsidiary Guarantor of Indebtedness or other obligations of any Restricted
Subsidiary so long as the incurrence of such Indebtedness incurred by such
Restricted Subsidiary is permitted under the terms of the Indenture; provided
that if the Indebtedness being guaranteed is subordinated to or pari passu with
a Subsidiary Guarantee, then the guarantee shall be subordinated or pari passu
to the Notes or a Subsidiary Guarantee, as applicable, to the same extent as
the Indebtedness guaranteed; or (ii) any guarantee by a Restricted
Subsidiary of Indebtedness of the Issuer or a Subsidiary Guarantor; provided
that such guarantee is incurred in accordance with Section 3.7 or
(iii) any guarantee by a Restricted Subsidiary that is not a Subsidiary
Guarantor of Indebtedness of another Restricted Subsidiary that is not a
Subsidiary Guarantor;


 


(15)                          the incurrence by the Issuer or any Restricted
Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves
to refund or refinance 


 


72

















 


any
Indebtedness, Disqualified Stock or preferred stock of the Issuer or any
Restricted Subsidiary incurred as permitted under Section 3.2(a) and
Sections 3.2(b)(2), and 3.2(b)(3), this Section 3.2(b)(15)
and Section 3.2(b)(16), including additional Indebtedness,
Disqualified Stock or preferred stock incurred to pay premiums (including
tender premiums), defeasance costs and fees in connection therewith (the “Refinancing
Indebtedness”) prior to its respective maturity; provided, however, that
such Refinancing Indebtedness:


 


(A)                               has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the lesser of (x) the
remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified
Stock or preferred stock being refunded or refinanced and (y) the
remaining Weighted Average Life to Maturity of the Notes;


 


(B)                               to the extent such Refinancing Indebtedness refinances
(i) Indebtedness subordinated or pari passu in right of payment to the
Notes or any Guarantee of the Notes, such Refinancing Indebtedness is
subordinated or pari passu in right of payment to the Notes or such Guarantee
at least to the same extent as the Indebtedness being refinanced or refunded or
(ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness
must be Disqualified Stock or preferred stock, respectively;


 


(C)                               shall not be in an amount in excess the principal amount (or accreted
value, if applicable) or liquidation preference of, plus any accrued and unpaid
interest on, the Indebtedness being so refunded or refinanced, plus the amount
of any premium (including tender premiums), defeasance costs and any related
fees and expenses;


 


(D)                               shall not have a final maturity date prior to the final maturity date of
the Indebtedness, Disqualified Stock or preferred stock being refunded or
refinanced; and


 


(E)                                shall not include:


 


(x) Indebtedness,
Disqualified Stock or preferred stock of a Restricted Subsidiary that is not a
Subsidiary Guarantor that refinances Indebtedness, Disqualified Stock or
preferred stock of an Issuer or a Subsidiary Guarantor; or


 


(y) Indebtedness, Disqualified Stock or preferred
stock of the Issuer or a Restricted Subsidiary that refinances Indebtedness,
Disqualified Stock or preferred stock of an Unrestricted Subsidiary;


 


(16)                          (i) Indebtedness, Disqualified Stock or
preferred stock of Persons incurred and outstanding on or prior to the date
such Person was acquired by the Issuer or any Restricted Subsidiary or merged
into the Issuer or a Restricted Subsidiary in


 


73














 


accordance
with the terms of the Indenture and (ii) Indebtedness of the Issuer or any
Restricted Subsidiary incurred in connection with or in contemplation of, or to
provide all or any portion of the funds or credit support utilized to
consummate, the acquisition by the Issuer or such Restricted Subsidiary of
property used or useful in a Similar Business (whether through the direct
purchase of assets or the purchase of Capital Stock of, or merger or
consolidation with, any Person owning such assets); provided that in the case
of both (i) and (ii), either (x) the Issuer would be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Leverage Ratio test set forth in Section 3.2(a) or (y) the
Ratings Condition is satisfied;


 


(17)                            Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business; provided
that such Indebtedness is extinguished within five business days of its
incurrence;


 


(18)                            Indebtedness consisting of promissory notes
issued by the Issuer or any of its Restricted Subsidiaries to any current or
former employee, director or officer of the Issuer, any of its Restricted
Subsidiaries or any of its direct or indirect parents (or permitted
transferees, assigns, estates, or heirs of such employee, director or officer),
to finance the purchase or redemption of Equity Interests of the Issuer or any
of its direct or indirect parent companies permitted by Section 3.3;
provided further, that such indebtedness must be expressly subordinated in
right of payment to the Notes or the Guarantees, as the case may be;


 


(19)                            Indebtedness of the Issuer or any Restricted
Subsidiary consisting of (i) the financing of insurance premiums or (ii) take-or-pay
obligations contained in supply arrangements, in each case, in the ordinary
course of business;


 


(20)                            Indebtedness, Disqualified Stock and preferred
stock of the Issuer and the Restricted Subsidiaries not otherwise permitted
hereunder in an aggregate principal amount or liquidation preference, which
when aggregated with the principal amount and liquidation preference of all
other Indebtedness, Disqualified Stock and preferred stock then outstanding and
incurred pursuant to this clause (20), does not at any one time outstanding
exceed $35.0 million; and


 


(21)                            Indebtedness of Foreign Subsidiaries in an
aggregate amount not to exceed $5.0 million at any time outstanding.


 


(c)                                  For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness, Disqualified Stock or preferred stock (or any
portion thereof) meets the criteria of more than one of the categories of
permitted Indebtedness, Disqualified Stock or preferred stock described in Section 3.2(b)(1) through
Section 3.2(b)(21)  or is entitled to be incurred pursuant to Section 3.2(a),
the Issuer shall, in its sole discretion, classify or reclassify such item of
Indebtedness, Disqualified Stock or preferred stock (or any portion thereof) in
any manner that complies with this covenant and such item of Indebtedness,
Disqualified Stock or preferred stock will be treated as having been incurred
pursuant to only one of such clauses or pursuant to the first paragraph hereof.
Additionally, all or any portion of any item of Indebtedness may later be 


 


74

















 


reclassified as having
been incurred pursuant to any category of permitted Indebtedness described in Section
3.2(b)(1) through Section 3.2(b)(21) or pursuant to Section 3.2(a) so
long as such Indebtedness is permitted to be incurred pursuant to such
provision at the time of reclassifications, provided that all Indebtedness
outstanding on the Escrow Release Date under the Senior Credit Facility shall
be deemed to have been incurred on such date in reliance on the exception
provided by Section 3.2(b)(1) and may not later be
reclassified. Accrual of interest, the accretion of accreted value, the
amortization of original issue discount and the payment of interest in the form
of additional Indebtedness, Disqualified Stock or preferred stock will not be
deemed to be an incurrence of Indebtedness, Disqualified Stock or preferred
stock for purposes of this Section 3.2.


 


For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
incurred, in the case of term debt, or first committed, in the case of
revolving credit debt; provided that if such Indebtedness is incurred to
refinance other Indebtedness denominated in a foreign currency, and such
refinancing would cause the applicable U.S. dollar-denominated restriction to
be exceeded if calculated at the relevant currency exchange rate in effect on
the date of such refinancing, such U.S. dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of such
Indebtedness being refinanced.


 


The
principal amount of any Indebtedness incurred to refinance other Indebtedness,
if incurred in a different currency from the Indebtedness being refinanced,
shall be calculated based on the currency exchange rate applicable to the
currencies in which such respective Indebtedness is denominated that is in
effect on the date of such refinancing.


 


The
Issuer will not, and will not permit any Subsidiary Guarantor to directly or
indirectly, incur any Indebtedness (including Acquired Indebtedness) that is
subordinated or junior in right of payment to any Indebtedness of the Issuer or
such Subsidiary Guarantor, as the case may be, unless such Indebtedness is
expressly subordinated in right of payment to the Notes or such Subsidiary
Guarantor’s guarantee to the extent and in the same manner in all material
respects and taken as a whole as such Indebtedness is subordinated in right of
payment to other Indebtedness of the Issuer or such Subsidiary Guarantor as the
case may be.


 


For
purposes of this Indenture, (1) unsecured Indebtedness shall not be
treated as subordinated or junior to secured Indebtedness merely because it is
unsecured or (2) senior Indebtedness shall not be treated as subordinated
or junior to any other senior Indebtedness merely because it has a junior
priority with respect to the same collateral or is secured by different
collateral.


 


SECTION 3.3.  
Limitation on Restricted Payments.


 


(a)                                  The Issuer will not, and will not permit any Restricted Subsidiary to,
directly or indirectly:


 


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(1)                                  declare or pay any dividend or make any
distribution on account of the Issuer’s or any Restricted Subsidiary’s Equity
Interests, including any dividend or distribution payable in connection with
any merger or consolidation other than:


 


(A)                              dividends or distributions by the Issuer payable in Equity Interests
(other than Disqualified Stock) of the Issuer or in options, warrants or other
rights to purchase such Equity Interests; or


 


(B)                                dividends or distributions by a Restricted Subsidiary so long as, in the
case of any dividend or distribution payable on or in respect of any class or
series of securities issued by a Restricted Subsidiary other than a Wholly
Owned Subsidiary, the Issuer or a Restricted Subsidiary receives at least its
pro rata share of such dividend or distribution in accordance with its Equity
Interests in such class or series of securities;


 


(2)                                  purchase, redeem, defease or otherwise acquire
or retire for value any Equity Interests of the Issuer or any direct or
indirect parent of the Issuer, including in connection with any merger or
consolidation, held by Persons other than the Issuer or any Subsidiary
Guarantor;


 


(3)                                  make any principal payment on, or redeem,
repurchase, defease, otherwise acquire or retire for value or give any
irrevocable notice of redemption with respect thereto in each case, prior to
any scheduled repayment, sinking fund payment or maturity, any Indebtedness,
other than:


 


(u)                                   Pari Passu Payment Lien Obligations;


 


(v)                                   Priority Payment Lien
Obligations;


 


(w)                                 Indebtedness permitted under
Sections 3.2(b)(4), 3.2(b)(7), 3.2(b)(8), 3.2(b)(9) and
3.2(b)(10);


 


(x)                                     the purchase, repurchase or
other acquisition of Indebtedness purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase or acquisition;


 


(y)                                   Indebtedness incurred under
revolving credit facilities (other than payments, redemptions, repurchases,
defeasances or other acquisitions or retirements for value that are accompanied
by termination or reduction of commitments under such revolving credit
facilities); or


 


(z)                                     the giving of an irrevocable
notice of redemption with respect to the transactions described in Sections
3.3(b)(2) and 3.3(b)(3); or


 


(4)                                  make any Restricted Investment;


 


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(all
such payments and other actions set forth in clauses (1) through
(4) above being collectively referred to as “Restricted Payments”),
unless, at the time of such Restricted Payment:


 


(A)                              no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof;


 


(B)                                immediately after giving effect to such transaction on a pro forma basis,
the Issuer could incur $1.00 of additional Indebtedness under the Section 3.2(a);
and


 


(C)                                such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Issuer and the Restricted Subsidiaries after
the Issue Date (including Restricted Payments permitted by Sections
3.3(b)(1), (8), (12), (14) and (16), but
excluding all other Restricted Payments permitted by Section 3.3(b)),
is less than the sum of:


 


(i)                                     the EBITDA of
the Issuer for the period (taken as one accounting period) from April 1,
2010, to the end of the Issuer’s most recently ended fiscal quarter for which
internal financial statements are available at the time of such Restricted
Payment, less the product of 1.4 times Consolidated Interest Expense of the
Issuer for the same period; provided that if the amount under this clause (i) for
any fiscal quarter is less than zero, then the amount “built” under this
clause (i) for such fiscal quarter shall be deemed to be equal to
zero, plus


 


(ii)                                  100% of the
aggregate net cash proceeds and the fair market value, as determined in good
faith by the Board of Directors, of marketable securities or other property
received by the Issuer since immediately after the Issue Date from the issue or
sale of:


 


(A)                              Equity Interests of the Issuer, including Retired Capital Stock (as
defined below), but excluding cash proceeds and the fair market value, as determined
in good faith by the Board of Directors, of marketable securities or other
property received from the sale of:


 


a.                                       Equity
Interests to members of management, directors or consultants of the Issuer, any
direct or indirect parent of the Issuer and the Issuer’s Subsidiaries after the
Issue Date to the extent such amounts have been applied to Restricted Payments
made in accordance 


 


77

















 


with Section 3.3(b)(4) of the next succeeding
paragraph; and


 


b.                                      Designated
Preferred Stock; or


 


(B)                                debt securities of the Issuer that have been converted into such Equity
Interests of the Issuer or its direct or indirect parents;


 


provided,
however, that this clause (ii) shall not include the proceeds from
(a) Refunding Capital Stock (as defined below), (b) Equity Interests
or converted debt securities of the Issuer sold to a Restricted Subsidiary, or
to an employee stock ownership plan or other trust established by the Issuer or
a Restricted Subsidiary, (c) Disqualified Stock or debt securities that
have been converted into Disqualified Stock or (d) Excluded Contributions
or Designated Preferred Stock, plus


 


(iii)                               100% of the
aggregate amount of cash and the fair market value, as determined in good faith
by the Board of Directors, of marketable securities or other property
contributed to the capital of the Issuer following the Issue Date other than
(i) net cash proceeds contributed to the Issuer from the sale of
Disqualified Stock or Designated Preferred Stock, (ii) net cash proceeds
received from Equity Offerings to the extent used to redeem Notes in compliance
with the provisions set forth in Section 5.7(c), (iii) by any
Excluded Contributions and (iv) by contributions to the Issuer and the
Restricted Subsidiaries in connection with the Plan of Reorganization, plus


 


(iv)                              100% of the
aggregate amount received in cash and the fair market value, as determined in
good faith by the Board of Directors, of marketable securities or other
property received by the Issuer or a Restricted Subsidiary by means of:


 


(A)                              the sale or other disposition (other than to the Issuer or a Restricted
Subsidiary or to an employee stock ownership plan or any trust established by
the Issuer or any of its Subsidiaries) of Restricted Investments made after the
Issue Date by the Issuer and its Restricted Subsidiaries and repurchases and
redemptions of such Restricted Investments from the Issuer and its Restricted
Subsidiaries and repayments of loans or advances which constitute Restricted 


 


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Investments made after
the Issue Date by the Issuer and the Restricted Subsidiaries and (without
duplication of amounts included in EBITDA) any dividends or distributions
received by the Issuer or a Restricted Subsidiary on account of Restricted
Investments made after the Issue Date (other than in each case to the extent
the Investment in such Restricted Investment was made by the Issuer or a
Restricted Subsidiary pursuant Section 3.3(b)(14)); or


 


(B)                                the sale (other than to the Issuer or a Restricted Subsidiary or to an
employee stock ownership plan or any trust established by the Issuer or any of
its Subsidiaries) of the stock of an Unrestricted Subsidiary (other than in
each case to the extent the Investment in such Unrestricted Subsidiary was made
by the Issuer or a Restricted Subsidiary pursuant to Section 3.3(b)(10) hereof
or to the extent such Investment constituted a Permitted Investment) or a
dividend or distribution from an Unrestricted Subsidiary in each case after the
Issue Date; plus


 


(v)                                 in the case of
the redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary
after the Issue Date, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Board of Directors in good faith
or if, in the case of an Unrestricted Subsidiary, such fair market value may
exceed $25.0 million, in writing by an Independent Financial Advisor, at
the time of the redesignation of such Unrestricted Subsidiary as a Restricted
Subsidiary, other than an Unrestricted Subsidiary to the extent the Investment
in such Unrestricted Subsidiary was made by the Issuer or a Restricted
Subsidiary pursuant to Section 3.3(b)(14) hereof or to the extent
such Investment constituted a Permitted Investment.


 


(b)                                 The foregoing provisions of Section 3.3(a) hereof will
not prohibit:


 


(1)                                  the payment of any dividend or distribution
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of the
Indenture or the redemption, repurchase or retirement of Indebtedness if, at
the date of any irrevocable redemption notice such payment would have complied
with the provisions of the Indenture;


 


(2)                                  the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Issuer (“Retired Capital
Stock”) or Indebtedness of the Issuer or a 


 


79

















 


Subsidiary
Guarantor, or any Equity Interests of any direct or indirect parent of the
Issuer, in exchange for, or out of the proceeds of the substantially concurrent
sale (other than to an Issuer or a Restricted Subsidiary or to an employee
stock ownership plan or other trust established by the Issuer or a Restricted
Subsidiary) of, Equity Interests of the Issuer or any direct or indirect parent
of the Issuer to the extent contributed to the Issuer (in each case, other than
any Disqualified Stock) (“Refunding Capital Stock”);


 


(3)                                  the redemption, repurchase or other
acquisition or retirement of Indebtedness of the Issuer or a Subsidiary
Guarantor made by exchange for, or out of the proceeds of the substantially
concurrent sale of, new Indebtedness of the Issuer or a Subsidiary Guarantor,
as the case may be, which is incurred in compliance with the provisions of Section 3.2
so long as:


 


(A)                              such new Indebtedness has a final scheduled maturity date equal to or
later than the final scheduled maturity date of the Indebtedness being so
redeemed, repurchased, acquired or retired;


 


(B)                                such new Indebtedness has a Weighted Average Life to Maturity equal to or
greater than the remaining Weighted Average Life to Maturity of the
Indebtedness being so redeemed, repurchased, acquired or retired;


 


(C)                                in the case of unsecured Indebtedness, such new Indebtedness is unsecured,
and in the case of secured Indebtedness, such new Indebtedness is either
unsecured or is Junior Lien Indebtedness pursuant to the Junior Lien
Intercreditor Agreement; and


 


(D)                               the principal amount of such new Indebtedness does not exceed the principal
amount of (or accreted value, if applicable), plus any accrued and unpaid
interest on, the Indebtedness being so redeemed, repurchased, acquired or
retired, plus the amount of any premium (including tender premiums) and any
fees and expenses incurred in connection with such issuance of new
Indebtedness;


 


(4)                                  a Restricted Payment to pay for the
repurchase, retirement or other acquisition or retirement for value of common
Equity Interests of the Issuer or any of its direct or indirect parents held by
any future, present or former employee, director or consultant of the Issuer,
any of its Subsidiaries or any of its direct or indirect parents (or permitted
transferees, assigns, estates, or heirs of such employee, director or
consultant) pursuant to any management equity plan or stock option plan or any
other management or employee benefit plan or agreement; provided, however, that
the aggregate Restricted Payments made under this clause (4) do not
exceed $5.0 million in any calendar year (with unused amounts in any
calendar year being carried over to the immediately succeeding calendar year;
provided further that such amount in any calendar year may be increased by an
amount not to exceed:


 


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(A)                              the cash proceeds from the sale of Equity Interests (other than
Disqualified Stock) of the Issuer and, to the extent contributed to the Issuer,
Equity Interests of any of the Issuer’s direct or indirect parents, in each
case to members of management, directors or consultants of the Issuer, any of
its Subsidiaries or any of its direct or indirect parents that occurred after
the Issue Date, to the extent the cash proceeds from the sale of such Equity
Interests have not otherwise been applied to the payment of Restricted Payments
by virtue of Section 3.3(a)(C); plus


 


(B)                                the cash proceeds of key man life insurance policies received by the
Issuer and its Restricted Subsidiaries after the Issue Date; less


 


(C)                                the amount of any Restricted Payments previously made pursuant to
clauses (A) and (B) of this clause (4);


 


(5)                                  the declaration and payment of dividends to
holders of any class or series of Disqualified Stock of the Issuer or any
Restricted Subsidiary issued in accordance with the covenant described under Section 3.2;


 


(6)                                  the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock (other than
Disqualified Stock) issued by the Issuer after the Issue Date;


 


(A)                              provided that the aggregate amount of dividends paid pursuant to this
clause (A) shall not exceed the aggregate amount of cash actually received
by the Issuer from the sale of such Designated Preferred Stock;


 


(B)                                the declaration and payment of dividends to a direct or indirect parent
of the Issuer, the proceeds of which will be used to fund the payment of
dividends to holders of any class or series of Designated Preferred Stock
(other than Disqualified Stock) of such parent issued after the Issue Date;
provided, that the amount of dividends paid pursuant to this clause (B) shall
not exceed the aggregate amount of cash actually contributed to the Issuer from
the sale of such Designated Preferred Stock;


 


(7)                                  repurchases of Equity Interests (i) constituting
fractional shares or (ii) deemed to occur upon exercise of stock options
or warrants or other securities convertible or exchangeable into Equity
Interests if such Equity Interests represent all or a portion of the exercise
price of such options or warrants;


 


(8)                                  the payment of dividends on the Issuer’s
common equity or the dividend or distribution to any direct or indirect parent
company to fund the payment by such parent company of dividends on its common
stock, following the consummation of the first public offering of the Issuer’s
common stock or the common stock of any of its direct or indirect parents after
the Issue Date, of up to 6% per annum of the net cash 


 


81

















 


proceeds
received by or contributed to the Issuer in any public offering, other than
public offerings with respect to the Issuer’s or such direct or indirect parent
company’s common stock registered on Form S-8 and other than any public
sale constituting an Excluded Contribution;


 


(9)                                  Restricted Payments that are made with
Excluded Contributions;


 


(10)                            other Restricted Payments in an aggregate
amount taken together with all other Restricted Payments made pursuant to this
clause (10) not to exceed $20.0 million;


 


(11)                            the declaration and payment of dividends by
the Issuer to, or the making of loans to, any direct or indirect parent company
of the Issuer in aggregate amounts not to exceed the aggregate amount required
for any direct or indirect parent company to pay, in each case without
duplication;


 


(A)                              franchise taxes and other fees, taxes and expenses required to maintain
their corporate existence;


 


(B)                                foreign, federal, state and local income taxes, to the extent such income
taxes are attributable to the income of the Issuer and the Restricted
Subsidiaries and, to the extent of the amount actually received from its
Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent
attributable to the income of such Unrestricted Subsidiaries; provided that in
each case the amount of such payments in any fiscal year does not exceed the
amount that the Issuer and its Restricted Subsidiaries would be required to pay
in respect of foreign, federal, state and local taxes for such fiscal year were
the Issuer, its Restricted Subsidiaries and its Unrestricted Subsidiaries (to
the extent described above) to pay such taxes separately from any such parent
entity;


 


(C)                                customary salary, bonus, indemnification obligations and other benefits
payable to officers, directors and employees or former officers, directors or
employees of any direct or indirect parent of the Issuer to the extent such
salaries, bonuses, indemnification obligations and other benefits are
attributable to the ownership or operation of the Issuer and the Restricted
Subsidiaries;


 


(D)                               general corporate overhead expenses of any direct or indirect parent of
the Issuer to the extent such expenses are attributable to the ownership or
operation of the Issuer and the Restricted Subsidiaries;


 


(E)                                 fees and expenses incurred by any direct or indirect parent company of
the Issuer in connection with any unsuccessful equity issuances or incurrence
of Indebtedness to the extent the net proceeds thereof were intended to be
contributed to the Issuer; and


 


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(F)                                 taxes with respect to income of any direct or indirect parent company of
the Issuer derived from funding made available to the Issuer and its Restricted
Subsidiaries by such direct or indirect parent company;


 


(12)                            the repurchase, redemption or other
acquisition or retirement for value of any Indebtedness or the making of a
dividend or distribution to any direct or indirect parent of the Issuer to fund
a similar purchase, redemption or other acquisition or retirement for value
required pursuant to provisions similar to those described under the provisions
of Section 3.10 (in which case a repurchase, redemption or other
acquisition or retirement price of not greater than 101% of the principal
amount of such Indebtedness) and Section 3.5; provided that there
is a concurrent or prior Change of Control Offer or Asset Sale Offer (in which
case a repurchase, redemption or other acquisition or retirement price of not
greater than 100% of the principal amount of such Indebtedness), as applicable,
and all Notes tendered by holders of the Notes in connection with such Change
of Control Offer or Asset Sale Offer, as applicable, have been repurchased,
redeemed or acquired or retired for value;


 


(13)                            the distribution, as a dividend or otherwise,
of (A) Equity Interests of, or Indebtedness owed to the Issuer or a
Restricted Subsidiary by, Unrestricted Subsidiaries (other than Unrestricted
Subsidiaries the primary assets of which are cash and/or Cash Equivalents) and (B) any
proceeds received from an Unrestricted Subsidiary on account of such Equity
Interests or Indebtedness, provided, that, in the case of clause (B), such
proceeds will be excluded from EBITDA for purposes of Section 3.3(a)(C)(i) hereof
and will be excluded from Section 3.3(a)(C)(v) hereof;


 


(14)                            Investments in joint ventures and Unrestricted
Subsidiaries; provided that the aggregate Restricted Payments made pursuant to
this clause (14) do not exceed the greater of (x) $20.0 million and (y) 1.0%
of Total Assets; provided that such amount shall be increased by an amount not
to exceed (A) the cash proceeds received as a dividend, distribution or
otherwise from such joint ventures and Unrestricted Subsidiaries (it being
understood that the forgiveness of any debt by such joint venture and
Unrestricted Subsidiary will not be a Restricted Payment hereunder) less (B) the
amount of any Restricted Payments previously made pursuant to subclause (A) of
this clause (14); provided, further, that such increased amount shall be
excluded from EBITDA for purposes of Section 3.3(a)(C)(i) hereof
and shall also be excluded from Sections 3.3(a)(C)(iv) and 3.3(a)(C)(v) hereof;


 


(15)                            distributions or payments of Receivables Fees;


 


(16)                            the repurchase, redemption, acquisition or
retirement of Indebtedness with Unutilized Excess Collateral Proceeds or
Unutilized Excess Proceeds; and


 


(17)                            Restricted Payments made in connection with
the Emergence Transactions as described in the Preliminary Offering Memorandum
as supplemented by the Supplement to Preliminary Offering Memorandum;


 


83














 


provided
however, that at the time of, and after giving effect to, any Restricted
Payment permitted under Sections 3.3(b)(5), 3.3(b)(6), 3.3(b)(10)
and 3.3(b)(13) hereof, no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof.


