Exhibit 10.9


 


Execution Copy


 


FIRST AMENDMENT


 


FIRST
AMENDMENT, dated as of March 31, 2010 (this “Amendment”), to the
Revolving Credit and Guarantee Agreement, dated as of February 19, 2010
(the “Credit Agreement”),  among RDA HOLDING CO. (“Holdings”),
THE READER’S DIGEST ASSOCIATION, INC. (the “Borrower”), and certain
of the Borrower’s Subsidiaries (the “Guarantors”), the lenders from time
to time party thereto (the “Lenders”) and JPMORGAN CHASE BANK, N.A., as
administrative agent (the “Administrative Agent”).


 


W I T N E S S E T H:


 


WHEREAS,
Holdings, the Borrower, the Guarantors, the Lenders and the Administrative
Agent are parties to the Credit Agreement;


 


WHEREAS,
the Borrower has requested certain amendments to the Credit Agreement as more
fully set forth herein; and


 


WHEREAS,
the Administrative Agent and the Lenders are willing to agree to such
amendments but only on the terms and conditions contained in this Amendment.


 


NOW
THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:


 


1.             Defined Terms. Unless
otherwise defined herein, capitalized terms used herein which are defined in
the Credit Agreement (as amended by this Amendment) are used herein as therein
defined.


 


2.             Amendment to Section 1.01.
Section 1.01 of the Credit Agreement is amended as follows:


 


(a)  by inserting the following definitions
in their appropriate alphabetical order:


 


“Commitment” means Revolving Credit Commitment.


 


“First Amendment”
means the First Amendment, dated as of March 31, 2010, to this Agreement.


 


“First Amendment
Effective Date” has the meaning set forth in the First Amendment,
which date is March 31, 2010.


 


(b)  by amending the definition “Required
Lenders” to read in its entirety as follows:


 


“Required Lenders”
means, as of any date of determination, Lenders having more than 50% of the
aggregate Revolving Credit Commitments then in effect or, if the Revolving
Credit Commitments have been terminated, the aggregate Revolving Credit
Exposures then outstanding.


 


3.             Amendment to Section 2.03.
Section 2.03 of the Credit Agreement is amended by inserting the following
new paragraph (l):


 


“(l) Existing
Letters of Credit. Notwithstanding anything to the contrary herein,
on and after the First Amendment Effective Date, each letter of credit set
forth on Schedule 2.03 will


 

















 


constitute
a Letter of Credit, and the issuer of such letter of credit shall constitute an
L/C Issuer, under this Agreement and for purposes hereof will be deemed to have
been issued on the First Amendment Effective Date.”


 


4.             Additional Amendments to the
Credit Agreement. The Credit Agreement is amended by making the changes
thereto indicated on Annex A hereto.


 


5.             Amendment to Schedules to the
Credit Agreement. The Credit Agreement is amended by adding Annex B hereto
as Schedule 2.03 to the Credit Agreement.


 


6.             Release of Cash Collateral.
JPMorgan Chase Bank, N.A., as the issuer of the letters of credit set forth on
Annex B hereto, agrees to release to the Borrower the cash collateral securing
such letters of credit in the amount of $7,930,965.07 one Business Day after
the First Amendment Effective Date.


 


7.             Conditions to Effectiveness of
this Amendment. (a) Pursuant to clause (ii) of the last paragraph
of Section 11.01 of the Credit Agreement, Section 2(b) hereof
shall become effective upon the date upon which this Amendment shall have been
executed and delivered by the Borrower and the Administrative Agent.


 


(b) Other
than as specified in Section 7(a) hereof, this Amendment shall become
effective upon the date (the “First Amendment Effective Date”) upon
which this Amendment shall have been executed and delivered by the Borrower,
the Administrative Agent and the Required Lenders (such term having the meaning
as amended by this Amendment).


 


8.             Representation and Warranties.
To induce the Administrative Agent and the Lenders to enter into this
Amendment, the Borrower hereby represents and warrants to the Administrative
Agent and each Lender that:


 


(a)  As of the First Amendment Effective
Date, and after giving effect to this Amendment, each of the representations
and warranties made by the Borrower in or pursuant to the Loan Documents is
true and correct in all material respects as if made on and as of such date (it
being understood and agreed that any representation or warranty that by its
terms is made as of a specific date shall be required to be true and correct in
all material respects only as of such specified date).


 


(b)  No Default or Event of Default has
occurred and is continuing after giving effect to the amendments contemplated
herein.


 


9.             Effect of Amendment. (a) This
Amendment shall not constitute an amendment or waiver of or consent to any
provision of the Credit Agreement or the other Loan Documents not expressly
referred to herein and shall not be construed as an amendment, waiver or
consent to any action on the part of the Borrower or any other Loan Party that
would require an amendment, waiver or consent of the Administrative Agent or
the Lenders except as expressly stated herein. Except as expressly amended
hereby, the provisions of the Credit Agreement and the other Loan Documents are
and shall remain in full force and effect in accordance with its terms.