 


Notwithstanding
anything to the contrary in the foregoing, (A) Restricted Investments of assets
and property constituting Collateral (other than cash and Cash Equivalents)
made pursuant to Section 3.3 (a) may only be made in Subsidiary
Guarantors and (B) the Issuer will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, declare or pay any dividend or make any
distribution (whether cash or noncash) on account of the Issuer’s Equity
Interests or purchase or redeem, defease or otherwise acquire or retire for
value any Equity Interests of the Issuer or any direct or indirect parent of
the Issuer, in each case to or for the benefit of any holder of common Equity
Interests of the Issuer or any direct or indirect parent of the Issuer, by
means of (i) Section 3.3(a)(C), (ii) Sections 3.3(b)(10), (13)
or (14) or (iii) clause (o) of the definition of “Permitted Investments,”
unless in each case such Restricted Payment is otherwise in compliance with the
Indenture and at the time of such Restricted Payment (x) the Consolidated
Secured Debt Ratio (calculated without giving effect to clause (1)(e) of the
definition of Consolidated Secured Debt Ratio) of the Issuer would have been no
greater than 3.25 to 1.00 on a pro forma basis (it being understood that the
amount calculated pursuant to clause (1) of the definition of Consolidated
Secured Debt Ratio will be reduced by the Liquidity of the Issuer and its
Restricted Subsidiaries in excess of $150.0 million for purposes of such
calculation) and (y) the Issuer and its Restricted Subsidiaries would have
Liquidity of no less than $100.0 million on a pro forma basis.


 


The
amount of all Restricted Payments (other than cash) will be the fair market
value (as determined in good faith by the Issuer) on the date of such
Restricted Payment of the assets or securities proposed to be paid, transferred
or issued by the Issuer or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment.


 


As
of the time of issuance of the Notes, all of RDA’s Subsidiaries will be
Restricted Subsidiaries. The Issuer and RDA will not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the last
sentence of the definition of “Unrestricted Subsidiary.” For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Issuer, RDA and the Restricted Subsidiaries
(except to the extent repaid) in the Subsidiary so designated will be deemed to
be Restricted Payments in an amount determined as set forth in the last
sentence of the definition of “Investment.” Such designation will be permitted
only if a Restricted Payment in such amount would be permitted at such time,
whether pursuant to Sections 3.3(a), 3.3(b)(9) or 3.3(b)(10)
hereof, or pursuant to the definition of “Permitted Investments,” and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.


 


SECTION
3.4.   Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.


 


(a)                                 The Issuer will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability
of any such Restricted Subsidiary to:


 


84

















 


(1)                                 pay dividends or make any other distributions
to the Issuer or any Restricted Subsidiary on its Capital Stock or with respect
to any other interest or participation in, or measured by, its profits, or pay
any Indebtedness owed to the Issuer or any Restricted Subsidiary;


 


(2)                                 make loans or advances to the Issuer or any
Restricted Subsidiary; or


 


(3)                                 sell, lease or transfer any of its properties
or assets to the Issuer or any Restricted Subsidiary.


 


(b)                                 The restrictions in Section 3.4(a) will not apply (in each case)
to encumbrances or restrictions existing under or by reason of:


 


(i)                                     contractual
encumbrances or restrictions in effect on the Issue Date, in effect on the
Emergence Date (as contemplated by the Plan of Reorganization as described in
the Offering Memorandum) and pursuant to the Senior Credit Facility as in
effect on the Escrow Release Date and the related documentation as in effect on
such date and any amendments, restatements, modifications, renewals,
supplements, refundings, replacements or refinancings of those agreements;
provided that the amendments, restatements, modifications, renewals,
supplements, refundings, replacements or refinancings are not materially more
restrictive, taken as a whole, with respect to such dividend and other payment
restrictions than those contained in those agreements on such date;


 


(ii)                                  the Indenture,
the Notes, the Exchange Notes, the Guarantees of the Notes and the Exchange
Notes and the Security Documents;


 


(iii)                               purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature discussed in Section 3.4(a)(3) on the
property so acquired;


 


(iv)                              applicable law
or any applicable rule, regulation or order;


 


(v)                                 any agreement
or other instrument of a Person acquired by the Issuer or any Restricted
Subsidiary in existence at the time of such acquisition (but not created in
contemplation thereof), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired provided
that, in the case of Indebtedness, such Indebtedness was permitted by the terms
of the Indenture to be incurred;


 


(vi)                              contracts for
the sale of assets, including, without limitation, customary restrictions with
respect to a Subsidiary pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary that impose restrictions on the assets to be sold;


 


85

















 


(vii)                           secured
Indebtedness otherwise permitted to be incurred pursuant to the covenants
described in Sections 3.2 and 3.6 that limit the right of the
debtor to dispose of the assets securing such Indebtedness;


 


(viii)                        restrictions on
cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business;


 


(ix)                              other Indebtedness,
Disqualified Stock or preferred stock of Foreign Subsidiaries permitted to be
incurred subsequent to the Issue Date pursuant to the provisions of the
covenant described in Section 3.2 that impose restrictions solely on the
Foreign Subsidiaries party thereto or their Subsidiaries;


 


(x)                                 customary
provisions in joint venture agreements and other similar agreements relating
solely to such joint venture provided that
with respect to any joint venture agreement relating to a Restricted
Subsidiary, such provisions will not materially affect the Issuer’s ability to
make anticipated principal or interest payments on the Notes (as determined in
good faith by the Board of Directors of the Issuer);


 


(xi)                              customary
provisions contained in leases, licenses and other agreements entered into in
the ordinary course of business;


 


(xii)                           any agreement
or instrument (A) relating to any Indebtedness or preferred stock of a
Restricted Subsidiary permitted to be incurred subsequent to the Issue Date
pursuant to Section 3.2 if the encumbrances and restrictions are not
materially more disadvantageous to the Holders than is customary in comparable
financings (as determined in good faith by the Issuer) and (B) either (x) the
Issuer determines that such encumbrance or restriction will not adversely
affect the Issuer’s ability to make principal and interest payments on the
Notes as and when they come due or (y) such encumbrances and restrictions apply
only during the continuance of a default in respect of a payment or financial
maintenance covenant relating to such Indebtedness;


 


(xiii)                        restrictions
created in connection with any Receivables Facility that, in the good faith
determination of the Board of Directors of the Issuer, are necessary or
advisable to effect such Receivables Facility; and


 


(xiv)                       any
encumbrances or restrictions of the type referred to in clauses (1), (2) and (3)
of Section 3.4(a) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (i) through (xiii) above; provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Issuer’s Board of
Directors, not materially more restrictive 


 


86

















 


taken as a whole with
respect to such encumbrance and other restrictions than those prior to such
amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing.


 


SECTION
3.5.   Limitation on Sales of Assets and
Subsidiary Stock.  (a)  The Issuer will not, and will not permit any
Restricted Subsidiary to, cause or make any Asset Sale of Collateral, unless:


 


(1)                                 the Issuer or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value (as determined in good faith by the Issuer on
the date of contractually agreeing to such Asset Sale) of the assets sold or
otherwise disposed of;


 


(2)                                 85% of the consideration therefor received by
the Issuer or such Restricted Subsidiary, as the case may be, is in the form of
cash, Cash Equivalents or Replacement Assets of a type which would constitute
Collateral (which are thereupon with their acquisition added to the Collateral
securing the Notes in the manner and to the extent required in the Indenture or
any of the Security Documents) or a combination of the foregoing;


 


(3)                                 to the extent that any consideration received
by the Issuer or a Restricted Subsidiary in such Asset Sale constitutes
securities or other assets that are of a type or class that constitutes
Collateral, such securities or other assets, including the assets of any Person
that becomes a Subsidiary Guarantor as a result of such transaction, are
concurrently with their acquisition added to the Collateral securing the Notes
in the manner and to the extent required in the Indenture or any of the
Security Documents; and


 


(4)                                 the Net Proceeds from any such Asset Sale of
Collateral is paid directly by the purchaser thereof to the Collateral Agent to
be held in trust in a Collateral Account for application in accordance with
this covenant.


 


Notwithstanding
the foregoing provisions of the above paragraph, the Issuer and the Restricted
Subsidiaries will not be required to cause any Net Proceeds to be held in an
Collateral Account in accordance with clause (3) of the above paragraph except
to the extent the aggregate Net Proceeds from all Asset Sales of Collateral
which are not held in an Collateral Account, or have not been previously
applied in accordance with the provisions of the following paragraphs relating
to the application of Net Proceeds from Asset Sales of Collateral, exceed $5.0
million.


 


Any
Net Proceeds deposited into the Collateral Account from any Asset Sale of
Collateral may be withdrawn to be invested by the Issuer or a Guarantor in
Replacement Assets constituting Collateral within 365 days of the date of such
Asset Sale, which Replacement Assets are thereupon with their acquisition added
to the Collateral securing the Notes; provided that the Replacement Assets
shall not include the Capital Stock of Foreign Subsidiaries for purposes of
this requirement unless the relevant Asset Sale consisted of the sale of the
Capital Stock of a Foreign Subsidiary.


 


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All
of the Net Proceeds received from any Recovery Event in respect of Collateral
shall be deposited directly into the Collateral Account and may be withdrawn to
pay Priority Payment Lien Obligations in accordance with the proviso of the
succeeding paragraph or be invested by the Issuer or a Guarantor in Replacement
Assets (which may include performance of a restoration of the affected
Collateral) within 365 days of the date of such Recovery Event, which
Replacement Assets are thereupon with their acquisition added to the Collateral
securing the Notes; provided, that (x) the Issuer shall not be required to deposit
in the Collateral Account the Net Proceeds in an aggregate amount of $5.0
million or less and (y) Replacement Assets shall not include the Capital Stock
of Foreign Subsidiaries for purposes of this requirement.


 


Any
Net Proceeds from Asset Sales of Collateral or Recovery Events that are not
applied or invested as provided in this Section 3.5(a) or in accordance
with the Security Documents will be deemed to constitute “Excess Collateral
Proceeds.” On or before the 366th day after an Asset Sale or Recovery Event
pursuant to this subsection (a), if the aggregate amount of Excess Collateral
Proceeds exceeds $20.0 million, the Issuer will be required to make an offer (“Collateral
Disposition Offer”) to all Holders of Notes and all holders of other Pari
Passu Payment Lien Obligations containing provisions similar to those set forth
in the Indenture with respect to offers to purchase or redeem with the proceeds
of sales of Collateral to purchase the maximum principal amount of the Notes
and such Pari Passu Payment Lien Obligations (on a pro rata basis) to which the
Collateral Disposition Offer applies that may be purchased out of the Excess
Collateral Proceeds, at an offer price in cash in an amount equal to 100% of
the principal amount of the Notes, plus accrued and unpaid interest to the date
of purchase, in accordance with the procedures set forth in the Indenture in
integral multiples of $1,000; provided, that
no Notes of $2,000 or less can be repurchased in part; provided,
further, that to the extent that Net
Proceeds relate to Asset Sales of Collateral securing Priority Payment Lien
Obligations, the Issuer may, prior to making a Collateral Disposition Offer,
repay, repurchase, redeem or acquire the maximum principal amount of
Indebtedness that is Priority Payment Lien Obligations (and to correspondingly
reduce commitments with respect thereto) secured by such Collateral that may be
repaid, repurchased, redeemed or acquired out of such Net Proceeds, plus
accrued and unpaid interest, to the date of prepayment, with any Excess
Collateral Proceeds not used to repay, repurchase, redeem or acquire such
Indebtedness offered to Holders in accordance with this paragraph (after giving
effect to the repayment, repurchase, redemption or acquisition of Priority
Payment Lien Obligations). To the extent that the aggregate amount of Notes and
other Pari Passu Payment Lien Obligations so validly tendered and not properly
withdrawn pursuant to a Collateral Disposition Offer is less than the Excess
Collateral Proceeds, the Issuer may use any remaining Excess Collateral
Proceeds (“Unutilized Excess Collateral Proceeds”) in any manner not
prohibited by the Indenture. If the aggregate principal amount of Notes
surrendered by Holders and Pari Passu Payment Lien Obligations tendered into
such Collateral Disposition Offer exceeds the amount of Excess Collateral
Proceeds, the Notes and Pari Passu Payment Lien Obligations to be purchased
shall be selected on a pro rata basis. Upon completion of such Collateral
Disposition Offer, the amount of Excess Collateral Proceeds shall be reset at
zero.


 


(b)                                 The Issuer will not, and will not permit any Restricted Subsidiary to,
directly or indirectly consummate an Asset Sale (other than Asset Sales of
Collateral which shall be treated in the manner set forth in Section 3.5(a)
above), unless:


 


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(1)                                 the Issuer or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value (as determined in good faith by the Issuer on
the date of contractually agreeing to such Asset Sale) of the assets sold or
otherwise disposed of;


 


(2)                                 at least 75% of the consideration therefor
received by the Issuer or such Restricted Subsidiary, as the case may be, is in
the form of cash, Cash Equivalents or Replacement Assets or a combination of
the foregoing; and


 


(3)                                 to the extent that any consideration received
by the Issuer or a Restricted Subsidiary in such Asset Sale constitutes
securities or other assets that are of a type or class that constitutes
Collateral, such securities or other assets, including the assets of any Person
that becomes a Subsidiary Guarantor as a result of such transaction, are
concurrently with their acquisition added to the Collateral securing the Notes
in the manner and to the extent required in the Indenture or any of the
Security Documents.


 


Within
365 days after the Issuer’s or a Restricted Subsidiary’s receipt of Net
Proceeds from an Asset Sale subject to this Section 3.5(b), the Issuer
or such Restricted Subsidiary, at its option, may apply such Net Proceeds from
such Asset Sale:


 


(1)                                 to repay Priority Payment
Lien Obligations (and to correspondingly reduce commitments with respect
thereto) and Indebtedness of the applicable Restricted Subsidiary (if such
Restricted Subsidiary is not a Guarantor);


 


(2)                                 to make an investment in (a)
any one or more businesses; provided that such investment in any business is in
the form of the acquisition of Capital Stock of such business such that it
constitutes a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions
of other assets (other than current assets), in each of (a), (b) and (c), used
or useful in a Similar Business; provided, further, that, to the extent such
investment is of the type which would constitute Collateral under the
applicable Security Documents, such investment is concurrently added to the
Collateral securing the Notes in the manner and to the extent required in the
Indenture or any of the Security Documents; and/or


 


(3)                                 to make an investment in (a)
any one or more businesses; provided that such investment in any business is in
the form of the acquisition of Capital Stock of such business such that it
constitutes a Restricted Subsidiary, (b) properties or (c) other assets that,
in each of (a), (b) and (c), replace the businesses, properties and assets that
are the subject of such Asset Sale; provided, further, that, to the extent such
investment is of the type which would constitute Collateral under the applicable
Security Documents, such investment is concurrently added to the Collateral
securing the Notes in the manner and to the extent required in the Indenture or
any of the Security Documents.


 


Pending
the final application of any Net Proceeds from Asset Sales in accordance with
clauses (1) through (3) above, the Issuer and the Restricted Subsidiaries may
temporarily reduce Indebtedness or otherwise apply such Net Proceeds in any
manner not prohibited by the Indenture. Any binding commitment to apply Net
Proceeds to invest in accordance with clauses (2) or (3) above shall be treated
as a permitted final application of Net Proceeds from the date of 


 


89

















 


such
commitment so long as the Issuer or such Restricted Subsidiary enters into such
commitment with the good faith expectation that such Net Proceeds will be
applied to satisfy such commitment within 180 days of such commitment; provided that if such commitment is later canceled,
terminated or otherwise not consummated during such period for any reason, then
such Net Proceeds shall constitute “Excess Proceeds” (as defined in the
next succeeding paragraph).


 


Any
Net Proceeds from Asset Sales covered by this Section 3.5(b) that are
not invested or applied as provided and within the time period set forth above
will be deemed to constitute “Excess Proceeds.” When the aggregate
amount of Excess Proceeds exceeds $20.0 million, the Issuer shall make an offer
to all Holders of the Notes, and, at the Issuer’s option, to the holders of any
Pari Passu Payment Lien Obligations (an “Asset Sale Offer”) containing
provisions similar to those set forth in the Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets, to purchase the
maximum principal amount of Notes (that is $2,000 or an integral multiple of
$1,000 in excess thereof) and Pari Passu Payment Lien Obligations that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. The Issuer will
commence an Asset Sale Offer within ten business days after the date that Excess
Proceeds exceeds $20.0 million by mailing the notice required pursuant to the
terms of the Indenture, with a copy to the Trustee. To the extent that the
aggregate amount of Notes and such Pari Passu Payment Lien Obligations tendered
pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer
may use any remaining Excess Proceeds (which shall also constitute “Unutilized
Excess Proceeds”) for any purpose not prohibited by the terms of the
Indenture. If the aggregate principal amount of Notes or the Pari Passu Payment
Lien Obligations surrendered by such holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and the applicable agent or
the Issuer shall select such Pari Passu Payment Lien Obligations to be
purchased on a pro rata basis based on the accreted value or principal amount
of the Notes or such Pari Passu Payment Lien Obligations tendered. Upon
completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero. After the Issuer or any Restricted Subsidiary has applied the
Net Proceeds from any Asset Sale as provided in, and within the time periods
required by, this Section 3.5(b), any Unutilized Excess Proceeds may be
released by the Collateral Agent to the Issuer or such Restricted Subsidiary
for use by the Issuer or such Restricted Subsidiary for any purpose not
prohibited by the Indenture.


 


(c)                                  For purposes of Sections 3.5(a) and (b), (i) any
liabilities (other than Pari Passu Payment Lien Obligations, Disqualified Stock
and Indebtedness the repayment of which would constitute a Restricted Payment)
(as shown on the Issuer’s, or such Restricted Subsidiary’s, most recent balance
sheet or in the Notes thereto) of the Issuer or any Restricted Subsidiary that
are assumed by the transferee of any such assets and for which the Issuer and
all Restricted Subsidiaries have been validly released by all creditors in
writing; and (ii) any securities or other obligations received by the Issuer or
such Restricted Subsidiary from such transferee that are converted by the
Issuer or such Restricted Subsidiary into cash or Cash Equivalents (to the
extent of the cash or Cash Equivalents received) within 180 days following the
closing of such Asset Sale shall be deemed to be cash or Cash Equivalents.


 


In
addition for purposes of Section 3.5(b) only, any Designated Noncash
Consideration received by the Issuer or any Restricted Subsidiary in such Asset
Sale having an 


 


90

















 


aggregate
fair market value, taken together with all other Designated Noncash
Consideration received pursuant to this Section 3.5(c) that is at that
time outstanding, not to exceed 1.0% of Total Assets with the fair market value
of each item of Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in value, shall be
deemed to be cash or Cash Equivalents.


 


The
Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws or regulations are applicable in connection with the repurchase of the
Notes pursuant to an Asset Sale Offer or a Collateral Disposition Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of the Indenture, the Issuer will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in the Indenture by virtue thereof.


 


SECTION
3.6.   Limitation on Liens.  The Issuer will not, and will not permit any
of the Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien (other than Permitted Liens) upon
any of their property or assets, now owned or hereafter acquired, or upon any
income or profits therefrom.


 


SECTION
3.7.   Limitation on Guarantees of Indebtedness by
Restricted Subsidiaries.


 


(a)                                 The Issuer and RDA will not permit any Restricted Subsidiary that is not
a Subsidiary Guarantor or a special-purpose Restricted Subsidiary formed in
connection with Receivables Facilities, to guarantee the payment of any
Indebtedness of the Issuer or any other Guarantor unless:


 


(A)                               such Restricted Subsidiary
executes and delivers within 10 business days supplemental indentures to this
Indenture and joinders or supplements to Registration Rights Agreements and the
Security Documents providing for a first-priority secured guarantee of payment
of the Notes by such Restricted Subsidiary, except if such Indebtedness is by
its express terms subordinated in right of payment to the Notes or such
Subsidiary Guarantor’s Guarantee of the Notes, any such guarantee of such
Restricted Subsidiary with respect to such Indebtedness shall be subordinated
in right of payment to such Restricted Subsidiary’s Guarantee with respect to
the Notes substantially to the same extent as such Indebtedness is subordinated
in right of payment to the Notes or such Subsidiary Guarantor’s Guarantee of
the Notes;


 


(B)                               such Restricted Subsidiary
waives and will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of subrogation in relation to the Holders in respect
of any payment by such Restricted Subsidiary under its guarantee until payment
in full of the Obligations under this Indenture;


 


(C)                               such Restricted Subsidiary
shall take such action as may be reasonably necessary to cause its property and
assets that are of the type which would constitute Collateral under the
Security Documents to be made subject to the Lien of the Security Documents in
the manner and to the extent required in the Indenture or any of the Security 


 


91

















 


Documents
and shall take all reasonably necessary action so that such Lien is perfected to
the extent required by the Indenture and Security Documents; and


 


(D)                               such Restricted Subsidiary
shall deliver to the Trustee an Opinion of Counsel to the effect that:


 


(1)                                 such Guarantee
of the Notes has been duly executed and authorized; and


 


(2)                                 such Guarantee
of the Notes constitutes a valid, binding and enforceable obligation of such
Restricted Subsidiary, except insofar as enforcement thereof may be limited by
bankruptcy, insolvency or similar laws (including, without limitation, all laws
relating to fraudulent transfers) and except insofar as enforcement thereof is
subject to general principles of equity;


 


provided that this
paragraph (a) shall not be applicable to any guarantee of any Restricted
Subsidiary: (x) that existed at the time such Person became a Restricted
Subsidiary and was not incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary; or (y) of Senior Indebtedness and
any refunding, refinancing or replacement thereof in each case to the extent it
is not incurred pursuant to a syndicated loan, registered offering of
securities under the Securities Act or a private placement of securities
(including under Rule 144A) pursuant to an exemption from the registration
requirements of the Securities Act.


 


(b)                                 Notwithstanding the foregoing and the other provisions of this Indenture,
any Guarantee by a Restricted Subsidiary of the Notes shall be automatically
and unconditionally released and discharged as provided in Section 10.2(c).


 


SECTION
3.8.   Transactions with Affiliates.  (a)  The Issuer will not, and will not permit any
Restricted Subsidiary to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Issuer (each of the foregoing, an “Affiliate
Transaction”), unless:


 


(1)                                 such Affiliate Transaction is on terms that
are not materially less favorable to the Issuer or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
by the Issuer or such Restricted Subsidiary with an unrelated Person on an arm’s-length
basis; and


 


(2)                                 the Issuer deliver to the Trustee (i) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate payments or consideration in excess of $15.0 million,
a resolution adopted by the majority of the Board of Directors of the Issuer
approving such Affiliate Transaction and set forth in an Officers’ Certificate
that (x) such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors, if any, and (y) that such
Affiliate Transaction complies with clause (a) above; and (ii) with respect to
any Affiliate Transactions or series of related Affiliate Transactions
involving aggregate payments or consideration in excess of $25.0 million, a
letter from an Independent Financial Advisor 


 


92

















 


stating
that such transaction is fair to the Issuer or such Restricted Subsidiary from
a financial point of view.


 


(b)                                 The foregoing provisions will not apply to the following:


 


(1)                                 transactions between or among the Issuer
and/or any of the Restricted Subsidiaries;


 


(2)                                 Restricted Payments permitted by the
provisions of this Indenture described above under Section 3.3 and the
definition of “Permitted Investments” (other than pursuant to clauses (c), (d) and
(o) thereof);


 


(3)                                 the payment of reasonable fees and
compensation paid to, and indemnities provided on behalf of, (and entering into
related agreements with) officers, directors, employees or consultants of the
Issuer, any of its direct or indirect parents or any Restricted Subsidiary;


 


(4)                                 transactions in which the Issuer or any
Restricted Subsidiary, as the case may be, delivers to the Trustee a letter
from an Independent Financial Advisor stating that such transaction is fair to the
Issuer or such Restricted Subsidiary from a financial point of view;


 


(5)                                 payments or loans (or cancellation of loans)
to employees or consultants of the Issuer, any of its direct or indirect
parents or any Restricted Subsidiary which are approved by a majority of the
Board of Directors of the Issuer in good faith and in accordance with
applicable law;


 


(6)                                 any agreement as in effect as of the Issue
Date or as contemplated to be in effect on the Emergence Date by the Plan of
Reorganization as described in the Offering Memorandum, or any amendment
thereto (so long as any such amendment is not disadvantageous to the Holders in
any material respect) or payments made thereunder or the performance thereof or
any transaction contemplated thereby;


 


(7)                                 the existence of, or the performance by the
Issuer or any Restricted Subsidiaries of its obligations under the terms of,
any equityholders agreement (including any registration right agreement or
purchase agreements related thereto) to which it is party as of the Issue Date
or as of the Emergence Date as contemplated by the Plan of Reorganization as
described in the Offering Memorandum and any similar agreement that it may
enter into thereafter; provided, however, that the existence of, or the
performance by the Issuer or any Restricted Subsidiary of its obligations under
any future amendment to the equityholders’ agreement or under any similar
agreement entered into after the Issue Date or after the Emergence Date, as the
case may be, will only be permitted under this clause (7) to the extent that
the terms of any such amendment or new agreement are not otherwise
disadvantageous to the Holders in any material respects;


 


(8)                                 transactions with customers, clients,
suppliers, or purchasers or sellers of goods or services, in each case in the
ordinary course of business and otherwise in compliance with the terms of the
Indenture which are fair to the Issuer and the Restricted


 


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Subsidiaries,
in the reasonable determination of the Board of Directors of the Issuer or the
senior management thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time in arm’s length negotiations with an
unaffiliated third party;


 


(9)                                 transactions with a Person (other than an
Unrestricted Subsidiary of the Issuer) that is an Affiliate of the Issuer
solely because the Issuer or a Restricted Subsidiary of the Issuer owns an
equity interest in or otherwise controls such Person;


 


(10)                          any purchases by the Issuer’s Affiliates of
Indebtedness of the Issuer or any of its Restricted Subsidiaries the majority
of which Indebtedness is offered to Persons who are not Affiliates and the
Affiliate of the Issuer purchases such Indebtedness on similar terms;


 


(11)                          any issuance or sale of Equity Interests
(other than Disqualified Stock) to Affiliates of the Issuer and the granting of
registration and other customary rights in connection therewith or any
contribution to capital of direct or indirect parent companies, the Issuer or
any Restricted Subsidiary;


 


(12)                          any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved
by the Board of Directors of the Issuer in good faith;


 


(13)                          sales of accounts receivable, or
participations therein, in connection with any Receivables Facility; and


 


(14)                          transactions contemplated by the Plan of
Reorganization and the related confirmation order.


 


SECTION
3.9.   Limitation on Activities of Holdings.  Holdings shall not conduct, transact or
otherwise engage in any business or operations other than (i) its ownership of
all of the Equity Interests in, and its management of, RDA, (ii) action
required by law to maintain its existence, (ii) performance of its obligations
under the Senior Credit Facility, this Indenture, the Security Documents and
the other agreements contemplated thereby, (v) any public offering of its
common stock, (vi) activities incidental to its maintenance and continuance and
to any of the foregoing activities and (vii) other activities to the extent
permitted by, and in compliance with, the Senior Credit Facility.


 


SECTION
3.10.   Change of Control.  (a)  If
a Change of Control occurs, the Issuer shall make an offer to purchase all of
the Notes pursuant to the offer described below (the “Change of Control Offer”) at a
price in cash (the “Change of
Control Payment”) equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to but excluding the date of
purchase, subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date.  Within 30 days following any Change of
Control, the Issuer will send notice of such Change of Control Offer by first
class mail, with a copy to the Trustee, to each Holder of Notes to the address
of such Holder appearing in the security register with a copy to the Trustee or
otherwise in accordance with the procedures of DTC, with the following
information:


 


94

















 


(1)                                 a Change of Control Offer is being made
pursuant to this Section 3.10, and that all Notes properly tendered pursuant
to such Change of Control Offer will be accepted for payment;


 


(2)                                 the purchase price and the purchase date,
which will be no earlier than 30 days nor later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”);


 


(3)                                 any Note not properly tendered will remain
outstanding and continue to accrue interest;


 


(4)                                 unless the Issuer defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest on the Change of Control
Payment Date;


 


(5)                                 Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to surrender the Notes,
with the form entitled “Option of Holder to Elect Purchase” on the reverse of
the Notes completed, to the paying agent specified in the notice at the address
specified in the notice prior to the close of business on the third business
day preceding the Change of Control Payment Date;


 


(6)                                 Holders will be entitled to withdraw their
tendered Notes and their election to require the Issuer to purchase such Notes;
provided that the paying agent receives, not later than the close of business
on the last day of the Change of Control offer period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder of the
Notes, the principal amount of Notes tendered for purchase, and a statement
that such Holder is withdrawing his tendered Notes and his election to have
such Notes purchased;


 


(7)                                 if such notice is mailed prior to the
occurrence of a Change of Control, stating the Change of Control Offer is
conditional on the occurrence of such Change of Control; and


 


(8)                                 that Holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $2,000 or an integral multiple of $1,000 in excess thereof.


 


The
Paying Agent will promptly mail to each Holder of Notes tendered the Change of
Control Payment for such Notes, and the Trustee will promptly authenticate and
mail to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided that each such new Note will
be in a principal amount of $2,000 or an integral multiple of $1,000 in excess
thereof.  The Issuer shall publicly
announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.


 


If
the Change of Control Payment Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid
interest, if any, will be paid on the relevant interest payment date to the
Person in whose name a Note is registered at the close of 


 


95

















 


business
on such record date, and no Additional Interest will be payable to holders who
tender pursuant to the Change of Control Offer.


 


Prior
to making a Change of Control Payment, and as a condition to such payment (a) the
requisite holders of each issue of Indebtedness issued under an indenture or
other agreement that may be violated by such payment shall have consented to
such Change of Control Payment being made and waived the event of default, if
any, caused by the Change of Control or (b) the Issuer will repay all
outstanding Indebtedness issued under an indenture or other agreement that may
be violated by a Change of Control Payment or the Issuer must offer to repay
all such Indebtedness, and make payment to the holders of such Indebtedness
that accept such offer and obtain waivers of any event of default from the
remaining holders of such Indebtedness. The Issuer covenants to effect such
repayment or obtain such consent prior to making a Change of Control Payment,
it being a default of the Change of Control provisions of this Indenture if the
Issuer fails to comply with such covenant.


 


(b)                                 On the Change of Control Payment Date, the Issuer will, to the extent
permitted by law,


 


(1)                                 accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer,


 


(2)                                 deposit with the paying agent an amount equal
to the aggregate Change of Control Payment in respect of all Notes or portions
thereof so tendered, and


 


(3)                                 deliver, or cause to be delivered, to the
Trustee for cancellation the Notes so accepted together with an Officers’
Certificate stating that such Notes or portions thereof have been tendered to
and purchased by the Issuer.


 


(c)                                  The Issuer will not be required to make a Change of Control Offer
following a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control
Offer made by the Issuer and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.


 


(d)                                 Notwithstanding anything to the contrary in this Section 3.10, a
Change of Control Offer may be made in advance of a Change of Control, conditional
upon such Change of Control.


 


(e)                                  The Issuer will comply with the requirements of Section 14(e) under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to a Change of Control Offer. To the extent
that the provisions of any securities laws or regulations conflict with
provisions of this Indenture, the Issuer will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described in this Indenture by virtue thereof.


 


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SECTION
3.11.   Reports and other information.


 


(a)                                 Notwithstanding that the Issuer or Holdings may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise
report on an annual and quarterly basis on forms provided for such annual and
quarterly reporting pursuant to rules and regulations promulgated by the SEC,
Holdings (or, if neither the Issuer or Holdings are at such time subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Issuer)
shall file with the SEC and make available to the Trustee and the registered
Holders, without cost to any Holder or the Trustee, from and after the Issue
Date, within the time periods specified in the SEC’s rules and regulations that
are then applicable to Holdings or the Issuer, as applicable, or if neither
Holdings or the Issuer is subject to the reporting requirements of the Exchange
Act, then the time periods for filing shall be those applicable to a filer that
is not an “accelerated filer” as defined in such rules and regulations:


 


(1)                                 all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-K
and 10-Q if Holdings were required to file such reports, including a “Management’s
discussion and analysis of financial condition and results of operations” and,
with respect to the annual information only, a report on the annual financial
statements by Holdings’ independent registered public accounting firm;


 


(2)                                 all current reports that would be required to
be filed with the SEC on Form 8-K if the Issuer or Holdings were required to
file such reports; and


 


(3)                                 any other information, documents and other
reports that Holdings or the Issuer would be required to file with the SEC if
they were subject to Section 13 or 15(d) of the Exchange Act;


 


in
each case in a manner that complies in all material respects with the
requirements specified in such form; provided, that
Holdings and the Issuer shall not be obligated to file such reports with the
SEC at any time prior to becoming subject to Section 13 or 15(d) of the
Exchange Act, in which event, the Issuer will make available such information
to prospective purchasers of the Notes (by posting such reports and information
on the primary investor relations website of the Issuer), in addition to
providing such information to the Trustee and the Holders; provided
further that Holdings and the Issuer shall not be obligated to make
either the transition report on Form 10-K for the period ended December 31,
2009 or the Quarterly report on Form 10-Q for the following quarter available
to prospective purchasers of the Notes, the Trustee or the registered Holders
until May 31, 2010.


 


(b)                                 If RDA has designated any of its Subsidiaries as Unrestricted
Subsidiaries and such Unrestricted Subsidiaries, either individually or
collectively, would otherwise have been a Significant Subsidiary, then the
quarterly and annual financial information required by the preceding paragraph
shall include a reasonably detailed presentation, as determined in good faith
by senior management of the Issuer, either on the face of the financial
statements or in the footnotes to the financial statements and in management’s
discussion and analysis of financial condition and results of operations, of
the financial condition and results of operations of the Holdings and its
Restricted Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries.


 


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(c)                                  The Issuer and the Guarantors shall make available to the Holders and to
prospective investors, upon the request of such Holders, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act
so long as the Notes are not freely transferable under the Securities Act. For
purposes of this Section 3.11, the Issuer and the Guarantors will be
deemed to have furnished the reports to the Trustee and the Holders as required
by this Section 3.11 if Holdings has filed such reports with the SEC via
the EDGAR filing system and such reports are publicly available.


 


(d)                                 The filing requirements set forth above for the applicable period may be
satisfied by Holdings prior to the commencement of the offering of the Exchange
Securities or the effectiveness of the Shelf Registration Statement by the
filing with the SEC of the registration statement relating to the exchange
offer pursuant to the Registration Rights Agreement and/or the Shelf
Registration Statement, and any amendments thereto, with such financial
information that satisfies Regulation S-X of the Securities Act; provided that
this paragraph shall not supersede or in any manner suspend or delay the Issuer’s
reporting obligations set forth in the first three paragraphs of this Section
3.11.


 


(e)                                  All financial information provided pursuant to this Section 3.11
will be accompanied by consolidating financial information that explains in
reasonable detail the differences between the financial information relating to
Holdings, on the one hand, and the information relating to the Issuer and the
Restricted Subsidiaries on a stand-alone basis on the other hand.


 


(f)                                   If Holdings has electronically filed with the Securities and Exchange
Commission’s Next-Generation EDGAR system (or any successor system), the
reports described in above (including any consolidating information required by
Section 3.11(e), unless otherwise provided to the Trustee and the
Holders), the Issuer shall be deemed to have satisfied the foregoing
requirements.


 


(g)                                  The Issuer will hold quarterly conference calls for the Holders of the
Notes to discuss financial information for the previous quarter. The conference
call will be following the last day of each fiscal quarter of the Issuer and
not later than ten business days from the time that the Issuer distributes the
financial information as set forth in clauses (a) and (b) above. No fewer than
two days prior to the conference call, the Issuer shall issue a press release
announcing the time and date of such conference call and providing instructions
for Holders, securities analysts and prospective investors to obtain access to such
call. For the avoidance of doubt, the Issuer may satisfy the requirements of
this Section 3.11(g) by holding the conference calls required above
within the time period required as part of any earnings calls of Holdings.


 


(h)                                 The Issuer will also hold a conference call for Holders of Notes to
discuss the status of the transition report on Form 10-K for the period ended December
31, 2009 and the related financial information for such period to the extent
then internally available no later than April 30, 2010. No fewer than two days
prior to the conference call, the Issuer shall issue a press release containing
such financial information and announcing the time and date of such conference
call and providing instructions for Holders, securities analysts and
prospective investors to obtain access to such call.


 


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(i)                                     The reports and other information provided to the Trustee pursuant to
this Section 3.11 shall be for informational purposes only and the
Trustee’s receipt of such shall not constitute notice of any information
contained therein, including the Issuer’s compliance with any of the covenants
thereunder (as to which the Trustee is entitled to rely exclusively on the
Officers’ Certificates). The Trustee will not be obligated to review or verify
such reports or information.


 


(j)                                    Nothing in this Section 3.11 shall be construed so as to require
the Issuer to include in such reports any information specified in Rule 3-16 of
Regulation S-X.


 


SECTION
3.12.   Future Guarantors.


 


(a)                                 The Issuer will cause each wholly-owned Domestic Subsidiary with assets
with either a book value or fair market value equal to or greater than $250,000
that is formed or acquired following the Issue Date to execute and deliver on
the Escrow Release Date or within 10 days of formation or acquisition, as
applicable, to the Trustee a supplemental indenture substantially in the form
of Exhibit C hereto pursuant to which such wholly-owned Domestic
Subsidiary will unconditionally Guarantee, on a joint and several basis with
the other Guarantors, the full and prompt payment of the principal of, premium,
if any, and interest in respect of the Notes on a senior secured basis and all
other obligations under the Indenture.


 


(b)                                 Each Restricted Subsidiary that becomes a Subsidiary Guarantor on or
after the Issue Date shall also become a party to the applicable Security
Documents and shall as promptly as practicable execute and deliver such
security instruments, financing statements and certificates and opinions of
counsel (to the extent, and substantially in the form, delivered on the Issue
Date and the Escrow Release Date (but no greater scope)) as may be necessary to
vest in the Collateral Agent a first-priority security interest (subject to
Permitted Liens) in the manner and to the extent set forth in the Security
Documents and this Indenture in properties and assets of the type constituting
Collateral as security for the Notes or the Guarantees, and thereupon all
provisions of the Indenture relating to the Collateral shall be deemed to
relate to such properties and assets to the same extent and with the same force
and effect.


 


(c)                                  Each Guarantee shall be released in accordance with Article X.


 


SECTION
3.13.   Maintenance of Office or Agency.


 


The
Issuer will maintain an office or agency where the Notes may be presented or
surrendered for payment, where, if applicable, the Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served.  The corporate trust office of the Trustee,
which initially shall be located at 45 Broadway, 14th Floor, New
York, New York 10006, Attn: Corporate Trust Services — Reader’s Digest Assoc.
Administrator, shall be such office or agency of the Issuer, unless the Issuer
shall designate and maintain some other office or agency for one or more of
such purposes.  The Issuer will give
prompt written notice to the Trustee of any change in the location of any such
office or agency.  If at any time the
Issuer shall fail to maintain any such required office or agency or shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the corporate trust office
of the Trustee, and the Issuer 


 


99

















 


hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.


 


The
Issuer may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind any such designation.  The Issuer will give prompt written notice to
the Trustee of any such designation or rescission and any change in the
location of any such other office or agency.


 


SECTION
3.14.   Corporate Existence.  Except as otherwise provided in this Article
III, Article IV and Section 10.2(b), the Issuer and RDA will
do or cause to be done all things necessary to preserve and keep in full force
and effect its respective corporate existence and the corporate, partnership,
limited liability company or other existence of each Restricted Subsidiary and
the rights (charter and statutory), licenses and franchises of the Issuer, RDA
and each Restricted Subsidiary; provided, however,
that the Issuer and RDA shall not be required to preserve any such right,
license or franchise or the corporate, partnership, limited liability company
or other existence of any Restricted Subsidiary if the respective Board of
Directors or, with respect to a Restricted Subsidiary that is not a Significant
Subsidiary (or group of Restricted Subsidiaries that taken together would not
be a Significant Subsidiary), senior management of the Issuer and RDA
determines that the preservation thereof is no longer desirable in the conduct
of the business of the Issuer, RDA and each of its Restricted Subsidiaries,
taken as a whole, and that the loss thereof is not, and will not be,
disadvantageous in any material respect to the Holders.


 


SECTION
3.15.   Payment of Taxes.  The Issuer and RDA shall pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, all
material taxes, assessments and governmental charges levied or imposed upon the
Issuer, RDA or any Subsidiary; provided, however,
that the Issuer and RDA shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim the amount,
applicability or validity of which is being contested in good faith by
appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Issuer and RDA), are being
maintained in accordance with GAAP or where the failure to effect such payment
will not be disadvantageous to the Holders.


 


SECTION
3.16.   Payments for Consent.  The Issuer will not, and will not permit any
of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid and is
paid to all Holders that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
amendment.


 


SECTION
3.17.   Compliance Certificate.  The Issuer shall deliver to the Trustee
within 120 days after the end of each Fiscal Year of the Issuer an Officers’ Certificate
stating that in the course of the performance by the signers of their duties as
Officers of the Issuer they would normally have knowledge of any Default or
Event of Default and whether or not the signers know of any Default or Event of
Default that occurred during the previous Fiscal Year; provided that
no such Officers’ Certificate shall be required for any Fiscal Year ended prior
to the Issue Date.  If they do, the
certificate shall describe the Default or Event of Default, its status and the action
the 


 


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Issuer
is taking or proposes to take with respect thereto.  The Issuer also shall comply with TIA § 314(a)(4).


 


SECTION
3.18.   Further Instruments and Acts.  Upon request of the Trustee or as necessary
to comply with future developments or requirements, the Issuer will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this
Indenture.


 


SECTION
3.19.   Limitation on Lines of Business.  The Issuer and RDA will not, and will not
permit any Restricted Subsidiary to, engage in any business other than a
Similar Business.


 


SECTION
3.20.   Statement by Officers as to Default.  The Issuer shall deliver to the Trustee, as
soon as possible and in any event within 10 days after the Issuer becomes aware
of the occurrence of any Event of Default or an event which, with notice or the
lapse of time or both, would constitute an Event of Default, an Officers’
Certificate setting forth the details of such Event of Default or Default, its
status and the actions which the Issuer is taking or proposes to take with
respect thereto.


 


SECTION
3.21.   Activities prior to the Assumption.


 


(a)                                 Prior to the Assumption, the Issuer shall not engage in any activities
other than issuing the Notes, issuing capital stock to, and receiving capital
contributions from, RDA, performing its obligations in respect of the Notes
under this Indenture and the Escrow Agreement, consummating the Assumption and
redeeming the Notes, if applicable, and conducting such other activities as are
necessary or appropriate to carry out the activities described above. Prior to
the Assumption, the Issuer shall not own, hold or otherwise have any interest
in any assets other than the Escrow Account and cash and Cash Equivalents (as
defined in the Escrow Agreement).


 


(b)                                 Prior to the Assumption, Issuer and RDA and its Restricted Subsidiaries
shall not engage in any activity or enter into any transaction or agreement
(including, without limitation, making any restricted payment, incurring any
debt, incurring any Liens except in favor of the Holders of the Notes, entering
into any merger, consolidation or sale of all or substantially all of its
assets or engaging in any transaction with its Affiliates) except in the
ordinary course of business or necessary to effectuate the Plan of
Reorganization and the Emergence Transactions substantially in accordance with
the description of the Plan of Reorganization set forth in the Preliminary
Offering Memorandum, the disclosure statement relating to the Plan of
Reorganization and the Confirmation Order together with such amendments,
modifications and waivers that are not, individually or in the aggregate,
materially adverse to RDA or any of its subsidiaries (after giving effect to
the consummation of the Emergence Transactions), taken as a whole, or to the
Holders of the Notes.


 


(c)                                  Any activity engaged in or transaction or agreement entered into by RDA
or any of its Restricted Subsidiaries or Guarantors during the period from and
including the Issue Date and ending on the Escrow Release Date (the “Escrow
Period”) which would have been subject to Articles III, IV or
X of this Indenture shall be deemed to have occurred on the Issue Date
as if all such Articles had been applicable to RDA, the Guarantors and the
Restricted Subsidiaries 


 


101

















 


since the Issue Date and
throughout the Escrow Period and shall be classified as having been made or
incurred or entered into pursuant to any relevant provision of such Articles; provided that the calculations made under this Indenture
shall be made as if such Articles has been in effect since the Issue Date and
throughout the Escrow Period.


 


SECTION
3.22.   Escrow of Funds.


 


(a)                                 Concurrently with the closing of the offering of the Notes, the Escrow
Issuer, RDA, the Initial Purchasers, the Trustee and the Escrow Agent shall
enter into the Escrow Agreement and in connection therewith the Initial
Purchasers and RDA will deposit the Escrowed Funds (as defined in the Escrow
Agreement) into the Escrow Account, which will include an amount sufficient to
yield the aggregate Special Redemption Price (as defined in the Escrow
Agreement) on the Special Redemption Date (as defined in the Escrow Agreement)
for the Notes.  The Escrow Issuer will
grant the Trustee, for the benefit of the Holders, a first priority security
interest in the Escrow Account and all deposits therein to secure the
Obligations under the Notes pending disbursement as described below.