 


(b) On
and after the First Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of
like import, and each reference to the Credit Agreement in any other Loan
Document shall be deemed a reference to the Credit Agreement as amended hereby.
This Amendment shall constitute a “Loan Document” for all purposes of the
Credit Agreement and the other Loan Documents.


 


2

















 


10.           Counterparts.
This Amendment may be executed by one or more of the parties to this Amendment on
any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed counterpart of a signature page by facsimile or by electronic
mail in portable document format (.pdf) shall be effective as delivery of a
manually executed counterpart.


 


11.           Severability.
Any provision of this Amendment which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 


12.           Integration.
This Amendment and the other Loan Documents represent the agreement of the Loan
Parties, the Administrative Agent and the Lenders with respect to the subject
matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Administrative Agent or any Lender
relative to the subject matter hereof or thereof not expressly set forth or
referred to herein or in the other Loan Documents.


 


13.           GOVERNING
LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


[The remainder of this page is
intentionally left blank.]


 


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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.


 


 


	
   

  	
  THE READER’S
  DIGEST ASSOCIATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas A.
  Williams

  
	
   

  	
   

  	
  Name:  Thomas A. Williams

  
	
   

  	
   

  	
  Title:  Senior Vice President and Chief Financial
  Officer

  



 


[The Reader’s
Digest First Amendment Signature Page]


 

















 


	
   

  	
  JPMORGAN CHASE
  BANK, N.A., as Administrative Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tina Ruyter

  
	
   

  	
   

  	
  Name:  Tina Ruyter

  
	
   

  	
   

  	
  Title:  Executive Director

  



 


[The Reader’s
Digest First Amendment Signature Page]


 

















 


	
   

  	
  Bank of America,
  N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephanie
  Vallillo

  
	
   

  	
   

  	
  Name:  Stephanie Vallillo

  
	
   

  	
   

  	
  Title:  Senior Vice President

  



 


[The Reader’s
Digest First Amendment Signature Page]


 

















 


	
   

  	
  Credit Suisse
  AG, Cayman Islands Branch, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Doreen Barr

  
	
   

  	
   

  	
  Name:  Doreen Barr

  
	
   

  	
   

  	
  Title:  Director

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lynne-Marie
  Paquette

  
	
   

  	
   

  	
  Name:  Lynne-Marie Paquette

  
	
   

  	
   

  	
  Title:  Associate

  



 


[The Reader’s Digest
First Amendment Signature Page]


 

















 


	
   

  	
  GOLDMAN SACHS
  CREDIT PARTNERS LP, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew
  Caditz

  
	
   

  	
   

  	
  Name:  Andrew Caditz

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  



 


[The Reader’s
Digest First Amendment Signature Page]


 

















 


Annex A


 






 










 


(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 Borrower,
(ii) the Borrower 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;


 


(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 Secured Parties to realize the benefits
of, and intended to be afforded by, the Collateral);


 


(i) solely with respect to Section 7.08(a)(i)(A) and
(B) and Section 7.08(b)(i)(A) and (B), 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 Borrower or any Restricted Subsidiary after
the Closing Date, including, without limitation, sale leasebacks and asset
securitizations permitted by this Agreement;


 


(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 Section 7.08(a)(i)(A) or
Section 7.08(b)(i)(A), 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 Borrower or its
Restricted Subsidiaries on the Closing Date.


 


3

















 


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 7.01 of any amounts included under
Section 7.01(a)(vii)(D)(1));


 


(6) solely for the purpose of determining the amount
available for Restricted Payments under Section 7.01(a)(vii)(A), 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 Borrower 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 Borrower 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 Borrower and the Restricted
Subsidiaries) in any line item of such Person’s consolidated financial
statements pursuant to GAAP resulting from the application of 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 obligations under Swap
Contracts 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 Borrower and the
Restricted Subsidiaries from a Person other than the Borrower 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 7.01 only (other than Section 7.01(a)(vii)(D)), there shall
be excluded from Consolidated Net Income any income arising from any sale or
other disposition of Restricted Investments made by the Borrower and the
Restricted Subsidiaries, any repurchases and redemptions of Restricted
Investments from the Borrower and the Restricted Subsidiaries, any repayments
of loans and advances which constitute Restricted Investments by the Borrower
or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary
or any distribution or dividend


 


12

















 


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


 


“Defaulting Lender”
means any Lender that (a) has failed to pay over to the Administrative
Agent or any other Lender any amount required to be paid by it hereunder within
one (1) Business Day of the date when due, unless subsequently cured or
(b) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.


 


“Designated
Noncash Consideration” means the fair market value of noncash
consideration received by the Borrower 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
Non-Debtors” means the Subsidiaries set forth on Schedule 1.01C.