 


(b)                                 The Issuer and RDA agree that (i) the terms of the Escrow Agreement shall
exclusively control the conditions under which and procedures pursuant to which
Escrowed Funds (as defined in the Escrow Agreement) can be released and (ii) it
will not attempt to have Escrowed Funds released from escrow except in
accordance with the Escrow Agreement.


 


SECTION
3.23.   Suspension of Certain Covenants.  Beginning on the first day of a Covenant
Suspension and ending on a Reversion Date (such period a “Suspension Period”),
the Issuer and its Restricted Subsidiaries will not be subject to Sections
3.2, 3.3, 3.4, 3.5(b), 3.7, 3.8, 3.12
and 4.1(a)(4).


 


On
each Reversion Date, all Indebtedness incurred, or Disqualified Stock or
preferred stock issued, during the Suspension Period will be classified as
having been incurred or issued pursuant to Section 3.2(a) or one of the
clauses of Section 3.2(b) (to the extent such Indebtedness or
Disqualified Stock or preferred stock would be permitted to be incurred or
issued thereunder as of the Reversion Date and after giving effect to
Indebtedness incurred or issued prior to the Suspension Period and outstanding
on the Reversion Date). To the extent such Indebtedness or Disqualified Stock
or preferred stock would not be so permitted to be incurred or issued pursuant Sections
3.2(a) or (b), such Indebtedness or Disqualified Stock or preferred
stock will be deemed to have been outstanding on the Emergence Date, so that it
is classified as permitted under Section 3.2(b)(3) Calculations made
after the Reversion Date of the amount available to be made as Restricted
Payments under Section 3.3 will be made as though the covenant described
under Section 3.3 had been in effect since the Issue Date and throughout
the Suspension Period. Accordingly, Restricted Payments made during the
Suspension Period will reduce the amount available to be made as Restricted
Payments under Section 3.3(a). As described above, however, no Default
or Event of Default will be deemed to have occurred as a result of the
Reversion Date occurring on the basis of any actions taken or the continuance
of any circumstances resulting from actions taken or the performance of
obligations under agreements entered into by the Issuer or any of the
Restricted Subsidiaries during the Suspension Period (other than agreements to
take actions after the Reversion Date that would not be permitted outside of
the Suspension Period entered into in contemplation of the Reversion Date).


 


102

















 


For
purposes of Section 3.5, on the Reversion Date, the Unutilized Excess
Proceeds amount will be reset to zero.


 


During
the Suspension Period, no Restricted Subsidiary may be designated as an
Unrestricted Subsidiary by the Board of Directors of the Issuer.


 


ARTICLE
IV


 


SUCCESSOR
ISSUER


 


SECTION
4.1.   Merger, Consolidation or Sale of All or
Substantially All Assets.


 


(a)                                 The Issuer shall not consolidate or merge with or into or wind up into
(whether or not the Issuer is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
properties or assets of the Issuer and the Restricted Subsidiaries, taken as a
whole, in one or more related transactions, to any Person unless:


 


(1)                                 the Issuer is the surviving corporation or the
Person formed by or surviving any such consolidation or merger (if other than
the Issuer) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation, limited liability
company or limited partnership organized or existing under the laws of the
United States, any state thereof, the District of Columbia, or any territory
thereof; provided that if such
Person is not a corporation, such Person shall be required to cause a
subsidiary of such Person that is a corporation to be a co-obligor of the Notes
(such Person, as the case may be, being herein called the “Successor Issuer”);


 


(2)                                 the Successor Issuer, if other than the Issuer,
expressly assumes all the obligations of such Issuer under this Indenture, the
Registration Rights Agreement, the Notes and the Security Documents pursuant to
supplemental indentures or other documents, agreements or instruments in form
reasonably satisfactory to the Trustee and shall cause such amendments,
supplements or other instruments to be executed, filed, and recorded in such
jurisdictions as may be required by applicable law to preserve and protect the
Lien on the Collateral owned by or transferred to the Successor Issuer,
together with such financing statements or comparable documents as may be
required to perfect any security interests in such Collateral which may be
perfected by the filing of a financing statement or a similar document under
the Uniform Commercial Code or other similar statute or regulation of the
relevant states or jurisdictions;


 


(3)                                 immediately after such transaction no Default
or Event of Default exists;


 


(4)                                 immediately after giving pro forma effect to
such transaction, as if such transaction had occurred at the beginning of the
applicable four-quarter period, either (i) the Successor Issuer would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test set forth in Section 3.2(a) or (ii) the
Ratings Condition is satisfied;


 


103














 


(5)                                 each Guarantor, unless it is a Subsidiary
Guarantor that is the other party to the transactions described above, in which
case clause (1)(b) of Section 10.2(b) shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply to such Person’s
obligations under this Indenture and the Notes and its obligations under the
Security Documents shall continue to be in effect and shall cause such
amendments, supplements or other instruments to be executed, filed and recorded
in such jurisdictions as may be required by applicable law to preserve and
protect the Lien on the Collateral owned by such Guarantor, together with such
financing statements or comparable documents as may be required to perfect any
security interests in such Collateral which may be perfected by the filing of a
financing statement or a similar document under the Uniform Commercial Code or
other similar statute or regulation of the relevant states or jurisdictions;


 


(6)                                 the Issuer shall have delivered to the Trustee
an Officers’ Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indentures, if any,
comply with this Indenture and, if a supplemental indenture or any supplement
to any Security Document is required in connection with such transaction, such
supplement shall comply with the applicable provisions of this Indenture and
the Security Documents;


 


(7)                                 to the extent any assets of the Person which
is merged or consolidated with or into the Successor Issuer are assets of the
type which would constitute Collateral under the Security Documents, the
Successor Issuer will take such other actions as may be reasonably necessary to
cause such property and assets to be made subject to the Lien of the Security Documents
in the manner and to the extent required in this Indenture or any of the
Security Documents and shall take all reasonably necessary action so that such
Lien is perfected to the extent required by the Security Documents; and


 


(8)                                 the Collateral owned by or transferred to the
Successor Issuer shall:


 


(a)                                 continue to constitute
Collateral under this Indenture and the Security Documents,


 


(b)                                 be subject to the Lien in
favor of the Collateral Agent for the benefit of the Collateral Agent, the
Trustee and the Holders of the Notes; and


 


(c)                                  not be subject to any Lien
other than Permitted Liens.


 


(b)                                 The Successor Issuer will succeed to, and be substituted for such Issuer
under this Indenture and the Notes and the Issuer (if not the Successor Issuer)
will be fully released from its obligations under this Indenture, the Notes and
the Security Documents but, in the case of a lease of all or substantially all
its assets, the Issuer will not be released from the obligation to pay the
principal of and interest on the Notes.


 


(c)                                  The Issuer shall not, directly or indirectly, lease all or substantially
all of the properties and assets of it and its Restricted Subsidiaries taken as
a whole, in one or more related transactions, to any other Person.


 


104

















 


(d)                                 Notwithstanding Sections 4.1(a)(3) and (a)(4),


 


(a)                                 any Restricted Subsidiary
that is not a Subsidiary Guarantor may consolidate with, merge into or transfer
all or part of its properties and assets to the Issuer or any Restricted
Subsidiary;


 


(b)                                 any Subsidiary Guarantor may
consolidate with, merge into or transfer all or part of its properties and
assets to the Issuer or a Subsidiary Guarantor;


 


(c)                                  the Issuer may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Issuer in
another State of the United States; and


 


(d)                                 the Assumption shall be
permitted.


 


(e)                                  For purposes of this Section 4.1, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Issuer, which
properties and assets, if held by the Issuer instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Issuer on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Issuer.


 


(f)                                   Notwithstanding anything to the contrary in this Indenture, any
Subsidiary with a value of less than $250,000 may liquidate or dissolve or
change its legal form if the Issuer determines in good faith that such action
is in the best interests of the Issuer and its Subsidiaries and is not
materially disadvantageous to the interests of the Holders of Notes.


 


ARTICLE
V


 


REDEMPTION
OF SECURITIES


 


SECTION
5.1.   Notices to Trustee.


 


If
the Issuer elects to redeem Notes pursuant to the optional redemption
provisions of Section 5.7 hereof, it must furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption date, an Officers’
Certificate setting forth:


 


(1)                                 the clause of this Indenture pursuant to which
the redemption shall occur;


 


(2)                                 the redemption date;


 


(3)                                 the principal amount of Notes to be redeemed;
and


 


(4)                                 the redemption price.


 


105

















 


Any
redemption referenced in such Officers’ Certificate may be cancelled by the
Issuer at any time prior to notice of redemption being mailed to any Holder and
thereafter shall be null and void.


 


SECTION
5.2.   Selection of Notes to Be Redeemed or
Purchased.


 


If
less than all of the Notes are to be redeemed pursuant to Section 5.7 or
purchased in an Asset Sale Offer or a Collateral Disposition Offer pursuant to Section
3.5 or a Change of Control Offer pursuant to Section 3.10 or an Excess
Cash Flow Offer pursuant to Section 5.9, the Trustee will select Notes
for redemption or purchase (a) if the Notes are in global form, pursuant to the
applicable rules of DTC and (b) if the Notes are in definitive form, on a pro
rata basis except:


 


(1)                                 if the Notes are listed on any national
securities exchange, in compliance with the requirements of the principal
national securities exchange on which the Notes are listed; or


 


(2)                                 if otherwise required by law.


 


No
Notes of $2,000 or less can be redeemed in part.  In the event of partial redemption, the
particular Notes to be redeemed or purchased will be selected, unless otherwise
provided herein, not less than 30 nor more than 60 days prior to the redemption
or purchase date by the Trustee from the outstanding Notes not previously
called for redemption or purchase.


 


The
Trustee will promptly notify the Issuer in writing of the Notes selected for
redemption or purchase and, in the case of any Note selected for partial
redemption or purchase, the principal amount thereof to be redeemed or
purchased.  Notes and portions of Notes
selected will be in amounts of $2,000 or whole multiples of $1,000; except that
if all of the Notes of a Holder are to be redeemed or purchased, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed or purchased. 
Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption or purchase also apply to
portions of Notes called for redemption or purchase.


 


SECTION
5.3.   Notice to Redemption.  At least 30 days but not more than 60 days
before a redemption date, the Issuer will mail or cause to be mailed, by first
class mail postage prepaid, a notice of redemption to each Holder whose Notes
are to be redeemed at its registered address, except that redemption notices
may be mailed more than 60 days prior to a redemption date if the notice is
issued in connection with a defeasance of the Notes or a satisfaction and
discharge of this Indenture pursuant to Articles VIII or XII
hereof.


 


The
notice will identify the Notes (including the CUSIP number) to be redeemed and
will state:


 


(1)                                 the redemption date;


 


(2)                                 the redemption price;


 


(3)                                 if any Note is being redeemed in part, the
portion of the principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of 


 


106

















 


such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
will be issued upon cancellation of the original Note;


 


(4)                                 the name and address of the Paying Agent;


 


(5)                                 that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;


 


(6)                                 that, unless the Issuer defaults in making
such redemption payment, interest on Notes called for redemption ceases to
accrue on and after the redemption date;


 


(7)                                 the paragraph of the Notes and/or Section of
this Indenture pursuant to which the Notes called for redemption are being
redeemed; and


 


(8)                                 that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.


 


At
the Issuer’s request, the Trustee will give the notice of redemption in the
Issuer’s name and at its expense; provided, however, that the Issuer has
delivered to the Trustee, at least 45 days prior to the redemption date (or
such shorter period as the Trustee shall agree), an Officers’ Certificate
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.


 


SECTION
5.4.   Effect of Notice of Redemption.  Once notice of redemption is mailed in
accordance with Section 5.3 hereof, Notes called for redemption become
irrevocably due and payable on the redemption date at the redemption
price.  Notice of redemption may, at the
Issuer’s option and discretion, be subject to one or more conditions precedent,
including, but not limited to, completion of an Equity Offering or Change of
Control, as the case may be.


 


SECTION
5.5.   Deposit of Redemption or Purchase Price.  Prior to 11:00 a.m. Eastern Time on the
redemption or purchase date, the Issuer will deposit with the Trustee or with
the Paying Agent money sufficient to pay the redemption or purchase price of
and accrued interest and Additional Interest, if any, on, all Notes to be
redeemed or purchased on that date.  The
Trustee or the Paying Agent will promptly return to the Issuer any money
deposited with the Trustee or the Paying Agent by the Issuer in excess of the
amounts necessary to pay the redemption or purchase price of, and accrued
interest and Additional Interest, if any, on, all Notes to be redeemed or
purchased.


 


If
the Issuer complies with the provisions of the preceding paragraph, on and
after the redemption or purchase date, interest will cease to accrue on the
Notes or the portions of Notes called for redemption or purchase.  If a Note is redeemed or purchased on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest shall be paid to the Person in whose
name such Note was registered at the close of business on such record
date.  If any Note called for redemption
or purchase is not so paid upon surrender for redemption or purchase because of
the failure of the Issuer to comply with the preceding paragraph, interest
shall be paid on the unpaid principal, from the redemption or purchase date
until such principal is paid, and to the extent lawful on any interest not paid
on such unpaid principal, in each case at the rate provided in the Notes and in
Section 3.1 hereof.


 


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SECTION
5.6.   Notes Redeemed or Purchased in Part.  Upon surrender of a Note that is redeemed or
purchased in part, the Issuer will issue and, upon receipt of an Issuer Order,
the Trustee will authenticate for the Holder at the expense of the Issuer a new
Note equal in principal amount to the unredeemed or unpurchased portion of the
Note surrendered; provided, that
each such new Note will be in a principal amount of $2,000 or integral multiple
of $1,000 in excess thereof.


 


SECTION
5.7.   Optional Redemption.


 


(a)
 At any time prior to February 15, 2013,
the Issuer may redeem all or a part of the Notes, upon not less than 30 nor
more than 60 days’ prior notice by first-class mail, postage prepaid, to the
registered address of each Holder of Notes or otherwise in accordance with the
procedures of DTC, at a redemption price equal to 100% of the principal amount
of Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid
interest and Additional Interest, if any, to but excluding the date of
redemption (the “Redemption Date”), subject to the rights of holders of
the Notes on the relevant record date to receive interest due on the relevant
interest payment date.


 


(b)                                 Prior to February 15, 2013, the Issuer may, at its option, redeem up to
35% of the aggregate principal amount of Notes issued under this Indenture at a
redemption price equal to 100% of the aggregate principal amount thereof, plus
a premium equal to the interest rate per annum on the Notes applicable on the
date on which the notice of redemption is given, plus accrued and unpaid
interest and Additional Interest, thereon, if any, to but excluding the
Redemption Date, subject to the right of Holders of record of the Notes on the
relevant record date to receive interest due on the relevant interest payment
date, with the net proceeds of one or more Equity Offerings of the Issuer or any
direct or indirect parent of the Issuer to the extent such net proceeds are
contributed to the Issuer; provided that
at least 65% of the aggregate principal amount of Notes originally issued under
this Indenture remains outstanding immediately after the occurrence of each
such redemption; provided  further
that each such redemption occurs within 90 days of the date of closing of each
such Equity Offering. The Trustee shall select the Notes to be purchased in the
manner described under Sections 5.1 through 5.6.


 


(c)                                  Except pursuant to clause (a) or (b) of this Section 5.7, the
Notes will not be redeemable at the Company’s option prior to February 15,
2013.


 


(d)                                 On and after February 15, 2013 the Issuer may redeem the Notes, in whole
or in part, upon not less than 30 nor more than 60 days’ prior notice by first
class mail, postage prepaid, with a copy to the Trustee, to each Holder of
Notes to the address of such Holder appearing in the Notes Register at the
redemption prices (expressed as percentages of principal amount of the Notes to
be redeemed) set forth in the table below, plus accrued and unpaid interest
thereon and Additional Interest, if any, to but excluding the applicable
Redemption Date, subject to the right of Holders of record of the Notes on the
relevant record date to receive interest due on the relevant interest payment
date, if redeemed during the twelve-month period beginning on February 15, of
each of the years indicated in the table below:


 


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  Period

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2013

  	
   

  	
  104.000

  	
  %

  
	
  2014

  	
   

  	
  103.000

  	
  %

  
	
  2015

  	
   

  	
  102.000

  	
  %

  
	
  2016 and thereafter

  	
   

  	
  100.000

  	
  %

  



 


(e)                                  Unless the Issuer defaults in the payment of the redemption price,
interest will cease to accrue on the Notes or portions thereof called for
redemption on the applicable Redemption Date.


 


(f)                                   Any redemption pursuant to this Section 5.7 shall be made pursuant
to the provisions of Sections 5.1 through 5.6.


 


SECTION
5.8.   Mandatory Redemption.  Except as set forth in Section 5.10 hereof,
the Issuer is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.


 


SECTION
5.9.   Excess Cash Flow Offer.


 


(a)                                 If for any fiscal year of the Issuer, commencing with the fiscal year
ending nearest December 31, 2010, the Issuer has Excess Cash Flow, the Issuer
will be required within 135 days after the end of such fiscal year to
consummate an offer to repurchase Notes (in integral multiples of $1,000 except
that no Note may be tendered in part if the remaining principal amount would be
less than $2,000) from Holders of the Notes and, at the Issuer’s option, from
the holders of any Pari Passu Payment Lien Obligations and Priority Payment
Lien Obligations containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or redeem with the Excess Cash
Flow (an “Excess Cash Flow Offer”), which offer shall be in an aggregate
amount equal to the excess of (i) the Notes First Lien Percentage (determined
as of the last day of such fiscal year) of 50% of Excess Cash Flow for such
fiscal year over (ii) (x) the aggregate principal amount of Notes optionally
redeemed or optionally repurchased (in open market transactions, by tender
offer or otherwise but excluding, for the avoidance of doubt, Notes purchased
pursuant to an Excess Cash Flow Offer, Collateral Disposition Offer or Asset
Sale Offer by the Issuer during such fiscal year) or, if lesser, (y) the
aggregate purchase or redemption price paid by the Issuer for all such
redemptions and repurchases referred to in subclause (x) above during such
fiscal year (the “Excess Cash Flow Offer Amount”), on a pro rata basis
according to principal amount but subject to such rounding as may be determined
by the Trustee to ensure Notes are purchased in the denominations provided
above, at a purchase price in cash equal to 100% of the principal amount of the
Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest due on the relevant interest payment date), in accordance
with the procedures (including prorating in the event of oversubscription) set
forth in Sections 5.1 through 5.6.


 


(b)                                 Within 105 days after the end of each fiscal year in which the Issuer has
Excess Cash Flow, the Issuer will mail a notice setting forth the Excess Cash
Flow Offer to each Holder at the address appearing in the Notes Register, with
a copy to the Trustee, stating:


 


(1)                                 that an Excess Cash Flow Offer is being made,
the maximum aggregate principal amount of Notes that the Issuer may be required
to purchase in such offer, and that such Holder has the right to require the
Issuer to purchase such Holder’s 


 


109

















 


Notes
(subject to proration) at a purchase price in cash equal to 100% of the
principal amount of such Notes plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant Interest Payment Date) (the “Excess Cash
Flow Payment”);


 


(2)                                 the repurchase date (which shall be no earlier
than 20 business days after such notice is mailed and no later than 135 days)
after the end of the applicable fiscal year) (the “Excess Cash Flow Payment
Date”); and


 


(3)                                 the procedures determined by the Issuer,
consistent with the Indenture, that a Holder must follow in order to have its
Notes repurchased.


 


(c)                                  On the Excess Cash Flow Payment Date, the Issuer will, to the extent
lawful:


 


(1)                                 accept for payment all Notes or portions of
Notes properly tendered pursuant to the Excess Cash Flow Offer (subject to
proration in the event the aggregate Excess Cash Flow Payment for all Notes,
Priority Payment Lien Obligations and other Pari Passu Payment Lien Obligations
validly tendered in such offer exceeds the Excess Cash Flow Offer Amount);


 


(2)                                 deposit with the paying agent an amount equal
to the Excess Cash Flow Payment in respect of all Notes or portions of Notes so
accepted for payment; and


 


(3)                                 deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers’ Certificate stating
the aggregate principal amount of Notes or portions of Notes being purchased by
the Issuer.


 


(d)                                 The paying agent will promptly mail to each Holder of Notes so accepted
the Excess Cash Flow Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $2,000 or larger integral multiples of $1,000.


 


(e)                                  The Issuer will comply, to the extent applicable, with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws or
regulations thereunder in connection with the repurchase of Notes pursuant to
an Excess Cash Flow Offer. To the extent that the provisions of any securities
laws or regulations conflict with provisions of the Indenture, the Issuer will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations described in the Indenture by virtue of
the conflict.


 


(f)                                   Notwithstanding the foregoing provisions of this Section 5.9, the
Issuer will not be required (but may elect to do so) to make an Excess Cash
Flow Offer in accordance with this covenant unless the Excess Cash Flow Offer
Amount with respect to the applicable period in respect of which such Excess
Cash Flow Offer is to be made exceeds $10.0 million (with lesser amounts in
excess of $1.0 million being carried forward for the purposes of determining
whether the $10.0 million threshold has been met for any future period).


 


110

















 


SECTION
5.10.   Special Mandatory Redemption.


 


If
the Escrow Conditions shall not have been fulfilled, or the escrow agent shall
not have received the Officers’ Certificate described in Section 7(a) of the
Escrow Agreement by February 28, 2010, or the Plan of Reorganization shall have
been amended, modified or waived in a manner that would be materially adverse
to RDA or any of its subsidiaries or to the Holders of the Notes, or the Plan
of Reorganization shall have been terminated prior to such date, the escrow agent,
pursuant to the Escrow Agreement, shall, without the requirement of notice to
or action by the Issuer, the Trustee or any other Person, notify the Trustee in
writing that all of the Notes shall be subject to a special redemption (the “Special
Redemption”) in accordance with this Section 5.10 on the second
Business Day after delivery of such notice but in any event on or prior to March
2, 2010 (the “Special Redemption Date”). 
In the case of a Special Redemption, the Issuer shall, not later than
11:00 A.M. New York City time (or such other time of day acceptable to the
Trustee which will permit it to give the notice referred to in the second
paragraph of Section 5.3) at least two Business Days prior to the
Special Redemption Date deliver an Officers’ Certificate to the Trustee setting
forth (i) that a Special Redemption will occur, (ii) the Special Redemption
Date, (iii) the Special Redemption Price and (iv) the other information
specified in Section 5.3.  The
Trustee shall deliver to each Holder a written notice (specifying the
information set forth in such Officers’ Certificate) of the Special Redemption
at least two Business Days prior to the Special Redemption Date.  On the Special Redemption Date, the Issuer
shall instruct the escrow agent to release cash to the Paying Agent for the
purposes of the Special Redemption.  On
the Special Redemption Date, the Notes shall be redeemed, in whole but not in
part, at a redemption price equal to 100% of the issue price of the Notes, plus
accrued and unpaid interest, from, and including, the Issue Date to, but
excluding, the Special Redemption Date, notwithstanding any noncompliance by
the Issuer with the requirements of the second sentence of this Section 5.10.