 


“Designated
Preferred Stock” means preferred stock of the Borrower 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 Borrower 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 7.01(a)(vii).


 


“DIP Credit
Agreement” means the Credit and Guarantee Agreement, dated as of August 26,
2009, among Holdings, the Borrower and certain of the Borrower’s Subsidiaries,
the lenders from time to time party thereto, the JPMorgan Chase Bank, N.A., as
administrative agent, and the other parties thereto, as amended, supplemented
or otherwise modified prior to the date hereof.


 


“Disposition”
or “Dispose” means the sale,
transfer, license, lease or other disposition (including any sale and leaseback
transaction and any sale of Equity Interests held in another Person) of any
property by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith; and, shall include any issuance by a
Person of any of its Equity Interests to another Person.


 


“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 Maturity Date; 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 Borrower 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 Borrower or any of
its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations.


 


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


 


15

















 


“Loan Parties”
means, collectively, the Borrower and each Guarantor.


 


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


 


“Material Adverse
Effect” means any event, development or circumstance that,
individually or in the aggregate, has had or could reasonably be expected to
have a material adverse effect on (a) the business, property, operations
or financial condition of Holdings and its Subsidiaries, taken as a whole, in
each case, other than such effects attributable to the commencement of the
Cases or the existence of prepetition claims and of defaults under claims to
the extent stayed by virtue of the commencement of the Cases, (b) the
business, property, operations or financial condition of Holdings, the Borrower
and the Restricted Subsidiaries, taken as a whole, in each case, other than
such effects attributable to the commencement of the Cases or the existence of
prepetition claims and of defaults under claims to the extent stayed by virtue
of the commencement of the Cases, or (c) the validity or enforceability of
this Agreement or any of the other Loan Documents or the rights and remedies of
the Administrative Agent and the Lenders hereunder or thereunder.


 


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


 


“Maturity Date”
means the date that is three (3) years from the Closing Date. 


 


“Maximum Rate”
has the meaning specified in Section 11.10.


 


“Moelis”
means Moelis & Company LLC, and any successor thereto.


 


“Mortgage”
means, collectively, the deeds of trust, trust deeds, hypothecs and mortgages
made by the Loan Parties in favor or for the benefit of the Administrative
Agent on behalf of the Lenders substantially in the form of Exhibit G
(with such changes as may be customary to account for local Law matters or as
otherwise may be reasonably satisfactory to the Administrative Agent), and any
other mortgages executed and delivered pursuant to Section 6.11.


 


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


 


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


 


“Net 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 Collateral 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 Collateral Documents.


 


26

















 


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


 


“Participant”
has the meaning specified in Section 11.07(e).


 


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


 


“PBGC”
means the Pension Benefit Guaranty Corporation.


 


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


 


“Permitted
Investments” means


 


(a) any Investment in the Borrower 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 Borrower 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 Borrower 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 Borrower 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 Section 7.08 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 Closing Date and any modification,
replacement, renewal or extension thereof; provided that the amount of


 


29

















 


any such Investment may not be increased except (x) as required by
the terms of such Investment as in existence on the Closing Date or (y) as
otherwise permitted under this Agreement;


 


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


 


(1) in exchange for any other Investment or accounts
receivable held by the Borrower 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 Borrower or
any Restricted Subsidiary with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default;


 


(i) obligations under Swap Contracts permitted under
Section 7.02(b)(i) and Section 7.02(b)(xii);


 


(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 Borrower 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 Borrower or any of its direct or indirect parents
(exclusive of Disqualified Stock of the Borrower); provided, however, that such
Equity Interests will not increase the amount available for Restricted Payments
under Section 7.01(a)(vii);


 


(l) guarantees of Indebtedness permitted under
Section 7.02; provided that if such Indebtedness can only be incurred by
the Borrower or Subsidiary Guarantors, then such guarantees are only permitted
by this clause to the extent made by the Borrower or a Subsidiary Guarantor,
and (ii) performance guarantees with respect to obligations incurred by
the Borrower or any of its Restricted Subsidiaries that are permitted by this Agreement;


 


(m) any transaction to the extent it constitutes an
Investment that is permitted and made in accordance with
Section 7.06(b) (except transactions described in clauses (ii), (iv),
(v), (vi), (viii) and (ix) of such Section 7.06(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 7.01 of any amounts applied pursuant
to Section 7.01(a)(vii)); 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 Closing Date or of an entity merged into the Borrower or merged into
or consolidated with a Restricted Subsidiary in accordance with


 


30

















 


(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), (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), (8), (9), (10), (15), (19) and (22) at the
time the original Lien became a Permitted Lien under this Agreement, 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 Liens securing the Secured Obligations and the holders of the
Indebtedness secured by such Lien have no greater intercreditor rights relative
to the Secured Parties than the original Liens and the related Indebtedness;


 


(18) Liens to secure Indebtedness of any Foreign Subsidiary
permitted by Section 7.02 (b)(xxi) covering only the assets of such Foreign
Subsidiary;


 


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


 


(20) Liens on the Collateral in favor of any
collateral agent (including for the benefit of the Secured Parties) 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 Indebtedness permitted to be incurred pursuant to
Section 7.02(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 Secured Obligations 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 this Agreement;


 


(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 7.02(b)(i); provided that any such Indebtedness (other than
Indebtedness that constitutes Secured Obligations) may be Bank Priority
Obligations, Pari Passu Payment Lien Obligations


 


33

















 


or have junior Lien priority pursuant to the Junior Lien Intercreditor
Agreement relative to the Secured Obligations and (y) Liens on property
and assets of Foreign Subsidiaries securing Indebtedness of Foreign
Subsidiaries incurred pursuant to Section 7.02(b)(i).


 


(27) Liens on Collateral securing Junior Lien
Indebtedness that has a stated maturity date that is longer than the Revolving
Credit Loans and that is permitted to be incurred pursuant to Section 7.02(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 Borrower or any of its Restricted Subsidiaries in the ordinary
course of business;


 


(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 Borrower or any Subsidiary or (iii) relating to purchase orders and
other agreements entered into with customers of the Borrower 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 7.02 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;


 


34

















 


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


 


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


 


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


 


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


 


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


 


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


 


35

















 


payable under any Loan Document to any Agent or any Lender,
(i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 3.01), each of such Agent and such Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Laws, and
(iv) within thirty (30) days after the date of such payment (or, if
receipts or evidence are not available within thirty (30) days, as soon as
possible thereafter), the Borrower shall furnish to such Agent or Lender (as
the case may be) the original or a certified copy of a receipt evidencing
payment thereof to the extent such a receipt is issued therefor. If the
Borrower fails to pay any Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to any Agent or any Lender the required
receipts or other required documentary evidence, the Borrower shall indemnify
such Agent and such Lender for any incremental taxes, interest or penalties
that may become payable by such Agent or such Lender arising out of such
failure. Notwithstanding anything to the contrary in this Section 3.01
(a), the Borrower shall not be required to increase the sum payable under any
Loan Document, or to indemnify any Lender or Agent, with respect to Taxes that
(i) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower), are United States withholding taxes imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes
a party hereto (or designates a new lending office), except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding taxes or
(ii) are withholding taxes that are excluded pursuant to Section 11.15(d).


 


(b)   In addition, the Borrower agrees to pay any and all present or
future stamp, court or documentary taxes and any other excise, property,
intangible or mortgage recording taxes or charges or similar levies which arise
from any payment made under any Loan Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, any
Loan Document (hereinafter referred to as “Other
Taxes”).


 


(c)   The Borrower agrees to indemnify each Agent and each Lender for
(i) the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section 3.01) paid by such Agent and such Lender and (ii) any
liability (including additions to tax, penalties, interest and expenses)
arising therefrom or with respect thereto, in each case whether or not such
Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority; provided such Agent or Lender, as the case may
be, provides the Borrower with a written statement thereof setting forth in
reasonable detail the basis and calculation of such amounts, which statement
shall be conclusive absent manifest error. Payment under this Section 3.01
(c) shall be made within thirty (30) days after the date such Lender or
such Agent makes a demand therefor.


 


(d)   If any Lender or Agent determines, in its reasonable discretion,
that it has received a refund in respect of any Taxes or Other Taxes as to
which indemnification or additional amounts have been paid to it by the
Borrower pursuant to this Section 3.01, it shall promptly remit such
refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 3.01 with respect to the
Taxes or Other Taxes giving rise to such refund plus any interest included in
such refund by the relevant taxing authority attributable thereto) to the
Borrower, net of all reasonable out-of-pocket expenses of the Lender or Agent,
as the case may be and without interest (other than any interest paid by the
relevant taxing authority with respect to such refund); provided that the Borrower, upon the
request of the Lender or Agent, as the case may be, agrees promptly to return
such refund (plus any penalties, interest or other charges imposed by the
relevant taxing authority) to such party in the event such party is required to
repay such refund to the relevant taxing authority. Such Lender or Agent, as
the case may be, shall, at the Borrower’s request, provide the Borrower with a
copy of any notice of assessment or other evidence of the requirement to repay
such refund received from the relevant taxing authority (provided that such Lender or


 


58

















 


(i)    declare or pay any dividend or make any distribution on account
of the Borrower’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 Borrower
payable in Equity Interests (other than Disqualified Stock) of the Borrower 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 Borrower 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;


 


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


 


(iii)  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:


 


(A)  Pari Passu Payment Lien Obligations;


 


(B)   Priority Payment Lien Obligations;


 


(C)   Indebtedness permitted under clauses (iv), (vii), (viii), (ix),
and (x) of Section 7.02 (b);