 


ARTICLE
VI


 


DEFAULTS
AND REMEDIES


 


SECTION
6.1.   Events of Default.  Each of the following is an “Event of
Default”:


 


(1)                                 default in payment when due and payable, upon
redemption, acceleration or otherwise, of principal of, or premium, if any, on
the Notes;


 


(2)                                 default for 30 days or more in the payment when
due of interest or Additional Interest, if any, on or with respect to the
Notes;


 


(3)                                 failure by the Issuer or any Guarantor to
comply with Section 4.1, 10.2(b), 3.5(a) or the failure by the
Issuer or any Guarantor to comply for 30 days or more with Section 3.10
or Section 5.9;


 


(4)                                 failure by the Issuer or any Restricted
Subsidiary for 60 days after receipt of written notice given by the Trustee or
the Holders of at least 25% in principal 


 


111

















 


amount
of the Notes then outstanding and issued under this Indenture to comply with
any of its other agreements in this Indenture, the Security Documents or the
Notes (other than those specified in clause (1), (2) or (3) above);


 


(5)                                 default under any mortgage, indenture or
instrument under which there is issued or by which there is secured or
evidenced any Indebtedness for money borrowed by the Issuer or any Restricted
Subsidiary or the payment of which is guaranteed by the Issuer or any
Restricted Subsidiary, other than Indebtedness owed to the Issuer or a
Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is
created after the issuance of the Notes, if both:


 


(A)                               such default either:


 


(i)                                     results from
the failure to pay any such Indebtedness at its stated final maturity (after
giving effect to any applicable grace periods); or


 


(ii)                                  relates to an
obligation other than the obligation to pay principal of any such Indebtedness
at its stated final maturity and results in the holder or holders of such
Indebtedness causing such Indebtedness to become due prior to its stated
maturity; and


 


(B)                               the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal
at stated final maturity (after giving effect to any applicable grace periods),
or the maturity of which has been so accelerated, aggregate $30.0 million (or
its foreign currency equivalent) or more at any one time outstanding;


 


(6)                                 failure by the Issuer or any Significant
Subsidiary or any group of Subsidiaries that, taken together as of the date of
the most recent audited financial statements of the Issuer, would constitute a
Significant Subsidiary to pay final judgments aggregating in excess of $30.0
million (or its foreign currency equivalent) (other than any judgments covered
by indemnities provided by or insurance policies issued by reputable and
creditworthy companies), which final judgments remain unpaid, undischarged and
unstayed for a period of more than 60 days after such judgment becomes final,
and in the event such judgment is covered by insurance, an enforcement
proceeding has been commenced by any creditor upon such judgment or decree
which is not promptly stayed;


 


(7)                                 the Issuer or any Restricted Subsidiary that
is Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for the
Issuer and its Restricted Subsidiaries), would constitute a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:


 


(i)                                     commences a voluntary case
or proceeding;


 


112

















 


(ii)                                  consents to the entry of an
order for relief against it in an involuntary case or proceeding;


 


(iii)                               consents to the appointment
of a Custodian of it or for substantially all of its property; or


 


(iv)                              makes a general assignment
for the benefit of its creditors; or


 


(v)                                 consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it;


 


(vi)                              or takes any comparable
action under any foreign laws relating to insolvency;


 


(8)                                 a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:


 


(i)                                     is for relief against the
Issuer or any Restricted Subsidiary that is a Significant Subsidiary or any
group of Restricted Subsidiaries that, taken together (as of the latest audited
financial statements for the Issuer and its Restricted Subsidiaries), would
constitute a Significant Subsidiary, in an involuntary case;


 


(ii)                                  appoints a Custodian of the
Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group
of Restricted Subsidiaries that, taken together (as of the latest audited
financial statements for the Issuer and its Restricted Subsidiaries), would
constitute a Significant Subsidiary, for substantially all of its property; or


 


(iii)                               orders the winding up or
liquidation of the Issuer, any Restricted Subsidiary that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together (as of
the latest audited financial statements for the Issuer and its Restricted
Subsidiaries), would constitute a Significant Subsidiary;


 


or any similar relief is granted under any foreign
laws and the order, decree or relief remains unstayed and in effect for 60
consecutive days; and


 


(9)                                 any (x) Guarantee, (y) Security Document
governing a security interest with respect to any Collateral having a fair
market value in excess of $25.0 million or (z) obligation under the Security
Documents, in each case, of Holdings or a Significant Subsidiary or any group
of Restricted Subsidiaries that, taken together as of the latest audited
consolidated financial statements for the Issuer and its Restricted
Subsidiaries would constitute a Significant Subsidiary ceases to be in full
force and effect (except as contemplated by the terms of this Indenture and the
Guarantees and except for the failure of any security interest with respect to
the Collateral to remain in full force and effect, which is governed by
paragraph (10) below) or is declared null and void in a judicial proceeding or
Holdings, or any Subsidiary Guarantor that is a Significant Subsidiary or group
of Subsidiary Guarantors that taken together as of the latest audited
consolidated financial statements of the Issuer and its Restricted Subsidiaries
would constitute a Significant


 


113














 


Subsidiary
denies or disaffirms its obligations under this Indenture, its Guarantee or any
Security Document and the Issuer fails to cause such Subsidiary Guarantor or
Subsidiary Guarantors, as the case may be, to rescind such denials or
disaffirmations within 30 days; or


 


(10)                          with respect to any Collateral having a fair
market value in excess of $25.0 million, individually or in the aggregate, (A) the
failure of the security interest with respect to such Collateral under the
Security Documents, at any time, to be in full force and effect for any reason
other than in accordance with their terms and the terms of this Indenture and
other than the satisfaction in full of all obligations under this Indenture and
discharge of this Indenture if such failure continues for 60 days or (B) the
declaration that the security interest with respect to such Collateral created
under the Security Documents or under this Indenture is invalid or
unenforceable, if such Default continues for 60 days or (C) the assertion
by the Issuer or any Guarantor, in any pleading in any court of competent
jurisdiction, that any such security interest is invalid or unenforceable.


 


However,
a default under clause (4) of this Section 6.1 will not
constitute an Event of Default until the Trustee or the Holders of 25% in
principal amount of the outstanding Notes notify the Issuer of the default and
the Issuer does not cure such default within the time specified in clause (4) of
this Section 6.1 after receipt of such notice.


 


SECTION 6.2.  
Acceleration.  If an Event
of Default (other than an Event of Default described in clause (7) or
(8) of Section 6.1) occurs and is continuing, the Trustee by
notice to the Issuer, or the Holders of at least 25% in principal amount of the
outstanding Notes by notice to the Issuer and the Trustee, may, and the Trustee
at the request of such Holders shall, declare the principal of, premium, if
any, and accrued and unpaid interest (including Additional Interest), if any,
and any other monetary obligations on all the Notes to be due and payable.  Upon such a declaration, such principal,
premium and accrued and unpaid interest (including Additional Interest) and any
other monetary obligations shall be due and payable immediately.


 


In
the event of any Event of Default specified in clause (5) of Section 6.1,
such Event of Default and all consequences thereof shall be annulled, waived
and rescinded, automatically and without any action by the Trustee or the
Holders, if within 30 days after such Event of Default arose:


 


(x)                                 the
Indebtedness or guarantee that is the basis for such Event of Default has been
discharged; or


 


(y)                                 the holders
thereof have rescinded or waived the acceleration, notice or action (as the
case may be) giving rise to such Event of Default; or


 


(z)                                  if the default
that is the basis for such Event of Default has been cured.


 


If
an Event of Default described in clause (7) or (8) of Section 6.1
occurs and is continuing, the principal of, premium, if any, and accrued and
unpaid interest (including Additional Interest) and any other monetary
obligations on all the Notes will become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.


 


114

















 


SECTION 6.3.  
Other Remedies.  If an Event
of Default occurs and is continuing, the Trustee may pursue any available
remedy by proceeding at law or in equity to collect the payment of principal of
(or premium, if any) or interest (including Additional Interest) on the Notes
or to enforce the performance of any provision of the Notes, this Indenture,
the Guarantees, the Security Documents or the Junior Lien Intercreditor
Agreement.


 


The
Trustee may maintain a proceeding even if it does not possess any of the Notes
or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any
Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default.  No remedy is
exclusive of any other remedy.  All
available remedies are cumulative.


 


SECTION 6.4.  
Waiver of Past Defaults.  The Holders of a majority in principal amount
of the then outstanding Notes by notice to the Trustee (with a copy to the
Issuer, but the applicable waiver or rescission shall be effective when the
notice is given to the Trustee) may (a) waive, by their consent
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), an existing Default or Event
of Default and its consequences under this Indenture except (i) a Default
or Event of Default in the payment of the principal of, or premium, if any, or
interest (including Additional Interest) on a Note or (ii) a Default or
Event of Default in respect of a provision that under Section 9.2
cannot be amended without the consent of each Holder affected and
(b) rescind any acceleration with respect to the Notes and its
consequences if (1) such rescission would not conflict with any judgment
or decree of a court of competent jurisdiction, (2) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any, and
interest (including Additional Interest) on the Notes that have become due
solely by such declaration of acceleration, have been cured or waived, (3) to
the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid, (4) if the Issuer
has paid the Trustee its reasonable compensation and reimbursed such Trustee
for its expenses (including the fees and expenses of its agents and counsel),
disbursements and advances and (5) in the event of the cure or waiver of
an Event of Default of the type described in clause (4) of Section 6.1,
the Trustee shall have received an Officers’ Certificate and an Opinion of
Counsel that such Event of Default has been cured or waived.  No such rescission shall affect any
subsequent Default or impair any right consequent thereto.  When a Default or Event of Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any consequent right.


 


SECTION 6.5.  
Control by Majority.  The
Holders of a majority in principal amount of the outstanding Notes may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or of exercising any trust or power conferred on the
Trustee.  However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, the Notes,
the Guarantees, the Security Documents or the Junior Lien Intercreditor
Agreement or, subject to Sections 7.1 and 7.2, that the
Trustee determines is unduly prejudicial to the rights of other Holders or
would involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.  Prior to taking any such action hereunder,
the Trustee shall be entitled to indemnification reasonably satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.


 


115

















 


SECTION 6.6.  
Limitation on Suits. 
Subject to Section 6.7, a Holder may not pursue any remedy
with respect to this Indenture or the Notes unless:


 


(1)                                 such Holder has previously given to the
Trustee written notice stating that an Event of Default is continuing;


 


(2)                                 Holders of at least 25% in principal amount of
the total outstanding Notes have requested that the Trustee pursue the remedy;


 


(3)                                 such Holder has offered to the Trustee
reasonable security or indemnity against any loss, liability or expense;


 


(4)                                 the Trustee has not complied with such request
within 60 days after receipt of the request and the offer of security or
indemnity; and


 


(5)                                 the Holders of a majority in principal amount
of the total outstanding Notes have not given the Trustee a direction
inconsistent with such request during such 60-day period.


 


A
Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.


 


SECTION 6.7.  
Rights of Holders to Receive Payment.  Notwithstanding any other provision of this
Indenture (including, without limitation, Section 6.6), the right
of any Holder to receive payment of principal of, premium (if any), or interest
(including Additional Interest) on the Notes held by such Holder, on or after
the respective due dates expressed or provided for in the Notes, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.


 


SECTION 6.8.  
Collection Suit by Trustee.  If an Event of Default specified in
clauses (1) or (2) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Issuer for the whole amount then due and owing
(together with interest on any unpaid interest to the extent lawful) and the
amounts provided for in Section 7.7.


 


SECTION 6.9.  
Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders allowed in any judicial proceedings relative to the Issuer, its
Subsidiaries or its or their respective creditors or properties and, unless
prohibited by law or applicable regulations, may be entitled and empowered to
participate as a member of any official committee of creditors appointed in
such matter and may vote on behalf of the Holders in any election of a trustee
in bankruptcy or other Person performing similar functions, and any Custodian
in any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.7.


 


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No
provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.


 


SECTION 6.10.  
Priorities.  (a) 
If the Trustee collects any money or property pursuant to this Article VI,
or pursuant to the foreclosure or other remedial provisions contained in the
Security Documents (including any money or property deposited into the Collateral
Account in connection therewith), it shall pay out the money or property in the
following order:


 


FIRST:  to the Trustee for
amounts due to it under Section 7.7;


 


SECOND:  to Holders for amounts
due and unpaid on the Notes for principal, premium, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, and interest
(including Additional Interest), respectively; and


 


THIRD:  to the Issuer, or to the
extent the Trustee collects any amount for any Guarantor, to such Guarantor.


 


(b)                                 The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 6.10.  At least 15 days before such record
date, the Issuer shall mail to each Holder and the Trustee a notice that states
the record date, the payment date and amount to be paid.


 


SECTION 6.11.  
Undertaking for Costs.  In
any suit for the enforcement of any right or remedy under this Indenture or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
a court in its discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys’ fees
and expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party
litigant.  This Section 6.11
does not apply to a suit by the Trustee, a suit by the Issuer, a suit by a
Holder pursuant to Section 6.7 or a suit by Holders of more than
10% in outstanding principal amount of the Notes.


 


ARTICLE VII




TRUSTEE


 


SECTION 7.1.  
Duties of Trustee.  (a) 
If an Event of Default has occurred and is continuing, the Trustee or the
Collateral Agent shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such person’s own affairs; provided that
the Trustee and the Collateral Agent will be under no obligation to exercise
any of the rights or powers under this Indenture, the Notes, the Guarantees,
the Security Documents or the Junior Lien Intercreditor Agreement at the
request or direction of any of the Holders unless such Holders have 


 


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offered the Trustee or the Collateral Agent
reasonable indemnity or security against any loss, liability or expense
satisfactory to the Trustee or the Collateral Agent.


 


(b)                                 Except during the continuance of an Event of Default:


 


(1)                                 the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against the
Trustee; and


 


(2)                                 in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates, opinions or
orders furnished to the Trustee and conforming to the requirements of this
Indenture, the Notes, the Guarantees, the Security Documents or the Junior Lien
Intercreditor Agreement, as applicable. 
However, in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine such certificates and opinions to determine whether or
not they conform to the requirements of this Indenture, the Notes, the
Guarantees, the Security Documents or the Junior Lien Intercreditor Agreement,
as the case may be (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).


 


(c)                                  The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:


 


(1)                                 this paragraph does not limit the effect of
paragraph (b) of this Section 7.1;


 


(2)                                 the Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts;


 


(3)                                 the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5; and


 


(4)                                 No provision of this Indenture, the Notes, the
Guarantees, the Security Documents or the Junior Lien Intercreditor Agreement
shall require the Trustee or the Collateral Agent to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder or thereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.


 


(d)                                 Every provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section 7.1.


 


(e)                                  The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Issuer.


 


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(f)                                   Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law, the Security Documents, the Junior
Lien Intercreditor Agreement or by Section 11.8.


 


(g)                                  Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 7.1 and to the provisions of the TIA.


 


(h)                                 Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Issuer shall be sufficient if signed by
one Officer of the Issuer.


 


SECTION 7.2.  
Rights of Trustee.  Subject to Section 7.1:


 


(a)                                 The Trustee may conclusively rely on and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or other
paper or document (whether in its original or facsimile form) reasonably
believed by it to be genuine and to have been signed or presented by the proper
person.  The Trustee need not investigate
any fact or matter stated in the document. 
The Trustee shall receive and retain financial reports and statements of
the Issuer as provided herein, but shall have no duty to review or analyze such
reports or statements to determine compliance with covenants or other
obligations of the Issuer.


 


(b)                                 Before the Trustee acts or refrains from acting, it may require an
Officers’ Certificate and/or an Opinion of Counsel.  The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on an Officers’
Certificate or Opinion of Counsel.


 


(c)                                  The Trustee may execute any of the trusts and powers hereunder or perform
any duties hereunder either directly by or through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent or
attorney appointed with due care by it hereunder.


 


(d)                                 In the absence of willful misconduct or negligence, the Trustee shall not
be liable for any action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers, conferred upon it by
this Indenture.


 


(e)                                  The Trustee may consult with counsel of its selection, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture,
the Notes, the Guarantees, the Security Documents or the Junior Lien
Intercreditor Agreement shall be full and complete authorization and protection
from liability in respect of any action taken, omitted or suffered by it
hereunder or under the Notes, the Guarantees, the Security Documents or the
Junior Lien Intercreditor Agreement in good faith and in accordance with the
advice or opinion of such counsel.


 


(f)                                   The Trustee shall not be deemed to have notice of any Default or Event of
Default or whether any entity or group of entities constitutes a Significant
Subsidiary unless a Trust Officer of the Trustee has actual knowledge thereof
or unless written notice of any event which is in fact such a Default or of any
such Significant Subsidiary is received by the Trustee at 


 


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the corporate trust
office of the Trustee specified in Section 13.2, and such notice
references the Notes and this Indenture.


 


(g)                                  The rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.


 


(h)                                 The Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture, the Notes, the Guarantees, the Security
Documents or the Junior Lien Intercreditor Agreement at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
may be incurred therein or thereby.


 


(i)                                     The Trustee shall not be deemed to have knowledge of any fact or matter
unless such fact or matter is known to a Trust Officer of the Trustee.


 


(j)                                    Whenever in the administration of this Indenture, the Notes, the
Guarantees, the Security Documents or the Junior Lien Intercreditor Agreement
the Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder or thereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the
absence of bad faith or willful misconduct on its part, rely upon an Officers’
Certificate.


 


(k)                                 In no event shall the Trustee be responsible or liable for any special,
indirect, punitive or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit), irrespective of whether the
Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.


 


(l)                                     The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
report, notice, request, direction, consent, order, bond, debenture, coupon or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine, during business hours and upon
reasonable notice, the books, records and premises of the Issuer and the
Restricted Subsidiaries, personally or by agent or attorney.


 


(m)                             The Trustee shall not be required to give any bond or surety in respect
of the performance of its powers and duties hereunder.


 


(n)                                 The Trustee may request that the Issuer deliver a certificate setting
forth the names of individuals and/or titles of officers authorized at such
time to take specified actions pursuant to this Indenture, the Notes or the
Security Documents.


 


SECTION 7.3.  
Individual Rights of Trustee.  The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may otherwise deal with
the Issuer, Guarantors or their Affiliates with the same rights it would have
if it were not Trustee.  Any Paying 


 


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Agent,
Registrar, co-registrar or co-paying agent may do the same with like
rights.  However, the Trustee must comply
with Sections 7.10 and 7.11. 
In addition, the Trustee shall be permitted to engage in transactions
with the Issuer; provided, however,
that if the Trustee acquires any conflicting interest under the TIA, the
Trustee must (i) eliminate such conflict within 90 days of acquiring
such conflicting interest, (ii) apply to the SEC for permission to
continue acting as Trustee or (iii) resign.


 


SECTION 7.4.  
Trustee’s Disclaimer.  The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Guarantees, the Security Documents
or the Notes, shall not be accountable for the Issuer’s or RDA’s use of the
proceeds from the sale of the Notes, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee or
any money paid to the Issuer pursuant to the terms of this Indenture and shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Trustee’s certificate of authentication.


 


SECTION 7.5.  
Notice of Defaults.  If a
Default or Event of Default occurs and is continuing and if a Trust Officer has
actual knowledge thereof, the Trustee shall mail by first class mail to each
Holder at the address set forth in the Notes Register notice of the Default or
Event of Default within 90 days after it is actually known to a Trust
Officer. Except in the case of a Default or Event of Default in payment of
principal of, premium (if any), or interest on any Note (including payments
pursuant to the optional redemption or required repurchase provisions of such
Note), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Holders.


 


SECTION 7.6.  
Reports by Trustee to Holders.  Within 60 days after each August 15
beginning August 15, 2010, the Trustee shall mail to each Holder a brief
report dated as of such August 15 that complies with TIA § 313(a) if
and to the extent required thereby.  The
Trustee also shall comply with TIA § 313(b) and TIA § 313(c).


 


A
copy of each report at the time of its mailing to Holders shall be filed with
the SEC and each stock exchange (if any) on which the Notes are listed.  The Issuer agrees to notify promptly the
Trustee in writing whenever the Notes become listed on any stock exchange and
of any delisting thereof and the Trustee shall comply with TIA § 313(d).


 


SECTION 7.7.  
Compensation and Indemnity.  The Issuer shall pay to each of the Trustee
and the Collateral Agent from time to time reasonable compensation for its
services hereunder and under the Notes, the Guarantees, the Security Documents
and the Junior Lien Intercreditor Agreement as the Issuer and the Trustee or
the Issuer and the Collateral Agent shall from time to time agree in
writing.  The Trustee’s compensation
shall not be limited by any law on compensation of a trustee of an express
trust.  The Issuer shall reimburse each
of the Trustee and the Collateral Agent upon request for all reasonable
out-of-pocket expenses incurred or made by it, including, but not limited to,
costs of collection, costs of preparing reports, certificates and other
documents, costs of preparation and mailing of notices to Holders.  Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the respective agents,
counsel, accountants and experts of the Trustee and the Collateral Agent.  The Issuer shall indemnify each of the
Trustee and the Collateral Agent against any and all loss, liability, damages, 


 


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claims
or expense (including reasonable attorneys’ fees and expenses) incurred by it
without willful misconduct, negligence or bad faith on its part in connection
with the administration of this trust and the performance of its duties
hereunder and under the Notes, the Guarantees, the Security Documents and the
Junior Lien Intercreditor Agreement, including the costs and expenses of
enforcing this Indenture (including this Section 7.7), the Notes,
the Guarantees, the Security Documents and the Junior Lien Intercreditor
Agreement and of defending itself against any claims (whether asserted by any
Holder, the Issuer or otherwise).  Each
of the Trustee and the Collateral Agent shall notify the Issuer promptly of any
claim for which it may seek indemnity of which it has received written
notice.  Failure by the Trustee or the
Collateral Agent to so notify the Issuer shall not relieve the Issuer of its
obligations hereunder.  The Issuer shall
defend the claim and each of the Trustee and the Collateral Agent shall provide
reasonable cooperation at the Issuer’s expense in the defense.  The Trustee and the Collateral Agent may each
have separate counsel and the Issuer shall pay the fees and expenses of such
counsel; provided that the Issuer
shall not be required to pay the fees and expenses of such separate counsel if
it assumes the Trustee’s or the Collateral Agent’s defense, and, in the
reasonable judgment of outside counsel to the Trustee or the Collateral Agent,
there is no conflict of interest between the Issuer and the Trustee or between
the Issuer and the Collateral Agent in connection with such defense.


 


To
secure the Issuer’s payment obligations in this Section 7.7, each
of the Trustee and the Collateral Agent shall have a lien prior to the Notes on
all money or property held or collected by the Trustee or the Collateral Agent
other than money or property held in trust to pay principal of and interest on
particular Notes.  Such lien shall
survive the satisfaction and discharge of this Indenture.  The Trustee’s and the Collateral Agent’s
respective right to receive payment of any amounts due under this Section 7.7
shall not be subordinate to any other liability or Indebtedness of the Issuer.


 


The
Issuer’s payment obligations pursuant to this Section 7.7 shall
survive the discharge of this Indenture. 
Without prejudice to any other rights available to the Trustee or the
Collateral Agent under applicable law, when the Trustee or the Collateral Agent
incurs expenses or renders services after the occurrence of a Default specified
in clause (7) or clause (8) of Section 6.1, the
expenses (including the reasonable fees and expenses of its counsel) are
intended to constitute expenses of administration under any Bankruptcy Law.


 


SECTION 7.8.  
Replacement of Trustee.  The
Trustee may resign at any time by so notifying the Issuer in writing not less
than 30 days prior to the effective date of such resignation.  The Holders of a majority in principal amount
of the Notes may remove the Trustee by so notifying the removed Trustee in writing
not less than 30 days prior to the effective date of such removal and may
appoint a successor Trustee with the Issuer’s written consent, which consent
will not be unreasonably withheld.  The
Issuer shall remove the Trustee if:


 


(1)                                 the Trustee fails to comply with Section 7.10
hereof;


 


(2)                                 the Trustee is adjudged bankrupt or insolvent;


 


(3)                                 a receiver or other public officer takes
charge of the Trustee or its property; or


 


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(4)                                 the Trustee otherwise becomes incapable of
acting.


 


If
the Trustee resigns or is removed by the Issuer or by the Holders of a majority
in principal amount of the Notes and such Holders do not reasonably promptly
appoint a successor Trustee as described in the preceding paragraph, or if a
vacancy exists in the office of the Trustee for any reason (the Trustee in such
event being referred to herein as the retiring Trustee), the Issuer shall
promptly appoint a successor Trustee.


 


A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Issuer. 
Thereupon the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. 
The successor Trustee shall mail a notice of its succession to
Holders.  The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.7.


 


If
a successor Trustee does not take office within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee or the Holders of at least
10% in principal amount of the Notes may petition, at the Issuer’s expense, any
court of competent jurisdiction for the appointment of a successor Trustee.


 


If
the Trustee fails to comply with Section 7.10, unless the Trustee’s
duty to resign is stayed as provided in TIA § 310(b), any Holder, who has
been a bona fide holder of a Note for at least six months, may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.


 


Notwithstanding
the replacement of the Trustee pursuant to this Section 7.8, the
Issuer’s obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.


 


SECTION 7.9.  
Successor Trustee by Merger.  If the Trustee consolidates with, merges or
converts into, or transfers all or substantially all its corporate trust
business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee.


 


In
case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Notes shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; provided that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate Notes
in the name of any predecessor Trustee shall only apply to its successor or
successors by merger, consolidation or conversion.


 


SECTION 7.10.  
Eligibility; Disqualification.  This Indenture shall always have a Trustee
that satisfies the requirements of TIA § 310(a)(1), (2) and (5) in
every respect.  The Trustee shall have a
combined capital and surplus of at least $100 million as set forth in its
most recent published annual report of condition.  The Trustee shall comply with TIA § 310(b);
provided, however, that there shall be
excluded from the operation of TIA § 310(b)(1) any


 


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indenture
or indentures under which other securities or certificates of interest or
participation in other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA § 310(b)(1) are met.


 


SECTION 7.11.  
Preferential Collection of Claims Against the Issuer.  The Trustee shall comply with TIA
§ 311(a), excluding any creditor relationship listed in TIA
§ 311(b).  A Trustee who has
resigned or been removed shall be subject to TIA § 311(a) to the
extent indicated.


 


SECTION 7.12.  
Trustee’s Application for Instruction from the Issuer.  Any application by the Trustee for written
instructions from the Issuer may, at the option of the Trustee, set forth in
writing any action proposed to be taken or omitted by the Trustee under this
Indenture and the date on and/or after which such action shall be taken or such
omission shall be effective.  The Trustee
shall not be liable for any action taken by, or omission of, the Trustee in
accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three Business
Days after the date any Officer of the Issuer actually receives such
application, unless any such Officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.


 


ARTICLE VIII


 


LEGAL
DEFEASANCE AND COVENANT DEFEASANCE


 


SECTION 8.1.  
Option to Effect Legal Defeasance or Covenant Defeasance; Defeasance.  The Issuer may, at its option and at any
time, elect to have either Section 8.2 or 8.3 hereof be
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article VIII.


 


SECTION 8.2.  
Legal Defeasance and Discharge.  Upon the Issuer’s exercise under Section 8.1
hereof of the option applicable to this Section 8.2, the Issuer and
each of the Guarantors will, subject to the satisfaction of the conditions set
forth in Section 8.4 hereof, be deemed to have been discharged from
their obligations with respect to all outstanding Notes (including the
Guarantees) on the date the conditions set forth below are satisfied
(hereinafter, “Legal Defeasance”). 
For this purpose, Legal Defeasance means that the Issuer and the
Guarantors will be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes (including the Guarantees), which will
thereafter be deemed to be “outstanding” only for the purposes of Section 8.5
hereof and the other Sections of this Indenture referred to in clauses (1) and
(2) below, and to have satisfied all of their other obligations under such
Notes, the Guarantees and this Indenture (and the Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging the
same) and to have cured all then existing Events of Default, except for the
following provisions which will survive until otherwise terminated or
discharged hereunder:


 


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(1)                                 the rights of Holders of Notes issued under
the Indenture to receive payments in respect of the principal of, premium, if
any, and interest on the Notes when such payments are due solely out of the
trust referred to in Section 8.4 hereof;


 


(2)                                 the Issuer’s obligations with respect to Notes
under Article II concerning issuing temporary Notes, registration
of such Notes, mutilated, destroyed, lost or stolen Notes and Section 3.13
hereof concerning the maintenance of an office or agency for payment and money
for security payments held in trust;


 


(3)                                 the rights, powers, trusts, duties and
immunities of the Trustee and the Collateral Agent and the Issuer’s or
Guarantors’ obligations in connection therewith; and;


 


(4)                                 this Article VIII with respect to
provisions relating to Legal Defeasance.


 


SECTION 8.3.  
Covenant Defeasance.  Upon
the Issuer’s exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Issuer and each of the
Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.4
hereof, be released from each of their obligations under the covenants
contained in Section 3.2, 3.3, 3.4, 3.5, 3.6,
3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.16,
3.19, 3.22 and Section 4.1(a)(4) hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.4 hereof are satisfied (hereinafter, “Covenant
Defeasance”), and the Notes will thereafter be deemed not “outstanding” for
the purposes of any direction, waiver, consent or declaration or act of Holders
(and the consequences of any thereof) in connection with such covenants, but
will continue to be deemed “outstanding” for all other purposes hereunder.  For this purpose, Covenant Defeasance means
that, with respect to the outstanding Notes and Guarantees, the Issuer and the
Guarantors may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1
hereof, but, except as specified above, the remainder of this Indenture and
such Notes and Guarantees will be unaffected thereby.  In addition, upon the Issuer’s exercise under
Section 8.1 hereof of the option applicable to this Section 8.3,
subject to the satisfaction of the conditions set forth in Section 8.4
hereof, Sections 6.1(4), 6.1(5), 6.1(6), 6.1(7) (with
respect only to a Restricted Subsidiary that is a Significant Subsidiary or any
group of Restricted Subsidiaries that taken together would constitute a
Significant Subsidiary), 6.1(8) (with respect only to a Restricted
Subsidiary that is a Significant Subsidiaries or any group of Restricted
Subsidiaries that taken together would constitute a Significant Subsidiary), 6.1(9) and
6.1(10) hereof shall not constitute Events of Default.


 


SECTION 8.4.  
Conditions to Legal or Covenant Defeasance.  In order to exercise either Legal Defeasance
or Covenant Defeasance under either Section 8.2 or 8.3
hereof:


 


(1)                                 the Issuer must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally 


 


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recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest due on the Notes issued under this Indenture on the Stated
Maturity date or on the applicable redemption date, as the case may be, of such
principal, premium, if any, or interest on such Notes, and the Issuer must
specify whether such Notes are being defeased to maturity or to a particular
redemption date;


 


(2)                                 in the case of Legal Defeasance, the Issuer
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to such Trustee confirming that, subject to customary
assumptions and exclusions;


 


(A)                               the Issuer has received from, or there has been published by, the United
States Internal Revenue Service a ruling; or


 


(B)                               since the issuance of such Notes, there has been a change in the
applicable U.S. federal income tax law;


 


in
either case to the effect that, and based thereon such Opinion of Counsel in
the United States shall confirm that, subject to customary assumptions and
exclusions, the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Legal Defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had not
occurred;


 


(3)                                 in the case of Covenant Defeasance, the Issuer
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to such Trustee confirming that, subject to customary
assumptions and exclusions, the Holders will not recognize income, gain or loss
for U.S. federal income tax purposes as a result of such Covenant Defeasance and
will be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;


 


(4)                                 no Default or Event of Default (other than
that resulting from borrowing funds to be applied to make such deposit and the
granting of Liens in connection therewith) shall have occurred and be
continuing on the date of such deposit;


 


(5)                                 such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Credit Facilities, the Indenture or any other material agreement or instrument
(other than the Indenture to which the Legal Defeasance or Covenant Defeasance
relates) to which, the Issuer or any Guarantor is a party or by which the
Issuer or any Guarantor is bound;


 


(6)                                 the Issuer shall have delivered to the Trustee
an Opinion of Counsel to the effect that, as of the date of such opinion and
subject to customary assumptions and exclusions following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally under any applicable U.S. federal or state law;


 


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(7)                                 the Issuer shall have delivered to the Trustee
an Officers’ Certificate stating that the deposit was not made by the Issuer
with the intent of defeating, hindering, delaying or defrauding any creditors
of the Issuer or any Guarantor or others; and


 


(8)                                 the Issuer shall have delivered to the Trustee
an Officers’ Certificate and an Opinion of Counsel in the United States (which
Opinion of Counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance, as the case may be, have been complied
with.


 


SECTION 8.5.  
Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions. 
Subject to Section 8.6 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5,
the “Trustee”) pursuant
to Section 8.4 hereof in respect of the outstanding Notes will be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium and Additional Interest, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.


 


The
Issuer will pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable Government Securities
deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.


 


Notwithstanding
anything in this Article VIII to the contrary, the Trustee will
deliver or pay to the Issuer from time to time upon the request of the Issuer
any money or non-callable Government Securities held by it as provided in Section 8.4
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee (which may be the opinion delivered under Section 8.4(1) hereof),
are in excess of the amount thereof that would then be required to be deposited
to effect an equivalent Legal Defeasance or Covenant Defeasance.


 


SECTION 8.6.  
Repayment to the Issuer.  Any money deposited with the Trustee or any
Paying Agent, or then held by the Issuer, in trust for the payment of the
principal of, premium or Additional Interest, if any, or interest on, any Note
and remaining unclaimed for two years after such principal, premium or
Additional Interest, if any, or interest has become due and payable shall be
paid to the Issuer on its request unless an abandoned property law designates
another Person or (if then held by the Issuer) will be discharged from such trust;
and the Holder of such Note will thereafter be permitted to look only to the
Issuer for payment thereof unless an abandoned property law designates another
Person, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Issuer as trustee thereof, will
thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which will not be
less than 30 days from the date 


 


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of
such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer.


 


SECTION 8.7.  
Reinstatement.  If the
Trustee or Paying Agent is unable to apply any money or U.S. dollars or
non-callable Government Securities in accordance with Section 8.2
or 8.3 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Issuer’s and the Guarantors’ obligations
under this Indenture and the Notes and the Guarantees will be revived and
reinstated as though no deposit had occurred pursuant to Section 8.2
or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or
8.3 hereof, as the case may be; provided, however,
that, if the Issuer makes any payment of principal of, premium or Additional
Interest, if any, or interest on, any Note following the reinstatement of its
obligations, the Issuer will be subrogated to the rights of the Holders of such
Notes to receive such payment from the money or non-callable Government
Securities held by the Trustee or Paying Agent.


 


ARTICLE IX


 


AMENDMENTS


 


SECTION 9.1.  
Without Consent of Holders.  Notwithstanding Section 9.2 of
this Indenture, the Issuer, any Guarantor (with respect to its Guarantee or
this Indenture), the Trustee and the Collateral Agent may amend or supplement
this Indenture, any Security Document, any Guarantee and the Notes without the
consent of any Holder:


 


(1)                                 to cure any ambiguity, omission, mistake,
defect or inconsistency;


 


(2)                                 to provide for uncertificated Notes in
addition to or in place of certificated Notes;


 


(3)                                 to comply with Article IV or Section 10.2(b);


 


(4)                                 to provide the assumption of the Issuer’s or
any Guarantor’s obligations to Holders;


 


(5)                                 to make any change that would provide any
additional rights or benefits to the Holders or that does not adversely affect
the legal rights under this Indenture, the Notes, the Guarantees or the
Security Documents of any such Holder;


 


(6)                                 to add covenants for the benefit of the
Holders or to surrender any right or power conferred upon the Issuer or a
Guarantor;


 


(7)                                 to evidence and provide for the acceptance and
appointment under this Indenture of a successor Trustee pursuant to the
requirements hereof;


 


(8)                                 to add a Guarantor under this Indenture or to
add additional assets as Collateral;


 


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(9)                                 release Liens in favor of the Collateral Agent
in the Collateral as provided under Section 11.6 or otherwise in
accordance with the terms of this Indenture or any Security Documents;


 


(10)                          to conform the text of this Indenture, the
Notes, the Security Documents or the Guarantees to any provision under the heading
“Description of notes” in the Offering Memorandum to the extent that such
provision in the Offering Memorandum was intended (as evidenced by an Officers’
Certificate from the Issuer) to be a verbatim recitation of a provision of this
Indenture, the Notes, the Security Documents or the Guarantees;


 


(11)                          to add any Pari Passu Payment Lien Obligations
to the Security Documents on the terms set forth therein or to add any Junior
Lien Indebtedness pursuant to the Junior Lien Intercreditor Agreement;


 


(12)                          to provide for the issuance of Exchange Notes
and Additional Notes in accordance with the limitations set forth in the
Indenture as of the Issue Date; or


 


(13)                          to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.


 


Subject
to Section 9.2, upon the request of the Issuer accompanied by a
resolution of its Board of Directors authorizing the execution of any such
amended or supplemental indenture, and upon receipt by the Trustee of the
documents described in Section 13.4 hereof, the Trustee will join
with the Issuer and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but will not be
obligated to, enter into such amended or supplemental Indenture.


 


After
an amendment or supplement under this Section 9.1 becomes effective,
the Issuer shall mail to Holders a notice briefly describing such amendment or
supplement.  The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment or supplement under this Section 9.1.


 


SECTION 9.2.  
With Consent of Holders.


 


Except
as provided below in this Section 9.2, the Issuer, the Guarantors,
the Collateral Agent and the Trustee may amend or supplement this Indenture,
any Security Document, any related Guarantee and the Notes issued hereunder
with the consent of the Holders of at least a majority in aggregate principal
amount of the Notes then outstanding and issued under this Indenture,
including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes, and, subject to Sections
6.4 and 6.7 hereof,  any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, and Additional Interest,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Notes, the Guarantees and the Security Documents issued
hereunder may be waived with the consent of the Holders of a majority in
principal amount of the 


 


129

















 


then
outstanding Notes issued under this Indenture (including consents obtained in
connection with a purchase of or tender offer or exchange offer for
Notes).  Section 2.11 hereof
and Section 13.6 hereof shall determine which Notes are considered
to be “outstanding” for the purposes of this Section 9.2.


 


Upon
the request of the Issuer accompanied by a resolution of its Board of Directors
authorizing the execution of any such amended or supplemental indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee
of the documents described in Section 13.4 hereof, the Trustee will
join with the Issuer and the Guarantors in the execution of such amended or
supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but will not be
obligated to, enter into such amended or supplemental Indenture.


 


Without
the consent of each Holder of Notes affected, an amendment, supplement or
waiver may not, with respect to any Notes issued thereunder and held by a
nonconsenting Holder:


 


(1)                                 reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;


 


(2)                                 reduce the principal of or change the fixed
maturity of any such Note or alter or waive the provisions with respect to the
redemption of the Notes (other than provisions relating to Sections 3.5,
3.10 and 5.9);


 


(3)                                 reduce the rate of or change the time for
payment of interest, including Additional Interest, on any Note;


 


(4)                                 waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on the Notes issued
under the Indenture, except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of the then
outstanding Notes and a waiver of the payment default that resulted from such
acceleration, or in respect of a covenant or provision contained in the
Indenture or any Guarantee which cannot be amended or modified without the consent
of all Holders;


 


(5)                                 make any Note payable in money other than that
stated therein;


 


(6)                                 make any change in the provisions of this
Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium, if any, or interest on the Notes;


 


(7)                                 make any change in these amendment and waiver
provisions that require each Holder’s consent;


 


(8)                                 impair the right of any Holder to receive
payment of principal of, or interest on such Holder’s Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder’s Notes;


 


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(9)                                 release any Subsidiary Guarantor that is a
Significant Subsidiary or group of Subsidiary Guarantors that, taken together
(as of the latest audited consolidated financial statements for the Issuer and
its Restricted Subsidiaries), would constitute a Significant Subsidiary from
any of its obligations under its Guarantee or this Indenture, except in
compliance with the terms thereof; or


 


(10)                          make any change to or modify the ranking of
the Notes or the Guarantees thereof that would adversely affect the Holders
thereof.


 


In
addition, without the consent of the Holders of at least 75% in principal
amount of Notes then outstanding, no amendment, supplement or waiver may modify
any Security Document or the provisions in this Indenture dealing with Security
Documents or application of trust moneys in any manner, taken as a whole,
materially adverse to the Holders or otherwise release any Collateral other
than in accordance with this Indenture and the Security Documents.


 


It
shall not be necessary for the consent of the Holders under this Indenture or
any Security Document to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.  A consent to any
amendment, supplement or waiver under this Indenture by any Holder of the Notes
given in connection with a tender or exchange of such Holder’s Notes will not
be rendered invalid by such tender or exchange.


 


After
an amendment or supplement under this Section 9.2 becomes
effective, the Issuer shall mail to Holders a notice briefly describing such
amendment or supplement.  The failure to
give such notice to all Holders, or any defect therein, shall not impair or
affect the validity of an amendment or supplement.


 


SECTION 9.3.  
Compliance with Trust Indenture Act.


 


Every
amendment or supplement to this Indenture, any Security Document, any Guarantee
and the Notes will be set forth in an amended or supplemental indenture that
complies with the TIA as then in effect.


 


SECTION 9.4.  
Revocation and Effect of Consents and Waivers.


 


Until
an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt
as the consenting Holder’s Note, even if notation of the consent or waiver is
not made on any Note.  However, any such
Holder of a Note or subsequent Holder of a Note may revoke the consent or
waiver as to such Holder’s Note or portion of its Note if the Trustee receives
written notice of revocation before the date the amendment, supplement or
waiver becomes effective.  An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.


 


The
Issuer may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to give their consent or take any other action
described above or required or permitted to be taken pursuant to this
Indenture.  If a record date is fixed,
then notwithstanding the immediately preceding paragraph, those Persons who
were Holders at such 


 


131

















 


record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date.  No such consent shall
be valid or effective for more than 120 days after such record date.


 


SECTION 9.5.  
Notation on or Exchange of Notes.


 


The
Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. 
The Issuer in exchange for all Notes may issue and the Trustee shall,
upon receipt of an Issuer Order, authenticate new Notes that reflect the
amendment, supplement or waiver.


 


Failure
to make the appropriate notation or issue a new Note will not affect the
validity and effect of such amendment, supplement or waiver.


 


SECTION 9.6.  
Trustee to Sign Amendments.


 


The
Trustee shall sign any amended or supplemental indenture authorized pursuant to
this Article IX if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee.  The Issuer may not sign an amended or
supplemental indenture until the Board of Directors of the Issuer approves
it.  In executing any amended or
supplemental indenture, the Trustee will be entitled to receive and (subject to
Sections 7.1 and 7.2 hereof) shall be fully protected in relying
upon, in addition to the documents required by Section 13.4 hereof,
an Officers’ Certificate and an Opinion of Counsel stating that the execution
of such amended or supplemental indenture is authorized or permitted by this
Indenture.


 


ARTICLE X


 


GUARANTEE


 


SECTION 10.1.  
Guarantee.  Subject to
the provisions of this Article X, each Guarantor hereby fully,
unconditionally and irrevocably guarantees, as primary obligor and not merely
as surety, jointly and severally with each other Guarantor, to each Holder of
the Notes, and the Trustee the full and punctual payment when due, whether at
maturity, by acceleration, by redemption or otherwise, of the principal of,
premium, if any, and interest (including Additional Interest) on the Notes and
all other obligations and liabilities of the Issuer under this Indenture
(including without limitation interest (including Additional Interest) accruing
after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Issuer or any
Guarantor whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding and the obligations under Section 7.7),
the Registration Rights Agreement and the Security Documents (all the foregoing
being hereinafter collectively called the “Guaranteed Obligations”).  Each Guarantee will be secured on a
first-priority basis by the Collateral owned by such Guarantor.  Each Guarantor agrees that the Guaranteed
Obligations will rank equally in right of payment with other Indebtedness of
such Subsidiary Guarantor, except to the extent such other Indebtedness is
subordinate to the 


 


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Guaranteed
Obligations, in which case the obligations of the Guarantors under the
Guarantees will rank senior in right of payment to such other Indebtedness.


 


To
evidence its Guarantee set forth in this Section 10.1, each
Guarantor hereby agrees that this Indenture shall be executed on behalf of such
Guarantor by an Officer of such Guarantor.


 


Each
Guarantor hereby agrees that its Guarantee set forth in Section 10.1
hereof shall remain in full force and effect notwithstanding the absence of the
endorsement of any notation of such Guarantee on the Notes.


 


If
an Officer whose signature is on this Indenture no longer holds that office at
the time the Trustee authenticates the Note, the Guarantee shall be valid
nevertheless.


 


Upon
the Assumption, the Guarantees set forth in this Indenture shall be deemed duly
delivered, without any further action by any Person, on behalf of the Guarantors.
Following the Escrow Release Date, the delivery of any Note by the Trustee,
after the authentication thereof hereunder, shall constitute due delivery of
the Guarantee set forth in this Indenture on behalf of the Guarantors.


 


Each
Guarantor further agrees (to the extent permitted by law) that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from it, and that it will remain bound under this Article X
notwithstanding any extension or renewal of any Guaranteed Obligation.


 


Each
Guarantor waives presentation to, demand of payment from and protest to the
Issuer of any of the Guaranteed Obligations and also waives notice of protest
for nonpayment.  Each Guarantor waives
notice of any default under the Notes or the Guaranteed Obligations.


 


Each
Guarantor further agrees that its Guarantee herein constitutes a Guarantee of
payment when due (and not a Guarantee of collection) and waives any right to
require that any resort be had by any Holder to any security held for payment
of the Guaranteed Obligations.


 


Except
as set forth in Section 10.2, the obligations of each Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason (other than payment of the Guaranteed Obligations in
full), including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense of setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Guaranteed Obligations or otherwise.  Without limiting the generality of the
foregoing, the Guaranteed Obligations of each Guarantor herein shall not be
discharged or impaired or otherwise affected by (a) the failure of any
Holder to assert any claim or demand or to enforce any right or remedy against
the Issuer or any other person under this Indenture, the Notes or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Indenture, the Notes or any other agreement; (d) the release of
any security held by any Holder or the Collateral Agent for the Guaranteed
Obligations or any of them; (e) the failure of any Holder to exercise any
right or remedy against any other Guarantor; (f) any change in the
ownership of the Issuer; (g) any default, failure or delay, willful or
otherwise, in the performance of the Guaranteed


 


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Obligations,
or (h) any other act or thing or omission or delay to do any other act or
thing which may or might in any manner or to any extent vary the risk of any
Guarantor or would otherwise operate as a discharge of such Guarantor as a
matter of law or equity.


 


Each
Guarantor agrees that its Guarantee herein shall remain in full force and
effect until payment in full of all the Guaranteed Obligations or such
Guarantor is released from its Guarantee in compliance with Section 10.2,
Article VIII or Article XII.  Each Guarantor further agrees that its
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of, premium,
if any, or interest on any of the Guaranteed Obligations is rescinded or must
otherwise be restored by any Holder upon the bankruptcy or reorganization of
the Issuer or otherwise.


 


In
furtherance of the foregoing and not in limitation of any other right which any
Holder has at law or in equity against any Guarantor by virtue hereof, upon the
failure of the Issuer to pay any of the Guaranteed Obligations when and as the
same shall become due, whether at maturity, by acceleration, by redemption or
otherwise, each Guarantor hereby promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee on behalf of the Holders an amount equal to the sum of (i) the
unpaid amount of such Guaranteed Obligations then due and owing and (ii) accrued
and unpaid interest (including Additional Interest) on such Guaranteed
Obligations then due and owing (but only to the extent not prohibited by law)
(including interest accruing after the filing of any petition in bankruptcy or
the commencement of any insolvency, reorganization or like proceeding relating
to the Issuer or any Guarantor whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding).