 


(D)  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;


 


(E)   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


 


(F)   the giving of an irrevocable notice of
redemption with respect to the transactions described in clauses (ii) and
(iii) of Section 7.01(a); or


 


(iv)  make any Restricted Investment


 


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


 


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


 


(vi)  immediately after giving effect to such transaction on a pro forma
basis, the Borrower could incur $1.00 of additional Indebtedness under
Section 7.02 (a); and


 


80






 










 


(vii)         such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Borrower and the Restricted
Subsidiaries after the Closing Date (including Restricted Payments permitted by
clauses (i), (viii), (xii), (xiv) and (xvi) of paragraph (b) below, but
excluding all other Restricted Payments permitted by paragraph (b)), is less
than the sum of:


 


(A) the EBITDA of the
Borrower for the period (taken as one accounting period) from April 1, 2010, to
the end of the Borrower’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 Borrower for the
same period; provided that if the amount under this clause (A) for any fiscal
quarter is less than zero, then the amount “built” under this clause (A) for
such fiscal quarter shall be deemed to be equal to zero, plus


 


(B) 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
Borrower since immediately after the Closing Date from the issue or sale of:


 


(1) Equity Interests of the
Borrower, 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:


 


I                    Equity Interests to members
of management, directors or consultants of the Borrower, any direct or indirect
parent of the Borrower and the Borrower’s Subsidiaries after the Closing Date
to the extent such amounts have been applied to Restricted Payments made in
accordance with clause (iv) of paragraph (b) below; and


 


II                Designated Preferred Stock;
or


 


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


 


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


 


(C) 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 Borrower following the Closing Date other than (i) net cash
proceeds contributed to the Borrower from the sale of Disqualified Stock or
Designated Preferred Stock, (ii) net cash proceeds received from Equity
Offerings to the extent used to redeem Senior Secured Notes, (iii) by any
Excluded Contributions and (iv) by contributions to the Borrower and the
Restricted Subsidiaries in connection with the Reorganization Plan, plus


 


(D) 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 Borrower or a Restricted Subsidiary by means of:


 


81

















 


(1)  the sale or other disposition (other than to
the Borrower or a Restricted Subsidiary or to an employee stock ownership plan
or any trust established by the Borrower or any of its Subsidiaries) of
Restricted Investments made after the Closing Date by the Borrower and its
Restricted Subsidiaries and repurchases and redemptions of such Restricted
Investments from the Borrower and its Restricted Subsidiaries and repayments of
loans or advances which constitute Restricted Investments made after the
Closing Date by the Borrower and the Restricted Subsidiaries and (without
duplication of amounts included in EBITDA) any dividends or distributions
received by the Borrower or a Restricted Subsidiary on account of Restricted
Investments made after the Closing Date (other than in each case to the extent
the Investment in such Restricted Investment was made by the Borrower or a
Restricted Subsidiary pursuant to clause (xiv) of paragraph (b) below); or


 


(2)  the sale (other than to the Borrower or a
Restricted Subsidiary or to an employee stock ownership plan or any trust
established by the Borrower 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 Borrower or a Restricted
Subsidiary pursuant to clause (x) of paragraph (b) below or to the extent such
Investment constituted a Permitted Investment) or a dividend or distribution
from an Unrestricted Subsidiary in each case after the Closing Date; plus


 


(E) in the case of the
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary after
the Closing 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 Borrower or a Restricted Subsidiary
pursuant to clause (xiv) of paragraph (b) below or to the extent such
Investment constituted a Permitted Investment.


 


(b) The foregoing provisions of Section 7.01(a) will
not prohibit:


 


(i)           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 this Agreement 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 this Agreement;


 


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


 


(iii)         the redemption, repurchase or other acquisition or retirement
of Indebtedness of the Borrower or a Subsidiary Guarantor made by exchange for,
or out of the proceeds of the substantially concurrent sale of, new
Indebtedness of the Borrower or a Subsidiary Guarantor, as the case may be,
which is incurred in compliance with Section 7.02 so long as:


 


82

















 


Indebtedness under Credit Facilities of Foreign Subsidiaries, (D) obligations
under Secured Hedge Agreements or (E) Cash Management Obligations; provided
that the aggregate principal amount of Indebtedness incurred under clauses (B),
(C), (D) and (E) outstanding at any one time shall not exceed $50.0 million
less the aggregate amount of all Net Proceeds of Asset Sales applied by the
Borrower or any Restricted Subsidiary since the Closing Date to permanently
repay any Indebtedness under Credit Facilities (and, in the case of revolving
credit Indebtedness, to effect a corresponding permanent reduction thereunder);


 


(ii)          the incurrence by the Borrower and any Subsidiary Guarantor
of Indebtedness represented by (i) the Senior Secured Notes issued on the Issue
Date (other than any Additional Notes), including any guarantee thereof, and
(ii) any Exchange Notes (including any guarantee thereof);