 


Each
Guarantor further agrees that, as between such Guarantor, on the one hand, and
the Holders, on the other hand, (x) the maturity of the Guaranteed
Obligations guaranteed hereby may be accelerated as provided in this Indenture
for the purposes of its Guarantee herein, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the Guaranteed
Obligations guaranteed hereby and (y) in the event of any such declaration
of acceleration of such Guaranteed Obligations, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantor for the purposes of this Guarantee.


 


Each
Guarantor also agrees to pay any and all costs and expenses (including
reasonable attorneys’ fees and expenses) incurred by the Trustee, the
Collateral Agent or the Holders in enforcing any rights under this Section.


 


SECTION 10.2.  
Limitation on Liability; Termination, Release and Discharge.


 


(a)                                 Any term or provision of this Indenture to the contrary notwithstanding,
the obligations of each Guarantor hereunder will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees
under the Senior Credit Facility) and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Guarantor under its Guarantee not 


 


134

















 


constituting a fraudulent
conveyance or fraudulent transfer under federal or state law and not otherwise
being void or voidable under any similar laws affecting the rights of creditors
generally.


 


(b)                                 Subject to Section 10.2(c), each Guarantor will not, and the
Issuer will not permit any Subsidiary Guarantor to, consolidate or merge with
or into or wind up into (whether or not such Guarantor is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets in one or more related
transaction to, any Person unless:


 


(1)                                 (a) such Guarantor is the surviving
corporation or the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) or to which such sale, assignment,
transfer, lease, conveyance or other disposition will have been made is a
corporation, partnership, trust or limited liability company organized or
existing under the laws of the United States, any state thereof, the District
of Columbia, or any territory thereof (such Guarantor or such Person, as the
case may be, being herein called the “Successor Person”);


 


(b) the Successor Person, if other than such
Guarantor, expressly assumes all the obligations of such Guarantor under this
Indenture, such Guarantor’s Guarantee and the Security Documents pursuant to
supplemental indentures or other documents or instruments in form reasonably
satisfactory to the Trustee and shall cause such amendments, supplements or
other instruments to be executed, filed, and recorded in such jurisdictions as
may be required by applicable law to preserve and protect the Lien on the
Collateral owned by or transferred to the Successor Person, together with such
financing statements or comparable documents as may be required to perfect any
security interests in such Collateral which may be perfected by the filing of a
financing statement or a similar document under the Uniform Commercial Code or
other similar statute or regulation of the relevant states or jurisdictions;


 


(c) immediately after such transaction (and
treating any Indebtedness which becomes an obligation of the Successor Person
or any Restricted Subsidiary as a result of such transaction as having been
incurred by the Successor Person or such Restricted Subsidiary at the time of
such transaction), no Default or Event of Default exists;


 


(d) the Issuer shall have delivered to the
Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplemental indentures,
amendments, supplements or other instruments relating to the applicable
Security Documents if any, comply with this Indenture and the Security
Documents, if a supplemental indenture or any supplement to any Security
Document is required in connection with such transaction, such supplement shall
comply with the applicable provisions of this Indenture;


 


(e) to the extent any assets of the Person
which is merged and consolidated with or into the Successor Person are assets
of the type which would constitute Collateral under the applicable Security
Documents, the Successor Person will take such other actions as may be
reasonably necessary to cause such property and assets to 


 


135

















 


be
made subject to the Lien of the Security Documents in the manner and to the
extent required in this Indenture or any of the Security Documents and shall
take all reasonably necessary action so that such Lien is perfected to the
extent required by the Security Documents; and


 


(f) the Collateral is owned by or transferred
to the Successor Person shall:


 


(i)                                     continue to
constitute Collateral under this Indenture and the Security Documents;


 


(ii)                                  be subject to
the Lien in favor of the Collateral Agent for the benefit of the Collateral
Agent, the Trustee and the Holders;


 


(iii)                               not be subject
to any Lien other than Permitted Liens; and


 


(2)                                 the transaction is made in compliance with Section 3.5.


 


Subject
to the limitations described in this Indenture, the Successor Person will
succeed to, and be substituted for, such Guarantor under this Indenture and
such Guarantor’s Guarantee but, in the case of a lease of all or substantially
all its assets, the Guarantor will not be released from its obligations under
its Guarantee.  Notwithstanding the
foregoing any Subsidiary Guarantor may merge into or transfer all or part of
its properties and assets to another Subsidiary Guarantor or the Issuer.


 


(c)                                  Any Guarantee by a Restricted Subsidiary of the Notes shall be
automatically and unconditionally released and discharged upon:


 


(1)                                 any sale, exchange or transfer (by merger or
otherwise) of Capital Stock of such Subsidiary Guarantor following which the
applicable Subsidiary Guarantor is no longer a Restricted Subsidiary) or all or
substantially all the assets of such Subsidiary Guarantor (other than by
lease), which sale, exchange or transfer is made in compliance with the
applicable provisions of the Indenture and all the obligations of such
Subsidiary Guarantor in respect of all Indebtedness of the Issuer or the
Subsidiary Guarantors terminate upon consummation of such transaction;


 


(2)                                 the release or discharge of the guarantee by
such Restricted Subsidiary which resulted in the creation of such Guarantee if
such Subsidiary Guarantor would not then otherwise be required to guarantee the
Notes pursuant to this Indenture provided, that if such Restricted Subsidiary
has incurred any Indebtedness or issued any preferred stock or Disqualified
Stock in reliance on its status as a Guarantor under the covenant in Section 3.2,
such Restricted Subsidiary’s obligations under such Indebtedness, Disqualified
Stock or preferred stock, as the case may be, so incurred are satisfied in full
and discharged or are otherwise permitted to be incurred by a Restricted
Subsidiary (other than a Subsidiary Guarantor) under Section 3.2, except a
discharge or release by or as a result of payment under such guarantee;


 


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(3)                                 if such Subsidiary Guarantor is designated as
an Unrestricted Subsidiary or otherwise ceases to be a Restricted Subsidiary,
in each case in accordance with the provisions of the Indenture, upon
effectiveness of such designation or when it first ceases to be a Restricted
Subsidiary, respectively; or


 


(4)                                 if the Issuer exercises its legal defeasance
option or covenant defeasance option as described in Article VIII
or if its obligations under the Indenture are discharged in accordance with Article XII.


 


SECTION 10.3.  
Right of Contribution.  Each
Guarantor hereby agrees that to the extent that any Guarantor shall have paid
more than its proportionate share of any payment made on the obligations under
the Guarantees, such Guarantor shall be entitled to seek and receive
contribution from and against the Issuer or any other Guarantor who has not
paid its proportionate share of such payment. 
The provisions of this Section 10.3 shall in no respect
limit the obligations and liabilities of each Guarantor to the Trustee and the
Holders and each Guarantor shall remain liable to the Trustee and the Holders
for the full amount guaranteed by such Guarantor hereunder.


 


SECTION 10.4.  
No Subrogation. 
Notwithstanding any payment or payments made by each Guarantor
hereunder, no Guarantor shall be entitled to be subrogated to any of the rights
of the Trustee or any Holder against the Issuer or any other Guarantor or any
collateral security or guarantee or right of offset held by the Trustee or any
Holder for the payment of the Guaranteed Obligations, nor shall any Guarantor
seek or be entitled to seek any contribution or reimbursement from the Issuer
or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Trustee and the Holders by the Issuer on account
of the Guaranteed Obligations are paid in full. 
If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Guaranteed Obligations shall not
have been paid in full, such amount shall be held by such Guarantor in trust
for the Trustee and the Holders, segregated from other funds of such Guarantor,
and shall, forthwith upon receipt by such Guarantor, be turned over to the
Trustee in the exact form received by such Guarantor (duly indorsed by such
Guarantor to the Trustee, if required), to be applied against the Guaranteed
Obligations.


 


ARTICLE XI


 


COLLATERAL
AND SECURITY


 


SECTION 11.1.  
The Collateral.


 


(a)                                 The Issuer hereby appoints Wilmington Trust FSB to act as Collateral
Agent, and each Holder by its acceptance of any Notes and the Guarantees
thereof, irrevocably consents and agrees to such appointment.  The Collateral Agent shall have the
privileges, powers and immunities as set forth in this Indenture, the Security
Documents and the Junior Lien Intercreditor Agreement.  Prior to the Escrow Release Date, the Notes
shall be secured as provided in the Escrow Agreement.  From and after the Escrow Release Date, the
due and punctual payment of the principal of, premium, if any, and interest
(including Additional Interest) on the Notes and the Guarantees thereof when
and as the same shall be due and payable, whether on an interest 


 


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payment date, at maturity,
by acceleration, repurchase, redemption or otherwise, interest on the overdue
principal of and interest (to the extent permitted by law), if any, on the
Notes and the Guarantees thereof and performance of all other obligations under
this Indenture, including, without limitation, the obligations of the Issuer
set forth in Section 7.7 and Section 8.5 herein, and
the Notes and the Guarantees thereof and the Security Documents, shall be
secured by first-priority Liens and security interests on the Collateral (subject
to Permitted Liens), as and to the extent provided in the Security Documents
which RDA and the Guarantors, as the case may be, will enter into on the Escrow
Release Date and will be secured by all Security Documents hereafter delivered
as required or permitted by this Indenture and the Security Documents.  The Collateral will also secure on a
first-priority basis RDA’s and the Guarantors’ Obligations under Priority
Payment Lien Obligations and Pari Passu Payment Lien Obligations, provided that
an authorized representative of the holders thereof shall have executed a
joinder to the Security Agreement in the form provided therein. Under the terms
of the Security Documents, the proceeds of any collection, sale, disposition or
other realization of Collateral received in connection with the exercise of
remedies (including distributions of cash, securities or other property on
account of the value of the Collateral in a bankruptcy, insolvency,
reorganization or similar proceedings) shall be applied, after the payment of
all amounts due to the Collateral Agent under the terms hereof and the Security
Documents, first to repay the Indebtedness and other obligations under Credit
Facilities (including any Post-Petition Interest with respect thereto) incurred
under Section 3.2(b)(1) hereof, Hedging Obligations with
lenders under such Credit Facilities or their Affiliates and Cash Management
Obligations (collectively, the “Priority Payment Lien Obligations”)
before any Holder receives any proceeds. 
The Issuer and the Guarantors hereby agree that the Collateral Agent
shall hold the Collateral in trust for the benefit of all of the Holders and
the Trustee, in each case pursuant to the terms of the Security Agreement and
the other Security Documents and, upon the consummation of the Assumption, the
Collateral Agent and the Trustee are hereby directed and authorized to execute
and deliver the Security Agreement and the other Security Documents.  The Collateral Agent is hereby authorized to
execute and deliver the Security Agreement and the other Security Documents.


 


(b)                                 Each Holder, by its acceptance of any Notes and the Guarantees thereof,
irrevocably consents and agrees to the terms of the Security Documents and the
Junior Lien Intercreditor Agreement (including, without limitation, the
provisions providing for foreclosure) as the same may be in effect or may be
amended from time to time in accordance with their terms and authorizes and
directs the Collateral Agent to perform its obligations and exercise its
rights, powers and discretions under the Security Documents and the Junior Lien
Intercreditor Agreement in accordance therewith.


 


(c)                                  The Trustee and each Holder, by accepting the Notes and the Guarantees
thereof, acknowledges that, as more fully set forth in the Security Documents
and the Junior Lien Intercreditor Agreement, the Collateral as now or hereafter
constituted shall be held for the benefit of all the Holders and the Trustee,
and that the Lien of this Indenture and the Security Documents in respect of
the Trustee and the Holders is subject to and qualified and limited in all
respects by the Security Documents and the Junior Lien Intercreditor Agreement
and actions that may be taken thereunder.


 


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SECTION 11.2.  
Further Assurances.


 


(a)                                 To the extent required under this Indenture or any of the Security
Documents, the Issuer and the Guarantors shall, at their sole expense, execute
any and all further documents, financing statements, agreements and
instruments, and take all further action that may be required under applicable
law, or that the Collateral Agent or the Trustee may reasonably request, in
order to grant, preserve, protect and perfect the validity and priority of the
security interests and Liens created or intended to be created by the Security
Documents in the Collateral. In addition, to the extent required under this
Indenture or any of the Security Documents, from time to time, the Issuer will
reasonably promptly secure the obligations under the Indenture and Security
Documents by pledging or creating, or causing to be pledged or created,
perfected security interests and Liens with respect to the Collateral perfected
to the extent required by the Security Documents. Such security interests and
Liens will be created under the Security Documents and other security
agreements and other instruments and documents in form and substance reasonably
satisfactory to the Trustee, and the Issuer shall deliver or cause to be
delivered to Trustee all such instruments and documents (including
certificates, legal opinions, title insurance policies and lien searches) as
the Trustee shall reasonably request to evidence compliance with this
covenant.  The Issuer agrees to provide
such evidence as the Trustee shall reasonably request as to the perfection (to
the extent required by the Security Documents) and priority status of each such
security interest and Lien.


 


(b)                                 The Issuer will otherwise comply with the provisions of TIA §314(b).  Promptly after the effectiveness of this
Indenture, to the extent required by the TIA, the Issuer shall deliver the
opinion(s) required by Section 314(b)(1) of the TIA.  Subsequent to the execution and delivery of
this Indenture, to the extent required by the TIA, the Issuer shall furnish to
the Trustee on or prior to each anniversary of the Issue Date, an Opinion of
Counsel, dated as of such date, stating either that (i) in the opinion of
such counsel, all action has been taken with respect to any filing, re-filing,
recording or re-recording with respect to the Collateral as is necessary to
maintain the Lien on the Collateral in favor of the Holders or (ii) in the
opinion of such counsel, that no such action is necessary to maintain such
Lien.


 


(c)                                  The Issuer shall comply with the applicable provisions of the Trust
Indenture Act as they relate to Collateral. 
The Issuer will cause Section 313(b) of the
Trust Indenture Act, relating to reports, and Section 314(d) of
the Trust Indenture Act, relating to the release of property and to the
substitution therefor of any property to be pledged as collateral for the
Notes, to be complied with, whether or not the Indenture is qualified under the
Trust Indenture Act. Any certificate or opinion required by
Section 314(d) of the Trust Indenture Act may be made by an
Officer of the Issuer except in cases where Section 314(d) requires
that such certificate or opinion be made by an independent engineer, appraiser
or other expert, who shall be reasonably satisfactory to the Trustee.
Notwithstanding anything to the contrary in this paragraph, the Issuer will not
be required to comply with all or any portion of Section 314(d) of
the Trust Indenture Act if it determines, in good faith based on advice of
counsel, that under the terms of Section 314(d) and/or any interpretation
or guidance as to the meaning thereof of the SEC and its staff, including “no
action” letters or exemptive orders, all or any portion of Section 314(d) is
inapplicable.


 


SECTION 11.3.  
After-Acquired Property.  Upon the acquisition by the Issuer or any
Guarantor after the Issue Date of (1) any after-acquired assets,
including, but not limited to, any after-acquired Material Real Property or any
equipment or fixtures which constitute 


 


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accretions,
additions or technological upgrades to the equipment or fixtures or any working
capital assets that, in any such case, form part of the Collateral, or
(2) any material Replacement Assets in compliance with Section 3.5,
the Issuer or such Guarantor shall execute and deliver, (i) with regard to
any Material Real Property, the items described under Section 11.5
within 30 days after the earlier of (x) the Escrow Release Date and (y) the
date of acquisition, and (ii) to the extent required by the Security Documents,
any information, documentation, financing statements or other certificates and
opinions of counsel as may be necessary to vest in the Collateral Agent a
perfected security interest, subject only to Permitted Liens, in such
after-acquired property (other than Excluded Asset) and to have such
after-acquired property added to the Collateral, and thereupon all provisions
of the Indenture relating to the Collateral shall be deemed to relate to such
after-acquired property to the same extent and with the same force and effect.


 


SECTION 11.4.  
Impairment of Security Interest.  Neither the Issuer nor any of its Restricted
Subsidiaries will take or omit to take any action which would materially
adversely affect or impair the Liens in favor of the Collateral Agent and the
Holders with respect to the Collateral. Neither the Issuer nor any of its
Restricted Subsidiaries shall grant to any Person, or permit any Person to
retain (other than the Collateral Agent), any Liens in the Collateral, other
than Permitted Liens. None of the Issuer, Holdings or any of their respective
Restricted Subsidiaries will enter into any agreement that requires the
proceeds received from any sale of Collateral to be applied to repay, redeem,
defease or otherwise acquire or retire any Indebtedness of any Person in a
manner that conflicts with this Indenture, the Notes, the Guarantees and the
Security Documents. Holdings and the Issuer will, and the Issuer will cause
each Subsidiary Guarantor to, at its sole cost and expense, execute and deliver
all such agreements and instruments as necessary, or as the Trustee or the
Collateral Agent reasonably requests, to more fully or accurately describe the
assets and property intended to be Collateral or the obligations intended to be
secured by the Security Documents.


 


SECTION 11.5.  
Real Estate Mortgages and Filings.  With respect to any fee interest in real
property which is required to be mortgaged to the Collateral Agent
(individually and collectively, the “Premises”) owned by the Issuer or a
Guarantor on the Issue Date or acquired by the Issuer or a Guarantor after the
Issue Date that forms a part of the Collateral, within 30 days of the Escrow
Release Date or 30 days of the date of acquisition, as applicable:


 


(1)                                 the Issuer or such Guarantor shall deliver to
the Collateral Agent, as mortgagee or beneficiary, as applicable, for the
ratable benefit of itself and the holders of the Notes, fully executed
counterparts of Mortgages, duly executed by the Issuer or such Guarantor,
together with satisfactory evidence of the completion (or satisfactory
arrangements for the completion) of all recordings and filings of such Mortgage
(and payment of any taxes or fees in connection therewith) as may be necessary
to create a valid, perfected first priority Lien, subject to Permitted Liens,
against the properties purported to be covered thereby;


 


(2)                                 the Collateral Agent shall have received
mortgagee’s title insurance policies in favor of the Collateral Agent, and its
successors and/or assigns, in the form necessary, with respect to the property
purported to be covered by the applicable Mortgages, to insure that the
interests created by the Mortgages constitute valid first priority Liens
thereon free and clear of all Liens, defects and encumbrances, other than 


 


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Permitted
Liens, all such title policies to be in amounts equal to 110% of the estimated
fair market value of the Premises covered thereby, and such policies shall also
include, to the extent available, all such endorsements as shall be reasonably
required and shall be accompanied by evidence of the payment in full of all
premiums thereon (or that satisfactory arrangements for such payment have been
made); and


 


(3)                                 the Issuer shall, or shall cause the Guarantors
to, deliver to the Collateral Agent (x) with respect to each of the
covered Premises owned on the Issue Date, such filings, surveys (or any updates
or affidavits that the title company may reasonably require in connection with
the issuance of the title insurance policies) (in each case, to the extent
existing on the Issue Date or the Escrow Release Date), local counsel opinions,
fixture filings, along with such other documents, instruments, certificates and
agreements, as the Collateral Agent and its counsel shall reasonably request,
and (y) with respect to each of the covered Premises acquired after the
Issue Date, such filings, surveys (to the extent existing at the time of the
acquisition), fixture filings, instruments, certificates, agreements and/or
other documents necessary to comply with clauses (1) and (2) above
and to perfect the Collateral Agent’s security interest and first-priority Lien
in such acquired covered Premises, together with such local counsel opinions as
the Collateral Agent and its counsel shall reasonably request.


 


SECTION 11.6.  
Release of Liens on the Collateral.


 


(a)                                 The Liens on the Collateral securing the Notes will
automatically and without the need for any further action by any Person be
released:


 


(1)                                 in whole or in part, as
applicable, as to all or any portion of property subject to such Liens which
has been taken by eminent domain, condemnation or other similar circumstances;


 


(2)                                 in whole upon:


 


(a)                                 satisfaction and discharge of the Indenture as set forth in Article XII
hereof; or


 


(b)                                 a Legal Defeasance or Covenant Defeasance as set forth in Article VIII
hereof;


 


(3)                                 in part, as to any property
that (a) is sold, transferred or otherwise disposed of by the Issuer or
any Guarantor (other than to the Issuer or a Subsidiary Guarantor) in a
transaction not prohibited by this Indenture at the time of such sale, transfer
or disposition or (b) that is cash or Net Proceeds withdrawn from the
Collateral Account for any one or more purposes permitted by Section 3.5(a);


 


(4)                                 in part, as to any property
that is owned or at any time acquired by a Guarantor that has been released
from its Guarantee in accordance with this Indenture, concurrently with the
release of such Guarantee;


 


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(5)                                 in part, in accordance with
the applicable provisions of the Security Documents; and


 


(b)                                 in whole or in part, as applicable, with the consent of
Holders of 75% of the outstanding aggregate principal amount the Notes
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, Notes).


 


To the extent applicable, the Issuer and each Guarantor will
furnish to the Trustee, prior to each proposed release of such Collateral
pursuant to the Security Documents and this Indenture:


 


(1)                                 an Officers’ Certificate
requesting such release;


 


(2)                                 an Officers’ Certificate and
an Opinion of Counsel to the effect that all conditions precedent provided for
in this Indenture and the Security Documents to such release have been complied
with;


 


(3)                                 a form of such release (which
release shall be in form reasonably satisfactory to the Trustee and shall
provide that the requested release is without recourse or warranty to the
Trustee);


 


(4)                                 all documents required by TIA
§314(d), this Indenture, the Security Documents and the Junior Lien
Intercreditor Agreement; and


 


(5)                                 an Opinion of Counsel to the
effect that such accompanying documents constitute all documents required by
TIA §314(d), this Indenture and the Security Documents.


 


Upon compliance by the Issuer or the Guarantors, as the case
may be, with the conditions precedent set forth above, and upon delivery by the
Issuer or such Guarantor to the Trustee of an Opinion of Counsel to the effect
that such conditions precedent have been complied with, the Trustee or the
Collateral Agent shall promptly cause to be released and reconveyed to the
Issuer, or the Guarantors, as the case may be, the released Collateral.


 


(c)                                  For purposes of the TIA, the release of any Collateral from the terms of
the Security Documents will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof or affect the Lien of this
Indenture or the Security Documents if and to the extent the Collateral is released
pursuant to this Indenture and the Security Documents or upon the termination
of this Indenture.


 


SECTION 11.7.  
Authorization of Actions to be Taken by the Trustee or the Collateral Agent
Under the Security Documents.


 


(a)                                 Subject to the provisions of the Security Documents and the Junior Lien
Intercreditor Agreement, each of the Trustee or the Collateral Agent may, in
its sole discretion and without the consent of the Holders, on behalf of the
Holders, take all actions it deems necessary or appropriate in order to (a) enforce
any of its rights or any of the rights of the Holders under the Security
Documents and the Junior Lien Intercreditor Agreement and (b) collect and
receive any 


 


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and all amounts payable in
respect of the Collateral in respect of the obligations of the Issuer and the
Subsidiaries hereunder and thereunder. 
Subject to the provisions of the Security Documents and the Junior Lien
Intercreditor Agreement, the Trustee or the Collateral Agent shall have the
power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts that may be
unlawful or in violation of the Security Documents, the Junior Lien Intercreditor
Agreement or this Indenture, and such suits and proceedings as the Trustee or
the Collateral Agent may deem expedient to preserve or protect its interest and
the interests of the Holders in the Collateral (including power to institute
and maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that
may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders or the
Trustee).


 


(b)                                 The Trustee or the Collateral Agent shall not be responsible for the
existence, genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the Liens in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes negligence, bad faith or willful misconduct on the part of the
Trustee or the Collateral Agent, for the validity or sufficiency of the
Collateral or any agreement or assignment contained therein, for the validity
of the title of the Issuer to the Collateral, for insuring the Collateral or
for the payment of taxes, charges, assessments or Liens upon the Collateral or
otherwise as to the maintenance of the Collateral. The Trustee or the
Collateral Agent shall have no responsibility for recording, filing,
re-recording or refiling any financing statement, continuation statement,
document, instrument or other notice in any public office at any time or times
or to otherwise take any action to perfect or maintain the perfection of any
security interest granted to it under the Security Documents or otherwise.


 


(c)                                  Where any provision of this Indenture requires that additional property
or assets be added to the Collateral, the Issuer and each Guarantor shall
deliver to the Trustee or the Collateral Agent the following:


 


(i)                                     a request from the Issuer
that such Collateral be added;


 


(ii)                                  the form of instrument
adding such Collateral, which, based on the type and location of the property
subject thereto, shall be in substantially the form of the applicable Security
Documents entered into on the Escrow Release Date, with such changes thereto as
the Issuer shall consider appropriate, or in such other form as the Issuer
shall deem proper; provided that
any such changes or such form are administratively satisfactory to the Trustee
or the Collateral Agent;


 


(iii)                               an Officers’ Certificate to
the effect that the Collateral being added is in the form, consists of the
assets and is in the amount or otherwise has the fair market value required by
this Indenture;


 


(iv)                              an Officers’ Certificate and
Opinion of Counsel to the effect that all conditions precedent provided for in
this Indenture to the addition of such


 


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Collateral
have been complied with, which Opinion of Counsel shall also opine as to the
creation and perfection of the Collateral Agent’s Lien on such Collateral and
as to the due authorization, execution, delivery, validity and enforceability
of the Security Documents being entered into; and


 


(v)                                 such financing statements,
if any, as the Issuer shall deem necessary to perfect the Collateral Agent’s
security interest in such Collateral.


 


(d)                                 The Trustee or the Collateral Agent, in giving any consent or approval
under the Security Documents, shall be entitled to receive, as a condition to
such consent or approval, an Officers’ Certificate and an Opinion of Counsel to
the effect that the action or omission for which consent or approval is to be
given does not adversely affect the interests of the Holders or impair the
security of the Holders in contravention of the provisions of this Indenture or
the Security Documents, and the Trustee or the Collateral Agent shall be fully
protected in giving such consent or approval on the basis of such Officers’
Certificate and Opinion of Counsel.


 


SECTION 11.8.  
Collateral Accounts.


 


(a)                                 The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under, and in accordance with, the Security Documents, and
to make further distributions of such funds to the Holders according to the
provisions of this Indenture, the Security Documents and the Junior Lien
Intercreditor Agreement.


 


(b)                                 Prior to the Escrow Release Date, the Collateral Agent shall have
established the Collateral Accounts, which shall at all times hereafter until
this Indenture shall have terminated, be maintained with, and under the sole
control of, the Collateral Agent.  The
Collateral Accounts shall be trust accounts and shall be established and
maintained by the Trustee at one of its corporate trust offices (which may
include the New York corporate trust office) and all Collateral shall be
credited thereto.  All Net Proceeds from
Asset Sales, Recovery Events in respect of Collateral, Net Awards or Net
Insurance Proceeds in an aggregate amount in excess of $10.0 million, including
earnings, revenues, rents, issues, profits and income therefrom and interest
earned thereon, shall be deposited in the Collateral Account and thereafter shall
be held, applied and/or disbursed by the Trustee in accordance with the terms
of this Indenture (including, without limitation, at the direction of the
Issuer to make any application or disbursement permitted by Section 3.5,
Section 6.10 and Section 11.8(a).  In connection with any and all deposits to be
made into the Collateral Accounts under this Indenture, the Security Documents
or the Junior Lien Intercreditor Agreement, the Trustee and/or the Collateral
Agent, as applicable, shall receive an Officers’ Certificate identifying which
Collateral Account shall receive such deposit and directing the Trustee and/or
the Collateral Agent to make such deposit.


 


(c)                                  Pending the distribution of funds in the Collateral Account in accordance
with the provisions hereof and provided that no Event of Default shall have
occurred and be continuing, the Issuer may direct the Collateral Agent to
invest such funds in Cash Equivalents specified in such direction, such
investments to mature by the times such funds are needed hereunder and such
direction to certify that such funds constitute Cash Equivalents and that no
Event of Default shall have occurred and be continuing.  So long as no Event of Default shall have
occurred and be continuing, the Issuer may direct the Collateral Agent to sell,
liquidate or cause 


 


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the redemption of any such
investments, such direction to certify that no Event of Default shall have
occurred and be continuing. Any gain or income on any investment of funds in
the Collateral Account shall be credited to the Collateral Account. The
Collateral Agent shall have no liability for any loss incurred in connection
with any investment or any sale, liquidation or redemption thereof made in
accordance with the provisions of this Section 11.8(c).


 


SECTION 11.9.  
Rule 3-16 of Regulation S-X.


 


(a)                                 Notwithstanding anything to the contrary set forth in this Article XI
or any Security Document, in the event that Rule 3-16 of Regulation S-X
under the Securities Act requires or would require (or is replaced with another
rule or regulation, or any other law, rule or regulation is adopted,
which would require) the filing with the SEC of separate financial statements
of a Subsidiary due to the fact that such Subsidiary’s Capital Stock secures
the Notes, then the Capital Stock of such Subsidiary need not be pledged
pursuant to this Section 11.9 and the Security Documents and shall
automatically be deemed released and to not be and to not have been part of the
Collateral, but only to the extent necessary to not be subject to such
requirement. In such event, the Security Documents may be amended or modified,
without the consent of any Holder, to the extent necessary to evidence the
release of Liens securing the Notes and the Guarantees on the shares of Capital
Stock that are so deemed to no longer constitute part of the Collateral and the
Trustee and Collateral Agent are hereby authorized by each Holder to execute,
or to authorize the execution of or the filing of, any agreement, document or
instrument in order to evidence such release or to otherwise give effect to
this Section 11.9.


 


(b)                                 In the event that Rule 3-16 of Regulation S-X is amended, modified
or interpreted by the SEC to permit (or is replaced with another rule or
regulation, or any other law, rule or regulation is adopted, which would
permit) a Subsidiary’s Capital Stock to secure the Notes in excess of the
amount then pledged without the filing with the SEC (or any other governmental
agency) of separate financial statements of such Subsidiary, then the Capital
Stock of such Subsidiary shall automatically be deemed to be a part of the
Collateral but only to the extent necessary to not be subject to any such
financial statement requirement (and, in such event, the Security Documents may
be amended or modified, without the consent of any Holder of the Notes, to the
extent necessary to subject to the Liens under the Security Documents such
additional Capital Stock) and the Issuer or such Subsidiary, as applicable,
shall take all such necessary steps to effectuate such Lien.


 


SECTION 11.10.  
Control Agreements.  The
Issuer and the Guarantors shall maintain all cash and Cash Equivalents of the
Issuer and the Guarantors (other than cash and Cash Equivalents not exceeding
$5,000,000 in the aggregate) at an account or accounts (a) with a
financial institution that has entered into a control agreement in favor of the
Collateral Agent with respect to such account(s) or (b) at an account
the entire balance of which is swept at least once every three business days to
an account described in clause (a) above as soon as practicable but in any
event within 30 days after the Escrow Release Date, as such compliance period
may be extended by an additional 30 days by the Administrative Agent under the
Senior Credit Facility in the exercise of its reasonable discretion if the
Issuer and the Guarantors are diligently pursuing delivery thereof, any such
extension to be certified to the Collateral Agent by an Officers’ Certificate
of the Issuer.


 


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SECTION 11.11.  
Information Regarding Collateral.


 


(a)                                 The Issuer
shall furnish to the Collateral Agent, with respect to the Issuer or any
Guarantor, promptly (and in any event within 30 days of such change) written
notice of any change in such Person’s (i) legal name, (ii) jurisdiction
of organization or formation, (iii) identity or corporate structure or (iv) Organizational
Identification Number. The Issuer and the Guarantors agree not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required in
the Security Documents in order for the Collateral to be made subject to the
Lien of the Collateral Agent under the Security Documents in the manner and to
the extent required by the Indenture or any of the Security Documents and shall
take all necessary action so that such Lien is perfected with the same priority
as immediately prior to such change to the extent required by the Security
Documents. The Issuer also agrees promptly to notify the Collateral Agent if
any material portion of the Collateral is damaged, destroyed or condemned.


 


(b)                                 Each year,
within 120 days after the end of the preceding Fiscal Year, the Issuer shall
deliver to the Trustee a certificate of a financial Officer setting forth the
information required pursuant to the schedules required by the Security
Documents or confirming that there has been no change in such information since
the date of the prior annual financial statements; provided that no such
certificate shall be required for any Fiscal Year ended prior to the Issue
Date.


 


ARTICLE XII


 


SATISFACTION
AND DISCHARGE


 


SECTION 12.1.  
Satisfaction and Discharge.


 


This
Indenture will be discharged and will cease to be of further effect as to all
Notes issued hereunder, when:


 


(a)                                 either:


 


(i)                                                     all Notes that have been authenticated and delivered, except lost, stolen
or destroyed Notes that have been replaced or paid and Notes for whose payment
money has theretofore been deposited in trust, have been delivered to the
Trustee for cancellation; or


 


(ii)                                                  all such Notes not theretofore delivered to the Trustee for cancellation
have become due and payable by reason of the making of a notice of redemption
or otherwise or will become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
in the name, and at the expense of the Issuer, and the Issuer or any Guarantor
has irrevocably deposited or caused to be deposited with such Trustee as trust
funds in trust solely for the benefit of the Holders, cash in
U.S. dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be 


 


146

















 


sufficient,
without consideration of any reinvestment of interest, to pay and discharge the
entire Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation for principal, premium, if any, and accrued interest to the date
of maturity or redemption;


 


(b)                                 no Default or Event of Default (other than that resulting from borrowing
funds to be applied to make such deposit and the granting of Liens in
connection therewith) with respect to the Indenture or the Notes issued
thereunder shall have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit and such deposit will not result in a
breach or violation of, or constitute a default under the Credit Facilities,
the Indenture or any other material agreement or instrument to which a Issuer
or any Guarantor is a party or by which the Issuer or any Guarantor is bound;


 


(c)                                  the Issuer or any Guarantor has paid or caused to be paid all sums
payable by the Issuer under the Indenture; and


 


(d)                                 the Issuer has delivered irrevocable instructions to the Trustee to apply
the deposited money toward the payment of such Notes issued thereunder at
maturity or the redemption date, as the case may be.


 


In addition, the Issuer shall deliver an Officers’
Certificate and an Opinion of Counsel to the Trustee stating that all
conditions precedent to satisfaction and discharge have been satisfied.


 


Notwithstanding
the satisfaction and discharge of this Indenture, if money has been deposited
with the Trustee pursuant to clause (a)(ii) of this Section 12.1,
the provisions of Sections 12.2 and 8.6 hereof will survive.


 


SECTION 12.2.  
 Application of Trust Money.


 


Subject
to the provisions of Section 8.6 hereof, all money deposited with
the Trustee pursuant to Section 12.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Issuer acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium and
Additional Interest, if any) and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated from other
funds except to the extent required by law.


 


If
the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 12.1 hereof by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuer’s and any Guarantor’s obligations under this Indenture
and the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 12.1 hereof; provided
that if the Issuer has made any payment of principal of, premium or Additional
Interest, if any, or interest on, any Notes because of the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.


 


147

















 


ARTICLE XIII


 


MISCELLANEOUS


 


SECTION 13.1.  
Trust Indenture Act Controls.  If and to the extent that any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.  Each Guarantor in
addition to performing its obligations under its Guarantee shall perform such
other obligations as may be imposed upon it with respect to this Indenture
under the TIA.


 


SECTION 13.2.  
Notices.  Any notice
or communication shall be in writing and delivered in person, sent by
facsimile, sent by electronic mail, delivered by commercial courier service or
mailed by first-class mail, postage prepaid, addressed as follows:


 


if to the Issuer, RDA or to any Guarantor:


 


The Reader’s Digest Association, Inc.


Reader’s Digest Road


Pleasantville, New York 10570


Attention: [        ]


Telecopy: [        ]


E-mail: [      ]


 


with a copy to:


 


Kirkland & Ellis LLP


601 Lexington Ave


New York, New York 10022


Attention: Joshua N. Korff


Telecopy:  (212) 446-4900


E-mail: joshua.korff@kirkland.com


 


148

















 


if to the Trustee, at its corporate trust office, which corporate trust
office for purposes of this Indenture is at the date hereof located at:


 


Wells Fargo Bank, National Association,


45 Broadway, 14th Floor


New York, New York 10006


Attention: Corporate Trust Services —


Reader’s Digest Assoc. Administrator


Telecopy: 212-515-1589


 


with a copy to:


 


Dewey & LeBoeuf LLP


1301 Avenue of the Americas


New York, NY 10019


Attention: Maria A. Dantas


Telecopy: +1 212 259-6333


E-mail: mdantas@dl.com


 


if to the Collateral Agent:


 


Wilmington Trust FSB


Corporate Client Services


Suite 1290


50 South Sixth Street


Minneapolis, MN 55402


Attention: Peter Finkel


Telecopy: 612-217-5651


E-mail: pfinkel@wilmingtontrust.com


 


with a copy to:


 


Salans LLP


Rockefeller Center


620 Fifth Avenue


New York, NY 10020


Attention:  Sahra Dalfen


Telecopier: 212-632-5555


E-mail: sadlafen@salans.com


 


The
Issuer or the Trustee by written notice to the other may designate additional
or different addresses for subsequent notices or communications.


 


Any
notice or communication to the Issuer or the Guarantors shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five calendar days after mailing if sent 


 


149

















 


by
registered or certified mail, postage prepaid (except that a notice of change
of address shall not be deemed to have been given until actually received by
the addressee).  Any notice or
communication to the Trustee shall be deemed delivered upon receipt.


 


Any
notice or communication mailed to a Holder shall be mailed to the Holder at the
Holder’s address as it appears in the Notes Register and shall be sufficiently
given if so mailed within the time prescribed.


 


Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the
manner provided above, it is duly given, whether or not the addressee receives
it, except that notices to the Trustee shall be effective only upon receipt.


 


In
case by reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.


 


SECTION 13.3.  
Communication by Holders with other Holders.  Holders may communicate pursuant to TIA
§ 312(b) with other Holders with respect to their rights under this
Indenture or the Notes.  The Issuer, the
Trustee, the Registrar and anyone else shall have the protection of TIA §
312(c).


 


SECTION 13.4.  
Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Issuer
to the Trustee to take or refrain from taking any action under this Indenture,
the Security Documents or the Junior Lien Intercreditor Agreement, the Issuer
shall furnish to the Trustee:


 


(1)                                 an Officers’ Certificate in form reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture, the applicable
Security Documents and the Junior Lien Intercreditor Agreement relating to the
proposed action have been complied with; and


 


(2)                                 an Opinion of Counsel in form reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.


 


SECTION 13.5.  
Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:


 


(1)                                 a statement that the individual making such
certificate or opinion has read such covenant or condition;


 


(2)                                 a brief statement as to the nature and scope
of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;


 


150

















 


(3)                                 a statement that, in the opinion of such
individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and


 


(4)                                 a statement as to whether or not, in the
opinion of such individual, such covenant or condition has been complied with.


 


In
giving such Opinion of Counsel, counsel may rely as to factual matters on an
Officers’ Certificate or on certificates of public officials.


 


SECTION 13.6.  
When Notes Disregarded.  In
determining whether the Holders of the required aggregate principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Issuer, any Guarantor or any Affiliate of them shall be disregarded and deemed
not to be outstanding, except that, for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which the Trustee actually knows are so owned shall be so
disregarded.  Also, subject to the
foregoing, only Notes outstanding at the time shall be considered in any such
determination.


 


SECTION 13.7.  
Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for
action by, or at meetings of, Holders. 
The Registrar and the Paying Agent may make reasonable rules for
their functions.


 


SECTION 13.8.  
Legal Holidays.  A “Legal
Holiday” is a Saturday, a Sunday or other day on which commercial banking
institutions are authorized or required to be closed in New York, New
York.  If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.  If a regular record date is a Legal Holiday,
the record date shall not be affected.


 


SECTION 13.9.  
GOVERNING LAW.  THIS
INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE OR INSTRUMENTS ENTERED INTO AND, IN EACH CASE, PERFORMED IN SAID
STATE.  EACH OF THE PARTIES HERETO AGREES
TO SUBMIT TO THE JURISDICTION OF THE STATE COURTS OF, AND THE FEDERAL COURTS
LOCATED IN, THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE (INCLUDING THE GUARANTEES SET FORTH HEREIN), THE
NOTES, THE JUNIOR LIEN INTERCREDITOR AGREEMENT OR THE SECURITY DOCUMENTS.


 


SECTION 13.10.  
USA Patriot Act.  The parties
hereto acknowledge that in accordance with Section 326 of the USA Patriot
Act, the Trustee, like all financial institutions and in order to help fight
the funding of terrorism and money laundering, is required to obtain, verify,
and record information that identifies each person or legal entity that
establishes a relationship or opens an account. 
The parties to this Indenture agree that they will provide the Trustee
with such information as they may request in order to satisfy the requirements
of the USA Patriot Act.


 


SECTION 13.11.  
No Recourse Against Others.  An incorporator, director, officer, employee
or stockholder of the Issuer or any Guarantor or any of their parent entities
(other


 


151






 










 


than
the Issuer and the Guarantors), solely by reason of this status, shall not have
any liability for any obligations of the Issuer or any Guarantor under the
Notes, this Indenture, the Security Documents or the Junior Lien Intercreditor
Agreement or for any claim based on, in respect of or by reason of such
obligations or their creation.  By
accepting a Note, each Holder waives and releases all such liability.  The waiver and release are a part of the
consideration for the issuance of the Notes.


 


SECTION 13.12.  
Successors.  All
agreements of the Issuer and each Guarantor in this Indenture and the Notes
shall bind their respective successors. 
All agreements of the Trustee and the Collateral Agent in this Indenture
shall bind its successors.


 


SECTION 13.13.  
Multiple Originals.  The
parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  One signed copy is enough to prove this
Indenture.


 


SECTION 13.14.  
Qualification of Indenture.  The Issuer has agreed to qualify this
Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and to pay all reasonable costs and expenses
(including attorneys’ fees and expenses for the Issuer, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of this Indenture and the Notes and printing this
Indenture and the Notes.  The Trustee
shall be entitled to receive from the Issuer any such Officers’ Certificates,
Opinions of Counsel or other documentation as it may reasonably request in
connection with any such qualification of this Indenture under the TIA.


 


SECTION 13.15.  
Table of Contents; Headings.  The table of contents, cross-reference sheet
and headings of the Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not intended to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.


 


SECTION 13.16.  
WAIVERS OF JURY TRIAL.  THE ISSUER, THE GUARANTORS, THE TRUSTEE, AND
THE COLLATERAL AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS INDENTURE, THE NOTES, THE
GUARANTEES OR ANY SECURITY DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.


 


SECTION 13.17.  
Security Agreement Controls.  Notwithstanding any contrary provision in
this Indenture, this Indenture is subject to the provisions of the Security
Agreement.  The Issuer, the Guarantors,
the Trustee and the Collateral Agent acknowledge and agree to be bound by the
provisions of the Security Agreement.


 


SECTION 13.18.  
Force Majeure.  In no event
shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including, without limitation,
strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services, it being understood that the 


 


152

















 


Trustee
shall use reasonable best efforts which are consistent with accepted practices
in the banking industry to resume performance as soon as practicable under the
circumstances.


 


SECTION 13.19.  
Effectiveness of Provisions for RDA and the Guarantors.  The provisions of this Indenture shall not be
effective for RDA and the Guarantors, with the exception of Sections 3.9,
3.14, 3.15, 3.19 and 3.21, until the Escrow Release Date.  On the Escrow Release Date, RD Escrow
Corporation will merge with and into RDA with RDA as the surviving entity and
RDA will assume all the obligations of RD Escrow Corporation hereunder, which
merger will be permitted notwithstanding anything to the contrary in this
Indenture.


 


153

















 


IN
WITNESS WHEREOF, the parties have caused this Indenture to be duly executed all
as of the date and year first written above.


 


 


	
   

  	
  RD
  ESCROW CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
  Name:
  

  	
  Thomas
  A. Williams

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  READER’S DIGEST

  
	
   

  	
  ASSOCIATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
  Name:

  	
  Thomas
  A. Williams

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RDA
  HOLDING CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas A. Williams

  
	
   

  	
  Name:

  	
  Thomas
  A. Williams

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EACH
  OF THE SUBSIDIARY GUARANTORS

  
	
   

  	
  LISTED
  ON EXHIBIT 1 HERETO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William H. Magill

  
	
   

  	
  Name:

  	
  William
  H. Magill

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  



 


[Signature
Page to the Indenture]


 

















 


	
   

  	
  WELLS
  FARGO BANK,

  
	
   

  	
  NATIONAL
  ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Martin Reed

  
	
   

  	
  Name:

  	
  Martin
  Reed

  
	
   

  	
  Title:

  	
  Vice
  President

  



 


[Signature Page to
the Indenture]


 

















 


	
   

  	
  WILMINGTON
  TRUST FSB,

  
	
   

  	
  as
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter Finkel

  
	
   

  	
  Name:

  	
  Peter
  Finkel

  
	
   

  	
  Title:

  	
  Vice
  President

  



 


[Signature
Page to the Indenture]


 

















 


EXHIBIT 1


 


	
  Subsidiary
  Guarantors

  
	
   

  
	
  Alex
  Inc.

  
	
  Allrecipes.com, Inc.

  
	
  Ardee
  Music Publishing, Inc.

  
	
  Christmas
  Angel Productions, Inc.

  
	
  CompassLearning, Inc.

  
	
  Direct
  Entertainment Media Group, Inc.

  
	
  Direct
  Holdings Americas Inc.

  
	
  Direct
  Holdings Custom Publishing Inc.

  
	
  Direct
  Holdings Customer Service, Inc.

  
	
  Direct
  Holdings Education Inc.

  
	
  Direct
  Holdings Libraries Inc.

  
	
  Direct
  Holdings U.S. Corp.

  
	
  Funk &
  Wagnalls Yearbook Corp.

  
	
  Gareth
  Stevens, Inc.

  
	
  Home
  Service Publications, Inc.

  
	
  Pegasus
  Asia Investments, Inc.

  
	
  Pegasus
  Investment, Inc.

  
	
  Pegasus
  Sales, Inc.

  
	
  Pleasantville
  Music Publishing, Inc.

  
	
  R.D.
  Manufacturing Corporation

  
	
  RD
  Large Edition, Inc.

  
	
  RD
  Publications, Inc.

  
	
  RD
  Walking, Inc.

  
	
  RDA
  Sub Co.

  
	
  Reader’s
  Digest Children’s Publishing, Inc.

  
	
  Reader’s
  Digest Consumer Services, Inc.

  
	
  Reader’s
  Digest Entertainment, Inc.

  
	
  Reader’s
  Digest Financial Services, Inc.

  
	
  Reader’s
  Digest Latinoamerica S.A.

  
	
  Reader’s
  Digest Sales and Services, Inc.

  
	
  Reader’s
  Digest Sub Nine, Inc.

  
	
  Reader’s
  Digest Young Families, Inc.

  
	
  Reiman
  Manufacturing, LLC

  
	
  Reiman
  Media Group, Inc.

  
	
  Retirement
  Living Publishing Company, Inc.

  
	
  Saguaro
  Road Records, Inc.

  
	
  Taste
  of Home Media Group, Inc.

  
	
  Taste
  of Home Productions, Inc.

  
	
  Travel Publications, Inc.

  
	
  W.A. Publications, LLC

  
	
  WAPLA,
  LLC

  
	
  Weekly
  Reader Corporation

  
	
  Weekly
  Reader Custom Publishing, Inc.

  
	
  World
  Almanac Education Group, Inc.

  
	
  World
  Wide Country Tours, Inc.

  
	
  WRC
  Media Inc.