 


(iii)         Existing Indebtedness (other than Indebtedness described in
clauses (i) and (ii) of Section 7.02(b));


 


(iv)        Indebtedness (including Capitalized Lease Obligations),
Disqualified Stock and preferred stock incurred by the Borrower 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 clause
(iv) and including all Refinancing Indebtedness incurred to refund, refinance
or replace any other Indebtedness, Disqualified Stock and preferred stock
incurred pursuant to this clause (iv), does not exceed the greater of $20.0
million and 1.0% of Total Assets;


 


(v)         Indebtedness incurred by the Borrower 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;


 


(vi)        Indebtedness arising from agreements of the Borrower 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 Borrower and the
Restricted Subsidiaries in connection with such disposition;


 


(vii)         Indebtedness of the Borrower 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 Borrower or another Guarantor) shall be deemed, in each case to
be an incurrence of such Indebtedness not permitted by this clause (vii);


 


87

















 


7.02(a) and Section 7.02(b)(ii) and (b)(iii) above, this clause (xv) and
clause (xvi) below, 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)
(1) 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 Revolving Credit Loans and (2) does not have a
maturity date prior to the Maturity Date;


 


(B)
to the extent such Refinancing Indebtedness refinances (i) Indebtedness
subordinated or pari passu in right of payment to the Secured Obligations, such
Refinancing Indebtedness is subordinated or pari passu in right of payment to
the Secured Obligations 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:


 


(1)
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 the Borrower or a Subsidiary Guarantor; or


 


(2)
Indebtedness, Disqualified Stock or preferred stock of the Borrower or a
Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or
preferred stock of an Unrestricted Subsidiary;


 


(xvi)                (i)            Indebtedness,
Disqualified Stock or preferred stock of Persons incurred and outstanding on or
prior to the date such Person was acquired by the Borrower or any Restricted
Subsidiary or merged into the Borrower or a Restricted Subsidiary in accordance
with the terms of this Agreement and (ii) Indebtedness of the Borrower 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 Borrower 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), the Borrower would be permitted to incur at least $1.00
of additional Indebtedness pursuant to the Consolidated Leverage Ratio test set
forth in paragraph (a) of this Section;


 


(xvii)       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;


 


89

















 


(xviii)      Indebtedness consisting of promissory
notes issued by the Borrower or any of its Restricted Subsidiaries to any
current or former employee, director or officer of the Borrower, 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 Borrower or
any of its direct or indirect parent companies permitted by Section 7.01;
provided further, that such indebtedness must be expressly subordinated in
right of payment to the Secured Obligations;


 


(xix)         Indebtedness of the Borrower 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;


 


(xx)          Indebtedness, Disqualified Stock and preferred stock of the
Borrower 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 (xx), does not at any one time outstanding exceed $35.0 million;
and


 


(xxi)         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 Section 7.02 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 clauses (b)(i) through (b)(xxi) above or is entitled to be
incurred pursuant to paragraph (a) of this Section, the Borrower 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 Section 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 paragraph (a) of this Section. Additionally, all or
any portion of any item of Indebtedness may later be reclassified as having
been incurred pursuant to any category of permitted Indebtedness described in
clauses (b)(i) through (b)(xxi) above or pursuant to paragraph (a) of this
Section 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 Closing Date under this Agreement shall be deemed to have
been incurred on such date in reliance on the exception provided by Section 7.02(b)(i)
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.


 


(d)  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.


 


(e)  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


 


90

















 


to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Leverage Ratio test set forth in Section 7.02(a);


 


(v)           each Guarantor, unless it is a Subsidiary Guarantor that
is the other party to the transactions described above, in which Section 7.04(a)(ii)
above shall apply, shall have by supplement to this Agreement confirmed that
its Guarantee shall apply to such Person’s obligations under this Agreement and
its obligations under the Collateral 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;


 


(vi)          the Borrower shall have delivered to the Administrative
Agent an Officers’ Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such supplements, if any, comply
with this Agreement and, if a supplement to this Agreement or any supplement to
any Collateral Document is required in connection with such transaction, such
supplement shall comply with the applicable provisions of this Agreement and
the Collateral Documents;


 


(vii)         to the extent any assets of the Person which is merged or
consolidated with or into the Successor Borrower are assets of the type which
would constitute Collateral under the Collateral Documents, the Successor
Borrower 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 Collateral
Documents in the manner and to the extent required in this Agreement or any of
the Collateral Documents and shall take all reasonably necessary action so that
such Lien is perfected to the extent required by the Collateral Documents; and


 


(viii)        the Collateral owned by or transferred
to the Successor Borrower shall:


 


(A)
continue to constitute Collateral under this Agreement and the Collateral
Documents,


 


(B)
be subject to the Lien in favor of the Collateral Agent for the benefit of the
Collateral Agent, the Administrative Agent and the other Secured Parties; and


 


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


 


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


 


(c) In addition, the
Borrower will 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.


 


(d) Notwithstanding the
foregoing clauses (a)(iii) and (a)(iv),


 


(i)            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 Borrower or any Restricted Subsidiary;


 


92

















 


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 Agreement;


 


(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 Collateral Documents, the Successor Person 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 Collateral Documents in the
manner and to the extent required in this Agreement or any of the Collateral
Documents and shall take all reasonably necessary action so that such Lien is
perfected to the extent required by the Collateral Documents; and


 


(F)
the Collateral owned by or transferred to the Successor Person shall:


 


(1)
continue to constitute Collateral under this Agreement and the Collateral
Documents;


 


(2)
be subject to the Lien in favor of the Collateral Agent for the benefit of the
Collateral Agent, the Administrative Agent and the Secured Parties;


 


(3) not be subject to any Lien other than Permitted Liens; and


 


(ii)           the transaction is made in compliance with Section 7.08.


 


(b) Subject to certain limitations described in this
Agreement, the Successor Person will succeed to, and be substituted for, such
Guarantor under this Agreement and such Guarantor’s Guarantor Obligations 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 Borrower.


 


Section 7.06           Transactions with Affiliates.
(a) The Borrower 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
Borrower (each of the foregoing, an “Affiliate
Transaction”), unless:


 


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


 


(ii)           the Borrower delivers to the Administrative Agent (A) 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
Borrower 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 (B) 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 stating that such transaction is
fair to the Borrower or such Restricted Subsidiary from a financial point of
view.


 


94

















 


(xii)          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 Borrower in good faith;


 


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


 


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


 


Section 7.07        Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.


 


(a) The Borrower 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:


 


(i)            pay dividends or make any other distributions to the
Borrower 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 Borrower or any Restricted Subsidiary;


 


(ii)           make loans or advances to the Borrower or any Restricted
Subsidiary; or


 


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


 


(b) The foregoing limitations in paragraph (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
Closing Date, including pursuant to this Agreement and the related
documentation as in effect on the Closing 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 the Closing Date;


 


(ii)           the Senior Secured Notes Indenture;


 


(iii)          purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature discussed in
Section 7.07(a)(iii) 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 Borrower 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 this Agreement to be incurred;


 


96

















 


similar to those set forth in the Senior Secured Note Indenture with
respect to offers to purchase or redeem with the proceeds of sales of
Collateral to purchase the maximum principal amount of the Specified 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 Specified Notes, plus accrued and unpaid interest
to the date of purchase, in accordance with the procedures set forth in the
Senior Secured Note Indenture; provided,
that the Borrower 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 the
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 of the Specified Notes in accordance with this
clause (after giving effect to the repayment, repurchase, redemption or
acquisition of Priority Payment Lien Obligations). To the extent that the
aggregate amount of Specified 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
Borrower may use any remaining Excess Collateral Proceeds (“Unutilized Excess Collateral Proceeds”) in
any manner not prohibited by this Agreement. Upon completion of such Collateral
Disposition Offer, the amount of Excess Collateral Proceeds shall be reset at
zero.


 


(b)  (i)  The Borrower 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 paragraph (a) above), unless:


 


(A)
the Borrower 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 Borrower on the date of contractually
agreeing to such Asset Sale) of the assets sold or otherwise disposed of;


 


(B)
at least 75% of the consideration therefor received by the Borrower 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


 


(C)
to the extent that any consideration received by the Borrower 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 Secured Obligations in the manner and to the
extent required in this Agreement or any of the Collateral Documents.


 


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


 


(A)
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);


 


(B)
to make an investment in (1) 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, (2) capital
expenditures or (3) acquisitions of other assets


 


99

















 


(other than current assets), in each of (1), (2) and
(3), 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 Collateral Documents, such investment is concurrently added to
the Collateral securing the Revolving Credit Loans in the manner and to the
extent required in this Agreement or any of the Collateral Documents; and/or


 


(C) 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 Collateral Documents, such investment is concurrently added to
the Collateral securing the Secured Obligations in the manner and to the extent
required in this Agreement or any of the Collateral Documents.


 


(iii)          Pending the final application of any Net Proceeds from
Asset Sales in accordance with clauses (ii)(A) through (ii)(C) above, the
Borrower and the Restricted Subsidiaries may temporarily reduce Indebtedness or
otherwise apply such Net Proceeds in any manner not prohibited by this
Agreement. Any binding commitment to apply Net Proceeds to invest in accordance
with clauses (ii)(B) or (ii)(C) above shall be treated as a permitted final
application of Net Proceeds from the date of such commitment so long as the
Borrower 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 clause (iv) below).


 


(iv)          Any Net Proceeds from Asset Sales covered by this paragraph
(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 Borrower may make an offer to all holders of the Specified
Notes, and, at the Borrower’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 Senior Secured Note
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets, to purchase the maximum principal amount of Specified Notes
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
Senior Secured Note Indenture. To the extent that the aggregate amount of
Specified Notes and such Pari Passu Payment Lien Obligations tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Borrower may use
any remaining Excess Proceeds (which shall also constitute “Unutilized Excess Proceeds”) for any
purpose not prohibited by the terms of this Agreement. Upon completion of any
such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
After the Borrower or any Restricted Subsidiary has applied the Net Proceeds
from any Asset Sale as provided in, and within the time periods required by,
this paragraph (b), any Unutilized Excess Proceeds may be released by the Collateral
Agent to the Borrower or such Restricted Subsidiary for use by the Borrower or
such Restricted Subsidiary for any purpose not prohibited by this Agreement.


 


(c) For purposes of paragraphs (a) and (b) of this
Section, (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 Borrower’s, or such Restricted Subsidiary’s,
most recent balance sheet or in the notes thereto) of the Borrower or any
Restricted Subsidiary that are assumed by the transferee of any such assets and
for which the Borrower and all Restricted Subsidiaries have been


 


100

















 


validly released by all creditors in writing; and (ii) any securities
or other obligations received by the Borrower or such Restricted Subsidiary
from such transferee that are converted by the Borrower 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 paragraph (b) of this
Section only, any Designated Noncash Consideration received by the Borrower or
any Restricted Subsidiary in such Asset Sale having an aggregate fair market
value, taken together with all other Designated Noncash Consideration received
pursuant to this paragraph (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.


 


Section 7.09     Prepayments, Etc. of Indebtedness.
The Borrower will not, and will not permit any Restricted Subsidiary to,
directly or indirectly:


 


(a) prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner (it being understood that payments of regularly scheduled
interest shall be permitted) any unsecured Indebtedness, any Junior Lien
Indebtedness or any Indebtedness that is required to be subordinated to the
Obligations pursuant to the terms of the Loan Documents (collectively, “Junior Financing”) or make any payment in
violation of any subordination terms of any Junior Financing Documentation,
except the refinancing thereof with Refinancing Indebtedness otherwise
permitted under Section 7.02 (b)(xv);


 


(b) amend, modify or change
in any manner materially adverse to the interests of the Lenders (i) any term
or condition of the Senior Secured Notes, the Senior Secured Note Indenture,
documentation governing Pari Passu Payment Lien Obligations or any Junior
Financing Documentation or (ii) any Organization Document of any Group Member,
in any case without the consent of the Administrative Agent; or


 


(c) amend, modify or
otherwise change Section 3.2(b)(1) of the Senior Secured Note Indenture or
clause (26) of the definition of “Permitted Liens” in the Senior Secured Note
Indenture.


 


Section 7.10     Holding Company. 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, the
Borrower, (ii) action required by law to maintain its existence, (ii) performance
of its obligations under this Agreement, the Senior Secured Note Indenture, the
Collateral 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, this Agreement.


 


Section 7.11     Payments for Consent. The Borrower
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 Lender for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Agreement unless such consideration is
offered to be paid and is paid to all Lenders 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 7.12     Limitation on Lines of Business. The
Borrower will not, and will not permit any Restricted Subsidiary to, engage in
any business other than a Similar Business.


 


101

















 


Annex B


 


	
  Applicant/Obligor

  	
   

  	
  L/C Number

  	
   

  	
  Amount (USD)

  	
   

  	
  Account party

  	
   

  	
  Beneficiary
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Reader’s Digest Association Inc

  	
   

  	
  CFCS-808046

  	
   

  	
  $

  	
  1,650,000.00

  	
   

  	
  The Reader’s Digest Association Inc

  	
   

  	
  North American Specialty Insurance

  
	
  The Reader’s Digest Association Inc

  	
   

  	
  CPCS-761228

  	
   

  	
  $

  	
  421,977.20

  	
   

  	
  Direct Holdings Americas, Inc.

  	
   

  	
  KBSII Willow Oaks, LLC

  
	
  The Reader’s Digest Association Inc

  	
   

  	
  TPTS-750710

  	
   

  	
  $

  	
  2,774,904.00

  	
   

  	
  The Reader’s Digest Association,

  	
   

  	
  Advance Magazine Publishers Inc.

  
	
  The Reader’s Digest Association Inc

  	
   

  	
  TPTS-777217

  	
   

  	
  $

  	
  300,000.00

  	
   

  	
  Direct Entertainment Media Group Inc.

  	
   

  	
  Massachusetts Bay Insurance Company

  
	
  The Reader’s Digest Association Inc

  	
   

  	
  TPTS-792495

  	
   

  	
  $

  	
  2,405,412.00

  	
   

  	
  The Reader’s Digest Association

  	
   

  	
  44 South Broadway Property LLC